Amazon SBA is a New Repricing Feature for Marketplace Sellers
Amazon is testing a new program called Amazon ‘Sold by Amazon’ (SBA) that effectively clones many third-party repricer tools. The company launched this program last week to select marketplace sellers.
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In exchange for their participation in Amazon SBA, sellers can set a guaranteed payout price called the Minimum Gross Proceed (MGP).
The MGP will keep sellers from receiving too little on sales, which will benefit sellers as they don’t have to worry about taking unexpected losses on their products.
For example, if a marketplace seller sets the MGP price at $50, and Amazon sells the product at $48, the seller will receive the full $50. If Amazon sells the product above the MGP price, the seller will receive the actual sale price.
Amazon covers the cost of the discount when the price falls below the MGP.
“Sellers choose which products to enroll in SBA, and once enrolled, these products are priced by Amazon… To ensure peace of mind, for each SBA product, Amazon will provide a Minimum Gross Proceed (MGP) amount to protect your margins.”
Quote from Amazon invitation to sellers
Amazon SBA – by invitation only
Currently, the Amazon SBA program is only available to invited sellers who participate in Amazon FBA (Fulfilled by Amazon). Sellers must also be registered owners of their brands in the Amazon brand registry.
Invited sellers have a choice in which products they make available in Amazon SBA.
Amazon control?
The company has been under fire from regulators that they have too much information about sales data from third-party merchants on its marketplace.
Regulators have accused Amazon of taking this information and then sourcing similar or the same products at lower prices on its platform.
READ MORE: Amazon faces EU antitrust investigation over use of merchant data
There is a fair amount of distrust in the seller community to give Amazon more control over selling prices and sales data.
The new program is unlikely going to appeal to sellers who feel that Amazon already has too much power over their business.
Also, for sellers that use multiple sales channels, Amazon SBA may not be an option. These sellers are unlikely to want products listed on one sales channel at a lower price than on other sales channels.
However, for sellers that only use the Amazon marketplace, Amazon SBA could be worth a try, especially if products are not selling well or to “close out” inventory that is being discontinued.
Certainly, Amazon hopes that the ‘Sold by Amazon’ tag line will help sell the repricer feature to sellers.
Amazon SBA is not a new idea
This is not the first time Amazon has launched such a program. In 2017, the company rolled out a program called “Discount Provided by Amazon” that seems similar.
Amazon SBA appears to be an evolution of the previous discount program by giving sellers more control over selling price and which items to discount.
Absent a full explanation from Amazon, it is not clear if “Discount Provided by Amazon” is being replaced by Amazon SBA.
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Good article and you have covered my initial concerns also:
1. if the brand sells on other channels then it seems like a risk that SBA would/could undercut these other channels, even that brands own website which might confuse buyers or ultimately lead buyers to always choose Amazon each time.
2. what if you did not want your price sold below your bottom price – perhaps you are trying to maintain a certain price range and do not want your hard earnt brand to be devalued.
But, with that said, and again I totally agree with your train of thought – if you are only selling on Amazon and currently use a 3rd party tool then you could save money by not using the 3rd party and hopefully get more sales on Amazon whilst never going below your bottom line!
I have said it before today, I still do not know why prices are constantly driven down all the time as money makes the world go round and we ** all ** need to earn a healthy profit!
Thank you Richard for your post and CrackerJack for your comments
To add a couple of others:
A. If you are only on Amazon and competing solely on price, then potentially this SBA is an option for you. With said, you probably are in stiff competition with razor-thin margins too, and only selling on Amazon. There are some who succeed in this way, yet not something we typically recommend with our clients.
B. If you really want to upset your other resellers and partners, SBA feels like an easy and cost-effective way to do so. I don’t see much upside here for the majority of non-Amazon brands…which seems to be more of the case these days. I feel like the days of just existing on Amazon are dwindling.