There is no question that Amazon is a major marketplace that your eCommerce business should take advantage of. While the products you sell, quality of your page, and customer reviews all impact your success on Amazon, being available to Prime members is also a key to success. Amazon Prime members pay an annual subscription fee to receive their purchases as fast as possible, and the typical Prime member spends more than 2x the amount each year than their non-Prime counterpart. The Amazon Prime badge gives you accessibility to these Prime members and is a crucial part of successfully selling on Amazon. You will only earn the Prime badge by participating in one of Amazon’s fulfillment programs, Seller Fulfilled Prime (SFP) and Fulfillment by Amazon (FBA). But what’s the difference between the two? We break down what each of the programs entails and explain the differences so you can choose the program best suited for your eCommerce business.
Fulfillment by Amazon (FBA)
FBA involves sending your products to Amazon’s warehouse, where Amazon then packs and ships items to customers. With FBA, you will qualify for Prime status. Your inventory is managed by Amazon and orders fulfilled by Amazon, all for a fee of course. After you ship your inventory to Amazon, the entire fulfillment process is in their hands, including the return process and customer service.
- Qualify for the Prime badge.
- Amazon takes care of order fulfillment, allowing you a hands-off approach to shipping on Amazon.
- Amazon handles the return process and customer support, taking that stress off your plate.
- Association with Amazon’s brand. When you choose FBA, Amazon ships your products in Amazon packaging and with Amazon inserts, which can help smaller, unknown brands seem more credible.
- You must pay fees for storage and picking, packing, and shipping. The fees depend on the product’s size, and can, therefore, become incredibly expensive for large, seasonal items.
- Because FBA is a hands-off approach, you do not have the ability to check in on the distribution center, and you have less control of inventory management.
- You are leaving order fulfillment up to Amazon and their employees, which are subject to delays, missing items, or damaged packaging that will impact your brand reputation and ratings.
- FBA fees fluctuate based on the time of year, size of products, and how quickly the products move. You are at the mercy of Amazon’s changing fees and policies, which can really add up if you carry many slow-moving, heavy products.
- Multichannel FBA is very expensive and is not accepted by all sales channels. Using a combination of FBA and your own warehouses is possible, but becomes very difficult.
- While Amazon packaging has benefits, it can also draw away from your brand and your products can get swept under the massive Amazon blanket.
Seller Fulfilled Prime
In contrast to FBA, Seller Fulfilled Prime is an alternative method where you are responsible for fulfilling your own orders. With SFP, you still earn the Amazon Prime badge, but you handle all of the fulfillment using an in-house process or a third party fulfillment partner. With SFP, you have control over your shipping methods and costs, transparency of your inventory, and a strong process for multichannel fulfillment.
- Avoid the hefty FBA fees, especially if you carry a lot of slow-moving items, heavy products, or season products.
- You may be able to source rates for storage and shipping that are cheaper than paying for FBA fees.
- Greater control of inventory management and the ability to check in on the warehouses.
- Since you are in charge of returns, you can monitor the process and ensure the returned item matches the order.
- You have more control over your delivery quality and can select the shipping carrier that meets this quality.
- Consistent warehouse costs regardless of item size which allows you to maintain your prices instead of dropping them to push products quickly.
- You can list items that are not FBA approved under the Prime badge and fulfill them through your warehouse.
- SFP is ideal for multichannel eCommerce, because you keep all of your inventory in one location. Your shipping costs will be consistent across all channels and you can be eligible for Amazon Prime as well as other fast shipping programs on other channels.
- Build your brand by choosing branded packaging and differentiate yourself from Amazon. Customers can then focus on your brand and product and you can build a direct relationship with them.
- All of the responsibility for sending the products to buyers is on you.
- You will have to pay your own shipping fees.
- You must locate your own warehouse and inventory management system.
- Managing returns and handling customer service is your responsibility, which can be a major added stress.
Which One is Right for My eCommerce Business?
There is no one “right” choice for Amazon fulfillment. Both FBA and SFP have their advantages and downfalls, and which option is best will largely depend on your business. Regardless of which method you choose, it is important that you have the proper ERP in place. With Listing Mirror, you can sell more and work less. Our #1 multichannel product listing software will help you with listing data management, order fulfillment, inventory syncing, and warehouse management for all of your channels, including Amazon. We support both FBA and SFP, and can help you manage your inventory no matter which one you choose. Learn more about how Listing Mirror will simplify your Amazon fulfillment process by visiting our website or contacting us HERE.