Amazon Seller-Fulfilled Prime Looks to Make a Comeback
What is Amazon’s Seller-Fulfilled Prime (SFP) Program?
In surprising news, Amazon has announced that it's reopening its Seller-Fulfilled Prime (SFP) program. This program allowed sellers to use their own or third-party facilities to keep their Prime badge while not using Amazon's Fulfillment by Amazon (FBA) warehouses.
Many sellers were able to do this successfully and sometimes more affordably than Amazon itself (perhaps because the warehouse/infrastructure is already a sunk cost to the brand).
What are the compliance issues associated with the SFP program?
The central issue with SFP is compliance, and there have been previous reports that "most" sellers in the program were not compliant with Amazon standards.
I suspect that if Amazon is considering reopening SFP, it will need to ensure compliance is more strict than it was previously; the monitoring and enforcement infrastructure needs to be swift and robust if this will work.
Communication and data reporting are essential parts of this -- it takes work to act as a node on Amazon's fulfillment network.
A few more thoughts:
When Amazon stopped SFP a few years back, they didn't turn it off entirely. They just stopped issuing new approvals. This made "SFP licenses" somewhat of a commodity in the seller community -- in the same way that Amazon Vendor Central accounts sometimes are.
All this reads like another way Amazon is creating "relief valves" in its fulfillment network so that Prime can keep expanding. Likely also add relief for Prime Day supply chain strain.
Is it a coincidence that there has been significant Amazon leadership turnover, and now SFP is returning? The timing must be more than coincidental, right?
While I understand why it's the seller that is certified for SFP if they ship independently ... if they are using a third-party logistics provider, it makes less sense.
How would certifying fulfillment providers instead of individual sellers benefit the industry and Prime standards?
I always thought there would be 3PLs who want to dropship on behalf of Amazon customers who should be able to be "SFP-certified" -- this would allow the certification to pass to the fulfillment provider itself (i.e., the one doing the hard work) as compared to the brand (i.e., the one who is paying the bill).
Think of it like the "DSP" program but instead of drivers, it's for independent fulfillment centers.
Certifying the providers and ensuring their compliance would also be easier than certifying each seller and could create a larger cottage industry focused on Prime standards.
Expert Consulting: How Will You Grow Your eCommerce Company?
When growth is elusive, I am an expert at asking incisive questions to surface the real issues and then present straightforward ideas that your team can actually implement.
Mistakes are expensive. They cost money, of course. What’s worse is the opportunity cost. I work with investors and management teams worldwide to help them get a handle on their digital business plans to execute a clear path forward.
For more on Amazon, you might also like: