Amazon Seller Fulfilled Prime (SFP)
How to Sell and Win in 2023
Your Website vs Marketplaces
After an extended pause, Amazon reopened enrollment for its popular Seller Fulfilled Prime program in October 2023. Seller Fulfilled Prime, launched in 2015, allows Amazon sellers to independently handle fulfillment while still offering one-day and two-day delivery speeds for Prime customers.
Requirements for Seller Fulfilled Prime include shipping more than 99% of orders on time, having nationwide delivery coverage for all standard-size products, and weekend pickup and delivery. New Sellers must also complete a trial period to show they can meet the requirements.
Seller Fulfilled Prime gives Amazon sellers more control over their brand, inventory, and customer data, but meeting Amazon’s strict performance metrics is NOT easy. Many Sellers do not know how to truly measure and stay on top of these standards so as not to jeopardize their program eligibility.
Keep reading for key takeways from the session, as well as a transcript of the webinar.
Key Takeaways For Sellers
Even More Warehouse Locations Needed
In the latest round of changes, Amazon has increased the % of page views that must promise 1-day and 2-day delivery speeds across product size tiers for merchants on Seller Fulfilled Prime.
For standard-sized products, 30% of page views must now promise 1-day delivery, while 70% of page views must promise 2-day delivery. For oversized SKUs, those numbers are 10% and 45% respectively.
This requires sellers to have multiple strategically located warehouses, which are close to the major population centers of the US – the Northeast, Southern California, Chicago Midwest region and Texas.
If you have as many as four different warehouse locations, you may still be able to achieve only 21% 1-day promise. With the latest revisions to Seller Fulfilled Prime, brands could need as many as six to nine strategically located warehouses to meet the delivery speed metrics.
But one of the most confusing aspects of the program has long been the page views metric. What do they mean, and what real world implications do they have? Our panelists unpack that in the webinar – you can get access to it by filling out the form above!
Technology More Important Than Ever
In the latest round of changes to SFP requirements announced on October 1, 2023, Amazon has removed use of the On Time Shipment metric and replaced it with On Time Delivery.
On Time Shipping requires that orders placed before the cutoff time must receive a first carrier scan the same day. On the other hand, On Time Delivery requires that the package reach the customer on before the delivery promise shown to them on the product detail page on the Amazon Marketplace.
This is a positive change for sellers – consider a scenario where a customer in Pennsylvania has placed an order for a item at 5PM ET. The brand has two warehouses, one in New York and the other in California. While it is past the cut-off time in New York, it is still within the cutoff time at California. Therefore, the merchant is forced to use expensive 2 day air shipping from California. Now, the seller has the flexibility to hold the shipment till the next day and send it via ground shipping services, which can still meet the delivery promise committed to the customer.
However, this only works if you have amazing technology in place to handle all these complex scenarios six days a week and in real time. Matt Snyder, VP of Online Retail at Vari has been on Seller Fulfilled Prime for 7 years. In the webinar, he shares his experience on just how crucial technology is to excelling at the SFP program.
SFP Has Benefits Beyond Amazon
Many sellers recognize how difficult and demanding Seller Fulfilled Prime is. However, the positives of the program are well known – it gives you access to the Prime shopper, without being beholden to FBA’s expensive fees. This makes a lot of sense for big and bulky items, seasonal, long tail, slow moving SKUs.
However, one thing that is often overlooked is the advantages that Seller Fulfilled Prime offers beyond the Amazon marketplace.
If a seller can figure out a strategy and playbook to execute Seller Fulfilled Prime well, it enables them to centralize inventory management better. Rather than sending out some of you inventory to Fulfillment By Amazon warehouses, another portion to Walmart Fulfillment Services and another to your 3PL for Shopify orders, you can centralize inventory management. Beyond savings on fulfillment and storage fees, centralized operations allow you to reduce the number of relationships you have to manage, eliminating busy work and process management.
Our panelists share more insights on the benefits of the program (despite its difficulty!) on the webinar.
You can get access to the on-demand recording by filling out the form above. We’ve also placed the full transcript of the webinar below for you to read. If you’re new to Seller Fulfilled Prime and are looking to learn everything about the program beginning with the basics, you can refer our ultimate guide here.
All right. We are very excited to bring this topic to you today. With, Amazon reopening enrollment for Seller Fulfilled Prime this month, there’s been a lot of buzz about SFP, but not everyone knows exactly what it is and what it takes to be successful on it. So we have an, a panel of experts here today with us.
We have Manish Chowdhary, the founder and CEO of Cahoot, Daniel Sodkiewicz , who is the CTO and co-founder of GeekSeller, and Matt Snyder, the VP of Online Retail at Vari. So our goal here today is that you leave this webinar with a better understanding of what sellers can do to win while selling on SFP.
So, without further ado, Manish, I’ll pass this over to you, take it away. Oh, thank you, Garima, welcome everyone, really appreciate, your time and thank you for joining. We have, an exciting panel here – we’ve got Matt Snyder from Vari. He is a former Amazonian, and he is one of the early adopters of SFP.
He has been doing this successfully as a seller, as a brand for over seven years. So we’re going to hear some, battle wins and battle scars from the trenches. And then we’ve got, Daniel from GeekSeller. Daniel and GeekSeller provide outstanding technology to integrate all the different channels and keep the inventory orders in sync.
With fulfillment, you’ve got myself – Manish Chowdhary, founder and CEO of Cahoot. So we’ve got a lot of content to cover and Daniel will also talk about Walmart opportunity in addition to us talking about Amazon SFP. So let’s, what’s on the agenda today is we’re going to cover the basics of Seller Fulfill Prime. And what are the requirements? We will also talk about the changes to the SFP program that just took place on October 1. These changes are very important and very important for sellers to understand the implications.
And Daniel will talk about Walmart. Because Walmart also is a great place to take advantage of free and fast shipping badges. And then, we will have plenty of questions, for Matt and the rest of the team. We will talk about real world use cases. And then there will be plenty of time, hopefully, for questions and answers.
But please keep those questions coming in the Q& A box. If we can’t get to them during this call, we will certainly get back to you afterwards. So let’s begin with the basics for those of you who may or may not be familiar with Seller Fulfilled Prime. This is kind of the high level, what is the Seller Fulfilled Prime program.
So, most of the folks who are selling on Amazon are familiar with FBA. You know, Seller Fulfilled Prime is very similar to FBA. That is – both of these programs give you access to the Prime shopper. So there are about 130 million prime shoppers in the US and getting access to those Prime shoppers is very vital to be successful on Amazon or to achieve your full potential as a seller in terms of maximizing your sales.
So what’s the difference between FBA and SFP? Folks, please stick around. This is basics for those of you already familiar. We’ve got some advanced content coming right after this. So Prime – both of them give you access to Prime shoppers. In case of FBA – All orders ship from Amazon warehouses. With respect to fulfillment cost, Amazon charges you a fixed fee for a SKU that you know up front – regardless of where it ships from, from the Amazon warehouse, whereas in case of Seller Fulfilled Prime, you are doing the fulfillment – if you have your own warehouses. You can do it from your own warehouses, or if you’re taking advantage of 3PL partners, you can ship them through 3PLs as well. Um, as with shipping, the cost varies by zone. That means how far the package is traveling, the weight, the dimensions, unlike FBA, which is a fixed fee per SKU.
Storage space, we all know that FBA can be quite expensive, and those rates are going up. And it is still limited with respect to how much space you can occupy in FBA fulfillment centers. And that is why Amazon introduced the bidding program sometime last year to take to allow sellers to manage that space better.
With respect to Seller Fulfilled Prime because you’re shipping from your own warehouse or through a 3PL, there’s no such hard and fast limits. And FBA is generally ideal for fast moving SKUs. SKUs come in, you inbound the SKU, they leave very quickly. So the inventory is not sitting for a long time. And Seller Fulfilled Prime can be used for all SKUs, but particularly for longer tail, seasonal when you don’t know how predictable the demand may be, and big and bulky. There are significant savings over FBA – especially the heavier items, the items that Amazon FBA is not ideal for.
And the other advantage of Seller Fulfilled Prime is once you have this infrastructure set up, you can now offer the same fast one day, two day shipping on all the sales channels that you serve. And it’s the same exact cost. It does not cost more to ship a, let’s say a Walmart order or a Shopify order.
Whereas obviously in FBA, if you are doing multi channel fulfillment, that is you’re fulfilling orders that are not originating from Amazon, it will cost you more. So that’s the basics. Let’s dive in to Seller Fulfilled Prime. What are the key performance requirements for Seller Fulfilled Prime? And these are the high level, the top requirement is on time delivery of at least 93.5%. That means if the customer was promised that the order is going to be delivered on X day, it must get to that customer within 93. 5 percent of the time. Otherwise, you’ll be violating the SFP performance metrics. Valid tracking rate of 99%. So this is something that historically some sellers would, upload the tracking information to Amazon, but don’t actually ship the order just to kind of trick Amazon.
I’m not suggesting that sellers are doing it. However, Amazon has caught on and therefore it is very important that you’re providing valid tracking information to Amazon 99 percent of the time. So you cannot put tracking information today and not ship the order. Amazon will catch that.
You cannot cancel more than 0. 5 percent of the orders. That is, you cannot cancel more than one out of 200 orders. Otherwise, you’ll be violating SFP metrics. So this is all intended to provide that exemplary service to the Prime shopper that Amazon cares very deeply about. Now, on the right hand side of the screen, you’ll see delivery speed metrics.
And this is these metrics are often from our experience, the most confusing for sellers. Many sellers do not fully understand how they’re computed or how they’re measured. We have plenty of slides to cover that.
So delivery speed metrics is measured by the size tier. Amazon used to have two size tiers. They’ve just introduced a brand new tier called extra large. So standard size, which is majority of the items for most sellers, you need to deliver at least within one day, 30 percent or more of the orders or page views, and we will cover this.
We’ll unpack this in a little bit and two days, at least 70 percent of your orders or 70 percent of the page views must display two day delivery. And oversize a little bit less, but it’s more than what it used to be. So one day is 10%, and you must provide two day page views for oversize items at least 40 percent of the time, 45 percent of the time.
And extra large is a brand new category or tier that was just introduced. And you must now ship extra large items also nationwide. And you must provide at least two day delivery for 15 percent of the orders. And these metrics are measured on a weekly basis. So it’s a rolling metric. So, you know, if you had a bad week and you somehow got away, that’s okay.
But you’ve got to start all over again the following Sunday. So these metrics are very demanding and will unpack this shortly. So this is one of the most confusing metrics that sellers have trouble grasping. So this is an example of a screenshot from the Product details page on Amazon. This is what is displayed to the consumer.
So as you can see – this page is offering a one day delivery promise. So one calendar day promise. The order was shipped tomorrow. So let’s unpack what this means. So most warehouses, most 3PLs have a cut off time for same day delivery. That means orders received until 2 p. m. will ship that same day.
And anything after that will ship the following day. And so this is not uncommon because you also need to arrange for carrier pickups. So this is generally aligned with when UPS, FedEx, USPS come to pick up packages. You need to have enough time. So 2 p. m. is the expectation from Amazon or you can be later.
So if your warehouse can operate later than 2 p. m. good for you. That is certainly helpful. So in this particular case. If the consumer was looking at the page before the cutoff time, let’s say on Monday, then that order can ship on Monday, and if we are providing a one day promise, that order will arrive on Tuesday, so that passes the one day page view metric requirement.
Now. The same exact order. Let’s say you were looking at that page at 7 p. m. in the evening. It’s obviously in most cases past the cut off time to ship that order the same day. And by the way, you need to configure these in your Amazon seller central account. So all of these cut off times need to be configured very accurately.
So in this case, this order will ship the following day on Tuesday. It will arrive on Wednesday. So it does not meet the one day promise, but it does the two day promise. Now, let’s take a look at the weekend. This is one of the most demanding metrics. This is what trips a lot of the sellers and 3PLs, because as part of Prime, Amazon wants you to ship six days a week.
You can pick Saturday or Sunday. Most sellers, most three PLS prefer to operate on Saturday. So let’s say the consumer is looking at your product detail page after cut off time after 2 PM. Let’s say 3 PM on Saturday. So if they’re not operating on Sunday, this order will ship on Monday, arrive on Tuesday.
In this particular case, this page view does not count towards either one day or two day because it does not arrive for at least three calendar days. And this is, of course, assuming that the product or the order will get there in one day. Basically, these are the factors that influence your pageview metrics and which is what makes this program so challenging.
So, folks, please keep your questions coming in. And this is a broad view. You know, most sellers are operating with 2 p. m. cut off. At least that’s the standard with Cahoot right now. So, as you can see from this up at the top. If the order is received the same day, it will meet one day page view metric for Monday through Saturday.
But if it comes after the cut off, and it will not count towards one day, it will count towards two day. So we have an entire webinar dedicated to explaining this in detail. So if you’re interested, please reach out, put the information in the chat or Q& A, and we will send you a copy of that webinar. You can find it in the resources section of Cahoot.ai. So what does it take in order to meet these metrics? You know meeting one day SFP delivery promise essentially requires multiple warehouses with two locations. You can cover about 10 percent of 1 day delivery promise. But we know that that’s not sufficient because Amazon wants you to meet at least 30 percent one day now.
That is a requirement. With four strategic warehouse locations, and again, I say strategic because these warehouses have to be located where the page views are coming from. And page views come from where the population lives, which is primarily the biggest centers of population on the coast, you’ve got the Northeast, and then you’ve got California, Texas and then upper Midwest, the Chicago region.
If you have four strategic warehouse locations, you can meet about 21 percent of one day promise and 42 percent of the population. It gets really demanding because to meet the new SFP requirements, you may need as many as six to nine strategic warehouse locations. I know it may sound daunting, but we have tons of information on this specific metric, and you can look this up.
There’s a link here, but also if you reach out to us. We’ll be happy to send you a copy of that webinar.
Amazon introduced Seller Fulfilled Prime in 2015, and it was a phenomenally successful program because for the very first time, sellers had access to the Prime Shopper without utilizing FBA. And then they rapidly stopped taking new enrollment in 2019. They, shut down the program or rather they closed the enrollment, no new sellers could qualify.
And then most recently, just October 1, two weeks ago, they reopened the enrollment, but with a number of changes. And that’s what we will cover now. Next is what are the new changes that Amazon has introduced? Amazon seller team has been listening to seller feedback, and they’ve made some some changes, and many of them are for the better.
And we will go into that shortly. On a high level, there are three big changes. One is now Amazon does not track on time shipping. They track on time delivery. Meaning it does not matter that you ship the order on time. What matters to Amazon the most is are the customers receiving their orders as promised.
So that’s one big change, 93. 5 percent of the time. Number two, they have also increased the speed metric, meaning they want sellers to deliver products even faster. So October 1, 2023, many of those metrics have increased. And that applies to all SKUs, including oversize, and we’ll cover that. Previously in order to ship SFP, Seller Fulfilled Prime Order, you had to purchase the shipping label directly from Amazon using their Buy Shipping technology, which they have made optional. So this is all, a very positive change because previously through our own experience at Cahoot, we would encounter bugs or issues that could not be explained.
That’s why are we not receiving FedEx ground for this order when we can get it directly from FedEx. So now you can ship these orders directly on your account and not have to purchase those labels on Buy Shipping. So the old metric used to be on time shipping. That means you ship the order in time.
Amazon would take responsibility and they would not penalize you. But they’ve made the change now. They want you to look at on time delivery. There’s a risk associated with this because obviously all sellers rely on national carriers like UPS, FedEx, USPS and others to deliver those products to customers on time.
What if they are late? So this is something that we don’t know how this will play out because many of those scenarios are outside the control of the 3PLs. It’s outside the control of the seller. However, Amazon has put out this metric that 93. 5 percent of the time you must deliver as it was promised on the product details page to the customer.
The second which is similar, same day carrier scan, which is same day shipping, is no longer required. So, examine a scenario that a customer in Philadelphia ordered the item and they placed the order after the cut off time they had to ship the order.
Because let’s say it’s five p. m. It’s past the New York cut off time. However, it is still within the California cut off time. So previously, because of the on time shipping, the sellers had no choice, but to ship cross country, even though it made no sense. In the new scenario, because Amazon only cares about on time delivery, you could actually delay this order.
And ship it the next day because even with ground shipping, it can get there the next day and you can still meet those metric requirements, which is fast and affordable. So previously, this was not possible, and all of this requires some amazing technology because you have to do this at scale.
You have to do this six days a week. You need to do it in real time. So I know Daniel will talk a little bit about that, and I can cover more in Q and A. That’s why you need amazing technology to pull this off. And then you must stay on top of carrier SLA. If the carrier promises that this order will deliver in one day because you’ve delayed that shipment from California, but you’re going to ship the following day from New York warehouse, that order better get there.
Otherwise, it will compromise the 93. 5 percent metric. So, in summary, what has changed in terms of delivery speed? This is something that Amazon cares very deeply about because the entire Prime program, the basis of that is free and fast delivery. So, before October one for those of you who are enrolled in this program may already know one day delivery promise was expected 20%. It has gone up by 50 percent to 30 percent now and 2 day from 55 to 70 percent. Oversize – this is something that previously sellers could carve out a region and a shipping template and only target a certain geography, but now oversize must ship nationwide and it must also ship faster.
That means you must provide one day promise 10 percent of the time two day 45 percent and the new tier extra large, which was just introduced. Previously, Everything was over oversized. Now, extra large packages or items weighing 50 lb. or more, or if the length exceeds 96 inches. For TVs, it’s 40 inches or girth, which is length and width and height together, is 130 inches.
So for extra large items like Sofa, TVs and all that, you still need to provide two day delivery to 15 percent of the page views. And we already covered that oversized SKUs must ship nationwide. You cannot say, I will not offer this item to, let’s say, if you were based in California.
And previously you could say this product is not available to customers in the New York area. But now all of those will count towards your page view metrics, which means even for oversized SKUs, you will need multiple warehouses. Because otherwise your metrics will be compromised. And this is a big change even for the oversized SKUs.
We covered this briefly. Amazon Buy Shipping is optional. Previously there were some issues with Amazon Buy Shipping. We know firsthand having operated for, for several years. Now you can purchase the label directly from the carrier as long as it meets the delivery promise. Although there is some advantage of using Buy Shipping because you get the Amazon A to Z claims protection through Buy Shipping.
So you’ll have to weigh the options and what makes most sense for your business. And then this is something that Amazon had introduced and then they canceled this recently based on seller feedback that they were, as part of reopening enrollment, they were going to charge 2% SFP fee on all orders. But they, based on seller feedback, they’ve canceled this, which is great news for the sellers. Just by way of introduction. If you’re looking for a reliable Seller Fulfilled Prime partner, you know, you may want to check out Cahoot.
We are one of the top rated fulfillment solutions on Amazon app store, Shopify SourceForge and TrustPilot. We take care of all the requirements for SFP. We have late cut off, weekend fulfillment and provide full service fulfillment. We can send your inventory to FBA and also help you do FBM and SFP – Seller Fulfilled Prime along with any other channel.
And the cost is generally significantly lower especially if your items are bigger and bulkier. So you can realize savings in addition to the flexibility that the SFP Prime program provides. So this is great news. I want to move to Daniel next. Daniel – if you please take over and share what opportunities do sellers have with Walmart free and fast shipping because I know that that has a direct correlation on sales on any channel, especially on marketplaces like Walmart.
Hey, Manish. Thank you. So, yeah here in GeekSeller, we work a lot with Walmart sellers. And good thing about meeting all those very challenging requirements, for Amazon. You can actually use this to also offer your fast shipping on other channels such as Walmart. And similarly to what happens on Amazon, also on Walmart.
On average you may expect to receive 30 to 50% increased conversion on your products. That’s the statistics provided by Walmart as official numbers. But those are also the numbers similar numbers we are seeing across our customers, uh, who are enrolled into the fast shipping on Walmart at the moment. An equivalent program on Walmart equivalent to Prime are the three day and two day tags that you can get on your products.
For the three day, you do not need to really request access to it. For the two day, you have to actually contact Walmart and apply to get access to be able to attach this tag to your products. Both of them will benefit your visibility on the website. And those are the requirements for the 2 day.
So again, for 3 day, you don’t have to get approval. For 2 day – you have to meet some kind of requirements prior to being approved. You have to sell for at least 90 days or fulfill at least 100 orders. This is interesting actually those numbers are very similar to what you can see for Amazon but one big difference is that actually Walmart cares about on time shipping.
So they actually they want to see the tracking number, by the specific time to be provided to the customer. And again, yeah, you have to meet requirements in terms of the valid tracking numbers here. Very important thing that for example, you cannot provide the FBA tracking numbers, right?
It’s not permitted to use FBA. That’s why you’re maintaining your own facilities and working with 3PLs to ship products. You have to offer free returns and, of course, also pretty low cancellation rate. Similar to what you saw on Amazon – you have to have very clear understanding of the fulfillment times and what does it mean?
The expected delivery date. So again 2 PM is the default cut off time in the settings, but you can adjust this and, there’s this mandatory zero lag time for the two and three day delivery. So they expect to see the package go to the customers before the cut off time.
A little bit about how to meet those requirements – it is actually very important to have some kind of technology that supports you with first of all, making sure that you keep your inventory updated on the marketplaces especially on Walmart. They’re very strict about having the proper quantities to be displayed.
And you want to have some kind of automation rules, inventory rules that will decide which order is supposed to be fulfilled with a specific warehouse, especially if you are working with with 3PL companies or, and on top of this, you are using your own facilities, you got to make sure that.
Those facilities, the 3PLs they receive proper data that you have correctly mapped the requested delivery dates. And then again, similarly to Amazon, but also, very much, specific to Walmart. You want to make sure that as soon as the 3PL or your own warehouse gets the tracking number, this tracking number is immediately sent to Walmart.
Actually, we also noticed that Walmart provides information about the earliest time you can provide the tracking number. There are actually cases where Walmart complains that somebody provided tracking number too early. So that’s also an interesting case. So yeah, having a partner, it’s important.
Also, if you’re trying to build your own API integration, it’s kind of challenging because those APIs are constantly changing. You probably do not want to invest into developers and technology on maintaining, those connections. We have a dedicated team that is constantly monitoring all those changes in the API’s, implementing them, we had to go through a pretty strict audit, from Amazon, Walmart and other marketplaces to make sure that the API integration is compliant with the requirements of those marketplaces.
So yeah it’s good to have, good partners for the technology. So again, like, this is very nice that if you, if you are able to meet Amazon requirements to provide fast shipping, you can expand and use the same capabilities on other marketplaces.
I’m writing a lot on LinkedIn in terms of the industry. So if anybody’s on LinkedIn, I encourage to connect with me. Thank you so much. Thank you, Daniel. That was very informative. And last but not least, and we’ve saved the best for the last, which is Matt Snyder, who is a seller, a brand, a very successful one and a former Amazonian.
So welcome, Matt. If you wouldn’t mind, please introduce Vari, your company, to the audience and also tell us about your relationship with SFP and how important it is for Vari. Well, yeah, appreciate the invitation to be to join here today. Manish, it’s always been great chatting with you and the team.
So my name is Matt Snyder. I’m the vice president of online retail at Vari. Some may know us as VariDesks. So we we sell office furniture. So primarily standing desk, high adjustable desk. I joined the company back in early 2017, just shortly after Amazon had launched SFP program.
So we were very early adopters to the program. And what initially drew us to this program was our company had started as a DTC brand. And so starting on DTC pushed us to build out our own kind of 3PL partnerships, build partnerships with our carrier selections. And also just the fact that we are big and bulky products.
Fewer times we can move our products, the better. And so as we started looking at Amazon, so again, for us, Amazon was kind of a secondary, we were focused on DTC first, Amazon came second. And so as we started looking at the opportunity on Amazon, we were starting with the options between FBA and the Seller Fulfilled Prime program.
And so what stood out to us was we actually we can have a lower operating cost using Seller Fulfilled Prime. That was the initial. And then, as we kind of went a little deeper into and looking into it now, and did it have at the time lower cost for us, but also reduce some of the other challenges that often kind of comes with programs, whether that be you know, the extra time and cost it takes to get product from your warehouse into the FBA program. The inventory, once it’s in the FBA program is limited to Amazon sales. That’s changed slightly today with you know, a few other services that Amazon has that you can fulfill from FBA to your own DTC or other channels, but, you know, at the time that was, that wasn’t a part of the options.
And then thirdly is having the inventory locked up. If you are selling in DTC or other places, it does actually increase the amount of inventory you have to have on hand. So by having a more centralized inventory for us, also kind of lower capital and the volume of inventory you had.
So those were kind of the initial kind of 3 big pieces for us that we focused on. And so as long time members of the program, we’ve definitely have had our ups and downs through the program. We’ve been through the many different changes that it’s had from different performance metrics, the most recent here just being launched a few weeks ago.
And, you know, we’re still kind of working through it. There’s the thing you’ll find out in this program. There’s a lot of trial and error. A lot of just testing to see how small changes impact your overall performance. So, you know, through that, we’ve had our moments of being ineligible in the program and going through the process to get back in the good graces of the program to get our eligibility back.
But I’d gladly say that, you know, we’ve been in a very good position for quite a while where we’ve been able to maintain that, but it is always an ongoing, consistent effort to make sure we’re hitting those metrics and keeping it with our internal operations, you guys kind of alluded to this earlier in terms of the internal support from your technology team, your operations team, your care team.
There’s a lot of different moving parts that goes into this program. And that’s ultimately like one of the biggest hurdles or obstacles to overcome is just, you know, it does require specific skill sets and expertise and partnerships to make this program work. But when it does work it does provide a lot of value.
To sellers and speaking of value, Matt – I’m sorry, not to cut you off, but speaking of value. You know, you’ve experimented with turning on Seller Fulfilled Prime – could you talk a little bit about that value in a quantifiable way, meaning, as painful as this program may be, but it has a significant value to the sellers in terms of sales lift. Being able to access the prime shopper. I know Amazon has officially proclaimed in the past that some sellers can see sales lift up to 50 percent by having Prime badge versus not Prime badge. What has been your experience? Yeah, I don’t think anybody can deny the fact that the Prime badge adds not only Sales lift .It provides that, you know, oftentimes when customers are shopping, if they’re a Prime customer, they’re either using that filter at the top of the page to only view Prime products or if you’re not Prime, that makes you ineligible or removes you from the search results.
But we also know that it’s just speed makes a big difference when they’re making that purchasing decision. So I think this impact is going to vary based upon the product category that you’re, that you’re selling in. For us specifically – within our category, most of our competitors at this point are all Prime eligible.
There’s a few that are not just due to certain constraints that again, being big bulky products. There’s sometimes restrictions that won’t allow you to be on FBA, but when we’ve had our times of turning Prime off, whether that be for weather impacts or other eligibility, things like that, you generally see about 20 percent kind of swing in sales during that period of time.
So it certainly does play a part in our overall conversion and revenue performance. Wow. 20%. That’s pretty meaningful- especially for a mature, successful brand like yourself who is selling, on many channels. But I know as we were preparing for this call, Matt the way you all think about Seller Fulfilled Prime or delivery speed is beyond just the Amazon channel. And there is a greater purpose behind this distributed inventory and why to do Prime and not go to FBA. Could you share some of your reasons that other brands and other sellers can learn the advantages of this program beyond the sales lift? Yeah, you know, and I think we kind of start talking about this a little bit earlier with Daniel in terms of Walmart, as more and more sellers are going beyond just Amazon today, whether that be Walmart, your own Shopify page or other marketplaces, you know, the challenge becomes, are you going to continue to enroll in you know, WFS for Walmart or other alternatives you know, similar to those and these other marketplaces or your own Shopify, the more that you decentralize your inventory.
The more your costs are going to go up. And in this way, if you are looking to expand into more marketplaces and retail channels, once you can centralize those, those resources, it brings down your need for additional inventory it cuts down on the replenishment time that you have when products do go in or out of stock and just gives you greater advantage in terms of scaling up and scaling quickly when you’re looking to add new marketplaces.
So I would say that’s definitely one that’s often overlooked when you’re thinking about building this out. And again, I think 1 of the key things we start looking into this program. There’s a lot of questions you need to be asking upfront to make the determination.
We’re big and bulky, but for some sellers and the type of products they sell either by price point or by product size, you know, the program won’t work. That doesn’t mean you shouldn’t still explore creating your own type of merchant fulfillment. So I think there’s additional values to explore there. But in this case, maybe SFP doesn’t work for you because of your price point or size.
But I wouldn’t let that keep you from still exploring your own merchant fulfillment services to help you expand these other solutions for these other marketplaces. Great, great point. I mean, there’s just in time inventory. You can stay leaner with your inventory with Seller Fulfilled Prime because you’re not as bound by the Amazon inbound delays, which happens quite a bit, especially in Q4.
Many sellers like to do kitting. Because they want multiple items to be sold together as a kit. Amazon does not provide those services. You covered big and bulky, but FBA storage fees can be can be significantly higher. They are three times higher in Q4 which is also a factor and also higher returns.
This is something that we, hear from sellers almost on a routine basis that, because it’s so easy to return the item to FBA, the consumer finds it so convenient to return and, and sellers generally experience a higher return on FBA versus SFP.
Matt, I know you built your own technology infrastructure, and you have multiple warehouses, even though you’re big and bulky.
Could you chat a little bit about what role does technology play? And fulfillment partners – what all are the different factors that it takes to pull off SFP metrics and stay successful for seven years that you have? Yeah, I certainly don’t want to overwhelm or dissuade people from pursuing this solution with this response, because there is a lot that goes into it. You know, for us, if you really think about it, the initial step is we got to get those orders out of.
That’s our central platform and into our platform as soon as possible. So we have, you know, API calls that are constantly going, pulling those order files out of Amazon. And then that goes, we’d make about every 15 minutes. Then we’re sending those catalog of orders out to our warehouse.
We are kind of dispatching then based upon where the orders shipping to and based upon where we have inventory. So, makes that determination of which warehouse assignment it’s going to. I think is pushed out to those warehouse locations, where we have teams constantly pick packing and shipping.
You kind of alluded to the, the cutoff times earlier. So 2:00 PM. One thing to keep in mind here just to this, could be a pain point or catch somebody if they’re not paying attention to this. The 2:00 PM is a rolling 2 p. m. And so in this case, if you have say, like, we do, we have 4 locations. That 2 p.m. cut off technically for anybody in the U. S. would be 2 p. m. West coast time, uh, so in this case if a customer is in Florida. And it’s 1 p. m. West coast time, that’s still technically within the cut off time, because we have a location West Coast, and you have pointed out this earlier, we could.
We can have that order shipped out of California that same day, we could push it to the next day and ship it from our warehouse is much closer. There’s risk in both of these – you’re shipping from the West Coast and it’s going to cost you more, or you ship from our case would be Atlanta, that’s the second day.
But there’s risk with those, with those speed times. But that’s something that, again, as we kind of get into this, there’s a lot of these kind of considerations and factors you have to account for, which goes back to the importance of the technology solutions in place. So, obviously, once the orders get out to warehouses, it’s pick pack ship, making sure you got the carriers there on time, picking up scanning.
So all this, you know – if you don’t have the right automations and technology place in place to make this work seamlessly. I couldn’t imagine anybody doing this at scale with manual processes. Certainly having the right technology partners is critical, but then also having the right partnerships with the warehouse and the carrier.
We think about the 2nd, part of this, the warehouse partnerships, you know, we, we put a higher focus on our Amazon orders. Then we do our own orders. And so there is a lot of process planning and intentionality that goes into the warehouse level of how they pick and pack, how they get it ready for the truck when their carriers come, we load Amazon orders last.
So they’re at the front of the trucks. When they hit the hub, they’re the 1st to come off 1st to get scanned. So every little piece that you can do along the way. That can make a small difference of that order, either getting delivered on time getting delivered late. There’s a lot of dependencies on outside sources, whether that be technology, warehousing or carriers that goes into this. So it’s very critical to have those close connections with each of those and also making sure you have really good oversight over each of those. So, the moment you see something not performing correctly, you can take the right reaction – whether that’s turning off your Prime until you get the solutions in place, but then also being able to have that ability to go in and make those corrections with the appropriate party at the time.
It makes a lot of sense, Matt. Thank you. I want to open this up to for Q& A now, and while we are getting the questions Garima, you want to?
Yeah, I know we don’t have too much time, but I think we can take a couple of questions here. The first one that we have here is – which SKUs make most sense for SFP rather than FBA?
I can start with that and Matt can chime in and Daniel, if you wanna. Big and bulky is a no brainer because it’s cheaper than FBA – that’s clearly one of the top categories. Anything perishable. Those are also very difficult. Amazon does not accept items that melt in the summer. So you cannot even send those products to Amazon. Anything that requires any form of kitting, any kind of additional pre work. Those items cannot be received by FBA. If you want to run very lean on inventory, that means you don’t want to send tons of inventory, which also increases your holding cost in addition to the inbounding delays and storage limits and the higher storage fees.
So, Amazon FBA is very, very good for the smaller items that are very cost effective and if you can send up ample inventory. Matt, if you want to add to that, please go ahead. Yeah, one other consideration I’d say is seasonality. I’ve talked to a few sellers where, you know, their peak season is, let’s just say like the holiday season, whether that be, maybe like costumes for Halloween, for example, or they have a very, very small window.
And yeah, there’s some ways now that you can go and you can get excess capacity for, for FBA. But there’s a lot of challenges to do that. And so this is another one of those areas where I probably look at SFP as a even if it’s not a full replacement, it’s, it’s something to subsidize or help with your FBA efforts, for seasonality or you alluded to the big and bulky. That’s typically where we see it as the big and bulky and in most cases, but seasonality be the other one I would strongly consider.
Right, right. Yeah. And just this morning I was speaking with another seller that sells high value electronics, you know, Apple iPhones or air pods, and they don’t want that inventory going into FBA. It’s easy to get lost. It’s easy to return. Items don’t come back efficiently. So there’s a lot of shrinkage that happens, especially with high volume consumer electronics as well.
Garima, we’re ready for the next question when you are.
So the next question we have is what advice can you give to a seller who’s new to SFP or considering doing SFP? Any other tips?
Yeah. I would say before you actually start – don’t jump into this, get into the enrollment, get approval and try and figure out as you go. Put a plan in place. First, there’s ways to kind of do a cost analysis of the program. We all know, like, there’s a calculator you’re going to use to get your cost.
You’re going to need to do a kind of cost analysis, you know, economics of this before you get started. Go talk with companies like Cahoot. Do exploring out there, find a couple of different options that are available to you out there. Start having this conversation of what we talked about technology.
We talked about the 3PL and the carrier services can work through those all those processes to understand what your costs are going to be. Right. And then you can sit down, do those evaluations, do that first so that when you go into Amazon and you get enrolled the program – you’ve got a three month trial period and you have to make sure that you really perform at a hundred percent capacity during that period, because if not, then, you know, you’re going to get kicked out and you’re not going to get back in.
Right. So it’s be diligent before you get started, make sure you’ve really done the due diligence of economics — you’ve got your plan in place and when something does go wrong, because it will, there’s always going to be hiccups that happens in this program, be prepared of how do you react and respond to it.
So those would be like, my key ways of advice to somebody new to the program and find somebody who’s doing it, reach out to them, ask for their insights and advice. You know, I’m always happy to talk with sellers who are exploring the program, if something does go wrong to give them some insights to how to look at fixing the issue that they’re experiencing.
Great point. I think one last question. Sorry. Sorry. Go ahead, Garima. No, I was just saying that Cahoot does provide that kind of savings analysis, so the economic analysis that Matt is referring to, so if any of you are interested, please reach out. But Garima, next question. I know we are running short on time.
Yeah. Just about two minutes left. I think one last question that both Manish and Matt can sort of chime in on. What can I look for in a fulfillment partner for SFP?
I can take this one. Again, uh, all the requirements must be met. Late same day cutoff, weekend delivery, weekend shipping, outstanding technology. It is a very demanding program – there is very little room for error. Orders must go out. You must maintain sufficient inventory at the different fulfillment centers.
Otherwise – you’ll end up paying considerably higher on shipping cost, even if you have your own warehouse or using 3PL, having great technology and oversight. SFP is not a program you set it and forget it. You have to stay on top of it almost every day, and Matt can probably speak to his large operations team that he has that monitors everything despite having a proven 3PL and proven partners.
Requires constant care and feeding. I’ll hand it over to Matt for his insights. Yeah, I would say there’s probably a small number of 3PLs that are you know, at the level needed to perform. So certainly recommend you, you reaching out, speaking with Manish and the team. As you’re evaluating, I’ll say the questions would be like, are you currently operating or offering SFP to other sellers?
If they’re not, I wouldn’t advise going down that path of trying to be the first to help them figure this out. So if they’re offering – more than likely at that point, they probably have the solutions in place already for the technology. So it makes it easy for you to kind of tie into their technology solutions to make that simple for you.
The 3rd would be like, do they have carrier relationships? The challenge here is you can you can still purchase shipping from Amazon. You can use your own carrier. Or in this case, if they have a strong carrier relationships already, or they have very good rates, then you can leverage those rates to help you with your cost savings.
So those would be kind of the key areas I would look at in my evaluations.
Awesome. Matt, thank you. We are out of time. So, want to respect everybody’s time and thank you everyone for joining. Send us more questions if you have, reach out, the contact information is here. You can, you can reach Matt Snyder on LinkedIn, you can find him, he’s very active. Even if you are just interested in learning more, we have tons of content available to you, and we will send out a copy of the recording, in a few days, once it gets processed.
So, thank you again, everyone, for joining. Have a great rest of your day. Thank you, everyone.
Daniel Sodkiewicz, CTO and Co-founder of GeekSeller
With a diverse background in software engineering, web design, and business development, Daniel, who operated a web design studio in NYC for 8 years, is now dedicated to leading GeekSeller from Austin, TX.
Matt Snyder, Vice President of Online Retail, Vari
Matt is a seasoned Vice President of Online Retail at Vari, a leading office furniture innovator. With a remarkable 15-year career in the realm of online retail, Matt has honed his expertise in retail media strategy and marketplace operations through his impactful roles at Woot.com, Amazon, and Vari (formerly Varidesk). A data-minded digital marketer and a strategist in merchandising, fulfillment operations, and online marketplaces, Matt has led transformative online retail initiatives that have collectively generated over $500 million in sales on the Amazon platform. His visionary approach and leadership have consistently driven business growth and innovation in the ever-evolving world of e-commerce.
In addition to his significant contributions within the industry, Matt currently serves as a Board Advisory member for the Prosper conference further demonstrating his commitment to shaping the future of online retail and fostering meaningful connections in the field.
Manish Chowdhary, Founder & CEO, Cahoot
Manish Chowdhary is the founder and CEO of Cahoot, the world’s first peer-to-peer order fulfillment network where merchants collaborate to increase their sales and margins by offering profitable one-day and two-day free shipping to customers nationwide. Manish has founded multiple industry-leading companies starting from his dorm room at the University of Bridgeport, CT. Manish’s specialties include e-commerce strategy, business methods innovation, supply chain and logistics optimization, and he holds 10 U.S. patents for his inventions. He has been featured in The New York Times, Forbes, Internet Retailer, and many other leading publications. Manish is a 40 Under 40 Competition Winner and holds an Honorary Doctorate, the highest honor from his alma mater, University of Bridgeport, CT.