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.
This article will serve as your SFP primer, highlighting the program’s benefits, requirements, and considerations for prospective participants.
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.
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.
To join SFP, sellers must:
Beyond the initial eligibility criteria, SFP sellers must also continuously maintain a high standard of performance metrics. These include:
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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:
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.