There is no denying the importance of the Prime program when it comes to selling your products on Amazon. Up until June of 2015, participating in Amazon’s Fulfillment by Amazon (FBA) service was the only way for third party sellers to make their products Prime eligible. While FBA certainly comes with a long list of benefits, there are also limitations as well as significant costs associated with the service. For companies looking for an alternative to the FBA program, Seller Fulfilled Prime could be the answer.
Seller Fulfilled Prime: The Ins and Outs
So what exactly is Seller Fulfilled Prime, you ask? In a nutshell, Seller Fulfilled Prime allows a third party seller to list products as Prime eligible while completely bypassing the Amazon warehouse system — and the fees that come along with it.
But participation in Seller Fulfilled Prime doesn’t come easy; third party sellers looking to participate in Seller Fulfilled Prime are required to complete a rigorous and strict trial period, and even after approval must continue to maintain performance metrics that live up to Amazon’s standards and requirements for maintaining Seller Fulfilled Prime eligibility.
Sellers who are approved to participate in Seller Fulfilled Prime also must purchase shipping from Buy Shipping Services in order to guarantee the same two day shipping promise that comes with any Prime eligible purchase on the Amazon site. Along with two day shipping, Buy Shipping Services gives sellers access to discounted shipping rates through UPS and FedEx as well as access to USPS Commercial Plus® rates.
For third party sellers who choose to participate in the Seller Fulfilled Prime program, there are plenty of potential benefits, not limited to:
- Access to the extensive Prime customer base
- Improved profit margins on oversized or heavy products, since you don’t have to pay to ship them to Amazon warehouses
- No risk of FBA long-term storage fees for slower-selling items
- Increased control over the returns and refunds process
- Simplified and more accurate inventory management
- Ability to sell items that are not eligible for FBA or are date- or temperature-sensitive — all as Prime eligible
While Seller Fulfilled Prime offers benefits to certain sellers, make no mistake — this program also benefits Amazon. With the extremely rapid growth that Amazon has experienced over the past few years, Amazon has had difficulty maintaining adequate warehouse storage space to house all of the products sold on its site. While they are constantly building new warehouses across the country, Seller Fulfilled Prime allows Amazon to more rapidly scale their growth while reducing the amount of money tied up in building new and larger warehouses.
For smaller third party sellers considering participation in Seller Fulfilled Prime, the costs associated with managing fulfilment internally or outsourcing fulfillment to a Third Party Logistics Service (3PL) might not pan out. And for third party sellers big and small, participation in Seller Fulfilled Prime only makes sense if you can ensure strict adherence to Amazon’s standards and requirements for maintaining Seller Fulfilled Prime eligibility. It is very important to fully understand the Seller Fulfilled Prime program requirements before you decide to attempt to participate in the program, making sure participation is both feasible and cost-effective for your company.
How to Decide If Seller Fulfilled Prime Is Right for You
You will definitely need to crunch some numbers in order to determine whether or not it makes sense for your business to participate in Seller Fulfilled Prime. Consider the costs associated with managing fulfillment internally as well as the money you will save from avoiding FBA fees.
The Fulfillment By Amazon Revenue Calculator is a helpful tool to use when doing this math. Be sure to keep the big picture in mind. Even if participation in Seller Fulfilled Prime saves you money on a per transaction level, you need to consider if those savings are worthwhile. For example, if managing order fulfillment internally robs you or your staff of time that could be spent on other revenue-generating tasks, then FBA may still make better overall financial sense for your business. Consider how the program would work for your particular business, the pros and cons of participation, and the ultimate value of the program in light of the benefits and risks.
Seller Fulfilled Prime typically works best for companies who have at least a couple of the following factors at play:
- Businesses with established fulfillment capabilities that can meet the rigorous program requirements for Seller Fulfilled Prime participation. This might be in the form of an internally-managed warehouse and staff, or an outsourced 3PL.
- Businesses who sell items that are heavy or oversized
- Businesses who sell items that require strict temperature or climate control
- Businesses with items that are at risk for incurring long-term FBA storage fees due to a slower sales pace
- Businesses looking to keep tight control over the returns and refunds process
Small companies will often find that the cost associated with managing order fulfillment internally and meeting the Seller Fulfilled Prime program requirements significantly outweigh the fees associated with the FBA program. While FBA fees may seem significant at first glance, without the economy of scale that larger sellers can rely on for managing fulfillment internally, small businesses will find that FBA fees are usually more cost-effective.
If the Seller Fulfilled Prime program seems like a good fit for your business, you can apply for the program to kickoff the process of getting up and running with the service. The application itself is fairly simple and straightforward, as the program heavily relies on the closely-monitored trial period to determine which companies can ultimately participate in the program.
Don’t Forget About Customer Reviews
In addition to Prime eligibility, the number of customer reviews associated with a product is a huge factor in determining whether a customer chooses to purchase one product over another. With the use of Salesbacker, anytime a customer purchases one of your products on Amazon they will receive an automated email composed by you, kindly requesting their feedback in the form of a customer review. So, make sure to sign up for your free 30-day trial of Salesbacker and start growing the number of customer reviews for your products today.