Not long ago, the only way to ensure 2-day shipment for Amazon Prime orders was to use Fulfillment By Amazon (FBA), the online sales giant’s in-house logistics arm.
But, since 2015, there’s been another way for online sellers like you to achieve Prime certification and tap into all of the related online selling advantages – Amazon’s Seller Fulfilled Prime (SFP) program.
So what, exactly, is Seller Fulfilled Prime (SFP)? Well, it’s an Amazon program that allows qualified sellers to display the highly coveted Prime badge, even if they’re fulfilling orders via their own warehouse or a third-party fulfillment partner. It’s also the subject of Amware’s newest eBook, which provides an abundance of information that will help you determine if – and how – your company should leverage SFP to cut costs and gain more control over your fulfillment process.
The eBook has the details, but here’s a quick Q&A to answer questions related to “What is Seller Fulfilled Prime?” These are questions we hear most often from online sellers trying to understand their Amazon fulfillment options.
Q: Can our company save money by shifting from FBA to SFP?
Our evidence suggests yes. However, just how much you can save depends on your business. Anecdotal evidence suggests that savings can be anywhere from 10%–25% (hard and soft costs), with 10% of the savings coming from avoiding Amazon fees and the balance coming from the reduction of resources required to prep/ship Amazon orders and manage issues that arise, such as disputes over returns or inventory. If you sell through multiple channels, including your own website, your inventory costs are likely inflated if you use FBA for Amazon orders. Once your inventory is in the Amazon system, it’s not available to fulfill orders from other channels. With SFP, warehouse inventory can be used to fulfill orders from any channel, including Amazon.
Q: We don’t think our company can meet Amazon Prime’s 2-day shipping requirement for all orders. Does that mean we can’t become certified under the SFP program?
Absolutely not. Under SFP, Amazon allows you to “regionalize” Prime-eligible products to buyers who are within a 2-day shipping radius of the shipping warehouse. Any of your orders that fall outside the radius would not be designated as Prime.
Q: Is it hard to regionalize Prime-eligible products?
Actually no. The setup within Seller Central (Amazon’s back-end management console for sellers) will mirror your parcel carrier’s service. For example, let’s say FedEx is the carrier. Prime eligibility will map with FedEx’s ETA for the order.
Q: What is the cutoff time for accepting Prime orders each day?
Any order made prior to 2 p.m. your local time (based on your Eastern-most warehouse) must ship from your warehouse the same day and be designated for 2-day transportation service. If your company can’t make that window, you probably shouldn’t designate an order as Prime.
Q: What if we made our cut-off times but a shipped order does not arrive in 2 days. Will we be penalized?
If your fulfillment center held up its end of the fulfillment bargain – shipping orders out same-day by 2 p.m. – then your seller ratings are not affected by a late-arriving shipment. Amazon Prime will deem that late shipment to be the fault of the carrier.
Q: Should I open up SFP to the entire country so all of my products are Prime-eligible?
Careful here. If you try to ship to everywhere in the U.S. in 2 days, you’ll end up with packages that can only make their two-day window if you use Priority Mail Express, UPS Next Day, and other costly delivery options. As a result, it’s best to regionalize Prime shipping designations based on each buyer’s location. Once you set up this regional strategy, you may not even need to choose 2-day shipping options and can end up using the more economical options of USPS Priority Mail, UPS Ground Residential, or FedEx Home Delivery.
Q: How long does it take for Amazon to approve an application for SFP?
Well, first you need to qualify. Amazon wants to protect its reputation among its best (Prime) customers, so it puts all applicants through a trial period. During this period, your company must prove that it can live up to the Prime’s famous two-day shipping promise and maintain an on-time delivery rate of 99% for trial orders. You’ll also need to have a minimum of 200 trial orders and a cancellation rate of no more than 1% for those orders.
Q: Will we get to display the Prime badge while we’re going through our trial?
No, the Prime badge will not be displayed on your Prime items during this trial. But after a successful trial, you will be automatically activated and the badge will start displaying.
Q: Where can I go to learn more about what the Seller Fulfilled Prime program is all about?
Definitely check out our latest eBook: The Ultimate Guide to Seller Fulfilled Prime. For information about some of the limitations of FBA, you might be interested in another Amware eBook: “Amazon: Great Sales Channel, Poor Fulfillment Strategy,” which talks about the FBA program.
Better yet, contact us and we’ll be glad to discuss the PROs and CONs as they relate to your specific business and situation.