Recently, Amazon has launched a new program that essentially allows the tech giant to control select third-party product prices in exchange for a minimum payout to sellers.
Amazon described this program as a “new, hands off the wheel selling experience.” Amazon is encouraging third-party sellers to sign up for the program, which permits them to chop their prices at will. In exchange, Amazon will give the seller a guaranteed payout known as Minimum Gross Proceeds. This is to prevent vendors from suffering an unexpected loss.
In an invitation to sellers, Amazon stated, “Sellers choose which products to enroll in SBA, and once enrolled, these products are priced by Amazon…To ensure peace of mind, for each SBA product, Amazon will provide a Minimum Gross Proceed (MGP) amount to protect your margins.”
In recent months, Amazon has come under fire for preventing sellers from offering lower prices on competing sites such as Wal Mart and eBay. In some instances, Amazon has even been reported to force vendors to raise their prices on other websites. Vendors are hopeful that this new program may address some of their concerns.
If you sign up for the program, you should know that Amazon’s end sales price is automatically generated via Amazon’s pricing engine, and the company will also cover the costs associated with returns. To qualify for the program, you must be a brand owner and be part of the Fulfillment by Amazon program.
As a result of the new SBA program, it is expected that consumers will gain access to even more competitive pricing, and sellers that opt into the program will most likely increase their sales. Additionally, there are no additional fees outside of the standard selling and FBA fees when you sign up for the program.
If there are any changes to your merchandise’s Minimum Gross Proceeds, you will be notified in advance.
If you are an Amazon seller and require the assistance of an experienced Certified Public Accountant, please contact Ebiz Accounting for an initial consultation. We provide Amazon business accounting services to clients in New York and throughout the United States.