Almost every guide tells new Amazon sellers to use FBA. Most of them are right about the general case and wrong about a meaningful minority of products.
FBA is not automatically better. It is better when your product is small, your margin is healthy, and you cannot deliver at Amazon's speed on your own. Change any one of those and the calculation shifts.
Here is the honest comparison for Amazon.in, and a framework for deciding.
What Each One Actually Means
FBA (Fulfilment by Amazon): You ship inventory to an Amazon fulfilment centre. Amazon stores it, picks it, packs it, ships it, and handles customer service and returns.
FBM (Fulfilment by Merchant): You hold the inventory. When an order comes in, you pack and ship it yourself, and you own customer service and returns.
Amazon India also offers two middle options that get overlooked:
Easy Ship: You store and pack. Amazon's logistics partner collects from your location and delivers. You keep control of inventory, Amazon handles the delivery leg.
Seller Flex: Amazon's processes run inside your own warehouse. Prime eligibility without shipping stock away. Realistically this is for sellers already doing serious volume.
Most of the decision is FBA against FBM, so that is the focus below, but Easy Ship is the answer more often than its low profile suggests.
The Comparison
| FBA | FBM | |
|---|---|---|
| Prime badge | Yes, automatically | Only via Seller Flex or Local Shops |
| Fulfilment cost | ₹27 to ₹180+ per unit | Your actual shipping cost |
| Storage cost | Monthly, per cubic foot | Your own space |
| Customer service | Amazon | You |
| Returns handling | Amazon | You |
| Buy Box advantage | Strong | Weaker at the same price |
| Cash tied up in stock | Higher, shipped in advance | Lower, ship on order |
| Control over packaging | Minimal | Complete |
| Effort per order | None | Real and recurring |
The Case for FBA
The Prime badge is the whole argument. Prime members are a large share of Amazon India's buying volume and they filter for it. A listing without the badge is invisible to a big part of the market regardless of price.
The Buy Box leans your way. When several sellers offer the same product, Amazon weighs fulfilment method heavily. FBA offers win the Buy Box against FBM offers at the same price routinely.
It scales without you. Going from 20 orders a day to 200 changes nothing about your day under FBA. Under FBM it changes everything.
Customer service is Amazon's problem. For FBA orders, buyer messages about delivery, damage, and returns go to Amazon. That is a genuine and underrated saving in hours.
The Case for FBM
Heavy and bulky products. FBA fulfilment fees scale with size and weight. Past roughly 5kg, or for anything oversized, the fee can exceed what a local courier charges you. Furniture, large appliances, and bulk packaged goods often fulfil more cheaply in-house.
Low-margin products. A ₹299 product paying a ₹27 fulfilment fee, a ₹40 referral fee, and a ₹15 closing fee has very little left. If your margin is thin and your own shipping is cheap, FBM keeps you solvent.
Slow-moving or highly seasonal stock. Storage fees punish inventory that sits, and Q4 rates punish it harder. Something that sells 12 units a month should not be paying rent in a fulfilment centre all year.
Made to order, personalised, or fragile. If each unit is customised, packed to your specification, or needs handling Amazon's process does not provide, FBA is not workable.
Very low volume. A handful of orders a week does not justify shipping inventory across the country and losing sight of it.
The Hidden Costs Nobody Mentions
Both sides have costs the comparison tables leave out.
FBA has an inventory performance score. Amazon's IPI measures how well you turn stock. Fall below the threshold and Amazon caps how much you are allowed to store, which can strand you before a peak season. Keep IPI above 400.
FBA removals cost money. Getting stock back out, or disposed of, is charged per unit. Dead inventory is expensive to exit as well as to hold.
FBM has a performance bar you have to clear. Late Dispatch Rate, Order Defect Rate, and Cancellation Rate are measured. Miss them consistently and Amazon suppresses your listings or suspends the account. Under FBA these metrics are largely Amazon's to hit. Under FBM they are yours, every single day, including the days you are ill or travelling.
FBM returns arrive at your door. Along with the inspection, restocking, and refund decisions.
A Decision Framework
Work through these in order.
1. What does the packed unit weigh? Over 5kg or oversized, price out FBM and Easy Ship before assuming FBA.
2. What is your net margin after all FBA fees? Run the numbers properly, including advertising. Our full breakdown of Amazon FBA fees in India has the calculation. Below 15 percent, FBA is probably not viable for that product.
3. Can you deliver in two to three days across your target region? If yes, Easy Ship is worth a serious look. If no, and your competitors are Prime, FBA is close to mandatory.
4. How fast does the product turn? Under 60 days of stock on hand, FBA is comfortable. Six months of stock sitting in a fulfilment centre is a storage bill, not a strategy.
5. Does the product need handling Amazon cannot give it? Personalisation, fragile goods, and made-to-order all point to FBM.
You Do Not Have to Pick One
The most common mistake is treating this as an account-level decision. It is not. It is a per-SKU decision, and Amazon lets you mix.
A sensible pattern for a growing catalogue:
- Fast-moving, small, healthy-margin SKUs go FBA. They earn the Prime badge where it matters most.
- Heavy, bulky, or slow SKUs stay FBM or Easy Ship. They keep their margin instead of donating it to fulfilment fees.
- New and untested SKUs start FBM. Prove demand with your own stock, then convert the winners to FBA once you know they turn.
That last one is worth emphasising. Testing a new product on FBM costs you effort. Testing it on FBA costs you a shipment, storage fees, and possibly a removal fee when it does not sell.
What Most Sellers Should Do
If you are starting out with a small, light product in a competitive category, use FBA. The Prime badge is worth more than the fees cost, and the guidance in our Amazon FBA beginner guide applies directly.
If your product is heavy, your margin is under 20 percent, or you already have working logistics, run FBM or Easy Ship and put the saved fees into advertising instead.
If you have more than a handful of SKUs, stop looking for one answer and sort them into the three buckets above.
Not Sure Which Way Your Catalogue Should Go?
Our ecommerce team has run both models across categories on Amazon.in, and the split usually is not what sellers expect before the numbers are on the table.
Send us your SKU list and margins and we will tell you which products belong where. Start a conversation.