Seller Fulfilled Prime: We're Here and Coming Back For a Pound of Flesh
Amazon has announced new pricing for their Amazon Seller Fulfilled Prime (SFP) offering. There are a lot of mixed feelings going on here. But first:
What's Seller-Fulfilled Prime?
Well, in the time machine of Amazon third-party marketplace, first there was no such thing as Prime, or FBA. Everything was "seller-fulfilled".
Why Was FBA Introduced and What's Its History?
Fulfillment By Amazon (FBA) was introduced in 2006 to improve the customer experience for buyers (and allow Amazon to pocket some coin) by allowing sellers to use Amazon logistics. Sellers using FBA were able to take advantage of the Prime badge (which itself launched in early 2005).
What Led to the Introduction of Seller-Fulfilled Prime?
For years, the only way for sellers to get the Prime badge was FBA. Until 2015, when Amazon introduced Seller-Fulflled Prime. Essentially allowing sellers who met certain criteria and approvals to earn the Prime badge, but still ship on their own without Amazon facilities. That program was paused a few years back.
What's New in the Upcoming Relaunch of Seller-Fulfilled Prime?
Now, Amazon has released information about the upcoming re-launch of Seller-Fulfilled Prime.
Pricing is 2% of sales and at least a $0.25 per unit minimum. (!!)
Self-fulfilled at least 100 packages
Cancellation rate less than 2.5%
Valid tracking rate greater than 95%
Late shipment rate less than 4%
While I am happy to see the program return, I am unhappy to see the 2% fee. My general take is this.
Prime is increasingly expensive real estate, rents are high and getting higher. Amazon Buy With Prime charges sellers 3% for access to Prime customers as part of their pricing, and I think Amazon learned the value of the Prime badge from this exercise.
Look, a lot of sellers do still sell and succeed on Amazon without Prime. However, for a competitive listing, a Prime listing will be prioritized in the Buy Box.
For sellers, diversification is in order. The lowest-hanging fruit for the average Amazon seller is Walmart Marketplace, followed by their direct-to-consumer website.
What's the Future Outlook for Amazon Sellers?
Will they allow Seller Fulfilled Prime with Buy With Prime?
These items which are too expensive/large/bulky or whatever to ship on Amazon FBA are now more likely to drop out of Prime, period. Perhaps incrementally you will pay that fee for some items which gives Amazon upside.
Under what situations will sellers decide the ROI is there? If it will put them over the edge in winning the Buy Box?
Is this just a form of "Decoy Effect" pricing to push more sellers into FBA which doesn't have this fee?
I fear the trend of rising rents of Amazon - if you thought it was high before - it is not abating anytime soon.
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