For those familiar with Amazon, the Prime badge has become a recognisable symbol across the marketplace. With over 150+ million paid Prime customers, the badge can help create a boost in sales for most products and categories, in addition to enabling merchants to participate in Amazon’s annual Prime Day event.

Over time, customers have grown to associate the badge with trust, as it signifies fast delivery, good customer service, and the lowest possible price. In fact, many Prime customers will only purchase products that feature the badge.

Obtaining the Amazon Prime Badge

Despite popular belief, Fulfilment-By-Amazon (FBA) is not the only way to earn the Prime badge. There are various options available for sellers interested in enrolment into the Amazon Prime programme.

Fulfilment-By-Amazon

Fulfilment-By-Amazon (FBA) is an avenue for sellers seeking a comprehensive shipping solution with easy-to-access features and a pay-as-you-go logistics system that includes warehousing, picking and packing, shipping, returns, and customer service. FBA is directly integrated into Amazon, so each item ordered via FBA is automatically processed when a customer places an order. The programme is available to businesses of all sizes, including sole traders and international corporations.

FBA is currently the simplest solution for sellers looking to join Amazon Prime. Product inventory is sent directly to Amazon, which is distributed into their various warehouses so that when a customer places an order Amazon will pick, pack and ship the item. Sellers with products established in FBA will automatically receive the Prime badge on their listing.

The advantages of using FBA include:

• No input required for any aspect of the order fulfilment and customer service processes

• Decreased packaging and shipping costs for sellers without an existing shipping system

• Integration with Amazon marketplace

• Amazon can remove negative feedback relating to fulfilment or shipping

Sellers should also note that FBA has some limitations:

• Additional fees can incur for long-term storage of products

• Third-party or independent fulfilment can be cheaper depending on existing business processes

• Without a software solution, it can be difficult for sellers to monitor and replenish stock in FBA. Sellers should always account for shipment delivery and processing as running out of stock will cause advertising campaigns to pause, and the Buy Box to disappear until the product becomes available again.

• Inventory Placement fees are applicable for all sellers that want to store products in the same location

Which sellers could benefit from FBA

Overall, FBA is an ideal solution for sellers managing sales through a few channels looking to reach more customers on Amazon. Outsourcing the fulfilment process enables businesses to focus on higher-value tasks such as market research, product development, and marketing.

FBA is also beneficial for sellers that have existing shipping systems but want to minimise the shipping times to a wide range of locations or cannot meet the standards required for SFP. The newly launched Multi-Channel Fulfilment (MCF) feature from FBA also supports businesses by working as a third-party provider to fulfil orders through on all business channels.

Seller-Fulfilled-Prime

Seller-Fulfilled-Prime enables businesses to handle fulfilment and shipping of inventory, whilst retaining the benefits of selling on Amazon Prime. However, Amazon has set a qualification period with strict standards and performance metrics which must be consistently met to ensure eligibility for the programme. To qualify for SFP, sellers must offer same day shipping without charge, using approved carriers and purchase shipping labels from Amazon.

SFP offers the following benefits to sellers:

• Retaining control of inventory and fulfilment

• No FBA shipping and handling fees

• Control over the returns and refunds process for customers

• Sellers offering heavy items can save costs on shipping as the product can be sent directly to customers

• Sellers with varied product items can use multiple solutions, such as using SFP to handle heavy items and sending small products into FBA

SFP sellers should consider limitations such as:  

• Sellers must have an established shipping operation that can handle orders quickly without incurring any charges to customers, while also keeping up with SFP requirements.

• The acceptance criteria are strict, including an initial trial period of 5-90 days during which a minimum of 200 orders must be fulfilled.

• If a seller does not meet the specified standards after qualifying for SFP, they will have to switch all their inventory into FBA to retain the Amazon Prime badge.

Which sellers could benefit from SFP

SFP is an ideal solution for businesses with existing shipping systems for other channels. It enables sellers to keep their existing system and removes the complexity of managing inventory in multiple locations, thereby not incurring additional costs.

Certain product categories are also well-suited to SFP, such as heavy items, products prohibited or limited by FBA, or products that require special storage such as refrigeration.

Vendor Central

Currently available through an invite-only recruitment process, Vendor Central enables businesses to become wholesale suppliers directly to Amazon instead of selling to consumers on the marketplace.  This programme is ideal for manufacturers and brands that prefer wholesale or lack the capacity to sell directly to consumers.

Seller suitability for Prime

Although there are numerous advantages to selling on Prime, the programme is not tailored to the requirements of each seller. The Prime badge itself is not a guarantee for sales success, therefore sellers should analyse whether it is a necessity for a product.

Amazon Prime is particularly effective for businesses competing with similar products with the Prime badge in the same category, such as brands with private-label products. Obtaining the Prime badge is also an effective strategy for third-party sellers offering branded products which compete for the Buy Box on the same listing against other sellers with a Prime badge.

However, enrolment in the Prime programme may not be necessary for some sellers. For instance, brands selling a product with an existing demand from consumers can still sell effectively without Prime. Additionally, sellers with products that are priced lower than marketplace competitors can still win the Buy Box.

Summary

While selling on Amazon Prime does enable sellers to connect with customers through the various programmes, it is not tailored for every business. Sellers should consider their existing business model, marketplace competitors, and target consumers to analyse whether the Prime badge will be required.

For more information about Amazon fulfilment, setting up Prime, or which solution works best for your business, contact one of our dedicated specialists.