Amazon allows you to establish an online presence where you can highlight items for millions of shoppers. Not only that, but Amazon is continually working to bring both buyers and sellers new and better ways to conduct online transactions.
One of the Amazon programs that sellers are taking advantage of is Seller-Fulfilled Prime (SFP). This program helps fulfillment run smoothly for a lot less money than FBA.
What is SFP?
Seller-Fulfilled Prime is a program for qualified Amazon sellers who have Professional Selling accounts to use the Amazon Prime badge on product listings without having to use FBA. All customer orders are fulfilled by the seller, the seller’s warehouse, or a 3PL.
Sellers can designate which locations to target with SFP, which allows them to offer Prime in areas where it makes sense for them to do so. For example, they can choose to use SFP for orders that are geographically close to their warehouse location, while using traditional fulfillment or FBA for other orders.
How Do Sellers Qualify for SFP?
Here are the requirements that sellers have to meet to participate in the SFP program:
- Offer Premium Shipping options
- Ship over 99% of your orders on-time
- Have an order cancellation rate that is under 0.5%
- Use Amazon Buy Shipping Services for 98.5% or more of your orders
- Deliver orders via carriers that are supported by SFP
- Agree to the Amazon Returns Policy
- Allow Amazon to handle all customer service inquiries
If you meet the above requirements, then you can start a trial period to demonstrate to Amazon that you can handle these orders. You won’t get access to the Prime badge while you are participating in the trial, but you must fulfill orders as if it’s there.
When you complete the trial period successfully, you’ll be enrolled in the SFP program and the Prime badge will appear on the ASINs you choose.
What is the Difference Between FBA and SFP?
You’re probably familiar with how the Fulfilled by Amazon (FBA) program works, perhaps you even use it. While both FBA and SFP are both fulfillment methods, they are very different, with each having features that will appeal to specific businesses depending on several factors such as size, profitability, and goals. To help you determine whether your business will benefit from using SFP, here are the biggest differences between FBA and SFP.
- Fulfillment – The biggest difference between FBA and SFP is the way that orders are fulfilled. With FBA, your orders are completely fulfilled by Amazon, just as the name suggests. They take care of every aspect of order fulfillment for you. With SFP, you are responsible for your own order fulfillment, whether that means you have your own warehouse, or you have a third-party logistics provider that does it for you.
- Fees – When you use FBA, you are subject to Amazon’s storage fees, which can (and do) change at any time. There are strategies to lower those fees, but you can avoid those fees altogether with SFP.
- Storage – With FBA, your products that are being stored are only available for orders that are placed on Amazon or specific orders that you route to them from other sales channels. There are rules on other marketplaces such as Walmart that prohibit the use of Amazon boxes to ship orders placed on their marketplace. When you use SFP, your products are available to fulfill for orders taken on any of your sales channels. Also, there are a few FBA product restrictions that may rule FBA out completely for retailers selling those items.
- Returns – If you use FBA, then you know that Amazon handles all returns on your behalf. With SFP, you are responsible for taking care of all returns and you must abide by Amazon’s return policies.
- Inventory Control – With FBA, once you have sent your stock to Amazon, no longer in your control. With SFP, you are in complete control of your inventory and can make whatever inventory decisions you want to without Amazon’s involvement.
Basically, the difference boils down to how much control you want over your inventory, the cost-effectiveness of SFP for your business, and whether your fulfillment methods can meet Amazon’s requirements. You will also need the ability to connect to Amazon’s Buy Shipping Services to print shipping labels for SFP, otherwise, you must log in to Amazon for each order to print the shipping label.
Is Seller-Fulfilled Prime Right for You?
Keep in mind, with SFP, you don’t have to commit to fulfilling all your orders using the program. Many sellers take advantage of SFP for fulfilling bulky or heavy shipments, while using FBA for smaller packages.
Whether SFP works for you or not will take some trial and error on your part, as well as a thorough understanding of the fees associated with it. You can use the Amazon FBA Revenue Calculator to compare FBA costs with your own fulfillment expenses to see if SFP or FBA makes sense for your business.