7 Things You Need to Know About Seller Fulfilled Prime

INTRODUCTION

WHAT IS SFP? HOW IS IT DIFFERENT FROM FBA?

WHAT ARE THE REQUIREMENTS FOR SFP ELIGIBILITY?

WHAT DOES THE SFP TRIAL PERIOD ENTAIL?

WHAT ARE SFP’S SHIPPING AND DELIVERY TIME REQUIREMENTS?

WHAT ARE THE BENEFITS OF SFP?

WHAT SHOULD SELLERS CONSIDER BEFORE JOINING SFP?

IS SFP RIGHT FOR ME?

SUMMARY

01

02

03

04

05

06

07

08

09

table of contents

800.875.8371

For many Amazon retailers, obtaining Prime seller

status is considered central to boosting sales and

gaining a competitive edge on America’s largest

online marketplace. Armed with the Prime badge,

online retailers can tap into the coveted group of

Prime buyers who, according to a recent Morgan

Stanley survey, spend more than 4.6 times than

non-Prime members. Moreover, the Prime audience

is increasingly growing year-over-year with 63%

of Prime members saying they have no plans

to cancel their membership in the near future

(Consumer Intelligence Research Partners, 2017).

With an estimated 80 million prime members,

it’s no wonder online retailers seek to obtain

Prime seller status.

AMAZON PRIME MEMBERSHIP GROWTH

*https://fa.morganstanley.com/theoberheidegroup/mediahandler/media/81078/Amazon_Disruption_Symposium.pdf**https://www.digitalcommerce360.com/2017/04/25/amazon-prime-members-80-million-in-the-us-up-38-year-over-year/

01

introduction

800.875.8371

02

It used to be that the only way to become a Prime

seller was to participate in Fulfillment by Amazon

(FBA) program where sellers are required to store

their inventory in Amazon’s warehouses and have

Amazon handle their order fulfillment. But today,

online retailers can also become Prime sellers by

participating in Seller Fulfilled Prime (SFP), a fulfillment

program that enables sellers to be “Prime” while

handling their own storage and fulfillment.

With Seller Fulfilled Prime, retailers can maintain

greater control over their inventory, orders and

shipping, and greater cost control by handling their

own fulfillment. Moreover, since the primary benefit

of SFP is enabling retailers to sell products as Prime,

SFP dramatically improves a seller’s chances of

winning the coveted Buy Box.

Although Seller Fulfilled Prime can be a great

program for many retailers, helping them boost

their Amazon sales significantly, it may not necessarily

be a good fit for others.

In this e-book, we’ll answer 7 common questions

about Seller Fulfilled Prime to help you decide

whether the program is right for your business.

800.875.8371

03

Prime buyers, according to a

recent Morgan Stanley survey,

spend more than 4.6 times

than non-Prime members.

“”

800.875.8371

what is SFP? how is it different from FBA?

04

Seller Fulfilled Prime (SFP) is a fulfillment program that was

introduced in 2015 by Amazon. It was created specifically for

retailers and brands who have their own fulfillment centers

or 3PLs (Third Party Logistics provider) but do not want

to participate in Amazon’s FBA program in order for their

listings to be Prime eligible. With Seller Fulfilled Prime, sellers

can offer their products as Prime yet still use their own

fulfillment facilities to store, process and ship their orders.

The biggest difference between SFP and Amazon’s FBA

program is that FBA requires sellers to store their inventory

in Amazon’s fulfillment centers. For businesses who do not

have their own warehouse or fulfillment capabilities, FBA

can be a convenient & cost-effective solution. FBA offers

significant flexibility, since sellers are not required to sign a

minimum monthly contract with Amazon or commit to a

specific duration of time or minimum usage. With FBA, all

inventory in Amazon’s fulfillment centers is automatically

designated as Prime. With SFP, sellers can decide which

listings they would like to offer as Prime and for which

regions of the country.

FBA’s numerous benefits include instant scalability (you

don’t have to worry about hiring more personnel as you

get busier), convenience (your warehousing, fulfillment,

customer service related to delivery and returns will be

taken care of by Amazon) and automatic designation

as a Prime seller.

The downside of FBA is that its fees can start to add up

and sellers lose some autonomy in their branding and

order fulfillment. For instance, FBA’s Inbound fees can

quickly become quite costly. In order to meet its two-day

delivery guarantee, Amazon requires FBA sellers to send

their inventory to various geographically distributed

fulfillment centers designated by Amazon. Sellers are

responsible for the costs of shipping their inventory to

each Amazon fulfillment center which can add additional

up-front expenses. Other FBA fees include oversize fees,

long-term storage fees, restocking fees for returns and

more. FBA fees are non-negotiable, whereas some 3PLs

are open to negotiating their rates for storage, pick and

pack, and their other fees.

FBA sellers also have less brand control since Amazon uses

its own branded packaging. With SFP, sellers can maintain

greater control of their branding, packaging and better

manage their fulfillment costs.

800.875.8371

what are the requirements for SFP eligibility?

05

To be eligible for SFP, you will first need to have a

Professional Selling account and qualify to offer

Premium Shipping (non-standard shipping). Premium

Shipping enables sellers to offer expedited shipping

options, such as Same-Day and Two-Day shipping, to

their Prime customers. Fast Shipping options are the

cornerstone of Amazon’s Prime program as Prime mem-

bers expect quick and reliable delivery as one of the main

benefits of Prime membership.

To be eligible and maintain eligibility for Premium

shipping, sellers must meet the following performance

requirements:

• On-time delivery rate: Must have an on-time

shipping rate of at least 99% for Premium

shipping orders.

• Valid tracking rate: Must have valid tracking IDs

for at least 94% of Premium shipping orders.

• Seller-initiated cancel rate: Must have 1% seller-

initiated cancellation rate for Premium shipping

orders. (common reasons why sellers cancel are

stock-outs, defective products, etc.)

In addition to fulfilling the requirement for Premium

Shipping, Amazon sellers must also satisfy the following:

• Offer two-day shipping to Prime members through

Premium shipping.

• Offer free standard shipping to Prime and

non-Prime members nationwide.

• Offer free return shipping.

• Purchase shipping labels through Amazon

Buy Shipping services for at least 95% of

your Prime orders.

• Allow Amazon to handle all your order-related

customer service issues.

• Comply with Amazon’s returns policy (recently

Amazon modified its Prime return policy to include

auto-authorized returns)

800.875.8371

06

If you already have a good shipping and performance

track record, chances are you have already been

invited to participate in the program. For those who

have not yet been invited, you will need to go through

a trial period to prove that you can adhere to Amazon’s

strict shipping and performance requirements.

tip: Sellers who are using 3PLs or other 3rd party

fulfillment facilities need to make sure that these

fulfillment centers understand the requirements of

Prime and can adhere to Amazon’s strict shipping

rules. It is a good idea to find a 3PL or fulfillment

center that has considerable experience with

fulfilling Amazon prime orders as they are more

likely to have processes and infrastructure already

in place.

800.875.8371

what does the SFP trial period entail?

07

Amazon requires that all sellers who have not been

automatically approved for Seller Fulfilled Prime go through

a rigorous trial period. The trial period lasts up to 90 days

and the seller has to fulfill 50 Prime orders with near perfect

metrics during that period. Sellers will be measured on

how well they meet all of the Seller Fulfilled Program

requirements. If the seller falls below the minimum

requirements, they will not receive the Prime badge.

Sellers will not receive the Prime badge until after the trial

period is over and they have proven that they can meet

Amazon’s expectations.

To begin your SFP trial period, simply follow Amazon’s

period directions:

Once you are approved for Seller Fulfilled Prime, the

listings you’ve designated as Prime will automatically

display the Prime badge. If you are unable to complete

your trial period or didn’t get approved by Amazon after

the trial period ends, you can try again with no penalty.

The trial period is lengthy but it simply ensures that you

are ready to guarantee the delivery time and rates Prime

members are accustomed to receiving.

“The trial period lasts up to 90 days and the seller has to fulfill 50 prime orders with new perfect metrics during that period”

800.875.8371

Seller Fulfilled Prime trial periodHow to start the trial

1. Register: Go to the Seller Fulfilled Prime main page and sign up to start your trial. 2. Enable Prime shipping in your Prime trial shipping template: Visit Configure Shipping Settings for steps on how to enable listings for Prime shipping and how to select regions where you would like to offer Prime delivery. Review Prime Shipping Requirements. 3. Enroll items in Seller Fulfilled Prime: Assign SKUs to your Prime shipping template.

Note: During the trial period, all SKUs assigned to a Prime shipping template will count as Prime trial orders, regardless of the buyer’s location. All Prime trial orders will contribute toward the trial period performance requirements described below.

4. Fulfill Prime trial orders: Identify Prime trial orders according to the Prime badge displayed on the Manage Orders page in Seller Central and the “isprime” identifier in Order Reports. Fulfill these orders according to the requirements listed on the How to process Seller Fulfilled Prime orders page.

what are SFP’s shipping and delivery time requirements?

08

One of the challenges of deciding whether you should

be an SFP seller is understanding the potential shipping

costs you will incur. As an SFP seller, you must offer

free Two-Day shipping to Prime members, but unlike

FBA, you can offer Prime delivery on a regional basis

instead of nationwide.

When you join the SFP program, you will be required

to create specific SFP shipping templates. In these

SFP shipping templates, you can select the regions

you want your listings to display the Prime badge

and where you can guarantee two-day delivery. For

instance, if your distribution center is in NY, you can

limit Prime delivery to areas near your distribution

center to ensure a two-day delivery.

SELLER FULFILLED PRIME SHIPPING REQUIREMENTS

Shipping Prime Non-Prime Method Customers Customers

Two-Day – Prime Urban areas Free Seller-set rates(2 Business Days)

Standard – Urban Free Free(3-5 Business Days)

Standard – Rural Free Free(7-14 Business Days)

Standard – Remote regions not eligible for Prime Shipping Seller-set rates Seller-set rates(7-14 Business Days)

800.875.8371

09

With SFP, you lose some control of your shipping costs.

SFP sellers are free to select any of the major carries and

use their own negotiated carrier rates. However, Amazon

will only allow you to select the carriers & their service

levels that can guarantee delivery of a Prime order with-

in two days based on customer’s location. For example,

although USPS is supported by Amazon, it is often not

available for Two-Day Prime shipping since it may not be

able to guarantee two-day delivery to a specific location.

Therefore, sellers may be surprised when they discover

USPS is disabled as a carrier choice and are left with

options that might be costlier than anticipated. On the

plus side, SFP sellers can access some of Amazon’s

negotiated rates, such as USPS Commercial rates,

which can potentially reduce shipping costs.

SFP sellers also need to be aware that there is a cut-off

time for accepting Prime orders each day. The cut-off

time for a Prime order is 2:00 pm, seller’s local time. If

a seller has multiple warehouses, they can choose the

Eastern-most location as the cut-off time. If a Prime order

is Two-Day shipping and comes in before 2:00 pm, then it

needs to be shipped out on the same business day before

midnight. If the order comes after 2:00 pm, then the order

can be shipped out on the next business day after midnight.

SFP CUT-OFF TIMES

Day Ordered Delivery Day (before cutoff) to customerMonday Wednesday

Tuesday Thursday

Wednesday Friday

Thursday The following Monday

Friday The following Tuesday

Saturday The following Wednesday

Sunday The following Wednesday

As of today, the cut-off time is set by Amazon for 2:00 pm and cannot be customized by sellers.

tip: To avoid being caught off guard when it comes to

shipping costs, it’s good practice to be conservative when

calculating your shipping cost and assume the higher rate.

Amazon selects carriers that have the highest probability

of being able to deliver an item on time and often that is

the more costly shipping service.

800.875.8371

what are the benefitsof SFP?

10

Seller Fulfilled Prime offers many benefits but it also

has a few risks in terms of potentially higher costs. So

why do so many sellers want to participate in Seller

Fulfilled Prime?

First and foremost, participation in SFP provides sellers

with access to the millions of Prime buyers who shop

more frequently, spend more money than non-Prime

buyers and prefer to buy from Prime sellers. Amazon

shoppers have grown to view the Prime badge as a

symbol of excellence and have developed greater

confidence in Prime sellers, certainly in the area of

delivery. According to Amazon, SFP sellers can see

an average sale increase of at least 50% on their

Prime listings when they join the program. That’s

not too shabby.

Secondly, SFP enables Prime sellers to have better

control of their inventory, fulfillment operations and

costs associated with both. Online retailers and brands

who already have their own warehouse(s) or fulfillment

facilities can forgo paying the fees associated with FBA,

such as fees for storage, pick & pack, and handling. FBA

sellers may sometimes experience delays for Amazon

fulfillment centers to unload and process their inventory,

thus leading to a loss of sales, especially during the busy

holiday season. SFP sellers, on the other hand, can select

fulfillment centers who can process their inventory with

little to no delay.

By having greater governance over their inventory and

fulfillment operations, SFP sellers can also expand their

online presence by selling on other online channels.

The ability to use the same fulfillment facilities to ship

your Amazon SFP orders as well as orders from other

online channels can help streamline sellers’ fulfillment

operations and potential costs.

800.875.8371

SFP sellers have a better control of their branding and

customer experience. Depending on their fulfillment

center, SFP sellers can request customized packaging

that reflects their brand and their company. You can

use your own box, your own packing slips, your own

packaging material etc.

Additionally, as a result of adhering to the strict Prime

metric requirements, SFP sellers can also experience

better product discoverability and ranking on Amazon’s

search results and have a better chance of winning the

Buy Box.

11800.875.8371

what should sellers consider before joining SFP?

12

Before joining SFP, sellers should weigh the operational costs of handling their own fulfillment & shipping vs. the gains of growing their sales by being able to list and sell more products as Prime. Below are a number of factors to consider when

evaluating the potential costs of SFP:

1 | Shipping zones Sellers must decide what zones they are willing or able to ship to in order to comply with Prime’s two-day delivery requirements. If you have a fulfillment center on the West Coast, you will need to decide if you want to offer your products as Prime across the nation or confined to areas near your fulfillment center. There are many factors that go into this decision such as profit margins, price points and your business model.. 2 | Add or change fulfillment locations If you decide to offer Prime to both coasts, you may want to add a fulfillment facility or 3PL on the opposite coast or use a distribution facility to a more central place in the US to cover all states. You will need to do a cost analysis to see whether adding a new distribution facility, moving your distribution center or simply shipping across the multiple zones is more beneficial for your business.

3 | Fulfillment centers that work with Prime Having a fulfillment center that has the labor, technology and resources to fulfill Prime orders in the allotted time is absolutely critical. If you do not follow the Prime shipping requirements, you can easily have your Prime status revoked. Make sure you use a distribution center that can commit to following Amazon’s strict shipping rules.

4| Fulfillment strategy It is important to have a cohesive fulfillment strategy as your business grows and you add online channels to your fulfillment infrastructure. Your logistics partners should be able to work with an inventory management system that can not only handle Prime orders but orders from multiple online channels.

5 | Amazon’s return policy Amazon has recently changed its SFP returns policy to include automatic returns. What that means for SFP sellers is that they need to auto authorize returns regardless whether buyer is a Prime member or not. Amazon’s customer service will handle all customers’ inquires specific to SFP returns which saves sellers time but also removes the sellers’ ability to offer an alternative to returns.

800.875.8371

is SFP right for me?

13

That depends. If you are a smaller seller or your ware-

house operations cannot support the fulfillment metrics

required to maintain Prime status, then FBA may work

better for you. Seller Fulfilled Prime can be a great option

for retailers and brands who want to handle their own

warehousing and fulfillment but still want their Amazon

products listed as Prime. In addition, since SFP sellers

can control their packaging, businesses that sell items

that require special handling like breakable or perishable

products could benefit from SFP. Likewise, companies

that rely on customized packaging for branding consis-

tency can continue their branding strategy using SFP.

SFP also works well with online retailers that sell items

that are slow moving or seasonal (you can avoid FBA’s

long-term storage penalty fee with SFP), and large and

heavy such as furniture (FBA charges shipping to their

warehouses and storage fees based on size and weight).

Retailers that offer high priced items with high margins

may also want to consider SFP, as the high margins may

provide enough cushion to offset the delivery rates.

800.875.8371

summary

14

Seller Fulfilled Prime is an excellent program for

online retailers selling on Amazon and can be potentially

lucrative. However, it’s important to make sure you do

a thorough analysis before taking the plunge.

When considering if SFP is right for you, it is important

to consider the following questions:

1 Can your existing warehouse operations

meet the stringent fulfillment requirements

for turnaround?

2 What will be the impact to your choice of

carriers and shipping costs when you move to SFP?

3 How much value will you get by making all/most

of your inventory Prime eligible?

4 How will moving to SFP impact your geographic

customer reach and what is your strategy around

how many regions you want to cover with SFP?

5 What will be the true costs of “free returns”

to your business?

6 How will I manage my inventory, orders and

fulfillment across channels? Will my existing

systems be sufficient?

With SFP, sellers have the dual benefit of accessing the

coveted Prime audience and having the freedom to sell

on other marketplaces. If you decide to become an SFP

seller as part of a multi-channel ecommerce strategy,

consider using an application, such as Solid Commerce,

that integrates with both Amazon FBA and SFP as well

as your other online channels.

800.875.8371

15

About Solid Commerce

Solid Commerce is the industry’s most comprehensive

multi-channel ecommerce solution that combines

listings, inventory, order and shipping functionality

in one platform. Created by ecommerce sellers for

ecommerce sellers, Solid Commerce offers online

retailers the ability to streamline their ecommerce

operations, reduce inefficiencies, and increase

sales on multiple online channels including Amazon,

Walmart, eBay, Jet, Shopify, BigCommerce and more.

To learn how Solid Commerce can help your

online retail business grow and get a live demo,

contact our team of eCommerce experts at

sales@solidcommerce.com or call us at 800.875.8371.

800.875.8371