16 Sep Understanding Amazon’s Seller Fulfilled Prime Program
Amazon Prime seller status guarantees Amazon merchants increased sales through access to Prime members — a market that continues to grow in numbers and volume of spend every year.
Sellers have a lesser-known second option to reach the coveted Prime status: participating in the Seller Fulfilled Prime (SFP) program.
Sellers need to join a waiting list to enroll. The program began in 2015 and was created for retailers that want to be able to offer their products as Prime but not rely on Amazon for storing inventory, order picking, and shipping customer orders sold through the Amazon channel.
Requirements of an SFP Seller
To sell on Amazon in the seller fulfilled program, the retailer must have a Professional Selling account and be able to offer Premium Shipping with expedited shipping options. In other words, they must be able to meet the two-day standard shipping time for Prime members. There is another high bar set for service performance: sellers must have an on-time delivery rate of 99% or higher, as well as acceptable tracking for orders in transit. They must also comply with Amazon’s return policy. If a seller is not automatically approved for the program, it must undergo a 90-day trial period to ensure it can meet all of the requirements.
Benefits of the SFP Program
The biggest benefit of the SFP program is the ability to sell products as Prime, which improves a seller’s chances of winning the Buy Box and being seen by qualified buyers first. This gives the seller access to the millions of Prime members, most of whom prefer to purchase from Prime sellers. Amazon estimates that sellers who enter the program will see a 50 percent increase in sales on Prime listings.
The SFP program allows sellers to retain more control over their business. Sellers handle their own inventory management, order packing, and shipping. They are also in control of their branding and packaging. In contrast to the Fulfillment by Amazon (FBA) program, which charges fees for fulfillment, SFP sellers who have their own warehouses or fulfillment facilities are not subject to these charges.
SFP sellers also retain the ability to sell on other channels besides Amazon, since they retain ownership over the fulfillment process for all of their orders. Using the same fulfillment facilities to ship SFP orders and other online orders consolidates fulfillment operations and can help reduce costs.
A seller that is considering the program must understand the potential costs of having to offer free two-day shipping to Prime members. Since SFP sellers are able to limit this to specific regions, it may work for sellers in certain areas only. For example, SFP sellers can restrict Prime delivery to addresses in a two-day ground delivery service range from the warehouse where shipping costs are lowest.
The delivery requirement can be a deal-breaker for many retailers. If a seller currently only uses the USPS, the SFP program most likely will not be beneficial, since the Post Office cannot guarantee two-day delivery to most locations. Sellers who rely on the USPS will find they are often required to choose more expensive delivery options, creating a negative margin on many Prime shipments.
The potential limitations mean the costs associated with the SFP program must be evaluated on a case-by-case basis, in terms of both shipping requirements and fulfillment strategy. SFP remains a good choice for online retailers that still want to manage their own fulfillment while gaining the benefits of being a Prime seller — but that are also flexible about their choice of carriers.