Amazon.com Inc. is ending its Small and Light Program for merchants and replacing it with what it calls Low-Price FBA rates. The move is likely to mean many merchants on Amazon will pay more for fulfillment services but customers will get faster delivery.
On June 29, Amazon sent sellers an email stating that beginning Aug. 29 the marketplace will change fulfillment rates for all items priced below $10 (previously $12). The change came “completely out of the blue” for Ethan Lauf Goldstein, founder and CEO of allergy and pain relief retailer Curist.
The differences between Small and Light Program and Low-Price FBA
The small and light program allows sellers to sell lighter, smaller and less expensive products for a reduced fulfillment fee. This was helpful since typical Amazon FBA fees would make selling cheaper products unprofitable. To offset this, Amazon provided slower shipping speeds compared with regular FBA items.
The new Low-Price FBA takes effect August 29. The rates for shipping low-priced products will be an average of $0.77 lower per item compared with current FBA rates.
Items priced below $10 will cost sellers about $0.30 more. The trade off? The items will now ship with regular, faster FBA fulfillment shipping speed.
Items priced higher than $10 will automatically ship with standard FBA rates and shipping speeds.
Sellers no longer need to complete an enrollment process for Low-Price FBA products.
What Amazon’s rate changes mean for sellers
Curist sells a few SKUs that fall into the $12 or less category. Removing the enrollment process for lower-priced items is helpful, Goldstein says. “Having that enrollment process was always a stumbling block because we would enroll a SKU of inventory and then couldn’t really raise the price above whatever the threshold was,” he says.
That made testing and pricing experimentation difficult because changing the price of a product can cause the referral fee to go up or down, Goldstein says.
The downside of the announcement is that SKUs under $10 are going to go up. “They’re not going up by a ridiculous amount, but going up by 10 to 20% is pretty substantial for some sellers,” he says. “And products in that $10-12 range no longer qualify for lower pricing — so those fulfillment fees can go up by 40-50%. It can be devastating for that product.”
Two months to shift strategy
Other sellers voiced concerns in an Amazon Sellers forum.: “We have several products that fall just under $12 and they do very well. However, $10 is too low as our margin is approximately $2.00,” seller Jmoe97 wrote in the forum.
Another seller voiced concerns about the change in price limit from $12 to $10. “What does this mean? The merchant has to choose. Make the top price $10 and make $0.20 or leave the reduced fee pricing and set a price only based on the standard FBA fees … If Amazon wants to solve headaches for everyone then set a standard FBA cost based on rate …,” wrote edutoys.
Amazon only changed its small and light program threshold in Nov. 2022 from $10 to $12. For Curist’s Goldstein, he wonders if Amazon’s shift in pricing threshold is “an unintended consequence,” he says.
Low-Price FBA’s impact on Prime Days in July
Goldstein says he won’t be surprised if some sellers are more aggressive with this year’s Amazon Prime Days in July to sell what they can before the new program goes live. Curist doesn’t have many products that fall under the $10 and below pricing threshold.
“But we are definitely going to re-evaluate all the products that are in that [small and light] program and see whether we’ll continue selling them,” Goldstein says.
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