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Seller Fulfilled Prime: Everything You Need to Know
What is Seller Fulfilled Prime, and should you consider it? With Amazon’s fees steadily increasing, many sellers are searching for ways to cut costs. While adjusting your pricing or ad strategy can help, there’s another often-overlooked area to explore: Shipping and fulfillment.
Shipping and fulfillment aren’t typically areas where most Amazon brands focus on saving money, especially if they’re using Fulfillment by Amazon (FBA), Amazon’s in-house fulfillment service.
FBA is convenient and works well for many sellers. However, as the costs and complexity of FBA continue to rise, some brands might want to explore an alternative: Seller Fulfilled Prime (SFP).
SFP is a program that allows you to handle your own shipping and fulfillment while still keeping the Prime badge. Launched in beta in 2015 to a limited number of sellers, SFP is now open to anyone who can meet Amazon’s stringent 1- and 2-day delivery requirements nationwide and maintain a cancellation rate below 2.5%, among other criteria.
It’s important to note that meeting SFP’s demands isn’t easy, but for some brands, it can be a more cost-effective option in the long run. We’ll break it down for you below.
Why switch to Seller Fulfilled Prime?
First, let’s be clear: FBA is a solid option for most brands. If you have a small, low- to medium-cost product that sells consistently throughout the year and is durable, sticking with FBA might be the best choice.
However, there are certain types of products that may not be as cost-effective with FBA. For instance:
Fragile Products: If your products are easily damaged, using FBA can lead to issues like customers receiving broken items, which can result in negative reviews and high return rates—both of which can hurt your Amazon business in the long run.
For example, if you sell commemorative glassware, there’s a risk Amazon might ship your products in inadequate packaging, like an envelope, leading to breakage during transit. Unfortunately, when using FBA, you have no control over how your products are packaged. If you want to ensure your products are properly packed, you’ll need to handle the shipping yourself.
High-Value Products: Expensive items, especially those priced over $200, are at risk of being lost or damaged in Amazon’s warehouses. While Amazon offers reimbursements, tracking down and claiming those reimbursements can be time-consuming. By managing the fulfillment yourself, you maintain control and minimize the risk of loss.
Oddly Shaped or Oversized Products: Products with unusual shapes, sizes, or weights can become prohibitively expensive to store and ship through FBA. For instance, if you sell a lightweight but bulky item like packing peanuts, Amazon’s size and weight rules might make it costlier to fulfill than the product is worth.
In a recent webinar, Matt Snyder shared how his company, Brands Excel, was able to cut shipping and fulfillment costs by as much as 50% in some cases by managing these aspects themselves.
Multi-Channel Logistics: If you sell across multiple platforms, Seller Fulfilled Prime (SFP) can be a game-changer. When you rely solely on FBA or similar services like Walmart’s fulfillment, you lose flexibility with your inventory.
For instance, if your product suddenly goes viral on TikTok and you experience a surge in orders from your TikTok Shop, you might want to reallocate inventory from Amazon to meet the demand elsewhere. However, with your inventory locked into FBA, you’re unable to make these shifts. Handling your own fulfillment allows you to be much more agile and responsive in a multi-channel environment.
Is Seller Fulfilled Prime helpful during the holidays?
When considering whether to try Seller Fulfilled Prime (SFP), it’s crucial to evaluate how it might perform during busy sales events.
On one hand, SFP can be particularly advantageous during periods like the holidays because it allows you to avoid the low-inventory fees that can disrupt your profitability.
On the other hand, if your fulfillment system isn’t highly efficient, the holiday rush could become stressful. If you ship orders too late, Amazon might revoke your Prime badge, which could be detrimental.
Here are a few factors to think about:
Peak Periods: If your product experiences a sharp sales peak—whether due to being a popular gift item, a seasonal product, or something similar—then your success hinges on smooth operations during this time.
If the majority of your sales happen within a narrow window, any disruption with FBA, such as delays due to full warehouses, could significantly impact your business. In these scenarios, SFP might be beneficial, provided your fulfillment process is quick and reliable.
Fees: During high-volume periods, like Q4, Amazon often tightens inventory limits and raises capacity fees, which can hurt your bottom line.
The low-inventory fee, in particular, can be problematic. It’s assessed every Sunday and affects all your sales for the upcoming week. If your inventory is too low leading into a major sales event, such as Prime Day, you’ll face additional costs on every sale that week.
Flexibility: Amazon’s warehouses are often packed during major sales events, making it difficult to manage your inventory flexibly. You need to be prepared for a surge in sales followed by a potential drop-off.
Managing your own fulfillment allows you to be more strategic and responsive, ensuring that you can adapt quickly to changes in demand.
So if Seller Fulfilled Prime worth it?
The reality is that for most brands, Seller Fulfilled Prime (SFP) can be quite a challenge. To meet Amazon’s 1-to-2 day shipping requirements, you’ll need a large-scale operation with enough inventory spread across warehouses nationwide.
Additionally, you’ll need to invest in technology that integrates with your seller account and automatically forwards orders to third-party logistics partners.
In many cases, SFP is best suited for products that aren’t ideal for Fulfillment by Amazon (FBA), such as high-value, fragile items, or large, low-cost products.
Selling on Amazon without inventory involves a step-by-step process. Here’s a breakdown:
As a seller, it’s crucial to spot lucrative products and navigate Amazon’s vast market successfully. Here, we’ll delve into five effective tactics to help you pinpoint products that meet market demands and ensure profitable margins for your Amazon business.
