Ever since its beta launch in 2015, Seller Fulfilled Prime (SFP) has been a hot topic for Amazon sellers. There are a ton of benefits to the program, but also some strict requirements and drawbacks. Our order fulfillment experts have designed this guide to help eTailers find an Amazon 3PL partner who can maximize the impact SFP can have on their eCommerce business.
What Is an Amazon Third-Party Seller?
Before we start talking about finding Seller Fulfilled Prime 3PL providers, we should have a quick look at the full Amazon sell-ship ecosystem. To be clear, we’re talking here about third-party sales on the Amazon platform, not goods sold and shipped by the company itself.
In Q2 2021, 56% of paid units sold on Amazon were from third-party sellers—the highest it has ever been. This is why it’s essential for online retailers who use Amazon to sell their products to understand Amazon order fulfillment and shipment options.
Fulfillment Options for Amazon Sellers
There are three main ways consumers can get the goods they purchase from third-party sellers on Amazon. The most prominent is Fulfillment by Amazon, or “FBA” for short.
Fulfillment by Amazon (FBA)
In the FBA program, sellers pay Amazon to warehouse, pick, pack, and ship their goods, in addition to handling customer support and reverse logistics. Essentially, FBA allows Amazon to act as a 3PL provider, putting its extensive logistics network to work.
For sellers, FBA is easy, and it guarantees that the item will be listed with the Prime badge. This promises buyers fast, free shipping, and increases the seller’s odds of winning a share of the Buy Box (we’ll cover this in-depth later).
Unfortunately, FBA is also quite expensive. Fulfillment by Amazon costs are broken down into two categories: fulfillment fees and storage fees.
- Fulfillment fees - On the fulfillment side, a small standard package (6 ounces or less) costs $2.70. Large packages more than 3 pounds are $5.68 plus $0.30 per pound above the first 3 pounds. Fulfillment rates can eclipse $150 for extremely large, oddly shaped packages.
- Storage fees - Inventory storage fees are on top of fulfillment fees. For standard-sized packages, they’re $0.75 per cubic foot from January-September and $2.40 per cubic foot from October-December. Oversize packages are slightly less expensive per cubic foot.
Seller Fulfilled Prime (SFP)
Introduced in 2015, Seller Fulfilled Prime gives third-party sellers the ability to list their items as Prime without paying for FBA. The program is pretty much exactly what it sounds like: order fulfillment is handled by the seller rather than Amazon.
The upside is similar to FBA. You get the benefit of the Prime badge and a shot at having the all-important Buy Box:
On Amazon, it’s common for multiple sellers to offer the same product. But when a user clicks the “Buy Now” option, only one is going to get the order. This is referred to as the Buy Box. Amazon algorithmically determines who should get the Buy Box order at any given time, with other sellers relegated to “Other Sellers on Amazon” below.
On desktop, 82% of purchases go through the products listed in the Buy Box, and an even higher percentage on mobile. In other words, the Buy Box can have a significant impact on your business. And while the algorithm for landing it is complex, FBA and SFP sellers have a dramatic advantage.
Amazon SFP Requirements
Unfortuantely, Amazon’s requirements for SFP are extremely stringent. To maintain your status, you must:
- Complete a trial period
- Offer premium shipping options (e.g., free one- or two-day shipping)
- Ship a minimum of 99% of orders on time (usually same-day for anything that comes in before 2 p.m.)
- Have less than 0.5% of orders cancelled
- Use Amazon’s Buy Shipping services for 98.5% of orders
- Use only approved carriers
- Agree to the Amazon Returns Policy
- Let Amazon handle customer service inquiries.
In addition, Amazon Seller Central shared new requirements to maintain your status as of February 1, 2021, which include:
- Sellers enrolled in SFP must have nationwide delivery coverage for all standard-size products, excluding hazmat items, on Prime enabled shipping templates (nationwide coverage only applies to the 48 contiguous states and the District of Columbia).
- Sellers enrolled in SFP must use shipping methods that support weekend delivery and pick up (Saturday or Sunday) to provide customers with a more consistent delivery experience throughout the week.
- Sellers enrolled in SFP must meet targets for one-day and two-day delivery promises. These metrics measure the percentage of customer page views when your SFP offer was the featured offer, regardless of a purchase. These metrics ensure that customers experience the delivery promise regardless of who fulfills their Prime order.
Some of these requrements can create significant stress for sellers looking to fulfill Prime orders themselves. Smaller teams, for instance, can expect to have quite a bit of trouble getting every single order out on time. And since Amazon is quite strict, even a few hiccups can cost you your SFP privileges.
Merchant Fulfilled Network
Merchant Fulfilled Network, or MFN, is the third (and least attractive) method of fulfilling third-party orders on Amazon. It’s basically SFP without the requirements, and without the advantages of the Amazon Prime badge and the Buy Box.
On the plus side, MFN sellers can use custom packaging, receipts, and the like. On the minus side, you’re an Amazon listing without a Prime badge or a realistic shot at the Buy Box for competitive items. Both of those are sub-optimal, to say the least.
Which Amazon Fulfillment Method Is Best?
To be truly competitive on Amazon, it’s basically a requirement to be eligible for Prime. That means Fulfillment by Amazon and Seller Fulfilled Prime are the two best fulfillment options.
If you have the right infrastructure in place, FBA’s hefty costs make SFP a very attractive option. But if you don’t have a plan, it can be almost impossible to keep up with the strict SFP requirements.
Finding an Amazon 3PL for Seller Fulfilled Prime
Fortunately, there are third-party logistics providers (3PLs) that specialize in helping third-party Amazon sellers meet Seller Fulfilled Prime criteria. In this situation, the Amazon 3PL provider, rather than the seller, warehouses goods and handles the order fulfillment process.
Basically, it’s like FBA but less expensive and significantly more flexible. Listings are eligible for the Prime badge, and the chances of getting time in the Buy Box increase significantly.
Using a Seller Fulfilled Prime 3PL partner is especially great for busy sellers or those without logistics experience. Everything from the order through delivery (and beyond) is handled by dedicated experts, leaving the seller to focus on core competencies like marketing and growing the business.
Hallmarks of a Good Seller Fulfilled Prime 3PL
To meet Amazon’s SFP criteria consistently, a 3PL should:
- Have a nationwide warehouse network, including at least 5-10 strategically located facilities. This allows for rapid, inexpensive shipping to the vast majority of the country.
- Have experience with the program. Dealing with SFP requirements can be difficult, and you don’t want to be the logistics provider’s guinea pig.
- Utilized advanced software that integrates directly with Amazon, and gives you real-time visibility into order status and metrics.
- Be focused on customer service. Putting your SFP reputation into someone else’s hands is a leap of faith. Make sure you pick a partner who aligns with your company values and goals.
Ready to Partner With an Experienced Amazon 3PL?
In this post, we’ve covered everything you need to know about Amazon SFP, including:
- The different fulfillment options Amazon offers third-party sellers
- Why Seller Fulfilled Prime sits in the “Goldilocks” zone – friendly on both cost and benefits
- How outsourcing to a 3PL partner can help you take advantage of SFP
- What to look for in a Seller Fulfilled Prime 3PL
If you’re an Amazon seller and this sounds good to you, we’d love to help. Rakuten Super Logistics is a leading Seller Fulfilled Prime logistics provider, with 20 years of fulfillment experience and a dozen fulfillment centers from coast to coast.
We can help build your business by giving you custom services and all the advantages of the SFP program without the hassle of fulfilling orders yourself or the hefty cost of Fulfillment by Amazon. Request a quote today to learn more about our order fulfillment services and we’ll be in touch ASAP.
Remember, the holiday season is right around the corner. If you don’t have your fulfillment partner in place yet, It's time to get a plan in place. Contact us today and leave Black Friday and Cyber Monday to us logistics experts you can trust!