Understanding Amazon MFN (Merchant Fulfilled Network)
To FBM or Not to FBM, that is the question
Amazon’s exclusive FBA service helps sellers store, pack, and ship products for customers and provides warehousing facilities for Amazon product returns. Amazon offers cost-effective shipping services to help improve Seller operational efficiency and save time and money on logistics costs.
However, there will be cases where FBA is not the right fit. An FBA seller can choose the Seller-fulfilled path called Merchant Fulfillment Network (Amazon MFN) or Fulfillment by Merchant (Amazon FBM).
Since Openbridge is an authorized PII Selling Partner application (Amazon Seller Central MFN), the post is meant to detail what it means to join the MFN/FBM sellers, including becoming a hybrid FBA/FBM merchant.
So, What is FBM?
Unlike Amazon Global Logistics service and FBA, where Amazon shipping and customer service are part of the service offering, Fulfillment by Merchant FBM/MFN means the Seller is responsible for the entire process pick, pack, and ship. This includes the underlying fulfillment systems, fulfillment fees, customer fulfillment options, fulfillment network, and seller support.
As a result, “Amazon Fulfillment by Merchant” means the seller assumes full responsibility for any and all logistics after the sale on Amazon, from processing orders to shipping costs to sending a replacement item (if needed).
Amazon MFN vs. FBM
The terms are interchangeable as Amazon officially uses “MFN”, but it also will use FBM depending on the context. They are describing the same thing. MFN and FBM simply refer to a method of selling where sellers list products in Amazon stores but manage all storage, shipping, and customer support independently.
In MFN/FBM, a seller must store and ship the merchandise themselves, and they are responsible for any customer support inquiries, returns, or complaints that arise in connection with their products. Sellers who use MFN can generally offer lower prices than those who use FBA because they are not required to pay fees for fulfillment by Amazon.
Why do sellers choose FBM?
For merchants, the MFN fulfillment process offers several key benefits to help them improve their profitability. First, FBM gives them greater control and predictability over their inventory and fulfillment operations. Amazon’s FBA program already helps mitigate the costs associated with fulfillment by transferring these to Amazon.
However, even with FBA, a certain amount of money can be saved through better logistics management. FBM allows sellers to establish their own criteria for success, which are then measured against fixed metrics.
Many sellers will use FBM to strategically lower their costs and increase margins by controlling their inventory and fulfilling orders more efficiently. Lastly, sellers will greatly influence the customer experience, especially regarding customer service.
MFN/FBM and Amazon PII
A seller performing FBM must access personally identified information (PII). What does Amazon consider PII? This information includes;
- Buyer’s First and Last name
- Buyer’s email address
- Buyer’s phone number
- Buyer’s Address Line 1, Address Line 2
- Gift Messages
Any MFN/FMB seller must adhere to Amazon Data Protection Policy (DPP) and Acceptable Use (AUP) policies relating to PII. For more information on how this applies to MFN/FBM, see the Openbridge Amazon PII doc.
FBM/MFN Opportunities: Amazon SFP (Seller Fulfilled Prime)
Amazon SFP allows MFN/FBM sellers to increase customer demand for their products with Prime. The SFP program expands the MFN/FBM customer base by listing a product with the Prime badge and shipping directly from your warehouse.
The program is only for those sellers who can commit to fulfillment services that offer two-day delivery at no charge for Prime customers. The program’s exposure to the Prime customer base can represent a significant growth opportunity. However, if you are operationally not ready to meet those commitments, be aware of the risks associated with increased customer service issues.
Note: SFP is not accepting new registrations but offers a waitlist when enrollment reopens.
Amazon FBM Requirements
While you are not paying Amazon for the logistics services, it does not mean you do not have internal costs for taking them on yourself. This includes meeting service expectations for any MFN/FMB merchant who wants to sell on Amazon.
Amazon uses several performance indicators to evaluate the performance of an Amazon Seller’s account. There are several indicators for which Amazon provides a specific compliance value. If your Seller account performance fails to meet the standards, it may lead to account restrictions and other situations.
- Offer Premium Shipping Options
- Your fulfillment services ship > 99% of your orders on time
- Have an order cancellation rate of < 0.5%
- Use Amazon Buy Shipping Services >= 99% of orders
- Nationwide delivery coverage
- Support Saturday or Sunday delivery and pick up
- 1-day and 2-day delivery promises
- Use Seller Fulfilled Prime carriers
- The Seller must agree to the Amazon Returns Policy
- Allow for all customer complaint or service inquiries to be dealt with by Amazon
Amazon FBM: Understanding Performance Benchmarks
Six leading indicators affect the performance of FBM/MFN Sellers:
- order defect rate
- cancellation rate
- late shipment rate
- valid tracking rate
- on-time delivery rate
- return dissatisfaction rate.
Order defect rate
Order Defect Rate (ODR) is a crucial indicator of your ability to provide a good buyer experience. ODR refers to the percentage of all orders with one or more defects to the total number of orders in a 60-day period. ODR includes a negative feedback rate, A-to-Z Guarantee Claim rate, and chargeback rate.
You cannot sell products on Amazon if the ODR is higher than 1%. ODR higher than 1% may result in account suspension.
Cancel rate
Cancel rate (CR) is the percentage of all orders canceled by the Seller to the total number of orders within a given 7-day period. This indicator includes all orders the Sellers cancel, except for orders the buyers request to cancel through the order cancellation function in their Amazon accounts. Unshipped orders that buyers directly cancel on Amazon are also not included.
You cannot sell products on Amazon if the CR is higher than 2.5%. CR higher than 2.5% may result in account suspension.
Late Shipment Rate
Late Shipment Rate (LSR) refers to the percentage of orders confirmed to be shipped more than 10-day or 30-day after the estimated shipping date. Amazon will require Sellers to complete the shipment within a 10-day or 30-day period. After the buyer places the order, you must confirm the order’s shipment within a 10-day or 30-day days. Otherwise, it will be considered a Late Shipment Rate.
You cannot sell products on Amazon if the LSR is higher than 4%. LSR higher than 4% may result in account suspension.
Valid tracking rate
Valid Tracking Rate (VTR) refers to having a good tracking ID within 30 days. VTR requires you to provide the logistics tracking information of an order according to the requirements of each Amazon Store, allowing buyers to access the fulfillment status of the order based on the tracking ID.
A VTR higher than 95% helps get a better rating and sales.
When your products are sold in US stores, European Stores, and Japanese stores, and the applicable tracking rate (VTR) is less than 95%, Amazon may restrict your right to sell non-FBA products under this category. It may also affect your eligibility to participate in Prioritized and guaranteed delivery.
Example: A Seller confirms that 200 packages have been sent, 190 of which have valid tracking IDs. Then, the correct tracking rate of Seller A is 95%. That is: 190÷200=0.95
In Seller Central,> Performance> Account Status> Fulfillment Performance section, click “View Details” and select the “Valid Tracking Rate” tab. Click the “Download report” button. Please remove the “Shipment delay” and “Delivery delay” options to filter and view orders with invalid or missing tracking information.
On-time delivery rate
On-time delivery rate (OTDR) refers to the percentage of all shipments delivered within the estimated delivery time to the total shipments tracked. For buyers, receiving the goods on time can significantly improve shopping satisfaction.
An on-time delivery rate (OTDR) higher than 97% helps bring buyers a better shopping experience and thus improves sales volume. Currently, Amazon does not impose any penalties on sellers who fail to meet the OTDR indicators.
You can set a suitable shipping time according to the actual situation to ensure the buyer can receive the goods within the estimated time.
Return Dissatisfaction Rate
Return Dissatisfaction Rate (RDR) refers to the percentage of all negative return requests to the total number of return requests. It is used to measure buyers' satisfaction level with their return experience.
RDR should be below 10%. Amazon does not impose any penalties on Sellers who fail to meet this performance goal.
Buyers whose problems have not been resolved will more likely submit negative feedback or file A-to-Z Guarantee Claims.
Get Started Today! Seller Central FBM Data Automation
Openbridge is an authorized PII application within the Selling Partner API ecosystem. We offer direct, code-free Amazon Seller Central MFN automation of official PII data to a private cloud warehouse or data lake.
If you are an FBM/MFN seller who manually downloads and manages hundreds or thousands of Amazon Seller exports, you risk not meeting Amazon AUP, DPP, or FBM benchmarks. All the manual file download work is risky, hard, expensive, and error-prone.
FBM sellers must rely on automation to ensure compliance and speed. Code-free Seller Central data integrations provide reliable automation for Seller Central data.
Openbridge automation ensures your team will quickly get data critical to optimizing demand level, sales statistics, operations performance, and sales lift.
- Leverage best-in-class analytics and business tools like Google Data Studio, Tableau, Microsoft Power BI, Looker, or Amazon Quicksight to fuel Amazon analytics via custom reports, interactive graphs, sales dashboards, and more.
- Take control of your Sales performance data and store it in a unified, single source of truth, private data lake, or cloud warehouses such as Amazon Redshift, Amazon Redshift Spectrum, Google BigQuery, Snowflake, Azure Data Lake, and Amazon Athena, and more.
Finally, you can turbocharge your FBM/MFN business with direct, code-free integrations with official Amazon APIs.
Get started with Amazon MFN using our 30-day, quick setup, no credit card, no charge, no risk, free trial.
Regardless of the fulfillment method, we have you covered if you are a hybrid FBA and FBM merchant. For fulfillment by Amazon FBA hybrid sellers, we also offer a broad collection of Order and Sales reports. Check out our complete offering of data integration solutions for Amazon Automation.
