Finding a 3PL for Seller Fulfilled Prime

By:
Rakuten Super Logistics
Aug 28, 2019

Ever since its beta launch in 2015, Seller Fulfilled Prime has been a hot topic for Amazon sellers. There are a ton of benefits to the program, but also some strict requirements and drawbacks. This post is designed to help eTailers find a logistics partner who can maximize the impact SFP can have on their business.

But before we start talking about 3PLs for Seller Fulfilled Prime, we should have a quick look at the full Amazon sell-ship ecosystem.

To be clear, we’re talking here about third-party sales on the Amazon platform, not goods sold and shipped by the company itself. In Q2 2019, 54% of paid units sold on Amazon were from third-party sellers.

FBA vs. SFP vs. MFN

There are three main ways consumers can get the goods they purchase from third-party sellers on Amazon. The most prominent is Fulfillment by Amazon, or “FBA” for short.

Fulfillment by Amazon

In the FBA program, sellers pay Amazon to warehouse, pick, pack and ship their goods, in addition to handling customer support and reverse logistics. Essentially, FBA allows Amazon to act as a super 3PL, putting its tremendous logistics network to work for tens of thousands of brands.

For sellers, it’s easy, and it guarantees that the item will be listed with the Prime badge. This promises buyers fast, free shipping, and increases the seller’s odds of winning a share of the Buy Box. (We’ll cover the Buy Box in depth later.)

Unfortunately, FBA is also quite expensive. Fulfillment by Amazon costs are broken down into two categories: fulfillment fees and storage fees.

On the fulfillment side, a small package (10 ounces or less) costs $2.41. Large packages (3-21 pounds) are $5.26 plus $0.38 per pound above the first three pounds. Fulfillment rates can eclipse $150 for extremely large, oddly shaped packages.

Inventory storage fees are on top of this. For standard sized packages, they’re $0.69 per cubic foot from January-September, and $2.40/cubic foot from October-December. Oversize packages are slightly cheaper per cubic foot.

Seller Fulfilled Prime

Introduced in 2015, Seller Fulfilled Prime gives third-party sellers the ability to list their items as Prime without paying for FBA. The program is pretty much exactly what it sounds like: Fulfillment is handled by the seller.

The upside is similar to FBA: You get the benefit of the Prime badge, and a shot at having the all-important Buy Box:

Buy Box on Amazon

On Amazon, it’s common for multiple sellers to offer the same product. But when a user clicks the “Buy Now,” only one is going to get the order. That’s the Buy Box.

Amazon algorithmically determines who should get the Buy Box order at any given time, with other sellers relegated to “Other Sellers on Amazon” below.

On desktop, 82% of purchases go through the Buy Box, and an even higher percentage start there on mobile. In other words, the Buy Box is a big deal. And while the algorithm for landing it is complex, FBA and SFP sellers have a dramatic advantage.

But There’s a Catch.

Amazon’s requirements for SFP are extremely stringent. To maintain your status, you must:

  • Complete a trial period
  • Offer premium shipping options (e.g., free one- or two-day shipping)
  • Ship a minimum of 99% of orders on time (usually same-day for anything that comes in before 2 p.m.)
  • Have less than 0.5% of orders cancelled
  • Use Amazon’s Buy Shipping services for 98.5% of orders
  • Use only approved carriers
  • Agree to the Amazon Returns Policy
  • Let Amazon handle customer service inquiries

Some of those are no big deal. Others, however, can create significant stress for sellers looking to fulfill Prime orders themselves. Smaller teams, for instance, can expect to have quite a bit of trouble getting every single order out on time. And since Amazon is quite strict, even a few hiccups can cost you your SFP privileges.

Merchant Fulfilled Network

Merchant Fulfilled Network, or MFN, is the third (and least attractive) method of fulfilling third-party orders on Amazon. It’s basically SFP without the requirements, and without the advantages of the Prime badge and the Buy Box.

On the plus side, MFN sellers can use custom packaging, receipts and the like. On the minus side, you’re an Amazon listing without a Prime badge or a realistic shot at the Buy Box for competitive items. Both of those are sub-optimal, to say the least.

Which Amazon Fulfillment Method Is Best?

To be truly competitive on Amazon, it’s basically a requirement to be eligible for Prime. That means Fulfillment by Amazon or Seller Fulfilled Prime are the two best fulfillment options.

If you have the right infrastructure in place, FBA’s hefty costs make SFP a very attractive option. But if you don’t have a plan, it can be almost impossible to keep up with the strict SFP requirements.

Finding a 3PL for Seller Fulfilled Prime

Fortunately, there are third-party logistics providers (3PLs) that specialize in helping third-party Amazon sellers meet Seller Fulfilled Prime criteria.

In this situation, the 3PL – rather than the seller – warehouses goods. When an order is placed, it automatically hits the 3PL’s software system, triggering it to be picked, packed and shipped on time using a Buy Shipping label via an Amazon-approved carrier.

Basically, it’s like FBA but less expensive and significantly more flexible. Listings are eligible for the Prime badge, and the chances of getting time in the Buy Box increase significantly.

Using a 3PL partner for Seller Fulfilled Prime is especially great for busy sellers or those without logistics experience. Everything from the order through delivery (and beyond) is handled by dedicated experts, leaving the seller to focus on core competencies like merchandising, marketing and advertising.

Without a 3PL, you’ll literally be shipping all your orders yourself. And you’ll have to do it perfectly, or else you’ll lose your SFP status.

Hallmarks of a Good SFP 3PL

To meet Amazon’s SFP criteria consistently, a 3PL should:

  • Have a nationwide warehouse network, including at least 5-10 strategically located facilities. This allows for rapid, inexpensive shipping to the vast majority of the country.
  • Have experience with the program. Dealing with SFP requirements can be difficult, and you don’t want to be the logistics provider’s guinea pig.
  • Utilized advanced software that integrates directly with Amazon, and gives you real-time visibility into order status and metrics.
  • Be focused on customer service. Putting your SFP reputation into someone else’s hands is a leap of faith. Make sure you pick a partner who’s on your side, 100%.

Conclusion

In this post, we’ve covered:

  • The different fulfillment options Amazon offers third-party sellers
  • Why Seller Fulfilled Prime sits in the “Goldilocks” zone – friendly on both cost and benefits
  • How outsourcing to a 3PL partner can help you take advantage of SFP
  • What to look for in an SFP 3PL

If you’re an Amazon seller and this sounds good to you, we’d love to help. Rakuten Super Logistics is one of the leading Seller Fulfilled Prime logistics providers in the U.S., with 18 years of fulfillment experience and a dozen fulfillment centers from coast to coast.

We can help build your business by giving you truly custom service and all the advantages of the SFP program without the hassle of fulfilling orders yourself or the hefty cost of Fulfillment by Amazon.

We’d love to work with you as you grow your brand on Amazon. Request a quote today, and we’ll be in touch ASAP.

Remember, the holiday season is around the corner. If you don’t have your fulfillment partner in place by October, you’re going to get left out in the cold. Contact us today, and leave Black Friday and Cyber Monday to us.