Statista estimates that nearly 85% of UK consumers shop online, spending around £2,600 each per year. Within that market, Amazon has become the dominant retail platform. With UK revenues of £26.4bn in 2023/24 and continuing double-digit growth, it is increasingly difficult for consumer brands to ignore.
But Amazon isn’t simply an ecommerce storefront.
It’s a real-time demand-and-distribution system.
Meaning that the strategic question for leadership teams isn’t “Should we sell on Amazon?”
But rather: “How do we operate Amazon profitably?”
And that question almost always leads to one answer: logistics.
Why is Amazon such an important channel?
Third largest retailer in the UK, Amazon has been named as the UK’s most successful ecommerce retailer every year since 2022. With forecasts anticipating five-year compound annual growth of 9.2%, the platforms domination is set to continue.
Tapping into e-commerce customers number one priority of free and fast delivery with Amazon Prime is key to their success. This strength is reflected by 46% of UK households (13.4M households*) now having access to an Amazon Prime subscription.
Why is successful selling on Amazon linked to logistics?
Logistics is key to the operational performance, customer attraction, satisfaction, retention, lifetime value and ultimately the profitability of any business distributing product. But this requirement is even more critical when it comes to selling on Amazon’s real-time demand-and-distribution system which operates very differently from traditional retail.
In supermarkets and wholesale channels, demand is influenced by buyer relationships, category planning and negotiated promotions.
On Amazon, demand is governed by data signals: availability, fulfilment speed, pricing, advertising and customer behaviour.
Most companies are successfully executing ‘just in time’ distribution for major bricks and mortar stores like Tesco and Halfords. Their bulk order is sent to a destination and delivered by an agreed date. If the order isn’t received, the Buyer will need to be reassured of its imminent arrival.
If you’re late with fulfilment of orders from your own website, a customer may leave a negative review, which you can address, but it has no bearing on your Google ranking.
But if you don’t get your logistics and inventory management right for Amazon the consequences are significant:
- Not fulfilling Amazon Prime customers’ next-day expectations, is likely to attract negative reviews which cause the ranking of your Amazon listings to decline, and could result in the removal of your “Prime Badge”, causing a significant fall in sales.
- If your products go ‘out of stock’, an Amazon buyer won’t call to order more. Instead, they will buy elsewhere. Not only will you lose the sale, but your ads will grow more expensive and your organic ranking will deteriorate.
This is why getting logistics right for Amazon is crucial.
Selling on Prime
Amazon Prime has fundamentally reshaped customer expectations.
Nearly half of UK households now have access to Prime, meaning fast, free delivery has become the default expectation rather than a premium service.
For brands, this creates a strategic choice:
Do you structure your logistics so your products can capitalise on Prime demand, or do you accept reduced visibility and conversion?
That decision often determines whether Amazon becomes a profitable channel or a marginal one.
Fulfilment by Amazon (FBA)
Fulfilment by Amazon (FBA) is often the fastest route to Prime eligibility and sales volume.
However, FBA introduces a different cost structure.
Fees are determined by category, product dimensions and weight, which means profitability must be evaluated at SKU level before committing inventory into Amazon’s fulfilment network.
For smaller, lighter products the increase in demand often outweighs the fulfilment fees. For larger items, the economics can be more complex and require careful pricing and logistics decisions.
Options for consideration
FBA isn’t the only way to sell on Prime. Seller Fulfilled Prime (SFP) status enables sellers to deliver from their own warehouses or through a Prime-certified 3PL provider, and wholesalers might be invited to sell in bulk to Amazon via Vendor Central. But which is better? While FBA typically leads to a greater volume of sales and being placed higher in Amazon search results there are some key considerations when weighing up your options:
1. Matching product and fulfilment
While shipping products under 2kg via courier rather than via FBA might present better margins, missing out on the Amazon Prime audience and having a 5–7-day lead time imposed on your listing may not. Only products dispatched via FBA or Prime Certified warehouses gain the prized Prime badge, and products sold via FBA consistently achieve higher ad placements than those shipped using a Prime certified 3PL.
2. Being Prime certified
The process of becoming a Prime Certified seller can take up to three months and requires a commitment to shipping Monday to Saturday, along with, or alternatively, the use of a Prime Certified 3PL provider.
3. Quantity and quality
It’s important to use the right 3PL provider for the right function. Splitting logistics of quantity orders from the individual Amazon packages that require the quality of a 24-hour service can be a good solution.
Selling on Amazon Prime also presents the added benefit of the £20 minimum order limit, leading customers to buy more units, or to add cheaper items to meet the threshold. Businesses with a range of Prime eligible cheaper SKUs stand to benefit from this.
The leadership lens
For leadership teams, Amazon logistics decisions are not purely operational. They influence:
- inventory allocation
- advertising efficiency
- working capital exposure
- and ultimately margin discipline.
When logistics, inventory and marketing decisions are fragmented across departments, selling on Amazon is inefficient and expensive. Where they’re governed together and a cross-functional capital allocation system is in place, Amazon can become a strategically managed growth channel.
If this article has caused you to pause for thought on your approach to selling on Amazon, or if you’d appreciate some advice then please get in touch.