7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
7 Things You Need to Know About Seller Fulfilled Prime
table of contents
01 INTRODUCTION
02 WHAT IS SFP? HOW IS IT DIFFERENT FROM FBA?
03 WHAT ARE THE REQUIREMENTS FOR SFP ELIGIBILITY?
04 WHAT DOES THE SFP TRIAL PERIOD ENTAIL?
05 WHAT ARE SFP’S SHIPPING AND DELIVERY TIME REQUIREMENTS?
06 WHAT ARE THE BENEFITS OF SFP?
07 WHAT SHOULD SELLERS CONSIDER BEFORE JOINING SFP?
08 IS SFP RIGHT FOR ME?
09 SUMMARY
800. 875. 837 1
introduction
For many Amazon retailers, obtaining Prime seller AMAZON PRIME MEMBERSHIP GROWTH
status is considered central to boosting sales and
gaining a competitive edge on America’s largest
online marketplace. Armed with the Prime badge,
online retailers can tap into the coveted group of
Prime buyers who, according to a recent Morgan
Stanley survey, spend more than 4.6 times than
non-Prime members. Moreover, the Prime audience
is increasingly growing year-over-year with 63%
of Prime members saying they have no plans
to cancel their membership in the near future
(Consumer Intelligence Research Partners, 2017).
With an estimated 80 million prime members,
it’s no wonder online retailers seek to obtain
Prime seller status.
*https://fa.morganstanley.com/theoberheidegroup/mediahandler/media/81078/Amazon_Disruption_Symposium.pdf
**https://www.digitalcommerce360.com/2017/04/25/amazon-prime-members-80-million-in-the-us-up-38-year-over-year/
800. 875. 837 1 01
It used to be that the only way to become a Prime Although Seller Fulfilled Prime can be a great
seller was to participate in Fulfillment by Amazon program for many retailers, helping them boost
(FBA) program where sellers are required to store their Amazon sales significantly, it may not necessarily
their inventory in Amazon’s warehouses and have be a good fit for others.
Amazon handle their order fulfillment. But today,
online retailers can also become Prime sellers by In this e-book, we’ll answer 7 common questions
participating in Seller Fulfilled Prime (SFP), a fulfillment about Seller Fulfilled Prime to help you decide
program that enables sellers to be “Prime” while whether the program is right for your business.
handling their own storage and fulfillment.
With Seller Fulfilled Prime, retailers can maintain
greater control over their inventory, orders and
shipping, and greater cost control by handling their
own fulfillment. Moreover, since the primary benefit
of SFP is enabling retailers to sell products as Prime,
SFP dramatically improves a seller’s chances of
winning the coveted Buy Box.
800. 875. 837 1 02
“
Prime buyers, according to a
recent Morgan Stanley survey,
spend more than 4.6 times
”
than non-Prime members.
800. 875. 837 1 03
what is SFP?
how is it different from FBA?
Seller Fulfilled Prime (SFP) is a fulfillment program that was get busier), convenience (your warehousing, fulfillment,
introduced in 2015 by Amazon. It was created specifically for customer service related to delivery and returns will be
retailers and brands who have their own fulfillment centers taken care of by Amazon) and automatic designation
or 3PLs (Third Party Logistics provider) but do not want as a Prime seller.
to participate in Amazon’s FBA program in order for their
listings to be Prime eligible. With Seller Fulfilled Prime, sellers The downside of FBA is that its fees can start to add up
can offer their products as Prime yet still use their own and sellers lose some autonomy in their branding and
fulfillment facilities to store, process and ship their orders. order fulfillment. For instance, FBA’s Inbound fees can
quickly become quite costly. In order to meet its two-day
The biggest difference between SFP and Amazon’s FBA delivery guarantee, Amazon requires FBA sellers to send
program is that FBA requires sellers to store their inventory their inventory to various geographically distributed
in Amazon’s fulfillment centers. For businesses who do not fulfillment centers designated by Amazon. Sellers are
have their own warehouse or fulfillment capabilities, FBA responsible for the costs of shipping their inventory to
can be a convenient & cost-effective solution. FBA offers each Amazon fulfillment center which can add additional
significant flexibility, since sellers are not required to sign a up-front expenses. Other FBA fees include oversize fees,
minimum monthly contract with Amazon or commit to a long-term storage fees, restocking fees for returns and
specific duration of time or minimum usage. With FBA, all more. FBA fees are non-negotiable, whereas some 3PLs
inventory in Amazon’s fulfillment centers is automatically are open to negotiating their rates for storage, pick and
designated as Prime. With SFP, sellers can decide which pack, and their other fees.
listings they would like to offer as Prime and for which
regions of the country. FBA sellers also have less brand control since Amazon uses
its own branded packaging. With SFP, sellers can maintain
FBA’s numerous benefits include instant scalability (you greater control of their branding, packaging and better
don’t have to worry about hiring more personnel as you manage their fulfillment costs.
800. 875. 837 1 04
what are the requirements
for SFP eligibility?
To be eligible for SFP, you will first need to have a In addition to fulfilling the requirement for Premium
Professional Selling account and qualify to offer Shipping, Amazon sellers must also satisfy the following:
Premium Shipping (non-standard shipping). Premium • Offer two-day shipping to Prime members through
Shipping enables sellers to offer expedited shipping Premium shipping.
options, such as Same-Day and Two-Day shipping, to • Offer free standard shipping to Prime and
their Prime customers. Fast Shipping options are the non-Prime members nationwide.
cornerstone of Amazon’s Prime program as Prime mem- • Offer free return shipping.
• Purchase shipping labels through Amazon
bers expect quick and reliable delivery as one of the main
Buy Shipping services for at least 95% of
benefits of Prime membership.
your Prime orders.
To be eligible and maintain eligibility for Premium • Allow Amazon to handle all your order-related
shipping, sellers must meet the following performance customer service issues.
requirements: • Comply with Amazon’s returns policy (recently
Amazon modified its Prime return policy to include
• On-time delivery rate: Must have an on-time
auto-authorized returns)
shipping rate of at least 99% for Premium
shipping orders.
• Valid tracking rate: Must have valid tracking IDs
for at least 94% of Premium shipping orders.
• Seller-initiated cancel rate: Must have 1% seller-
initiated cancellation rate for Premium shipping
orders. (common reasons why sellers cancel are
stock-outs, defective products, etc.)
800. 875. 837 1 05
If you already have a good shipping and performance
track record, chances are you have already been
invited to participate in the program. For those who
have not yet been invited, you will need to go through
a trial period to prove that you can adhere to Amazon’s
strict shipping and performance requirements.
tip: Sellers who are using 3PLs or other 3rd party
fulfillment facilities need to make sure that these
fulfillment centers understand the requirements of
Prime and can adhere to Amazon’s strict shipping
rules. It is a good idea to find a 3PL or fulfillment
center that has considerable experience with
fulfilling Amazon prime orders as they are more
likely to have processes and infrastructure already
in place.
800. 875. 837 1 06
what does the SFP trial period entail?
Amazon requires that all sellers who have not been To begin your SFP trial period, simply follow Amazon’s
automatically approved for Seller Fulfilled Prime go through period directions:
a rigorous trial period. The trial period lasts up to 90 days
and the seller has to fulfill 50 Prime orders with near perfect
Seller Fulfilled Prime trial period
metrics during that period. Sellers will be measured on
How to start the trial
how well they meet all of the Seller Fulfilled Program
1. Register: Go to the Seller Fulfilled Prime main page and sign up to start your trial.
requirements. If the seller falls below the minimum 2. Enable Prime shipping in your Prime trial shipping template: Visit Configure Shipping Settings for steps
on how to enable listings for Prime shipping and how to select regions where you would like to offer Prime delivery.
requirements, they will not receive the Prime badge. Review Prime Shipping Requirements.
3. Enroll items in Seller Fulfilled Prime: Assign SKUs to your Prime shipping template.
Note: During the trial period, all SKUs assigned to a Prime shipping template will count as Prime trial
Sellers will not receive the Prime badge until after the trial orders, regardless of the buyer’s location. All Prime trial orders will contribute toward the trial period
performance requirements described below.
period is over and they have proven that they can meet
4. Fulfill Prime trial orders: Identify Prime trial orders according to the Prime badge displayed on the Manage
Amazon’s expectations. Orders page in Seller Central and the “isprime” identifier in Order Reports. Fulfill these orders according to
the requirements listed on the How to process Seller Fulfilled Prime orders page.
“The trial period lasts up to Once you are approved for Seller Fulfilled Prime, the
90 days and the seller has listings you’ve designated as Prime will automatically
display the Prime badge. If you are unable to complete
to fulfill 50 prime orders your trial period or didn’t get approved by Amazon after
the trial period ends, you can try again with no penalty.
with new perfect metrics The trial period is lengthy but it simply ensures that you
are ready to guarantee the delivery time and rates Prime
during that period” members are accustomed to receiving.
800. 875. 837 1 07
what are SFP’s shipping and delivery
time requirements?
One of the challenges of deciding whether you should SELLER FULFILLED PRIME SHIPPING REQUIREMENTS
be an SFP seller is understanding the potential shipping
costs you will incur. As an SFP seller, you must offer Shipping Prime Non-Prime
Method Customers Customers
free Two-Day shipping to Prime members, but unlike
FBA, you can offer Prime delivery on a regional basis Two-Day – Prime Urban areas Free Seller-set rates
instead of nationwide. (2 Business Days)
Standard – Urban Free Free
When you join the SFP program, you will be required (3-5 Business Days)
to create specific SFP shipping templates. In these
Standard – Rural Free Free
SFP shipping templates, you can select the regions
(7-14 Business Days)
you want your listings to display the Prime badge
and where you can guarantee two-day delivery. For Standard – Remote regions not
eligible for Prime Shipping Seller-set rates Seller-set rates
instance, if your distribution center is in NY, you can
(7-14 Business Days)
limit Prime delivery to areas near your distribution
center to ensure a two-day delivery.
800. 875. 837 1 08With SFP, you lose some control of your shipping costs. midnight. If the order comes after 2:00 pm, then the order
SFP sellers are free to select any of the major carries and can be shipped out on the next business day after midnight.
use their own negotiated carrier rates. However, Amazon
SFP CUT-OFF TIMES
will only allow you to select the carriers & their service
levels that can guarantee delivery of a Prime order with- Day Ordered Delivery Day
(before cutoff) to customer
in two days based on customer’s location. For example,
Monday Wednesday
although USPS is supported by Amazon, it is often not
available for Two-Day Prime shipping since it may not be Tuesday Thursday
able to guarantee two-day delivery to a specific location. Wednesday Friday
Therefore, sellers may be surprised when they discover Thursday The following Monday
USPS is disabled as a carrier choice and are left with
Friday The following Tuesday
options that might be costlier than anticipated. On the
Saturday The following Wednesday
plus side, SFP sellers can access some of Amazon’s
negotiated rates, such as USPS Commercial rates, Sunday The following Wednesday
which can potentially reduce shipping costs. As of today, the cut-off time is set by Amazon for 2:00 pm
and cannot be customized by sellers.
SFP sellers also need to be aware that there is a cut-off
time for accepting Prime orders each day. The cut-off
tip: To avoid being caught off guard when it comes to
time for a Prime order is 2:00 pm, seller’s local time. If shipping costs, it’s good practice to be conservative when
a seller has multiple warehouses, they can choose the calculating your shipping cost and assume the higher rate.
Eastern-most location as the cut-off time. If a Prime order Amazon selects carriers that have the highest probability
is Two-Day shipping and comes in before 2:00 pm, then it of being able to deliver an item on time and often that is
needs to be shipped out on the same business day before the more costly shipping service.
800. 875. 837 1 09what are the benefits
of SFP?
Seller Fulfilled Prime offers many benefits but it also facilities can forgo paying the fees associated with FBA,
has a few risks in terms of potentially higher costs. So such as fees for storage, pick & pack, and handling. FBA
why do so many sellers want to participate in Seller sellers may sometimes experience delays for Amazon
Fulfilled Prime? fulfillment centers to unload and process their inventory,
thus leading to a loss of sales, especially during the busy
First and foremost, participation in SFP provides sellers holiday season. SFP sellers, on the other hand, can select
with access to the millions of Prime buyers who shop fulfillment centers who can process their inventory with
more frequently, spend more money than non-Prime little to no delay.
buyers and prefer to buy from Prime sellers. Amazon
shoppers have grown to view the Prime badge as a By having greater governance over their inventory and
symbol of excellence and have developed greater fulfillment operations, SFP sellers can also expand their
confidence in Prime sellers, certainly in the area of online presence by selling on other online channels.
delivery. According to Amazon, SFP sellers can see The ability to use the same fulfillment facilities to ship
an average sale increase of at least 50% on their your Amazon SFP orders as well as orders from other
Prime listings when they join the program. That’s online channels can help streamline sellers’ fulfillment
not too shabby. operations and potential costs.
Secondly, SFP enables Prime sellers to have better
control of their inventory, fulfillment operations and
costs associated with both. Online retailers and brands
who already have their own warehouse(s) or fulfillment
800. 875. 837 1 10SFP sellers have a better control of their branding and
customer experience. Depending on their fulfillment
center, SFP sellers can request customized packaging
that reflects their brand and their company. You can
use your own box, your own packing slips, your own
packaging material etc.
Additionally, as a result of adhering to the strict Prime
metric requirements, SFP sellers can also experience
better product discoverability and ranking on Amazon’s
search results and have a better chance of winning the
Buy Box.
800. 875. 837 1 11what should sellers consider
before joining SFP?
Before joining SFP, sellers should weigh the operational 3 | Fulfillment centers that work with Prime Having
costs of handling their own fulfillment & shipping vs. the a fulfillment center that has the labor, technology and resources
gains of growing their sales by being able to list and sell to fulfill Prime orders in the allotted time is absolutely critical.
more products as Prime. If you do not follow the Prime shipping requirements, you can
easily have your Prime status revoked. Make sure you use a
Below are a number of factors to consider when distribution center that can commit to following Amazon’s
evaluating the potential costs of SFP: strict shipping rules.
1 | Shipping zones Sellers must decide what zones 4| Fulfillment strategy It is important to have a cohesive
they are willing or able to ship to in order to comply with fulfillment strategy as your business grows and you add
Prime’s two-day delivery requirements. If you have a online channels to your fulfillment infrastructure. Your logistics
fulfillment center on the West Coast, you will need to partners should be able to work with an inventory management
decide if you want to offer your products as Prime across system that can not only handle Prime orders but orders from
the nation or confined to areas near your fulfillment center. multiple online channels.
There are many factors that go into this decision such as
profit margins, price points and your business model.. 5 | Amazon’s return policy Amazon has recently changed
its SFP returns policy to include automatic returns. What that
2 | Add or change fulfillment locations If you means for SFP sellers is that they need to auto authorize
decide to offer Prime to both coasts, you may want to returns regardless whether buyer is a Prime member or not.
add a fulfillment facility or 3PL on the opposite coast or Amazon’s customer service will handle all customers’ inquires
use a distribution facility to a more central place in the specific to SFP returns which saves sellers time but also
US to cover all states. You will need to do a cost analysis removes the sellers’ ability to offer an alternative to returns.
to see whether adding a new distribution facility, moving
your distribution center or simply shipping across the
multiple zones is more beneficial for your business.
800. 875. 837 1 12is SFP right for me?
That depends. If you are a smaller seller or your ware-
house operations cannot support the fulfillment metrics
required to maintain Prime status, then FBA may work
better for you. Seller Fulfilled Prime can be a great option
for retailers and brands who want to handle their own
warehousing and fulfillment but still want their Amazon
products listed as Prime. In addition, since SFP sellers
can control their packaging, businesses that sell items
that require special handling like breakable or perishable
products could benefit from SFP. Likewise, companies
that rely on customized packaging for branding consis-
tency can continue their branding strategy using SFP.
SFP also works well with online retailers that sell items
that are slow moving or seasonal (you can avoid FBA’s
long-term storage penalty fee with SFP), and large and
heavy such as furniture (FBA charges shipping to their
warehouses and storage fees based on size and weight).
Retailers that offer high priced items with high margins
may also want to consider SFP, as the high margins may
provide enough cushion to offset the delivery rates.
800. 875. 837 1 13summary
Seller Fulfilled Prime is an excellent program for With SFP, sellers have the dual benefit of accessing the
online retailers selling on Amazon and can be potentially coveted Prime audience and having the freedom to sell
lucrative. However, it’s important to make sure you do on other marketplaces. If you decide to become an SFP
a thorough analysis before taking the plunge. seller as part of a multi-channel ecommerce strategy,
consider using an application, such as Solid Commerce,
When considering if SFP is right for you, it is important that integrates with both Amazon FBA and SFP as well
to consider the following questions: as your other online channels.
1 Can your existing warehouse operations
meet the stringent fulfillment requirements
for turnaround?
2 What will be the impact to your choice of
carriers and shipping costs when you move to SFP?
3 How much value will you get by making all/most
of your inventory Prime eligible?
4 How will moving to SFP impact your geographic
customer reach and what is your strategy around
how many regions you want to cover with SFP?
5 What will be the true costs of “free returns”
to your business?
6 How will I manage my inventory, orders and
fulfillment across channels? Will my existing
systems be sufficient?
800. 875. 837 1 14About Solid Commerce
Solid Commerce is the industry’s most comprehensive
multi-channel ecommerce solution that combines
listings, inventory, order and shipping functionality
in one platform. Created by ecommerce sellers for
ecommerce sellers, Solid Commerce offers online
retailers the ability to streamline their ecommerce
operations, reduce inefficiencies, and increase
sales on multiple online channels including Amazon,
Walmart, eBay, Jet, Shopify, BigCommerce and more.
To learn how Solid Commerce can help your
online retail business grow and get a live demo,
contact our team of eCommerce experts at
sales@solidcommerce.com or call us at 800.875.8371.
800. 875. 837 1 15You can also read
