Top 3 Alternatives to Amazon FBA

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What’s not to love about Amazon FBA? List your product on Amazon, send them your inventory, and reap the rewards of the Amazon Prime badge and low shipping costs (though FBA fees are rising again).

It’s a great deal for those that can get it, but sellers need to be aware of rising FBA fees. It’s also limited in two key ways: 1) it’s an inflexible point solution and 2) Amazon simply doesn’t have enough space. And no wonder; Amazon adds about 3,700 new 3rd-party sellers a day, so FBA can’t keep up with demand. Amazon’s response is to limit FBA to work well only for the SKUs that maximize their profit (not the sellers’) and to impose restrictive inventory limits.

Sellers that want to grow both on and outside of Amazon will need an alternative to FBA to keep their growth engine humming. Read on to learn more about what to watch out for with Amazon FBA and your options for other ecommerce order fulfillment solutions.

Why You Can’t Rely on Just Amazon FBA

Amazon FBA will do a great job of fulfilling a portion of the volume of your small SKUs sold on Amazon, but it falls short otherwise.

Comparison between shipping items using FBA and ground shipping

image courtesy: Amazon FBA Revenue Calculator, DIY Shipping estimated using discounted shipping rates for Zone 4 Residential shipping

The above example is typical of Amazon FBA fees: their price for small and standard items beats other options, but even slightly oversized products like the example 5lb dog bed ends up costing almost double a merchant’s price shipping it on their own. The reason is simple – they’ve optimized their network for small, easy, and efficient products.

As a result, Amazon sellers that use FBA for their shipping are boxed in when it comes to growth, and they all compete with one another to sell the same small, cheaper items. If FBA is your only good option, you can’t profitably expand your product line to larger, less competitive options because fulfillment fees will eat up your margins, making a 3PL a necessary consideration. If you raise price to compensate, then you’ll lose to the savvy merchants who have diversified their fulfillment strategies and can get the product to the customer at half the price.

The challenges don’t end there for Amazon FBA. ecommerce’s year over year unprecedented boom in growth has delivered massive returns to Amazon and Amazon sellers, but it’s also left FBA bursting at the seams. To compensate, Amazon switched from ASIN-level inventory limits to product type inventory limits and overnight sellers saw their inventory limits cut by up to 65%.

The popularity of FBA leads to restrictions and limitations to the service

image courtesy: US Census Bureau, Marketplace Pulse, Cahoot interviews with merchants

On top of the lower limits, Amazon FBA is also experiencing receiving delays of up to three weeks. This creates a huge window of time in which a seller can run out of stock on a key item: even if the seller sent a timely replenishment, receiving delays can create the issue. In the peak selling season, this is an even bigger problem. Demand surges can easily run an item out of stock in a matter of days or even hours, triggering a death spiral in which a product loses its search rank, which lowers impressions and conversions, which in turn lowers inventory limit again.

It’s clear that Amazon FBA is no longer an all-in-one solution for Amazon sellers. It’s a point solution that can be an important part of a fulfillment strategy but needs to be augmented to cover for its flaws.

Evaluating Amazon FBA Order Fulfillment Alternatives

Amazon FBA’s structure tells a valuable, if simple lesson: the most cost-effective way to offer nationwide 1-day and 2-day delivery is to create a distributed fulfillment network that always has inventory near the end customer. This setup enables 1- and 2-day delivery with economic ground shipping; the best of both worlds.

To enjoy the same benefits of Amazon FBA’s network without the same drawbacks, sellers’ options generally fall into three main categories:

1. Open Multiple Fulfillment Centers Yourself

Merchants can take it upon themselves to open multiple US fulfillment centers, but today’s environment is extremely challenging. Warehouse space has never been more limited or expensive, and there are an incredible 400,000 open job positions for frontline ecommerce order fulfillment workers. On top of that, opening one’s own centers ties up significant capital and is risky – if a seller picks a sub-optimal location, or a location becomes sub-optimal as consumer preferences change, they’re stuck footing the bill.

2. Third-Party Logistics Companies (3PLs)

Another option is to outsource fulfillment to multiple 3PLs. These are generally smaller, independent companies not connected to any specific marketplace but 3PLs can offer comprehensive supply chain solutions. You will have to contract numerous 3PLs to get nationwide 1-day and 2-day coverage. Order routing across disparate 3PLs is complex and labor-intensive, so you may need to invest in expensive fulfillment software to make it more efficient. Fulfillment costs will vary between 3PLs, and not all of them can meet the strict SLAs needed to win the Buy Box on every marketplace, so be sure to use something like a 3PL request for proposal (RFP) template to get an apples to apples comparison.

3. Tech-enabled Fulfillment Network

A modern and affordable alternative to working with 3PLs is to use an ecommerce order fulfillment network. A tech-enabled fulfillment network upgrades the traditional 3PL model to cover the whole country. Merchants will send their inventory to multiple nodes in the network, and then the network’s software will automatically send parcels from the optimal location to the end customer, saving on shipping costs. In essence, these networks are “FBA-lite” – they have the same core functionality as FBA.

Definition of a Fulfillment Company

A fulfillment company is a third-party logistics (3PL) provider that specializes in managing the entire order fulfillment process for ecommerce businesses. They handle tasks such as inventory management, warehousing, order processing, packaging, and shipping. By outsourcing these logistics services, commerce businesses can focus on their core operations, such as marketing and product development, while the fulfillment company ensures that orders are processed efficiently and accurately.

Benefits of a Fulfillment Company in Ecommerce

In the ecommerce landscape, a fulfillment company plays a crucial role in providing efficient and cost-effective order fulfillment services to sellers. Acting as an extension of the ecommerce business, these companies manage logistics and supply chain operations, ensuring that customers receive their orders quickly and accurately. This allows ecommerce businesses to scale their operations without the burden of managing warehousing, packing, and shipping, ultimately enhancing customer satisfaction and operational efficiency.

Cahoot: Alternative to Amazon FBA

Cahoot is a robust FBA alternative, and it works just as well as a backup or enhancement of FBA as it does as a full replacement. And Cahoot’s much more than that; it’s the most flexible solution in the marketplace and can ship orders for every ecommerce sales channel.

Cahoot is the next generation of tech-enabled fulfillment networks. Unlike other networks that are collections of 3PLs, Cahoot’s innovative approach unlocks and empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted ecommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants.

As a result, costs are lower than what you get with a traditional 3PL fulfillment company, and service levels are higher. With a P2P network, multi-channel fulfillment with nationwide 1-day and 2-day delivery is the norm. Merchants can use the network solely for outsourced fulfillment, similar to FBA, or they can choose to fulfill orders for other merchants and offset some of their own outsourced fulfillment costs.

Frequently Asked Questions

What are the costs for FBA?

The main costs associated with Amazon FBA are fulfillment fees, storage fees (including aged inventory surcharges), and any extra charges for removal or disposal of inventory, inventory prep such as barcoding, placement fees, inbound defect fees, and possibly others. Make sure to factor these into your pricing strategy!

What is a 3PL?

A third-party logistics company (3PL) is a service provider that either arranges or handles a variety of supply chain functions for a business. These functions can include brokering, shipping, storing, or packing a company’s freight, as well as supply chain strategy and access to technology.

Is 3PL pricing more transparent?

3PL providers ensure transparent pricing by offering customizable logistics solutions and engaging in contract negotiations, which allows for clear and flexible pricing options. This way, you know exactly what you’re paying for and can budget accordingly.

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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New Amazon FBA Holiday Order Fulfillment Fee Squeezes Seller Margins

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It has been a difficult year filled with price increases for Amazon sellers that rely on Fulfillment by Amazon (FBA), and it’s about to get even more difficult.

On August 16th, Amazon announced that for the first time ever, they will implement a Holiday Peak Order Fulfillment Fee to take effect from October 15th, 2022 to January 14th, 2023. Per Amazon, the fee will be an average of USD 0.35 per item sold using US and Canada FBA. Even in isolation, a 35 cent increase in fulfillment fees can be difficult for sellers to absorb. Considering the enormous pressure that inflation is already putting on sellers and other FBA price increases, this could be the straw that breaks the camel’s back.

How has Amazon ratcheted up the price pressure on FBA sellers this year, and what can sellers do to fight back and protect their margins?

Amazon FBA Price Increases in 2022

Amazon has raised prices across the board for FBA sellers multiple times in 2022. How do they add up?

Amazon-FBA-Fee-Increases-2022

Source: Amazon Seller Central, Cahoot analysis

Annual Amazon FBA Fee Increase

It started with annual FBA fee increases that kicked in on February 1st. Order fulfillment fees increased from 2% on the low end to as much as 12% on the high end. Sellers with items in the Small Standard categories saw increases of 8%, or $0.22 to $0.27. For small products selling under $20 or even $10, this immediately shaved off a few points of margin.

On top of that, FBA Storage Fees increased by $0.08 per cubic foot, or 10.6%. Again, this increase can shave off a point or two of margin, making enduring profitability that much more difficult.

Finally, Amazon increased Removal and Disposal Fees by over 100% for many items. For instance, a SKU between 1-2 lbs will increase from $0.35 to $0.75. Sellers don’t usually plan on having to pay for removal, but nevertheless some products will fail to sell and need to be liquidated – especially in the cutthroat environment of Amazon’s 3P marketplace. This change raises the overall cost of doing fulfillment business.

Amazon Fuel and Inflation Surcharge

Just two months later, Amazon added a 5% “fuel and inflation surcharge” on top of the previously announced price increases. This kind of surcharge was a first for Amazon, and like the previous changes it adds another ~20 to 50 cents in cost to most items. Taken together with the Q1 increases, by this point FBA had already added a dollar or more to total fulfillment costs for many items.

Amazon Holiday Peak Order Fulfillment Fee

The new fee in question, the Holiday Peak Order Fulfillment Fee, will be applied on top of both of the February price increases and the Fuel and Inflation Surcharge. It will be in effect from October 15th of this year to January 14th in 2023, so for the entirety of peak.

At an average of another 35 cents on top of the other increases, there are few, if any, items that haven’t shot up over a dollar in cost to fulfill through FBA this year. When you consider that many smaller items only cost $3 or $4 to fulfill through FBA, that’s a staggering 25%+ increase in one of the most important operational costs in one year. Sellers with small, $10 items have now likely seen over 10% more of their revenue disappear in FBA fees in just over half a year. That, unfortunately, is fatal to most sellers.

The Top Amazon FBA Alternative: Cahoot FBM

Cahoot has created an Amazon-like ecommerce order fulfillment services network that makes low cost, fast and free shipping a breeze for every eCommerce sales channel – including Amazon FBM.

Cahoot is the next generation of tech-enabled order fulfillment networks. Unlike other networks that are collections of third party logistics warehouses (3PLs), Cahoot’s innovative approach empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. Since they fulfill their own DTC orders, they know how important top-notch fulfillment is, and they put the same care and energy into your orders as they do for their own.

Because Cahoot is leveraging excess capacity in merchant-owned warehouses, we’re less pressured by rising warehouse and labor costs than Amazon is. As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company. With a P2P network, multi-channel fulfillment with nationwide 1-day and 2-day delivery at economy shipping rates is the norm.

Still unconvinced? Here’s a deep dive into how you can make the choice between Amazon FBM vs FBA – or decide to use a mixed strategy.

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Amazon Market Research: How Data-Driven Decisions Increase Online Profits

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In the vast and competitive world of ecommerce, staying ahead of the game is essential for business success. Whether you’re a seasoned Amazon seller or just starting out, one of the most valuable strategies you can adopt is investing in thorough market and product research. This investment can significantly boost your online profits and help you make informed decisions about which products to sell and how to sell them. In this comprehensive guide, we will explore the importance of market and product research on Amazon and how effective Amazon product research strategies can maximize your return on investment (ROI).

Understanding the Amazon Marketplace

Amazon is the world’s largest online marketplace, offering an extensive range of products to consumers across the globe. This immense platform presents both opportunities and challenges for sellers. To succeed, you must first understand the dynamics of the Amazon marketplace:

  • Competition: Amazon hosts millions of sellers, and each product category is highly competitive. Know your competition in order to carve out your niche effectively.
  • Consumer Behavior: Amazon’s search algorithm, A9, determines product rankings based on various factors, including customer reviews, keywords, and sales history. Understanding how customers search for products can help you optimize your listings.
  • Fulfillment Options: Amazon offers different fulfillment methods, such as Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM). Each has its pros and cons, and your choice can impact your profit margins.
  • Pricing Strategies: Dynamic pricing is common on Amazon, so keep an eye on your competitors’ pricing strategies and adjust yours accordingly.
  • Reviews and Ratings: Positive reviews and high ratings can boost your product’s visibility and credibility, increasing sales.

Another valuable resource for Amazon sellers is the Amazon Product Opportunity Explorer tool. This tool helps identify new product ideas by allowing sellers to search for relevant niches and access key metrics like customer needs and search volume, which aid in making informed decisions and reducing the risk of product failure.

Market Size and Growth

Understanding Amazon’s market size and growth helps make informed decisions about your product offerings. Amazon’s net revenue has seen a consistent upward trajectory, reaching an impressive $638 billion last year. Projections suggest this figure will continue to rise 5 – 9% per quarter, driven by the ever-increasing demand for online shopping, the expansion of Amazon’s product range, and strategic acquisitions.

To gain valuable insights into Amazon’s market size and growth, sellers can leverage tools like SmartScout. This tool provides historical market share data, helping you understand the dynamics of the Amazon marketplace and identify potential growth opportunities. Additionally, analyzing Amazon’s revenue breakdown by product category can offer a more granular view of the market, enabling you to make informed decisions about your product offerings.

The Foundation of Successful Amazon Selling

Before delving into the specifics of market and product research, it’s helpful to understand why it’s the foundation of successful Amazon selling. Here are some key reasons:

Avoiding Costly Mistakes

Without proper research, you’re fundamentally operating in the dark. You may invest in products with little to no demand or are oversaturated with competition. These mistakes can result in significant financial losses. Market research helps you avoid these pitfalls by providing data-driven insights into what products will likely succeed.

Adaptation and Growth

Ecommerce is a dynamic space. Consumer preferences, market trends, and competitors’ strategies can change rapidly. By investing in research, you not only identify opportunities but also adapt to changing circumstances. This adaptability is fundamental to sustained growth in the long term.

Enhanced Decision Making

Data-driven decision-making is the hallmark of successful Amazon sellers. With the correct information at your fingertips, you can make informed choices about product selection, pricing strategies, and marketing efforts. This increases your chances of success and profitability.

The Benefits of Market Research

Amazon market research involves analyzing the Amazon marketplace as a whole to identify trends, opportunities, and gaps in the market. Here’s how investing in Amazon market research can help sellers:

  • Identifying High-Demand Products: By analyzing search trends and historical data, you can identify products with high demand but limited competition. Tools can also help estimate sales to identify lucrative opportunities in these niches.
  • Evaluating Competition: Market research helps you assess the strength of your competition. You can identify weaknesses in their offerings and develop strategies to outperform them.
  • Pricing Insights: Analyzing price trends can help you set competitive and profitable product prices.
  • Understanding Customer Needs: By examining customer reviews and feedback, you can gain insights into what customers like and dislike about existing products in your chosen niche.
  • Seasonal Trends: Market research allows you to identify seasonal trends and adjust your product offerings accordingly.

Understanding Market Trends

Understanding current market trends is one of the first steps in effective Amazon market research. Market trends encompass consumer preferences, product demand, and industry shifts. Analyzing sales trends helps identify market dynamics and emerging opportunities. Here’s how to harness this knowledge:

Track Seasonal Variations

Many products experience seasonal fluctuations in demand. You can optimize your product listings and marketing efforts by tracking these patterns. For example, if you’re selling holiday-themed items, you’ll want to prepare well in advance to capture peak seasonal demand.

Analyze Historical Data

Historical sales data is a goldmine for understanding market trends. It can reveal long-term patterns and help you forecast future demand. Analyzing this data can guide your inventory management and product selection strategies.

Competitor Analysis

Competitor analysis is another critical aspect of Amazon market research. Understanding your competitors can give you a competitive edge. Here’s how to go about it:

Monitor Sales Volumes: Keeping an eye on your competitors’ sales volumes can provide valuable insights into market demand. It’s also important to understand their gross sales to formulate better strategies based on their monthly revenue, average daily orders, and unit prices. This information can help you identify trends and adjust your approach accordingly.

Identify Key Competitors

Start by identifying your main competitors in your niche. Look for sellers with similar products and target demographics. Tools can provide a comprehensive list of competitors.

Analyze Pricing Strategies

Study your competitors’ pricing strategies. Are they pricing lower to capture market share, or do they maintain premium pricing? Understanding their pricing approach can help you position your products effectively.

Monitor Sales Volumes

Knowing how well your competitors are performing can inform your own strategies. If a competitor is consistently outselling you, it’s worth investigating their marketing tactics, product listings, and customer reviews.

Product Research: Finding Profitable Products

While understanding market trends and analyzing competitors are valuable components of Amazon’s success, product research is equally important. Utilizing a product research tool can assist in finding profitable products by analyzing competition and tracking market trends. Here’s how to identify profitable products:

Niche Selection

Start by selecting a niche that aligns with your expertise and interests. Look for niches with a balance between demand and competition. Avoid overly saturated markets where it’s challenging to stand out.

Identify High-Demand Products

Use tools like Algopix to identify high-demand products with the potential for consistent sales. These tools can also help generate a list of potential product ideas tailored to specific business criteria. Look for products that are evergreen and not subject to seasonal fluctuations.

Evaluate Profit Margins

Calculate potential profit margins by considering the cost of goods, Amazon fees, and shipping costs. Ensure that your chosen products offer a healthy profit margin to sustain your business.

Check for Trends and Seasonality

Examine whether your chosen products have consistent demand throughout the year or if they are subject to seasonal trends. Seasonal products can be profitable but require careful planning.

Analyzing Customer Feedback

Customer feedback is a goldmine of information that can significantly enhance your product research efforts. By delving into customer reviews and ratings, you can gain valuable insights into customer satisfaction and pinpoint areas for improvement. This deeper understanding of your target audience can help you develop marketing strategies that resonate with their needs.

Tools like AMZScout are invaluable for analyzing customer feedback. They provide a comprehensive analysis of reviews and ratings, allowing you to identify trends and patterns. This data can guide you in refining your products and improving customer satisfaction. Additionally, engaging with customers on social media and online forums can provide further insights into their preferences and needs, helping you tailor your offerings more effectively.

Product Selection and Sourcing

Selecting and sourcing the right products is a cornerstone of successful Amazon selling. To identify profitable products that meet customer demand and can be sourced at competitive prices, you need to conduct thorough product research. Tools like Jungle Scout can be instrumental in this process, offering a comprehensive analysis of product trends and sales data.

When selecting products, consider factors such as demand, competition, and pricing. Ensure that the products you choose comply with Amazon’s policies and guidelines. Building relationships with reliable suppliers who can provide high-quality products at competitive prices is also crucial. This approach not only helps in maintaining product quality but also in securing better profit margins.

Supplier Relations and Logistics

Building strong relationships with suppliers is the first step for sourcing high-quality products at competitive prices. Clear and professional communication with suppliers ensures they understand your needs and expectations. Additionally, developing a robust logistics and shipping strategy is necessary for timely delivery to customers.

Tools like ShipStation can streamline your logistics and shipping processes. This platform helps manage orders and shipping efficiently, ensuring that customers receive their products on time. By optimizing your logistics, you can enhance customer satisfaction and maintain a competitive edge in the market.

Optimizing Product Listings

Optimizing your product listings is a continuous process that involves keyword research and customer-focused content. Here’s how it can impact your profitability:

Keyword Research

Identify high-performing keywords for your products. Understanding search volume helps gauge product demand and trends, assess seasonality, and identify profitable keywords for optimizing product listings. Incorporate these keywords naturally into your product titles, descriptions, and backend search terms. Effective keyword research and optimization can improve your product’s visibility in Amazon’s search results.

Compelling Product Descriptions

Write compelling product descriptions that highlight the benefits and features of your products. Use high-quality images and ensure that your listing is complete and informative. A well-optimized listing can lead to higher conversion rates.

User-generated Content

Encourage customers to leave reviews and answer questions on your product listings. Positive reviews and helpful answers can build trust and boost sales. Respond to customer inquiries promptly to provide excellent customer service.

Marketing and Promotion Strategies

Effective marketing and promotion strategies are critical for driving traffic to your product listings and increasing sales. To develop these strategies, consider factors such as customer demographics, product trends, and competitor analysis. Tools like Helium 10 provide a comprehensive analysis of marketing and promotion strategies, helping you craft effective campaigns.

Ensure that your marketing and promotional strategies comply with Amazon’s policies and guidelines. Leveraging social media and influencer partnerships can also boost your product’s visibility and brand awareness. By developing a well-rounded marketing strategy, you can attract more customers and increase your sales volume.

Social Media and Influencer Partnerships

Social media and influencer partnerships are powerful tools for Amazon sellers. Partnering with influencers in your niche can enhance brand awareness and credibility. Platforms like Facebook and Instagram are excellent for promoting products and driving traffic to your listings.

To maximize the benefits of social media and influencer partnerships, develop a comprehensive social media strategy that includes content creation, engagement, and advertising. Ensure that your social media presence aligns with your brand identity and messaging. Tools like Hootsuite can help manage your social media presence and engagement, making it easier to connect with your audience and promote your products effectively.

Minimizing Risks

Investing in market and product research isn’t just about increasing profits; it’s also about minimizing risks. Here are some strategies to reduce potential losses:

Diversify Your Product Portfolio

Avoid putting all your eggs in one basket. Diversify your product portfolio to spread risk. If one product experiences a downturn, others can help balance your overall profitability.

Monitor Your Inventory

Overstocking or understocking can lead to financial losses. Regularly monitor your inventory levels and adjust your orders accordingly. Consider using Amazon’s Fulfillment by Amazon (FBA) program to streamline your inventory management.

Stay Informed and Agile

Keep a pulse on industry news, changes in Amazon’s policies, and emerging trends. Be prepared to pivot your strategies when necessary. Staying informed allows you to make proactive decisions.

Conclusion

In the competitive world of Amazon ecommerce, success isn’t guaranteed, but it’s attainable with the right strategies. Investing in market and product research is a smart move that can significantly increase your online profits. By understanding the Amazon marketplace, identifying high-demand products, and thoroughly researching potential offerings, you’ll be better equipped to make informed decisions, optimize your listings, and ultimately grow your ecommerce business. Remember that continuous research and adaptation are key to staying competitive in the ever-evolving world of online retail.

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Or Hillel, Algopix

 

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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Is Amazon Responsible for the Sales by Third-Party Sellers?

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Technology platforms govern consumer experience in a huge way. Users simply come to the platform, search for what they want, and start using it. Behind this consumer behavior, is the implicit trust in the platform that its users will act in the best interest of other customers. Apple’s App Store, Amazon’s Marketplace and Mastercard’s payment services are some examples.

Technology platforms govern consumer experience in a huge way. Users simply come to the platform, search for what they want, and start using it. Behind this consumer behavior, is the implicit trust in the platform that its users will act in the best interest of other customers. Apple’s App Store, Amazon’s Marketplace and Mastercard’s payment services are some examples.

Apple vs. Amazon on governing its customers

Apple has been very careful about who it allows to operate on its platform and regularly weeds out apps which might exploit its users, such as the recent case of a few dating apps. They were removed from Apple’s App Store because they allowed children as young as 12 to access them.

On the other end of the spectrum is Amazon. Amazon has aggressively expanded its third-party seller base. Now it accounts for about half the revenue generated by the e-commerce division of Amazon.

But in the process, they have been accused of being lax about the quality of merchants they have allowed on the platform. This has enabled counterfeits and sometimes, dangerous items to be sold on the biggest online marketplace in the US.

3rd party seller avoiding responsibility for defective goods

Recently, a federal court has ruled that Amazon can be held liable for defective goods sold on its site by third-party sellers. This has come after a long battle where earlier a lower court had ruled in Amazon’s favor.

CNBC reported, “The decision on Wednesday related to a case in which a Pennsylvania customer, Heather Oberdorf, purchased a retractable dog leash on Amazon.com from a third-party vendor, The Furry Gang. While walking her dog in 2015, Bernardo was blinded after the leash suddenly recoiled. Neither Oberdorf nor Amazon have been able to contact The Furry Gang.”

How will Amazon deal with the backlash?

So why is Amazon being held responsible? The central point is the customer’s trust in Amazon. Amazon only allows customers to contact the seller through Amazon. This means that the merchants can conceal themselves from the customer, putting the onus squarely on Amazon in case of malfeasance.

There are a couple of paths Amazon can take from here. One, it can increase the scrutiny for the quality of merchants, making it harder to sell on Amazon. On the other hand, it can allow direct access for customers to merchants, losing control of customer experience. Given Amazon’s obsession with customers, we can only expect an innovative solution just around the corner.


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How Amazon Buy with Prime Impacts the DTC Customer Experience

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Shopify and Amazon have teamed up to offer Prime delivery to Shopify DTC ecommerce shoppers called Buy with Prime. Third-party ecommerce merchants that sign up for the service will install the Prime badge in their checkout process, connect Amazon Pay as a Wallet within Shopify Payments for customers to checkout with Amazon Pay, and leverage Amazon’s huge distribution network to fulfill orders on their own sites through the Multi-Channel Fulfillment (MCF) outsourced logistics service. This allows merchants to tap into the preferences of Amazon Prime members, such as fast shipping and a seamless shopping experience. Additionally, Shopify merchants can benefit from integrating Buy with Prime into their stores, enabling them to offer fast shipping and easy checkout, while streamlining operations through Amazon’s logistics network. It’s effectively Amazon payment and fulfillment for ecommerce brands.

The potential benefits for a DTC Seller are obvious: they’ll be able to offer their customers one-and-two-day delivery, and Prime users will have their checkout information pre-loaded on the site via their Amazon Wallet. This is no small win. According to McKinsey & Company, more than 90% of US online shoppers expect free two-day shipping, while the vast majority of Sellers lack a network of warehouses to store and ship distributed inventory to make fast and free shipping affordable.

Some drawbacks are obvious – you’ll have to put Amazon branding all over your checkout and post-purchase experience, for instance. Many others are harder to spot, though, and they affect the entire customer experience that you’ve worked so hard to create.

In this blog, we’ll walk you through the basics of what Buy with Prime (BWP) is, how it affects the ecommerce industry, and how it negatively affects your customer’s experience. Finally, we’ll share our perspective on how you can get the key benefit of Buy with Prime (fast and free shipping) without surrendering your brand to Amazon.

What is Buy with Prime?

Amazon Buy with Prime gives DTC Sellers the ability to offer their customers the Amazon Prime checkout and delivery experiences on their Shopify site. When a Seller integrates with the service, they’ll get:

  • The Prime logo and expected delivery date in their checkout process
  • Checkout financing operated by Amazon Pay
  • Checkout will pre-load customer information if they’re already Prime members
  • Fulfillment from Amazon FBA which operates Amazon’s FBA fulfillment network
  • Shipping by Amazon Logistics (or partnered carriers)
  • Option to adopt Amazon Prime’s returns policy
Buy with Prime on Shopify mobile interface showing how direct-to-consumer brands can leverage Prime benefits to increase conversion rates

As we mentioned above, the benefit is obvious: Amazon Prime is the gold standard for speedy online delivery, and you’ll get it on your site. Prime has consistently raised customer expectations for fast and free delivery over its history, to the point where slow shipping and paid shipping are two of the biggest drivers of cart abandonment.

If you don’t currently offer fast and free shipping, Buy with Prime will immediately fix that issue for you. The theory behind Buy with Prime is that the easier transaction coupled with buyer expectations for fast delivery will increase conversion rate, (Amazon reports ~16% lift), thus increasing your web store’s growth. Additionally, integrating two powerful ecommerce tools like Amazon Multi-Channel Fulfillment and Buy with Prime simplifies the management of product catalogs, orders, and returns for online retailers while leveraging Amazon’s Fulfillment Network.

How Buy with Prime Shifts the Ecommerce Landscape

Buy with Prime will leave DTC Sellers with little choice but to improve their delivery experience to meet the standards long set by the marketplaces.

Online brands have long maintained that their curated shopping experiences, community building, and custom unboxing experiences counterbalance the raw power of fast and free delivery from marketplaces. A look at ecommerce transaction value in the United States suggests otherwise, though, as combined US marketplace GMV growth exceeds US DTC GMV growth.

US consumers spend nearly four times as much on Amazon, Walmart, and Target’s ecommerce sites than they do on all DTC ecommerce sites combined. And on top of that, the marketplaces are growing faster. We attribute a huge part of the marketplaces’ advantage to the fast and free shipping that they offer by default on most goods. After all, online consumers cite fast and free shipping as a baseline expectation in survey after survey.

Buy with Prime will ratchet up US consumer expectations for fast and free shipping even further. Now, DTC Sellers aren’t just putting their superior brand and shopping experience up against the convenience of the marketplaces. They also have to fight against competing DTC Sellers that sign up for Buy with Prime and thus combine the power of their brand with Amazon’s famed fulfillment network.

Shipping options for competitor products highlighting the competitive advantage of Buy with Prime's 1-day delivery over standard 7-day shipping

Imagine if YOUR top competitor installs Buy with Prime on their site and blows your delivery speed out of the water. Online consumers love comparison shopping, and you’ll be at a severe disadvantage on your Product Display Page (PDP) and in checkout. You can expect your cart abandonment rate to skyrocket. In short, your slow delivery experience will become an even bigger liability than it already is. Integrating Buy with Prime into Shopify stores can provide a competitive edge by enhancing delivery speed and efficiency, making it important for Shopify merchants to consider this feature. Additionally, by offering Prime benefits, you can boost shopper confidence. Prime members love the reliability and speed of Amazon’s delivery service, and by extending these benefits to your own site, you can encourage more sales and reduce cart abandonment rates.

Likewise, DTC brands can benefit from streamlined fulfillment, offloading the logistics to FBA and potentially enjoying reduced fulfillment costs (more on this later; it may not be as simple as it sounds).

How Buy with Prime Interrupts Your Customer Experience

So, the answer must be simple, right? Just sign up for Buy with Prime and drive more sales.

If only it were that easy.

Unfortunately, Amazon Buy with Prime is a much better deal for Amazon than it is for DTC Sellers, and it’s all in the way BWP will impact your customer experience and ability to retain loyal buyers.

Metaphorical image showing Amazon's Buy with Prime as a Trojan horse strategy for expanding into Shopify's ecommerce territory

To Amazon, Buy with Prime is about much more than extending its fulfillment operations, Amazon FBA, to DTC Sellers. In fact, they care much more about their ability to get your browsing and purchasing data and use it to their advantage. With BWP, a Seller has to use Amazon Pay for transactions. That means that Amazon will get all of your customer data, and not to mention they’ll bank tons of transaction fees.

While Amazon is laughing its way to the bank, it will be interrupting your customer experience at every step of the journey.

How BWP Affects Discovery

We’ll start at the beginning of the customer journey: product discovery. Here, DTC stores are already at a severe disadvantage: a majority of US shoppers say that they start their online product searches on Amazon.

It’s already an uphill battle trying to get customers to your website. If you install Amazon Buy with Prime, you’ll give Amazon even more ammunition to prevent shoppers from ever making it to you.

It’s simple: if you give Amazon rich data on what your customers are purchasing, they’ll know exactly what to suggest to the customer the next time they stop by Amazon. Since by definition these shoppers are Prime customers, it’s a sure bet that they’ll do so. And when they visit, they’ll see product recommendations perfectly targeted to them, thanks to the additional information that you gave Amazon through Buy with Prime.

Fewer customers will make it to your site organically because more of them find what they’re looking for on Prime without ever turning to a search engine. You’ll have to react by spending more on digital advertising, raising your ACOS, and hurting your margin.

How BWP Affects Conversion

With prominent placement on the Product Details and checkout pages, Amazon Buy with Prime most obviously affects conversion.

While the Prime button promising fast and free shipping from Amazon should help lower cart abandonment rates from shoppers who want fast shipping, it raises a whole host of other issues that counteract the benefits.

First, and perhaps most obviously, Buy with Prime will repeatedly remind shoppers that they should check Amazon before completing a purchase on a DTC website. Price checking is already a core part of many shoppers’ online purchasing behavior, and the Prime logo will only serve to further solidify this trend.

Illustration depicting the potential drawback of Buy with Prime integration: Shopify customers considering 'is it cheaper on Amazon?' instead of completing DTC checkout

When the price check occurs, the DTC brand can only lose. The customer may see that Amazon has the same item for less (a common occurrence because Amazon strictly enforces their “lowest price” rule), and they’ll also see a host of competitive offers. Taken together, the increased risk of losing a customer to Amazon counteracts the benefit of fast and free shipping.

On top of that challenge, Buy with Prime also removes a key DTC Seller tool to boost AOV. Many Sellers use free shipping as a carrot to induce customers to sign up for loyalty programs or to increase their cart size. “Free shipping for orders over $49” is a tried and true tool to increase profit, but by using Buy with Prime, it goes out the window. Larger order sizes and customer loyalty programs are key pillars in DTC profitability, because each maximizes profit dollars relative to overhead and marketing spend. Amazon will interrupt your ability to use these tools, and instead it replaces your tools with its own loyalty program – Prime.

Finally, Buy with Prime will hurt conversion because it will likely increase cart abandonment rate. According to BigCommerce, the average cart abandonment rate is nearly 70%, and that number rises to a whopping 86% for mobile shoppers. Most DTC Sellers know the truth behind that large number – many shoppers use online carts as a “save for later” feature, and they come back to complete their purchase at a later date. Buy with Prime will interrupt that process and steal customers that are carefully considering a purchase.

How BWP Affects Post-Purchase and Brand Loyalty

Buy with Prime is supported by the FBA network, but Sellers expecting FBA’s low rates will likely be disappointed. Amazon already lets Sellers use FBA for their DTC orders through its non-Amazon solution, Amazon Multi-Channel Fulfillment, but the fulfillment pricing is shockingly bad.

Rate table comparing Amazon FBA fulfillment fees with Multi-Channel fulfillment fees, showing Multi-Channel pricing 2-3 times higher

Cahoot’s analysis of 2025 FBA rates versus MCF rates reveals that MCF is at least 50% more expensive than FBA, and reaches nearly 3X the cost for the small standard size category (which are the items FBA loves to ship!). Sellers that have done the math to consider Amazon FBA vs FBM already know that FBA is a bad deal for items larger than a few pounds, and this comparison rate table suggests that Buy with Prime will be an even worse deal.

On top of that, you will lose the ability to control the unboxing experience. No more free marketing from unboxing videos, no more custom inserts to boost repeat rate, and no more amazing first impressions: Amazon now owns your post-purchase experience. Yes, the experience is improving in terms of delivery speed, but it’s degrading in every other way (we all know how FBA loves to put small items in oversized boxes with a ton of air pillows that customers hate to pop and send to the landfill). And to add insult to injury, you’re now marketing for Amazon by using their Buy with Prime logo on your checkout pages.

How BWP Affects Repeat Purchases

Last but certainly not least, Amazon Buy with Prime will also interrupt your ability to build brand loyalty, win repeat purchases from your customers, and increase lifetime value by carefully cultivating a long-term relationship – the linchpin of sustainable profitability.

You’re up against some daunting statistics – according to a 2024 Marketing Scoop survey, Prime members spend an average of $1400 per year on Amazon, (nearly twice as much as non-Prime customers). And half of Prime members buy something on Amazon at least once a week, and 75% shop on Amazon 3-4 times per month.

And now, every time they visit Amazon, they’ll see recommendations to buy your products right then and there instead of going back to your website.

Amazon.com homepage with a note highlighting that 85% of Prime customers visit at least once per week and half make a purchase at least weekly

Amazon can and will use the data it gains from its Buy with Prime plugin on your site to sell to your customers with pinpoint precision. With Prime users visiting Amazon.com just about every week, they’ll quickly start buying your product (or a competitor’s) on Amazon instead of your site.

Amazon is touting Buy with Prime as a way that you can tap into Prime’s huge customer base.

In reality, it’s Amazon’s way to tap into your customer base.

Setting up Buy with Prime on your Shopify store is a straightforward process that can be completed in a few simple steps that start with installing the app. Search for the Buy with Prime app in the Shopify App Store. Once you find it, click on the install button to add it to your Shopify store. There are a few minor configurations, but again, very straightforward.

Alternatives to Amazon Buy with Prime

DTC Sellers must feel like they’re stuck between a rock and a hard place. On one hand, they’re squeezed by demanding customer expectations for fast and free shipping, while on the other, they’re faced with the incredible expense of providing fast and free shipping. Now, Amazon promises to help with the latter challenge, but it’s a poison pill that invades their customer experience.

Thankfully, there’s a better way.

Amazon can provide fast and free shipping affordably across the country thanks to its ability to distribute inventory to multiple locations and tightly control fulfillment with intelligent, automated rules. Ten years ago, they were at the forefront of this revolution in fulfillment, but now they’re far from the only ones that can affordably power fast and free shipping.

Workflow for offering profitable free and fast shipping with elements like distributed inventory, real-time carrier rate optimization, delivery tracking, and performance monitoring

Cahoot is at the forefront of boosting profitable growth for online Sellers by enabling fast and free shipping across all channels. Unlike Amazon Buy with Prime, Cahoot fulfillment operates in the background, leaving you to own your customer experience – but with new and improved fast delivery. And again, unlike Amazon Buy with Prime, it works for all sales channels: Buy with Prime certainly won’t be available for Walmart and other major marketplaces. You’re limited to Shopify, a plug-in to be used on another ecommerce platform, or custom integration.

And more than Amazon, (and other distributed 3PL networks), Cahoot offers unparalleled flexibility in fulfillment to support the exact needs of DTC Sellers. We offer efficient B2B fulfillment alongside our fast B2C fulfillment, and we also can integrate seamlessly with existing merchant-operated warehouses (or extend your existing 3PL with more locations!). If you have one warehouse on the East Coast, and shipping across the country is killing your margin, we can stand up a West Coast location for you and install our market-leading technology to intelligently govern your new, nationwide fulfillment network. Of course, if you need a full-service solution, that’s what we do.

Contact us to speak with a fulfillment expert and learn how we can boost your growth while cutting costs and headaches today.

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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Seasonal Keywords to Optimize Your Amazon Product Listings

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Hola, Amazon Sellers! We’ve got some news for you. It is predicted that the 2021 holiday season is going to witness eCommerce sales of $206.88 billion with a rise of 11.3% in the US.

With the holiday season knocking at our doors, Amazon sellers are putting their best foot forward in optimizing their listings for grand traffic, massive sales, and greater profits.

If you want to reap the benefits of this holiday shopping season, then there is no better time than this! But how can you stand out in such a fiercely competitive environment? 

For Amazon sellers, a winning holiday keyword strategy is one of the best ways to improve their listings’ discoverability. By investing early in seasonal keyword optimization, you can acquire high positions in SERPs ahead of the competition and increase traffic and sales exponentially. 

So, are you ready for the revolutionary 2021 Amazon holiday shopping sales? Let’s make the seasonal keyword optimization magic happen with some powerful seller moves. But before we unveil some of the best Amazon keyword practices, let’s understand the fundamentals of Amazon SEO and how it works.

What is Amazon SEO?

The first page of Amazon’s SERP is one of the most coveted pieces for every seller. It has the power to convert one-time page visitors to buyers and bring about a stunning increase in overall profits.  

Like Google, Amazon analyzes the search results through its algorithm, which again includes several factors like –

  • Product Title with high-converting keywords
  • Product Description with relevant keywords
  • Product Features with clear bullet points
  • Appealing Product Images
  • Good Ratings and Reviews
  • Competitive Product Price

The underlying search engine is known as A9. The algorithm deploys several parameters to engineer the relevancy of millions of listings stored in its database with the search terms used by the shoppers.

Behind closed doors, Amazon’s search engine algorithm – A9 is constantly being renewed and refined. Although no one really knows its formula or how exactly it works, there are some widely known factors that influence it.

What is A9?

A9 is Amazon’s product ranking algorithm which provides the results depending on the terms or keywords or queries added by users in Amazon’s search box. The results displayed are catalyzed by the shopper’s preferences, past orders, and keyword matches.

How does A9 work?

The A9 algorithm selects the product listings to be displayed to potential buyers and their rankings based on some criteria like:

  • Relevant keywords added in listings that match with customer search queries
  • Previous customer preferences and behavior
  • Customers’ past purchases

While customer preferences and their past purchases aren’t in your hands, what you can influence is your product’s organic ranking by optimizing your listings and making them SEO-friendly.

Why Should You Optimize Amazon Keywords for This Holiday Season?

The goal of Amazon’s search engine is to provide customers with the most relevant product results in relation to the search queries they insert. When it comes to product listings, Amazon looks at keywords present in various fields of the listing like title, description, and bullet points. To display products for every time they are searched, Amazon “indexes” these keywords in its database, i.e., collecting, parsing, and storing the search terms. 

Therefore, a crucial portion of your Amazon marketing strategy is to ensure that your listings have an optimized Amazon product title, descriptions, and bullet points with high-converting and relevant keywords. This is even more significant to the holiday season as it brings about an exponential increase in traffic as compared to other times.

Your listing should be optimized in a way that A9 can locate it, and it should also be compelling for customers to pay enough attention to your products and brand.

It is recommended that during the holiday season, holiday-based search terms like “gift pop-up cards”, “Christmas gifts”, etc. should be added to your listing content.  

Note: When you craft your listing content, make sure it flows naturally. Avoid keyword stuffing, as this diminishes the credibility of your product listing, and drives away potential buyers from your product page to your competitors’ pages.

Tips on Optimizing your Amazon Product Listing with Seasonal Keywords

Here are a few tips and tricks that will help you tackle Amazon’s A9 ranking factors and make your listings holiday season ready in no time:

Step 1: Perform Relevant Keyword Research

Before you begin with keyword research, you should pause and set your goals for your products and brand and why would you want to leverage keywords for your listings.

Do you wish to improve your listing’s search rankings? Are you launching a new product this holiday season? Are you trying to compete with existing sellers selling seasonal products?  

Once you define your goals, your keyword research task gets way easier than it actually is.

Generally, you want to add those keywords to your listings that are more specific and searched for the most by shoppers. For instance, listing Christmas bells as “bells” in your product title will likely have a negative impact on where your product appears in the SERPs as it will attract a lot of irrelevant traffic who aren’t even searching for Christmas bells.

Since long-tail search terms are considered more effective, you must incorporate long-tail keywords into your product listings to optimize for Amazon’s SERPs.

Another efficient strategy is to implement the next-to-highest ranking Amazon keywords for your listings. Small-scale third-party Amazon sellers launching new holiday/seasonal products can face overwhelming competition for the top keywords.

In such cases, optimizing a listing for the keyword “Christmas bell” and expecting to land at the top of Amazon’s SERP is not favorable. Therefore, it’s a good idea to opt for a more specific long-tail keyword like “Christmas Tree Decoration Bells”.

Top Seasonal Keywords

Here is a list of the best seasonal keywords collected by us that you may use for your product listing content:

  • Gifts for Men
  • Gifts for Women
  • Christmas Decorations
  • Christmas Socks
  • Kids Halloween gifts
  • Jazz Christmas
  • Halloween Gifts Adults
  • Thanksgiving Candies
  • Cyber Monday Deals
  • Toys Black Friday Deals
  • Christmas Gifts
  • Classical Christmas

How to Perform Keyword Research?

There are several third-party Amazon seller tools for performing keyword research that uses AI and ML technology to provide the most accurate data.

One such tool is SellerApp’s keyword research tool that analyzes thousands of data points to offer high-converting keywords for every seller type. The following are the SellerApp features that analyze keywords in a more innovative way –

Seller-App-keyword-research
  • Product Keyword: Get the best keywords, their relevance score, monthly search volumes and cost-per-click, to increase your listing desirability and discoverability.
  • Reverse ASIN lookup: Compare your product to the competition and learn from their keyword strategies. Search any ASIN and see which keywords are ranking for that listing.
  • Index checker: Check if your backend search terms entered in Seller Central are indexed or not. Optimize your product discoverability as per Amazon’s best practices.
  • Keyword Tracker: View real-time keyword ranking position, change in their position, indexed products, and data-driven recommendations to improve Amazon listing SEO.
  • Keyword Booster: This tool will show you all the optimal keywords for your product. Here, you can find and sort keywords based on their frequency. Copy and paste your keyword list into the Keyword Booster. Filter your keyword results by the variety of duplication filters, remove unwanted words and characters. Copy the cleaned keyword list from the Keyword Booster with the copy button and paste the optimized keyword list on your Amazon product info page.

Step 2: Make Your Product Title SEO-Friendly

Product Title is one of the most crucial factors that have the power to exponentially boost your product’s visibility and rankings. Make sure that you add all the relevant information in your title and craft a catchy product title.

According to Amazon, a product title should include the following:

  • Brand
  • Product
  • Material
  • Quantity
  • Color

Note: A product title in the Amazon search is limited to 100 characters only. Therefore, use the space in a rightful manner – do not overstuff it with keywords, keep it appealing and simple.

Amazon has provided guidelines on how to craft good product titles. Your product title should include product information such as brand, product line, color, size, material or key feature, and packaging or quantity. Here, you must also include 1-2 relevant keywords that can influence product conversion and click-through rates.

If you are selling seasonal products, make sure to include holiday special keywords in your product title to get more visibility.

SEO-friendly-title

Ensure that the initial 5-6 words of the title are clear, crisp, and intelligible. These simple techniques make the title eye-catching as well as optimize it for the Amazon search.

Step 3: Optimize the Bullet Points

Amazon provides slots for adding bullet points that explain your products in a clear and concise manner to shoppers. Bullet points are found under any parent/child ASINs on the listing page.

They are usually paid more attention than the actual product description. Therefore, you should leverage this space to explain all the compelling features and benefits your product has.

In this section, add secondary keywords that are important but may not fit in the title, for example, keywords that are seasonal and resonate with the upcoming holiday/festivities. There is no need to repeat keywords from the title or other sections.

optimize-bullet-points

Simply use high-converting keywords throughout your product listings that you have gathered from your keyword research.

It is estimated that Amazon will index the first 1,000 bytes for your bullet points. Therefore, you must make sure that your bullet points should be 200 bytes max for them to be indexed.

Step 4: Craft a Product Description that Converts

Amazon’s A9 algorithm will prioritize those listings that have the power to convert and have made a considerable amount of sales in the past. Therefore, your product description should be crafted in a way that adds value to your listing and unveils its lucrative benefits, rather than just being informational.  

Add in only the most relevant keywords that pertain to your product’s unique features, its type and texture, and overall utility.

The product description is also an ideal way to portray your brand and its vision, attract the target audience, and focus on the problem-solution framework. The character length of your description should be 2,000 characters, including spaces. Remember to make it short and crisp and not a huge chunk of complex texts.

Step 5: Do Not Forget the Backend Keywords

Amazon also offers sellers the opportunity to add hidden search terms, which are called “backend keywords.”

Although not visible, these keywords constitute the backbone of your listing’s rankings on Amazon SERP.

You can get up to 249 bytes for adding other very relevant keywords for your product that weren’t fit to be added into your listing content visible to customers like title, description, and bullet points. The best part about this section is that here, you can include –

  • other high-ranking long-tail keywords,
  • holiday-related keywords like “gift ideas”, “gift pop up cards”,
  • misspellings that are searched the most by customers,
  • synonyms that shoppers might look for,
  • translation words of your products in Spanish or French or any other language.

Here, you don’t need to add product identifiers, like your brand or product name, or content that is irrelevant or repetitive.

Final Thoughts

If you stay proactive and prepare well for the 2021 holiday season, nobody can cease your progress. For even the most advanced Amazon sellers, optimizing keywords takes immense effort, time, and analyzing capabilities. Even though it all seems too overwhelming in the beginning, it can be streamlined with the right AI-powered Amazon keyword tool.

The truth is the more you can streamline the seasonal touch points across your Amazon business, the easier it will be to attract relevant traffic and scale-up.

We hope that this step-by-step guide benefits your Amazon business and fuels your seller journey to success. If you have any more questions, get in touch with us!

Dominik Larcher

Author Bio – Arishekar N

Arishekar N, Director of Marketing & Growth at SellerApp, is a specialist in digital marketing, in addition to website keyword optimization for search engines. His areas of expertise include enhancing the organic & paid ranking of webpages on search engines with innovative SEO & SEM strategies and online promotions.

LinkedIn: https://www.linkedin.com/in/arishekar/

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Amazon and the One-Stop-Shop: What Sellers Need to Know

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The One-Stop-Shop is a new VAT scheme that was introduced in July 2021 across the European Union. It offers an alternative for online entrepreneurs and Amazon sellers who, until then, had to register for VAT in a variety of countries if they wanted to expand their business across the EU.

The One-Stop-Shop was accompanied by changes concerning the delivery thresholds in the EU, the taxation of goods sold to end customers across borders, and the VAT registration and filing duties.

In this article, we will dive into the specifics of the One-Stop-Shop program and discuss what opportunities the OSS offers to Amazon sellers and FBA users.

Threshold Changes that Came With the Introduction of the One-Stop-Shop

Until July 2021 online sellers had to register for VAT in their home country and in all EU countries to which sales exceeded the delivery thresholds. The thresholds were set by each European country individually and were usually set at 35,000€ or 100,000€. 

In all countries in which sellers were registered for VAT, they also had to submit VAT returns. Following the filing of returns, VAT needed to be paid separately to each tax authority, following differing deadlines and formats. Furthermore, all sales prior to the crossing of the threshold limit were taxed with a domestic VAT rate and the VAT had to be paid to the domestic tax office. This meant that sellers had to continuously monitor several threshold limits and payment deadlines at once.  

The country-specific thresholds were replaced by an EU-wide threshold of only 10,000€ when the One-Stop-Shop was introduced. This new, lower threshold is reached by all cross-border sales to European countries combined and, therefore, crossed much earlier. This also means that sellers often have to register in several countries at once. A solution to this is the voluntary registration for the One-Stop-Shop scheme.

The One-Stop-Shop for Amazon Sellers

For business-to-consumer cross-border sales, a One-Stop-Shop registration replaces foreign VAT registrations. Additionally, the EU-wide delivery threshold is no longer applicable. This means that all sales – even the first – are subject to country-specific foreign VAT rates. Thresholds do no longer need to be monitored and no further VAT registrations are necessary – as long as goods are only stored in the home country.

Since no further VAT registrations are necessary, neither are regular foreign VAT returns. Instead, a regular OSS report needs to be prepared and submitted to the tax authorities in the country of OSS registration, the sellers’ home country in the European Union or their country of choice if they are not based in the EU.

Of course, a VAT registration in the home country and the submission of domestic VAT returns are still necessary, as the One-Stop-Shop only applies to cross-border transactions. For the same reason, the usability for the One-Stop-Shop is greater for basic Amazon sellers than for sellers making use of Fulfillment-Programs such as Amazon FBA. Amazon sellers generally only store their products in their home country and the goods are then delivered from there to customers EU-wide. FBA programs, on the other hand, enable sellers to store their products in a variety of foreign European countries.

The One-Stop-Shop and Amazon FBA Sellers

Within the PAN-EU FBA program for example, sellers’ products might be stored in England, France, Germany, Italy, Spain, Poland and the Czech Republic. As soon as products are stored in a country, VAT registrations are mandatory. Therefore, sellers participating in the PAN-EU program need to register for VAT in all countries mentioned above. However, participation in the One-Stop-Shop is still possible.

Deliveries from the home country to foreign countries are taxed with foreign VAT rates and appear in the OSS report, as detailed above. Deliveries from foreign warehouses to customers in the same country are settled in a foreign VAT return, while cross-border deliveries to third countries are again appearing in the OSS report filed in the home country. Lastly, deliveries from foreign warehouses to customers in the seller’s home country appear in the domestic VAT return.

As evidenced, the usability of the One-Stop-Shop for Amazon sellers using FBA is smaller than the advantages of the OSS for basic Amazon sellers storing only in their home country. However, the new scheme can still be advantageous. This depends on the delivery volume, the chosen FBA program, and the customer base and is best decided on a case-by-case basis.

Technical Solutions for the One-Stop-Shop

If you want to or have to use the OSS to fulfill your VAT duties in Europe as an Amazon seller another challenge facing you are the different VAT rates. This is especially true if you sell products from several niches or Amazon product categories to which country-specific reduced VAT rates apply. A solution comes in the form of the hellotax OSS full-service package.

This VAT service provider specialized on the Amazon and FBA E-Commerce business offers their proprietary OSS software in combination with an OSS registration. The software automatically calculates VAT rates and compiles reports which aid in the creation of OSS reports. The hellotax team of local tax accountants then regularly files your OSS returns.

The OSS service can also be used in conjunction with the regular VAT services, which include VAT registrations EU-wide and the submission of regular VAT returns. All your VAT duties are therefore taken care of by one service provider and you can concentrate on scaling your Amazon business while staying worry-free and VAT compliant across the European Union.

Dominik Larcher

Author:

Dominik Larcher
Content Manager, hellotax

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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Amazon Announces Q4 Deal Submission Deadlines

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As sellers and Amazon arrive at the conclusion of Prime Day 2023, all eyes have shifted to the fall and Q4 holiday shopping season that lies ahead. The online retailer wants sellers to start planning, and it has already announced the Lightning Deal submission deadlines for the rest of its major 2023 deal events – the Fall Prime Deal Event and Black Friday / Cyber Monday.

What Events / Weeks do These Include?

The company has announced Lightning Deal Submission deadlines for 2 events: 

  • Fall Prime Deal Event (known informally as the 2nd Prime Day)

Amazon announced this event, available exclusively to its Prime members for the first time in October 2022. While many speculate the company introduced it to force another wave of shopping from its customers in the lull between Prime Day and Q4, it is still a great opportunity for sellers to capitalize on. 

  • Black Friday / Cyber Monday week

Amazon, like every other retailer, aims to capitalize on the surge in sales during this festive time of the year, as the holidays approach. 

When do I Need to Get my Deals in?

  • For the Fall Prime Deal Event, you must get your Lightning Deals in by August 11, 2023. 
  • For Black Friday / Cyber Monday, you must get your deals in by September 1, 2023 

Note: Amazon has only announced deadlines for Lightning Deals so far. You can also submit Coupons and Prime Exclusive Discounts for these events. The company will announce the deadline for these later.

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Amazon Expands Free Shipping for ALL Orders to Non-Prime Members

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Starting Monday and for an unspecified limited time, all Amazon customers — and not just Prime members — will get free shipping with no minimum purchase, which the e-commerce giant in a press release said will apply to “hundreds of millions of items.”

The news comes as rivals have also boosted their free delivery. Target last month, for example, announced free two-day shipping between Nov. 1 through Dec. 22 with no minimum purchase or membership required. And Walmart has expanded free two-day shipping (with a $35 minimum) to “millions of additional items” sold by third-party sellers on its online marketplace, and customers can return marketplace items to any Walmart store.

Read the article here.

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October 2023 Seller Fulfilled Prime Guidelines – What’s New, What’s Changed, What’s Important?

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19 minutes

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On August 8, 2023, Amazon announced a wide range of changes to the criteria it expects sellers to meet on its Seller Fulfilled Prime program. The company introduced new requirements, while updating its expectations from merchants across other metrics. These include on-time delivery, valid tracking, nationwide delivery, delivery speed, free returns and program fees. Amazon has also removed the use of the On-Time Shipment metric and no longer requires the use of its Buy Shipping services.





No time to read? No problem! Watch this quick video summary instead.

In this article, we breakdown each criteria – explaining the old requirements and the new ones that will go into effect on October 1, 2023. We also explain the impact we expect sellers to face from each of these changes.

changes to Amazon SFP requirements

Program Requirements and Criteria

On-Time Shipment (OTS)

The On-Time Shipment Rate is defined by Amazon as the number of units that shipped on or before the Promised Ship Date / Total No. of Shipped SFP Units.

Amazon tracks this metric based on when the carrier scan occurs. 

Old SFP Requirements
New SFP Requirements
Impact on Sellers
> 99% OTS rate expected.
Amazon is no longer going to track this metric on Seller Fulfilled Prime. The company claims that it is doing this to provide greater flexibility of shipping services and carrier options.
Positive (but only if you have the right technology in place!).

Previous Expectations

If an order is received before the cut-off time Mon-Fri and Sat/Sun (whichever the seller prefers to enable), carrier scan must occur the same day.

A carrier scan must occur the next day if an order is received after the cut-off time.

This is the most important metric in the current Seller Fulfilled Prime requirements.

New Expectations

Sellers will no longer be judged on this metric.

You don’t have to ship the same day if shipping tomorrow is optimal

Under the current Seller Fulfilled Prime guidelines, Amazon requires sellers to ensure a carrier scan is conducted the same day for all orders received before the cut-off time. 

There are situations where this rule forces sellers to unnecessarily use expensive air shipping, at the expense of more economical services. It’s best to understand this with an example: 

Let’s imagine you’re a seller with 2 warehouse locations – one in Los Angeles and the other in New York. Imagine that you receive an order from a customer in Connecticut at 3PM ET on a Monday:

same-day carrier scans

Ideally, you would like to use an economical ground service which can reach the customer in time by fulfilling the order from your New York warehouse. However, because it is past the cutoff time in New York, but before the cutoff time in Los Angeles, Amazon will expect a carrier scan that same day.  The only way for you to ship from Los Angeles and deliver to the customer by the promised date is through an expensive air shipping service. 

However, with carrier scans no longer required on the same day, you can now choose to ship the next day from your New York warehouse through a service like UPS ground – which is 3.5X cheaper than the air service. Such cost savings can only be achieved, however, if you have the right technology in place. Your shipping software needs to intelligently compare warehouse locations, carriers and shipping services to determine the most economical option to use, which still satisfies the customer expectation.

On-Time Delivery (OTD)

The On-Time Delivery Rate is defined as Number of Units delivered on or before the Promise Date (which the customer sees at the time of checkout) / Total No. of SFP Units Shipped. 

Amazon tracks this metric based on 2 parameters – the delivery date committed to the customer when they checkout, and when the package is actually delivered at their address.

on-time delivery metrics

Previous Expectations

Under the old program, Amazon heavily pushed the use of its Buy Shipping Service. Amazon might also believe that only the services on Buy Shipping are capable of meeting the delivery promises made to customers. 

Therefore, it was only in cases when labels were bought off of Buy Shipping that sellers were held to the high bar of 97% on-time delivery.

New Expectations

This becomes the most important metric under the new Seller Fulfilled Prime requirements.

Amazon is also going to minimize the provision of “Promise Extensions” (in some cases, the customer is shown a later delivery date because Amazon factors in buffer time due to logistical challenges at the seller’s end).

They encourage sellers to begin by looking at their On-Time Delivery Rate for orders without Promise Extensions (to get a sense of their ‘true’ order fulfillment levels).

No More Protection Through Buy Shipping Usage Available

While the 93.5% on-time expectation is a reduced one, which is more favorable for sellers (they don’t have to be perfect every time), this metric could still work against them.  The major reason for this is that sellers now lose the protection that the previous program afforded – so long as they bought the label on Amazon Buy Shipping, and performed the carrier scan in time, they could not be held accountable for any delays in order delivery due to carrier issues. Now, it no longer matters whether the label was bought through Buy Shipping or if a carrier scan occurred in time – sellers must meet the 93.5% benchmark. The biggest contributor to making it happen are the shipping carriers. The biggest criteria by which Amazon measures success on the program is now in the hands of a factor that the seller cannot entirely control – the ability of the shipping carriers to execute operations smoothly and without disruption.

Buy Shipping Usage

Amazon Buy Shipping is Amazon’s system through which sellers and merchants can purchase shipping labels to fulfill their orders. 

The Buy Shipping Usage % is defined as the Number of Units for which labels were bought with Buy Shipping / Total No. of SFP Units Shipped 

Amazon Buy Shipping is now Optional
Old SFP Requirements
New SFP Requirements
Impact on Sellers
>99% Buy Shipping usage
No longer tracked
Positive

Previous Expectations

Buy Shipping usage is extremely important. Sellers must print nearly every label on Buy Shipping. Complying with program requirements boiled down to printing labels on Buy Shipping, and then ensuring carrier scans occurred on the same day.

New Expectations

Sellers will not be judged any longer by this metric – this is the biggest step Amazon claims it is taking to provide sellers and merchants “greater flexibility of shipping services and carriers”.

In return for being able to pick services off of Buy Shipping, a timely carrier scan will not suffice – the orders need to actually reach the customer within the Promised Delivery Date >93.5% of the time.

More flexibility in picking carriers and services

Amazon Buy Shipping has one major issue that numerous sellers have reported anecdotally. The platform does not do a good job of estimating the delivery speeds of USPS services.  Buy Shipping sometimes excludes USPS services that are actually capable of meeting the delivery date, forcing the seller to pick a more expensive shipping label that it does believe is capable of reaching the customer in time. Buy Shipping also occasionally runs into errors, where it does not return a particular carrier for no particular reason. In all these cases, merchants are forced to buy labels off Buy Shipping, which reduces their usage less than the 99% bar.  

With this requirement gone, sellers are now free to pick the ‘truly’ cheapest service. However, you can see the benefits of this only if you have an intelligent multi-carrier shipping software in place that rate-shops multiple carriers and shipping services to identify the truly cheapest label on each order.

Valid Tracking Rate (VTR)

Amazon provides its customers tracking numbers for them to be able to see where their order is at. 

An order has valid tracking if it receives a first carrier scan (the scan that is performed by the carrier to indicate that the order is in transit). 

Amazon defines the Valid Tracking Rate as Number of Prime packages with a Valid Tracking ID / Number of Prime packages for which shipment has been confirmed.

Old SFP Requirements
New SFP Requirements
Impact on Sellers
Not tracked currently
>99% – Amazon requires that the scan be made by an Amazon – integrated carrier.
Neutral

Previous Expectations

Sellers were not assessed on this metric.

New Expectations

Sellers are responsible for updating shipping carrier, shipping service and tracking number information on Amazon for each order, to enable customers to track the status of their packages.

Less Hassle for Merchants in Meeting This Metric

Amazon expects each package to have at least one carrier scan. This scan must occur before the customer receives their order, so that they can use the tracking number to see where their order is on Amazon. The fact that the carrier scan does not have to occur the same day is a positive for sellers. Many sellers have reported issues with carrier operations on the weekends – their packages are picked up, but no scans are actually conducted on a Saturday. Under the current program, this leads to violations of the OTS metric.  

Under the new program, sellers should not face too many hurdles with getting packages scanned once before they reach customers.

Nationwide Delivery Coverage

This refers to the ability for products to be made available with fast shipping across the contiguous United States (the lower 48 states). 

This expectation is based on the size tier that the item falls into (Standard Sized / Oversized / Extra Large). 

oversized SKUs must now ship nationwide
Old SFP Requirements
New SFP Requirements
Impact on Sellers
Only for Standard-sized Products
Expected for every SFP SKU, across all size tiers
Has Positives and Negatives

Previous Expectations

Standard-sized products must be made available within the entire contiguous U.S. on fast shipping.

Oversized items can be serviced within specific regions (also known as Regional SFP) – nationwide fast shipping is not required for them.

New Expectations

Products across all 3 of Amazon’s size tiers – Standard Sized, Oversized and Extra Large – must be made available in the contiguous U.S. on fast shipping.

Any product (regardless of size tier) that is configured with a Prime shipping template has a minimum delivery speed of 3-5 calendar days – sellers cannot edit this.

Prime Badge Available Nationwide For all SKUs, but with the Caveat of Higher Shipping Fees

Amazon is now willing to provide sellers the Prime badge nationwide on oversized and extra large SKUs, whereas previously it was restricted to just the specific regional part of the country the seller operated from. The metrics for 1- and 2-day delivery are not yet extremely high. This is on the whole a positive for sellers because the Prime badge boosts search rank, conversion and sales on these SKUs. 

The negative is that the minimum delivery speed across every size tier is 3-5 days. This is a calendar-day based metric, which includes Sundays and Holidays. Therefore, it may not be possible to always use discount services capable of meeting the delivery timeline, such as USPS Priority Mail, FedEx Home or UPS Ground. In some cases, the seller might still be forced to use expensive air shipping.

Delivery Speed Metrics

Amazon tracks this based on the % of Product Detail page views that promise same-, 1- or 2-day delivery to customers. 

This percentage will be calculated based on pageviews from customers across the entire contiguous United States, not just those in your defined regions for Same-, 1- or 2-day deliveries.

faster delivery expected

Previous Expectations

Amazon introduced the delivery speed metric as a percentage of product detail pageviews that promise customers same-, 1- or 2-day delivery. 

The calculation is based on calendar days, and includes Sundays and holidays.

New Expectations

The delivery speed metrics across all size tiers have increased. They will now be based on pageviews from customers all over the lower 48 states, in addition to those in your defined regions for same-, 1- and 2-day deliveries.

Amazon has said that it does not have targets for Same-Day Deliveries initially.

However, as Amazon focuses on same-day deliveries for its inhouse FBA logistics network, there might be revisions to this in the coming months.

Delivery Speed Expectations Increase Across Every SKU

delivery speed expectations
  • This is how delivery promises will be displayed to customers (assuming a cut-off time of 2PM, and that you deliver every order within 1 day after it ships). 
  • These metrics have always been the most crucial and challenging for sellers to meet. Sometimes, they’ve been unfairly penalized for them also. Let’s say you’re based in New York, and a customer in Connecticut is browsing your product detail page at 6 PM ET. Even though you may be capable of delivering the package to them the next day, Amazon will still show only a 2-day delivery promise. 


Achieving a high % of 1- and 2-day delivery pageviews nationwide is not easy, and relies largely on ensuring that your inventory is strategically distributed in a network of USA fulfillment centers so that customers from everywhere see fast shipping promises.

Trial Period

Sellers hoping to be a part of the SFP program must go through a trial period where they can prove to Amazon that they are capable of meeting the rigorous criteria of the program. 

During this trial period, when customers shop their products, they will not see the Prime badge on the listings. On successfully completing the trial period and meeting the SFP criteria, Amazon will enable the Prime badge for the listings.

Old SFP Requirements
New SFP Requirements
Impact on Sellers
A short pre-trial process, followed by a 90 day trial where 200 orders have to be shipped, while meting all SFP criteria.
A 90 day pre-qualification process, followed by a 30 day trial where 100 orders have to be shipped, while meeting all SFP criteria.
Positive for Some, Negative for Others

Previous Expectations

Before the trial:

Have a Professional seller account, and activate Premium Shipping. Fulfill 30 Premium orders in 1 month. 

During the trial: 

Fulfill 200 orders in 90 days. Do so while meeting all requirements of the SFP program. 

New Expectations

Products across all 3 of Amazon’s size tiers – Standard Sized, Oversized and Extra Large – must be made available in the contiguous U.S. on fast shipping.

Any product (regardless of size tier) that is configured with a Prime shipping template has a minimum delivery speed of 3-5 calendar days – sellers cannot edit this.

Time to Enrollment Shortens for Some Sellers, While Others May No Longer Be Eligible

Previously, the trial period was longer in length and order volumes – having to fulfill 200 orders in 90 days while meeting the program criteria. Now, if you’ve self-fulfilled 100 packages in the last 90 days (or under, say 60 days) – you can get on the shorter trial of 30 days.  The overall time to Seller Fulfilled Prime enrollment is potentially shorter (if a merchant can move past pre-qualification quickly).

However, when comparing 200 packages in 90 days to 100 deliveries in 30 days, sellers are expected to ship nearly 50% more orders per month – this can exclude sellers with small monthly volumes who were previously eligible to participate in the program. 

Performance Evaluation

Amazon periodically assesses how its SFP sellers are faring, and to check whether they are meeting the expectations set for them.

Old SFP Requirements
New SFP Requirements
Impact on Sellers
Tracked every 7 days, and every 30 days
Tracked every 7 days
No change

The evaluations that Amazon conducts on sellers continues to occur at the same cadence that it always has – sellers will not face anything new.

Amazon will begin tracking sellers against the new set of metrics beginning October 1, 2023. 

Resolving Disputes

Needless to say, order fulfillment is complex and mistakes can occur. While merchants face no penalties for mistakes that FBA makes, sellers on Amazon SFP face severe penalties for issues with orders. 

Old SFP Requirements
New SFP Requirements
Impact on Sellers
If a requirement is missed, Amazon will suspend SFP for you and require you to submit a Plan of Action.
If a requirement is missed 3 times, you lose SFP eligibility.
Positive (if your SFP Fulfillment Partner has responsive support)

Previous Expectations

The Plan of Action needs to explain why you slipped up, what specific steps you’re taking to fix the current situation and measures that will be put in place to ensure it does not repeat.

New Expectations

An email will be sent the first time a requirement is missed. The Prime badge will be “paused” the 2nd time you miss the same requirement. If you are sure the issue is fixed, you can restart the Prime badge. If you make it through four weeks without violating the same requirement after you restart the Prime badge, your account will be reset. If you do miss the same requirement the 3rd time, you will lose the Prime badge. If you go through the pre-qualification process, you can start an SFP trial again.

Amazon Gives Sellers More Chances, but the Road Back is Extremely Tough

Under the previous Seller Fulfilled Prime requirements, when Amazon found sellers missing a certain metric, it would suspend them from the program and require submission of a Plan of Action. This was harsh – a single mistake could lead to suspension of the Prime badge. This was exacerbated by the resolution process – it can take a long time for Amazon to get back, and if they deemed the Plan of Action not good enough, they could delay reinstatement on the program.

 Now, sellers have 3 strikes per program requirement. Additionally, this gives a chance to sellers to dig into why they missed a metric and work with their fulfillment partner to ensure it does not repeat again. Sellers that have an SFP fulfillment partner with responsive, reliable customer support should not face too much trouble in ironing out their errors and continuing their participation in the program. However, if the 3 strikes do occur, then it is a long, long way back – sellers must begin all over again – right from the pre-qualification process.

Free Returns

When a customer wishes to return a Return-eligible Prime item, the sellers are in most cases required to pay for the cost of the return shipping label, and to provide the customer a full refund. In a small number of cases, the customer might be required to bear the cost of the shipping label – in these cases, a refund is provided after deducting the price of the label.

Old SFP Requirements
New SFP Requirements
Impact on Sellers
Sellers are required to bear the cost of the return shipping labels in all cases, EXCEPT certain Buyer reason codes.
For any return eligible item under 50 lb, the Seller must provide free returns – irrespective of the buyer / seller reason code.
Negative

Previous Expectations

When the return had these Buyer codes, sellers were exempt from bearing the cost of the return label: 

  • Accidental order
  • Better price available
  • No longer needed or wanted
  • Performance or quality not adequate
  • Incompatible or not useful for intended purpose
  • Part not compatible with existing system
  • Excessive installation or did not install

New Expectations

Sellers must bear the cost of the return shipping label even in the cases of the above-mentioned buyer reason codes.

Return Costs Rise for Sellers – Even When the Onus is on the Buyer

Previously, in certain cases, sellers could provide refunds after deducting the cost of the shipping label. Now, even in cases where the onus may lie on the buyer’s side, the seller must bear the cost of the return shipping label. This is an additional expense that they must bear, which was not the case previously.

Program Fees

Old SFP Requirements
New SFP Requirements
Impact on Sellers
Does not exist
No Fee (a charge was originally planned by Amazon and subsequently withdrawn)
No Impact

Amazon originally announced that they would charge sellers 2% of the unit price for every item shipped via Seller Fulfilled Prime, or a minimum of $0.25. 

Amid growing scrutiny from regulators over anti-competitive practises, the company withdrew this fee for concerns over how sellers and officials would perceive such behavior. Amazon withdrew the fee a few days before September 26, 2023 when the Federal Trade Commission and 17 US states sued the company for anti-competitive behavior.

Amazon Resources

We hope you found our breakdown helpful and informative!

To read more about the old requirements that the program wanted sellers to meet, visit this page on Amazon Seller Central: https://sellercentral.amazon.com/help/hub/reference/external/G202072550 

To read about the new requirements that Seller Fulfilled Prime will enforce starting October 1, 2023, visit this page on Seller Central:

https://sellercentral.amazon.com/help/hub/reference/external/GXCRLXHNJNPE2DHM

You can also read our guide to selling and winning on Amazon Seller fulfilled Prime to learn everything there is to know about SFP before you start the process in October 2023. 

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Indy Pereira

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