Amazon’s Prime membership program is probably the most popular loyalty program in history. That might sound like an exaggeration, but what other membership program has more than 200 million members worldwide, with about 3/4ths of them in the U.S.? What’s more, a whopping 91 percent of Prime members of two years or more don’t even bother looking on other sites for most purchases.
As part of Prime (and by extension Amazon Business Prime), Amazon has set a high bar for fulfillment; i.e. fast and free shipping to most places for Prime-eligible products. No other Ecommerce service in the world has been able to replicate this.
From a seller’s standpoint, having products be available through Prime can be a huge sales driver. One study from 2015 found Prime members converted at an astonishing 74 percent, and although it’s outdated, our own internal data suggests that Prime-eligible products convert at 4 – 6 times higher rates. This has proven particularly true in light of the pandemic’s effect on Ecommerce.
Now, a B2B seller might wonder whether or not they need to have their products become Prime-eligible. After all, they might be perfectly able to pick, pack, and ship from their own warehouses.
However, it’s highly unlikely that an individual B2B manufacturer is going to be able to have the same level of infrastructure to support the speed and no-cost delivery that Prime presents. And B2B buyers have the same expectations that B2C buyers do—fast and free shipping.
In order for a seller to have their products be Prime-eligible, they need to do one of three things:
Sell products to Amazon as a wholesaler
Find a certified prime-eligible warehouse
Use Amazon’s Fulfilled by Amazon (FBA) program
In our experience, #3 is the most effective way to capture the Prime badge.
In case you’re unfamiliar, Fulfilled by Amazon is a core component of the Amazon ecosystem. It leverages Amazon’s best-in-class fulfillment network to handle the last mile of Ecommerce delivery. When using FBA, Amazon only holds the products for you, leveraging the infrastructure (warehouses, planes, trucks, etc.) to handle delivery.
Many of the use cases we regularly see for Amazon B2B purchasing are businesses that want to accelerate delivery times of getting products. B2B purchases completed through more traditional procurement processes (POs, procurement platforms, etc.), can take weeks or months to be approved, much less fulfilled. But FBA allows them to speed up at least the tail end of that process. What’s more, Fulfilled by Amazon handles all front-line customer service inquiries and returns, and have made the return process as painless as it could be. Amazon has essentially removed friction at every step, and customers respond by using Prime more and more.
Of course, B2B sellers are welcome to manage fulfillment themselves, even for Prime-eligible products. Both the products and the fulfillment processes need to be certified, but it is possible.
That doesn’t mean it’s a good idea, though. Using FBA for B2B fulfillment dramatically reduces both the seller’s risk and fulfillment expenses. As you may know, fulfillment can be very tricky and there is a lot of room for human error. Managing fulfillment internally can also be very expensive, with sellers needing to make significant infrastructure investments, especially if they want to maintain Prime-eligible products.
In contrast, Fulfilled by Amazon is extremely reliable and less expensive. FBA handles all the picking, packing, shipping, customer service and returns, and because of Amazon’s enormous scale, they can do this less expensively than most—if not all—manufacturers or distributors. When using FBA, your products are nearly guaranteed to be flawlessly delivered into customers’ hands. That also means there’s no risk of losing Prime eligibility; Amazon will have no problem suspending your account if you’re doing fulfillment internally and mess up frequently enough.
Lastly, what’s perhaps most appealing about FBA is that you can use the service to ship orders from your own Ecommerce site. In terms of setting it up, FBA is basically treated just like any other 3rd party warehouse. Check out this helpful article from Amazon to learn more about using FBA to ship your Ecommerce orders.
Do you have questions about using or setting up Fulfilled by Amazon? We can help. Contact us to chat about the program and how it can benefit your business.