FBA vs FBM in the UK: how to decide SKU by SKU

Compare the full cost per unit of Fulfilment by Amazon and merchant fulfilment for each UK SKU, including storage, peak fees and returns, then build a sensible hybrid.

Decide between FBA and FBM one SKU at a time. Compare the full cost of getting one unit to a customer under each method, then weigh the gap against the extra sales you expect from the Prime badge. Fulfilment by Amazon (FBA) usually wins for small, light, fast-selling products. Fulfilment by merchant (FBM) usually wins for bulky, slow-moving or fragile items, and for products you can already ship cheaply. Many sellers end up with a mix, and that is often the right answer.

Build the FBA side of the model

Referral fees are mostly the same whichever way you fulfil, so focus on the costs that differ. One exception: in Clothing and Accessories, Amazon UK charges a lower referral rate on the part of the price above £40 for FBA and Seller Fulfilled Prime offers. For an FBA unit, add up:

• Fulfilment fee: a flat fee per unit based on product type, size and weight. Use the Revenue Calculator or the fee preview reports in Seller Central for each SKU's current figure. Amazon UK says most products priced at or below £20 are now eligible for Low-Price FBA rates.
• Fuel and logistics surcharge: a percentage of the fulfilment fee. Amazon introduced it at 1.5% for UK FBA in April 2026 and, at the time of writing (November 2026), it rises to 2% from 2 November 2026.
• Peak fulfilment fee: for the 2026 season, Amazon applies a festive peak fee to UK units shipped from 15 October 2026 to 14 January 2027, averaging £0.12 per parcel item and £0.07 per large or extra-large envelope item. Oversize and Low-Price FBA items are excluded.
• Monthly storage: charged per cubic foot of average daily volume. At the time of writing, standard-size items in most categories cost £0.76 per cubic foot from January to September and £1.51 from October to December. Clothing, footwear and some accessories, and oversize items, have lower rates.
• Storage surcharges: a storage utilisation surcharge can apply when your stored inventory is high relative to sales (the ratio must be above 22 weeks, among other criteria), and an aged inventory surcharge applies to units stored for more than 241 days.
• Inbound and prep: freight to Amazon's fulfilment centres, plus preparing and labelling units to Amazon's requirements. Amazon has ended its own prep and labelling service in the US and Canada, so budget for doing prep yourself or through a prep centre, and check the current UK position and any charges shown in Send to Amazon before you confirm a shipment.
• Returns and removals: Amazon handles FBA returns, but returns processing, removal and disposal can all carry fees. Check which apply to each SKU, especially in categories with high return rates.

Storage is easiest to judge per unit: multiply the unit's volume in cubic feet by the monthly rate and the months it will sit in stock. A unit of 0.1 cubic feet held for two months in Q4 costs about £0.30 at the October to December rate. A slow seller held for most of a year costs far more and can also attract the aged inventory surcharge.

Build the FBM side of the model

For a merchant-fulfilled unit, add up:

• Postage: your contracted carrier rate, or the rate available through Amazon's Buy Shipping, for the parcel's weight and size.
• Packaging: boxes, mailers, void fill and labels.
• Labour: picking, packing and dispatch, including weekend and peak cover if you promise fast delivery.
• Space: the share of your warehouse or storage costs the product takes up.
• Returns: return postage where you pay it, inspection, repackaging and write-offs.
• Customer service: delivery and returns queries, which Amazon handles for FBA orders.

FBM also carries performance risk. Amazon measures merchant-fulfilled orders on dispatch times, cancellations and tracking, and missed targets can affect your account health. Price that risk honestly if your team is small.

Weigh the value of Prime

The cost gap is only half of the decision. FBA offers carry the Prime badge, which can make them more competitive for the Featured Offer and more attractive to Prime members. There is no fixed figure for what Prime is worth; it varies by category and price. The practical answer is to test: run a SKU through FBA for a period, compare its conversion rate and sales with a comparable FBM period, and put the difference into your model.

Seller Fulfilled Prime (SFP) gives the badge to orders you ship yourself, but the bar is high. Amazon UK's programme page lists a trial with a zero-day handling time, shipping more than 99% of orders on time, a cancellation rate below 0.5%, using Buy Shipping for at least 98% of orders with supported carriers, a domestic warehouse and acceptance of Amazon's returns policy. It suits sellers with strong operations and products that are expensive to store in FBA.

When each option tends to win

FBA tends to win when:

• The product is small and light, so the fulfilment fee is low compared with your own postage.
• It sells quickly, so storage per unit stays small, even in Q4.
• Prime clearly lifts conversion in your category.
• You want to grow without hiring warehouse staff.

FBM tends to win when:

• The item is oversize or heavy, where storage and fulfilment fees climb quickly.
• It sells slowly, so storage and aged inventory charges eat into the margin.
• It is fragile, high value, personalised or made to order.
• You already ship cheaply through your own carrier contracts or a third-party warehouse.

The hybrid approach

You do not have to choose once for the whole catalogue, or even once per product. Common hybrid patterns include:

• FBA for fast sellers, FBM for the long tail and bulky lines.
• A merchant-fulfilled offer on the same ASIN as backup, so you can keep selling if FBA stock runs out or an inbound shipment is delayed.
• More stock in FBA ahead of peak, sent before Amazon's inbound cut-offs, then moving slower lines back to FBM in January when storage rates fall.
• Using FBA stock to ship orders from your own website or other marketplaces through Multi-Channel Fulfilment, where the fees compare well with your own shipping.

Review the split at least once a quarter. Amazon's fees, storage rates and your own costs change, and a SKU that suited FBA last year may not suit it this year.

How Farioxa can help

Farioxa's marketplace operations service includes SKU-level FBA and FBM cost modelling, FBA shipment planning and preparation, and day-to-day management of merchant-fulfilled orders. It suits sellers who want an independent check on fulfilment costs or extra capacity before peak.