Selling on Amazon has been a tipping point for the world of eCommerce. If you’re an active Amazon seller, you might have heard about Amazon Seller Fulfilled Prime (SFP) and how it can elevate your business.
Before 2016, if you wanted to sell under the Amazon Prime label, you needed to use the Fulfillment by Amazon (FBA) program. This entailed increased expenses and a high risk of returns from buyers. Luckily, Amazon Seller Fulfilled Prime arrived to change it all.
In this article we’ll go over some of the most important aspects of this program, so you can weigh out your options and decide if it is the right pick for you.
What Is Amazon Seller Fulfilled Prime (SFP)?
This revolutionary program allows high-volume sellers to sell under the “Prime Label” and ship Prime orders to customers in 2 days, fulfilling orders themselves or outsourcing to a fulfillment partner. It can also help sellers increase their listing exposure by highlighting the Prime Badge. According to Amazon, “Seller fulfilled product listings that were Prime-eligible for the first time via SFP experienced a sales uplift of over 50% on average.” – Seller App
You might be thinking: “That sounds like a hassle, why not just have Amazon fulfill my orders for me?” Well, the alternative for selling under the Prime label is the Fulfillment by Amazon (FBA) program.
Having the tech giant handling and shipping your products while you sit back and enjoy the profits may seem like a dream come true. But as the saying goes, “nothing in life comes free.” The FBA program will charge storage fees as well as fulfillment fees. So, the longer your product sits in their storage facilities, the more it’s going to cost you. In the end, you may have to re-calculate your costs to make sure your business is still profitable. You may have to look for alternatives to FBA if you find it is eating into your profits.
Amazon Seller Fulfilled Prime has some advantages that can make it a better fit for your business needs.
For the first time, you can take care of storage and fulfillment on your own, which means you won’t have to pay daily fees for Amazon to keep your product in their warehouse. This is especially beneficial if you own a storage facility or if your product doesn’t require huge amounts of space and care.
Here’s what you can do if you don’t own a warehouse or don’t have the time to take care of fulfillment…
One great benefit of the Seller Fulfilled program is that it allows you to outsource to a fulfillment partner, these are companies that can help you with storage and logistics and they specialize in Amazon fulfillment. This can be very beneficial if you don’t have your own infrastructure or you simply don’t have the time and energy to deal with the intricate workings of the logistics process.
PROs | Is Seller Fulfilled Prime (SFP) the Right Fit for Me?
Certainly, the Amazon selling experience is very diverse, not just because of its wide arrange of products but also its many businesses with unique models and needs. If you are wondering if SFP is the right program for you, you’ll need to think about your business values and capabilities.
If you value your brand and want to position it or just have in the spotlight of your transactions SFP is a good choice, since you’re doing the shipping and logistics you can highlight your logo as opposed to the FBA program where amazon does everything and as a result, your product ends up branded by Amazon instead of you.
More control over your business
Of course, it is nice to have Amazon do the work for you, but for some people having detailed control over their business and their process is very important. If it’s important for you to oversee these details, SFP might be a better fit.
Offer Prime products without going crazy over rigorous guidelines
If you have ever used FBA, you know how hard it can be to cover all of the details imposed by Amazon for things like packaging and storage it can take larger amounts of time and effort to prep your products in accordance with the Amazon warehouse guidelines. SFP allows you to manage your own process and still offer a quality product under the Prime label.
We have to be realistic about where we are standing.
Would it be nice to have amazon do everything for us? Yes. But, can we afford it? That’s the real question and there is no shame in saving money whenever we can. Your business should be your main priority, and if something seems to be a waste of money rather than an investment you should make the right call.
The great thing about SFP is you can potentially hire a fulfillment partner and have the best of worlds for a lower cost.
CONs | Qualifying for Seller Fulfilled Prime (SFP)
Here is where it gets a bit tricky. Amazon is known for setting the bar high when it comes to eligibility requirements.
But don’t get discouraged just yet. Remember this is to uphold a quality standard and it allows you to shield your business behind Amazon’s outstanding reputation.
These are some of the requirements that many sellers perceive as “difficult to achieve”:
• Use Amazon’s Buy Shipping for at least 98% of orders.
• Keep an on-time shipment rate of 99%.
• Maintain a 99% valid tracking rate.
• Have a cancellation rate of <0.5%.
Reaching Amazon’s high standards might seem a bit daunting, but once we’ve broken them down, you can see that this is something you can easily achieve—if you’re persistent enough, of course.
Let’s take a look at some important aspects of reaching these metrics:
Keep an efficient inventory
If you like to keep personal track of your inventory and keep it close to you an In-house process might work just fine. However, depending on how much infrastructure you have, it can be hard to maintain a high standard of efficiency when it comes to tracking and fulfillment. Consider outsourcing to a company that can ensure fast shipping and high-quality service.
The majority of online shoppers consider shipping times as one of the main factors of abandonment of a sales cart. To avoid this, you’ll need to ensure fast deliveries across all your means of distribution. This again comes down to your capabilities, since this is a major factor to consider, you will have to be honest about how much you can take on yourself and how much you should be paying someone else to do it.
Think about scalability
In-house solutions are a great way to keep a close eye on your business, and maybe save a bit of money. But what happens when your company starts growing? Do you have the ability to upscale and still maintain your delivery time and quality? Growing is fantastic but it also means more work and bigger investments. You can either expand before your demand surpasses your capabilities or hire a company that can offer to keep up with your business.
Outsource to a fulfillment provider
Outsourcing sounds like an amazing idea as it comes with many advantages, but also many considerations.
Here’s what should you do to make the right choice:
Like with most services there are many companies out there willing to help and do business with you. Odds are that most of those companies have a solid reputation, but that doesn’t necessarily mean they are a good fit. Think about what aspects are important to you (like brand presence, customer support, etc.) rather than just focusing on the main service they provide or what they’re famous for.
Don’t overlook costs
Make sure that your product remains profitable, even with the cost of outsourcing.
It’s important to calculate shipping costs. Therefore, make sure you’re going with the provider that accommodates your investment capabilities. You can also use shipping and fulfillment calculators to ensure you’re not overlooking any important aspects of your operation.
Do a trial run
You don’t have to immediately change your whole delivery system. You can start by outsourcing a few of your products to see how your fulfillment provider works for you. If you like the way they do things, you may eventually switch all your deliveries to them.
Don’t be afraid to ask questions. The more you communicate with these companies the better they can understand your needs and accommodate better solutions for them.
Last Words of Advice
Overall, this program is a great opportunity for every seller. However, you need to make sure you are choosing a strategy that works for you. Everyone wants to save money, but you also need to be able to manage your time better. If you are working overtime, weekends, and overextending yourself you might want to reconsider your current strategy.
Using Amazon Seller Fulfilled Prime can be a great idea and a worthwhile endeavor.
While finding the best fulfillment option for your operation, learn about Amazon’s regulations to abide by the rules and avoid any unpleasant surprises.
AMZ Advisers is a full-service eCommerce consultancy focused on creating growth opportunities for brands, manufacturers, and private labels across the US, Europe, Canada, and Asia.
The AMZ Advisers team has been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.