A Quick Guide to Amazon Lingo – Part 1!
Starting to sell on Amazon, whether as a company looking to build a third-party business on Amazon or as a brand with products to launch on the popular e-commerce platform, is an exciting avenue for anyone with a dream of reaching the company’s 300 million+ customer base. But for many sellers and brands alike, understanding the terminology of Amazon can be a real challenge.
So this week on our blog we wanted to give our readers a gift for the holidays – Amazon Terminology 101! This is part one of two and covers some of the most basic terms you need to know when selling on Amazon.
It’s All About Prime Shipping
FBA – Fulfillment By Amazon
As a seller on Amazon, you can sell your products in several different ways. The most popular and efficient method is Fulfillment By Amazon, or FBA. This is when sellers send products to Amazon to be stored in the company’s warehouses throughout the country, ready to be picked by Amazon associates when a customer orders one of your items on Amazon.com. This option allows sellers to rely on Amazon for storage, picking, packing, shipping and customer service for all items you sell with FBA. Also, this is the best way to make your items eligible for Amazon’s Prime Free 2-day shipping. Prime shipping not only improves your sales as customers shop exclusively for this benefit, but also gives you a shot at the Buy Box.
MFN – Merchant Fulfilled Network
The main alternative to selling through Fulfillment By Amazon is selling through the Merchant Fulfilled Network or MFN. MFN indicates products that the merchant (seller) sends directly to customers from their location. While there is a limited option to designate a seller’s products as available with shipping via Prime (see SFP below), most MFN products are displayed without Prime shipping. With an MFN item, merchants are responsible for packaging, labeling and shipping out the product to the customer, as well as handling any customer questions or concerns for the product. For some sellers, shipping directly from their location is the best option starting out as they test their Amazon selling capabilities.
SFP – Seller-Fulfilled Prime
Seller Fulfilled Prime is an option for merchants who are shipping from their own warehouse through MFN and who can get their products to consumers’ doorsteps within the 2-day shipping window that Prime customers expect. SFP gives sellers who sell MFN a chance to compete with FBA product listings that are automatically designated with a Prime shipping badge. While there are strict requirements for utilizing SFP, including a 90-day trial period, merchants who sell their products with Prime shipping, whether SFP or FBA, consistently outperform product listings without Prime benefits.
What is a “Buy Box” and Why Does It Matter?
The Buy Box is the area on an Amazon product’s detail page in which Amazon’s preferred option is featured. When you look at a product on Amazon, the price reflected in the upper right-hand corner of the listing is the offer currently in the Buy Box. Amazon uses an algorithm to determine which offer sits in the Buy Box at any given time. Some of the factors that decide which offer and seller have the Buy Box include good pricing, seller rating, in-stock inventory and whether an item has a Prime shipping option. Having the Buy Box is a huge advantage for Amazon sellers since customers are more likely to buy an item right from the product listing page at the Buy Box price than they are to seek out a seller that does not hold the Buy Box.
Two Types of Sellers
1P – First Party Seller
A 1P Seller, or First Party Seller, is when a brand or company sells a product directly on Amazon, through either of the two selling platforms below. A brand may prefer to manage its Amazon presence by selling items directly instead of hiring a company to handle their sales or selling to Amazon direct.
3P – Third Party Seller
A 3P Seller, or Third Party Seller, is the alternative to a 1P Seller. This is when a seller buys products from brands they do not own or manufacture and sells them on Amazon.com. Unlike a 1P seller, 3P sellers are only able to list products in Seller Central.
Two Selling Platforms
SC – Seller Central
All sellers on Amazon – whether 1P or 3P, list their products on either Seller Central or Vendor Central. As mentioned above, all 3P sellers work through SC to list and manage their products, since Vendor Central is an exclusive selling platform. From a customer’s point of view, all the product listings look the same regardless of which platform they were established on. Brands can sell on either platform depending on their goals. If a company is listing products to sell MFN or FBA, they will work on Seller Central to list their products on Amazon.com.
VC – Vendor Central
In contrast to Seller Central, Vendor Central is an option for companies to sell to Amazon directly. Not only is Vendor Central limited to 1P sellers, it is also an exclusive invitation-only selling platform. However, brands can request an invitation to be a part of VC too. As a consumer, you can tell which items are being sold through VC on a product’s listing when the seller name reads: “Ships from and sold by Amazon.com.”
For more words, phrases and Amazon acronyms that will help clear up the mystery of selling on Amazon check out part two!
Thank you for reading!