Generating billions of dollars in sales, Amazon has solidified their position as a go-to platform for online shopping worldwide. Central to that success is their Prime program, a membership service offering numerous benefits, including free two-day shipping, streaming media, and more. As of Amazon’s last public report, they had over 200 million Prime members worldwide, illustrating the program’s widespread popularity and reach.

In 2015, Amazon announced a new initiative: Seller Fulfilled Prime (SFP). The program empowers third-party sellers by letting them display the Prime badge on orders fulfilled directly from their own warehouses or through a third-party logistics provider.

The program had been closed to new sellers, but will open for enrollment sometime in 2023. This signals an exciting opportunity for third-party sellers, and anyone interested should closely monitor Amazon’s updates for more information.

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This article will serve as your SFP primer, highlighting the program’s benefits, requirements, and considerations for prospective participants.

Understanding Seller Fulfilled Prime (SFP)

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SFP is an innovative program Amazon developed to expand third-party sellers’ capabilities on the platform. It bridges the gap between Amazon’s two major selling arms: the third-party Fulfilled by Merchant (FBM) selling option and the Fulfilled by Amazon (FBA) program.

At its core, SFP allows sellers to fulfill their orders directly from their own warehouses or through a third-party logistics provider, rather than sending their inventory to Amazon’s warehouses in the FBA program. Although they handle their order fulfillment, these sellers can still display the coveted Prime badge on their listings and tap into the millions of loyal Amazon Prime customers.

While FBA offers significant benefits — namely, Amazon handling storage, packaging, shipping, customer service, and returns management — sellers have to send their inventory to Amazon’s fulfillment centers to receive these advantages. This can present challenges in terms of warehousing fees, long-term storage restrictions, and the risk of stock becoming lost or damaged.

In contrast, SFP offers sellers more control over their inventory and fulfillment processes. This means they can potentially save on storage fees and better manage their stock levels. However, they’re also fully responsible for maintaining Amazon’s high standards of customer service, shipping speed, and reliability.

SFP brings its own considerable benefits for sellers, with the most noteworthy being the ability to display the Prime badge on their product listings, despite not using FBA. This can significantly increase product visibility to draw in Amazon’s massive base of Prime customers, who are known for their higher-than-average purchase frequency and loyalty. Sellers also enjoy more control over their inventory and fulfillment processes, which can lead to cost savings and more efficient operations.

Program requirements for Seller Fulfilled Prime

The SFP program has specific requirements that sellers must meet to participate. These criteria are designed to ensure Amazon’s high customer service standards are upheld, regardless of whether an order is fulfilled by Amazon or a third-party seller.

General eligibility

To join SFP, sellers must:

• Already sell on Amazon and have a professional account. This is necessary because the program is built on Amazon’s existing seller platform.
• Have an established track record of excellent performance, which is measured through Amazon’s Order Defect Rate (ODR). ODR is a key performance metric Amazon uses to assess sellers, and it should be below 1% for the trailing 60 days.
• Be able to fulfill orders from all states within the country of selling and offer premium shipping options.

Performance metrics and standards

Beyond the initial eligibility criteria, SFP sellers must also continuously maintain a high standard of performance metrics. These include:

• On-Time Shipment Rate: Greater than or equal to 99% for Prime orders
• Order Cancellation Rate: Less than 0.5% for Prime orders
• Valid Tracking Rate: Greater than or equal to 95% for Prime orders

Integration requirements for order management and tracking

Amazon requires SFP sellers to use Buy Shipping Services for at least 99% of their Prime orders. This service provides tracking information for all shipments, which is crucial for maintaining transparency and meeting Amazon’s performance metrics.

Minimum order volume and fulfillment capabilities

To participate in SFP, sellers must demonstrate they can handle a minimum order volume and have adequate fulfillment capabilities. Although Amazon hasn’t explicitly stated a minimum order volume, sellers should assess their capacity to ensure they can meet demand, particularly with the potential increase in sales due to displaying the Prime badge.

Additionally, SFP sellers are required to use Amazon’s approved carriers and meet Amazon’s Prime delivery speed requirements, including two-day delivery.

The SFP fulfillment process

SFP shifts the onus of fulfillment onto the sellers. Therefore, it’s critical for vendors to understand the entire process, from order receipt to shipping, to ensure they can provide the high level of service Amazon Prime customers demand.

Order fulfillment workflow

The order fulfillment process in SFP begins when a customer places an order for a Prime-eligible product. Amazon notifies the seller of the order, and the seller is then responsible for picking, packing, and shipping the product. (This is in contrast to the FBA model, where Amazon takes over after the order is placed.)

SFP sellers bear more responsibility compared to the FBA program. Key tasks include:

• Inventory management: Sellers must keep track of their inventory levels to ensure they can fulfill all orders. This is crucial, as stockouts can lead to canceled orders and potentially harm performance metrics.
• Order fulfillment: Sellers must have processes in place for efficient picking, packing, and shipping of products. They must be fast enough to meet Amazon’s delivery speed requirements for Prime orders.
• Shipping: Sellers are required to use Amazon-approved shipping carriers and must meet the two-day delivery promise for Prime orders.

Sellers who participate in SFP are also responsible for their own customer service. This includes responding to consumer inquiries and handling returns in accordance with Amazon’s return policies. Providing high-quality customer service is critical for maintaining a strong seller reputation and meeting Amazon’s performance metrics.

Key considerations for sellers in SFP

While the SFP program offers significant potential benefits, it also comes with certain challenges that require careful consideration. Before joining, sellers should evaluate whether SFP aligns with their business model and capabilities.

The feasibility for your business

Carefully analyze your business’s capabilities and goals against SFP’s requirements. Can you handle the increased order volume that may result from the Prime badge? Do you have the resources and processes in place to meet Amazon’s high performance standards? Consider conducting a trial run of fulfilling orders in-house to gauge whether SFP is a feasible option for you.

Costs and fees

While SFP can save you on storage fees associated with FBA, there are other costs to consider, including expenses for shipping, returns, and packing materials. Also, remember that, as an SFP seller, you’ll be responsible for customer service, which may require additional resources.

Logistical and operational challenges

SFP sellers face unique logistical and operational challenges. Managing your own inventory, fulfilling orders, ensuring fast and reliable shipping, and handling customer service and returns require time, resources, and efficient processes. Before joining SFP, you should assess whether your business has the capabilities to tackle these responsibilities efficiently.

Maintaining customer satisfaction and performance metrics

It’s no secret that Amazon has high expectations for sellers to keep customers happy. As such, maintaining superb customer satisfaction and meeting Amazon’s performance metrics is crucial for SFP sellers. Poor performance risks losing your Prime eligibility and being suspended from selling on Amazon altogether.

Tips for successful Seller Fulfilled Prime participation

Transitioning to Seller Fulfilled Prime can open up new opportunities for your business on Amazon. However, success in the program requires meticulous planning and efficient execution. Here are some tips to ensure successful participation in the SFP program:

• Optimize your fulfillment processes: Efficient fulfillment is the backbone of the SFP program. Consider employing strategies such as batch picking, where you pick multiple orders simultaneously, or zone picking, where you pick all items from a particular zone before moving on to the next. Streamlined packing stations, organized inventory, and reliable shipping carriers also contribute to efficient fulfillment.
• Leverage shipping carriers and tools: Partner with reliable shipping carriers who can meet Amazon’s two-day delivery requirement for Prime orders. You can negotiate rates with multiple carriers to find the best deal. Also, leverage tools like Amazon’s Buy Shipping Services to automate the shipping process and ensure tracking information is readily available for consumers.
• Monitor and improve performance metrics: Amazon’s performance metrics are more than requirements for the SFP program; they’re also indicators of your business’s health. Regularly monitor these metrics and take proactive steps to improve them. That might involve honing your fulfillment process, refining customer service, or managing your inventory more effectively.
• Keep up to date on program and policy changes: Amazon is known for frequent changes and updates to their seller programs and policies. Stay informed about any changes to SFP’s requirements, policies, or new features to ensure compliance and take advantage of new opportunities.

Wrapping up — SFP is the lucrative middle ground between FBM and FBA

Seller Fulfilled Prime marks a new era in Amazon’s third-party selling landscape, offering sellers the coveted Prime badge while allowing them to retain control over their inventory and fulfillment processes. However, the program comes with stringent responsibilities and requirements. To participate, sellers must demonstrate excellent performance, manage their own inventory, fulfill orders in a timely manner, and provide top-notch customer service, all while adhering to Amazon’s stringent standards.

Before joining SFP, carefully assess whether your business is equipped to handle the program’s responsibilities and costs. That entails analyzing your fulfillment capabilities, your resources for customer service, and your ability to meet Amazon’s performance metrics consistently. If your business is up to the task, SFP can be a bountiful revenue-generation channel.

Not sure where to begin? Get in touch with MyFBAPrep — we’re skilled at helping our clients navigate every facet of Amazon selling.