Amazon Marketing Tips

Amazon SFP: Is It Right for You or Should You Consider AFP?

Amazon Seller-Fulfilled Prime (SFP) is a tempting option that keeps generating interest even though it’s currently a paused program. Getting a Prime badge from Amazon but not dealing with Amazon locations or strict requirements means access to a large pool of shoppers but on your terms. That might be what your company needs to make this year the best so far.

However, Amazon SFP is a tricky option. Not only does it have strict requirements, but you’ve got to join a waitlist for when it opens once more. There has been recent news to signal that the program may get a new life soon. So, let’s look at what SFP offers, the requirements you need to meet, and why it could be better than FBA. That way, you’re ready if Amazon’s latest program is the first step in relaunching Amazon SFP.

What does Amazon SFP include?

Amazon SFP is a sales tool that gives businesses the “Prime” badge on their products on Amazon’s marketplace. The difference that Amazon SFP offers is that you take orders through Amazon, but you can send these out from a warehouse you or a non-Amazon partner control

The benefit is that you get the Prime badge, which many customers use to sort and look for products because it comes with free shipping at the two-day delivery rate. Your Prime badge listings are also more likely to be listed as the featured offer for a product. According to Amazon, being the featured offer means that you’re the default purchase option when someone clicks “Add to Basket” to get that product. 

There are some restrictions and requirements essential to know to help you determine if this is the right path for your business. Needing to use Amazon’s specific transportation partners, for example, may shift your costs. So, let’s look at those Amazon SFP requirements to understand what you need to do to stay in the program.

Are there Amazon SFP requirements?

There are a few critical Amazon SFP requirements you’ll need to follow to stay in the service’s good graces and earn your spot in the program. Amazon runs a trial period for applicants where it will evaluate your capabilities and order management. It asks you to pick, pack, and ship orders on the same day, use its carriers and labels, and meet core metrics within your own warehouse. You can also outsource to a partner 3PL if they can deliver on these demands. That may be easier given how tight the controls are.

The current list of Amazon SFP requirements includes:

  • Ship over 99% of orders on time
  • Order cancellation rate of less than 0.5%
  • Offer “premium shipping” options
  • Use Amazon Buy Shipping for at least 99% of orders
  • Use Amazon’s list of SFP carriers
  • Have nationwide delivery coverage, with weekend delivery and same-day order processing in most instances
  • Meet Amazon targets for 1-day and 2-day delivery
  • Offer Amazon’s returns policy and let the company manage order inquiries and support requests from customers

What’s happening in SFP today?

If you meet all those Amazon SFP requirements, you’ve got one last step: join the waitlist. That sounds easy, but it may be the biggest hurdle in the entire process. You can try your luck signing up here, but we haven’t seen Amazon make any moves on the waitlist for quite some time. The waitlist has been up since roughly September 2020, and businesses in Amazon’s seller forums have said they’ve heard nothing since that time.

It’s likely more than Amazon SFP requirements being too restrictive. Amazon says you’re signing up to be notified “when enrollment reopens” and that “Seller Fulfilled Prime is not accepting new registrations.”

Amazon makes more money through its FBA program and has invested significantly in its own logistics network, so it may have pushed past partners to FBA and away from SFP. 

Today, Amazon SFP feels like a program that Amazon is quietly winding down, so you might not have much luck getting into the program. If you are already using SFP but are thinking about shifting gears, let’s look at your other big option from Amazon.

SFP versus FBA

Even if Amazon SFP feels out of reach, the Prime badge is still very tempting. If you want to go for the badge, you’ll need to consider the Fulfilled By Amazon (FBA) program instead. FBA is a program where Amazon’s warehouses will fill your orders. All you need to do is get products ready and shipped to Amazon. You sell, they ship, and the customer gets their order in Prime’s two-day window.

FBA essentially brings in all the Amazon SFP work you need to do into Amazon’s warehouses. So, they oversee inventory processing and storage, inventory counts, picking and packing orders, creating shipping labels and tracking details, and sending goods to customers via preferred carriers. Those tough SFP metrics become less of a burden.

It’s a tempting prospect. If you have access to both programs, here’s a quick pros and cons guide that might make choosing a little easier. Don’t forget that you’ve got a third option: do it yourself or outsource fulfillment to a 3PL. In many instances, you can still sell on Amazon and deliver goods within 1 to 2 business days, but without many of the added costs of SFP and FBA.

The good and bad of SFP

Good

  • Prime badge ensures your products are visible in common sorting by customers
  • Ability to brand packages, tape, inserts, and more, instead of sending customers an “Amazon box”
  • Control or outsource your fulfillment, making it possible for you to find lower costs or negotiate better rates
  • Fewer Amazon demands for Amazon labels and prep work compared to FBA
  • Your customers get 24/7 customer service

Not so good

  • Must ship 99% of orders on time
  • Order cancellation rates for any reason must be under 0.5%
  • Restricted to Amazon’s Buy Shipping for at least 99% of orders
  • Not able to manage customer service directly, meaning Amazon gets the credit for positive experiences
  • Must follow Amazon’s returns policy, which some sellers say is too generous to the buyer and invites potential fraud

The pros and cons of FBA

FBA pros

  • Order fulfillment is done for you, allowing you to focus on sales and listings
  • Amazon handles order details, tracking information, and returns
  • Fees can be smaller than costs to do it yourself, especially if you’re scaling (up or down) quickly
  • Amazon offers discounted shipping rates, which may beat the rates you can negotiate with carriers
  • Not tied to your own physical warehouse, so you only pay for the space you use and aren’t in a long-term lease
  • Can be expanded to multi-channel fulfillment, allowing you to use Amazon’s shipping for orders on your website and other marketplaces
  • Large and growing fulfillment network, making it easier to position goods closer to customers and cut down on some shipping costs

FBA cons

  • Everything has a cost, and these can compound quickly because Amazon has put in some increases lately. There are so many fees you’ll need Amazon’s list of key terms to understand them all
  • You also face fees you don’t pay in your own warehouse, such as long-term storage fees
  • Amazon sets controls on how often you can replenish inventory, which can change at any moment and depend on individual products
  • Amazon tends to have higher levels of returns and you’ll need to use its return policy here too
  • Inventory packaging and preparation requirements so intense that many companies outsource the prep work to 3PLs
  • Worries over chargebacks

The balance

Amazon SFP and FBA have a lot of overlap, so it can be hard to see where the two services really differ. In a direct comparison, SFP tends to be cheaper than FBA because you don’t have the high inventory prep costs and you have more control over storage, handling, and other activities where FBA charges fees. After you join FBA, Amazon will typically ask you to split inventory across multiple locations. Unfortunately, there are some fees around this inventory planning and any internal redistribution.

FBA shines by making fulfillment easier for you. Your company no longer needs to meet the high demands of SFP. Amazon also has enough distribution points that a disruption at once won’t impact all your order fulfillment. FBA also puts the labor required in Amazon’s hands, so you can have your best week ever and not worry about hiring immediately or paying a lot of overtime to get orders out the door on time.

Think of the decision as choosing between control and more work versus outsourcing at likely higher costs per order.

Where should your store invest?

Previously, it’s been a much tougher decision to pick which Amazon service makes the most sense. Right now, that choice is simple because, for any company that’s not already part of Amazon SFP, you only have one option. Amazon SFP is closed to new partners. So, you’ve got to ask if giving up control of your fulfillment and meeting FBA’s strict requirements are worth it.

Amazon FBA is often worth it for smaller and growing eCommerce businesses when Amazon is their core sales channel. If you’ve got your own site and sell through Facebook, Instagram, and other platforms, FBA may be a good choice for the part of your fulfillment. FBA gives you the Prime badge and allows you to meet more customers on Amazon’s platform.

If you’re scaling, trying to build brand loyalty, or want to branch out into new products quickly, there is another path to take that includes Amazon SFP or FBA. Bring on a 3PL to do the Amazon FBA prep, so inventory is sent to Amazon’s warehouse properly, avoiding fines and labeling costs. That’ll reduce expenses and fines, and the 3PL will give you a guarantee that items are prepared correctly. 

This 3PL can also send out orders for your other channels. That can simplify your efforts because you only need to worry about getting products from the manufacturer to the 3PL. This partner then distributes goods to Amazon’s locations and fills orders, all working from a single inventory pool. You don’t have to control multiple inbound freight shipments, which is especially challenging when importing products from overseas. 

Even better, if you outgrow Amazon or want to try a new opportunity, you can immediately start those sales. There’s no need to contact Amazon to get inventory returned or worry about their ability to integrate with a new platform. You make the business decisions while partners manage the execution.

Is Amazon signaling a change?

In late April 2022, Amazon revealed a change that may signal a shift to both Amazon SFP and FBA. Amazon has created a new “Buy with Prime” program that will extend the Prime badge and benefits to marketplaces, websites, and areas outside of Amazon.com. One of the partners mentioned at launch was BigCommerce, which could mean that stores built on that platform will get this option earlier in the rollout.

Buy with Prime will originally be for FBA sellers, but Amazon says it’ll soon expand it beyond that pool. The goal is to get brands that don’t sell on Amazon to use the Prime badge. The unconfirmed thought here is that Amazon will likely ask for a cut of these sales because of the benefit that customers get while it provides customer support and returns processing. Amazon also keeps payment data in its grips because users make purchases through their Amazon accounts.

What’s important for you is that Amazon is going to need some restrictions and requirements for this new program. The current Amazon SFP requirements seem like the right place to start. It could be that Amazon paused SFP to get ready for a big rollout like Buy with Prime. So, working on getting metrics up to meet those standards at your or a partner’s warehouses may position you strongly for getting into the Buy with Prime program.

That’s all speculation for now, but it’s one of the clearest paths forward for Amazon SFP and would make sense why Amazon hasn’t shut down the program or removed the web pages for a service that’s been paused for more than 18 months.

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