Everyone loves Amazon. Let’s be real. Whether you have or have not, you’ll probably dislike Amazon a little bit after reading this post. But we still Amazon… 3 deliveries today and counting 🙂
We’ll start with what Seller-Fulfilled Prime (SFP) is. If you were around for the early years of Amazon, you’ll remember that everything on Amazon was sold and fulfilled by individual sellers.
In 2006, FBA, or Fulfillment by Amazon, was introduced. This allowed sellers to use Amazon logistics to improve the customer experience. Of course, Amazon also made this change to put more money in their pockets, but I digress. One big perk of this is that sellers could get the Prime badge, and until 2015, it was the only way to do so.
That year, Amazon introduced Seller-Fulfilled Prime. Basically, sellers could get the Prime badge but keep their shipping in-house as opposed to doing it out of an Amazon warehouse. And now, it’s back. They’ve released some information so far; here’s what they included:
Cost Structure:
- 2% fee based on sales
- + minimum of 25 cents per unit sold
Eligibility:
- Fulfill at least 100 packages independently
- Cancellation rate < 2.5%
- Tracking rate > 95%
- Late shipment rate < 4%
This program will be good for sellers, but the deal is dampened a bit by the 2% fee. Here’s my take: the cost of everything Prime is getting higher and higher. Rental fees are higher and Buy With Prime, which sellers need to reach Prime customers, requires an additional 3% fee.
While some sellers thrive on Amazon without Prime, the majority need the Prime badge to maximize their success.
For sellers, diversification is paramount. For the average Amazon seller, the low-hanging fruit is leveraging Walmart Marketplace, followed by their own direct-to-consumer website.
My concern is the trajectory of Amazon’s escalating costs. As if the rates weren’t bad enough before, it looks like the prospect of alleviation is remote. Will merchants end up bearing the rising costs and have to pass them on to end customers?
Yours Truly,
The Instant Refund Expert™
The Refunds Blog 