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How to Sell on Amazon Prime

If you're a marketplace or ecommerce seller, you've likely thought about selling on Amazon. However, while the site is undoubtedly the biggest platform for sellers, there is a distinct difference between regular Amazon and Amazon Prime. To qualify, you have to use Amazon's fulfillment system, which can cost more. However, this option has some distinct advantages, particularly if you want to increase sales on Amazon.

  • Higher Ranking - There are roughly 142 million Prime members in the U.S. alone. When you sell on Prime, your products rank higher in searches. Just as with search engines, if you're near the top, users will pick your brand over the competition. Learn more about Amazon SEO services and ranking factors.
  • Better Odds for the Buy Box - 82% of all sales made on Amazon come from the Buy Box. If you're not familiar with the Amazon FBA Buy Box system, it works by assigning sellers to purchases. Customers don't want to sift through different sellers to figure out which one is the best. Instead, Amazon chooses for them. Once a customer adds the product to their cart, the seller in the "buy box" gets the sale. As a Prime affiliate, you have better odds of getting into the box.
  • Better Customer Satisfaction - An excellent Amazon sales strategy is to make shopping as convenient as possible for buyers. Prime members already get plenty of perks, including free shipping and shorter delivery windows, giving you a distinct advantage.

Overall, selling on Amazon Prime is beneficial and can position your brand better within the platform. Just ask BetterVent. With Prime shipping, the BetterVent® product has seen a 30% year-over-year increase in Amazon sales.


How to Become an Amazon Prime Seller

Although the easiest way to qualify for Prime status is to utilize Amazon's fulfillment centers, it's not the only option. There are three ways to get the Prime badge, and each one has pros and cons. If you're not at that point yet, you might want to check out this blog post about how to sell on Amazon for beginners.

The primary decision you have to make is whether you'll be a first-party (1P) or third-party (3P) seller. As a first-party vendor, you sell your products directly to Amazon, which then sells to consumers. Third-party vendors, however, sell directly to customers through Amazon's platform. You can find out more about 3P vs. 1P selling here, including the distinct benefits and disadvantages of each.

If you want to know how to become an Amazon Prime seller, here is a breakdown of the three paths available:

  1. Fulfillment by Amazon (FBA): With FBA, you send your products to Amazon, which stores them in one of their warehouses. When a customer buys the item, Amazon handles all shipping logistics. Selling FBA via Amazon Seller Central allows you to earn money on each sale. You have to pay closer attention to inventory levels, send-in dates, and high-volume shopping days, and this process can eat into your profit margin. That said, FBA is an ideal and trustworthy route for many brands that don't have sufficient fulfillment resources of their own—and with Amazon's Buy with Prime program, you can also bring the benefits of Prime shipping to your brand's ecommerce store.
  2. Amazon Vendor Central: If you'd prefer to be a first-party seller, you can let Amazon handle all the details. Rather than selling to customers directly, you ship wholesale to Amazon. While this option is easier overall, it does limit how much you can make per unit. Not only can Amazon lower your minimum advertised price (MAP) (find more on that here), but there are no guarantees on how much it will buy each time.
  3. Seller Fulfilled Prime (SFP): If you already sell/ship products to customers directly, you can join Amazon Seller Central. Rather than having Amazon store and ship your items, you handle everything in-house. However, to qualify for Prime, you need to match Amazon's quality standards, meaning that you can't charge for shipping, and your orders have to be fast and accurate. This option is called Seller Fulfilled Prime (SFP), but it's not required to be part of Seller Central.

When comparing SFP vs. FBA, only companies that have sufficient infrastructure should go the Seller-Fulfilled Prime route. Otherwise, it's hard to adhere to Amazon's shipping standards. Compared to Vendor Central, though, this option can be much more profitable, as evidenced by Endangered Species Chocolate's success story.


How to Sell on ‘Amazon Prime Now’

Starting in 2014, Amazon began offering same-day delivery of various products through the Amazon Prime Now platform. Since then, this offshoot of the main ecommerce site has grown to include Amazon Prime Fresh and Amazon Pantry.

The idea of Amazon Prime Now is to allow Prime members to buy perishable (and non-perishable) goods and receive them within a couple of hours. With such speed and convenience, it's never been easier for users to stay at home and order whatever they want. Who knew that the company would be so prescient, considering the challenges of 2020?

As an Amazon Prime seller, you might be wondering how you can get in on that instant-gratification action. Unfortunately, all three options (Now, Fresh, and Pantry) are closed to third-party vendors. The primary reason is to maintain consistency. Since these offerings promise same-day delivery (sometimes in as little as two hours), Amazon can't rely on vendors to fulfill these orders that quickly. Only Amazon has the funding and infrastructure capable of handling it.

That said, you can potentially sell your wares on Amazon Prime Now if you go through the Vendor Central program. Since you're selling wholesale products to Amazon, the company can pack, store, and ship those items however it sees fit across all of its Prime platforms. So, if you're selling bulk foods and pantry items, you might see them listed. Otherwise, you can't participate.


Is Selling on Amazon Prime Profitable?

Although there are tangible benefits to selling on Amazon Prime, doing so does not guarantee success. Some vendors can thrive on the platform, while others languish with low sales and profit margins. Part of the problem is that there are various fees included with this option. So, if you're not careful, you could wind up spending more than you make.

Here is a breakdown of the different Amazon selling fees, so you know what to expect.

  • Monthly Subscription - To be a professional seller on Amazon, you have to pay $39.99 per month. If you don't, you'll pay the company $0.99 per item sold.
  • Referral Fees - Since you're selling on Amazon, you pay them for the privilege. Referral fees vary by product category and price point. You can see a complete list here.
  • Amazon FBA Fees - If you're letting Amazon fulfill your orders, you have to pay for both storage and shipping costs. These prices depend on the item's size and weight and whether it is part of the books, music, videos, or DVDs category (BMVD). If your products stay in the warehouse for longer than six months, you'll pay additional long-term storage fees. Here's a list of FBA fees.
  • Amazon Closing Fee - Items in the BMVD category cost an extra $1.80 closing fee since the shipping rates vary more than other products.

All of these expenses are included in Amazon Prime seller fees, depending on which path you chose from above. As a Prime seller, you also have to pay attention to the FBA selling calendar to ensure that your stock doesn't run out. Otherwise, you could risk losing your status.

If you use FBA, you'll pay more in Amazon fulfillment fees. However, there are additional costs to consider, even if you're a Seller Fulfilled Prime member. Other fees include:

  • Book Rentals - Amazon charges $5 per textbook rental.
  • High-Volume - If you have tons of 3P sales products, you could get charged $.005 per item. This only applies if you're selling more than 100,000 listings.
  • Refund Fees - Customers return items all the time. While you do get refunded, Amazon takes a portion of the referral fee, which is either $5 or 20 percent of the total cost, whichever is less. To help mitigate returns, it’s incredibly important to have a solid Amazon Brand Marketing Strategy.

As you can see, all of these expenses can add up, particularly if you're not selling too many items. Fortunately, you don't have to struggle if you use a Prime or Amazon Seller Consultant. Speaking of which...


Looking for an Amazon Prime Agency or Prime Seller Consultant?

Being a successful ecommerce business takes a lot of time, money, and hard work. If you're trying to juggle it all yourself, you're going to struggle at some point. Instead, it's far better to utilize a third-party consultant company like SupplyKick. There are three ways that we can help you thrive on Amazon, both through Prime and Vendor or Seller Central:

  • Amazon Marketing Agency - We'll show you how to promote your items to drive higher sales. We can even take photos, create videos, offer listing optimization services, and develop marketing materials such as A+ Content or Enhanced Brand Content for you.
  • Amazon Seller Consultant - Navigating the ins and outs of Amazon's platform can be confusing and time-consuming. We're the experts, so we can get you selling on Prime much faster.
  • Amazon Seller Management - Tired of the headaches involved with Amazon FBA, Vendor Central, or SFP programs? Let us take care of everything so that you can focus on other key aspects of your ecommerce strategy and business growth.

Overall, when it comes to selling on Amazon Prime, SupplyKick is the best resource available. Connect with us and let’s walk through your current listings and fulfillment strategy together.

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