Warehousing & Fulfillment

Amazon Doubles Down on Seller Fulfilled Prime Requirements

Warehousing & Fulfillment
August 21, 2020
7 min read

As Amazon doubles down on fulfillment requirements for sellers enrolled in SFP, Ware2Go is enabling merchants to do more than simply comply with the new policy. We’ll examine how “The Amazon Effect” has shaped consumer preference for 2-day shipping and anticipate the ways these new policies may shape the future of eCommerce fulfillment. 

Last Thursday Amazon notified merchants enrolled in its SFP program that as of February 1, 2021 it would be enhancing its already stringent Seller Fulfilled Prime requirements to include supporting Saturday pickups and delivery, meeting targets for 1 and 2-day delivery promises, and offering nationwide delivery coverage for all standard size products. Amazon reported that even before the upset of the COVID-19 pandemic, SFP on-time delivery rates were only 16%, and in an effort to bolster its Prime offerings, will hold SFP sellers to a much higher standard. As the online retailer continues to invest significantly in a fulfillment infrastructure to support even faster delivery for Prime members, they hope to create a streamlined and consistent delivery experience for all Prime purchases, regardless of the listing seller or fulfillment service. As merchants consider the pressures of these new requirements in light of changes to FBA’s Inventory Performance Index threshold and quantity limits announced earlier this year, they may find this to be the perfect opportunity to reexamine their SFP strategy ahead of a likely unprecedented peak season.

Beyond Seller Fulfilled Prime Requirements

These new requirements are likely not too surprising to savvy online merchants who have watched the so-called “Amazon Effect” shape consumer expectations for delivery since Amazon Prime’s inception in 2005. The graph below shows the explosive growth in online search for “2-day shipping” over the past 16 years as the offering grew from a novel added value to a general expectation.

google search trends for "2 day shipping" have spiked from 2004

The larger trend indicates that not only is 1 or 2-day delivery a driver of customer satisfaction and retention, but when advertised early in the customer journey, can actually capture shoppers at the top of the sales funnel and increase overall conversion rates. What’s more, we’ve found this to be true across all sales channels. Google Shopping’s recent consumer behavioral research named this phenomenon “The Power of Now”, and their research found that a fast shipping guarantee significantly influenced shoppers’ decisions to purchase one product over another. Likewise, our recent merchant survey indicated that 65% of merchants saw an increase in cart conversion rates of up 25% when 2-day delivery was offered at checkout, regardless of the sales channel.

While this trend has been strengthening steadily over time, the sudden shift in consumer behavior as a result of the COVID-19 pandemic rapidly accelerated its pace. In our recent merchant survey, 76.8% of merchants indicated that they had pivoted their sales strategy during the pandemic, and anecdotally, we’ve seen a significant shift in our B2B vs B2C order mix, evidencing a larger trend in the evolution of retail business models at large. At Ware2Go we’re seeing the emergence of a new way of doing business that we’re calling B2E (or Business to Everyone). 

The hallmarks of a B2E business model are consistent customer service levels for B2B and B2C customers alike, the flexibility to fulfill a variety of order types, and the infrastructure to deliver quickly anywhere in the country. For this reason Ware2Go has focused on building an expansive warehouse network supported by robust technology to service all product needs, order types, and transportation requirements. Merchants who have seen this trend coming and are already considering partnerships with qualified fulfillment experts are ahead of the curve and uniquely positioned to leverage this trend for long-term growth rather than simply react to the policies dictated by Amazon for Prime sellers.

Don’t Just Meet Requirements for Seller Fulfilled Prime

Ware2Go understands the value of a reliable 1-2 day delivery network to meet customer delivery expectations across all sales channels, which is why we’ve built tools to help our merchants build the warehouse network that enables them to reach their customers within their required delivery window. The example below illustrates how a 3-warehouse system within our current network can reach 100% of the US population in 2 days or less and 30% in just 1 day.

Ware2Go's network can reach 100% of the US population with just 3 warehouses.

In the past 3 months we have achieved 97% on-time delivery for all SFP orders, compared to Amazon’s self-reported average of 16% on-time delivery among SFP merchants, and as we continue to grow our nationwide network of warehouse partners, we’re confident that Saturday delivery and pickups will be achievable ahead of the February 2021 deadline.

As we work to understand how Amazon Prime’s delivery standards will continue to drive consumer expectations, Ware2Go is anticipating the next wave of fulfillment standards resulting from the now ubiquitous “Amazon Effect”. As Fulfillment by Amazon introduces more 1-day delivery promises to Prime members, consumers will adjust to this new standard, and in time it will influence their expectations for all digital shopping experiences. Ware2Go is committed to more than simply meeting these new requirements for Seller Fulfilled Prime but helping merchants stay ahead of the curve by building a network to support 1-day delivery to 99% of the country in the near future.

Amazon’s SLA’s may be the most demanding, but Ware2Go understands that Seller Fulfilled Prime requirements are simply the “price of doing business” for merchants looking to compete in the Business to Everyone era. Through robust technology and a flexible warehouse network, Ware2Go strives to make these requirements achievable for businesses of all sizes. Amazon indicated in its announcement to merchants that it would roll out a new seller dashboard to allow full visibility into on-time fulfillment and delivery rates and that clear communication with fulfillment partners would be a key to successfully meeting requirements for most merchants. This type of communication and visibility is part of the basic functionality of the platform that Ware2Go uses to connect merchants’ sales channels to their fulfillment network and drives not only strict adherence to on-time delivery SLA’s but offers valuable insights to merchants looking to use their fulfillment strategy to drive growth.

Leveraging Amazon’s Standards for Long-Term Growth

Amazon frequently serves as a litmus test for consumer sentiment, and this new policy indicates that 1-2 day delivery is here to stay as the industry standard for eCommerce fulfillment. The recent spike in demand brought on by COVID-19 highlighted the limitations of Amazon’s own internal fulfillment network and prompted the retailer to bolster its Prime fulfillment across the board, including these new requirements for Seller Fulfilled Prime. Merchants capable of meeting these stringent requirements will not only see returns on their Amazon listings but will drive sales and top line growth across all of their channels. Ware2Go is committed to constantly innovating to keep its merchant partners one step ahead of fulfillment trends to deliver excellent customer experiences with a fully optimized B2E supply chain. Reach out to talk with a supply chain expert about building an SFP network for your business, and we’ll run our Network Optimization analysis to show you exactly where to place warehouses.

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