Amazon FBA, SFP, and FBM: What’s The Difference?
Amazon FBA, SFP, and FBM: What’s The Difference?
Are you an Amazon seller grappling with the logistics of fulfilling orders?
Amazon offers three main fulfilment options: Fulfilment by Amazon (FBA), Seller Fulfilled Prime (SFP), and Fulfilment by Merchant (FBM).
Each approach has its advantages and disadvantages, and selecting the right one can significantly impact your business’s success and operational processes.
This article will delve into the key distinctions between FBA, SFP, and FBM, exploring the pros and cons of each fulfilment method.
We’ll also guide you through the considerations necessary to choose the most suitable option for your unique business needs and product range, empowering you to make an informed decision.
Understanding the Fulfillment Options
What is Fulfilled by Amazon (What is Amazon FBA)?
Fulfillment by Amazon (FBA) is a service where Amazon takes care of storing your products in their fulfilment centres. They handle the entire order processing and customer service, allowing you to focus on other aspects of your business.
To use FBA in the UK, you need to follow Amazon’s stringent regulations for FBA sellers, which vary by product category.
What is Amazon Seller Fulfilled Prime (What is Amazon SFP)?
Seller Fulfilled Prime (SFP) enables you to deliver directly to domestic Prime customers within two days from your own warehouse.
It allows you to offer Prime shipping without relying on Amazon’s fulfilment centres, providing greater control over inventory and costs while benefiting from Prime customer access.
To qualify for SFP, your business must meet specific criteria, including having a domestic warehouse, maintaining high on-time delivery rates, and using Amazon’s preferred carriers.
What is Amazon Fulfilled by Merchant (What is Amazon FBM)?
Fulfilled by Merchant (FBM), also known as Merchant Fulfilled Network (MFN), allows sellers to market items through Amazon without using Amazon’s fulfilment services.
Online retailers are responsible for order processing, packing, and shipping themselves, often collaborating with third-party logistics (3PL) companies like byrd for efficient fulfilment.
FBM offers greater flexibility and control over the fulfilment process but limits exposure as FBM products are ineligible for Amazon Prime or the Buy Box.
Comparing FBA, SFP, and FBM
Prime Eligibility and Buy Box Advantage
Both Fulfilled by Amazon (FBA) and Seller Fulfilled Prime (SFP) sellers enjoy the significant benefit of being eligible for Prime delivery, granting access to over 100 million Prime customers worldwide.
The Prime badge is crucial as customers actively seek it, knowing it guarantees fast and free delivery without additional fees. This competitive edge translates into higher conversion rates. Additionally, FBA and SFP products are eligible for the coveted Amazon Buy Box, further boosting sales potential.
Cost Implications
FBA entails substantial costs for storage, processing, packaging, and delivery. Handling fulfilment independently or through a third-party partner can be more cost-effective.
However, with FBA, you’ll need to factor in Amazon’s fees, which vary based on product dimensions and weight. Even with FBA, sellers still incur inbound shipping, storage, and order processing costs.
Conversely, FBM and SFP sellers bear warehouse storage and delivery expenses themselves (read more here). If you already have a well-established logistics operation, these costs may be competitive.
Focusing on SFP could be more economical than FBA, as you can optimise packaging, negotiate shipping rates, and avoid certain FBA fees.
Control and Flexibility
With FBM, you have complete control over the fulfilment process, allowing customisation to meet specific needs. This flexibility enables you to make changes without being bound by Amazon’s requirements.
Similarly, SFP offers more control over fulfilment compared to FBA, enabling tailored services and fewer Amazon logos on packages.
How to qualifying for Seller Fulfilled Prime
To qualify for Seller Fulfilled Prime (SFP), businesses must meet specific criteria set by Amazon. The process involves a trial period to demonstrate the ability to deliver a seamless Prime experience.
Trial Period Requirements
- Have an Amazon Professional seller account
- Possess a domestic warehouse to fulfil orders
- Maintain an on-time shipment rate exceeding 99%
- Achieve an order cancellation rate below 0.5%
- Utilise Amazon Buy Shipping Services for at least 98% of orders
- Deliver orders using Amazon’s supported SFP carriers
- Agree to Amazon’s Returns Policy
- Allow Amazon to handle all customer service inquiries
During the trial period, the Prime badge will not be displayed on enrolled items. However, sellers must process orders with zero-day handling time.
Upon successful completion of the 30-day trial, meeting requirements like shipping at least 100 packages with a 93.5% on-time delivery rate and 99% valid tracking, sellers automatically enrol in SFP, and their products display the Prime badge.
Delivery and Returns Criteria
As an enrolled SFP seller, businesses must:
- Provide free one-day and two-day delivery for Prime customers
- Offer free nationwide standard shipping for all customers
- Meet minimum thresholds for one-day and two-day delivery speeds
- Maintain an on-time delivery rate of at least 93.5%
- Achieve a valid tracking rate of 99% or higher
- Limit seller-initiated cancellations to below 0.5%
- Ship and deliver Prime orders on weekends
- Offer free returns on items weighing under 50 lb
- Allow Amazon to manage all post-order customer service inquiries
By adhering to these stringent requirements, sellers can leverage the benefits of SFP, including Prime eligibility and increased visibility, while retaining control over fulfilment operations.
Conclusion
The decision to choose between Amazon’s fulfilment options – Fulfilled by Amazon (FBA), Seller Fulfilled Prime (SFP), or Fulfilled by Merchant (FBM) – should be based on a careful evaluation of your business needs, goals, and capabilities.
Each option presents distinct advantages and challenges in terms of costs, control, flexibility, and eligibility for Prime benefits. Ultimately, the right choice will depend on factors such as your product range, order volume, logistics infrastructure, and growth aspirations.
As a fulfilment company dedicated to supporting Amazon sellers, we recognise the complexities involved in navigating these options.
Our aim is to empower you with the knowledge and insights necessary to make an informed decision that aligns with your unique circumstances and propels your business towards success in the dynamic Amazon marketplace.
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