7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
7 Things You Need to Know
About Seller Fulfilled Prime
7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
table of contents

         01       INTRODUCTION

        02        WHAT IS SFP? HOW IS IT DIFFERENT FROM FBA?

        03        WHAT ARE THE REQUIREMENTS FOR SFP ELIGIBILITY?

        04        WHAT DOES THE SFP TRIAL PERIOD ENTAIL?

        05        WHAT ARE SFP’S SHIPPING AND DELIVERY TIME REQUIREMENTS?

        06        WHAT ARE THE BENEFITS OF SFP?

        07        WHAT SHOULD SELLERS CONSIDER BEFORE JOINING SFP?

        08        IS SFP RIGHT FOR ME?

        09        SUMMARY

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
introduction

        For many Amazon retailers, obtaining Prime seller                                                               AMAZON PRIME MEMBERSHIP GROWTH
        status is considered central to boosting sales and

        gaining a competitive edge on America’s largest

        online marketplace. Armed with the Prime badge,

        online retailers can tap into the coveted group of

        Prime buyers who, according to a recent Morgan

        Stanley survey, spend more than 4.6 times than

        non-Prime members. Moreover, the Prime audience

        is increasingly growing year-over-year with 63%

        of Prime members saying they have no plans

        to cancel their membership in the near future

        (Consumer Intelligence Research Partners, 2017).

        With an estimated 80 million prime members,

        it’s no wonder online retailers seek to obtain
        Prime seller status.

      *https://fa.morganstanley.com/theoberheidegroup/mediahandler/media/81078/Amazon_Disruption_Symposium.pdf
      **https://www.digitalcommerce360.com/2017/04/25/amazon-prime-members-80-million-in-the-us-up-38-year-over-year/

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
It used to be that the only way to become a Prime              Although Seller Fulfilled Prime can be a great
       seller was to participate in Fulfillment by Amazon             program for many retailers, helping them boost
       (FBA) program where sellers are required to store              their Amazon sales significantly, it may not necessarily
       their inventory in Amazon’s warehouses and have                be a good fit for others.
       Amazon handle their order fulfillment. But today,

       online retailers can also become Prime sellers by              In this e-book, we’ll answer 7 common questions
       participating in Seller Fulfilled Prime (SFP), a fulfillment   about Seller Fulfilled Prime to help you decide
       program that enables sellers to be “Prime” while               whether the program is right for your business.
       handling their own storage and fulfillment.

       With Seller Fulfilled Prime, retailers can maintain

       greater control over their inventory, orders and

       shipping, and greater cost control by handling their

       own fulfillment. Moreover, since the primary benefit

       of SFP is enabling retailers to sell products as Prime,
       SFP dramatically improves a seller’s chances of

       winning the coveted Buy Box.

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
“
                  Prime buyers, according to a
                  recent Morgan Stanley survey,
                  spend more than 4.6 times

                                            ”
                  than non-Prime members.

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
what is SFP?
                                                how is it different from FBA?

        Seller Fulfilled Prime (SFP) is a fulfillment program that was        get busier), convenience (your warehousing, fulfillment,
        introduced in 2015 by Amazon. It was created specifically for         customer service related to delivery and returns will be
        retailers and brands who have their own fulfillment centers           taken care of by Amazon) and automatic designation
        or 3PLs (Third Party Logistics provider) but do not want              as a Prime seller.
        to participate in Amazon’s FBA program in order for their
        listings to be Prime eligible. With Seller Fulfilled Prime, sellers   The downside of FBA is that its fees can start to add up
        can offer their products as Prime yet still use their own             and sellers lose some autonomy in their branding and
        fulfillment facilities to store, process and ship their orders.       order fulfillment. For instance, FBA’s Inbound fees can
                                                                              quickly become quite costly. In order to meet its two-day
        The biggest difference between SFP and Amazon’s FBA                   delivery guarantee, Amazon requires FBA sellers to send
        program is that FBA requires sellers to store their inventory         their inventory to various geographically distributed
        in Amazon’s fulfillment centers. For businesses who do not            fulfillment centers designated by Amazon. Sellers are
        have their own warehouse or fulfillment capabilities, FBA             responsible for the costs of shipping their inventory to
        can be a convenient & cost-effective solution. FBA offers             each Amazon fulfillment center which can add additional
        significant flexibility, since sellers are not required to sign a     up-front expenses. Other FBA fees include oversize fees,
        minimum monthly contract with Amazon or commit to a                   long-term storage fees, restocking fees for returns and
        specific duration of time or minimum usage. With FBA, all             more. FBA fees are non-negotiable, whereas some 3PLs
        inventory in Amazon’s fulfillment centers is automatically            are open to negotiating their rates for storage, pick and
        designated as Prime. With SFP, sellers can decide which               pack, and their other fees.
        listings they would like to offer as Prime and for which
        regions of the country.                                               FBA sellers also have less brand control since Amazon uses
                                                                              its own branded packaging. With SFP, sellers can maintain
        FBA’s numerous benefits include instant scalability (you              greater control of their branding, packaging and better
        don’t have to worry about hiring more personnel as you                manage their fulfillment costs.

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
what are the requirements
                                             for SFP eligibility?

        To be eligible for SFP, you will first need to have a        In addition to fulfilling the requirement for Premium
        Professional Selling account and qualify to offer            Shipping, Amazon sellers must also satisfy the following:

        Premium Shipping (non-standard shipping). Premium              • Offer two-day shipping to Prime members through
        Shipping enables sellers to offer expedited shipping         		 Premium shipping.
        options, such as Same-Day and Two-Day shipping, to             • Offer free standard shipping to Prime and
        their Prime customers. Fast Shipping options are the         		 non-Prime members nationwide.

        cornerstone of Amazon’s Prime program as Prime mem-            • Offer free return shipping.
                                                                       • Purchase shipping labels through Amazon
        bers expect quick and reliable delivery as one of the main
                                                                     		 Buy Shipping services for at least 95% of
        benefits of Prime membership.
                                                                     		 your Prime orders.
        To be eligible and maintain eligibility for Premium            • Allow Amazon to handle all your order-related
        shipping, sellers must meet the following performance        		 customer service issues.
        requirements:                                                  • Comply with Amazon’s returns policy (recently
                                                                     		 Amazon modified its Prime return policy to include
          • On-time delivery rate: Must have an on-time
                                                                     		 auto-authorized returns)
        		 shipping rate of at least 99% for Premium
        		 shipping orders.
          • Valid tracking rate: Must have valid tracking IDs
        		 for at least 94% of Premium shipping orders.
          • Seller-initiated cancel rate: Must have 1% seller-
        		 initiated cancellation rate for Premium shipping
        		 orders. (common reasons why sellers cancel are
        		 stock-outs, defective products, etc.)

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
If you already have a good shipping and performance
        track record, chances are you have already been
        invited to participate in the program. For those who
        have not yet been invited, you will need to go through
        a trial period to prove that you can adhere to Amazon’s
        strict shipping and performance requirements.

        tip:      Sellers who are using 3PLs or other 3rd party
        fulfillment facilities need to make sure that these
        fulfillment centers understand the requirements of
        Prime and can adhere to Amazon’s strict shipping
        rules. It is a good idea to find a 3PL or fulfillment
        center that has considerable experience with
        fulfilling Amazon prime orders as they are more
        likely to have processes and infrastructure already
        in place.

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
what does the SFP trial period entail?

        Amazon requires that all sellers who have not been                To begin your SFP trial period, simply follow Amazon’s
        automatically approved for Seller Fulfilled Prime go through      period directions:
        a rigorous trial period. The trial period lasts up to 90 days
        and the seller has to fulfill 50 Prime orders with near perfect
                                                                          Seller Fulfilled Prime trial period
        metrics during that period. Sellers will be measured on
                                                                          How to start the trial
        how well they meet all of the Seller Fulfilled Program
                                                                            1. Register: Go to the Seller Fulfilled Prime main page and sign up to start your trial.
        requirements. If the seller falls below the minimum                 2. Enable Prime shipping in your Prime trial shipping template: Visit Configure Shipping Settings for steps
                                                                          		 on how to enable listings for Prime shipping and how to select regions where you would like to offer Prime delivery.
        requirements, they will not receive the Prime badge.              		Review Prime Shipping Requirements.
                                                                            3. Enroll items in Seller Fulfilled Prime: Assign SKUs to your Prime shipping template.

                                                                          			 Note: During the trial period, all SKUs assigned to a Prime shipping template will count as Prime trial
        Sellers will not receive the Prime badge until after the trial    			 orders, regardless of the buyer’s location. All Prime trial orders will contribute toward the trial period
                                                                          			 performance requirements described below.
        period is over and they have proven that they can meet
                                                                            4. Fulfill Prime trial orders: Identify Prime trial orders according to the Prime badge displayed on the Manage
        Amazon’s expectations.                                            		 Orders page in Seller Central and the “isprime” identifier in Order Reports. Fulfill these orders according to
                                                                          		 the requirements listed on the How to process Seller Fulfilled Prime orders page.

       “The trial period lasts up to                                      Once you are approved for Seller Fulfilled Prime, the

       90 days and the seller has                                         listings you’ve designated as Prime will automatically
                                                                          display the Prime badge. If you are unable to complete

       to fulfill 50 prime orders                                         your trial period or didn’t get approved by Amazon after
                                                                          the trial period ends, you can try again with no penalty.
       with new perfect metrics                                           The trial period is lengthy but it simply ensures that you
                                                                          are ready to guarantee the delivery time and rates Prime
       during that period”                                                members are accustomed to receiving.

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7 Things You Need to Know About Seller Fulfilled Prime - Solid Commerce
what are SFP’s shipping and delivery
                                             time requirements?

        One of the challenges of deciding whether you should       SELLER FULFILLED PRIME SHIPPING REQUIREMENTS
        be an SFP seller is understanding the potential shipping
        costs you will incur. As an SFP seller, you must offer     Shipping                        Prime              Non-Prime
                                                                   Method                          Customers          Customers
        free Two-Day shipping to Prime members, but unlike
        FBA, you can offer Prime delivery on a regional basis      Two-Day – Prime Urban areas     Free               Seller-set rates
        instead of nationwide.                                     (2 Business Days)

                                                                   Standard – Urban                Free               Free
        When you join the SFP program, you will be required        (3-5 Business Days)
        to create specific SFP shipping templates. In these
                                                                   Standard – Rural                Free               Free
        SFP shipping templates, you can select the regions
                                                                   (7-14 Business Days)
        you want your listings to display the Prime badge
        and where you can guarantee two-day delivery. For          Standard – Remote regions not
                                                                   eligible for Prime Shipping     Seller-set rates   Seller-set rates
        instance, if your distribution center is in NY, you can
                                                                   (7-14 Business Days)
        limit Prime delivery to areas near your distribution
        center to ensure a two-day delivery.

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With SFP, you lose some control of your shipping costs.       midnight. If the order comes after 2:00 pm, then the order
        SFP sellers are free to select any of the major carries and   can be shipped out on the next business day after midnight.
        use their own negotiated carrier rates. However, Amazon
                                                                      SFP CUT-OFF TIMES
        will only allow you to select the carriers & their service
        levels that can guarantee delivery of a Prime order with-     Day Ordered                    Delivery Day
                                                                      (before cutoff)                to customer
        in two days based on customer’s location. For example,
                                                                      Monday                         Wednesday
        although USPS is supported by Amazon, it is often not
        available for Two-Day Prime shipping since it may not be      Tuesday                        Thursday

        able to guarantee two-day delivery to a specific location.    Wednesday                      Friday
        Therefore, sellers may be surprised when they discover        Thursday                       The following Monday
        USPS is disabled as a carrier choice and are left with
                                                                      Friday                         The following Tuesday
        options that might be costlier than anticipated. On the
                                                                      Saturday                       The following Wednesday
        plus side, SFP sellers can access some of Amazon’s
        negotiated rates, such as USPS Commercial rates,              Sunday                         The following Wednesday
        which can potentially reduce shipping costs.                  As of today, the cut-off time is set by Amazon for 2:00 pm
                                                                      and cannot be customized by sellers.
        SFP sellers also need to be aware that there is a cut-off
        time for accepting Prime orders each day. The cut-off
                                                                      tip:   To avoid being caught off guard when it comes to
        time for a Prime order is 2:00 pm, seller’s local time. If    shipping costs, it’s good practice to be conservative when
        a seller has multiple warehouses, they can choose the         calculating your shipping cost and assume the higher rate.
        Eastern-most location as the cut-off time. If a Prime order   Amazon selects carriers that have the highest probability
        is Two-Day shipping and comes in before 2:00 pm, then it      of being able to deliver an item on time and often that is
        needs to be shipped out on the same business day before       the more costly shipping service.

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what are the benefits
                                             of SFP?

        Seller Fulfilled Prime offers many benefits but it also     facilities can forgo paying the fees associated with FBA,
        has a few risks in terms of potentially higher costs. So    such as fees for storage, pick & pack, and handling. FBA
        why do so many sellers want to participate in Seller        sellers may sometimes experience delays for Amazon
        Fulfilled Prime?                                            fulfillment centers to unload and process their inventory,
                                                                    thus leading to a loss of sales, especially during the busy
        First and foremost, participation in SFP provides sellers   holiday season. SFP sellers, on the other hand, can select
        with access to the millions of Prime buyers who shop        fulfillment centers who can process their inventory with
        more frequently, spend more money than non-Prime            little to no delay.
        buyers and prefer to buy from Prime sellers. Amazon
        shoppers have grown to view the Prime badge as a            By having greater governance over their inventory and
        symbol of excellence and have developed greater             fulfillment operations, SFP sellers can also expand their
        confidence in Prime sellers, certainly in the area of       online presence by selling on other online channels.
        delivery. According to Amazon, SFP sellers can see          The ability to use the same fulfillment facilities to ship
        an average sale increase of at least 50% on their           your Amazon SFP orders as well as orders from other
        Prime listings when they join the program. That’s           online channels can help streamline sellers’ fulfillment
        not too shabby.                                             operations and potential costs.

        Secondly, SFP enables Prime sellers to have better
        control of their inventory, fulfillment operations and
        costs associated with both. Online retailers and brands
        who already have their own warehouse(s) or fulfillment

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SFP sellers have a better control of their branding and
       customer experience. Depending on their fulfillment
       center, SFP sellers can request customized packaging
       that reflects their brand and their company. You can
       use your own box, your own packing slips, your own
       packaging material etc.

       Additionally, as a result of adhering to the strict Prime
       metric requirements, SFP sellers can also experience
       better product discoverability and ranking on Amazon’s
       search results and have a better chance of winning the
       Buy Box.

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what should sellers consider
                                            before joining SFP?

        Before joining SFP, sellers should weigh the operational        3 | Fulfillment centers that work with Prime Having
        costs of handling their own fulfillment & shipping vs. the      a fulfillment center that has the labor, technology and resources
        gains of growing their sales by being able to list and sell     to fulfill Prime orders in the allotted time is absolutely critical.
        more products as Prime.                                         If you do not follow the Prime shipping requirements, you can
                                                                        easily have your Prime status revoked. Make sure you use a
        Below are a number of factors to consider when                  distribution center that can commit to following Amazon’s
        evaluating the potential costs of SFP:                          strict shipping rules.

        1 | Shipping zones Sellers must decide what zones               4| Fulfillment strategy It is important to have a cohesive
        they are willing or able to ship to in order to comply with     fulfillment strategy as your business grows and you add
        Prime’s two-day delivery requirements. If you have a            online channels to your fulfillment infrastructure. Your logistics
        fulfillment center on the West Coast, you will need to          partners should be able to work with an inventory management
        decide if you want to offer your products as Prime across       system that can not only handle Prime orders but orders from
        the nation or confined to areas near your fulfillment center.   multiple online channels.
        There are many factors that go into this decision such as
        profit margins, price points and your business model..          5 | Amazon’s return policy Amazon has recently changed
                                                                        its SFP returns policy to include automatic returns. What that
        2 | Add or change fulfillment locations If you                  means for SFP sellers is that they need to auto authorize
        decide to offer Prime to both coasts, you may want to           returns regardless whether buyer is a Prime member or not.
        add a fulfillment facility or 3PL on the opposite coast or      Amazon’s customer service will handle all customers’ inquires
        use a distribution facility to a more central place in the      specific to SFP returns which saves sellers time but also
        US to cover all states. You will need to do a cost analysis     removes the sellers’ ability to offer an alternative to returns.
        to see whether adding a new distribution facility, moving
        your distribution center or simply shipping across the
        multiple zones is more beneficial for your business.

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is SFP right for me?

        That depends. If you are a smaller seller or your ware-
        house operations cannot support the fulfillment metrics
        required to maintain Prime status, then FBA may work
        better for you. Seller Fulfilled Prime can be a great option
        for retailers and brands who want to handle their own
        warehousing and fulfillment but still want their Amazon
        products listed as Prime. In addition, since SFP sellers
        can control their packaging, businesses that sell items
        that require special handling like breakable or perishable
        products could benefit from SFP. Likewise, companies
        that rely on customized packaging for branding consis-
        tency can continue their branding strategy using SFP.

        SFP also works well with online retailers that sell items
        that are slow moving or seasonal (you can avoid FBA’s
        long-term storage penalty fee with SFP), and large and
        heavy such as furniture (FBA charges shipping to their
        warehouses and storage fees based on size and weight).
        Retailers that offer high priced items with high margins
        may also want to consider SFP, as the high margins may
        provide enough cushion to offset the delivery rates.

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summary

        Seller Fulfilled Prime is an excellent program for          With SFP, sellers have the dual benefit of accessing the
        online retailers selling on Amazon and can be potentially   coveted Prime audience and having the freedom to sell
        lucrative. However, it’s important to make sure you do      on other marketplaces. If you decide to become an SFP
        a thorough analysis before taking the plunge.               seller as part of a multi-channel ecommerce strategy,
                                                                    consider using an application, such as Solid Commerce,
        When considering if SFP is right for you, it is important   that integrates with both Amazon FBA and SFP as well
        to consider the following questions:                        as your other online channels.

          1 Can your existing warehouse operations
            meet the stringent fulfillment requirements
        		 for turnaround?

          2 What will be the impact to your choice of
        		 carriers and shipping costs when you move to SFP?

          3 How much value will you get by making all/most
        		 of your inventory Prime eligible?

          4 How will moving to SFP impact your geographic
        		 customer reach and what is your strategy around
        		 how many regions you want to cover with SFP?

          5 What will be the true costs of “free returns”
        		 to your business?
          6 How will I manage my inventory, orders and
        		 fulfillment across channels? Will my existing
        		 systems be sufficient?

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About Solid Commerce

        Solid Commerce is the industry’s most comprehensive
        multi-channel ecommerce solution that combines
        listings, inventory, order and shipping functionality
        in one platform. Created by ecommerce sellers for
        ecommerce sellers, Solid Commerce offers online
        retailers the ability to streamline their ecommerce
        operations, reduce inefficiencies, and increase
        sales on multiple online channels including Amazon,
        Walmart, eBay, Jet, Shopify, BigCommerce and more.

        To learn how Solid Commerce can help your
        online retail business grow and get a live demo,
        contact our team of eCommerce experts at
        sales@solidcommerce.com or call us at 800.875.8371.

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