Sell on Amazon Prime: Amazon Prime Delivery Trucks by Todd Van Hoosear

How to sell on Amazon Prime in 2020

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If you’ve ever browsed Amazon’s marketplace, chances are you’ve seen the Amazon Prime badge on various product listings. 

As a shopper, its meaning is clear: If you are a Prime member, when you buy the product you’ll get free 2-day shipping.  

As a seller, the benefits of having the Prime badge displayed prominently on your listing might not be so obvious, but make no mistake — having the Prime badge is a must for almost everyone selling on Amazon.

 

What is Amazon Prime?

Amazon Prime is a monthly subscription service available to all Amazon shoppers. Members on an annual plan pay $119 per year, while Prime student members pay $59 per year. As for monthly subscriptions, they cost $12.99 and $6.49 per month respectively.

By subscribing to Amazon Prime, shoppers not only get special streaming, reading and shopping benefits (eg. access to lightning deals 30 minutes before non-Prime members, and exclusive-to-Prime-member deals like Prime Day), they also receive shipping perks. 

Depending on where buyers live, being a Prime member means being eligible for:

  • Free 2-hour shipping
  • Free same-, one- and two-day shipping
  • Saturday shipping
  • Release-date delivery

At this point there are over 150 million Prime members worldwide, with 112 million in the U.S. alone).

 

How to sell on Amazon Prime

When it comes to selling Amazon Prime as a third-party seller, you have two options: Seller Fulfilled Prime and Fulfillment by Amazon.

Seller Fulfilled Prime (SFP)

While sellers who fulfill their own orders (FBM) are now able to sell Amazon Prime, there is currently a waiting list. However, that doesn’t mean you can’t get everything in order while you wait to get accepted into the program. 

Aside from making sure you have the necessary inventory available to fulfill your Prime orders quickly, it’s also the perfect time to research Amazon’s approved shipping partners to find the right one for you and your business.

Then, when you’ve been moved from the Seller-Fulfilled-Prime waiting list to its mandatory trial period, you’ll be better equipped to meet SFP’s requirements. 

To complete the SFP trial period successfully, you must:

Amazon doesn’t specify an exact time frame for their SFP trial period, and the Prime badge will not be displayed during your trial. But once Amazon decides you’ve completed the trial successfully, the ASINs you enrolled will automatically show the badge on their listings.

Fulfillment by Amazon (FBA)

The easiest way to sell Amazon Prime is to use FBA as your fulfillment method. Regardless of your business model, by joining Amazon as an FBA seller your products will automatically be considered for Amazon Prime.

No waiting list. No official trial period. As an FBA seller, all you have to do to get that Prime badge on your listings is obtain and maintain good seller-performance metrics

While Amazon doesn’t specify exactly what is required of FBA sellers to get and keep the Prime badge, they appear to place emphasis on the following

  • Having an order defect rate of less than 1%
  • Complying with Amazon’s listing and product policies
  • Adhering to Amazon inventory storage limits
    • For example, if you have slow moving inventory or a low ‘Inventory Performance Index’ score, Amazon can limit your FBA storage
What if you’re a new seller?

If you’re new to Amazon, or just starting your Amazon-selling journey, don’t worry. 

Though it may take a little while to become a fully-fledged Prime seller due to the need of building up your seller metrics and/or completing the SFP trial, there are things you can do in the meantime.

First, make sure you do your product research to ensure you have a product that is high in demand and low in competition

Then, when you know what you’re going to sell and you’ve found the best supplier to manufacture it, create an optimized listing.

Finally, put a solid launch plan in place to help you generate reviews. It should include promotions, follow-up emails for your customers and PPC (pay-per-click) campaigns

How much does it cost?

The cost to sell on Amazon Prime depends on your fulfillment method. 

If you’re selling Fulfillment by Amazon (FBA), then the cost of Amazon Prime is baked into your FBA fees. The size of the fee will depend on:

  • The dimensions of your product
  • Your product’s shipping weight
  • The size tier of your product
  • The weight of your product’s packaging

But, if you are fulfilling your product orders yourself (Fulfillment by Merchant or FBM), then you won’t have to pay additional Amazon fees. However, making sure your orders are fulfilled within Amazon’s required time frame could increase your labor and shipping costs.

 

Why should you sell Amazon Prime?

From a ready-to-buy customer base to an increased chance of winning the Buy Box, there are many benefits to selling Amazon Prime.  

Amazon Prime members are loyal

Due to the fact that Prime members pay a monthly fee to ensure speedy delivery — and rather than let their Prime subscription go to waste — members are more likely to purchase from Amazon.

In fact, according to a recent Jungle Scout survey* of more than 1,000 consumers, 60% of Amazon Prime members said they would describe themselves as “brand loyal.” Only 39% of non-Prime members said the same.

Not only that, when asked where they would shop if they could only purchase products from one store, 67% of Prime members said they would shop on Amazon. For non-Prime members, that number drops to 32%. 

Amazon Prime messaging markets your product for you

Getting past consumers to buy from you again can be difficult. Yet it’s extremely important for the success of your business to turn those shoppers into repeat customers. 

Not only is it more expensive for you to acquire new customers, repeat customers spend an average of 20% more than first-time buyers. Their conversion rate is much higher as well (60-70%).

More than three-quarters (82%) of Prime members think Amazon is a good company for shoppers, and 84% value being able to shop on the platform. 

For non-Prime members, while those numbers are still high, they do drop considerably in comparison; 60% and 52% respectively.

Amazon Prime members are ready to buy

Prime members don’t just go to Amazon first before trying other online stores; they also spend money on the site regularly and during major holidays like Black Friday and Prime Day.

Nearly two-thirds (60%) of Prime members plan to participate in Prime Day 2020, while an additional 32% said they might.

As for “regular” shopping, a significant portion (85%) of Prime members reported making a purchase on Amazon at least once a month; 49% stated that they shop on the site at least once a week.

On the other hand, only 39% of non-Prime members said they shop on Amazon at least once per month. And just 13% say they shop on the site at least once each week.

Amazon Prime members are willing to pay more

Unlike non-Prime members, shoppers who have a Prime subscription don’t have to hit a minimum purchase amount to get free shipping. Regardless of price, if a product listing has the Prime badge, members get free (and at least) two-day shipping.

And although product price doesn’t factor into Prime members getting expedited shipping at no extra cost, they’re actually willing to pay more to get just that. 

Over half (59%) of Prime members are willing to spend more on a product if it ships more quickly. Only 31% of non-Prime customers are willing to do the same.

Amazon Prime increases your chances to win the Buy Box

While the Amazon Prime badge is a major factor in converting shoppers into customers, Amazon’s Buy Box (the ‘Add to cart’ button on a product’s listing) plays a key role as well. 

In fact, 83% of Amazon’s sales are generated through its Buy Box. For that reason, owning the Buy Box is extremely important. And according to Amazon, if you’re selling Amazon Prime then the chance of your product being buyers’ default option improves.

 

*Methodology

In May, 2020, Jungle Scout conducted an anonymous survey of 1,006 U.S. consumers, asking them about their buying preferences and behaviors. 

Respondents ranged in age from 18 to 75+, and represent every U.S. state, all genders and employment types, and various levels of income.

 

For more information about this survey and/or Jungle Scout’s data, please contact [email protected].

 

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24 comments on “How to sell on Amazon Prime in 2020

    1. Hi Darsan,

      You will need to send your inventory to an FBA warehouse. When you receive an order, Amazon will pack your item in a Prime box.

  1. Hi great Jungle Scout team,
    I’m on my way to set up my Amazon seller account.
    And I love FBA as all your opinion but i still concern in some points:
    1. I plan to name generally so that i can sell different product->Which type of business should i choose is the best?
    2. About packaging: With items are small like face towel, hand glove, face mask…
    Can i just pack them in bulk in a big box and ship to Amazon’s warehouse without separate each order (for example 5 pieces per order)-> Amazon will do that?
    And Will Amazon also label every package? or anything else I have to do please let me know.
    3. Can i ask Amazon to pack as my expectation (with my own inserts, envelop, my stamp or tape with my logo and name on it… for example)?
    4. Is it OK for beginner like me to choose Jungle Scout subscription at 19USD/month?
    5. Can i choose individual as first and then switch to private label like you have recommended?
    Please walk me through these.
    Thank you.

  2. Thank you for your great job Dave.
    Please make my concern clear. Does it mean that i will be a prime seller if i choose FBA.
    Thank you.

  3. We are a prime seller however we are having trouble getting our new products added. The site says not available but we are ready to ship?

    1. Hi Anita,

      Great question!

      Typically, most sellers are paid once every two weeks. If you are paid for a product but then the customer requests a refund, the amount is deducted from your next scheduled payment. If you balance drops below zero on Amazon, then Amazon will charge the credit card you have on record.

  4. Great article, but you are wrong about the requirements for prime. You do not have to be an FBA seller to qualify. I urge you to research “Seller Fulfilled Prime”.

  5. I’m trying to determine shipping costs to Amazon fulfillment center as a prime seller. What is the best way to figure shipping to Amazon using FBA?

  6. Hi Team,
    I have a question, when you have the product and ready to buy, does the product needs to be shipped to my residential address or to Amazon warehouse given I have FBA Account ?

    regards
    Angelique

  7. I have a Amazon store and have an established business outside of Amazon already for years and want to sell my product on prime. What are the steps i need to take to do this?

  8. You didn’t mention anything about all of the sales tax liability you incur. You will have to file for a sales and use tax certificate in every state that Amazon has a warehouse. In addition, more states are now requiring that you also submit a yearly income tax filing with them. Other states charge franchise tax and entity taxes on top of everything else. Lots of fees, headaches, and more.

  9. Thank you for the insight. I was always wondering how did PRIME work, and today I learned a great deal. I’m brand new getting ready to launch my first product and definitely I will keep my eye on becoming a PRIME seller.

    I’m a follower of yours.

    Best regards,

  10. Hi I’m a prime seller and it’s going pretty good. I just need to source this product more because it is flying off the shelf.

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