Many sellers know about Fulfillment By Amazon, but the e-commerce giant also offers another program called Amazon Seller Fulfilled Prime (SFP). The name is self-explanatory: Rather than sending your inventory to Amazon warehouses for fulfillment, a seller would ship Amazon Prime orders themselves, making sure to meet Amazon’s strict shipping deadlines. The primary benefits of SFP include having full control over the shipping experience to the customer, the ability to use your own fulfillment processes, and the ability to eliminate FBA inventory costs by keeping the inventory in your own warehouses.
Why Amazon SFP Is Important
Amazon SFP is the only way to get the Prime Shipping badge without sending in your inventory to Amazon’s FBA warehouses. You retain control of the fulfillment process while enjoying a huge increase in sales – some sellers report sales as much as 50% higher compared to non-Prime listings. You may have many reasons that you would prefer to avoid sending your products to Amazon FBA warehouses. Everything from reducing your warehousing expenses to preferring other locations for your inventory come into play with this decision.
SFP has a learning curve that can cost you a lot of money when you’re first starting out, if you’re not careful. Here are three tips to help you achieve a successful sales strategy with this lucrative Amazon program.
Tip #1: Don’t Open Amazon SFP Up to the Entire Country
Amazon Prime promises two-day shipping for all of the Prime-eligible products. If you try to ship everywhere in the United States, you’re going to end up with a lot of packages that need to be delivered quickly and that will mean shipping with Priority Mail Express, UPS Next-Day and other pricey shipping options.
A tactic that experienced Amazon SFP sellers utlilize is to look at the shipping zones around your warehouses and base your range off of that distance. You’ll avoid sky-high shipping fees and possible delivery delays that could lead to poor seller ratings and possibly getting removed from the SFP program when you limit your regions. Amazon has a 97 percent on-time delivery requirement to remain part of SFP. While this practice may seem counterintuitive to boosting your revenue, you end up making more in the long run.
Once you pick your locations, you’ll find that you don’t need to choose two-day shipping options for your packages. You end up being able to use USPS Priority Mail, UPS Ground and FedEx Ground, which are more economical choices. You can also change your service area during the week to account for fluctuations in the shipping services available to SFP.
Tip #2: Weekly Reporting and Monitoring
Another important practice to adopt is weekly reporting and monitoring. It’s easy for problems to slip by if you only check your Amazon Seller Central reporting interface once every week or so. You should be checking every day or two, paying attention to a few areas:
- Penalties: Are you getting penalized more than once for a problem on an order? Any hits to your seller rating should only apply once for a particular issue, and you don’t want to risk getting kicked out of SFP because of an error in this part of the process. Reach out and discuss your findings with support staff so they can correct your statistics.
- Late Scans: Do your packages get scanned late by UPS, FedEx or USPS? Since you have to stay above that 97 percent magic on-time number to remain in the program, their oversight could impact your bottom line. You can determine whether a package time is wrong by digging into the delivery time data. Times that are particularly early or late in the day may have run into this problem.
Tip #3: Controlling Your Shipping Costs
Shipping costs are a huge part of the SFP process. If you are not optimizing your fulfillment process, you can easily cut into your profit margin or even lose money on all orders when you’re in SFP. The two-day delivery requirement can create a number of logistical problems that require some time to work out with your supply chain. Here are a few tips that will decrease the number of times that you have to resort to a premium shipping service for fulfillment.
- Choosing a Shipping Services: One of the most important things to realize about SFP is that you get offered different shipping service choices at different times. You won’t have consistency in this selection and it may change between each order. Amazon does follow a general pattern that you can use to cut down on your shipping expenses.
- USPS Shipping Early in the Week: The first three days of the week are the most expensive ones to deal with. USPS Priority Mail and First Class Package Service don’t consistently deliver within two days from Monday through Wednesday. You probably won’t see Amazon offering this option during this time frame.
- USPS Shipping Late in the Week: Once you get Thursday through Saturday, you see USPS Priority Mail and First Class Package Service and more often. Since Saturday does not count against you on the two-day delivery count and the USPS delivers for free on Saturday, you will have more flexibility to use these services.
- Using UPS/FedEx for Cost Projections: When calculating your shipping costs into your ROI analysis for lower weight orders to close delivery zones, assume that you’re going to need to use UPS Ground or FedEx Home Delivery services to send out your packages. The costs will be higher than USPS Priority Mail, which will help give you a ROI cushion since some of your orders will be shipped using the less expensive USPS services.
- Use Package Pickup: How much time do you waste on taking packages to shipping centers? Utilize carrier pickup service, so you can spend your time fulfilling orders instead of wasting time dropping off shipments at the UPS Store or Post Office.
Amazon SFP is an excellent program for many sellers, but you need to know exactly what you’re getting into. Even the most prepared businesses have a learning curve to overcome, but these tips will get you started off on the right foot for seller success.