This post is written by Katy Luxem, and is about the difference between Amazon FBA and Seller Fulfilled Prime. Katy is Content Manager at eCommerce Nurse. In case you want to submit a guest post to Sellerscale blog, feel free to reach out to us directly at email@example.com
One of the biggest Amazon draws is its quick delivery of a huge range of products.
Like most people who’ve ever purchased something online, you’ve probably heard of Amazon Prime. An Amazon Prime membership equates to free 2-day shipping in the US and even faster-guaranteed shipping in certain Amazon UK and EU locales.
Amazon Prime currently boasts more than 100 million members worldwide, which is a lot of customers utilizing fast, reliable delivery on everything from shampoo and dog food to the latest book releases.
On the seller side, you may be wondering how to capitalize on or compete with Amazon’s delivery promise; a tenet that customers clearly love.
In this post, we’ll outline your choices when it comes to Fulfillment by Amazon and Seller Fulfilled Prime.
(Example of the Amazon Prime badge, as displayed in search and browse.)
What is Amazon FBA?
In 2006, Amazon launched a program called Fulfillment by Amazon (FBA). This program allowed sellers to leverage Amazon’s logistics network to pick, pack, ship, and deliver customer orders all over the globe.
The fee structure is fairly easy to navigate and allows sellers to receive the Prime logo badge on their products in search and browse, making them instantly more attractive to customers.
Many customers don’t even know (or need to know) the difference between Amazon vendor or FBA products. FBA is available for all sellers. All you have to do is register, which can be done quickly in a Seller Central account.
FBA sellers store their inventory in Amazon FCs while sellers manage and track this using an online user interface. Amazon is equipped to deal with package dimensions, warehouse space allocation, and physically packaging and sending items. Essentially, all of the logistics once it reaches their warehouse.
FBA also makes returns simple, as customers are given an immediate refund while Amazon handles the process.
What is Seller Fulfilled Prime?
Seller Fulfilled Prime is an Amazon-run program that allows sellers to deliver directly to domestic Prime customers from their own warehouse, using their own logistics.
By displaying the Prime badge, such sellers are committing to fulfill orders with that country’s Amazon delivery SLA at no additional charge for Prime customers.
Amazon gives SFP sellers access to the right transportation solutions to help you meet the high bar for the Prime customer experience.
Sellers wishing to join the program must first complete a trial period.
You must maintain a Professional selling account, offer premium shipping options, ship over 99% of your orders on time, have an order cancellation rate of less than 0.5%, use Amazon Buy Shipping Services, agree to the Amazon Returns Policy, and allow for customer service inquiries to be dealt with by Amazon.
An on-time shipping rate of 99% of orders is the SFP standard. Because customers are guaranteed delivery date, any sellers who miss this may be charged a fee so the customer can be refunded.
Returns of SFP items are handled through the seller’s warehouse, but refunds are usually given to the customer within two business days. Sellers are usually responsible for these costs.
As of June 2020, the only way to get into this program is to join the waitlist on Amazon Seller Fulfilled Prime page.
While the waitlist has been available for some time, acceptance rates are slow. Particularly with the COVID-19 economic slowdown.
Buy Shipping Services Amazon FBA and Seller Fulfilled Prime
One crucial piece of Seller Fulfilled Prime is that sellers using the program must purchase all shipping labels through Buy Shipping Services.
This streamlines outbound delivery and also the return process for whichever shipping carrier.
FBA, however, simplifies this and allows merchants to print labels directly from Amazon. Sellers can also choose to have the FBA label service complete this step, further streamlining the process.
How to choose between Seller Fulfilled Prime and Amazon FBA?
Like most Amazon processes, there is no one-size-fits-all approach. Sellers must evaluate the pros and cons and decide what works best for their business and customers.
Unlike vendors, sellers still retain control of pricing. But fulfillment options are a key point when it comes to margins, happy customers, and a smooth-running business in the long-term.
The choice to go with FBA or SFP depends on the number of orders processed, the size of the items sold, a cost-benefit analysis, if you plan on international expansion, or how much customer interaction and control the company wants.
Some businesses may also choose a hybrid, multi-channel fulfillment approach, using different fulfillment methods for different items. Again, this depends on the factors previously mentioned. Other sellers may choose to retain full control, and ship with the Merchant Fulfilment Network (MFN) instead.
Need more help with Amazon FBA and Seller Fulfilled Prime?
Regardless of which method your business chooses for logistics, your customers only care about one thing: Getting exactly what they ordered on time. It can be tricky to decide what might work best for your particular situation and business.
While there are many tools out there to help manage your inventory or FBA products, eCommerce Nurse provides an invaluable way to leverage all of your options and plan for continued growth. We can help you make sense of data, audit your account, deep-dive into your metrics and costs, and optimize your listings for success, no matter what your logistics currently look like. We work with all types of sellers, whether they are already set up with FBA or just opening an account to sell their first product. Please contact us for more information or questions.