Amazon Fulfillment: A Complete Guide for Third-Party Sellers in 2022

Amazon Fulfillment: A Complete Guide for Third-Party Sellers in 2022

Amazon fulfillment doesn't need to be complex. This guide will provide all you should be aware of FBA, FBM, and SFP and offers tips for success on the Amazon marketplace.

Amazon provides 3 fulfillment alternatives for sellers who are third party: FBA (Fulfillment by Amazon), FBM (Fulfillment by Merchant) along with SFP (Seller-Fulfilled Prime).

The most straightforward solution for sellers selling regular size products according to Amazon's standards is for them to permit Amazon to manage the entire fulfillment process and customer service via FBA. FBA allows Prime status for Amazon's fulfillment, delivery and fulfillment networks.

What is Fulfillment by Amazon (FBA)?

Amazon FBA, also known as Fulfillment by Amazon, is a program run by Amazon's internal logistic and fulfillment network.

The primary goal of Amazon's logistics system is to provide 1 to 2 day delivery (and same-day delivery for increasing numbers of products) of its products for Amazon Prime customers.

The Amazon FBA program permits third-party vendors to keep their goods in Amazon's Amazon fulfillment centers.

Amazon handles fulfillment, shipping, and customer interactions on behalf of the seller as well as takes a share of each sale in accordance with their fee schedule and pays the seller in a regular interval of every 2 weeks.

Advantages of Enrolling in Amazon FBA The primary benefit of enrolling as a participant in Amazon FBA is that the primary benefit of joining Amazon FBA Program can be Prime status, which puts your items in the top position of results of searches and attracting the interest of customers who are loyal Prime customers who spend twice as much on Amazon than the average Amazon customer.

A few multichannel sellers who are enrolled in FBA choose to split the fulfillment among Amazon's fulfillment and services, and other outsourced fulfillment service providers, while others are able to meet multiple channel requirements via Amazon Multi-Channel Fulfillment.

The downsides of FBA include a lack of transparency into order and inventory status, insufficient customer information and an uneasy experience for customers.

If customers make a purchase through your Amazon storefront, and it is delivered at their door with Amazon-branded packaging They are then able to associate the product they purchase with Amazon instead of your own brand.

Amazon FBA Storage Limits Amazon FBA was designed to allow third-party sellers to provide Prime shipping. This offered Prime customers more options when they shop on Amazon.

In the beginning, FBA storage limits allowed sellers to store their goods in Amazon FBA Warehouses for up to 12 month at fair storage costs.

But, as the program was becoming more popular among FBA sellers, and FBA warehouses began to get full, Amazon began prioritizing quick-turning inventory, and enticing FBA sellers to only store the equivalent of a few weeks' of inventory at a time.

The best option for many sellers could be to adopt an approach that involves multiple threads to fulfill. Instead of solely relying on FBA sellers could create two SKUs in an ASIN. One SKU will be fulfilled through Amazon and the other one will be fulfilled by the merchant.

When the FBA SKU has sold and the vendor is out of stock, the merchant is able to switch to their fulfilled seller SKU up to the point that FBA is replenished.

If they have an alternative fulfillment system established, merchants reduce their chance of having stockouts and when they can outsource FMB fulfillment to a reliable 3PL or 4PL network, they can offer the same 1 to two-day delivery that customers are used to in Prime orders.

FBM is an alternative to FBA when the limitations of inventory limit the growth.

What is Amazon Fulfillment by Merchant (FBM)?

Amazon FBM which is also known as Fulfilled by Merchant, is a program that permits Amazon sellers to advertise on the marketplace, and to handle the fulfillment, shipping, and customer communication by themselves or through an external service provider for fulfillment of orders.

The main benefit of registering in Amazon FBM Amazon FBM program as opposed to Amazon FBA is a sense of control and autonomy to Amazon sellers.

Sellers are able to control their branding by using custom packaging instead of orders being delivered with Amazon Prime packaging, creating confusion for customers that could cause customers to return to another Amazon seller instead of returning to the primary channel for sales.

With Amazon FBM sellers are also responsible for all communications with customers, ensuring that all interactions with customers are flawless and consistent with the overall experience of the brand.

The biggest drawback of Amazon FBM in comparison to FBA is the fact that FBM doesn't come with Prime status. Although the Prime badge could boost sales overall, it's vital to think about how much Amazon FBA's storage and fulfillment charges could impact the revenue of these sales.

Analyzing the profitability of skus in your Amazon sales can help you determine if the charges are really outweighing the profit of the increased sales.

What Is Amazon Seller Fulfilled Prime (SFP)?

The third fulfillment option available to Amazon sellers would be Amazon SFP which is also known as Seller Fulfilled Prime. This program provides sellers the most efficient of both options.

The seller manages all fulfillment and shipping processes as well as customer interactions through either an in-house system or an outsourced fulfillment partner.

The major distinction in SFP FBM and FBM is that sellers who enroll within the SFP program are given the status of Prime.

Amazon SFP is a program that was created in response to the Amazon SFP program was created in response to a need to clear valuable warehouse space within Amazon's warehouses, and also to expand the number of options and sellers in Amazon Prime. Amazon Prime Program.

Amazon's primary focus for storage and warehouse work is Amazon private labels, which means that the increasing scarcity of warehouse space may eventually help sellers create their own products without losing their Prime membership.

It is important to remember it is important to note that you must be aware that the SFP program is extremely selective and competitive. It's been closed to applicants for more than a year.

Merchants can join the waitlist, however Amazon hasn't revealed the number of sellers on the waitlist , or the date when it will officially let the program reopen to new applicants.

Amazon will also screen all applicants to its program by enrolling them during a trial phase where their listings do not bear any Prime badge, however they must meet Prime's same day fulfillment and two-day delivery requirements prior to being accepted.

Leveraging Amazon’s Fulfillment Standards for Long-Term Growth Amazon often serves as a benchmark for the mood of consumers and this policy is a sign that 1-2-day delivery will remain as the standard in fulfillment for eCommerce.

The recent increase in demand caused by COVID-19 exposed the weaknesses of Amazon's internal fulfillment system and led Amazon to expand it with Prime fulfillment across all of its channels with these new rules in sellers who are fulfilled by Prime.