The 59% Difference: How Fulfillment Choice Impacts Amazon Success
Estimated Reading Time: 2 Minutes
Context
A client recently asked us about a fundamental choice all sellers face on Amazon: how to fulfill orders.
The primary options are Fulfillment by Amazon (FBA), Fulfillment by Merchant (FBM), or Seller Fulfilled Prime (SFP). FBA provides a coveted Prime badge, but comes with more Amazon fees. FBM promises autonomy, but sacrifices the Prime badge and can negatively impact conversion due to longer delivery speeds. SFP seems to offer a compromise between the two, but qualifying and staying compliant isn’t easy.
But how impactful is the FBA Prime badge? And is SFP actually a happy middleground? Does the right answer vary for different sellers? We dug into our ~$3B data set to settle it once and for all.
We analyzed our ~$3B dataset to settle it once and for all.
📊 What the Data Says
Our analysis of marketplace performance demonstrates a clear hierarchy in fulfillment effectiveness. FBA delivers a 59% sales lift compared to similar products sold through FBM. This advantage stems from several factors: Prime badge visibility, customer confidence in Amazon's fulfillment guarantee and improved Buy Box competitiveness (where relevant).
FBA drives a 59% demand lift over FBM; SFP drives a 9% demand lift.
SFP delivers a 9% lift over FBM, which may seem reasonable until operational requirements come into focus. Maintaining SFP eligibility demands strict performance standards: 93.5% on-time delivery, near-perfect tracking accuracy, and weekend fulfillment capabilities. Few sellers successfully can sustain this performance level at scale.
Implications
For most sellers, FBA justifies its cost structure through improved conversion rates and Buy Box win frequency. The 59% demand increase typically overcomes fulfillment expenses and generates superior profitability even after accounting for all fees.
SFP remains impractical for the majority of sellers. The operational investment required to maintain qualification standards typically yields returns that do not justify the complexity. There are of course exceptions to this and to those sellers, we give huge kudos.
FBM retains value in specific scenarios: when multi-channel pooling and for oversized items, extremely low-margin products, or inventory with minimal velocity. For general merchandise, however, the sales volume reduction can create an unfavorable economic equation.
Interested in How This Might Apply to Your Situation?
Lighthouse Commerce works with sellers to evaluate these trade-offs like these and structure fulfillment strategies that maximize profit. To discuss your specific opportunity, contact us at learnmore@lhcommerce.com or use the link below.
