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Seller-Fulfilled Prime Is Surging
There are an estimated 90 million Amazon Prime subscribers today. Sellers are eager to gain access to this massive audience, as they are more than twice as likely to shop online daily than non-Prime customers.
Seller-Fulfilled Prime, a fulfillment method that allows qualified Amazon sellers with Professional Seller accounts to display the Amazon Prime badge on orders fulfilled via their own warehouse or third-party logistics providers, has seen a dramatic increase over the course of the last year. Sellers have the ability to regionally designate where they would like to engage in SFP, allowing them to be Prime in the specific areas that make geographical sense for their business. This allows sellers to protect their margins and capitalize on cost-effectiveness via their own warehouse location.
According to Amazon, “Seller-fulfilled listings that became Prime-eligible for the first time through Seller-Fulfilled Prime experienced an average sales uplift of more than 50%.” As we have learned from Amazon’s transition of long-term storage fee assessment from semi-annual to a monthly basis beginning in September 2018, they are acutely focusing on optimizing their warehouse space and removing any slow-moving items that are sitting in storage for long periods of time. With that, Amazon is on board with sellers transitioning to SFP, as it reduces the need to build more FBA fulfillment centers.
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The variable that has the highest impact on Amazon’s Buy Box decision is fulfillment method (which is interwoven with Prime eligibility). Many customers are taking advantage of Amazon SFP today, as Amazon views this fulfillment method as strong as FBA in terms of Buy Box eligibility and potential. In order to become and stay eligible for SFP, the seller needs to have a Professional Seller account and must always be eligible for the Premium Shipping program. Here are some of the basic qualifications:
The 30-day eligibility requirements for an item to qualify are:
- An on-time delivery rate of at least 92% for Premium Shipping orders
- A valid tracking ID for at least 94% of Premium Shipping orders
- A cancellation rate of less than 1.5% for Premium Shipping orders
The trial period lasts between five and 90 days, depending on when the seller satisfies the performance requirements on a minimum of 200 Prime trial orders. If you fail to fulfill the requirements for 200 eligible Prime trial orders within 90 days, the trial period will reset automatically and you will be able to try again.
Lastly, sellers must agree to specific program terms for Prime items in order to qualify, such as:
- Automatically directing all post-order customer service inquiries to Amazon
- Sticking to Amazon’s return policy
- Buying all shipping labels for orders with a Prime item through Amazon’s Buy Shipping Services
- Offering Prime shipping benefits (such as free two-day shipping to nearly all addresses in the continental U.S.) and guaranteed delivery dates
Advantages of SFP
There are several reasons that sellers are transitioning specific ASINs to be fulfilled via Seller-Fulfilled Prime:
- To receive access to the Prime customer base. More exposure and product discoverability on the marketplace will lead to more sales conversions.
- To gain complete control over your inventory, which eliminates the need to send the stock to Amazon.
- To experience the same Buy Box privileges as FBA sellers.
- To eliminate FBA shipping and handling fees.
- To avoid FBA long-term storage fees, which are being evaluated on a monthly basis beginning in September 2018 and will be scrutinized more meticulously.
- To increase profits on bulky, heavy merchandise that are subject to high FBA fees and FBA-ineligible items (typically those deemed as hazardous).
- To instill a more seamless returns process. With SFP, sellers can directly handle returns on Prime purchases, which will help them track and identify product returns.
According to our Amazon User Study 2018, 68% of Prime members make online purchases at least once a week, up from 50% last year. It is clear that the Amazon Prime audience is purchasing more frequently, so sellers should do everything in their power to become Prime-eligible if they aren’t already. If they have a well-oiled Amazon operation in place, Seller-Fulfilled Prime is an ideal option to grant them the Prime badge on specific SKUs.