As you research your options for tapping into the Amazon marketplace, you might be wondering if and how you can participate in the growing Prime frenzy. The great news for retailers like you? Seller Fulfilled Prime allows sellers to use the Amazon Prime badge to fulfill orders directly from their warehouses. In other words, it gives you access to coveted Amazon Prime shoppers.
Originally, online retailers who wanted a prime badge needed to go through Fulfillment by Amazon (FBA). But this proved unattractive for sellers who either couldn’t justify the cost of FBA or wanted to manage their own inventories. Recognizing the need for an alternative solution, the Seller Fulfilled Prime program is rolled out.
Currently, Seller Fulfilled Prime is not accepting new registrations, but they do have an active waitlist. If you’re debating whether to join Seller Fulfilled Prime, here’s what you need to know.
You Can Store Your Inventory In Your Own Warehouse
Obtaining a Prime badge can turbocharge a company’s sales.
Some consumer firms have doubled their average monthly sales when they obtained the Prime badge.
Others saw monthly average sales increase by as much as 52% while a home and garden company said its product sales jumped 166% after getting the Prime badge.
Many online sellers are embracing an omni-channel marketing strategy so they grow their own sales channels and also sell their products through online channels to reach a wider audience. But to compete with all the other retailers in the marketplace, they need a way to stand out and boasting the Prime badge is a very good way to do so.
Of course, these sellers don’t want to use FBA, where they ship inventory to Amazon warehouses for distribution as orders come in. They already have warehousing and logistics set up, and they don’t want to double their spend.
With Seller Fulfilled Prime, as long as customer service metrics are met, companies can fulfill orders using their own operations and Amazon gets the benefit of delivery support without hindering its customer promise. A win-win scenario.
You Have To Commit To Honoring The Two-Day Shipping Promise
Amazon Prime members receive unlimited two-day delivery at no additional cost. Online sellers who use the Prime badge must commit to honoring this. In exchange, they get access to Amazon’s most loyal customers.
Today, 82% of American households have an Amazon Prime membership, which costs $119 per year. Plus, Amazon consistently ranks number one in customer satisfaction studies. In other words, the company is very protective over its customer experience, and expects its Seller Fulfilled Prime partners to be that way, too.
Of course, Amazon supports its Seller Fulfilled Prime members with transportation solutions to meet this high level of customer service, which most non-Amazon e-retailers struggle with. The company provides sellers with access to its approved shipping companies and carriers whose tracking can be validated. In fact, using these third-party logistics partners is a requirement for participating in Seller Fulfilled Prime.
You Have To Offer Premium Shipping Options
Members of Seller Fulfilled Prime must also offer premium shipping options in addition to the standard two-day delivery. In the United States, Premium Shipping also includes one-day shipping.
In addition, there is a mandatory requirement for handling time, called Fulfillment Latency. Seller Fulfilled Prime Members must have a handling time of zero days, regardless of the system default of one to two days.
There are a number of other requirements sellers have to meet to be eligible to offer Premium Shipping:
- Sell on Amazon for more than 90 days
- Possess a Valid Tracking Rate of 99%
- Achieve an On-Time Delivery Score of 97% or more
- Maintain a seller-initiated cancellation rate of less than 0.5%
Once Premium Shipping status is unlocked, eligibility is monitored on an ongoing basis.
You Must Ship More Than 99% of Orders On Time
Amazon doesn’t hand out its Prime badge to just anyone, and it’s not afraid to revoke it later. The customer-centric company expects a lot of its sellers. Of course, it gets something in return from great sellers: bandwidth.
Despite Amazon’s massive warehousing and logistics infrastructure - as well as its plans to invest another $1 billion on shipping improvements - the company needs the support of third parties to keep up with customer demand. Consequently, it’s bringing companies with shared shipping standards into the fold.
As you can expect, those shared shipping standards are not low -- one expectation is to ship more than 99% of orders on time.
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You Must Comply With the Amazon Returns Policy
All retailers selling through Seller Fulfilled Prime must comply with Amazon’s return policy. This isn’t surprising since returns are the new frontier when it comes to dominating the customer experience. Generally, Amazon permits the return of items within 30 days of the shipment’s receipt.
When a customer requests a return, his or her return is immediately approved by Amazon and they are sent a prepaid return mailing label. It’s important to know that retailers are responsible for the return costs, with a few exceptions.
There are some items, like apparel and jewelry, where sellers must offer a return while others, like hazardous materials, are non-returnable. Whether or not an item is returnable is at the discretion of Amazon customer service representatives.
On a related note, all customer service inquiries related to products sold through Seller Fulfilled Prime go through Amazon’s customer service team.
You Must Successfully Complete a Trial Period
Joining Seller Fulfilled Prime isn’t as simple as signing up and selling. After you’ve signed up - or successfully moved off the waitlist - you have to go through a trial period. Only upon successfully passing the trial period do you get the coveted Amazon Prime badge on your listed products.
During the trial period, sellers must meet the requirements of a Seller Fulfilled Prime member (even though the badge isn’t displayed on their products yet). This includes keeping a zero-days handling rate.
You Have Access To the Coveted “Buy Box”
The Buy Box is the section on the right-hand side of the screen that gives customers the option to either “Add to Cart” or “Buy Now.” Only some products get the buy box while others have to share the screen.
What exactly does this mean? Well, since Amazon is a marketplace, oftentimes there are several people or companies selling the exact same product. Since Amazon is famously customer obsessed, their priority is making it as easy as possible for customers to find sellers who offer the best value for money.
How does Amazon define value? While the exact algorithm is an internal recipe, the decision is based on two major factors: price and seller metrics. Generally speaking, Amazon will display sellers who offer a competitive price. That said, if a seller has outstanding product, delivery, and customer service metrics, then it can win the buy box with a slightly higher price.
82% of customer sales go through the Buy Box, so it would be an understatement to say it’s highly prized by sellers.
Products offered through Seller Fulfilled Prime have a much higher chance of winning the Buy Box since these sellers must meet and maintain such rigorous customer satisfaction standards.
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Put Fast-Moving Goods in FBA and Slow-Moving Goods in Seller Fulfilled Prime
If your business could go either way - meaning both Fulfillment by Amazon and Seller Fulfilled Prime would work for you - here’s a helpful rule of thumb. If you have fast-moving products, use FBA. If you have slow-moving products, use SFP.
Because fast-moving products require a lot of work, and if they bring in consistent income but require a lot of labor, you can outsource that work to a company that has optimized and perfected warehousing and outbound logistics.
On the other hand, you don’t want your slow-moving products sitting in Amazon’s warehouses and incurring service fees indefinitely. So it’s better to use Seller Fulfilled Prime for products that are slow moving or have seasonal or unpredictable demand.
Carefully Consider Whether Your Products Are Suitable For Seller Fulfilled Prime
You can sell almost anything through Seller Fulfilled Prime, but some products are more suited to the platform than others. Amazon especially recommends SFP for products that are:
- High value
- Items with variations
- Inventory with special handling or preparation requirements
What these items have in common is their handling requirements. While Amazon’s warehousing and fulfillment operation is a reliable, well-oiled machine, you may sell products that require a special touch. In this case, your products can benefit from the marketing exposure of having a Prime badge while being handled and packaged by your in-house team.
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You Could Benefit From a Sophisticated Warehouse Management System if Considering Seller Fulfilled Prime
If you’re interested in joining Seller Fulfilled Prime and you’ve put your name on the waitlist, it’s worth amping up your fulfillment operation while you wait.
A wms software is essential for sellers trying to take their business to the next level. A good WMS enables you to:
- Centrally control and oversee your warehouse operations including putaway, picking, packing, labor scheduling, and more
- Consolidate data from across your warehouse in one centralized location for easy access, report generation, and data analysis
- Boost your warehouse’s productivity with sophisticated warehouse processes that can only be facilitated with a WMS including wave picking and cross-docking
A WMS is also the natural predecessor to a warehouse control system (WCS) or warehouse execution system (WES). These software solutions allow you to eventually implement warehouse automation equipment like conveyor belts, automated storage and retrieval systems (AS/RS), or autonomous mobile robots.
Amazon itself uses a highly sophisticated WMS to smoothly manage its massive operation, which includes 288 million square feet of space.
One of the things that makes Amazon different is that unlike most online retailers, it sells almost everything. This presents quite the warehousing challenge.
Warehouses typically allocate dedicated sections of the warehouse for different products, so it’s easy to put things away and later pick them for products. Everything in its place and a place for everything. But how do you create dedicated sections for products when you offer almost every product?
To function profitably, Amazon has embraced a system of “organized chaos.” Instead of creating dedicated spaces, warehouse workers place items anywhere. A box of Frosted Flakes might be placed next to a pack of Energizer AA batteries, which in turn sits next to a single copy of A People’s History of the United States.
While this may sound like a nightmare, it’s enabled Amazon to fulfill orders faster. The system works because each time a worker places an item on a shelf, he or she scans both the item and the shelf location.
The next time a worker needs to pick a box of Frosted Flakes, she doesn’t have to cross the entire warehouse to find the dedicated cereal section. She can simply use her mobile device to determine where the nearest box of Frosted Flakes sits.
Of course, this is a very powerful system, and your warehouse may not need such a sophisticated system . But it does demonstrate the power of a warehouse management system.
What’s more, it’s easier than ever to deploy a WMS in your warehouse. In the past, warehouses put off purchasing warehouse management software because on-premise systems required massive upfront costs for the infrastructure, plus ongoing updates and maintenance that fell outside the expertise of the in-house team.
Today, there are cloud-based, software as a service (SaaS) warehouse management systems that companies can leverage instead. No infrastructure is required aside from computers and internet connection, which most companies already have. All updates and maintenance are handled by the software provider.
In addition, a warehouse manager can access the WMS from any device, allowing him to keep tabs on his business - like its Seller Fulfilled Prime channel - from his laptop, tablet, or mobile phone.
Seller Fulfilled Prime Offers Experienced Fulfillment Operations a Powerful Sales Channel
The Amazon Prime badge enhances sellers’ product listings and boosts sales numbers. By extension, the Seller Fulfilled Prime program gives experienced retailers a valuable marketing opportunity: access to hundreds of millions of loyal Amazon Prime members while retaining control of shipping and handling. For companies to be eligible to join--and maintain eligibility in-- this coveted program, a warehouse management system is a must.
Get a demo today and see how Logiwa manages seller fulfilled prime process.
Written by Ruthie Bowles
Ruthie is a content marketing consultant for Logiwa. Her specialties include small business development and inventory management.