If you want to see success as an Amazon seller, you need to tap into the breadth and depth of the Amazon Prime market.
According to Consumer Intelligence Research Partners, 63% of all Amazon shoppers are Prime members. This comes in at around 85 million memberships and counting, an increase by 35% from 2016.
Not only are Prime members abundant on Amazon, but the buying power of these Prime subscribers is robust as well. Prime members shop nearly 25 times on Amazon per year, compared to 14 times for non-Prime buyers.
You need to focus on catering to the Amazon Prime audience to gain greater visibility and a higher velocity of sales.
Read on to learn what Amazon Prime is, the advantages of focusing your efforts on Prime members, and how you can make your products Prime-eligible.
What is Amazon Prime?
Amazon Prime is a subscription for Amazon buyers. It costs $99 per year in the U.S. and entitles members to a variety of benefits.
The greatest benefit is free shipping on millions of items. Prime members are eligible for free one- or two-day shipping for Prime-eligible items, and they even have access to free same day delivery in eligible ZIP codes. Learn more about Prime Shipping benefits for customers here.
Amazon Prime also offers:
- Prime Early Access: 30-minute early access to Lightning Deals on products
- Prime Video: unlimited streaming of videos and TV episodes on Amazon with options for additional video subscriptions
- Prime Music: unlimited, ad-free access to hundreds of Prime playlists with over a million songs
- Prime Photos: unlimited, secure photo storage in Amazon Cloud Drive
- Prime Pantry: low-priced grocery, household, and pet care items shipped same day in certain places for a flat delivery fee of $5.99
- Prime Now: one hour delivery for thousands of products from local stores in eligible areas
- Kindle First: early access to download a new book for free once per month
- Elements: Amazon line of goods that focuses on providing the precise sourcing of products
There are a number of other specific and exclusive benefits for Prime members as well.
Amazon Prime also targets students. With a valid .edu email, students get the first six months free (for free shipping) and then get a 50% discount on Prime after that. Plus, students have access to student-specific deals, coupons, and offers.
Because of the above advantages of Prime, more and more Amazon customers are taking advantage of this service. With a quick calculation, they can see that the cost of shipping, music, and video offsets the $99 annual fee. It’s no surprise that over half of all Amazon shoppers decide to take advantage of the Prime membership benefits.
What are the benefits of Prime for sellers?
When a service benefits your customers, it benefits you in tandem. A happy customer is a happy business. This means that you want to offer as many Prime-eligible products as possible, so you can attract Prime subscribers.
1. Access to loyal customers
Amazon Prime buyers are loyal to Amazon. They’ve paid $99 for the service, often primarily to get free shipping options. This encourages them to purchase more on Amazon in order to “get their money’s worth” with their Prime subscription. The more they buy on Amazon, the greater the value of their $99 subscription.
In this way, Amazon Prime is basically like a loyalty program. Amazon offers exclusive benefits to Prime members, which encourages long-term engagement with the platform.
As an Amazon seller, you need this loyalty. You want to tap into a market of buyers who are consistently shopping on Amazon for their goods. If you can win them over with a quality product and great customer service, these Prime-loyal customers will keep coming back to your brand on Amazon.
Loyalty to Amazon can convert to a loyalty of your Amazon storefront in tandem.
2. Access to high-spenders
Prime members spend on average $1,100 per year, while non-members spend an average of $600. Prime customers spend nearly double that of their counterparts. This is likely linked to the loyalty aspect of the Prime subscription.You want to be selling to customers who spend more on Amazon, because that means they could potentially spend more on your products.
3. Greater competitive advantage
There are millions of sellers on Amazon. How do you stand out and differentiate your brand?
Leveraging Amazon Prime is an easy way to ensure you’re remaining competitive on the market. Amazon Prime can help you gain a competitive advantage by instantly attracting Prime customers. Prime customers want to purchase as many Prime-eligible items as possible to take advantage of their subscription. Prime customers will almost always choose a Prime product over a non-Prime one.
Interestingly, Prime-eligibility may not even be a competitive advantage anymore, though. Prime has turned into such a critical audience on Amazon that it’s becoming a necessity for sellers to be Prime-eligible in order to even stay in the game.
4. Enhanced ability to win the Buy Box
A Prime eligible seller (with good rankings) will almost always win the Buy Box over a non-Prime eligible seller. Prime eligibility increases your Amazon optimization and ability to win the Buy Box, which is crucial to your visibility, conversion, and sales.
5. Increased sales velocity
Winning the Buy Box naturally increases your sales velocity because you are the go-to for customers when they add a product to their cart. Even beyond the Buy Box, your Prime eligibility will encourage Prime members to buy from you in order to utilize their membership.
But your sales don’t just increase with Prime customers. Showing Prime eligibility can even improve your non-Prime sales simply because you appear more trustworthy to buyers overall. Moreover, Prime status is still more likely to put you at the top of the Buy Box, which will appear to non-Prime customers as well.
Moreover, Prime memberships can be shared by up to 4 friends or family members. While there are millions of Prime memberships, there are actually multiple potential customers behind each of those subscriptions. More customers equal more opportunities for sales.
SELLER’S CHOICE TIP: Take part in Lightning Deals. Prime members get 30-minute early access to Lightning Deals. You can use occasional Lightning Deals to gain visibility in front of Prime customers. This heightened visibility can increase your sales, reviews, and seller rank, which can help you optimize and win the Buy Box moving forward.
How do you become Prime–eligible?
If you want to tap into the above benefits of selling to Prime customers, you have two options for making your products Prime Eligible: Fulfilled By Amazon (FBA) and Seller Fulfilled Prime (SFP).
Fulfilled By Amazon
FBA is the easiest way to become Prime-eligible. If you use Amazon’s fulfillment services, your FBA products are automatically labeled for Prime.
It’s important to note that using FBA isn’t just great for Prime customers. Non-Prime customers can also benefit from the fast shipping and quality service of Amazon’s FBA.
You pay a fee for FBA, but you get an entire logistics process in return. They will handle everything from storage to picking and to shipping to customer service. They make sure that everything goes out on time and runs smoothly for the customer. FBA will also handle returns on your behalf, utilizing their world-class customer service.
The downsides of FBA are the cost and the loss of control. FBA has fulfillment fees per pound and warehousing fees per cubic foot. These can be especially expensive if you have large or heavy items. Moreover, FBA sometimes has “penalty” fees, like if you have inventory stored in their Fulfillment Center for longer than six months.
Moreover, Amazon controls your inventory, so it can be a challenge to figure out what you do and don’t have in stock. In these cases, we recommend an inventory management system like Skubana.
Overall, FBA is an easy, hands-off approach to logistics while also ensuring top-notch customer service—and giving you instant Prime status.
Recommended read – FBA 101: How & When To Start Using Fulfillment By Amazon
Seller Fulfilled Prime
If you don’t want to use FBA, you would typically qualify as FBM or “Fulfilled By Merchant.” This means you handle the logistics of storage, packing, and shipping yourself. Seller Fulfilled Prime is also fulfilled by the merchant (you), but you are Prime-eligible and can display the Prime badge on your listings.
Basically, Amazon allows their best sellers to fill and ship their own products under the Prime label. There are several reasons why someone might choose SFP over FBA:
- Eliminates FBA fees
- Stops splitting inventory to different warehouses (Amazon’s Distributed Inventory Placement)
- Ability to sell products that are typically ineligible for FBA
- More control over inventory
- More control over returns and refunds, including the ability to charge a restocking fee
SFP can be more cost-effective for sellers with large, heavy products. They don’t have to pay for extensive FBA warehousing or fulfilling fees based on size. Moreover, they don’t have to ship their products to FBA, which can add another leg of transport and cost. Rather, they ship direct to their own warehouse and from their warehouse to the customer, saving one in-between step. Plus, SFP sellers can “ship by region,” where they flag certain SKUs as Prime-eligible based on the shipping address.
BUT only the best sellers qualify for Seller Fulfilled Prime. There is an intense trial period where Professional Sellers must prove they can fulfill Prime orders.
Plus, you have to handle all of the logistics yourself. With FBA, you have more time to focus on selling and marketing rather than on day-to-day operations.
Additionally, with SFP, you’ll likely have to have your own warehouse and warehouse staff to ensure products are able to be shipped out same day or next day. This can incur a huge expense for a number of Amazon sellers.
How to register for SFP trial:
- Make sure you are eligible for Amazon Premium Shipping. You need to meet the following three requirements for Premium Shipping orders:
- On-time delivery rate of at least 92%
- Valid tracking ID for at least 94%
- Cancellation rate of less than 1.5%
See if you meet these requirements on your Seller Central Performance page.
- Go to Seller Fulfilled Prime main page and sign up for a trial.
- Enable Prime Shipping in your trial shipping template.
- Go to “Configure Shipping Settings” to start enabling your Prime-eligible listings. Here you can choose which regions and SKUs to offer Prime delivery.
- Agree to program-specific terms:
- Buy all shipping labels via Amazon’s Buy Shipping Services
- Automatically direct all post-order customer service inquiries to Amazon
- Adhere to Amazon returns policy
- Offer the same Prime shipping benefits and guaranteed delivery dates
- Start fulfilling Prime trial orders. You’ll want to send the products quickly and efficiently to ensure the customers receive them on time with high-quality service.
The Bottom Line
If you want to succeed as an Amazon business, you need to tap into the extensive Prime membership. With increased loyalty and a high velocity of sales, Prime-eligibility is the key to growing your business in the short and long term. At Seller’s Choice, we usually recommend FBA as a way to make your products Prime-eligible.
If you want to attract more Prime customers, optimize your listings, and improve your Buy Box odds, you need Seller’s Choice.
With extensive experience and an expert team, we know how to find, attract, and convert Prime and non-Prime Amazon customers.