Editor’s note: this article was updated on January 2017
Amazon’s been working on recruiting third-party merchants into its Seller Fulfilled Prime program. But the venture could lead to problems for sellers who join if they don’t have the capability to ensure 2-day shipping. Find out what you stand to gain if you apply, and what you stand to lose if you don’t.
For a glimpse of Seller Fulfilled Prime basics, please read on.
Prime Fulfillment for All
We’ve discussed Amazon Prime previously on our blog, but we’ve never mentioned A fulfillment model that enables third-p… More. It’s a new approach to selling on Amazon as a merchant, launched in May 2015, when Amazon.com invited a select few of its merchants to join.
The program flags qualifying products as eligible for Prime 2-day delivery. When they sell, SFP sellers buy a shipping label from Amazon using the MWS BuyShipping API, and ship straight from their warehouse. Switching to Prime fulfilment has some merit, by all accounts.
First of all, it offers immediate access to 47 million Prime subscribers. Nearly half of all US households subscribe to Prime, they have a higher average household income than other Amazon customers, CNBC reports, they spend more in their first year than non-Prime members, and they spend more and more with each new subscription, Geekwire claims.
Another reason sellers can’t resist switching to Prime is the fact that they enjoy the same This refers to the situation where a sel… More privileges as FBA sellers do. Finally, being able to leverage Amazon’s negotiated shipping rates on large products is a welcomed change considering the dimensional weight charges coming into effect this year and FBA handling costs increasing as of February 18.
There are numerous other advantages to Prime badging for sellers, including:
- Increased sales velocity;
- Complete stock control, and no need to split up your inventory to share with Amazon;
- Using the ‘ship by region’ feature, where items flagged as Prime-eligible by the seller are only shown as available for Prime shipping to customers whose registered shipping address is in the seller’s close proximity;
- Easier return processing and greater transparency than with FBA listings with automated return authorizations.
When it comes to disadvantages, one may be that you have only 2 business days from the moment a returned item reaches your warehouse to issue a refund, rather than the 5-day break you have for a non-Prime order.
| Note: If your performance metrics drop, your eligibility for Prime stops. You then need to wait at least seven days after you’ve restored your metrics before you can regain it. |
Amazon claims releasing the Prime Now app and launching Seller Fulfilled Prime lead to sellers Prime badging 500,000 products worldwide, a recent press release suggests. But Amazon’s gains go far beyond that. FBM Prime saves Amazon a fortune in warehouse investments, and it allows it to fulfill Prime Now orders in 2 hours or less even in urban areas, where it doesn’t have any fulfillment centers.
As for sellers, it’s not as clear how much of a difference having access to Amazon Prime’s 47 million subscribers has made. Nor is it clear which of the three fulfillment channels – FBA, FBM or Seller Fulfilled Prime – is better, since they focus on different types of products. Still, knowing you always have a choice is an attractive incentive.
Should You Join the Amazon Seller Fulfilled Program?
Seller Fulfilled Prime is for every seller, but not always worthwhile for every type of merchandise. It’s aimed at sellers with:
- bulky items that would cost too much to store at fulfilment centres;
- items ineligible or unsuitable for FBA, including hazardous material;
- country-specific items (certain types of plugs or language content).
⎸Note: Sellers can also choose SFP over FBA if they don’t have time to wait for Amazon fulfilment centres to process their inventory, whatever the type of product.⎹
But you’ll probably only find this out when you sign up. Depending on your location and the type of product you have, Seller Fulfilled Prime may be too costly for you. Similarly, for small and light items, you can use the FBA Small and Light service instead.
Here are some of Amazon’s claims about Seller Fulfilled Prime and what you should consider before joining:
- You can set your own shipping rates. True, but Amazon Prime customers expect free shipping and you won’t receive a shipping credit, so you need to factor your shipping costs into your price.
- You can set the regions you want to ship to and charge per location. True, but be aware that unless you have warehouses that can supply most of the country in a matter of hours or days, you’ll be unable to fulfil a substantial amount of orders. Customers will see your Prime badge if they’re in one of your chosen areas, but you’d be just another third-party seller if you don’t do premium shipping for their area.
- You can select the courier that’s best for you from the list of Amazon Logistics and supported couriers’ services. True, but premium 2-day shipping via USPS (Priority, Regional Rate, and First Class) will not be available for most items.
- Negotiated courier rates are up to 60% lower through Amazon Logistics than standard services. Maybe, but sellers claim that this discount isn’t passed on to them, and some have private rates with FedEx or other couriers that are far more advantageous than what Amazon has to offer.
The greatest problem sellers face is the fact that they can’t ship most of their items via USPS, and can only ship using UPS or other couriers’ much more expensive services.
There are ways to deal with this, though. Some sellers reportedly claim to use Amazon Logistics when they log in their shipments, but then cancel the process mid-way through and wait 90 days for a refund. Then and only then will they be allowed to enter a new tracking number (including one from USPS). This affects their performance metrics, though, and we wouldn’t recommend it.
It’s been some time since SFP was rolled out, and we’re aware the situation may have changed in the meantime. We try to update our blog posts whenever needed, so your contribution is very much appreciated. We hope we’ve addressed some of your concerns, and please feel free to share your own experiences with us in the comment section below.
Emin Filip follows trends and advances in online selling, looking for the impact they may have on online merchants, including 3rd-party Amazon sellers.