What Is Amazon Seller Fulfilled Prime?June in Blog
Seller Fulfilled Prime has been around since 2015, but this article comes on the heels of Amazon’s less-than-ideal (to say the least) updates on inventory restock limits.
We’ll be looking at how Amazon Seller Fulfilled Prime (SFP) works, how it differs from FBA, and why it’s probably not a viable option for you even with this whole FBA inventory circus.
Related Listening: Episode 385: Is FBA Dead?
What is Seller Fulfilled Prime?
Here’s what Amazon says:
Seller Fulfilled Prime (SFP) lets you offer Prime members the free two-day shipping they love, but handle the fulfillment yourself.
It lets you sell your products under Prime, while fulfilling orders from your own warehouse or from a third-party logistics provider (3PL). In other words, your merchant-fulfilled orders get the Prime badge.
Since you don’t need to send your products into FBA, it seems like one of Amazon’s ways to relieve itself of the pressure of taking in a lot of inventory from third-party sellers, while still being ‘customer obsessed’.
Seller Fulfilled Primed vs. Amazon FBA
What’s your business going to look like under Seller Fulfilled Prime? Here’s a quick comparison between SFP and standard FBA.
|Amazon FBA||Seller Fulfilled Prime|
|Customer service||Amazon Customer Service||Amazon Customer Service|
|Shipping costs to customer||Amazon arranges and bills the seller||Seller arranges and pays shipping costs|
|Inbound shipping costs to FBA||Yes||None|
|Performance metrics||None||Seller must hit strict metrics to quality and remain eligible|
|Storage & Fees||Amazon takes care of storage and fulfillment. Sellers can pay FBA fees and track their inventory all in one place||Sellers have to set up their own warehouse or work with a 3PL and incur storage costs themselves|
|Returns||Amazon handles returns||Seller handles returns, but must comply with Amazon standards|
Looking at the table above, FBA and Seller Fulfilled Prime are the same in that they give Prime eligibility, Amazon’s Customer Service suite, and higher chances of snagging the Buy Box. But the similarities end there.
The biggest difference is in how you incur the shipping costs. With FBA, Amazon practically arranges for everything and passes the shipping costs on to you as a seller. With Seller Fulfilled Prime, you shoulder shipping costs directly AND you have to arrange for shipping and logistics yourself, which is one of the biggest negatives with merchant-fulfilled models.
So here’s the tradeoff:
- You either gain more control over your shipping process by taking care of it yourself either by running your own warehouse or using a 3PL and incurring shipping costs directly; or
- Let Amazon do all the grunt work and just pay the FBA fees (which is the equivalent of the shipping fee)
Who can sign up for Seller Fulfilled Prime?
Amazon opens and closes registration for Seller Fulfilled Prime, somewhat unpredictably (and as of this writing, it’s currently closed). But if you’re willing to join their active waitlist, there are some key things you need to remember.
There are strict requirements
Straight off Amazon’s Seller Fulfilled Prime page, the requirements are:
- Offer Premium Shipping Options
- Ship over 99% of your orders on time
- Have an order cancellation rate of less than 0.5%
- Use Amazon Buy Shipping Services for at least 99% of orders
- Have nationwide delivery coverage for all standard-size products
- Use ship methods that support weekend delivery and pick up (Saturday or Sunday)
- Meet targets for 1-day and 2-day delivery promises
- Deliver orders with our supported Seller Fulfilled Prime carriers
- Seller must agree to the Amazon Returns Policy
- Allow for all customer service inquiries to be dealt with by Amazon
Strict seems like an understatement, and the slim margin for error is what puts off a lot of sellers.
Right out of the gate, you have to ship 99 percent of your orders on time. That means you’re only allowed a single delayed order for every 100 you ship out, otherwise Amazon might hit you with a 30-day suspension from the program.
You must offer Premium Shipping
Premium Shipping is an entirely different program that lets you provide fast shipping options to Prime customers. It even has metrics of its own, which include:
- Valid Tracking Rate of 99%
- On-Time Delivery Score rate of 97% or greater
- Seller-initiated cancellation rate of less than 0.5%
You must use Buy Shipping Services
You will also have to use Amazon’s Buy Shipping services (The costs come off your account). This lets you purchase shipping labels individually or in bulk at discounted rates from partner carriers right on Seller Central.
It also means having your products shipped through Amazon’s trusted network of shipping partners or pre-selected carriers like UPS or FedEx.
You also get Amazon’s distributed warehouse network, (i.e., your products are stored in multiple Amazon warehouses across the country), which can work to your advantage as it can mean shorter shipping distances and lower costs.
You must offer nationwide coverage and Saturday deliveries
Take note of a couple of key updates to Seller Fulfilled Prime that took effect on February 1, 2021:
Nationwide delivery coverage. This means you can no longer use the ‘regionalized’ strategy of using Seller Fulfilled Prime for orders within a couple of states, and other methods for orders outside your region. As of the update, Amazon wants SFP sellers to have nationwide delivery coverage for all standard size products.
Saturday deliveries and pickups. In keeping with Prime’s 1- and 2-day guarantees, sellers enrolled in SFP are required to use shipping methods with Saturday delivery and pick-ups, which could mean paying a bit more for shipping and even paying an employee to work on weekends.
If you operate your own warehouse and are not currently open on Saturdays, the Saturday delivery requirement can be a deal breaker.
There is a trial period
Before you actually get to operate under Seller Fulfilled Prime, Amazon will require you to successfully complete a trial period, where you will have to fulfill a minimum of 200 Prime orders with:
- An on-time shipment rate of at least 99%
- The use of Buy Shipping Services for at least 95% of Prime orders
- A cancellation rate of no more than 1%
Depending on how soon you can fulfill those 200 orders, the trial period could take anywhere from 5 to 90 days. But here’s the big catch: Your products won’t have the Prime badge during the trial period. You will only get the Prime badge after a successful trial period, or you try again.
What are the Pros and Cons of Seller Fulfilled Prime?
Alright so you know how Seller Fulfilled Prime differs from FBA and you know what it takes to qualify. Is it actually worth it? Let’s look at a rundown of its pros and cons.
Seller Fulfilled Prime Pros
- No inbound shipping costs. With SFP, you no longer have to ship products into a bunch of different FBA warehouses which can potentially save you a lot of money.
- Prime badge. Normally, merchant fulfilled orders don’t get the prime badge, but you will here.
- Control. Since you’re shipping products from your own warehouse, you get a little bit more control over packaging and the fulfillment process.
- No inventory restock limits. Because you’re warehousing your own products, you won’t face stock limits like you sometimes will with FBA.
Seller Fulfilled Prime Cons
- Strict requirements. The metrics you have to hit are almost ridiculous. In fact, no matter how advanced SFP sellers are, chances are they’ve been suspended at some point. Even small errors can get you suspended from the program and lose Prime eligibility.
- Trial period. Another tough requirement. You basically have to hit SFP metrics without the Prime badge helping you out, not to mention Amazon requires you to process the orders with a zero-day handling time.
- Cut-off periods and weekend shipping. Imagine receiving an order at 1:59 PM and still having to ship that within the same day to hit the Prime 2-day guarantee. That’s a real possibility with SFP.
- Returns. Unlike with FBA, you will need to handle customer returns yourself, but you still have to abide by Amazon’s free return shipping policy.
The best thing you get out of Seller Fulfilled Prime is, well… Prime. Prime members are the most active shoppers on the marketplace, and they spend over twice as much as non-Prime members.
For customers, the Prime badge indicates reliability, so it’s definitely a good way to build your brand and expand your customer base.
Related Reading: Amazon Badges and How to Get Them
Also, in some cases, SFP is less expensive than FBA, especially when you’re having to ship and store your inventory in multiple locations. Inbound shipping fees can be very high as well as FBA’s storage fees, not to mention that Amazon’s storage and restock policies could literally change overnight.
If you do go for Seller Fulfilled Prime, the main thing to watch out for is hitting those metrics, which, let’s face it, Amazon does not even hit consistently themselves.
With regards to shipping costs, this could be much higher or lower than FBA, depending on the fulfillment infrastructure you are currently working with.
Cut-off periods can be a pain in the butt, too. Some sellers mention that the cut-off time is 2PM (local time). In other words, you will have to ship even 1:59 PM orders out within that same day in keeping with Prime’s 2-day guarantee.
Does Being Suspended from Seller Fulfilled Prime Suspend My Entire Account?
If you fail to hit the stringent metrics for Seller Fulfilled Prime and do proceed to have your SFP privileges removed, generally it does not result in your entire account being suspended. You will lose all of the benefits of being Seller Fulfilled Prime but you can still sell and, if you switch to
FBA, you will regain the Prime badge.
Should you sign up for Seller Fulfilled Prime?
The update effective February 1, 2021 that now requires Saturday deliveries in addition to the myriad of other requirements all but torpedoed the program for many sellers.
At best, there are certain scenarios where Seller Fulfilled Prime at least makes sense:
1. If you’re already doing well running your own warehouse and have a solid logistics process setup, signing up for SFP and slapping on that Prime badge is an easy way to boost sales.
2. There are also certain item types with which you are better off shipping with Seller Fulfilled Prime, such as:
- high-value items
- seasonal products and those with unpredictable demand
- items with variations
- slow-moving goods
- products that require special handling or preparation
3. It also makes sense to do both SFP and FBA in some cases. For example, you can opt to use Seller Fulfilled Prime to ship slow-moving products (in order to avoid Amazon’s FBA storage fees) and go with FBA for fast-moving goods to take advantage of Amazon’s reliable fulfillment process.
Other than those instances, it’s pretty hard to recommend Seller Fulfilled Prime at the moment (not that you can sign up easily).
If you’re a new seller, you’re better off going wholly merchant fulfilled (FBM) and then going for SFP once your fulfillment process is ironed out. Otherwise, FBA is still the more convenient option, if Amazon ever lets you send in your inventory, that is.
Seller Fulfilled Prime lets you manage your own fulfillment process while still having the Prime badge on your products, but the metrics to stay eligible make little sense unless you’re already doing well fulfilling orders on your own.
Consider the convenience and other FBA perks that you are forgoing before signing up to SFP (or in this case, joining the waitlist).
Are there other instances where Seller Fulfilled Prime is viable? Leave a comment below.
Justeen has years of experience in writing about technology and consumer electronics. When he’s not helping you navigate the intricate world of e-commerce, he’s busy geeking out over Tolkien’s legendarium.