As Amazon has become the largest eCommerce company in the world, just about every seller of online products has sought to align itself with the eCommerce giant. But, what's the best way of doing that? In this article, we'll look at the different fulfillment methods available to Amazon sellers.
Many products that Amazon sells qualify for free 2-day shipping via the company’s Amazon Prime service. There are over 112 million Prime members as of January 2020. Consumers love the free 2-day shipping guarantee and sellers want to display the Prime logo with their listings because it boosts sales.
In 2015, Amazon introduced another fulfillment method, the Seller Fulfilled Prime (SFP) Program, which allows qualified suppliers to handle their own fulfillment (outside FBA), yet still retain Prime status. This has increased options for suppliers who may be disenchanted with FBA’s high storage rates and other limitations.
Amazon Prime Fulfillment Methods
Amazon Marketplace sellers have three different fulfillment methods when fulfilling Prime orders. Here’s a rundown on each method.
Fulfillment by Amazon: Amazon sellers do not have to use FBA, but about half do because it saves them the hassle of arranging it on their own. When you select FBA, Amazon will manage the entire fulfillment process for you—a fact that makes your products automatically eligible for Prime status. This approach tends to work well for companies that don’t have the physical space to store inventory, or that aren’t working with an experienced third-party fulfillment provider to manage these responsibilities.
By shipping products to Amazon—and then having FBA store and ship them—companies can save themselves the time and hassle associated with fulfillment. While FBA may be a convenient choice for that reason, there are many limitations of FBA, including the fact that your packages, upon delivery, won’t carry your brand nor will you have the ability to customize the way packages go out (inserts, special packaging, etc). Also, FBA’s storage rates can be quite high.
Seller Fulfilled Prime by Merchant: With this option, you’ll be responsible for all aspects of the order, fulfillment, and shipping process. This may be a cheaper way to go if you understand how to operate an efficient fulfillment operation and if you have a warehouse network that enables 2-day delivery across the U.S. It allows you to maintain control of your products and inventory. But many eCommerce companies simply don’t want to invest money and time to build a fulfillment infrastructure. They would rather focus on sales growth.
Seller Fulfilled Prime using a third party fulfillment (3PF) partner: This option fills the gap that existed between FBA and the reality that if you didn’t use Amazon’s fulfillment services your listings wouldn’t include the Prime shipping badge.
Use of a 3PF allows sellers to display the Prime badge, as long as the solution meets strict SFP requirements. Naturally the 3PF must be able to meet the 2-day shipping requirement for Prime orders. Check out this blog post to learn more about Seller Fulfilled Prime and use of a third party partner.
Finding a Partner to Fulfill Amazon Orders
If you’re looking for a logistics provider to help with Amazon fulfillment, be sure to put these key points on your criteria list:
- Look for a provider that has multiple DCs situated around the country, and that’s able to meet the demands of 2-day shipping to many different geographic points.
- Seek out a business partner with deep expertise in ecommerce fulfillment services. You'll want to see demonstrable experience in this area.
- Find a provider that offers late-day order cutoffs for same-day shipping.
For more information - or to just weight your options with a knowledgeable logistics provider - contact Amware Fulfillment today.