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Amazon's Low-Price FBA Programme: A Comprehensive Guide for Third-Party Sellers

Amazon’s Low-Price FBA Programme: A Comprehensive Guide for Third-Party Sellers

Amazon recently announced changes to how it handles fulfilment for low-cost products with the introduction of the Low-Price FBA programme. This new programme replaces the previous Small and Light FBA option and aims to streamline the shopping experience while boosting seller margins.

As an Amazon seller, it’s essential to understand how this transition impacts your business. In this in-depth guide, we’ll breakdown everything you need to know about Low-Price FBA, including eligibility requirements, fee structures, key differences from Small and Light, and tips for adapting your inventory and pricing strategies.

By the end, you’ll have a clear picture of what this change means and how to take advantage of the opportunities it presents. Let’s get started!

Background: Amazon’s Past Programmes for Low-Cost Items

To provide some necessary context, let’s briefly cover the programme Low-Price FBA is replacing. Amazon launched Small and Light FBA in 2013 to encourage more affordable, lightweight products under $12 to be sold on the marketplace.

It offered reduced fulfilment fees to incentivize sellers. However, a tradeoff was slower shipping speeds since items were stored and shipped from separate fulfilment centers made for Small and Light inventory [Amazon FBA Guide].

While this succeeded in boosting low-cost product selection, it created a sub-par customer experience relative to standard FBA due to lengthier delivery windows. Amazon thus sought a unified approach providing both low prices and fast shipping.

Introducing the Low-Price FBA Programme

With Low-priced FBA, Amazon aimed to merge the affordability of Small and Light with the seamless customer experience of standard FBA. Here are the program’s key aspects:

  • Automatic eligibility: Items at or below a specified price threshold in each category automatically qualify. No application needed.
  • Standard fulfillment centres: Inventory is stored and shipped from standard FBA warehouses, just like other FBA items.
  • Fast shipping speeds: Customers enjoy Prime-like delivery timelines typical of standard FBA orders.
  • Lower fulfilment fees: Sellers benefit from reduced per-item and monthly storage costs compared to standard FBA rates

In summary, Low-Price FBA delivers a streamlined shopping and fulfillment experience for low-cost products – a major upgrade over Small and Light. Let’s explore some practical implications.

Qualifying for Low-Price FBA

To benefit from this programme, products must meet certain eligibility criteria that vary slightly across categories and marketplaces:

  • Price threshold: Items must be priced at or below the specified threshold for their category, which ranges between $10-15 in most cases.
  • Size and weight limits: Dimensions and weight must fit Amazon’s standard shipping profiles for FBA inventory.
  • Good seller performance: Your account needs to be in good standing without any policy violations to qualify.

Be sure to verify the exact thresholds that apply in your category and country location. Prices just above the limit won’t qualify, so check frequently, as thresholds can change.

Comparing Fees: Low-Price vs. Small & Light vs. Standard

With any fee-based programme, understanding the cost implications is crucial. Let’s examine how per-item fulfilment fees compare across the different FBA options:

Fulfilment Program Per-Item Fees (4oz item)
Standard FBA $3.35+
Small & Light (Previous) $2.40
Low-Price FBA $2.59

As you can see, Low-priced FBA fees sit in between the previous rates. For many smaller items, sellers will pay less than standard but more than Small & Light. Larger items face higher costs compared to Small & light items.

To determine the best approach for your portfolio, analyse sales data and profitability at each fee level. While margins shrink on some SKUs, others may benefit enough to offset the increases.

Additional Tips for the Transition

With the launch deadline looming in late August and September, here are some final tips to navigate the switch to Low-priced FBA:

  • Review your catalogue. Ensure qualifying listings are priced correctly to maintain eligibility.
  • Test new pricing. Experiment raising prices on impacted items to compensate for higher fees while still selling.
  • Adjust inventory levels. Order the right quantities based on new estimated sales velocities and costs.
  • Consider replacing the software. Automated tools like RepricerExpress can optimise prices across your listings. [RepricerExpress]
  • Monitor fulfilment charges. Track spending to catch any unexpected increases from the new rates.
  • Ask for help if needed. Work with an experienced consultant to analyse your business and advise on short-term strategies.

Above all, stay flexible and be prepared to adjust your approach over time as you gain insights into how low-priced FBA is affecting individual product performance. With preparation, it can still boost your sales potential on Amazon.

Key Takeaways

To summarise the most important points:

  • Low-Price FBA aims to deliver fast fulfilment for low-cost items while offering sellers reduced fees.
  • Products below the category-specific price threshold will automatically qualify.
  • Fulfilment fees under a low-priced FBA sit between standard FBA and previous small & light rates.
  • Carefully analyse your catalogue and test new pricing strategies to adapt listings impacted by higher fees.
  • Monitor performance and costs closely during the transition, and be ready to test new approaches over time.

With diligent preparation and ongoing optimisation, sellers can leverage low-price FBA to boost their bottom line on low-ticket products sold through Amazon FBA.

FAQs

Here are some commonly asked questions about Amazon’s low-priced FBA programme:

Q: When do small & light end and low-priced FBA begin?

A: Small & Light expires on August 29, 2023, in the US and September 26, 2023, for EU marketplaces. Low-priced FBA takes effect after those dates.

Q: How do I know the price threshold that applies?

A: Check Seller Central or your local Amazon selling guidelines for the thresholds by category in your specific marketplaces.

Q: Can items be in multiple FBA programmes?

A: No, an item can only be in one FBA programme at a time based on its attributes. Pricing directly impacts which program it falls under.

Q: What are the size and weight limits for low-priced FBA inventory?

A: Dimensions and weight must fit Amazon’s standard inventory profiles for each marketplace and category. Refer to specific measurement guidelines.

Q: Can I still qualify products individually, like Small & Light?

A: No, eligibility for low-priced FBA is automatic based on an item’s attributes meeting the general programme requirements. No application or approval is needed.

Q: How do I estimate my new costs under Low-Price FBA?

A: Use the per-item fee schedules available on Seller Central or from third-party tools to model updated product costs based on your individual sales volumes and attributes.

I hope this comprehensive guide has helped provide clarity on Amazon’s low-price FBA programme and how third-party sellers can best prepare and take advantage of the opportunities it presents. Please let me know if you have any other questions!

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