There are currently more than 200 million people subscribed to Amazon Prime (according to a 2024 report by Statista). While there are many benefits to a Prime membership, fast, free shipping is an ever-present, growing appeal to purchasing products via Amazon Prime. Over 60% of sales on Amazon went to independent sellers on the platform, many of whom ship their products via Fulfillment by Amazon (FBA). This program allows independent sellers to use Amazon’s extensive fulfillment network and logistics infrastructure, earning the Prime eligible badge on their listings.
While the FBA program gives sellers access to Amazon’s fulfillment network and helps customers get the fast, free shipping they’ve come to expect, there are some drawbacks to using FBA, including fees, capacity constraints, and strict packaging rules. Independent sellers on Amazon can still earn the Prime badge on their listings and skip having to work through FBA by becoming eligible for the Seller Fulfilled Prime (SFP) program. With SFP, sellers can fulfill their orders without having to send inventory to Amazon FBA first.
Since Amazon reopened its enrollment for SFP in October of 2023, more sellers have been choosing this option. Amazon’s new FBA capacity management system has made inventory forecasting more difficult, and independent sellers would also have better margin control by avoiding Amazon’s numerous FBA fees and label requirements. In addition to this, Amazon has pushed its Buy with Prime program, which allows businesses to have a “buy with Prime” button on their direct sites. This can be used with SFP to create a hybrid fulfillment strategy. Read on to see if SFP is right for your business.
The Benefits of Seller Fulfilled Prime
Sellers can no longer simply enroll in SFP. First, they must pre-qualify for the program by meeting Amazon’s shipping speed and tracking requirements and then pass a 30-day trial. After that, performance metrics are reviewed on a weekly basis. Sellers with a Professional Selling Account benefit not only from the Prime badge and its appeal to shoppers. Amazon’s customer service will also handle the post-order customer contact for sellers.
One of the most frequent pain points discussed with our clients is the impact of FBA fees on their net profit. There are placement fees, inbound service placement fees, low-inventory-level fees, and more. My colleague, Shannon O’Connell, wrote a post about Amazon FBA fee changes to illustrate how these costs break down, in addition to how the weight of each individual product changes the fee amounts.
Another benefit of using SFP instead of FBA is that sellers can use their packaging, barcodes, and labels without having to meet all of Amazon’s requirements. Businesses enrolled in SFP would also not be constrained by capacity limits at Amazon’s fulfillment centers and would not be at risk for FBA shipments going missing. They would not have to worry about placing removal orders for any inventory that is aged or otherwise unsellable. A business selling a product with specific storage requirements (such as temperature or the presence of an eye wash station) would not be restricted by Amazon’s fulfillment centers being unable to accommodate them.
The Challenges of SFP
Sellers would need to be able to meet Amazon’s shipping and delivery speed requirements to prequalify and participate in the 30-day trial for SFP to have the Prime badge on their products. This means that it would be necessary for those businesses to already have strong logistics programs since they’re not using Amazon’s Prime network. For U.S. sellers, using multiple distribution centers is necessary due to the size of the country. This is crucial since over 60% of online shoppers expect fast shipping.
This obstacle could be overcome by using a third-party logistics company and having strong partnerships with parcel carriers. This leads to the next consideration factor: the need to balance costs versus customer expectations. There are costs to being able to meet SFP’s standards. These range from the resources to staff a warehouse, the cost of using a 3PL company, and paying for expedited shipping with carriers. Sellers must weigh this against the benefits of offering Prime shipping.
There is always the possibility that Amazon will change its SFP policies or lose eligibility if shipping performance does not meet SFP’s standards. Sellers would need to consider whether or not having the risk of losing Prime eligibility via SFP outweighs FBA’s fees and requirements.
Is SFP the Right Choice?
Seller Fulfilled Prime is a compelling alternative for independent Amazon sellers looking to maintain the Prime badge while avoiding FBA’s increasing fees and storage constraints. With greater control over inventory, branding, and fulfillment, SFP can be a game-changer. This is especially true for businesses that have a strong logistics infrastructure already in place.
The strict shipping requirements and the need for reliable parcel carriers and 3PL relationships mean that SFP is not a one-size-fits-all solution. Sellers must carefully consider if consistently meeting Amazon’s delivery speed expectations is worth it to bypass FBA fees and package requirements. As Amazon continues to refine SFP, FBA, and its other fulfillment programs, staying informed and flexible will be the key to long-term success on Amazon. If a business can meet the demands of SFP, the rewards – potentially better margins, greater inventory control, and Prime eligibility — may be worth the investment.
