What you Need to Know about Merchant Fulfilled Prime

Amazon has shifted a lot of power into the hands of sellers with a program called “Merchant Fulfilled Prime,” or MFP. This invite-only program has been extended to a handful of sellers on the marketplace and enables them to make their items Prime eligible without using Fulfillment by Amazon (FBA). By combining the freedom of fulfillment by merchant (FBM) with one of the largest perks of FBA, Amazon is empowering retailers to take control of their destiny on the marketplace.

Of course, there are certain requirements that retailers have to meet in order to receive the golden ticket to the exclusive program. We don’t know all of the prerequisites Amazon uses in order to qualify its sellers, but we do know that you must have a solid reputation while moving a large volume of SKUs.

In order to partake in MFP, sellers must be able to deliver any item to the continental United States in 2 days or less. So a consistent delivery record and upstanding seller rating are two obvious validations a seller must have to qualify for MFP. When sellers utilize MFP, 98.5 percent of their orders must ship out on time, and retailers must have a maximum cancellation rate of 1.5 percent.

Now when a seller becomes enrolled in MFP, it isn’t necessarily an “all or nothing” decision. They can select specific SKUs to become Prime eligible, and can base their Prime eligibility on location. This gives retailers the ability to pick and choose items that will look more appealing to certain consumers and that have the ability to ship out on time.

So how should retailers roll out MFP across their product assortment? And how can they use MFP to their advantage? The payoff of having Prime-eligible products without the FBA costs allows you to maintain full control of your selling and fulfillment process while reaping the benefits of FBA.

Location, Location, Location

A major advantage of MFP is that you don’t have to worry about the fees and shipping costs that come with FBA. You use your own warehouse, and fulfillment and customer service teams. However, it can take a lot to implement two-day shipping based on your company’s size, especially if you only have one warehouse.

If your warehouse is on the east coast of the US, only target consumers near that warehouse that you can reach with two-day shipping. If you cannot guarantee two-day shipping to a consumer in San Jose, California, then you should not make your items Prime eligible to them. Shipping costs can be drastic when flying products across the country.

Save Prime for High Margin Products

If you have greater resources and want to push your shipping limits, then it’s important to note that you can make specific SKUs Prime eligible. Without FBA, shipping costs can be back breaking, especially if you do choose to ship everywhere in the continental US. There is one way to cushion shipping costs, though: use high margin products.

Find the products that earn you substantial margins. If you’re willing to sacrifice a bit of that margin, then make it Prime eligible and offer it nationwide. But make sure you have the bandwidth and resources to do so, overstepping your boundaries can hurt your bottom line and could lead to you losing your MFP privileges.

Plan Ahead

If you’ve been selected to participate in MFP, odds are you’ve garnered a solid reputation, which is definitely worth celebrating. But really make sure your business is ready for the demanding task of Prime fulfillment. Amazon has a set of expectations for your business, and you must meet them consistently in order to stay in favor.

Give Prime eligibility a test run and see how your team does. You don’t want MFP to completely expend your resources, so make sure your team is able to handle the demand because the rate at which you ship items will more than likely increase substantially.

Prime eligibility will definitely accelerate your business’ growth and give you more independence in your Amazon selling process. Once your items become Prime eligible, the next adventure lies in the path to the Buy Box. Our Amazon repricer can help—learn more today.

Contributing writer: Brian Smyth