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In compliance with the legally binding agreement reached with the European Commission, Amazon will change the Prime criteria and Buy Box offer display in June 2023 throughout the European Union. This will affect Amazon merchants across all the current and future marketplaces within the EU.
The significant modification changes how sellers across all Amazon fulfillment channels, which includes Fulfilled by Amazon (FBA), Fulfilled by Merchants (FBM), and Amazon retail, are evaluated for Prime eligibility, as well as a change of the criteria for the Prime badge. In the past, using FBA or Seller Fulfilled Prime (SFP) practically guaranteed better placement than products from vendors using FBM.
An overview of the commitments
Data protection changes
- For its retail business, Amazon is not allowed to exploit any private data gathered from or connected to the actions of independent sellers on its marketplace. This is true for both the automated tools used by Amazon and its staff members who may use the information from Amazon Marketplace to make decisions about Amazon retail.
- Amazon can not use such data to market both its private-label products and branded goods.
Buy Box Changes
- When assessing the offers to determine the winner of the Buy Box, Amazon must treat all merchants equally.
- Amazon is required to present the Buy Box winner with a second competitive offer if there is one from another vendor that sufficiently differs from the first one in regards to price and/or shipping.
Prime Badge Changes
- Amazon must establish non-discriminatory standards and requirements for marketplace merchants and offers for Prime.
- Amazon must permit Prime sellers to freely select any carrier for their shipping and logistics needs and to bargain terms directly with their carrier of choice.
- Amazon is not allowed to use any data obtained through Prime on the circumstances and effectiveness of third-party carriers for its logistical services.
If Amazon violated these commitments, the European Commission could penalize Amazon up to 10% of its annual turnover without first having to establish that EU antitrust laws have been broken. Alternatively, the European Commission could order Amazon to pay a fine of 5% of its daily revenue per day of noncompliance.
Old Criteria for Prime Eligibility
Prior to the changes made 21st of June 2023 offers needed to meet certain customer experience standards. Among the requirements were tracking, customer returns, delivery time, reliability, and customer service:
- An Amazon Professional seller account
- Fulfill your orders from a domestic warehouse
- On-Time Shipment Rate at minimum 99 % (Cut-Off Time: 13:00)
- Orders using Amazon Buy Shipping Services ≥ 98%
- On-Time Delivery Rate at a minimum of 97 % when not using BuyShipping labels
- Order cancellation rate < 0.5%
- Deliver orders using pre-approved Seller Fulfilled Prime carriers
- Accept the Amazon return policy
- Allow Amazon to handle all customer service requests
The New EU Criteria for Prime Eligibility
An offer must meet three requirements to qualify for Prime: (1) Be available nationwide, (2) Have free shipping, and (3) Offer Prime members free returns (with a few restrictions based on product weight and cross-border shipping). Sellers must consistently fulfill the standards listed below for each product category to be eligible for Prime. Check the Seller Prime Programs for information on the various product categories and their associated thresholds.
- Delivery Promise: Prime-listed products must meet delivery requirements that are based on the product category and storage location.
- On-Time Delivery: Prime orders must reach the customer by the given delivery date or earlier. At least 90% of deliveries must be completed on time.
- Tracking: When verifying the shipment of Prime orders, a seller must provide tracking information. A valid tracking number rate of a minimum of 99% is required.
- Cancellation Rate: The rate of cancellation of Prime orders that the sellers initiate before shipment cannot be higher than 0.5%.
Furthermore, sellers who want to enroll their FBM offers in the Prime program will be able to use alternative logistics providers and negotiate their terms directly with them, as long as delivery tracking information is made available to Amazon via their tracking systems and other Prime requirements listed above are met.
Key Take-Aways
Amazon merchants who want to add the Prime badge now have greater flexibility, especially when it comes to their order fulfillment. Large retailers and brands should not face any issue meeting Prime eligibility requirements because they typically already provide a comparable delivery service. However, depending on product category and storage location they could run into issues when it comes to cross-border shipments.
The change may not make a significant difference for SME merchants, gaining the Prime badge will be easier but when delivery services require large quantities to access affordable pricing the Prime badge can be hard to maintain without delivery costs significantly decreasing the profits.
Hurdles regarding Prime fulfillment can be overcome by working with a 3PL company that is experienced with Amazon fulfillment, such as byrd. Utilize a European Fulfillment Network with local warehouses in all the major markets that guarantee 1-2 day delivery time on national orders. Combine it with automatic shipment tracking and you can make sure that your order fulfillment meets the Prime eligibility requirements. Another big plus is that you will be able to take advantage of bulk pricing on your shipments and but more resources into expanding your business.