American 3P Brand owners on Amazon’s marketplace recently received an email inviting them to a new program called Sold By Amazon (SBA). The general gist of the new initiative is that Amazon will be able to re-price enrolled ASINs for Sellers to ensure products are competitively priced.
Sellers can still have their profit margins protected though via a Minimum Gross Proceed (MGP). MGP is like a safety net for SBA Sellers. It’s the amount that you as a Seller are guaranteed to receive for each SBA unit sold, minus Amazon’s applicable fees. Minimum gross proceeds will be re-evaluated every 6 months based on the Average Sales Price of the product in that period.
When a customer purchases your SBA product, Amazon will then purchase the item from you, and sell it on to the customer. You will be paid based on the sale price, or the Minimum Gross Proceeds, whichever is greater. The MGP will be calculated in advance of enrolment allowing you to see whether enrolling a specific product will be worth it. You will continue to manage your listings and inventory the same way you do for your FBA listings. Standard selling and FBA fees will apply, but there are no additional fees for participating in the SBA program.
This program is still in early development so at the moment, SBA listings will be unavailable for Sponsored Products or any deals such as Lightning Deals, Best Deals or Deal of the Day. However, Amazon has taken responsibility for handling product returns with no additional cost to Sellers at this time.
66% of the top 10,000 sellers on Amazon use FBA
To register for the SBA program, go to your Seller Central Account > Settings > Account Info > Your Services > Sold By Amazon.
You can then review the terms and conditions and register your account for SBA. Once registered, Amazon will enable a “Sold by Amazon” view under your “Manage your Inventory” tab. All your eligible FBA listings and their Minimum Gross Proceed (MGP) amounts will be displayed. You must then enrol specific ASINs from this page. Registering for SBA will not automatically enrol your listings. Once a listing is enrolled, you can unenroll it from SBA anytime.
3rd Party Sellers accumulated $160 billion of sales on Amazon last year
The programme appears to be Amazon ensuring their prices are the lowest they can be online. This comes at a time where other online marketplaces such as Walmart & Target have begun closing the gap between their price differences. Walmart apparently is offering the cheapest products in several categories. It has become increasingly difficult for Amazon to maintain its low prices when approximately 58% of Amazon accounts are now 3rd Party and can control their prices themselves. By ensuring prices are the most competitive by pricing 3P products, Amazon can maintain their reputation as the world’s cheapest ecommerce marketplace and increase profits for its sellers and in doing so, themselves.
Ethan Kitching, Chief Commercial Officer