To understand Seller Fulfilled Prime, it’s important to get a good grasp on Amazon Prime in general. Amazon recently revealed for the first time just how many Prime members they have: 100 million. Amazon vendors have long known the value of being a Prime seller. Even before the official number was announced, it was obvious that there were a lot of Prime members. It was also clear that they see the Prime label as a decisive benefit when making purchasing decisions. When you can get free 2-day shipping, why would you settle for less?
The company’s data backs up this anecdotal knowledge. Amazon has reported that a Prime listing earns up to 50% higher sales than non-Prime listings. Obviously, you want those higher sales.
But until recently, the main way to get that Prime designation – Fulfilled by Amazon (FBA) – involved paying higher fees to Amazon to manage storage and shipping for you. For vendors that would rather save that extra cash, Seller Fulfilled Prime now provides an alternative.
What is Seller Fulfilled Prime (SFP)?
Seller Fulfilled Prime is a vendor option that allows you to claim the Prime label for your products while continuing to store them in your own warehouse and handle shipping yourself.
Vendors that use SFP still use Amazon Logistics for shipping, but it’s up to you to package the items, print the label, and make sure it gets out on time. And, you have to swallow the cost for 2-day shipping yourself, which can add up – especially for orders from customers far away from your warehouse.
With SFP, Amazon still handles much of the customer service, although you’ll have some more control over returns and issuing refunds. And you’ll still be paying Amazon some fees for selling through the site, but the amount should add up to much less than with FBA.
Is it right for your business?
Seller Fulfilled Prime isn’t the best option for every business, but for some the reduced fees and increased control are absolutely worth it. The main businesses likely to benefit from switching to SFP (or using some combination of SFP and FBA) are those that:
Already have a fully staffed warehouse
Or even better, several warehouses across the U.S. If you were paying FBA storage fees just to get the Prime designation even though you can store and ship things just fine yourself, then SFP makes a lot of sense.
Have inventory that tends to sell slowly
If you’re paying a lot in long-term storage fees to Amazon, you’re better off keeping that stock in your own warehouse.
Sell through multiple platforms beyond Amazon
Handling the logistics of shipping all your orders through the same system is more efficient and cost-effective than outsourcing work to Amazon that you’re already doing for all your other orders.
Sell products that aren’t eligible for FBA
You can still get that Prime label for the items that are too bulky or considered hazardous with SFP.
If your business doesn’t have its own warehouses or doesn’t have a solid logistics setup for handling shipments quickly and efficiently, then FBA is still your best bet. But, if you can handle storage and shipment on your own and want to give less of your profits back to Amazon, SFP may be for you.
How to Get Started with Seller Fulfilled Prime
Vendors used to have to get an invitation from Amazon to try out Seller Fulfilled Prime, but that’s no longer the case. If you’re interested, you need to take the following steps.
1. Make sure you qualify.
Trying to apply for SFP will just be a waste of time if you don’t meet Amazon’s qualifications. Most of the qualifications have to do with proving yourself in the later steps on our list. But to be considered at all for SFP, you have to be a retailer that does a good amount of business through Amazon. Specifically, you should fulfill at least 200 orders every 90 days. If you’re a smaller business that doesn’t sell that much, or most of your sales happen on platforms other than Amazon, then you may simply not qualify for the program.
2. Develop a system to ensure you can get orders out fast.
To be an SFP vendor, you have to get orders out fast enough to keep up with the 2-day shipping expectations that both Amazon and their Prime customers have. Before you think about signing up for SFP, make sure you have enough staff and a solid system for packing and fulfilling orders quickly. Amazon doesn’t allow much room for error here. If you’re not prepared to get those orders out same day, even if someone at the warehouse calls in sick or you have an abnormally busy day, then you’re not ready for SFP.
3. Sign up for Premium Shipping.
Before you can qualify for SFP, you have to prove yourself with Premium Shipping. Eligibility for Premium Shipping requires that within the last 30 days (at any given time) you have:
- Delivered at least 92% of your orders on time.
- Provided a valid tracking ID for at least 94% of your orders.
- Canceled less than 1.5% of your orders.
If you can pull that off, then you’ll have the option to start a Seller Fulfilled Prime trial.
4. Enroll in the Seller Fulfilled Prime trial period.
When you’re logged into your Amazon account, go to the Seller Fulfilled Prime main page to sign up.
Once your trial has started, go to Shipping Settings to enable Prime shipping. Amazon provides Prime Shipping templates that make it easy to get started, but you can edit them or create your own.
Make sure you clarify which regions you want to offer Prime shipping in. If you only have warehouses in a couple of places, then paying for fast delivery on orders to the entire U.S. will cut into your profits pretty quickly. Make sure you limit Prime to areas where you can reasonably afford the 2-day shipping.
Figure out which products you want to enroll in Prime to start, and assign the relevant SKUs to your Prime template. You have to add at least one SKU for your trial to officially start, but you can add or change which products are included as you go.
5. Keep your account in good standing.
Once you’re all set up, it’s crucial both during your trial period and beyond to fulfill Amazon’s requirements if you want to stay in the SFP program. To move beyond the trial period, you have to fulfill at least 200 orders within 90 days that meet their requirements:
- On-time shipping rates for at least 99% of orders, and all orders shipped out same day.
- Use of Amazon’s shipping service for at least 95% of orders.
- A cancelation rate of less than 1%.
If you meet the goal of 200 orders faster than 90 days, your trial will be shorter.
If you slip – either during the trial or after – you’ll lose your status and either have to go back to FBA or lose the Prime label, so make sure you hold your business to the high standards Amazon inevitably will enforce.
Seller Fulfilled Prime can be a good way for some Amazon vendors to save money, but you have to be smart about how you use it. If you’re not careful, you could end up spending more on shipping than you previously did in fees to Amazon. But if you manage it well, you can get the higher sales that come with Prime, all while keeping more of your profits per sale.