Seller Fulfilled Prime – Amazon SFP Services
Amazon is massive. In 2018 the company earned the estimated nearly £200 billion in retail e-commerce. All this is possible, thanks to its customer base. The average Amazon customer spends about £500 a year on the site. Amazon Prime members spent more than double that amount, which is £1150 per year. This means that getting the Prime tag can boost your sales significantly, especially because Amazon is an expert when it comes to making people buy more.
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Back in 2015, Amazon has introduced a new Seller Fulfilled Prime programme (SFP) to meet the needs of retailers who choose not to put their products into Fulfilled by Amazon (FBA). eBay has also been thinking about introducing their solution but despite many tests and announcements, their eBay order fulfilment service called Managed Delivery is nowhere near ready. Back to Amazon – in the past, products were only included in Prime if they were placed into Amazon’s warehouses via FBA programme. However, this programme isn’t always a suitable option. Some products are seasonal, and some products are heavy or large. It also means giving control of your stock to Amazon.
Quick delivery is key to ecommerce fulfillment, and in a competitive marketplace, it can often be the deciding factor when choosing a retailer to purchase from. And many retailers are always on the lookout for a new turn-key technology, such as Seller Fulfilled Prime. Put simply – Amazon Prime gives your customers super-fast delivery. In turn, they are likely to be more attracted to your products if they are available under the Prime programme.
The Seller Fulfilled Prime will allow you to display the Prime badge, while dispatching orders from your fulfilment provider, rather than Amazon’s distribution centres. Meaning all of your stock is in one place for fulfilment across all of your channels.
How does Seller Fulfilled Prime work?
The process of receiving an SFP badge starts with selling on Amazon during a trial period before you can display Prime flag next to your products. Seller Fulfilled Prime will base the length of your trial on your performance. It can be as short as five days or last longer, up to three months. It all depends on the scale of your eCommerce business and whether you satisfy the performance requirements and meet Prime fulfilment excellence and customer experience satisfaction criteria.
How to qualify for Amazon SFP
To be eligible for online Seller Fulfilled Prime status you have to complete the trial period by shipping at least 50 Prime Orders with 100% on-time delivery rate.
Sounds simple, but there are additional SFP requirements that you need to fulfil before you can start the trial in the first place. And to meet them you will not only have to ship from a warehouse but also process the shipment with Amazon labels. You will be required to pick, pack and ship your orders with approved Prime carrier – all that within one day window.
You need to ask yourself a question whether you can handle that and more importantly if you can promptly scale up your operations. The Prime badge is likely to boost your sales in a short period of time. That’s why you might want to consider outsourcing your order fulfilment, but we will get to that point in a moment. First, let’s find out whether you can meet the requirements to be eligible for Seller Fulfilled Prime programme.
Seller Fulfilled Prime requirements and eligibility
Amazon will require you to meet the below standards if you wish to benefit from selling your products under Prime tag. You might want to sign up for a Fulfilled by Amazon option, but it does not come cheap. Below we listed six requirements that every seller must adhere to in order to qualify for Seller Fulfilled Prime.
SFP Requirements, as of Autumn 2019:
- Rate of orders shipped on time over 98.5%
- Cancellation rate of orders below 0.5%
- Mandatory adherence to Amazon Returns Policy
- Shipping labels to be purchased from Amazon
- Amazon must process customer service enquiries
- Deliveries to be carried out by approved carriers
- Premium options for shipment on offer
Pros and cons of SFP
Like everything in life, Seller Fulfilled Prime programme has its advantages and disadvantages. Below we will help you asses your eCommerce business and decide whether Seller Fulfilled Prime is a good option or not.
Advantages of Seller Fulfilled Prime programme
The reason Prime tag boost sales is because Prime members are not only loyal customers, but most importantly, they are very active ones. Amazon is the largest online retailer in the UK, with a 23% market share of all online retail sales. According to research by Mintel, 86% of consumers shop on Amazon. Almost 40% of those people have Amazon Prime subscriptions, which equate to 15 mln in the UK alone. That number gives the SFP sellers an opportunity to increase their sales channels significantly.
Leave the competition behind
Amazon became so big that one may argue it is rather a shopping search engine itself, similar to how YouTube became a search engine for videos. In such a context, the SFP programme allows you to leave the competition behind as the vast majority of the Amazon sellers neither qualifies nor is interested in enrolling in Seller Fulfilled programme. This means that all those Prime users that shop on Amazon most often, will have more opportunities to find your product among others.
Whether you signed up for Fulfilled by Amazon programme before or you’re just starting with Amazon Prime programme, you will have an opportunity to reduce costs. Access to a warehouse is a must-have when joining the Prime programme. And if you’ve been with Amazons FBA before, you know well that it is a pricey solution when it comes to inventory storage fees. Contrary to Seller Fulfilled Prime programme. You can cut those costs down if you either have your own warehouse or if you decide to rent one. To further optimise your expenses instead of hiring the storage place only, you can consider having your order fulfilment operations completed on your behalf. Especially if you want to reduce shipping and handling fees or defer duty and VAT charges until your goods are shipped. Find out more about our order fulfilment solutions.
Professional Customer Service
A good customer service team is a must these days. When your seller account receives Prime badge, you allow Amazon’s highly-trained customer service representatives to handle all customer care queries on your behalf. It also gives your prime customer an option to track their orders, apply for returns, and process refunds.
Disadvantages of SFP programme
Scaling time frames
We mentioned before that jumping on Seller Fulfilled Prime bandwagon will most likely result in sales increase. And that may be a struggle to handle if you’re fulfilling your orders by yourself. Remember that you can only keep your Prime badge if you continuously meet the requirements.
Rules to follow
With all the benefits that the SFP programme gives, it comes with quite strict rules to follow if you want to maintain the status. And if you fail to meet those rules, it can take up to a month to get back on track.
Handling fees and costs of the Seller Fulfilled Prime programme
There are no fees to pay in order to qualify for SFP programme. However, there are some costs that you need to take into consideration, like expedited premium shipping, and factor them into your pricing. Remember that Amazon has a list of approved carriers, and you have to process your orders within one day, which may lead to increased shipping costs. At the same time, sellers have to provide an option for free standard shipping that will apply to all of your Prime orders.
It is important to assess early on if Seller Fulfilled Prime scheme is something that your particular goods (and their margins) can benefit from. Checking on your competition and listings with Amazon SFP badge can give you a good idea if you should give it a shot. However, you should expect that each retailer will assume individual margins and often have different arrangements with order fulfilment service providers.
Get help in assessing your products for Seller Fulfilled Prime.
Ideal products to sell under Prime flag
You can sell any goods under the Seller Fulfilled Prime badge as long as you adhere to the SFP programme requirements. However, an ideal order is a slow-moving item with high demand during peak timeframes like Christmas holiday or Black Friday sales – for example, fitness & exercise equipment or smart home technology products. At the same time, items that have higher than average value and have multiple options to choose from like size, colour, type, for example, small consumer electronics, shoes, phone cases and accessories, cosmetics and beauty products. Personalised items are also ideal for the SFP programme, especially if they require bespoke packaging or special handling. These may be DNA testing kits, vape and e-liquid products or toys, books and media that often require gift packaging.
Ideal products for SFP programme:
- Goods of high value
- Products with variable options to choose from (size, colour, type)
- Items with seasonal spikes in sale volumes
- Bespoke packaging, handling and preparation
- Slow-moving products
In-house vs outsourced order fulfilment
When considering applying for SFP, you need to ask yourself whether you want to fulfil your orders by yourself or through outsourcing company. As we said before, Amazon requires that you dispatch orders from a warehouse after following pick, pack and shipping process before you ship the item through approved career. So, whatever option you choose, you will have to think about how much experience you have with this process. Do you have enough employees to handle a pick and pack operation and API integrated system that will allow you to control whether you maintain the SFP requirements?
In-house fulfilment gives you full control over the whole process, but if you outsource your order fulfilment, it may bring benefits that you otherwise would not have.
Benefits of outsourcing your order fulfilment services:
- Defer duty and VAT charges until your items are shipped from customs bonded warehouse
- Cloud-based stock management system integrated with 48 e-commerce platforms
- Branded packaging options
- Time and human resources savings
- Able to quickly adjust the scale of service during peak sale periods like Black Friday, Prime Day or Christmas
- Large scale warehousing capacity
- Preferential storage and shipping rates
Grow your sales
See how The Storage Place can help you entering Seller Fulfilled Prime programme and grow your sales channels.
Is it really worth the hassle?
Yes, although as with everything, it depends on your circumstances. A Prime tag gives you a massive opportunity to increase sales, but it’s not a guarantee. However, if it does increase your sales, and you’re not in a position to scale your business or maintain Prime tag, then outsourcing to an order fulfilment house might be what will make the whole hassle worth it.
SFP has certain advantages and disadvantages, which apply depending on the state of your business and your vision of development.
If you choose to outsource order fulfilment to The Storage Place, our team of experts will support you throughout the process. Our fully API integrated orders management system will ensure that orders are picked accurately, packed and dispatched on time. At the same time, our cloud-based system allows full transparency with 24/7 access, keeping you in the loop.
To find out more about our fulfilment services and Amazon’s Seller Fulfilled Prime programme, contact our team.