Just when you think you understand how selling with Amazon works, they provide some new confusing service or offering. Amazon users have a growing number of shipping options to consider when making purchases. As the convenience and affordability of Prime 2-day shipping dominates, people can use Prime Now when they’re in a hurry. They can use Subscribe and Save for items they need regularly and Prime Pantry for grocery items.
The growth in shipping options is a natural extension of the larger Amazon business model. It’s strange to think that Amazon started out simply as an online bookstore. Now, Amazon sells over 500 million products in a wide range of categories. People looking for a TV, a new set of PJs, or Mother’s Day flowers know they can go to the same place for all of them.
By offering more shipping options and product types, Amazon continues to position itself as the one-stop solution for almost every shopping need. For Amazon sellers, the more you get people on the platform considering your products, the better. But, to stay competitive on the platform and convince your potential customers to choose you, you have to figure out how to offer the shipping options customers want. And, with so many different options available, that can get complicated.
Here’s a rundown of the main shipping options all Amazon sellers should be aware of and what options you have as a seller to determine how your products are shipped.
Amazon’s Shipping Options
Buyers on Amazon will have one or more of the shipping options below. It all depends on the products they consider.
Many of the shipping options we’ll cover are specific to Prime members. But, not all Amazon customers or sellers are eligible for Prime. For orders that don’t qualify for Amazon Prime, sellers in good standing can still provide customers with faster shipping options. Premium shipping options include:
- Same-day shipping
- One-day shipping
- Two-day shipping
Anyone that’s been selling on Amazon for over 90 days is eligible to use premium shipping. You can set prices for each option based on the expenses you expect to incur. The main catch here is that you have to follow through on getting those orders in on time. Say your customer pays for one-day shipping, and it takes two or three days for them to get the order. In that case, you’ll lose eligibility to continue offering premium shipping.
Amazon Subscribe and Save
Another notable option available outside of Prime is Subscribe and Save. Products that people are likely to buy more of regularly, like toiletries or dog food, are eligible for Subscribe and Save. It promises both a discount and free shipping in exchange for having several eligible products packaged together and sent at a consistent date each time.
Any sellers that use FBA can apply to have their products included in the Subscribe and Save program. The discount customers receive increases from 5% to 15% for any monthly delivery that includes at least five products. This gives customers extra incentive to choose Subscribe and Save eligible products when shopping. That means your participation in the program is likely to elicit more orders, although at a slightly reduced price.
If you do participate in the Subscribe and Save program, you have to do your best to keep your products stocked at least 85%.
Amazon Prime Shipping Options
Almost two-thirds of all Amazon customers are Prime members. This means that, for the majority of your Amazon customers, the most important shipping options are under the Prime umbrella.
For most sellers to take advantage of the Prime shipping options, you’ll have to choose a seller option that puts the shipping process into Amazon’s hands (and pay extra fees for the privilege). We’ll dive more into the specific options you have for having your products listed as Prime below.
Free Two-Day Shipping
The first and most common of the Prime shipping options is Amazon’s famous free two-day shipping for Prime members. This is available for all sorts of product types. Prime members have come to take the fast shipping for granted. And, they are that much more likely to opt for products that they know they can get fast for free. By choosing a seller option that makes your products eligible for Prime, you can expect to see an increase in sales.
Business Prime Shipping
It's not just individuals who have access to Prime membership. Any businesses that have invested in an Amazon Business account get free, two-day shipping as well. Prime shipping for these accounts works pretty much the same as it does for member accounts.
Amazon Prime Pantry
Amazon Prime Pantry is an option specific to non-perishable grocery products. So, if you sell food, beverages, household items, toiletries, or wellness products, it could be a worthwhile shipping option for your products.
As of now, Prime Pantry orders have a flat shipping fee of $5.99 for each box. That means that all the products included in the Prime Pantry program have to be housed in the same warehouse. That way, Amazon can get them all together into a box each time an order comes in. Amazon recently announced a plan to shift their Prime Pantry pricing to a subscription model. With the new system, regular users can pay $5 a month for free shipping on Prime Pantry items. But those who opt out of the subscription pay a higher fee ($8) for each box they order.
Prime Pantry items don’t get the 2-day shipping other Prime products do. They’re shipped within 1-4 days of purchase. Obviously, that means there are certain types of grocery items that don’t make sense in the Prime Pantry program. Produce or meat would require special packaging and faster shipping, for instance. Those items are better suited for our last two options.
Amazon Prime Now
Amazon Prime Now goes even further than the 2-day shipping Prime members expect to offer a number of items with free 2-hour shipping. Prime Now is currently only available in certain areas, though. Amazon offers this option for a wide variety of products. It includes grocery products (including things like produce and dairy), electronics, and clothes.
As with the other Prime options, this shipping option generally only applies to products that Amazon stores and delivers themselves. This allows them to ensure that they can deliver the product within the promised time. Sellers can’t choose to be featured in the Prime Now program. But, if you choose the right Amazon seller option, Amazon may opt to sell your products that way.
This is one of the newest Amazon shipping options and one that’s still only available in select cities. Amazon Fresh is devoted specifically to grocery delivery. Amazon’s purchase of Whole Foods earlier this year sent a clear message that they’re planning to move more into grocery delivery. And, more than Prime Pantry and Prime Now, Amazon Fresh is likely to be their main service for doing so.
Amazon Fresh is available exclusively to Prime members who are willing to pay an additional monthly subscription fee of $14.99. Seller participation for Amazon Fresh works differently than most other Prime options, though. That's because the sorts of items included in Amazon Fresh wouldn’t be stored in a warehouse like most other types of products are. Food and grocery sellers interested in participating must apply to be invited to the Amazon Local Market in order to have their products included in Amazon Fresh.
Amazon’s Seller Options
When you sell with Amazon, you get a few options for how your relationship with them will look. Many people take into account Fulfillment by Merchant vs. Fulfillment by Amazon, but there are actually even more things to consider.
Fulfilled By Merchant (FBM)
FBM is for businesses that see Amazon as essentially a marketing channel – one more place for your customers to encounter your products. FBM is the seller option that leaves you with the most control over the selling process. You list your products on Amazon, but you stay in charge of storing your inventory until it’s bought. Then, you pack and ship it to the customer yourself. Dealing with any needed customer service or returns is also up to you.
But when it comes to shipping options, you’re at a real disadvantage here. FBM sellers can offer standard shipping and, if you’re in good standing (as described above), premium shipping options as well. But in the world of Amazon, those options won’t ever look as good to customers as the Prime shipping options.
Fulfilled By Amazon (FBA)
The most common seller option that allows you to take advantage of those popular Prime shipping options is FBA. With FBA, you ship inventory to Amazon, they store it in their warehouse and pack and ship the orders. They take over most of the work that happens after you list a product on the site.
While you do have to pay extra fees for Amazon taking over some of the work, this is the easiest option for your products to become eligible for Prime shipping. That definitely includes Prime’s 2-day shipping. And, for some of your products, could mean Prime Pantry or Prime Now as well. Some types of products may also qualify for Subscribe and Save.
For most Amazon sellers, your main choice will be between FBA and FBM. So, FBA is the most practical option for achieving Prime status for your products. But, there are a few other options that some sellers will find worth considering.
Seller Fulfilled Prime (SFP)
SFP is a program available to some sellers that have their own warehouses for storing inventory and that have been selling with Amazon for a while.
To get approved for the program, SFP sellers must have demonstrated an ability to consistently deliver products in the time promised. They have to continue to demonstrate that ability throughout the program to stay approved. If you want the Prime designation without paying Amazon fees for storage that you can handle on your own, this could be your best option.
For many sellers that try SFP, though, the cost of providing 2-day shipping on their own doesn’t make up for the fees they save by storing the inventory themselves. SFP only makes financial sense in some cases. For some brands, it's a good way to keep more in-house while maintaining that valuable Prime badge on their listings.
FBA Onsite falls somewhere between FBA and SFP. It’s a newer option that’s currently only available to a few Amazon sellers. It may grow to be available to more with time, though. FBA onsite allows sellers to qualify for Prime shipping and keep their own inventory in-house like SFP does. But, you can tap into Amazon’s software and shipping network. So, they take over some part of the fulfillment process.
Essentially, Amazon will begin to treat your warehouse like an Amazon warehouse, saving them money on storage costs. Meanwhile, you benefit from savings on shipping costs and many of the fees you would be paying them for fulfillment otherwise.
Amazon Seller Central
For brands that sell products they create themselves (so first-party sellers), Amazon’s invitation-only Seller Central program goes even further than FBA and SFP. Essentially, you can become a supplier to Amazon. You sell them your products wholesale in bulk. Then, they do all the work of listing out the products on their site and fulfilling orders.
Even more so than with the other options, your job shrinks here as Amazon’s expands. You only have to worry about shipping them inventory and let them handle the rest. Once they’ve bought your inventory, they have every incentive to sell it. That means listing it with the most attractive shipping options for the type of product it is. But, it could also mean selling your products at a lower price than you sell them for on your own website. By selling your products to Amazon to manage, you could be turning them into your main competitor – and one that undercuts the pricing you’re able to offer yourself.
Even so, for some businesses the quantities of sales they’ll make under this option will make the potential risks worth it.
Shipping With Amazon (SWA)
Shipping with Amazon isn’t an option available to most Amazon sellers yet, but it’s something they’ve announced and plan to begin making available to sellers in select locations later this year. Under SWA, sellers can continue to hold onto their inventory, but let Amazon take on the shipping job once orders are placed through the site.
In other words, like UPS or FedEx, Amazon will show up at the business, pick up the products to be delivered, and deliver it to the customer themselves. For sellers that want that Prime badge but don’t want to pay all the fulfillment fees, this option offloads the hardest part of meeting Amazon’s exacting shipping standards. And it makes the option available even to those businesses that don’t have warehouses that qualify for SFP or FBA Onsite.
If all goes well in the cities where they start testing this option, Amazon is likely to expand the program to all sellers in markets throughout the country and may even begin to offer a shipping service to non-Amazon sellers in a bid to compete with UPS and FedEx for the larger shipping market.
SFP was just started last year and already since then, Amazon has added FBA onsite and now SWA to the list of offerings for businesses to consider. Who knows what other shipping and fulfillment options will be available by the end of 2018.
If this all seems a bit overwhelming to you, remember that you don’t have to learn everything there is to know about selling on Amazon yourself. We’ve got skilled professionals at Directional Cue doing the work of staying on top of every new change, trend, and best practice for you. You can focus on all the other work involved in running your business, and let people who know the Amazon marketplace inside and out take care of figuring out the best seller options for you and how to make the most profit out of them.
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