Monday, April 18, 2016

What is Amazon Seller-Fulfilled Prime?

Amazon Prime, the membership scheme with perks that include free two-day shipping, is now open to sellers who do their own fulfilment. 

Are you a self-fulfilled seller? Learn about the benefits of reaching Amazon’s premium customer base - Prime members.

Seller-Fulfilled Prime 

Having access to Prime customers increases sales. A staggering 70% of upper income US households are Prime Members (Business Insider). Prime members are loyal, deep-pocketed and spend more than non-Prime customers.

According to RBC Capital:

  • 73% of Prime shoppers buy 2-3 times a month. 
  • 49% of Prime members spend more than $800 per annum.
  • Prime adoption grew to 40% of Amazon’s US customers in 2015 . 
For sellers, Prime increases the discoverability of products. Strict barriers to entry mean less competition for Prime sellers. Having the Prime ‘badge’ beside a product promotes buyer confidence and increases the chance of winning the Buy Box. Customers will choose products with free shipping options over those without it.

Seller-Fulfilled Prime allows Amazon to give Prime members more choice by adding items that aren’t stored in its own warehouses. For sellers, having access to millions of high spending, loyal Amazon customers is a huge bonus - but there’s a catch. In return, Amazon wants more control over which courier service you use.

The Logistics Game

Amazon Logistics is now the mandatory carrier for Seller-Fulfilled Prime for most postal destinations in the UK. In Germany, courier firm DPD must be used when available. Amazon Logistics is a courier service that collects directly from retailers rather that Amazon fulfilment centres.

The changes will be most keenly felt by couriers, shipping companies and the like. Initially, self-fulfilled sellers could choose any courier service from Amazon’s list of preferred shippers. Now, Amazon is establishing control over the end-to-end purchasing process by making Amazon Logistics the mandatory choice where available.

For some merchants, Amazon’s extensive logistics network and competitive rates will be a benefit. For others, especially larger retailers, it could mean significant investment in warehousing and inventory systems to integrate with Amazon Logistics.

Is this an opportunity to sell more, or a risk handing over logistics to Amazon? Find out more in our Guide to Seller-Fulfilled Prime.