Did you know that Fulfillment By Amazon (FBA) is the number-one driver of marketplace seller growth? Is Amazon’s new Seller Fulfilled Prime service catching up? Here’s how to make them both work for you.
Since 2006 Amazon has made fulfillment easier and more profitable (in theory) for online sellers with its Fulfillment-by-Amazon (FBA) service. Sellers using Amazon FBA can tap into Amazon Prime’s coveted 57 million members (huge!) by shipping their products directly from Amazon’s own warehouses, utilizing two-day or next-day shipping and global exporting advantages.
Why is this important? Prime members spend an average of $1,200 annually with Amazon versus $700 for those without Prime! (source: Consumer Intelligence Research Partners)
Shortly after launch, FBA solved enormous operational problems faced by independent sellers and typically enabled sellers to maintain positive customer service reviews.
In 2015, Amazon also beta-launched Seller Fulfilled Prime which allowed select marketplace merchants flag their product listings as eligible for Prime two-day delivery to Amazon Prime customers – and ship from their own warehouses. Sellers also enjoy the same, “Buy Box” benefits as FBA sellers do, but with reduced FBA fees charged by Amazon.
In August 2016, Amazon launched Seller Fulfilled Prime worldwide.
FBA or Seller Fulfilled Prime?
Which one should you focus on as a seller? Ultimately you need to test both in order to get a good sense of not only what drives sales volume, but also the highest margins (note: using Seller Fulfilled Prime requires you to be very on top of your own shipping, customer, service, and packaging game). Product categories and turnover rates will greatly influence how you use these.
As for FBA, the Infographic below provided by our friends at the Prosper Show breaks down why it’s still the #1 sales driver on Amazon. No matter which one you choose to grow your business, it’s a good news that sellers now have more choices to make money. Learn everything you need to know about Amazon FBA in this Free ASD Podcast!
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But which one does Amazon want you to use?
“We’re dedicated to making the fulfillment technology that Amazon develops available to sellers,” said Peter Faricy, VP for AmazonMarketplace, in a recent announcement.
“The FBA service and Seller Fulfilled Prime program are the greatest opportunities in e-commerce for sellers to easily reach loyal Prime members and expand their business. We are proud that we are empowering so many retailers to grow their business, many of them small businesses and entrepreneurs. In fact, 50 percent of the total units sold on Amazon are from sellers.”
Hmmmm. In other words, you’ll have to try them for yourself and see what works (including FBM a.k.a., Fulfillment by Merchant). Login to your Amazon Sellers account here to see how to get set up with each of these services.
This Infographic by PROSPER Show, the leading trade show for Amazon Sellers, explains how exactly how FBA works, and how you can make it work for you: