Amazon Shocks Some Third-Party Sellers With a New 2% “Program Fee”

Amazon is set to implement a new “Program Fee” of 2% (minimum of 25 cents) that will affect third-party marketplace sellers participating in the Seller Fulfilled Prime (SFP) program. The company announced the fee in a notice published in Seller Center, its hub for third-party selling partners.

Starting from October 1st, Amazon will charge this fee for each product shipped by sellers who manage their warehousing, packing, and shipping.

In addition to this new fee, Amazon sellers are subject to an 8% to 15% commission on orders processed through the platform, making this a cost increase for SFP participants.

In contrast to the more widely recognized Amazon FBA (Fulfillment by Amazon) program, Amazon SFP enables sellers to retain full control over warehouse and customer service while still displaying the coveted Prime badge on product listings.

However, this privilege demands adherence to strict standards mirroring Amazon’s own policies, including one- to two-day delivery.

Although SFP was introduced by the company in 2015, enrollment in the program was paused in 2019 due to SFP not providing the same high-quality experience customers expect from Prime, according to the company’s notice to sellers.

In addition, Amazon stressed the necessity of establishing robust support for sellers in the SFP program and setting clear benchmarks to ensure orders result in a superior Prime experience for customers.

The introduction of the new fee coincides with a challenging period for Amazon, as reports indicate the company is currently facing antitrust litigation from the Federal Trade Commission (FTC). What if any role this fee might play in Amazon’s battle with the FTC remains uncertain.

New Amazon SFP Fee Part of Program Overhaul

Amazon SFP’s Program Fee could potentially be a strategic maneuver to encourage sellers to shift towards its FBA service, especially when considering the also new stricter requirements on parts of the SFP program, which include:

• Offering nationwide delivery.
• Achieving an on-time delivery rate of 93.5% or higher.
• Maintaining a valid tracking rate exceeding 99%.
• Meeting minimum performance standards for delivery speed (which varies based on package size).
• Providing Free Returns for packages under 50 lbs, in accordance with Amazon’s standard policies.

Additional requirements apply to both existing and new SFP program applicants, and the changes to the program will be enforced by Amazon starting in October. This should ensure customers receive the level of service they expect from Prime.

The decision to levy a new charge on SFP participants could potentially have repercussions for current sellers, obligating them to fulfill to meet the new requirements. The current SFP requirements, while still quite strict, are less stringent.

This could influence their fulfillment strategies, potentially leading them to explore alternative sales channels such as eBay or Walmart.

As the industry observes the evolution of this program, sellers will need to carefully weigh the trade-off between retaining control over their operations or entrusting their inventory and customer service to Amazon.

The upcoming Amazon Accelerate seller conference in September might be a good starting point for third-party merchants to consider their options.

For more information on the new Amazon SFP requirements and how existing sellers can apply, visit this link on Seller Central (account required). The program is only available to active sellers with a minimum of 90-day sales and fulfillment history.

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