Want to sell on Amazon with that coveted Prime symbol on your product listings? Amazon has a program called Seller-Fulfilled Prime, which allows third-party sellers to offer two-day Prime shipping without using Amazon’s warehouses for fulfillment.
While Seller-Fulfilled Prime (SFP) can help small-medium sized businesses increase their sales on Amazon, sellers must meet Amazon’s strict performance standards in order to be eligible for SFP as well as to maintain SFP status.
We’ll cover everything you need to know about Amazon Seller-Fulfilled Prime, including:
- Seller-Fulfilled Prime requirements
- The difference between FBA, FBM, and SFP
- Changes coming in 2021
- Alternative fulfillment options
- How to apply for SFP
What is Seller-Fulfilled Prime?
Seller-Fulfilled Prime is a program that allows Amazon sellers to offer 2-day Prime shipping to Amazon customers while fulfilling orders from their own warehouse or by using a third-party fulfillment center.
This is different from Amazon’s Fulfillment by Amazon (FBA) program, in which Amazon handles the packing, shipping, and other fulfillment operations for a seller’s Amazon products from their warehouses. (Since they control the shipping, all FBA products automatically sell as Prime.)
If you want to fulfill your own products (ie. Fulfillment by Merchant or FBM) — whether to maintain full control over the fulfillment and storage of your Amazon inventory or avoid paying Amazon FBA and storage fees — SFP allows you, as an Amazon seller, to experience the sales benefits of having the Prime badge on your listing. By offering this Prime shipping on your listing, you are committing to fulfill all your orders with fast, two-day shipping at no extra charge to the customer.
Not only is this appealing for Amazon shoppers and can help drive sales for your products, it’s also great for Amazon, which can increase its Prime offerings without taking up more warehouse space.
What are the requirements for Seller-Fulfilled Prime?
As of September 2020, Amazon is not currently accepting new registrations to join SFP, but if it is a shipping option you would like to offer in the future, you should work on getting your numbers up now.
How it works:
To be eligible for SFP, Amazon sellers must go through a trial period of anywhere from 5 and 90 days, and fulfill FBM orders with all of Amazon’s strict shipping requirements. (In other words, you have up to 90 days to meet the required trial orders.)
During the trial period, you must offer Premium One-Day to Two-Day delivery options to prove to Amazon that you can meet the fulfillment promises. The Prime badge will not be displayed on your listings during the trial period. You must meet the following criteria for at least 50 Prime trial orders:
- 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 for at least 99% of orders (this is when you purchase shipping labels in Seller Central and tracking info is automatically added)
- Maintain a cancellation rate of less than 1%
- Add tracking ID to more than 84% of orders
- Maintain a 4.5+ feedback rating over a 30-day rolling period
- Process orders with a zero-day handling time
Once you complete the trial period, Amazon will automatically enroll you into SFP and your product listing will then display the Prime badge!
To maintain eligibility for SFP, you are required to meet the same Prime trial performance requirements consistently. Even if your feedback rating or your cancellation rate were to drop below Amazon’s criteria for one day, Amazon will remove the Prime badge from those listings, and you may no longer be eligible for SFP.
Who can use Amazon’s Seller-Fulfilled Prime program?
SFP is great for experienced Amazon sellers who sell high volumes through FBM.
Currently, SFP allows sellers to enable two-day Prime shipping to specific regions where sellers know they can meet that promise.
However, in February 2021, Amazon will require SFP sellers to offer nationwide two-day delivery as well as Saturday delivery and pick-ups.
We’ll go over these changes in greater detail below, and if you are currently enrolled in SFP and think that you may not be able to meet these new requirements, we’ll go over some alternative fulfillment options to keep the Prime badge on all your products.
Pros and Cons of Amazon Seller-Fulfilled Prime
- You have access to Amazon’s 150 million Prime members
Prime members are Amazon loyalists. 67% of Amazon Prime members said if they had to shop at only one store, it would be Amazon. By enabling the Prime badge on your listings, your products will have increased discoverability as Prime customers will be able to filter their search by Prime products only.
- You don’t have to pay FBA fees or storage fees
Amazon’s FBA fees and storage fees can be a huge deciding factor for whether sellers choose to use FBA or SFP. Because of how Amazon’s fee structure is based on weight and dimensions, you may be more profitable using SFP than FBA. Additionally, storage fees vary during different times of the year and Amazon can limit your storage space if your IPI score is low.
- It helps you compete for the Buy Box
Winning the Buy Box means that when customers click on “Add to Cart,” their default option is to buy the product from you. Products listed with the Prime badge have increased chances to win the Buy Box over an FBM offer. Even if you were selling your product via FBM, your price would have to be considerably lower than an FBA or SFP offer to get the Buy Box.
- You have more control over your inventory
By utilizing SFP, you will have more control and insight over your Amazon inventory by keeping your operation in one location. You’ll avoid lag time between sending inventory into an Amazon FBA warehouse and worrying about running out of stock. You also have the option of using a third-party fulfillment center to store and ship SFP orders.
- You have to meet Amazon’s strict standards to maintain SFP status
If you are not able to meet Amazon’s requirements for SFP, then Amazon will remove your Prime eligibility. Starting February 2021, Amazon’s requirements will become even more stringent and many sellers will not be able to meet Amazon’s standards.
- You cover the cost of storing and shipping items
Yes, you’ll save money on FBA fees and Amazon storage fees, but that does not mean you will not have any costs of your own. You need to take into account the cost of a warehouse, employees, shipping supplies such as boxes and labels, as well as expedited shipping costs. And premium shipping costs can really eat into your margins.
- You have to handle returns
When using FBA, any customer’s returns will be handled by Amazon and sent back to Amazon. When using SFP, not only do you need to abide by the same return policies as FBA sellers, but customer returns will be sent back to you. This can be a challenge if you do not have the space or a standard operating procedure on how to handle returns.
Amazon’s changes to Seller-Fulfilled Prime and what it means for sellers
Starting February 2021, Amazon is making changes to Seller Fulfilled Prime which require SFP sellers to offer nationwide two-day delivery as well as Saturday delivery and pick-ups.
Currently, SFP sellers can offer regional Prime shipping only to areas where they know they can meet the two-day delivery window. And for other regions, sellers need to offer free premium shipping but orders do not need to be delivered within two days. Soon that will change.
The announcement Amazon sent SFP sellers:
These new requirements may make it much more difficult for sellers to participate in SFP. Unless sellers have a multi-warehouse operation or utilize a third-party fulfillment partner, their shipping costs may be too high to maintain profitability.
For example, if your warehouse is located on the east coast and you receive a Prime order from the west coast, your expedited shipping costs will likely be very expensive.
So why is Amazon making these changes? According to its letter to sellers, Amazon wants to ensure Prime customers are receiving orders within one or two days because in the past, fewer than 16% of SFP orders in the U.S. met the Prime Two-Day delivery promise.
Amazon continues to invest in its fulfillment capabilities in order to improve Prime customers’ experience, and the company wants all Seller-Fulfilled Prime orders to meet the same exact customer expectations of Prime.
Alternative fulfillment options for SFP sellers
If you are no longer able to meet Amazon’s new strict SFP requirements, what are your options?
- Well, obviously you can use FBA or switch back to FBM where you can no longer offer Prime shipping, but those options may not be best for your business.
- You can utilize a third-party fulfillment center to store and fulfill all of your SFP orders. You will then need to pay storage fees to the warehouse you use, but in many cases, it is still cheaper than using FBA.
- There are plenty of fulfillment centers that work with Amazon sellers and Seller-Fulfilled Prime specifically. To learn more about finding third-party fulfillment centers that can handle your SFP orders, check out our article on Alternatives to Amazon Fulfillment.
How to enroll in SFP
Enrollment to Seller-Fulfilled Prime is currently closed but we suggest putting yourself on the waitlist for when it reopens to new sellers.
(Our prediction is that registration for SFP will open after the new fulfillment requirements take effect in February 2021.)
To ensure your business will be ready for SFP, set up some FBM offers and see if you can handle the fulfillment process and maintain Amazon’s requirements. If you find you’re successful, you may be the perfect candidate for SFP!
Do you sell on Amazon using Seller-Fulfilled Prime? Tell us your experience in the comments!