If you’ve ever shopped on Amazon, you’ve probably noticed the Amazon Prime symbol on numerous product listings.
As a shopper, that means that if you’re a Prime member, you’ll get free 2-day shipping when you buy the product.
The benefits of having the Prime badge prominently displayed on your listing may not be immediately apparent to you as a seller, but make no mistake: having the Prime badge is a requirement for practically everyone selling on Amazon.
What is Amazon Prime?
All Amazon customers have access to Amazon Prime, which is a monthly subscription service. Annual membership is $119 per year, while Prime student membership costs $59 per year. Monthly subscriptions are $12.99 per month and $6.49 per month, respectively.
Customers who sign up for Amazon Prime enjoy not just exclusive streaming, reading, and buying privileges (such as access to lightning discounts 30 minutes before non-Prime members, and exclusive-to-Prime-member deals like Prime Day), but they also get free shipping.
Being a Prime member may entitle buyers to the following benefits, depending on where they live:
- Shipping is free for two hours.
- Same-day, one-day, and two-day shipping are all free.
- Saturday delivery is available.
- Dates for delivery
There are about 150 million Prime subscribers globally at the current time, including 112 million in the United States alone.
How to sell on Amazon Prime
When it comes to selling Amazon Prime as a third-party seller, you have three options: Fulfillment by Amazon, Seller Fulfilled Prime and Vendor Central.
Here’s a summary of the three options:
Amazon fulfils orders (FBA): FBA is an Amazon logistics service that encompasses warehousing, picking, packaging, shipping, returns, and customer care. It is a comprehensive, easy-to-use, pay-as-you-go service.
Because the FBA programme is linked to the Amazon marketplace, when you sell an item on Amazon that is held in an Amazon warehouse, the order is automatically processed. All businesses, from lone traders to multinational corporations, can participate in the FBA programme.
Prime Fulfilled by the Seller (SFP): Sellers that use SFP can manage their own fulfilment and shipping while still receiving the Prime logo on their products. Orders are shipped either from the seller’s own warehouses or through a third-party logistics service provider (a 3PL).
SFP membership comes with a qualification period that includes strict standards and performance indicators that must be met consistently in order to remain in the programme. Businesses who handle their fulfilment (for example, for orders placed on their own website or through other marketplaces) stand to benefit the most from this strategy.
Central Vendors: Instead of selling directly to customers through the third-party marketplace, you sell to Amazon as one of its wholesale suppliers.
Vendor Central is by invitation only; to participate, you must be recruited as a vendor by Amazon. Vendor Central is especially useful for well-known companies and manufacturers, many of whom have already been asked to participate.
Fulfilment by Amazon (FBA):
Using FBA as your fulfilment method is the simplest way to sell Amazon Prime. Your products will be immediately considered for Amazon Prime if you join Amazon as an FBA seller, regardless of your company plan.
There is no waiting list. There is no formal trial period. To get the Prime label on your listings as an FBA seller, all you have to do is attain and maintain good seller-performance metrics.
While Amazon does not specify what FBA sellers must accomplish to obtain and maintain the Prime badge, they appear to place a premium on the following:
- Having a rate of order defect of less than 1%
- Following Amazon’s product and listing policies
- Observing Amazon’s inventory storage restrictions
- Amazon can limit your FBA storage if you have slow-moving inventory or a low Inventory Performance Index score.
Pros:
- FBA (Fulfillment by Amazon) is a fulfilment outsourcing service. You are not responsible for shipping orders or any other part of order fulfilment.
- It’s completely automated and linked to Amazon’s marketplace.
- FBA fees may be less expensive than packing and sending your own items, especially if you haven’t done any shipping before.
- Negative customer feedback on shipment or fulfilment can be removed by Amazon.
- Your listings will also say “Fulfilled by Amazon” in addition to the Prime logo, which may have a beneficial impact on client confidence.
Cons:
- Depending on your pricing structure, FBA can be more expensive than handling your own delivery.
- Long-term storage expenses, for example, can be complicated and/or unexpected.
- You’ll need to keep an eye on inventory levels in FBA and replace goods on a regular basis, keeping in mind the time it takes for shipments to arrive and be processed.
- Unless you pay extra for the “Inventory Placement Service,” Amazon may ask you to ship modest quantities to various locations.
- Amazon has the ability to “commingle” your inventory with products from other vendors, putting you on the hook for a false or damaged item that came from another seller.
Who is FBA ideal for?
FBA is a great option for sellers that exclusively sell on Amazon or have a small number of sales elsewhere.
It outsources the whole fulfilment process, allowing sellers to focus on higher-value duties such as product development and marketing. FBA is an excellent way to earn the Prime badge and manage your customer fulfilment in one fell swoop if you don’t have any orders coming in from other channels.
Sellers who already have a shipping business and want to use FBA should:
- Want to get your product to as many people as possible in the shortest amount of time; or
- Are not able to meet the SFP criteria.
FBA’s Multi-Channel Fulfillment (MCF) capability is available to organisations that sell through other channels but lack a comprehensive shipping operation. With MCF, Amazon functions as a broad 3PL, able to fulfil orders from any source.
It’s worth noting that MCF has higher fees than “regular” FBA, and if you have a lot of orders coming in from places other than Amazon, it can be cheaper to utilise a separate 3PL.
Seller Fulfilled Prime (SFP)
While Amazon Prime is now available to vendors that fulfil their own orders (FBMs), there is currently a waiting list. However, just because you’re waiting to be accepted into the programme doesn’t mean you can’t get your affairs in order.
Aside from making sure you have enough goods on hand to fulfil Prime orders swiftly, now is a good time to look into Amazon’s approved delivery partners to see which one is best for you and your company.
You’ll be better positioned to meet SFP’s requirements once you’ve been transferred from the Seller-Fulfilled-Prime waiting list to the required trial period.
To successfully finish the SFP trial period, you must:
- Provide your consumers with premium delivery alternatives.
- Have an order cancellation rate of less than 0.5% and ship over 99% of your orders on time.
- For at least 99% of your orders, use Amazon’s Buy Shipping Services.
- Demonstrate that you can handle orders in a “zero-day” manner.
- Allow Amazon to take care of customer service issues.
- Amazon-approved carriers will deliver your items.
- Accept and adhere to Amazon’s refund and return procedures.
The Prime emblem will not be visible during your trial, and Amazon does not give a specific time frame for its SFP trial period. However, after Amazon determines that you have finished the trial, the ASINs you enrolled will automatically display the badge on their listings.
Pros:
- Your inventory and fulfilment operations remain under your control.
- There are no FBA shipping and handling fees, and you simply need to keep track of inventory in your warehouse (s).
- Bulky and hefty items have the potential for bigger revenues because they don’t have to be shipped twice (first to Amazon and then to the customer).
- Sellers with a diverse inventory can employ a variety of fulfilment methods, such as SFP for big items and FBA for smaller items.
- SFP merchants can offer products that aren’t eligible for FBA or that require particular storage, such as temperature control or quick expiration dates.
Cons:
- You’ll need to run a high-quality shipping operation that meets all SFP criteria while also fulfilling orders quickly and paying all charges.
- There’s the cost of purchasing and operating a warehouse, as well as people, software, and inventory management systems.
- SFP has strict approval conditions, which include qualifying for Premium Shipping and completing a 5- to a 90-day trial period with a minimum of 200 orders. Applications are sometimes placed on a waiting list.
- If sellers qualify for SFP but then fall short of the requirements, they will have to go through the hassle of transferring to FBA if they want to keep their Prime status.
who is SFP ideal for?
SFP is great for companies that already ship their own products through other channels, such as their own website, other online marketplaces, in-store sales, or phone purchases. It enables businesses to preserve their present systems, capitalise on previous investment and fixed expenses, and avoid the complexities of handling inventories in another location.
Sellers who already have a warehouse with workers who can fulfil orders according to Amazon’s specifications would prefer to use SFP instead of FBA, thus it’s a good fit.
SFP is particularly well-suited to certain types of products. These include large and heavy things, as well as items that FBA prohibits or restricts, such as products that contain fragile or hazardous ingredients, or that require special handling.
Vendor Central
Vendor Central is a completely different animal. Amazon recruiters persuade businesses to join the platform, and then they buy in quantity and at wholesale pricing from you. Your products will be sold on Amazon’s website, and Amazon will manage all of the logistics, such as storage, shipping, customer service, and returns.
Your products will all carry the Prime label because they are sold through Amazon.
Pros:
- Vendor Central is straightforward. All you have to do now is process and bill Amazon’s purchase orders, just like you would if you were selling wholesale to any merchant.
- All business-to-consumer sales are handled through Amazon. You’re not a part of it.
- “Ships from and sold by Amazon.com” is printed on Vendor Central listings, which may increase buyer confidence.
- A+ Content, Subscribe & Save, and Amazon Vine reviews are among the effective marketing tools available to vendors.
Cons:
- Vendor Central is only open to those who have been invited.
- To get the best results, you must still spend on marketing. It can be quite costly.
- Amazon chooses which products and quantities to purchase from you. It’s possible that order volumes will fall short of expectations.
- If you want your products to be available on the Amazon website but Amazon doesn’t want to stock them, you’ll have to offer them directly to consumers or locate a third-party vendor.
- Amazon has the potential to drive prices below your Minimum Advertised Price (MAP).
Who is Vendor Central ideal for?
Manufacturers and brands who wish to sell wholesale solely will benefit from this scheme. Vendor Central is ideal for brands that lack the capacity or know-how to sell directly to customers.
It also applies to brands that are required to sell directly to Amazon under the Product Availability Policy (now ambiguously referred to as “Standards for Brands Selling in the Amazon Store”).
What If You’re a First-Time Seller?
Don’t worry if you’re new to Amazon or just getting started with Amazon selling.
Though becoming a fully-fledged Prime seller may take some time due to the necessity to build up your seller metrics and/or complete the SFP trial, there are several things you can do in the meantime.
To begin, conduct market research to ensure you have a product that is in great demand and has little competition.
Then, once you’ve decided what you’ll sell and discovered the best supplier to make it, build an optimised listing.
Finally, make sure you have a sound launch strategy in place to assist you to get reviews. Promotions, customer follow-up emails, and PPC should all be included.
Why would you want to sell on Amazon Prime?
There are numerous advantages to selling on Amazon Prime, ranging from a ready-to-buy customer base to a higher chance of winning the Buy Box.
1. Amazon Prime members are loyal: Non-Prime subscribers are less devoted to Amazon than Prime members. According to a survey, 65% of Amazon Prime users consider themselves “brand loyal.” If they could only buy things from one store, 75% of Prime members say they would shop on Amazon; without a subscription, that percentage lowers to 38%.
2. Amazon Prime Members Are Willing to Pay More: On most items, Prime members enjoy free two-day shipping. Over half of Prime members (61%) are prepared to pay more for a product that comes faster. According to a poll, only 41% of non-Prime users would pay more for speedier shipments.
3. Amazon Prime Increases Your Chances to Win The Buy Box: On a product’s listing on Amazon, the Buy Box is the ‘Add to Cart’ button. Amazon’s Buy Box is responsible for 83% of all sales. According to Amazon, if you offer Amazon Prime, your chances of becoming the default selection for buyers increase.
Conclusion
For the majority of vendors, selling on Amazon Prime has a significant impact on growing sales. Through three seller programmes that suit a variety of businesses, selling on Amazon Prime allows you to connect your brand and products with customers faster than ever before. Examine your business scenario carefully to find what matches best, and get “primed” for more sales than you’ve ever had before.
