Sold by Amazon (SBA) is a program that lets third-party sellers control their listed products on the Amazon Marketplace while letting Amazon price the products. The program was launched in 2019 and can now be used by all eligible sellers.
This guide comprehensively introduces Sold by Amazon Program, how it works, and who’s eligible for it. The guide will also discuss the advantages and disadvantages of the program to help you decide if it is a good fit for your brand or products.
What is Sold By Amazon
This is how Amazon explains this program:
Sold by Amazon, or SBA provides a new ‘hands off the wheel’ selling experience for FBA listings designed to help sellers grow their business.”
SBA, or Sold by Amazon, is the perfect choice for sellers who prefer full control over their listings and inventory but want someone else to manage the pricing. Who is better than the experts at Amazon? With this approach, you can rest assured that your sales will be successful without having too much responsibility on your part.
How does SBA work
Brands participating in the SBA program will be granted a Minimum Gross Proceeds (MGP). It gives Amazon the right to price the product at any price, with the Brand still receiving the MGP for each product sold. It means the Brand will get a minimum amount per unit no matter the price at which Amazon markets the product.
For the programs in the SBA, Amazon will be the seller of record and responsible for sales tax for all items sold, as the items will also appear with the “Sold by Amazon” tag on Amazon’s site.
What Is Minimum Gross Proceeds (MGP)
Before you enlist one of your ASINs in the Sold By Amazon program, they will set a minimum amount that must be received when selling each unit. Referred to as ‘Minimum Gross Proceeds’ or MGP, this value is determined solely by Amazon, and it’s either accepted or rejected – no negotiations are involved.
For case in point, if you have a Minimum Gross Proceeds of $20 and Amazon sells the item for $23, you, as the seller, get the full $23. But, on the other hand, if Amazon sells the item at $18, you still get the $20 payment.
Is Minimum Gross Proceed Fixed
Minimum Gross Proceed amounts are not fixed. According to the terms and conditions, Amazon has the right to revisit the MGP amount every six months when Amazon can propose a new amount.
You will be notified of the change and given seven days to approve. If you fail to take action, the item will be delisted until you enter your admin console and either confirm the new MGP or remove it from the SBA program.
Who Can Sell In The SBA Program
Back in mid-2019, Amazon released an invite-only beta version of SBA. After a six-month trial, the program became available to all eligible sellers.
The eligibility requirements include the following:
- Have a professional selling account
- Be enrolled in the FBA program
- Be enrolled in Amazon’s Brand Registry
Amazon SBA is open to all qualified sellers who already do FBA and are registered with Amazon’s Brand Registry. If you’ve enrolled your Brand and want to know if you have ASINs qualified for Sold By Amazon, find the settings menu in the top right corner in Seller Central and select account information from the drop-down menu.
If you have eligible ASINs, you can select one or some for registering for Sold By Amazon. However, many sellers still need to get eligible SKUs and thus will not see the option to register.
Registering for the program only registers you; it does not automatically register any of your listings.
Amazon SBA Program: Pros and Cons
At this point, you have all of the basics, some potential benefits, and some cautions. Here is the list of pros and cons that may arise when you choose to enroll your SKUs.
Advantages of Sold By Amazon Program
There are plenty of advantages of the SBA program that can benefit your Brand:
- Free to join: Joining Sold by Amazon is free and open to everyone. However, FBA fees will still apply.
- No need to reprice manually: For high-volume sellers, it is time-consuming to maintain the prices competitively. With Sold By Amazon program, you no longer need third-party repricing software to maintain the most competitive pricing.
- Control your listing: With Amazon taking care of repricing, you can focus more on listing management. You can still display your brand feature in the listing rather than showing Amazon’s.
- Decide which SKU enrolled: You can choose which SKU to enroll in the sold by Amazon program rather than having all the SKUs enrolled.
- Enhance credibility: When customers see “ship from and sold by Amazon” on your listing, they will feel that your Brand is more reliable than the others. Therefore, it is more likely that they will make a purchase.
- No need to handle sales tax: Many brands are concerned about a possible tax liability when selling on Amazon Seller Central. Sold by Amazon eliminates that worry for products acknowledged into the program. If avoiding possible sales tax liability is a top priority for your company, SBA may be a better fit.
- Opt-out anytime you want: If it turns out that this program is not a good fit, you can un-enroll anytime you want.
Disadvantages of sold by Amazon program
There are also downsides to this program:
- Potential violation of MAP: The main disadvantage is that Amazon sets the price instead of you. Some brands may have MAP (Minimum Advertising Price), the lowest price a supplier will require for their goods to be showcased or advertised for sale. If you enroll in the Sold By Amazon program, Amazon does not consider MAP when repricing. Instead, it will set it at whatever price they think is competitive. If you have a MAP policy in place, Amazon could potentially violate that policy and undercut the price of your product.
- Not guaranteed to generate sales: Though customers may have more confidence when purchasing from an SBA listing, Amazon does not guarantee an increase in sales.
- Harder to compete after unenrolling: Once you give up your control to Amazon, it can be a lot harder to compete if you unenroll your product later, as customers are already used to Amazon’s low price for that product. On top of that, if you sell the same products in another marketplace, giving Amazon control of the sales price can backfire. People will just go to Amazon to get their products cheaper.
By enrolling in Amazon SBA, your products will be able to maintain competitive prices. However, you will still have the chance to control your listing to enhance your Brand.
There are also downsides to the program. For example, when Amazon sets the price, it will not consider the Minimum Advertising Price and might violate it just to stay competitive.
Amazon business owners should consider all these pros and cons before deciding if this is a good fit for their brands.
Frequently Asked Questions
Q: Is Sold By Amazon a good fit for my Brand?
A: It depends on your goals and priorities as a seller. For example, it may not be the best fit if you are looking to protect your products from price erosion. However, if avoiding possible sales tax liability is your company’s priority, SBA may be a better fit.
Q: What are the requirements for enrolling in SBA?
A: To enroll in Sold By Amazon, eligible brands must have a Seller Central Professional selling account and be registered with Amazon’s Brand Registry. Additionally, they must enroll in Fulfillment by Amazon Services (FBA).
Q: What are some of the benefits of using SBA?
A: It is free to join Sold by Amazon and opt-out. If you enroll in the program, you don’t need to reprice manually, but you still take control of your listing. In addition, you can enhance credibility since you will have “ship from and sold by Amazon” on your listing, thus increasing the conversion rate. Finally, you will no longer need to worry about sales taxes issues since Amazon will take care of these for you.