How to Adapt to Amazon’s Latest Push for 1-Day Delivery, Part 1

In part one of this three-part series, I will decode Amazon.com's latest and most radical changes to its Seller Fulfilled Prime (SFP) program. I will share what merchants can do to adapt and thrive in the new one-day e-commerce delivery world.

On August 20, 2020, in a post titled Important Updates to Seller Fulfilled Prime (SFP), Amazon first announced these new and much stricter nationwide one-day and two-day delivery requirements for third-party Amazon sellers offering SFP. So, why did Amazon radically change SFP? According to a company spokesperson, fewer than 16 percent of SFP orders in the U.S. met the two-day delivery promise — even before COVID-19. The primary reason cited is that merchants didn't work weekends. With these changes, Amazon is pushing harder than ever for nationwide one-day delivery to be the new norm. With Amazon owning an estimated 38.7 percent of all e-commerce revenue, every other merchant and every other marketplace will need to follow suit to remain competitive.

First introduced in 2016, Amazon SFP enabled third-party sellers to list their products on Amazon and ship them from their own warehouses or fulfillment centers. In a Regional SFP program, these merchants had the choice of which regions to offer free one-day or two-day delivery. Because of this level of control and flexibility, Regional SFP was a boon for many sellers.

Beginning Feb. 1, 2021, everything changed. Amazon discontinued Regional SFP on standard-sized items. The new SFP requirements are now nationwide and call for a strict one-calendar-day and two-calendar-day delivery promise on Amazon product detail pages. Because the delivery promise is based on calendar days, and not business days, Amazon now requires that these merchants and their carriers offer weekend pickups and deliveries.

Below are the most three most significant changes to the program. For a detailed overview of new SFP requirements and recommendations for meeting them, check out Meeting Amazon New Seller Fulfilled Prime Requirements.

1. 1-Day and 2-Day Delivery Promise on Amazon Product Detail Pages

Amazon expects that if you're part of the SFP program, at least 20 percent of your product detail page views must promise one calendar-day delivery. At least 55 percent of the page views must promise a two calendar-day delivery, as of Feb. 1. These numbers will go up to 30 percent and 70 percent, respectively, as of June 1. Considering that this requirement is one calendar day and not one business day, this is a tall order. This metric is even harder to achieve when you account for the fact that the delivery promise will show two days if viewed after your same-day shipping cut-off time. It may show three days on Saturday evening since those orders would ship on Monday and arrive at the customer's doorstep by Tuesday.

Source: Cahoot Peer-to-Peer Order Fulfillment Network

2. Weekend Pickups and Deliveries Required

The second change is weekend pickup and delivery. As part of the new Amazon SFP guidelines, Amazon wants sellers to be shipping out packages at least one of the two weekend days, Saturday or Sunday. Beyond scheduling weekend pickups with carriers, merchants will need to consider scheduling, overtime, security, and many other factors in this decision.

3. No More Regional SFP for Standard-Sized Items

And the third change is Regional SFP is no longer allowed for standard-sized items (package dimensions up to 18”x14”x8” and weight less than 20 lbs.). However, Regional SFP is still available for oversized items. Deciding not to offer one-day delivery nationwide is likely to have a negative impact not only on a seller’s Amazon sales, but also on all other channels. We will explain further in parts two and three of this series.

What Does This Mean for Amazon Third-Party Sellers?

In Amazon’s recent communication, it has made three things very clear: there are no exceptions to weekend pickups and deliveries; it is not planning to soften the requirements in any way; and if a seller is suspended due to delivery metrics, the only way to appeal is to submit a plan of action. Amazon’s tips for meeting the new performance requirements could be summarized as "just do it." This has created quite a stir in Amazon seller forums.

In practical terms, Amazon SFP Sellers with only one or two fulfillment centers will need to add additional warehouses, seek out new 3PL relationships, or join an e-commerce order fulfillment network to meet the new nationwide one-day and two-day delivery promise. Sellers must also make special arrangements for weekend pickups with carriers like USPS, FedEx, and UPS. This extended work-week needs to factor in that labor and overhead costs may go up. Finally, to stay compliant with the new delivery metrics, most merchants may need to extend their same-day shipping cut-off times. Many will need to invest in next-generation e-commerce shipping software to optimize same-day fulfillment operations to get more done with the same staff.

As is evident on Amazon and other leading marketplaces, there's a strong correlation between expedited delivery promise and conversion rates, leading to more sales. According to a 2018 survey from Dropoff, an astonishing 99 percent of U.S. consumers say "fast delivery" is crucial to them when making online purchases. Due to these rising consumer expectations around fast and free delivery as well as pressure from Amazon, other marketplaces are quickly moving in the same direction.

Walmart has a Seller-Fulfilled Expedited Delivery program based on two-day shipping, which is said to boost conversion rates by 50 percent. And, shortly following Amazon, Walmart announced free next-day delivery regionally on orders over $35. Shopify is building its fulfillment network to help merchants provide fast and free delivery. All three of the largest marketplaces — Amazon, Walmart, and eBay — offer greater visibility and Buy Box preferences for free expedited shipping.

In the next article of this series, I will explore the implications of fast and free delivery on Amazon sellers and the e-commerce industry as a whole. I will share specific strategies and tactics that e-commerce merchants can employ to survive and thrive in the new normal of one-day delivery — in all sales channels.

Manish Chowdhary is the founder and CEO of Cahoot, a peer-to-peer order fulfillment network where merchants collaborate to increase their sales and margins by offering profitable one-day and two-day free shipping to customers nationwide without spending a penny more than the economical ground shipping.