If you sell goods on eCommerce and have not heard about FTC’s Lawsuit against Amazon- “The Big One” , then you’re probably living under a rock. To give you a summary, in September 2023, the Federal Trade Commission filed a significant complaint in a federal district court, asserting that Amazon operates as an unlawful monopoly. The FTC and its state partners say Amazon’s actions allow it to “stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon”.
If the FTC can prove that Amazon is manipulating the market through its market power, it could make the case that the company needs to be broken up or restructured. Sounds very extreme right?
In this article we will cover Amazon’s perspective and reasons for considering a strategic pivot from Fulfillment by Amazon (FBA) to Seller Fulfilled Prime (SFP). According to a report from Baird analysts, breaking up with Amazon would be a huge mistake for sellers. Let’s see how Amazon is in the right-:
Analysts refute FTC’s claim, Amazon is innovative, not anti-competitive-:
FTC argues Amazon has stifled competition, analysts say “Fulfillment by Amazon” has raised the level of competition.
- Amazon started the trend of 2 day free and fast shipping back in 2005, creating a new norm of customer expectation.
- Since then, prominent retailers like Walmart, Target, eBay and Best Buy have been compelled to introduce 2-day free and fast shipping initiatives, although taking about 13 years to catch up.
- Not only has this increased competition, but also improved the overall shopping experience for customers.
- Moreover, Amazon’s “Buy with Prime” program, enables DTC merchants to sell on non-Amazon channels such as Shopify, BigCommerce, Shopify, eBay, Etsy while having the Amazon “Prime Badge”, boosting their competitive edge across marketplaces.
- These initiatives by Amazon have positively contributed to sellers and encouraged competition beyond the Amazon marketplace.
Amazon’s recent efforts of providing 1-day free and fast shipping, improves customer experience.
- In Q2 2023, Amazon reached its fastest Prime speeds ever– more than half of Amazon Prime member orders in the 60 largest U.S. metro areas arrived either the same day or next day.
- This new accomplishment not only improves the shopping experience for end customers, but also allows sellers to scale up businesses and acquire new customers through faster shipping.
- The other side of the coin is that, like with 2-day shipping,this move will push retailers to further improve their fulfillment networks, encouraging healthy competition and happy customers.
Amazon reopens Seller Fulfilled Prime (SFP), inviting 3PLs to boost order fulfillment and drive healthy competition-:
- In June 2023, Amazon announced they would reopen enrollment for their Seller Fulfilled Prime (SFP) program.
- Sellers now have the option to use their own 3PLs to fulfill their orders while still getting benefits of Amazon’s “Prime Badge”
- SFP encourages more 3PLs to fulfill orders on the Amazon marketplaces and encourages sellers who cannot afford FBA to use alternative means, driving competition for both sellers and eCommerce fulfillment partners.
Despite the internet’s popular opinion that Amazon is anti-competitive and manipulative, such initiatives prove that Amazon has always prioritized customers and sellers through its technology innovations. Amazon is here to stay regardless of claims made by regulatory bodies.
Sticking to Amazon is smart, but sticking to Amazon blindly can hurt sellers. In 2023 itself, FBA introduced a suite of surcharges such as fees hike, storage restrictions, and peak-season surcharges. For sellers distressed with expensive FBA charges, now is a great time to shift gears to Seller Fulfilled Prime (SFP). With SFP, sellers can get Amazon’s “Prime Badge” benefits, have higher logistics autonomy and reduce costs.
Why Seller Fulfilled Prime (SFP) isn’t going anywhere:
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Customer Satisfaction Remains Paramount for Amazon:
Amazon has always prioritized customer satisfaction, and SFP plays a pivotal role in maintaining and enhancing this aspect. As Fulfillment by Amazon (FBA) faces challenges in meeting Prime delivery standards, SFP steps in to ensure that you and Amazon can continue to provide 2-day nationwide delivery, ultimately keeping your customers happy. Additionally, SFP offers the advantage of cost savings, greater logistics autonomy, and the retention of Amazon’s coveted Prime badge.
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SFP Provides Amazon with a Regulatory Advantage:
In an era of mounting regulatory pressures, SFP emerges as a strategic asset for Amazon. It equips the company to counter allegations from regulatory bodies such as the FTC. By offering SFP as an option, Amazon can argue that it levels the playing field for sellers and fulfillment partners, while simultaneously expanding delivery options for end consumers. This proactive approach can help Amazon maintain its competitive edge while appeasing regulatory concerns.
How can sellers prepare and excel on Seller Fulfilled Prime (SFP)?
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Assess your FBA costs:
Sellers should conduct a thorough analysis of the cost implications associated with FBA. Changes in FBA policies, including long-term storage restrictions, FBA restock limitations, storage surcharges, and fee hikes, necessitate a close examination. Sellers should evaluate whether FBA still aligns with their business objectives and cost-efficiency goals.
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In-Depth Research on SFP Program Requirements and Strategies:
Winning on Seller Fulfilled Prime requires a comprehensive understanding of its intricacies. To excel within this system, sellers must delve into the specific requirements and strategies. Cahoot’s comprehensive guide to Seller Fulfilled Prime (SFP) can serve as an invaluable resource, providing sellers with the knowledge they need to thrive within the SFP framework.
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Partner with an Ideal SFP Fulfillment Provider:
Selecting the right ecommerce order fulfillment partner is a critical aspect of winning with SFP. To achieve nationwide delivery, sellers need to collaborate with a partner equipped with a robust warehouse network or multiple fulfillment centers across the USA. Moreover, within this network, the chosen partner must possess the capability to distribute inventory in proximity to the end consumer, meeting the stringent 1-2 day delivery requirements.
As Seller Fulfilled Prime cements its status as a permanent fixture in the eCommerce landscape, it should no longer be viewed as a mere contingency plan for rare FBA emergencies. Instead, it has become an essential strategy for enhancing customer satisfaction and driving business growth. By leveraging the advantages of SFP, sellers can not only secure their place in the highly competitive market but also continue to deliver the top-notch service that Amazon customers expect and deserve. Embracing SFP is not just a smart move; it’s a strategic imperative in the ever-evolving eCommerce landscape.
