On October 1, 2023, Amazon reopened new seller enrollment for Seller Fulfilled Prime (SFP). It has also begun charging sellers an additional 2% fee on all SFP orders, including those sellers who have been with the program since its inception in 2015.
With the new fee taking effect right at the start of Q4, some SFP sellers are concerned about their holiday plans and profit margins.
“We’ve got until October 1 to decide, do we pass this on to customers?” Pattern COO Rob Hahn told Modern Retail, “A lot of brands have already ordered stuff and planned for volume for the rest of the year.”
Potential applicants to the program also have questions. With new fees and requirements, does SFP still offer sellers cost-saving potential and Prime credibility? Read on to find out what you need to know before taking the leap on SFP.
Table of Contents
- What Is Seller Fulfilled Prime (SFP)?
- How to Apply for Seller Fulfilled Prime
- Is SFP Right For You?
What Is Seller Fulfilled Prime (SFP)
Seller Fulfilled Prime (SFP) is a fulfillment option that allows Amazon sellers to handle their own order fulfillment, while still displaying the Amazon Prime badge on their product listings.
Launched in 2015, Amazon SFP was conceived as a way for sellers to handle their own fulfillment and save on costs, while still boasting the coveted Amazon Prime badge — and all the customer trust it brings with it.
But SFP sellers must adhere to strict standards to participate in the program, including offering consistent one- and two-day shipping.In 2019, Amazon paused new applications to the program citing a need to improve program standards and build in more support for sellers. Now, in 2023, SFP is finally reopening to new applicants on the waitlist.
How Does Seller Fulfilled Prime Work?
SFP sellers are responsible for storing their own inventory, as well as picking, packing, and shipping all orders within the same day that they are placed. Orders must be shipped by Amazon SFP-approved carriers, using Amazon-approved shipping labels that sellers are required to purchase from these carriers.
According to Amazon, sellers who participate in the Seller Fulfilled Prime program must:
- Offer Premium Shipping Options
- Ship over 99% of their orders on time
- Have an order cancellation rate of less than 0.5%
- Use Amazon Buy Shipping Services for at least 99% of orders
- Have nationwide delivery coverage for all standard-size products
- Use shipping methods that support weekend delivery and pick up (Saturday or Sunday)
- Meet targets for 1-day and 2-day delivery promises
- Deliver orders with supported Seller Fulfilled Prime carriers
- Agree to the Amazon Returns Policy
- Allow Amazon to deal with all customer service inquiries
SFP sellers can choose to meet these requirements by self-fulfilling orders from their own warehouses, or by partnering with one or more third-party logistics (3PL) providers.
SFP vs. FBA
With Fulfillment by Amazon (FBA), merchants ship their inventory for storage in Amazon’s warehouses. When a customer places an order, Amazon picks, packs, and ships the order using its own logistics network.
Most FBA orders are eligible for free two-day shipping, which is covered by the cost of participating in FBA. Amazon also takes care of all customer service and manages all returns.
All Amazon sellers are eligible for FBA, subject to certain product restrictions and inventory requirements. The vast majority of Amazon sellers — around 89%, according to JungleScout — use FBA to fulfill their orders.
FBA sellers get the Amazon Prime badge on their products and can generally expect higher conversion rates. With fulfillment fully outsourced to Amazon, they can focus on marketing, new product development, and other growth strategies.
However, participating in FBA comes with a price, including a long list of fees for inventory storage, fulfillment services, removal orders, aged inventory surcharges, returns processing and more. FBA sellers also need to make sure they stay in Amazon’s good graces, keeping track of new policies and requirements for storage, receiving and more.
SFP vs. FBM
Fulfillment by Merchant (FBM) sellers list their products in the Amazon store, but are responsible for storing, picking, packing and shipping all their own orders. They also handle their own customer support and returns independently of Amazon. Sellers can choose to do this on their own, or contract with a 3PL.
For some sellers, FBM can be more profitable than FBA, but it is also more time consuming. Additionally, using FBM means foregoing the Amazon Prime badge, which can be a dealbreaker for many customers.
FBM is a good option for stores that sell oversized products, those that require special handling, or items that move too slowly to merit Amazon’s high inventory storage fees.
It’s also a useful option for dropshippers, sellers who sell handmade goods, those who already have an affordable fulfillment network or 3PL partner in place, and those who use FBA for most orders, but like having a backup option for high-volume sales periods like Black Friday or in case of unexpected supply chain disruptions.
What’s the Difference Between FBA, SFP, and Premium Shipping?
Premium Shipping is a term that refers to Amazon’s one- and two-day shipping options. These options are available to FBA sellers and others who meet certain strict eligibility requirements and high performance standards.
How to Apply for Seller Fulfilled Prime
To apply for Seller Fulfilled Prime, interested merchants can join the waitlist through Amazon Seller Central. Before applying, make sure you meet all the pre-qualification requirements below.
What Do You Need to Qualify for SFP?
In order to qualify for SFP, sellers must meet the following pre-qualification requirements:
- An Amazon Professional seller account
- A domestic US address listed as their default shipping address
They also need to have met the following metrics over the previous 90 days:
- Self-fulfilled at least 100 packages
- Cancellation rate of less than 2.5%
- Valid tracking rate greater than 90%
- Late shipment rate of less than 4%
Sellers who meet these requirements are eligible to participate in a 30-day SFP trial period, during which they prove to Amazon that they can offer an experience consistent with customers’ expectations of Amazon Prime.
What Is the Amazon Seller Fulfilled Prime Trial Period?
According to JungleScout, the SFP trial period has historically been anywhere between five and 90 days.
During this period, sellers must fulfill at least 100 Prime orders in adherence with Amazon’s shipping standards. With the new reopening of SFP enrollment, Amazon has implemented a standard 30-day trial period for all prospective SFP sellers who meet its pre-qualification requirements.
Throughout the 30-day trial, sellers are required to offer one- and two-day premium shipping, and all orders must be packed and shipped the same day they are placed. Sellers do not have access to the Amazon Prime badge until they successfully complete their trial and become enrolled in the program.
Is Amazon SFP Worth It? 8 Things to Consider
If you’re weighing the pros and cons of applying for Amazon SFP, here are eight key questions to consider.
1. Are FBA and Amazon storage fees holding you back?
For some merchants, especially those who sell large or heavy products, FBA and Amazon storage fees can be significantly more burdensome than the cost of your own warehousing and logistics. If that’s you, SFP could be the more profitable option.
2. Will the 2% order fee significantly eat into your profits?
With the new added fee attached to all Amazon SFP orders, SFP may no longer be a profitable option for your business even if it could have been before.
Be sure to weigh all the factors that could impact your ROI on Amazon, before applying for SFP.
3. Do you want more control over your inventory?
SFP can give you more oversight over your inventory, including the opportunity to partner with third-party solutions that offer you more data and insight into your SKUs. It can also mean you have more control over your replenishment timing, so you’re less likely to run out of stock.
4. Could your brand benefit from more discoverability?
If you’re already selling FBM, earning SFP status would mean more visibility to Amazon’s roughly 200 million Prime members, which could be great for your sales. However, if you already have other ways of driving traffic to your product listings, like a growing social following or a strong search presence, the increased visibility may not be worth the costs.
5. Do you want higher odds of winning the Buy Box?
SFP could get you closer to that winning slot without having to drastically slash your prices. Then again, the high costs of handling your own fulfillment and keeping up with Amazon’s SFP requirements could mean you end up spending enough to cancel out the difference.
6. Are you comfortable keeping up with Amazon’s standards?
Staying SFP-eligible means continuously adhering to Amazon’s strict requirements, which — like every other policy at Amazon — can be subject to change without warning. If you can’t keep up, you could find yourself scrambling to catch up with new rules or risk being dropped from a program.
7. Do you have your own warehousing and logistics or a strong 3PL partnership?
Paying for your own warehousing, shipping supplies and shipping costs can get very expensive. Not to mention all the internal resources required to keep fulfillment running. However, if you’re already handling your own fulfillment on other channels, or feel confident you can get lower rates off Amazon, FBM could end up being a more economical option than SFP.
8. Are you prepared to manage your own returns and customer service?
With SFP, you have to handle everything on your own, from dealing with customer complaints to receiving and restocking returns. Despite all that work, you still have to adhere to Amazon’s returns policies if you don’t want to put your SFP status at risk. This is another area where SFP might make more sense if you already have some of this infrastructure in place for other sales channels, or because you’re already doing high volumes on Amazon.
Is SFP Right For You?
Some existing SFP sellers struggle with the high costs of offering ultra-fast nationwide fulfillment and delivery — especially when they have to pay a fortune to overnight products to far-off states in order to maintain their eligibility.
Some also worry that the additional 2% fee will cancel any increased ROI they could have made from choosing SFP over FBA.
In light of other recent changes at Amazon, like new FBA capacity limits and rising FBA fees, some sellers may benefit from SFP. But others may choose to move away from Amazon entirely, as once-profitable programs become increasingly untenable for their business models.
If you’re selling relatively low volumes or already struggling to stay above water with fees, shipping, storage, or other costs, SFP probably isn’t the right choice for you.On the other hand, for experienced Amazon sellers currently using FBM, applying for SFP could be a great option, especially if you’re already selling at high volumes and keeping up with Amazon’s rules.
Build a More Profitable Amazon Business
No matter which way you cut it, selling on Amazon is getting more expensive.
Whether you’re planning a move to Seller Fulfilled Prime, partnering with a new 3PL, paying Amazon for shipping supplies, or simply trying to cover your order fees, SellersFi can help.
Explore our complete suite of financial solutions designed for every e-commerce scenario, or check out our Amazon resources hub for more answers on all things Amazon.
