Many sellers leverage Fulfillment by Amazon (FBA) to maintain a Prime status for their products, but this method means that their inventory needs to be shipped and committed to Amazon’s warehouses. One alternative to FBA could be acquiring the highly-coveted Seller Fulfilled Prime badge from Amazon. This badge allows sellers to maintain their Prime status while continuing to keep control over their inventory and business.
Despite the recent rise in the cost of the Amazon Prime subscription freight program this service continues to add subscribers. Amazon Prime now has over 100 million members. Because of this fiercely loyal group of subscribers ensuring that your brand’s products stay prime is important to ensuring conversion on the Amazon Marketplace. The average conversion rate for Amazon listings is 10 to 15 percent. The rate for Prime members is even higher, at about 74%. This is because a lot of people who visit Amazon are already set on buying something—if not that day, then in the near future.
What is Seller Fulfilled Prime?
Unlike the FBA (Fulfillment by Amazon) method, where sellers send their stock to Amazon, which then distributes it to the customer, SFP is about the seller handling the logistics & distribution of their own products.
The Seller Fulfilled Prime program means that your own warehousing and logistics capabilities must be able to meet the extremely intensive standards of Amazon’s Prime, including:
- Ship over 99% of your orders on time
- Use Amazon Buy Shipping Services for at least 99% of orders
- Have nationwide delivery coverage for all standard-size products
- Use ship methods that support weekend delivery and pick up (Saturday or Sunday)
- Meet targets for 1-day and 2-day delivery promises
- Allow for all customer service inquiries to be dealt with by Amazon
Even entrance to the SFP program is challenging. Amazon is not currently accepting new applications and there is a waiting list for this program. Once your application is approved you would need to complete a trial period meeting the standards listed above, and only then, would your brand qualify for the Seller Fulfilled Prime Badge.
Important Things To Know About SFP
The reason many brands consider SFP a good alternative to FBA is that it allows them to manage their inventory as they choose, rather than locking it up in the Amazon warehouses. This means that they can continue to feed all of their channels with the inventory that they own rather than committing some portion of it fully to the Amazon Marketplace. The SFP method does require that the seller cover all costs of storing, shipping and handling. You also need to use Amazon’s buy shipping tools in order to ship and track all orders. The logistics are on you, and so is managing the final profit margin.
While you don’t need to share your inventory with Amazon, you are in full control of all shipping, handling, and management. You’re in charge of finding a suitable carrier, properly packaging, and storing all inventory. You need to do all of this while still following Amazon Prime guidelines. If you don’t you could risk losing your SFP badge and Prime status for your listings.
The Advantages of SFP
There are several advantages to using this method. One that many sellers strive for, is the opportunity to have their products carry the Prime designation. With 100 million Prime members, and a much higher conversion rate this could mean a great increase in sales.
Although it might seem daunting to cover all costs of shipping, storing, and handling, it allows you full control over your inventory. You choose the best way to store your products, package them and find the best carrier to ship them out.
You can also compete for the Amazon Buy Box, giving you even more opportunities to scale your growth as a seller.
How Do You Know If This Is The Best Option?
Many new businesses choose the FBA method, because of the costs of SFP. When you’re operating on a tight budget, it can be difficult to have to cover the costs of all inventory. Businesses that are growing and selling through multiple channels, often switch to SFP. It is more convenient to manage inventory that way.
Phelps UNITED checks all the boxes in eCommerce! Contact us at Phelps UNITED to work with our Amazon Marketplace experts to ensure your products stay prime.