Update: Amazon delays ‘June 1st changes’ : Last August, Amazon announced some major changes to their Seller Fulfilled Prime (SFP) program. SFP is a great option that let’s large brands offer ‘Prime’ shipping to Amazon customers and ship directly from their own warehouses. The program was very well received by many brands, especially brands that had large, perishible, or high value goods. Brands could set their Prime area by region; helping to avoid ‘lost sales’ for cross country shipments.
The program has been around for 2+ years and has always had very strict rules; 99% on time shipment, 99% on time delivery and less than a 0.5% cancellation rate. Amazon raised the bar in August, requiring the following as of February 1st:
- Nationwide delivery coverage for all standard-size products (any item that is less than 20lbs and is classified as ‘standard size’ by Amazon..
- Ship methods that support weekend delivery and pick up (Saturday or Sunday) .
- A new requirement that a certain percentage of page views (not orders) but show as a 1 or 2 day delivery regardless of whether a purchase was made.
Naturally these items causes a lot of confusion but Amazon was largely silent. They sent a note in Q4 that lowered the page views percentages, but offered no other guidance.
The new policies went live February 1st and we’re already seeing sellers unable to meet one or more of the requirements.
The biggest issue by far has been the new ‘display speed’ requirement that a certain % of users must see 1 or 2 day delivery (regardless of whether they buy or not) Amazon requires
- Standard size items: 20% of page views must see 1 day delivery option. 55% of page views must see 2 day delivery option
- This was supposed to increase to 30% and 70% June 1st
- Oversized items: 5% of page views must see 1 day delivery, 30% must see 2 day
- This was supposed to increase to 15% and 60% June 1st
The big question since February was whether or not the first level was possible. Many sellers have dropped out of the program and Amazon’s dropping of the June 1st new levels is an admission of the fact that most cannot hit this target.
Here’s an example of why many brands won’t be able to hit these targets. Let’s take a mid-size operation with 1 large warehouse operating on the East Coast. Their shipping volume andnegotiated rates with UPS can work with Seller Fullfiled prime, but they won’t be able to hit the delivery speed promise:
- 2 Day challenge:
- East Coast based operation has normal 2 day national delivery
- Cutoff time 2PM EST
- Orders from 12AM to 1:59 nationwide would (in theory) see 2 day. However, this can be impacted by the # of days handling time you have
- Orders after 2PM unti 11:59 will not see 2 day delivery
- If you have a large base of customers on the West Coast your page views will be highest when you can’t meet 2 day
- East Coast based operation has normal 2 day national delivery
- 1 Day challenge
- Same East Coast operation can do 1 day via Fedex and/or UPS
- This normally only covers 11-18% of the US
- If you use the same time issues as 2 day you have almost no change of getting 20% of users to see it
- Same East Coast operation can do 1 day via Fedex and/or UPS
Yeoman analyzed over 100,000 orders and overlayed their order time with the times the warehouse was open. 58% of total orders would have occurred outside the 2 day shipping window outlined above making it impossible for a midsize East Coast brand to meet Seller Fulfilled prime requirements.
Amazon has not said what the new levels will be after 12/31, but this delay gives organization time to continue to address this challenge and (potentially) plan for a non-prime relationship for some of their items. Currently there are only a very small set of sellers that are hitting these two metrics.
If your organization needs help navigating Amazon, contact us.
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