Amazon Seller Fulfilled Prime (Amazon SFP): Everything You Need to Know
You’ve likely heard of Amazon Seller Fulfilled Prime (Amazon SFP) as a fulfillment option other than MFN/FBM and FBA. Put simply, Amazon SFP allows sellers to display the Prime badge on listings they fulfill from their own facilities.
Of course, Amazon SFP sellers must adhere to Amazon Prime’s strict shipping standards and meet several other requirements. Depending on what type of seller you are and what products you sell, it could be an enticing option.
But how do you know if Amazon Seller Fulfilled Prime is right for you?
There’s a lot to know about this relatively new fulfillment option, such as:
• Who’s eligible
• What it takes to qualify
• How it affects your operations
• Pros and cons of the program
Thankfully, we’re going to discuss every detail of this program so you know whether it makes sense for your business. Keep reading to learn all you need to know about Amazon Seller Fulfilled Prime.
The (short) history of Amazon Seller Fulfilled Prime (Amazon SFP)
Launched in 2015, Seller Fulfilled Prime is a program that allows qualified Amazon sellers with Professional Selling accounts to display the Amazon Prime badge on orders fulfilled via their own warehouse(s) or third-party logistics (3PL) providers.
Seller Fulfilled Prime means sellers no longer need to rely on FBA to be granted Prime status.
Whether you currently use FBA, FBM/MFN, or both, there’s a great chance that switching to SFP can help your listings. According to Amazon:
“Seller fulfilled listings that became Prime-eligible for the first time through Seller Fulfilled Prime experienced an average sales uplift of more than 50%.”
That’s based on an “analysis done in Q3 2015 is for those listings which were moved from seller-fulfilled to Seller Fulfilled Prime in Q2.” Clearly, those numbers are nothing to shrug off.
Amazon itself also benefits from sellers enrolling in SFP, as the program reduces the need to build more fulfillment centers.
Considering that costs can run into the billions for building each fulfillment center, you can argue that the pressure removed from Amazon by Seller Fulfilled Prime is as impactful as the boost in sales that Prime status can provide to each SFP seller.
But not just any sellers can qualify for Seller Fulfilled Prime status. Only the best sellers can qualify, and each one must pass a tough trial period fulfilling Prime orders — before they can display the Prime logo.
How to qualify for Amazon Seller Fulfilled Prime (the SFP trial period)
Sellers who successfully complete the trial period to prove they’re capable of meeting Amazon Prime shipping standards are automatically enrolled in Seller Fulfilled Prime.
So how do they start (and, ideally, complete) the Seller Fulfilled Prime trial? The first part of qualifying for SFP is to have a Professional Seller account and be eligible for Amazon Premium Shipping.
Here are the specifics about eligibility for Premium Shipping status directly from Amazon Seller Central:
Now, here are directions from Amazon on how to begin the process of enrolling in Seller Fulfilled Prime:
Sellers must meet the following Prime performance requirements set forth by Amazon during their SFP trial period:
Lastly, sellers must agree to several specific program terms for Prime items in order to qualify, such as:
• buying all shipping labels for orders with a Prime item via Amazon’s Buy Shipping Services
• automatically directing all post-order customer service inquiries to Amazon
• adhering to Amazon’s returns policy
• offering Prime shipping benefits (seen in the image below) and guaranteed delivery dates
This might seem like a lot to take in so you may want to read this all a few times. If you think you can meet the trial and post-trial SFP requirements, that means you’re ready for the big time. So, now let’s discuss the main reasons you might want to jump through all these hoops to use Amazon SFP.
Why you should consider using Amazon Seller Fulfilled Prime
There are several key reasons that sellers may want to consider using Amazon Seller Fulfilled Prime, namely to:
• eliminate FBA shipping and handling fees
• stop split FBA shipments due to Distributed Inventory Placement
• gain access to Amazon Prime’s tens of millions of members to boost sales
• avoid long-term FBA inventory storage fees
• get more control over returns and refund collection
• earn higher profits on bulky and heavy items
• sell certain products that are ineligible for FBA
Let’s analyze each of these reasons in depth.
Eliminating FBA shipping and handling fees and split shipments with Amazon SFP
FBA fees (which are changing again this year) are a major pain. From pick and pack fees to weight handling, order handling, and storage fees, they sometimes feel downright excessive.
For years, FBA fees were considered a “necessary evil” for Amazon sellers. That’s because using FBA grants sellers Prime status. And, with Prime status comes a greater chance of winning the Buy Box.
FBA used to be the only way to become Prime-eligible — even for mega sellers with that could easily fulfill orders according to Amazon’s peak standards. So, these sellers were forced into a tough decision to either:
Chop a huge chunk out of their profits and reduce work for their staff by fulfilling orders via FBA in exchange for Prime status and its perks.
or
Fulfill orders via MFN/FBM from their own warehouses and lower their chances of winning the Buy Box and, as a direct result, making sales.
Many sellers with warehouses and staff previously outsourced fulfillment to FBA anyway — simply to become Prime-eligible. After all, Prime is a compelling force to consumers on the Amazon Marketplace.
Unfortunately, with FBA, Amazon forces sellers to either allow their initial FBA shipments to be split between up to three fulfillment centers or pay a per-item fee for “Inventory Placement Service” to ensure shipments get sent only to one fulfillment center.
Of course, with this being Amazon, Inventory Placement Service has certain category exceptions. Apparel, Jewelry, Shoes, Media, Oversize items, and “products with special prep or handling requirements (for example, certain items classified as hazardous materials)” do not qualify.
Sellers who ship heavy/bulky items to FBA are especially familiar with the pain of getting hit with multiple shipping charges. But now that SFP is an option, it’s possible to get the perks of Amazon Prime without profit-crushing FBA fees.
Access to the (many) perks of Amazon Prime
Why on earth would consumers spend $99/year (or $10.99/month) to be able to receive free Prime two-day shipping?Maybe it has to do with the included Prime Video streaming service. Perhaps it’s simply because people like getting things shipped to them super fast.
Whatever the case, it’s a good thing Amazon CEO Jeff Bezos didn’t let that question nag him too much when developing Amazon Prime. Prime is one of Amazon’s most successful programs to date. And it’s not just because of the consumer side; sellers love Prime too because of the great benefits it gives them.
Consider these remarkable Amazon Prime stats:
• There are a reported 54 million Amazon Prime members and counting as of early 2016
• The 54 million represents a 35% increase in membership from 2015
• Prime members tend to purchase Prime products over non-Prime items
• They also spend nearly twice as much as non-Prime shoppers
• Prime Day 2016 was the most successful sales day in online history
On top of all that, Prime has the power to seriously boost the sales velocity of your listings. That means your inventory for Prime listings will turn over much faster, and you’ll need to adjust your replenishment schedule to reflect that.
The bottom line on Amazon Prime for sellers: Access to Prime can unlock sales and profits you’ve never been able to attain without it.
Avoiding FBA long-term storage fees
We already discussed how Amazon SFP can eliminate FBA shipping and handling fees; now let’s talk storage fees.
Since Seller Fulfilled Prime merchants tend to be big players with their own warehouses, inventory storage shouldn’t be an issue. But before the existence of Amazon SFP, many of these larger sellers would send bulk shipments to FBA in order to become Prime eligible.
Sadly, many of them had empty space in their warehouses as a result — with hefty FBA storage fees, to boot. Still, these sellers felt justified in using Amazon’s premium fulfillment program to gain Prime shipping eligibility and boost their chances of winning the Buy Box. In their minds, paying FBA fees was worth the exposure that Prime gave them.
First, these sellers pay basic FBA inventory storage fees. (These are changing effective March 1st, 2017. See chart below.)
Then, to make matters worse, many of these sellers incur FBA long-term storage fees when products don’t sell.
Overly optimistic sellers would send massive shipments to Amazon fulfillment centers. Then, when they didn’t sell certain products as fast as anticipated, the boxes would sit in FBA inventory for months — eating away at profits.
That’s because Amazon could be using that space to store faster-selling items (which help them collect fees faster). Because of this, Amazon penalizes sellers with long-term inventory storage fees when precious fulfillment center space is filled with products that don’t sell for long time periods.
The beauty of Seller Fulfilled Prime is that this doesn’t have to be the norm for stellar sellers anymore. Sellers who qualify for Amazon SFP can ship from their own warehouse(s) and avoid paying for storage in FBA facilities.
They also no longer have to risk using FBA for slow-moving products that could end up sitting in inventory longer than expected.
More control over returns and refunds
One major pain point of FBA is that sellers don’t always get reimbursed for returns right away — if at all. In fact, there’s a business that exists for the sole purpose of helping Amazon sellers get the money they’re rightfully owed back from Amazon.
The story behind this apparent lack of organization on Amazon’s part is common: human error. And it’s not just with getting FBA sellers refunds in a timely fashion; it’s also in >product handling.
Amazon FBA staff are far from perfect, and it’s very possible that your products can get damaged or lost during the handling process. When this happens, it can lead to many headaches for sellers, who are tasked with filing claims and dealing with potentially fraudulent buyers.
Using Seller Fulfilled Prime can help reduce some of these concerns. Below, you’ll find Amazon’s customer service and returns requirements and policies for SFP:
And, here are the charges for return shipping, along with who pays them:
If you’re okay with this returns process, Amazon SFP is calling your name.
Earn higher profits on bulky and heavy items
Sure, FBA is great for small, lightweight products that sell fast and have clear sales velocity. Here’s why:
• Amazon won’t hit small and lightweight products with high storage or weight handling fees
• Amazon won’t slap fast-selling products with long-term FBA inventory storage fees
• Products with predictable sales velocity will rarely surprise you by sitting in inventory longer than expected
• Fragile or meltable items that FBA warehouse staff are prone to damaging and improperly packing.
FBA can help take major burdens off you during peak selling season (Q3 to Q4), too. With that said, there are plenty of products that you’d be better off fulfilling via Amazon SFP.
The first group that comes to mind is bulky and/or heavy items.
With FBA, you pay high fees when shipping heavy items to fulfillment centers (and, as you now know, you could be paying for up to three shipments due to Distributed Inventory Placement) and when you ship products to buyers.
With Seller Fulfilled Prime, you avoid having to ship expensive, heavyweight items to Amazon first. Plus, you get to use your own inventory space (that also costs you money), instead of paying extra for Amazon’s.
If your product mix calls for it, perhaps using both FBA and Seller Fulfilled Prime makes sense for you. Consider analyzing your SKUs and dividing them up into their ideal fulfillment categories.
Cons of Amazon Seller Fulfilled Prime
So far, we’ve covered all the benefits of Amazon SFP, but what about the drawbacks?
Clearly, SFP can work wonders for sellers who sell certain types of items and already have the infrastructure (warehouse, staff) in place. But it also pays to understand everything that’s required of you to maintain eligibility in the SFP program.
Here’s what you need to do:
Beyond any extra costs associated with fulfilling Prime 2-day shipping orders via your carrier through Buy Shipping Service and the added pressure of maintaining Amazon’s lofty standards for the program, SFP has no drawbacks if used strategically based on your product mix.
The bottom line: Who benefits from Amazon Seller Fulfilled Prime the most?
So, you’ve made it to the end — clearly, you’re serious about getting started with Seller Fulfilled Prime.
Here’s a little wrap-up of everything we covered:
→ Start the process of enrolling in Seller Fulfilled Prime by completing a trial of fulfilling 200 Prime orders.
→ Once you complete the trial, Amazon automatically enrolls you in the program and you must maintain eligibility by meeting Amazon’s stringent Prime standards.
→ SFP is ideal for sellers who already operate a warehouse and have staff that can handle picking, packing, and shipping.
→ FP can reduce FBA fees in every category, from shipping, inventory storage (short- and long-term), handling, and order processing.
→ SFP can gain more control over the returns process, make inventory management easier, and boost profits, especially on heavy/bulky items.
Smart sellers will find that fulfilling heavier/bulkier shipments via SFP and relying on FBA during busy seasons for small/lightweight items can boost their profits.
Of course, before you jump into Seller Fulfilled Prime, use a tool like Amazon’s FBA Revenue Calculatorto roughly compare the costs of FBA to your own fulfillment costs. Only then will you be able to truly gauge if Seller Fulfilled Prime is right for you.
