How 3PLs can Offer Seller-Fulfilled Prime (SFP) Service to Amazon Sellers

Amazon has recently announced the reopening of enrolment for its Seller Fulfilled Prime (SFP) program after nearly four years of its closure. In this blog, we are breaking down what Amazon SFP is, the requirements sellers must meet to join the program, and how 3PL can enable Seller Fulfilled Prime sellers to sell and fulfill better.

Introduced in 2015, Seller Fulfilled Prime (SFP) is an Amazon seller program that allows third-party sellers to ship Prime orders directly to the customer on their own or using a third-party logistics (3PL) partner. However, in 2019, Amazon discontinued the enrolment in the Seller Fulfilled Prime (SFP) program, citing sellers did not meet the “delivery and fulfillment standards” expected by Amazon.

Importance of SFP for Amazon sellers and customers

The Seller Fulfilled Prime (SFP) offers various advantages to the various stakeholders in the e-commerce ecosystem, namely the Amazon sellers, consumers, and third-party logistics providers. Here are some of them:

Sellers

By participating in Seller Fulfilled Prime (SFP), sellers can display the coveted Prime badge on their listings. This can lead to increased visibility and conversion rates. There are over 180 million Prime users in the US, and sellers would not want to miss out on selling their products to them.

Additionally, it provides sellers greater control over their fulfillment processes, enabling them to maintain their brand identity, packaging, and customer experience.

The cost factor is another major reason why some sellers choose the SFP. For some sellers, handling the fulfillment independently or outsourcing it to a 3PL is more cost-effective than selecting the Fulfillment by Amazon (FBA) program that imposes multiple fees like storage fees, fulfillment fees, returns fees, etc.

Customers

Seller Fulfilled Prime (SFP) ensures that Amazon Prime customers can access a wider range of products eligible for one-day and two-day delivery, thus improving the shopping experience. Also, buyers can benefit from a more diverse selection of Prime-eligible items, as sellers from various locations and niches participate in the Seller Fulfilled Prime program.

3PLs

Seller Fulfilled Prime (SFP) enables 3PLs to offer Prime-eligible shipping options to their customers by meeting Amazon's fulfillment and delivery standards. This can expand their market reach and attract more Amazon sellers. It allows 3PLs to tap into Amazon's vast seller base and enhance their competitiveness in the e-commerce space.

What are the Seller Fulfilled Prime requirements?

Requirements under the Amazon Seller Fulfilled Prime Program

Here are the Seller Fulfilled Prime requirements that Amazon sellers must as mandated by Amazon:

Must offer free one-day and two-day delivery for Prime customers
Free nationwide standard shipping for all customers
Meet minimum thresholds for one-day and two-day delivery speeds as viewed by Prime customer detail page views
An on-time delivery rate of at least 93.5%
A valid tracking rate of at least 99%
A seller-initiated cancellation rate of less than 0.5%
Ship and deliver Prime orders on weekends (Saturday, Sunday, or both)
Must offer free returns on items weighing under 50 lb
All post-order customer service inquiries are managed by Amazon

Why 3PLs must enable SFP for Sellers

Enabling Seller-Fulfilled Prime (SFP) for sellers through third-party logistics providers can be highly advantageous for various reasons. Here are some of the major advantages sellers can benefit from by using the Seller Fulfilled Prime (SFP) program through a 3PL:

Increased Competitiveness Against FBA

3PLs trump Amazon FBA as a fulfillment partner for sellers on many fronts. 3PLs are generally more cost effective, provide a personalized experience, have 4PL benefits, and may also specialize in certain product categories. However, FBA has one key advantage – the ‘Prime Badge’ it offers to sellers’ products that fulfill through the program.

The appeal of this badge is a compelling enough reason many brands and sellers to continue using the FBA service offered by Amazon.

Now, with the introduction of Seller Fulfilled Prime, the much sought-after Prime badge is available to FBM sellers, too. The 3PLs that enable the same for sellers will be an attractive service provider, making them a favorable alternative to Amazon FBA.

Client expectations and demand

79.8% of customers prefer Amazon Prime for its free and fast shipping. For Seller Fulfilled Prime (SFP) sellers, 3PLs can ensure that their products and fulfillment meet these expectations, making them more attractive to Prime members.

Also, 3PLs can offer various shipping options, including express delivery, same-day shipping, or weekend deliveries. This flexibility allows sellers to cater to a broader range of customer preferences.

Improved retention and revenue maximization from existing clients

Seller Fulfilled Prime (SFP) through 3PLs allows sellers to maintain more control over the fulfillment process, ensuring a consistent and high-quality customer experience. It is no secret that consistency is key to retaining existing clients who expect reliability. 3PLs can maximize the value they attain from their clientele by offering the in-demand service of Seller Fulfilled Prime (SFP).

How can 3PLs help Sellers with Seller Fulfilled Prime?

Here are some of the instances where 3PLs can help sellers with SFP:

Working with reliable carriers

3PLs must partner with reliable shipping carriers with a track record of providing fast and on-time deliveries, ensuring that sellers can offer one-day or two-day shipping options to Amazon Prime customers.

Also, to meet Amazon's SFP requirements, 3PLs should have robust tracking systems in place. They must ensure that not only sellers but also the end customer have access to real-time shipment tracking information. This transparency is vital for managing and meeting client expectations and demands.

One way to ensure the reliability and compliance of the carrier's service is by partnering with carriers that are recognized and supported by Amazon.

Real-time integration with Amazon Seller Central

The fulfillment software 3PLs use must be integrated with Amazon Seller Central to streamline the seller's operations on Amazon. Real-time integration provides sellers with the confidence that their inventory levels are constantly updated, ensuring that any inaccuracies in the marketplace's inventory counts do not lead to backorders.

Additionally, since speed is the key in SFP, the integration can help 3PLS in sourcing orders the moment they are placed so that the fulfillment process can be underway instantly. Also, it can enable real-time updates and tracking for the end consumer – a critical success factor in SFP – and ensures sellers have an optimal tracking rate.

Maximizing the efficiency of pick, pack, and ship operations

3PLs can only meet the SLAs under Seller Fulfilled Prime – meeting minimum thresholds for one-day and two-day delivery speeds, shipping orders in less than 24 hours, etc – if they have an optimized pick, pack, and ship process. And maximizing the efficiency of pick, pack, and ship operations in ecommerce fulfillment requires a combination of strategic approaches. Therefore, 3PLs must choose the right fulfillment process that optimizes procedures, providing clear guidance to associates in their pick, pack, and ship operations while eliminating guesswork.

Secondly, they must create an efficient warehouse layout and manage storage to enhance picking speed, expediting the entire fulfillment process. For example, this can be done by placing frequently picked items closer to packing stations and optimizing shelving for easy access.

Additionally, using technology such as scanners, PDAs, and mobile computers is vital to eliminate the manual entry of location and product codes in the fulfillment process. These tools streamline order processing, reduce errors, and accelerate the packing and shipping of orders– ultimately increasing operational efficiency in e-commerce fulfillment centers. By having efficient pick, pack, and ship operations, 3PLs can help sellers have the required on-time delivery rate as mandated by Amazon.

Inventory distribution

Inventory distribution is a critical aspect of effective supply chain and fulfillment operations, particularly for 3PLs with multiple warehouses or utilizing a fulfillment network. Distributing a seller's inventory closer to demand centers offers several advantages.

By strategically placing inventory in proximity to areas with high customer demand, 3PLs can minimize order lead times, enabling them to fulfill orders more quickly and meet customer expectations for one-day or two-day deliveries. This ensures that SFP sellers meet Amazon's requirement of one-day/two-day deliveries for Prime orders.

Minimizing fulfillment errors to reduce returns

Minimizing fulfillment errors is essential for SFP sellers to reduce returns and adhere to Amazon's standard return rate and policies. 3PLs must minimize the returns due to fulfillment errors like incorrect products, variants, damaged products, etc. 3PLs can help Amazon sellers achieve this goal by implementing several processes, like introducing checks and balances within the warehouse to ensure that the right product is picked, packed, and labeled correctly.

Also, 3PLs must use sufficient protective materials and packaging to ensure near-zero damages during transit. Additionally, 3PLs must collaborate with reliable carriers who specialize in protecting products and are well-suited to the seller's specific product categories, which can further minimize the risk of damages and return requests.

Defined reverse logistics process

SFP sellers must have a well-defined reverse logistics process that meets Amazon's seller-fulfilled returns guidelines. This includes returns authorization, validation, timely refunds or exchanges, and compliance with Amazon's standards.

Hopstack for E-commerce 3PLs: Enhancing the efficiency and accuracy of high-volume fulfillment

3PLs that cater to e-commerce sellers selling on Amazon and other similar marketplaces are often underserved with the tools and technologies they use. The traditional pen-and-paper and spreadsheet-based processes do not cut it and make it nearly impossible for 3PLs to meet the clients’ expectations.

Hopstack’s 3PL warehouse management and fulfillment software is meant to solve this. With a focus on client SLAs, Hopstack helps e-commerce 3PLs maximize the efficiency and accuracy of their fulfillment operations.

Hopstack also comes with plug-and-play integration with the Amazon Seller Central, ensuring a continuous synchronization of orders, products, inventory, and delivery information. This is a critical factor in ensuring the right inventory levels reflect on the marketplace, orders are fulfilled promptly, and customers get visibility into their orders, all in real time.

Speak with Hopstack’s product specialist, and learn more about how the software can help boost the performance of your 3PL’s operations — including enabling your fulfillment business to meet the standards of Amazon Seller Fulfilled Prime (SFP).