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Originally published on November 22, 2023, updated November 22, 2023
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Cahoot explains essential strategies for successfully utilizing Amazon's Seller Fulfilled Prime Program in this guest article.
On October 1, 2023, Amazon reopened enrollment to its Seller Fulfilled Prime (SFP) program. Amazon SFP allows sellers to feature the coveted Prime badge on their listings while maintaining autonomy over order fulfillment. While the program is appealing, Amazon sets demanding criteria sellers must meet to maintain the high-quality experience Prime shoppers expect.
Many sellers avoid the program because of how demanding the criteria are. In this article, we’ll begin with how SFP (despite its difficulty) can provide your brand with significant advantages. We’ll then discuss essential strategies for SFP success. We’ll use real-world scenarios to explain the criteria, and how our strategies can navigate challenges successfully.
SFP can help you maintain a competitive edge. Here are a few of the main advantages of the program:
While Amazon FBA has great rates for lightweight, small, and fast moving SKUs, it can become expensive for big and bulky items. Long-term storage fees increase on slow-moving, long-tail, or seasonal SKUs. If you have items like these, it’s worth exploring alternatives.
Merchants can boost margins and profits across their catalog by using both FBA and SFP, based on whichever is better for a specific item.
While some sellers use FBA across their entire catalog, others fulfill certain SKUs on their own and without SFP.
Such "merchant fulfilled non-Prime" SKUs fare poorly. With free and fast shipping now table stakes, their conversion rates take a hit. Amazon SFP improves conversion rates for these listings and makes them more accessible to the 150 million US Prime members.
SFP’s benefits extend beyond Amazon. By participating in SFP, you will develop logistics systems outside of FBA. This can be extended to serve channels beyond Amazon.
For example - let’s imagine you’re expanding to Walmart. If you use only FBA for fulfillment, your only option might be sending inventory to Walmart Fulfillment Services. You’ve already placed inventory in multiple FBA warehouses. By making inbounds to Walmart warehouses, you create redundant inventory to serve the same geographies. Managing fulfillment partners for each sales channel can create management overhead.
Related reading: Selling on Walmart vs. Amazon: Pros and Cons
But with infrastructure in place to fulfill SFP orders, you can use the resources to handle orders across all other channels. This helps you centralize inventory, become leaner, and eliminate redundancies.
With the right SFP fulfillment partner, you’ll pay one bill and have a consistent shipping experience across channels. It also reduces overhead and frees up your time.
While Amazon’s Multi-Channel Fulfillment is a good option, it can cost significantly more to fulfill non-Amazon orders. With your SFP infrastructure, you can ship at the same rates across all channels.
While these advantages are attractive, the program is challenging. Amazon continually raises the SFP requirements to provide Prime members with the best experience. While the criteria are well known, many don’t know where sellers trip up, and how to avoid those mistakes. It’s also important to follow the strategies of the best sellers.
In this section, we’ll dive into the things vital to SFP success with real-world examples.
In the latest SFP requirements, Amazon has replaced the ‘On Time Shipment’ metric with ‘On Time Delivery.’
The On-Time Shipment metric required that 99% of orders placed before the cut-off time must receive a carrier scan the same day. The On-Time Delivery metric requires that 93.5% of orders must be delivered on or before the delivery date promised to the customer on the Product Detail page.
For sellers, this has positive implications. Consider this example:
While this is good news, it is contingent on having shipping software designed for warehouse automation. Rather than having humans manually rate shop, your software must automatically compare fulfillment locations, carriers, and shipping services to pick the cheapest label. In many cases, sellers choose Amazon SFP for cost savings over FBA. Without intelligent rate shopping, sellers risk defeating the whole purpose of enrolling in the program. Make sure your software can perform cost optimization at scale - on every order, six days a week.
Learn more: Amazon Seller Fulfilled Prime: 2023 Program Updates
Amazon expects 30% of product detail pageviews on standard-sized listings to promise one-day delivery. However, the mapping between the number of warehouses, the percentage of the US population covered, and the delivery speed promises shown to customers is not linear. This nuance makes the SFP pageviews metrics complex. Let’s consider this:
To achieve the 30% metric for one-day delivery, you could need as many as nine strategically located warehouses. And when we say strategically located, we mean it! Each warehouse must be close to a major population center.
Traditional 3PLs with limited warehouse locations have difficulty meeting these requirements affordably. While exploring options, consider disruptive models that combine vast warehouse footprints with lower costs such as peer-to-peer networks for eCommerce order fulfillment.
Our last recommendation is about finding the right fulfillment partner. When making your choice, we recommend going with a data-driven fulfillment vendor. What does this mean?
There are many components to 3PL fees - inbound receiving, storage, pick-pack, and shipping. Many times, sellers get excited about one item on a rate card. For example - if you’re a DTC brand in California, you might partner with a 3PL with warehouses in Los Angeles because of cheaper inbound costs. But if most of your orders come from New York, you lose money on every shipment. You’ve won the battle but lost the war.
Avoid this by working with partners that provide data-driven analysis, making it easy to identify their Total Cost of Ownership. That way, you can compare costs accurately against your current provider.
While everyone loves savings, it isn’t the only important consideration. Given the rigorous criteria, make sure the 3PL has deep expertise with SFP. Reach out to them for reference customers you can talk to and check out Seller Central reviews.
By choosing a data-driven vendor who’s loved by sellers, you’ll go a long way toward being successful.
Seller Fulfilled Prime offers brands many advantages - it can improve margins, increase sales, and drive operational efficiencies. However, because the Prime shopper is so important to Amazon, standards on the program are higher than ever.
Intelligent technology is vital to meet requirements and generate savings. To offer fast deliveries, you’ll need multiple strategically located warehouses. Lastly, carefully evaluate fulfillment partners. The best Amazon SFP merchants blend data-driven rigor with operational expertise and have the social proof to back up their claims.
Succeeding in the program isn’t easy, but it can create a powerful competitive advantage for your brand. Good luck!
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