A new program was recently launched by Amazon that could have important impacts on Amazon FBA sellers. The program is known as Sold By Amazon. This enables the company to have greater control over third party product prices in exchange for minimum payment amounts that will be provided to sellers.
The pricing policy at Amazon has come under fire in recent years due to many critics who argue that it prohibits sellers from being able to offer low prices in other places or even forces them to raise prices on the same products they have at other sites. Similar programs have been pursued before by Amazon including one option that allowed the company to reduce third party prices by paying the discount amount separately to sellers.
The way that program works is that sellers give permission to Amazon to cut the price of their products as the massive company sees fit. This is in exchange for a payout that Amazon will then make to FBA or third party sellers known as minimum gross proceed. The main purpose of this, according to Amazon, is to reduce the possibility of unexpected losses for sellers. Sellers will still maintain some level of control over selecting which products to enroll in Sold By Amazon.
This program is currently inviting sellers to participate. Amazon provides a minimum gross proceed for each individual products that the seller chooses to enroll in the SBA program. Those who have already been invited to participate in the Sold By Amazon program are being told that this is to protect their margins as well as to increase sales and save time by automating prices and to give sellers who are active on the platform some peace of mind that they will not receive less than an agreed upon amount for that particular product.
Antitrust concerns have been raised recently regarding Amazon’s practices and pricing policy, particularly by legislators who argue that the price parity clause stops sellers from being able to offer lower prices when those same products are listed at other retailers.
One Democrat legislator, for example, argued about a clause which was since removed even though the policy still states that Amazon has the power to suspend any products or discontinue access to the buy box button in the event that the seller engages in another company proceeds as a pricing practice that hurts consumer trust. Amazon’s marketplace currently makes up approximately 40% of the e-commerce market in the United States. If you are interested in selling your Amazon e-commerce business, scheduling a consultation with our experienced website brokers can help you with your next steps.
Are you an Amazon FBA seller? Are you looking to make a change in your business and sell your company so that you can move on to other pursuits? If this describes you, set aside time to speak with us about selling your Amazon FBA business quickly and easily with the help of a qualified business broker.