Written by Mike Glover
22nd August 2017 • 10 min read
Amazon Seller Fulfilled Prime is currently creating quite a buzz within the ecommerce industry.
It’s no great revelation to say that Amazon is a dominant player when it comes to selling products online. But there’s a specific aspect of this marketplace that’s experiencing huge and continual growth in itself – Amazon Prime.
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Amazon Prime members have proven themselves to spend more money, more often. In fact, a recent Consumer Intelligence Research Partners study revealed that Prime members spend an average of $1,300 per year with Amazon, compared to just $700 for non-Prime customers.
So gaining access to this lucrative marketplace is something that could potentially see huge increases in sales for any ecommerce business. And this blog post will show you exactly how to do that through the Seller Fulfilled Prime initiative.
What is Amazon Seller Fulfilled Prime?
Independent ecommerce businesses being able to access and sell to Prime members isn’t a new concept. Fulfilment By Amazon (FBA) has provided this opportunity since 2006. This way, retailers stock inventory in Amazon warehouses and have orders fulfilled from here to ensure the quality requirements are adhered to.
This is great for some Amazon sellers. Others, though, can begin to drown in the continual fees for slow moving products and see their profit margins get slowly eaten away at.
But the game changed in late 2015 as Amazon began rolling out Seller Fulfilled Prime (SFP). This allows independent Amazon sellers to display the Prime badge while still fulfilling orders from their own facilities.
See the screenshot below for an example of what items with and without the Prime badge look like.
Are Prime Members Really Worth It?
Don’t forget that a Prime badge on an item means you’re committing to Prime standards of shipping from your own warehouse, although Amazon helps by giving you access to its distribution network.
But if you’ve never sold to Prime members previously, then you may be questioning whether going through all this is actually worth it.
The data suggests an emphatic yes. As mentioned earlier, Amazon sees Prime members spend on average almost double the amount non-Prime customers do at around $1,300 each year.
Looking at events like Amazon Prime Day just bolsters this claim. Prime Day 2016 saw worldwide orders up 60% compared with the year before and was declared the company’s “biggest day ever” by the Vice President of Amazon Prime. This means bigger than Black Friday and Cyber Monday.
Combine all this with the estimation that Prime membership has increased by 300% in the last three years to 85 million in the US alone and it’s safe to say this is a growing marketplace of very willing spenders.
Seller Fulfilled Prime vs Fulfilment By Amazon
The main benefit of Seller Fulfilled Prime is gaining that coveted Prime badge. But this also comes with FBA. So why not just use the latter and let Amazon worry about fulfilling the orders for you?
Firstly, with SFP you’re no longer sending Amazon your stock and paying the storage and fulfilment fees. Don’t forget, with FBA these charges come regardless of whether you actually sell product or not. Plus, Amazon have now introduced penalty fees for stock sitting in their warehouse for over a certain period.
What SFP also means is that you can gain the Prime badge without needing to split your inventory between Amazon’s warehouse and your own (as done with FBA). So you can have one central location where you fulfil all your multichannel orders from.
Another crucial part of SFP over FBA is gaining back control of returns. This means you can easily identify exactly which returned items tie to which orders and reduce risk of customer fraud.
How to Access Seller Fulfilled Prime
So you might now be wondering how you actually go ahead and take advantage of Seller Fulfilled Prime. To put it simply, there are two phases.
Phase One: Premium Shipping
The first phase is making sure you have Premium Shipping set up. This allows you to offer 1-2 day shipping and create a number of shipping profiles, which is great considering shipping rates are so closely tied to winning the Amazon Buy Box.
However, there are a few key metrics you need to keep on top of in order to maintain Premium Shipping eligibility, including:
- An on-time delivery rate of at least 92% for Premium Shipping orders.
- A valid tracking ID for at least 94% of Premium Shipping orders.
- A cancellation rate of under 1.5% for Premium Shipping orders.
Phase Two: Seller Fulfilled Prime Trial
If you perform well enough in the Premium Shipping phase, then you can apply to start a Seller Fulfilled Prime trial.
In a nutshell, you set a certain number of your products to display the Prime badge and get up to 90 days to fulfil a minimum of 200 Prime orders to the following standards:
- An On-Time Shipment Rate of at least 99% for Prime trial orders. All Prime trial orders placed before your daily cut off time must be shipped on the same day it’s received, regardless of shipping speed selected by the customer.
- Use of Buy Shipping Services (Amazon’s own shipping logistics) for at least 95% of Prime trial orders.
- A cancellation rate of less than 1% on Prime trial orders.
If you don’t fulfil the above requirements on 200 Prime trial orders within 90 days, then the trial period will start over for you to try again.
Once you pass the trial, you’re automatically enrolled in the programme. But you must maintain Premium Shipping eligibility and continue to meet Prime targets or you’ll lose your status.
So Seller Fulfilled Prime is obviously not going to be for everyone. To meet these standards from your own facility requires a seamless and well-drilled operation. Luckily, Veeqo can help with this via our new Seller Fulfilled Prime feature.
But if you can meet the standards then accessing that lucrative Prime customer base without the downfalls of FBA could result in some major business growth.
Have you tried Seller Fulfilled Prime or considered the transition? What’s been your experience so far? Let us know in the comments below.
Written by Mike Glover
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