FBA or SFP: How to Sell on Amazon Prime

September 27, 2020
Written by Kevin Wong
amazon seller consultant

Amazon now has over 150 million Prime subscribers worldwide as of January 2020, according to CEO Jeff Bezos. What does it mean for sellers like you? It implies that, if you're an Amazon Prime seller, you can offer your products to more than 150 million ready-to-buy customers. What's the catch? You need to figure out how to sell stuff on Amazon with the capacity to fulfill its free one-day shipping policy.

One-day shipping?!

Yes, this is the competitive advantage of Amazon Prime. Because of this enticing feature, more consumers are joining the program. Now, it's up to you, the seller, to make this happen. What do you need to do? Do you have to optimize your listings to be visible on Prime? Where can you hire a first-class courier service? If you're willing to try this business venture, read on and let's dive into the nitty-gritty of how to sell stuff on Amazon Prime.

What is Amazon Prime?

Let's define Amazon Prime based on the benefits a customer can enjoy:

Top-notch delivery service

The primary benefit members can receive on Amazon Prime is the FREE and FAST shipping service for qualified purchases. It offers two- and one-day shipping on eligible orders. Prime subscribers can get two-hour delivery for free if their zip code is included in the Prime Now list. Are you shopping on weekends? It allows shipping every Saturday as low as $7.99 per item. For standard shipping, the waiting period is only 4 to 5 business days.

Unlimited streaming 

Prime users can enjoy unlimited streaming of movies, TV episodes, and music. Customers may watch Amazon Channels like HBO, SHOWTIME, and STARZ. It also has Twitch Prime, which is perfect for avid gamers.

Shopping galore

Members can get exclusive savings from Amazon's Whole Foods Market with 2-hour delivery in select cities. They can also earn 5% back when they shop at Amazon.com and Whole Foods Market using the Amazon Prime Rewards Visa Signature card. Prime customers can get seven days to try the items in Prime Wardrobe at home before purchasing it. 

Reading and other benefits

Prime subscribers who love to read can borrow various reading materials from the Prime Reading catalog. They get early access to download new books for free every month. Amazon also allows two adults living in the same household to share particular Amazon Prime benefits. Plus unlimited photo storage using Amazon Photos.

5 Reasons why you should start selling on Amazon Prime

It seems Amazon has every benefit you could ever want as a Prime member, now it's up to you to push your products on the market. Here are other reasons for selling on Amazon Prime:

  1. Prime members are the loyal members of the Amazon marketplace. On Amazon Prime, customers voluntarily come to you and not the other way around. 
  2. Amazon does the marketing for you. When you visit Amazon Prime's website, its homepage displays all the benefits that their subscribers can enjoy. Plus, the lure of free and speedy delivery service.
  3. You will have exclusive access to Prime's ready-to-buy customer base. Its subscribers possess high purchasing power, considering the rewards they could get as a member.
  4. Besides having strong purchasing power, Prime subscribers are also willing to pay more. They have no qualms of spending a monthly membership fee of $12.99 or an annual fee of $119. On average, Prime members spent $1400 on Amazon each year. It is twice the yearly spending of non-Prime members.
  5. You will have a chance to win the Buy Box by default. Enough said.

How to sell stuff on Amazon Prime

You have two options for how to sell prime on Amazon: Seller Fulfilled Prime (SFP) or Fulfillment by Amazon (FBA). 

Seller Fulfilled Prime (SFP)

On SFP, Amazon allows you to handle fulfillment and shipping. You can store inventory in your chosen warehouse, thus, gaining greater control over returns and refunds. However, there are requirements you must meet as follows:

  • You're committed to pick, pack, and ship items the same day.
  • You can deliver 99% of orders on time.
  • Your order cancellation rate is at least 0.5%.
  • You're using Buy Shipping services from Amazon in at least 99% of your orders.
  • You must adhere to the Amazon Returns Policy.
  • You're using SFP carriers from Amazon.
  • You're authorizing Amazon to take care of your customer service inquiries.

After you make it to SFP's waitlist, you must undergo a trial period to prove that you can meet the requirements above. During the trial period, your products don't have a Prime badge on it yet. If you pass the trial period, the Prime badge will show on your enrolled ASINs, and you're automatically registered in SFP.

Fulfillment by Amazon (FBA)

It is the opposite of SFP. You will let Amazon handle the fulfillment of your orders and your inventory is stored in Amazon's fulfillment centers. Using FBA, there is the condition that you must follow Amazon's product and inventory requirements. See the complete list here.

Have we mentioned that you're eligible for Amazon Prime once you enrolled in FBA? Yup. There's no need for a waiting list or a trial period. Therefore, Amazon shoulders the burden of one- or two- free shipping. It comes with a price, though, and a hefty one that is.

Do you need to worry about Amazon product ranking on Prime?

Here's the general idea behind the product ranking on Amazon Prime. Initially, you don't have to worry about your Amazon product ranking because its A9 algorithm does that. 

Regarding consumer behavior, Prime members are likely to click products with a Prime badge or filter out non-Prime products. You don't even need to search for tools for Amazon sellers to rank your product listings, since the prime badge already puts you a step ahead. 

However, you must practice due diligence by optimizing your listings every now and then, especially, if you're a new seller on Amazon. It would help if you still built your seller metrics from scratch. Perform rigorous product research and keyword research. Remember that your listings must be optimized before launching it in the marketplace.

In a nutshell, Amazon Prime allows sellers to engage with the most loyal buyers in the marketplace. The challenge is how to sell stuff on Amazon with a fast delivery service. Which one is perfect for you: SFP or FBA? If you have your own warehouse and an inventory system in place, choose SFP. On the other hand, if you're willing to shell out money and know yourself that you cannot meet SFP requirements, go for FBA. Thoroughly assess your business situation to take advantage of the benefits Amazon Prime offers.

Do you want to prepare your product listings before selling on Amazon Prime? Seller Interactive has a team of expert Amazon consultants willing to help and guide you. For inquiries, email [email protected].

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