Seller Fulfilled Prime: The Peak Season Advantage

Have you considered using Amazon Seller Fulfilled Prime this peak season? Learn more about this strategy from the experts at Cahoot.

eCommerce order fulfillment is a critical component of any online business, and it becomes even more crucial during peak seasons like the holidays.

Traditionally, Fulfillment by Amazon (FBA) has been a popular choice for many sellers due to its convenience and scalability. However, the increasing costs associated with FBA and its expensive peak season surcharges are prompting a shift towards alternative fulfillment strategies. Seller Fulfilled Prime (SFP) emerges as a compelling option, offering potential cost savings and greater control.

The Rise of Seller Fulfilled Prime

Seller Fulfilled Prime is a program that allows Amazon sellers to fulfill Prime orders directly from their own warehouses. While it requires more operational oversight than FBA, it can offer significant advantages, particularly during peak seasons. Sellers can reduce costs, improve control, and enhance customer satisfaction by managing eCommerce order fulfillment in-house or through a Seller Fulfilled Prime 3PL.

The Impact of FBA Peak Season Surcharges

Amazon's FBA peak season surcharges have become a substantial burden for many sellers. These fees, applied to both storage and fulfillment, can significantly erode profit margins during the most critical time of the year.

While the holiday season is a boon for sellers, it’s also increasingly expensive. Historically, storage fees have gone up to more than 3x the usual cost in Q1 to Q3, and peak season fulfillment fees have also increased by 6% or more in recent years. As a result, many businesses are seeking more cost-effective fulfillment solutions.

Is Seller Fulfilled Prime Worth It?

One of the primary benefits of SFP is the potential for cost savings. Sellers can retain a larger portion of their revenue by avoiding FBA peak season surcharges and managing order fulfillment in-house or through a 3PL.

While FBA is typically competitively priced for smaller SKUs, it tends to penalize larger and bulkier items due to its dimensional weight. Many sellers have found success in cutting down fulfillment fees by using their own carrier account or through a 3PL. Imagine what a 10-30% reduction in fulfillment fees can do to your business during peak season. Plus, with Seller Fulfilled Prime, sellers can completely sidestep the 3x peak FBA storage fees.

Overcoming the Seller Fulfilled Prime Challenge

Maintaining Seller Fulfilled Prime (SFP) eligibility is no small feat. Amazon sets a high bar for sellers, demanding stringent adherence to delivery speed metrics, on-time delivery rates, and overall operational excellence.

To thrive in this competitive environment, sellers must meticulously monitor performance and implement robust fulfillment strategies. From managing increased order volumes to navigating shipping carrier challenges, the demands of SFP require a dedicated approach. To dive deeper into the specific metrics and strategies for SFP success, check out our webinar on Seller Fulfilled Prime fulfillment metrics.

Despite the tough metrics to meet, Seller Fulfilled Prime (SFP) has been gaining popularity because it offers a cost-effective alternative to FBA, especially during peak seasons when FBA fees skyrocket.

Why Bringing Fulfillment Outside FBA Makes Sense

While Seller Fulfilled Prime offers greater control over your fulfillment operations, the real advantage lies in its potential for cost optimization. Here's how SFP empowers you to manage costs more effectively:

• Granular Cost Management: Unlike FBA's flat per-unit fulfillment fee, SFP allows you to analyze and optimize your shipping costs. By negotiating rates with carriers directly, you can potentially achieve lower prices, especially for bulk orders.
• Dimensional Weight Savings: FBA charges based on dimensional weight, which can be disadvantageous for bulky or lightweight products. With SFP, you can pack your orders efficiently, reducing shipping costs based on actual package weight. This is particularly beneficial during peak seasons when heavier items are in high demand.
• Reduced Storage Fees: SFP allows you to manage your own warehouse space or partner with a 3PL for storage. This may offer greater flexibility and potentially lower storage costs compared to FBA's standard rates, especially for slow-moving inventory.

This control over costs becomes even more crucial during peak seasons when order volume and shipping prices typically increase. By strategically managing your fulfillment process, you can retain a larger portion of your profits during these critical periods.

Here's an additional tip: Consider using a combination of SFP and FBA. You can leverage SFP for your core product line and high-volume items while utilizing FBA for fast-moving or specialty products that might benefit from its fulfillment network. This hybrid approach can provide the best of both worlds, optimizing control and cost-efficiency.

Planning Early for Peak Season Success

Effective planning is the cornerstone of a successful peak season with Seller Fulfilled Prime. To avoid common pitfalls, sellers must implement a strategic approach well in advance.

• Product Planning and Production: Analyze historical sales data and emerging trends to identify seasonal products that align with your target market. Collaborate with your manufacturer to establish production timelines that ensure sufficient inventory levels before the peak season begins.
• Partner with a Proven 3PL: Secure a Seller Fulfilled Prime 3PL partner with a proven track record in SFP fulfillment at least two to three months before your peak selling period. This allows ample time to plan warehouse locations, allocate warehouse space, familiarize unique fulfillment process needs, and integrate seamlessly with your systems.
• Onboarding and Inventory Management: If partnering with a new 3PL, schedule plenty of time for onboarding and system integration. Ensure inventory arrives well in advance of the peak season to allow for thorough testing and optimization.
• Ensure FBA compliance: To meet peak season demands while using both SFP and FBA, sellers must carefully plan inventory shipments to Amazon fulfillment centers, adhering to strict inbound deadlines.
• Technology Implementation: Invest in robust order management and shipping software to streamline operations and improve efficiency. This includes systems that can handle real-time inventory updates, shipping label generation, and carrier integrations. Typically this is not included in a traditional 3PL.
• Customer Communication Strategy: Develop clear communication plans to manage customer expectations during the peak season. Utilize email, social media, and website updates to inform customers about order processing times, shipping delays, and return policies.

By following these proactive steps, sellers can position themselves for a successful peak season, mitigating potential challenges and maximizing sales opportunities with Amazon SFP.

FBA Alternative

So, is Seller Fulfilled Prime worth it? The program offers a viable alternative to FBA, especially during peak seasons when costs and complexities increase. Not only that, sellers can combine both approaches to make the most of peak season selling. By carefully planning, managing operations effectively, and leveraging technology, sellers can successfully implement SFP and achieve their business goals.