Mark your calendars, sellers: Prime Day is just around the corner. With over 100 million paying members globally, Amazon Prime is a surefire sales accelerator. But not every merchant finds Amazon’s fulfillment service ideal, either due to the extra cost or the nature of their products. Fortunately, Amazon has a relatively new alternative for reaching Prime members without sending inventory to Amazon’s fulfillment centers: Seller Fulfilled Prime.
Seller Fulfilled Prime 101
With market competition getting stiffer, and fulfillment costs increasing, sellers have to be more creative now than ever to stay ahead. Customers demand faster (and freer) shipping now than ever, despite fulfillment costs increasing. Amazon Prime is a major driver of this demand with its fast free shipping to domestic subscribers.
To help expand on their Prime offering, Amazon launched Seller Fulfilled Prime in June 2015. The program offers all of Prime’s sales benefits — a 30-40% increase in volume on average — without all of the fees that come with FBA storage and handing. However, Prime fulfillers will have to meet strict standards to participate:
SFP Requirements
In order to become eligible for Seller Fulfilled Prime, both merchants and their listed products need to meet certain qualifications. First, each item needs to meet the following standards for at least the past 30 days:
- On-time delivery rate of at least 92% for orders with Premium Shipping
- Valid tracking for at least 94% of orders with Premium Shipping
- Less than 1.5% cancellation rate of orders with Premium Shipping
If the seller has at least one item that qualifies, they can start a trial period to gauge their fulfillment performance. The period can last up to 90 days, but may complete sooner if the seller has a high order volume and fulfills them sufficiently. During the trial, and indefinitely after, Seller Fulfilled Prime orders must be fulfilled to the following standards:
- At least 98.5% of orders must ship on time
- Order cancellation rate must be under 1.5%
- Must purchase shipping through Amazon’s label service
- Must issue refunds within 2 days of receiving returns
Is Seller Fulfillment Right for You?
Despite its cost-savings and sales benefits, Seller Fulfilled Prime isn’t a good fit for every Amazon seller. If you have a warehouse that you’re shipping from already, you may qualify and be able to keep up with the demand. So how do you determine if SFP is right for your business?
First, the pros: by far the biggest perk for FBM sellers is that Seller Fulfilled Prime can dramatically increase sales velocity in comparison to non-Prime sales. You get Buy Box priority on the same weight as FBA offers, and of course you’ll win over buyers that prioritize Prime options regardless of who has the Buy Box.
There are also benefits directly gained by ditching the Amazon fulfillment centers and related handling. Along with saving on FBA storage and picking fees, you also gain complete control over your inventory. No more splitting up inventory to send to FBA centers – now you have all of your stock in your own facilities.
However, there are definitely drawbacks to consider with SFP. First, there are the stringent Prime standards that your team will need to maintain in order to remain in the program. Also, you’ll need to buy shipping through Amazon’s label service, but USPS services aren’t eligible – that means no Priority or First Class rates.
Ultimately, the biggest winners with Seller Fulfilled Prime will be merchants shipping large, bulky items. These products are very expensive to send to FBA centers for storage and fulfillment, and that cost is completely avoided by shipping directly from your warehouse to the customer. SFP also opens up Prime selling for products that were ineligible for FBA, such as hazardous materials or certain refurbished goods.
Getting Started with Seller Fulfilled Prime
If you’ve made up your mind to start your SFP trial, or if you’ve already finished the trial and need to keep up with demand, you’re now in need of an inventory and fulfillment tool that supports Seller Fulfilled Prime. Fortunately, SKULabs has you covered: we offer built-in inventory management and order fulfillment for all of your channels, including your Seller Fulfilled Prime orders.
If you haven’t already, sign up for a SKULabs account and connect your Amazon store using the setup wizard. The setup only takes a couple minutes, and the wizard will help build your catalog and import existing item and inventory info. Once that’s done, you can add Amazon as a shipping carrier to get rates and buy labels using their shipping service.
With SKULabs, you can pick and ship SFP orders with the exact same workflow as you use for all your other orders. You’ll just use Amazon’s rates and shipping methods to print labels for your Seller Fulfilled Prime orders. As with all other channels, we’ll mark the order as shipped and send the tracking info back to Amazon so that they can notify the buyer.
If you have an operational warehouse and you’re looking to save on Amazon fulfillment cost, give Seller Fulfilled Prime a try. You can turn participation in the program on or off at any time, and even set the geographical region you want to fulfill for. With these tools, Seller Fulfilled Prime can protect your margins and keep both buyer and seller happy. With SKULabs in the mix, even the strictest fulfillment standards are easy to maintain.