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Best Way to Sell on Amazon: FBA vs FBM vs Wholesale (Profit Comparison)

Posted on Categories Academy

There are multiple ways to sell on Amazon, and each has different cost structures, operational requirements, and profit potential.

Many sellers ask:

What is the best way to sell on Amazon?

The answer depends on what you’re optimizing for:

  • profit margin
  • scalability
  • cash flow
  • operational simplicity
  • risk level

In this guide, we’ll compare the three most common selling approaches — FBA, FBM, and wholesale — and explain how to evaluate them from a profitability perspective.

What Is the Best Way to Sell on Amazon?

For many sellers, Amazon FBA is the most scalable fulfillment method, while wholesale is often the most stable selling model.

However, the “best way” depends on your goals.

A seller optimizing for automation might prefer FBA.
A seller optimizing for control might prefer FBM.
A seller optimizing for predictable inventory may prefer wholesale.

To choose the best approach, you need to understand the cost structure and profit dynamics of each.

Understanding the Difference: Fulfillment Method vs Business Model

Before comparing options, it’s important to clarify terminology.

FBA vs FBM = Fulfillment method

  • FBA means Amazon stores and ships your inventory.
  • FBM means you store and ship products yourself (or through a third-party fulfillment partner).

Wholesale = Sourcing/business model

Wholesale refers to buying products from authorized suppliers or distributors.

Wholesale sellers can use either:

  • FBA
  • FBM

So the most accurate comparison is:

  • FBA vs FBM (fulfillment strategy)
  • Wholesale vs private label vs arbitrage (business model)

This guide focuses on the most common real-world choice sellers make:

Should I sell using FBA, FBM, or wholesale-based reselling?

Option 1: Amazon FBA (Fulfillment by Amazon)

Amazon FBA is one of the most popular selling methods because it reduces operational work.

With FBA, Amazon handles:

  • storage
  • packing
  • shipping
  • customer service
  • returns (in most cases)

Pros of Amazon FBA

  • Prime eligibility (higher conversion rates)
  • faster shipping
  • better customer trust
  • easier scaling
  • Amazon handles fulfillment operations

Cons of Amazon FBA

  • fulfillment fees can be high
  • storage fees can reduce profit
  • less control over inventory handling
  • return processing risk (unsellable inventory)

Profit Considerations for FBA Sellers

FBA profitability depends heavily on:

  • product size and weight (fee tier)
  • inventory turnover (storage fees)
  • return rate
  • advertising cost
  • pricing stability

FBA works best for products with:

  • consistent sales volume
  • manageable size/weight
  • strong margins

Option 2: Amazon FBM (Fulfilled by Merchant)

FBM means you handle fulfillment yourself, either through your own warehouse or a third-party logistics provider (3PL).

Pros of FBM

  • lower fees in some cases
  • more control over packaging and fulfillment quality
  • easier to sell oversized or heavy products
  • flexible inventory management

Cons of FBM

  • operational workload is higher
  • shipping speed can affect conversion rate
  • customer service responsibility is greater
  • returns handling becomes your responsibility

Profit Considerations for FBM Sellers

FBM can be more profitable when:

  • FBA fees are too high for your product type
  • you have negotiated shipping rates
  • you have an efficient warehouse or 3PL partner
  • your product is oversized or low-margin

FBM is often used by sellers who prioritize margin and control, especially in categories where FBA fees make profitability difficult.

Option 3: Wholesale Selling on Amazon

Wholesale selling means purchasing products in bulk from authorized distributors or suppliers and reselling them on Amazon.

Wholesale sellers often sell on shared listings, competing with other sellers for the buy box.

Pros of wholesale

  • stable supply chain (compared to arbitrage)
  • easier to scale with capital
  • proven demand (selling established brands)
  • lower product development risk

Cons of wholesale

  • competition is often intense
  • pricing pressure can reduce margins
  • many brands are gated or restricted
  • listing quality is not always controllable

Wholesale is often considered one of the most sustainable models for long-term Amazon selling.

Profit Comparison: FBA vs FBM vs Wholesale

Below is a clear comparison of how these models typically differ.

FBA Profit Profile

FBA tends to offer:

  • higher conversion rates (Prime)
  • more automation
  • higher fees

Best for:

  • standard-sized products
  • products with strong margins
  • sellers scaling multiple SKUs

Profit risk:

  • storage fees and return losses can reduce margin if inventory turnover is slow.

FBM Profit Profile

FBM tends to offer:

  • lower platform fees (in some cases)
  • higher control
  • higher operational workload

Best for:

  • oversized/heavy products
  • sellers with warehouse or shipping efficiency
  • products where Prime is less critical

Profit risk:

  • conversion rates can be lower if shipping is slower or less trusted.

Wholesale Profit Profile

Wholesale tends to offer:

  • predictable demand
  • stable product supply
  • easier scaling with capital

Best for:

  • sellers who want consistent sourcing
  • sellers comfortable with buy box competition
  • sellers who can negotiate strong supplier terms

Profit risk:

  • margins may decline over time due to price competition.

What Is Usually the Most Profitable Way to Sell on Amazon?

Profitability depends on your cost structure.

In many cases:

  • FBA can generate higher total profit due to higher conversion and scale
  • FBM can generate higher margin per unit if shipping is optimized
  • Wholesale can generate consistent cash flow but may have thinner margins

The key is not choosing the “most profitable method” in theory.

The key is knowing which one is most profitable for your products.

How to Compare Profit: The Real Amazon Profit Formula

To compare FBA, FBM, and wholesale accurately, sellers should calculate net profit per unit.

Net Profit Per Unit =

Selling Price
 – Amazon Referral Fee
– Fulfillment Cost (FBA fee or FBM shipping cost)
– Product Cost (COGS)
– Prep and Packaging Cost
– Storage Fees (FBA)
– Advertising Cost per Sale
– Return/Refund Impact
= Net Profit

This formula allows sellers to compare different fulfillment methods using real unit economics.

Key Differences in Amazon Fees (FBA vs FBM)

Referral fee

Both FBA and FBM pay referral fees.

This fee is category-based and usually ranges from 8% to 15%.

Fulfillment costs

  • FBA: fixed fulfillment fee based on size and weight
  • FBM: variable shipping cost based on carrier, destination, and packaging

Storage costs

  • FBA: monthly storage fees apply
  • FBM: warehouse storage costs apply (if applicable)

Inventory Strategy: Why It Matters for Profit

Inventory planning is one of the biggest differences between these approaches.

FBA inventory strategy

FBA requires careful inventory turnover to avoid:

  • high storage fees
  • aged inventory surcharges

FBM inventory strategy

FBM gives more flexibility, but requires:

  • warehouse space
  • packaging processes
  • labor planning

Wholesale inventory strategy

Wholesale often involves bulk purchasing, which can create:

  • higher inventory exposure
  • cash flow pressure
  • storage needs (FBA or warehouse)

Inventory turnover is often a deciding factor in long-term profitability.

Advertising Considerations (PPC Impact)

Advertising affects all selling models.

However, PPC impact varies:

FBA

FBA tends to convert better, which can reduce PPC cost per sale.

FBM

FBM conversion may be lower, which can increase PPC cost per sale.

Wholesale

Wholesale sellers may not control the listing, which can make PPC less effective unless the listing is already strong.

PPC should always be evaluated using break-even ACOS.

Break-Even ACOS (Important for All Models)

Break-even ACOS is the highest ACOS you can afford without reducing profit.

Break-even ACOS formula:

Profit before ads ÷ Selling price

Example:

Selling price: $40
Profit before ads: $10

Break-even ACOS = 10 ÷ 40 = 25%

This metric helps sellers avoid scaling ads beyond their margin limits.

Which Amazon Selling Method Is Best for Beginners?

From a purely operational perspective:

  • FBA is often the easiest to manage
  • FBM requires more daily operations
  • wholesale requires capital and supplier relationships

But the best long-term approach is usually the one that fits your resources.

If you already have warehouse capability, FBM may be a strong option.
If you have supplier access, wholesale may scale faster.
If you want simplicity and automation, FBA is often the best choice.

Which Amazon Selling Method Scales Best?

In many cases:

  • FBA scales best operationally
  • Wholesale scales best from a sourcing stability perspective
  • FBM scales best for sellers with logistics efficiency

The best scalable model is usually the one where you can consistently maintain profit while increasing volume.

Key Metrics to Track for FBA, FBM, and Wholesale Sellers

Regardless of your model, profitable scaling requires tracking performance at product level.

Important metrics include:

Profitability metrics

  • net profit per ASIN
  • net margin percentage
  • profit per unit
  • return impact

Advertising metrics

  • ACOS
  • TACoS
  • break-even ACOS

Inventory metrics

  • sell-through rate
  • inventory turnover
  • storage cost trends

Why Many Sellers Choose FBA + Wholesale Together

A common scaling approach is combining:

  • wholesale sourcing
  • FBA fulfillment

This model can be effective because it provides:

  • stable supply (wholesale)
  • strong conversion (FBA Prime)
  • operational scalability

However, it still requires careful profit tracking because wholesale margins are often thinner and competition is higher.

Frequently Asked Questions (FAQ)

Is FBA better than FBM?

FBA is often better for scaling because of Prime eligibility and automation, but FBM can be more profitable for certain products, especially oversized items or sellers with low shipping costs.

Is wholesale the best way to sell on Amazon?

Wholesale is one of the most stable ways to sell on Amazon because it offers predictable supply and demand. However, margins can be lower due to competition.

Can you do wholesale with FBM?

Yes. Wholesale sellers can fulfill through FBM or FBA depending on product size, shipping costs, and buy box competition.

What is the most profitable way to sell on Amazon?

The most profitable method depends on your product costs, fees, advertising spend, and return rates. Sellers should calculate net profit per unit and track profitability per ASIN.

Final Thoughts: The Best Way to Sell on Amazon Depends on Your Profit Structure

There is no single “best way” to sell on Amazon for everyone.

FBA, FBM, and wholesale each work well under the right conditions.

The most reliable way to choose the best model is to compare them using real profitability calculations, including:

  • Amazon fees
  • fulfillment costs
  • advertising spend
  • return impact
  • inventory storage exposure

If you want to compare profitability across FBA, FBM, and wholesale products at the ASIN level, sellerboard helps Amazon sellers track net profit, fees, refunds, and advertising impact — so you can scale the model that actually performs best.