Amazon has recently launched STEP Program, a performance-linked program, where sellers get benefits based on their previous performance on Amazon.
Many people have criticized Amazon for extending certain benefits only to a few sellers on its platform in the last few months. It mainly includes those in which Amazon is a stakeholder, directly or indirectly.
Amazon has made the evaluation of sellers through the STEP Program effective from 01st January 2021 only to explain when the matter gets too heated.
In our opinion, Amazon is correct as it provides certain extra benefits to sellers that abide by its rules and provide them with more business.
If we buy something in bulk in the market, we get some extra discounts. So, giving certain benefits to some sellers for good performance and a large volume of business is fair.
Now, let’s understand how the STEP Program works.
Under the STEP Program, Amazon has categorized the sellers into four categories — Basic, Standard, Advanced, and Premium. By default, Amazon categorizes all sellers as Standard level Sellers. Each seller’s performance is evaluated based on the following metrics –
- Total Cancellation Rate
- Total Late Dispatch Rate
- Seller Controllable Return Rate
- Out of Stock Rate
- Prime Listings Customer Views
- Regional In-Stock Rate (Only for Premium)
- Net Sales Volume/Net Sales Units (Only for Premium)
Amazon evaluates the seller’s performance, for the last quarter, on the 1st of next quarter. For example, Amazon evaluates the metrics for January to March on 1st April and decides the seller category accordingly.
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Now, let’s look at the Benchmarks for various metrics that Amazon has offered.
Based on these Benchmarks, Amazon will evaluate your performance. Amazon provides the following benefits once a seller reaches various levels.
We recommend you not get lured by the benefits that Amazon offers you for Advanced & Premium Sellers.
Consider all the points before making a wise decision for yourself.
Let us explain with our example. We sell certain furniture products on Amazon and our website Premlarshop.
We have chosen Easy Ship & Self Ship (i.e., Fulfillment by Merchant) as the fulfilment method on Amazon. To know the various fulfilment options on Amazon, Click Here.
We have made this decision due to following reasons –
- Our products are enormous in size. These products require multi-layered packaging for complete safety in transit. You can’t rely on Amazon packing staff to pack big products with much care.
- The large size of the products attracts huge Rental Costs, which is illogical to pay if you can store the products at your warehouse.
- We inspect our returned products in a much better way as compared to amazon staff at fulfilment centres. This in-depth inspection ensures that our new customer doesn’t get a previously returned damaged product without proper check.
This decision closes our doors to be a Premium Seller. Being a premium seller requires us to maintain a 35% Regional In-Stock Ratio, which in simple language means choosing Fulfillment By Amazon.
But overall, we are happy being an Advanced seller on Amazon and enjoy the benefits that Amazon offers at this level.
Therefore, I recommend you consider your products’ nature and your overall strategy before setting your targets for performance.
I hope you have grasped how Amazon’s STEP Program works and how you make a helpful strategy for your business.
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