We're still trying to wrap our heads around a new program from Amazon called SBA (Sold by Amazon). Today, CNBC reported on the new program that sounds like a hybrid form of drop-shipping with repricing thrown in. "When a customer purchases a SBA product, Amazon will purchase the product from you, and sell it to the customer," Amazon explains on its website.
SBA listings will appear to customers as "Ships from and Sold by Amazon.com," just like products sold by Amazon itself, and Amazon is the seller of record and handles online sales tax.
Amazon sets the price, and brand sellers must agree to a "Minimum Gross Proceeds" (MGP) upfront; Amazon can sell SBA items for less than MGP, but if it does, it will still pay the seller the MGP. "You will be paid based on the sales price, or the Minimum Gross Proceeds (MGP), whichever is greater."
Sellers who must be careful about MAP pricing requirements should fully explore the implications - Amazon states: "SBA will manage pricing to drive competitiveness and will not incorporate any manufacturer MAP policies. However, each listing enrolled in SBA will have a Minimum Gross Proceed (MGP) - you will never receive less than this amount, protecting your margins (see FAQ #3). We recommend working with your brands to determine where SBA makes sense for you."
Standard selling and FBA fees will apply, but there are no additional fees for joining or participating in the SBA program. Sellers will continue to manage their listings and inventory the same way they do for their FBA listings. And while sellers can't currently run Sponsored Products ads or Lightening Deals on SBA listings at this time, Amazon is "working on enabling" those features.
What about returns? "For volunteering as an early adopter, Amazon will handle product returns with no additional cost to you at this time. Should this change, Amazon will notify you in advance."
According to the Amazon website, "To be eligible for SBA you must register your brand through Amazon Brand Registry, have a Professional Selling account, and have your products registered for Fulfillment by Amazon Services (or FBA)."
In an overview of the new program, Amazon writes, "Sold by Amazon (or SBA) provides a new, hands off the wheel selling experience for FBA listings that is designed to help Sellers grow their business. Sellers choose which products to enroll in SBA, and once enrolled, these products are priced by Amazon. Amazon's pricing engine will make pricing adjustments so customers receive competitive prices."
Not only do many Amazon sellers use repricing programs to optimize pricing, which can be in constant flux, but Amazon's own repricing is legendary - Business Insider
wrote last year that Amazon changes product prices 2.5 million times a day based on customer's shopping patterns, competitors' prices, profit margins, inventory, "and a dizzying array of other factors."
eBay has also been trying to influence sellers pricing practices, and it is working toward becoming a "Managed Marketplace," according to eBay CEO Devin Wenig.
But SBA is about more than pricing, and could be related to other changes it has made to its product-sourcing methods. There has been a lot of talk about Amazon moving vendors from Vendor Central accounts to Seller Central accounts.
the SBA test program as letting Amazon "control third-party product prices in exchange for a minimum payout to sellers."
The publication said a spokesperson told it "the SBA program is designed to "save time and increase sales by automating prices so they can consistently and effortlessly offer customers great prices." It's also meant to provide sellers "peace of mind that they will never receive less than the agreed upon amount for that product.""