Sellers using a Fulfilled by Merchant (FBM) model can enroll in Amazon’s Seller Fulfilled Prime (SFP) program. With SFP, Sellers benefit from having the Prime badge, however, they must also comply with the very stringent same day shipping and 2-day delivery requirements.
Recently, Amazon made changes to its popular SFP program and several Amazon sellers are having to pivot to meet the new normal of nationwide one and two-day delivery or risk losing sales. Third-party sellers can no longer extend offers that include free Prime shipping just regionally; it is now nationwide or not at all. Even more, sellers have to abide by the strict 1-2 day delivery promise on orders – even on Saturdays.
Here we take a look at some of the challenges of SFP; as well as outline some benefits to utilizing a fulfillment partner to meet these strict requirements.
Some issues are obvious, others are more nuanced including:
• Absence of warehouse resources (building, equipment, technology). Lack of Direct-to-Consumer fulfillment experience and/or toolset.
• A single geographic location (compared to multi-geographic reach) will prevent shipment of products nationwide in 1-2 days without accruing substantial costs (due to Next Day or Two Day Air).
• Per the latest Amazon SFP guidelines, Amazon requires the use of ship methods that support Saturday delivery and Saturday shipping with pickups. In addition to scheduling weekend pickups with carriers, merchants must consider scheduling, overtime, security, and many other factors in this decision. Many fulfillment providers do not operate on weekends.
• Inability to obtain aggressive shipping rates (discount level is based upon Seller’s volume alone).
• Difficulty managing the peaks and valleys of sales volume.
• Costs are largely fixed and not variable.
• Difficulty meeting Amazon’s same-day shipping requirements, especially those of Seller Fulfilled Prime, can impact the overall cost-effectiveness of the program.
For many Amazon Sellers, utilizing the help and expertise of an Amazon-experienced 3PL can be a more cost-effective option than Fulfillment by Amazon or self-fulfillment.
Below we take a look at some of the benefits (including Seller Fulfilled Prime) in choosing a 3PL:
• Expertise – A qualified 3PL will help Sellers navigate fulfillment to Amazon buyers, both now and in the future, as Amazon programs change.
• Multichannel Fulfillment – Lower Inventory Complexity and Carrying Costs – The processing of orders from a single partner (even when multiple sales channels are engaged) allows Sellers to reduce complexity while keeping inventory flexible and carrying costs low. No need to have one set of inventories for Amazon and another for the rest of the business.
• Seller Fulfilled Prime – Using a Seller Fulfilled Prime-experienced 3PL can increase the likelihood that the Seller will qualify for and maintain participation in the program, which requires strict adherence to stringent fulfillment performance metrics. An experienced provider has likely already built the tools and refined the processes necessary to meet Amazon’s high standards. Participation in the SFP program also helps Sellers win the Buy Box, and therefore, sell more on Amazon.
• Geographic Reach – 3PLs with locations in multiple geographies can help Sellers dramatically reduce both shipping costs and delivery times. For example, incorporating just two facilities in optimal locations can achieve a 2-day ground transit to over 90% of U.S. households. Leveraging these locations, while using Amazon’s Seller Fulfilled Prime program, will result in the ability to reach more customers via ground shipping.
• Branding – Using a 3PL gives Sellers the competitive edge by providing a branded experience, reflected in its personalized packaging, email confirmations, packing slips, and marketing inserts. All of these customer touchpoints are invaluable opportunities to promote the brand.
• Reporting – Information is critical to making sound business decisions, and can lead to lower costs, higher profits, and improved order execution. Utilizing a fulfillment partner allows Sellers to leverage the power of their own data. Sophisticated 3PL’s will incorporate robust Business Intelligence (BI) tools that enable their clients to analyze their company data. The slicing and dicing of key data points can be integral in profiling customers, identifying order trends, and building operational metrics.
• Returns and Refurbishment – An experienced 3PL can help Sellers design an appropriate reverse logistics program that not only facilitates consumer returns, but extracts value from the returned items as well. Many 3PLs offer inspection and refurbishment programs that can renew returned products for resale.
• Customer Care – 3PLs that offer Customer Care services provide Sellers with greater control, and to seamlessly integrate the customer brand experience. Many 3PLs offer Customer Care via live agent, e-mail, chat, and/or social media. These services can prove critical in managing the returns process, whether resulting in a “save-the-sale” opportunity or professional handling of a return.
You can learn more about supporting your Amazon business by downloading our e-book where we present the two methodologies, Vendor Central and Seller Central, outlining the advantages and disadvantage of each, along with their two fulfillment options, Fulfillment By Amazon (FBA) and Fulfillment
By Merchant (FBM).
