What are the differences between Amazon’s seller categories?

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If you are new to Amazon, you may have noticed that little “Prime” notation, and wondered what it means.

Turns out that the selling processes used by Amazon are a little more complicated than just Prime or non-Prime. In this article, we cover the 4 main processes, and how they affect (or don’t affect) buyers.

Fulfilled by Amazon

Fulfillment By Amazon (FBA) is a service offered by Amazon to third-party sellers.  So basically, when you buy an item that states “fulfilled by Amazon,” you are not buying the product directly from Amazon.  These are from other merchants but stored in Amazon’s warehouses then packed and shipped by Amazon itself. Amazon charges a storage fee to the FBA merchant, along with a monthly membership fee paid by the merchant, and transaction fees for each item sold. All of those fees to the FBA merchant means that the price to the end buyer is usually higher than it would be for the same item sold in other ways, but many customers prefer it (especially Prime customers) because of the expedited shipping.

Customer Service is also handled by Amazon, including product returns and replacements.  So in most cases, buying a “fulfilled by Amazon” product will give you similar shipping rates, policies and buyer’s protection as items “sold by Amazon.”

One problem that buyers may encounter is counterfeit products from these third-party sellers. Occasionally (as confirmed by my own experience, and comparing notes with other FBA merchants) Amazon will screw this up. Amazon is supposed to make sure that the item shipped is the one that was supplied by the FBA merchant, but they don’t always keep that straight. When they screw that up, they always blame the merchant.

You can (and should) check the seller’s ratings and reviews, but bear in mind that some negative ratings are not deserved. Unfortunately, the current review system makes it very hard to figure out whether a negative review is really accurate. Because of Amazon’s attitude that it’s never their fault, many FBA sellers are chosing to shut down theirFBA businesses.

Customer returns FAQ:  http://amzn.to/2shvwiP

Ships and sold by Amazon

Products that are shipped and sold by Amazon are acquired by the company from different manufacturers then packed and shipped directly from Amazon’s warehouse.  For these items, Amazon has full control of the prices and takes responsibility for the quality, delivery and customer service.

Typically, these are items that were previously sold by FBA merchants, and did so well that Amazon decided to “cut out the middleman” and go around the FBA seller. This is becoming more and more common, as Amazon seeks to increase its own profit at the expense of FBA merchants that do “too well.”

Yet another reason FBA sellers are leaving.

Ships and sold by Merchant

Merchant Fulfilled (MF) is the category where every aspect of handling your orders are in the merchant’s hands – from storage, packing, shipping and customer service.  MF is very similar to eBay or Etsy from the vantage point of the seller.

If there is a dispute between you and the merchant in which you are not satisfied with their response, you can still reach out to Amazon. Amazon has very strict rules regarding the performance of MF sellers, and makes ordering from MF sellers less convenient than either FBA or Ships and Sold by Amazon. This includes such things as making the MF merchandise more difficult to find by giving FBA and SSA items more prominent placement.

MF can often be a bargain to the buyer. Just check the reviews and ratings (with the caveat that it’s hard to tell sometimes whether negative reviews are justified).

Ordering from Third-Party Seller FAQ:  http://amzn.to/2shN1zB

Merchant-Fulfilled Prime

There is a 4th category, called Merchant-Fulfilled Prime which is not really visible to the buyer, but does affect the seller choosing this method. As far as the buyer is concerned, it’s just like SBA, but the seller has to get a very difficult-to-earn certification, and is then held responsible for on-time 2-day delivery. Even if late delivery is caused by the carrier (UPS or USPS), or some event completely beyond the control of the selling (earthquake, hurricane, or whatever), the seller gets penalized. Again, it is never Amazon’s fault.

Because of the difficulty of the certification process, and being on the losing end of any finger-pointing contest about late delivery, there aren’t many merchants willing to use MFP. It’s usually limited to delivery of things Amazon refuses to ship (like liquids in glass containers bigger than 32oz, or anything that can’t be shipped by air).

Most buyers can’t really tell if something is being ordered via MFP.

The MFP program also allows sellers to restrict their delivery area (because of that strict two-day delivery requirement), so if you aren’t in that sellers area, you won’t even see those MFP listings.

What should you chose?

Since Amazon makes it much easier to use Prime (FBA and SBA), most buyers opt for those. But you are looking for the best price, and you are willing to wait a little longer for delivery (or don’t have a Prime membership), you might want to consider MF.