In early August, Amazon introduced its newest selling feature, Sold by Amazon (SBA). The feature gives Amazon control over product pricing as a way to keep up with competition. In the short-term, businesses who use this feature could see an increase in overall sales, but in the long-term, the results might not be as impressive.
What is SBA?
With SBA, sellers are completely leaving product pricing up to Amazon. Those enrolled in the program will pick which products to include in their listings, and from there, Amazon will price the products to sell accordingly. Products chosen to be included in SBA will be listed as ‘ships from and sold by Amazon’ and once sold, Amazon will purchase and process the order. To make sure your business isn’t taking any losses, Amazon will offer a Minimum Gross Profit (MGP) for each listed product in order to protect your profit margins. Amazon will automatically and regularly monitor product pricing to eliminate the stress that comes with selling on the platform.
Who Can Use SBA and How Much Does It Cost to Enroll?
This service is available to sellers already enrolled in Fulfilled by Amazon (FBA) and those with Professional Selling Accounts. FBA fees still apply for product listings, but there are no additional fees when signing up. As of now, SBA is only offered by invitation.
How is SBA Different than Fulfillment by Amazon (FBA)?
FBA allows sellers to store their products in Amazon facilities, as well as allow Amazon to package and ship the products. Essentially, FBA and SBA are meant to work together to improve the entire selling process for sellers.
Downfalls of SBA
SBA removes any concern that comes with pricing and making a profit off products listed on Amazon. But, when it comes to handing product pricing over to Amazon, businesses should pay attention to the bottom line; Amazon will only update MGP every six months and businesses will have seven days to accept or decline the offer. In busy buying times, like the holidays, your MGP could be lower than expected, resulting in a decrease in overall profit.
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