Fulfilled by Amazon vs Seller Fulfilled Prime (FBA vs SFP)
Quick answer: Fulfilled by Amazon (FBA) means you send inventory to Amazon’s warehouses and Amazon picks, packs, ships, handles customer service and processes returns, for a fee. With seller fulfillment (FBM) you store and ship orders yourself or through your own 3PL. Seller Fulfilled Prime (SFP) is seller fulfillment that still earns the Prime badge, but only if you meet Amazon’s strict delivery-speed and performance standards. FBA is easier to run; SFP and FBM give you more control over inventory and storage costs.
| Fulfilled by Amazon (FBA) | Seller Fulfilled Prime (SFP) | Merchant fulfilled (FBM) | |
|---|---|---|---|
| Who stores and ships | Amazon | Seller or seller’s 3PL | Seller or seller’s 3PL |
| Prime badge | Yes | Yes, if standards are met | No |
| Main costs | Fulfillment and storage fees | Your own warehouse and shipping | Your own warehouse and shipping |
| Returns and customer service | Amazon | Seller | Seller |
| Control over inventory | Low | High | High |
Amazon is the lifeblood of countless online merchants around the world, and Amazon FBA and Prime for seller fulfillment are widely used by many e-commerce companies around the world to support their fulfillment and shipping operations. However, the two are very different in several important ways – all of which greatly affect how online merchants fulfill and ship their orders to customers.
This guide takes a closer look at what FBA and Seller Fulfillment Prime are and examines the key differences between them in detail.
What is Amazon FBA?
FBA, or Fulfillment by Amazon (shown to shoppers as “Fulfilled by Amazon”), means that Amazon opens its platform to third-party sellers, incorporates its inventory into Amazon’s global logistics network, and provides them with picking, packing, and terminal delivery services, for which Amazon charges a service fee.
What is Amazon FBM？
FBM stands for Fulfillment by Merchant (also called merchant fulfilled or seller fulfilled), meaning the seller ships orders themselves.
Simply put, it means that sellers deliver their orders sold on Amazon, Amazon only as a sales platform, from inventory, packaging, delivery, customer service and a series of processes are the responsibility of sellers themselves.
What is Seller Fulfilled Prime?
Seller Fulfillment Prime is another very popular Amazon fulfillment program that allows merchants who meet the criteria to deliver products from their warehouses to domestic Amazon Prime customers. In turn, this is in exchange for shipping services provided by a Seller Fulfilled carrier.
Requirements to become a Seller Fulfilled Prime merchant have included the following. Amazon updates these thresholds from time to time, so always check the current requirements in Seller Central:
Shipping more than 99% of orders on time
Offering premium shipping options
Having an order cancellation rate of less than 0.5%
Using Amazon to purchase shipping for at least 98.5% of orders
Allowing all customer inquiries to be handled by Amazon
Deliver orders using Amazon’s “seller fulfillment” Prime carriers
Agree to Amazon’s return policy
Merchants can become full Seller Fulfilled Prime members after completing the trial period and are responsible for picking, packing, and shipping orders the same day they are placed.
Benefits of Seller Fulfilled Prime
More Opportunities to Reach Prime Members
Sellers’ products can be exposed to Amazon Prime members more frequently, and high exposure can translate into more sales.
Have More Control Over Inventory
SFP allows you to ship your inventory from non-Amazon warehouses, giving you more control over your inventory. This is especially beneficial if you have multiple sales channels or seasonal products, where you can anticipate sales spikes during holidays such as Amazon Prime Day, Black Friday, or Cyber Monday.
Better Control Over Long-Term Storage Costs
SFP gives sellers complete control over their warehouse costs and needs. This can result in significant cost savings, especially for sellers who have managed their supply chain well and have a good handle on their sales forecasts.
Control Fulfillment and Transportation Costs
With SFP, sellers can eliminate inbound shipping costs to Amazon and have more control over their fulfillment costs.
Increase Product Flexibility
With SFP, sellers keep their inventory in their warehouse or 3PL and can process their products promptly when orders come out.
FBA vs. Seller Fulfilled Prime: 5 Key Differences
If you choose an Amazon FBA account, Amazon will take full responsibility for your fulfillment operations, from picking and packing to shipping. All online merchants need to do is make sure their inventory is currently in one of Amazon’s warehouses, and the e-commerce giant will take it from there. However, merchants who choose this route must pay a fulfillment fee to Amazon for this service.
On the other hand, if you choose the seller fulfillment Prime service, the only fee you pay is the shipping fee. Merchants can take advantage of the Amazon Prime brand and its shipping rules, but all other aspects of fulfillment are their responsibility.
With FBA, a merchant’s inventory is stored in Amazon’s distribution centers for a fee. It is important to note that these fees vary depending on the time of year, size of the item, and length of storage. For example, items stored before and during the holiday season from October to December incur more fees than items stored at other times of the year.
For online merchants using the Seller Fulfilled Prime program, it is necessary to have their warehouse store inventory. Importantly, merchants on the Seller Fulfilled Prime program must ship Prime program orders the same day they are received, which means their warehouse operations should be as efficient and streamlined as possible.
Amazon FBA fees include warehousing, picking, packaging, shipping, returns, and customer service.
Choosing Seller Fulfilled Prime does not incur any of these fees, but it does mean that your own company must have a way to store, fulfill, and ship orders regularly.
To focus on other aspects of their business, online merchants who prefer to let go of inventory may prefer the Amazon FBA program. By relinquishing control of their inventory, merchants are free to focus on other business needs. However, they also cannot check the status of their inventory as it is in Amazon’s distribution centers and may have a more difficult time deciding exactly what is in stock and which items should be replaced due to low sales or being out of season. It is also important to note that storing items that are more than 6 months old can incur penalties.
With “seller fulfillment” Prime, merchants maintain complete control over their inventory. This means that they must maintain their warehouse operations and can make changes to their inventory very easily.
With FBA, Amazon handles every return request, accepts returns at any of its distribution centers, and handles all customer service related to the return of items.
With seller-owned Prime, your own business is responsible for handling returns. This requires you to have dedicated customer service and returns departments, but also minimizes the chance of customer fraud and provides more transparency into why and when items are returned.
Conclusion
As Amazon Prime members continue to grow and the cost of selling to them rises, SFP offers sellers a great option for better profit potential and a more flexible scale. Sellers will need to be committed and operationally sound to meet Amazon’s strict qualifications.
Honest FulPhilment is a professional e-commerce third-party fulfillment site. If you need help evaluating your options, then choosing us is a great way to go.
FAQ
What does fulfilled by Amazon mean?
Fulfilled by Amazon (FBA) means the seller's products are stored in Amazon's fulfillment centers and Amazon picks, packs, ships, provides customer service and handles returns for those orders. FBA items are usually eligible for Prime shipping.
What is the difference between Seller Fulfilled Prime and FBA?
With FBA, Amazon stores and ships your products for fulfillment and storage fees. With Seller Fulfilled Prime, you keep inventory in your own warehouse or 3PL and ship Prime orders yourself, which gives more control but requires you to meet Amazon's fast-delivery and performance standards.
What is Amazon merchant fulfilled (FBM)?
Merchant fulfilled, or Fulfillment by Merchant (FBM), means the seller lists products on Amazon but stores, packs, ships and handles customer service for orders on their own or through a third-party logistics provider.
What is the difference between sold by Amazon and fulfilled by Amazon?
Sold by Amazon means Amazon itself is the retailer. Fulfilled by Amazon means a third-party seller owns and sells the product, but Amazon stores and ships it.
Is FBA or seller fulfillment better?
FBA suits sellers who want hands-off logistics and Prime eligibility. Seller fulfillment suits sellers with large, slow-moving, seasonal or multichannel inventory who want to avoid Amazon storage fees and keep control of their stock.