For online retailers seeking a loyal customer base, tapping into Amazon Prime is the ultimate sales strategy. There are over 200 million Prime subscribers around the globe, 74% of which are based in the US.
In the majority of product categories, products displaying the Prime badge are guaranteed to sell like hotcakes and it becomes hard for any prime member to ignore your products.
The Amazon Prime seller badge serves as a symbol of assurance to customers, signifying Amazon’s reliability in taking care of the brand, product, and customer.
Many Amazon Prime members solely purchase items with the Amazon Prime seller badge.
In reality, there are three different ways to acquire the Prime badge.
We’ll dissect each method, explain how they function, weigh their pros and cons, and help you choose the best option for your business.
Why Sell On Amazon Prime?
Selling on Amazon Prime can be incredibly beneficial for any business looking to reach a large customer base (prime members) with its products.
With an extensive network and reliable shipping system, you as an Amazon prime seller can ensure speedy delivery of your goods to all the Amazon prime customers.
By joining Amazon Prime as a prime seller, you are also showing other prime sellers and customers that your company is dedicated to customer satisfaction and providing quality services at competitive prices.
Through FBA, sellers can have their products eligible for free two-day shipping, as well as other offers available exclusively to those selling on the Amazon Prime platform such as amazon buy shipping services and subscription discounts.
Seller Fulfilled Prime (SFP)
Selling on Amazon Prime using Seller Fulfilled Prime (SFP) allows you to offer prime customers fulfilling delivery of your products without having to store items in an Amazon warehouse.
That personalization can be just what prime members are looking for when choosing which Amazon store and prime seller they want to purchase from, helping you stand out from the competition.
Vendor Central
Selling on Amazon Prime is a great way To take your business to the next level and reach even more prime members. Utilizing Amazon’s Vendor Central is among the methods to achieve this.
With Vendor Central tools, sellers can ramp up their exposure quickly and get their products shipped out faster than ever before. Taking advantage of this program makes it much easier to succeed on Amazon Prime.
And what’s better and interesting is once your products are in FBA, they automatically qualify for the coveted Prime badge, making it easier for shoppers to find and purchase your items.
Pros
Outsource order fulfillment: FBA allows you to outsource your order fulfillment, so you don’t have to deal with shipping or other related tasks.
Fully automated fulfillment: This service is fully automated and integrated with the Amazon marketplace, making it a convenient option for many sellers.
Save time and effort: With FBA, Amazon takes care of shipping and customer service, which can save you a lot of time and effort.
Save cost: Depending on your business, using FBA may be less expensive than doing your own packing and shipping, especially if you don’t have much experience in this area.
Remove fulfillment-related negative feedback: One of the benefits of using FBA is that Amazon can remove negative feedback from customers that relates to shipping or fulfillment, which can be very helpful for maintaining a good reputation.
Cons
Additional cost: While FBA can be a convenient option for outsourcing order fulfillment, there may be some unexpected fees to consider, such as long-term storage fees or additional charges for certain services. Depending on your business model and cost structure, using FBA can be more expensive than doing your own shipping and handling.
Inventory management: When using FBA, it’s important to regularly monitor your inventory levels and replenish your stock as needed, while also taking into account the time it takes for shipments to be processed and received.
Extra cost for extra service: If you don’t want Amazon to split your inventory and ask you to ship small quantities to multiple locations, you may need to pay extra for the “Inventory Placement Service.
May be held responsible for fake items: One potential downside to using FBA is that Amazon may “commingle” your inventory with products from other sellers, which means you could be held responsible for a fake or damaged item that came from a different seller. It’s important to be aware of this risk and take steps to mitigate it, such as using unique identifiers for your products.
Who is FBA right for?
Amazon Prime and FBA (Fulfillment by Amazon) could be the perfect fit for those entrepreneurs and small business owners who are looking for an easy way to manage their online shopping and product fulfillment without the hassle of storing, packing, and shipping.
If you’re a business owner looking to keep a firm grip on your inventory and order fulfillment, while still reaping the rewards of Amazon Prime, then Seller Fulfilled Prime might just be the answer you’re looking for!
With SFP, you’ll have complete control over your inventory and order fulfillment, while also enjoying the many benefits of selling on Amazon Prime.
Pros
Save money: With SFP, you don’t have to pay any shipping and handling fees to Amazon, and you only have to worry about managing inventory levels in your own warehouse(s), so you can save money and stay in control.
Get more control: One of the benefits of SFP is that you get to have more control over returns and refunds, which can be especially helpful if you have specific policies or processes you want to follow.
Make higher profits: If you sell bulky or heavy items, SFP can be a great option because you don’t have to ship them twice (once to Amazon and then to the customer), which means you could potentially make higher profits.
Bypass FBA regulations: Another advantage of SFP is that you can sell products that aren’t eligible for FBA, or that have special storage requirements like temperature control or short expiration dates, which can help you expand your product offerings and reach more customers.
Use multiple fulfillment methods: SFP also gives you the flexibility to use multiple fulfillment methods depending on your inventory, so you can ship bulky products via SFP and smaller products via FBA, for example, to optimize your processes and costs.
Can be expensive to maintain the warehouse: One of the challenges of using SFP is that it can be expensive to set up and maintain all the necessary infrastructure, such as a warehouse, staff, software, and inventory systems, which can be a barrier to entry for some sellers.
High criteria: Another hurdle with SFP is that Amazon has strict acceptance criteria, including qualifying for Premium Shipping and completing a trial period of at least 5 to 90 days with a minimum of 200 orders. In some cases, there may even be a waiting list for new applications.
Risk of falling below Amazon’s standards: Even if you do qualify for SFP, there’s always the risk of falling below Amazon’s standards, which could result in losing the Prime badge and having to switch to FBA. This can be a disruptive and time-consuming process for sellers who have already invested in their SFP operations.
Who is SFP right for?
For businesses that already have their own shipping infrastructure in place for other sales channels, Seller Fulfilled Prime (SFP) can be a great option because it allows them to keep using their existing systems, saves on fixed shipping costs elsewhere, and avoid the complexity of managing inventory in multiple locations.
SFP is especially useful for sellers who want to maintain more control over their inventory and shipping processes, as it allows them to fulfill orders directly from their own warehouse, rather than relying on Amazon’s fulfillment centers.
This can be a strategic advantage for businesses that want to differentiate themselves from competitors and maintain strong customer relationships.
Vendor Central
Vendor Central is a third third party marketplace, seller central and distinct selling option on Amazon that operates through invitation only.
Since Amazon sells the products, they automatically come with the coveted Prime badge, which can significantly enhance the visibility and credibility of your products.
Pros
Amazon takes care of all: One of the major benefits of Vendor Central is that Amazon takes care of all the business-to-consumer sales. This means you don’t have to worry about anything related to customer service, shipping, returns, or other aspects of selling on the platform.
Earn Sold by Amazon badge: When your products are listed on Vendor Central, they will be labeled as “Ships from and sold by Amazon.com. This can be a major confidence booster for customers, as it signals that Amazon stands behind your products and will handle any issues that arise.
Access to powerful marketing tools: Vendors who sell through Vendor Central also have access to a range of powerful marketing tools. These include A+ Content, which allows you to create rich product descriptions with enhanced images and text; Subscribe & Save, which incentivizes customers to purchase your products on a recurring basis; and Amazon Vine reviews, which provide free samples to trusted reviewers in exchange for unbiased feedback.
Cons
Need invitation to join: Vendor Central is an exclusive platform, and you need the invitation to join.
Need to pay for marketing efforts: Although Amazon handles sales and customer service, vendors need to pay for marketing efforts.
Low order volumes: Amazon decides which products they want to purchase and in what quantities, which may result in lower order volumes than expected.
May be rejected by Amazon: If Amazon doesn’t want to stock a product, vendors will have to sell it themselves or through a third-party seller.
If you are a manufacturer or brand that primarily sells wholesale and doesn’t have the resources or experience to sell directly to consumers, Vendor Central may be a good option for you.
Additionally, if you are required to sell your products directly to Amazon under their Product Availability Policy, Vendor Central is the way to go.
This program allows brands to sell their products in bulk to other third party sellers on Amazon, which will then handle all the logistics of selling to consumers on the Amazon website.
Do You Really Need To Sell On Amazon Prime?
If you’re considering selling on Amazon Prime, it’s important to consider whether it’s actually necessary for your business.
Despite the fact that Amazon offers over 12 million products, not all of them have the coveted Prime badge, and many still sell well.
Conversely, many products with the badge don’t sell as well as expected. While having the Prime badge can be essential in some cases, it’s not always a deal-breaker.
So, it’s important to ask yourself whether you truly need it before committing to programs like FBA, SFP, or Vendor Central.
You should be an Amazon Prime seller if:
If you’re wondering whether you really need Amazon Prime to succeed, consider the following points:
You will need Prime if:
You’re selling your own brand but are competing with similar products that have the Prime badge. This is common for many private-label products.
You’re selling a third-party branded product that other sellers are also offering, and one or more of these sellers have the Prime badge. In this case, you’ll be competing for the Buy Box with sellers who have Prime, which can make it difficult to get sales.
If your product is priced much better than Prime sellers who are competing for the Buy Box, then you can still win the Buy Box without having Prime.
If you’re selling used or rare products, such as textbooks or refurbished items, you aren’t competing directly with others, so having the Prime badge may not be necessary.
If you’re selling something that’s difficult to ship or find on Amazon, such as commercial machinery or specialized components with a low sales volume, it may not be suitable for FBA, and Amazon may not want to sell it through Vendor Central.
How To Choose The Right Program For Your Business?
Selling on Amazon Prime can significantly boost sales for most sellers, but it’s important to choose the right program that best suits your business needs.
When contemplating the best way to acquire Prime status for your product listings, there are three primary factors to take into account.
Business Type
First, you need to determine what kind of Amazon business you’re running and what products you’re selling. Are you selling to B2C, B2B, or both? What is the best way to sell your products?
Competition
Secondly, it’s important to evaluate the competition in your category. To remain competitive in the face of similar-priced items bearing the Prime badge, it’s imperative that your products also display the coveted emblem.
Demand
Thirdly, you need to assess the demand for your products. If there is significant demand, then having Prime is crucial. However, if your products are more niche, you may not need it.
Thus careful consideration must go into making this decision before committing any resources to these programs.
Frequently Asked Questions
What is Amazon seller Prime?
Amazon seller Prime is a program designed for Amazon sellers that offers benefits like free two-day shipping, discounted rates on Amazon services, and access to special seller tools.
Do Amazon sellers get free Prime?
No, Amazon sellers do not automatically get free Prime. However, they can enroll their own website in the Amazon seller Prime program to receive the benefits mentioned above.
How do I activate Amazon Prime as a seller?
To activate Amazon Prime as a seller, you need to enroll in the Amazon seller Prime program. You can do this by going to your seller account, navigating to the “Settings” tab, and selecting “Amazon seller Prime” from the dropdown menu. From there, you can follow the prompts to enroll in the program.
8-figure Amazon seller and serial online entrepreneur since 2015. Research and practice various online business models, and apply his in-depth learnings to further expand and grow his businesses as well as help others to achieve greater successes. Ex-VP of a high tech VC in Vancouver and a Management Consultant with over a decade of experience in the industry. Master's Degree from HEC Paris.
