Fulfillment by Amazon (FBA)
Your inventory goes to Amazon fulfillment centers (either from you or directly from your supplier).
Amazon ships your orders and handles all returns — including related customer support, shipping and tracking.
Customers can use their Amazon Prime account when they buy from you.
Amazon Prime is an annual service ($99) that allows customers to get free 2-day shipping when they order their products from Amazon, plus same-day and one-day shipping options.
Packaging decisions must happen before products are shipped to Amazon.
When you are out of stock, your listing will not appear in search results.
Fulfillment by Merchant (FBM)
You do all the heavy lifting yourself.
You hold product inventory at your location.
When an order comes in: you box it, package it, put the label on it, pay for it, and ship it out yourself.
Whether customers pay for shipping at checkout or you offer them free shipping, your company must cover the up-front costs to ship the product.
You control your packaging in real time and can add inserts at will.
When you are out of stock, your listing still appears in search results.