Amazon introduced a brand new offering for third-party merchants called Amazon FBA Small and Light, and it breaks some of the traditional "rules" of Fulfillment by Amazon.
Anyone who's come across "Add-on" items on Amazon understands that the marketplace is just not willing or able to offer free 2-day shipping on all of its low-cost items. The FBA S&L program is designed to increase the selection of cheap goods that are available on the site and offer free shipping.
Through the new program, Amazon is able to offer greater selection; merchants can capitalize on Amazon's economies of scale with regard to shipping and fulfillment costs; and customers can get free shipping on a single-item orders, though it will take Prime members longer to receive them than they're used to getting Amazon orders.
We've got details in Wednesday's Newsflash, in the meantime, here are eight things for merchants to know about the new FBA Small and Light program:
1) Like Standard FBA, merchants send the S&L items to Amazon, which handles customer service and returns.
2) Unlike Standard FBA, there's no free 2-day shipping available to Prime members.
3) All Small and Light items are shipped "FREE Standard Shipping" (4-8 business days) to all customers, both Prime and non-Prime members.
4) It's cheaper to use the program than to use regular FBA (or to ship the items yourself, according to Amazon). A one-ounce item costs $1.90 plus the marketplace fee (commission), which is a minimum of $1 that all Amazon 3P merchants pay.
5) Even if sellers have elected not to commingle their FBA inventory, Amazon may commingle Small and Light items with other sellers' units, and tracking of inventory provenance may not be available. (Enrolling in the new program does not affect sellers' commingling preferences for units outside of the program.)
6) There are thousands of products available through the program from hundreds of sellers. Products include lipstick, trading cards, stickers, memory sticks, pipe cleaners, ear plugs, and iPhone accessories.
7) While the program is being marketed to merchants, Amazon admitted it's offering some items itself ("retail" as opposed to 3P).
8) Amazon built a brand new FBA warehouse dedicated to Small & Light in Kentucky that became operational in Q4.
Neil Ackerman has led the product management team for FBA Small and Light and told EcommerceBytes they set out to offer a program that would be less expensive for third-party merchants than the cost of fulfilling those items themselves.
Is Amazon using third-party merchants to take the risk of selling these goods? "The risk is extremely low," said Ackerman, because they're limiting the program to fast-moving ASINs. Amazon hasn't seen any slow movers in the 13 weeks since testing the program, but would reach out to a merchant right away if they saw a slow turn.