There’s one marketplace dominating large parts of global ecommerce right now – and that marketplace is Amazon. Within Amazon, there’s one area experiencing huge growth, and that area is Amazon Prime. Amazon Prime Day on 12th July generated the kind of buzz other marketplaces can only dream about. Across the Volo platform we saw gross merchandise value increase 55% over the previous 30-day average, while Prime Day 2016 was 42% busier than the previous year, which was the very first Prime Day.
Sellers are scrambling to win the attention of the Amazon Prime customer and fighting to win the Amazon Buy Box. They’re qualifying for the Amazon Prime mark by using Fulfillment by Amazon (‘FBA’) and sending their consignments to Amazon seller Fulfillment centres across the world. They’re also fulfilling Prime orders themselves, shipping from their own warehouse to the same high standards as Amazon. And they’re winning big time. What’s going on?
A brief history of Amazon Seller Fulfilled Prime
Late in 2015 Amazon launched a closed beta programme called ‘Seller Fulfilled Prime’. This was in major part caused by pressure in their FBA Fulfillment Centres by slow-moving seller stock being stored for a long time. Presumably the thought process was ‘why don’t we invite sellers with excellent ratings the chance to offer Prime shipping options and ship from their own warehouse, using our logistics?
The beta was extended by invitation to more and more sellers as Amazon refined the model. Sellers were jumping on the juggernaut and accessing the lucrative Prime customers. They were saving on both shipping to and storing at FBA centres and they were seeing remarkable returns. To illustrate this point, two Volo customers have seen a 100% increase in Amazon GMV over several months. Amazon has decided that Seller Fulfilled Prime (SFP for short) is ready for global prime time, if you pardon the pun, in August 2016.
The Seller benefits from Seller Fulfilled Prime
Amazon Prime customers currently number 57 million, up from 40 million in 2015. These customers pay a $99 annual fee, or the local currency equivalent, are fiercely loyal to Amazon and choose to buy items with Amazon Prime badges next to them for the great value and the free shipping. They also benefit from other Amazon services targeted at them. The average Prime customer spends double that of their non-Prime counterpart.
Amazon predicts that sellers joining Seller Fulfilled Prime will see a 30 to 40% jump in their sales, and we’ve already shared with you a couple of higher returns from Volo customers. As long as they keep their metrics up to the required standard, Seller Fulfilled Prime sellers benefit from up to 60% cheaper couriers through the Amazon Logistics network and can also rely on excellent Amazon customer service.
It’s entirely possible for sellers to win the Prime badge with large bulky items that are unsuitable for FBA, as well as FBA-ineligible items (typically those deemed hazardous materials). Since Prime is so closely tied to winning the Amazon Buy Box – whose determinants centre on price, the customer experience and seller track record, sellers can also compete successfully with both FBA sellers and even Amazon Retail itself.
How to jump on the Seller Fulfilled Prime Juggernaut
In a nutshell, there are 2 phases to getting on board. The first phase is known as ‘Premium Shipping’. An Amazon seller can set up new shipping templates that allow 1-2 day shipping and this allows you to offer extra charges for certain geographical locations. Premium Shipping is great for you because shipping rate is an important metric in winning the Buy Box. You can also make far more specific shipping profiles than ever before, which gives you additional flexibility and helps with profitability.
If you perform well using Premium Shipping, you can contact Amazon – or perhaps they’ve had their eye on you and have already contacted you directly – to register your interest in the second phase, which is Seller Fulfilled Prime. Providing you meet the shipping metrics and have processed enough Premium Shipping orders, you are SFP-eligible and can submit a list of items you want to set as ‘Amazon Prime’ labelled. Amazon reviews the performance of how your Prime labelled items are being shipped and if enough volume has been despatched, they’ll allow you to have the Prime badge on your item offers. You must use Amazon Logistics for all shipping, except where they don’t have postcode coverage and then an approved carrier can be used. You apply both Amazon logistics and approved carriers to orders through Amazon functionality known as ‘Buy Shipping’.
So, what to do next with this Seller Fulfilled Prime thing? Well, the best first place to go to is Amazon Seller Central, where you can find out the detail on the programme eligibility and requirements (you’ll need an Amazon Seller Central account to access these links).
Read back later this week and find out if Seller Fulfilled Prime is right for you…