June 3rd, 2024
How to Choose the Right Amazon Seller Shipping Options
With various Amazon shipping options available, finding the right one for your business is crucial. It's not just about delivering packages; it's about ensuring a great customer experience and fostering business growth. Here are four key questions to consider:
- Do you have the capacity to handle shipping in-house?
- How do your costs compare to Amazon FBA shipping rates?
- Which option offers the Prime badge, enhancing your brand's credibility?
- How quickly can you deliver orders to customers?
To understand Amazon shipping charges, we'll break down the basics and compare the top three Amazon fulfillment options: Seller Fulfilled Prime, Fulfillment by Amazon (FBA), and Fulfillment by Merchant (FBM).
What's New With Amazon Shipping Fees
Recent updates to Amazon's fee structure have stirred concern among sellers, prompting discussions in forums and groups about the potential impact on their businesses. Here's what you need to know:
2024 FBA Fulfillment Fee Changes: While FBA fulfillment fees are set to decrease overall, the introduction of a new FBA inbound placement service fee is causing worries. This fee, based on shipment destinations and package sizes, could significantly raise costs for some sellers.
New Low Inventory Fee: Amazon's low-inventory-level fee has frustrated many sellers. Applied to products with consistently low inventory relative to demand, this fee complicates inventory management and may lead to extra costs.
Additional Fee Adjustments: Other fee changes, including updates to aged inventory surcharges, FBA removal and disposal fees, and returns processing fees, add to the complexity for sellers.
Amidst these challenges, Amazon also brings positive changes like reduced referral fees for apparel and enhanced benefits for sellers in programs like Supply Chain by Amazon and the Amazon Vine Program. While adapting to these fee adjustments may seem overwhelming, staying informed and adjusting strategies can help sellers navigate this evolving landscape.
History of Seller Fulfilled Prime
Amazon launched Seller Fulfilled Prime (SFP) in 2015, allowing sellers to handle shipping while still providing Prime benefits. However, in 2019, Amazon paused SFP due to quality concerns.
With a commitment to top-notch service, Amazon aims to meet global customer expectations. Last year, on October 1, 2023, Amazon reopened SFP enrollment, highlighting the importance of choosing the right fulfillment method amid increasing options and customer demands.
Amazon Seller Fulfillment Options
Amazon offers two types of merchant-fulfilled operations, FBM and SFP, as well as an option where Amazon stores, packs, and ships for sellers called FBA. Here's a breakdown of the basics:
- Fulfillment by Merchant means you handle shipping for your Amazon listings. It can be managed by you or a third-party logistics provider.
- Seller Fulfilled Prime (SFP) lets eligible sellers display a Prime badge and deliver directly to Prime customers. With SFP, you commit to Two-Day Delivery at no extra cost to Prime customers, with Amazon providing transportation solutions.
- Fulfillment by Amazon, or FBA, is the fulfillment option in which the seller ships products to an Amazon fulfillment warehouse. Then when an order is placed, Amazon will pick, pack, and ship the order.
Fulfillment by Merchant
Exploring Amazon FBM Shipping Cost & Features
Seller Fulfilled Prime
Seller Fulfilled Prime Shipping Rates & FAQ
SFP is great for experienced, high-volume sellers. To join, sellers must meet high performance standards and pass a trial period. During this time, the Prime badge won't show on your listings. After completing a 5 to 90-day trial with 200 Amazon seller orders, you're automatically enrolled. Adherence to Amazon's quality standards for service, returns, and refunds is crucial.
How Do You Enroll in Seller Fulfilled Prime?
Applications should reopen later in 2023. If you’re interested in signing up for Seller Fulfilled Prime, join the waitlist to be notified when enrollment reopens.
The Benefits of Participating in Seller Fulfilled Prime
Seller Fulfilled Prime lets sellers offer Prime-level shipping without using Amazon's warehouses. Despite its challenges, it brings several benefits. The Prime badge boosts profits, and its shipping rates can be cheaper than FBA. It offers more control over inventory, fulfillment, and shipping, plus access to Amazon’s customer service.
How to Qualify for Amazon Seller Fulfilled Prime
- Offer your customers premium Amazon shipping options
- Maintain a 99% on-time shipping rate by shipping at least 99% of your orders within the designated time frame
- Maintain an order cancellation rate of less than 0.5%
- Use Amazon Buy Shipping Services for at least 99% of orders
- Deliver your orders with Amazon-supported Seller Fulfilled Prime carriers
- Agree to the Amazon Returns Policy
- Allow Amazon to handle all customer service inquiries
Fulfillment by Amazon
Understanding Seller Fulfilled Prime vs FBA
FBA is ideal for high-volume, high-margin products, offering streamlined processes as Amazon handles storage and shipping. Sellers pay a 10-15% fee per transaction, varying by product. FBM is better for small or new businesses, allowing control over packaging and shipping but requiring customer service responsibilities.
FBA is ideal for sellers who fulfill the following criteria:
- Your product has a high turnaround rate and you sell at a higher-than-normal volume
- You don’t mind lowering the cost to the lowest possible profit point
Learn how FBA works, the benefits, inventory management, and Amazon shipping costs for sellers in our one-page Amazon FBA reference guide.
Understanding How to Ship with Amazon
FBM (Fulfillment by Merchant)
- Handle All Aspects: You're responsible for prepping, packaging, shipping, and returns.
- Customer Support: Manage all customer inquiries and meet or exceed Amazon's service policies.
- Discounted Shipping: Access discounted rates through Amazon's partnered carriers.
- Predictable Costs: Avoid unexpected expenses and policy changes.
Seller Fulfilled Prime
- Own Warehouse: Store your inventory in your warehouse or a third-party provider's.
- Choose Carriers: Use your preferred shipping carriers, potentially securing lower rates.
- Prime Badge: Sell items not eligible for FBA under the Prime badge.
- Avoid Storage Fees: No costly FBA storage fees or penalties for excess inventory.
Amazon FBA (Fulfillment by Amazon)
- Prep and Ship: Prepare and send products to Amazon's fulfillment centers.
- Prime Logo: Your inventory is listed with the Prime logo for eligible products.
- Amazon Handling: Amazon manages packing, delivery, customer service, and returns.
- Pay-as-You-Go: Pay fees for storage space and fulfilled orders.
- Shipping Included: FBA fees cover the cost of shipping.
Winning the Buy Box
Seller Fulfilled Prime and FBA products have increased chances to win the Buy Box. Winning the Buy Box means that when customers click on “Add to Cart,” their default option is to buy the product from you.
The Buy Box is responsible for nearly 82% of all sales, making it a valuable win for sellers. If you play your cards right, SFP or FBA can give you the competitive advantage you need to boost sales and visibility.
Download your Buy Box Checklist for more techniques to win the Buy Box and secure more sales.
The Cost Breakdown of Amazon Seller Shipping Charges
Fulfillment by Merchant (FBM)
- Low Initial Costs: Minimal upfront expenses, mainly covering shipping.
- Account Plans: Choose between Individual ($0.99/unit) or Pro ($39.99/month) plans.
- Referral Fee: Around 15% of the total sales price.
Fulfillment by Amazon (FBA)
- No Shipping Costs: Amazon handles shipping, but you pay FBA fees based on product size and weight.
- Storage Fees: Monthly and long-term storage fees apply.
- Payment Options: Fees are deducted from your balance or charged to your credit card.
Seller Fulfilled Prime
- Free Application: No cost to apply for SFP.
- No Warehouse Fees: No charges for warehousing, shipping, or handling.
- Shipping Costs: Vary based on order volume, package size, and location.
- Referral Fee: Typically 15% of the product's selling price.
Doubling Up on Fulfillment Options
Can't decide between Amazon FBM, FBA, or Seller Fulfilled Prime (SFP)? Mix and match! Many sellers choose FBA for popular products and FBM/SFP for slower-moving or seasonal items. By using multiple fulfillment programs, you can maximize profits and avoid costly inventory fees.
Need help choosing how to ship through Amazon? Schedule a consultation with us by filling out this form. We'll guide you through the options and find the best fit for your brand.