From Modern Retail, August 14:
Amazon has rolled out a new selling format for brands in its third-party marketplace that lets sellers submit products to be priced by Amazon’s algorithm.
To participate in the program, called Sold by Amazon, sellers have to already be enrolled in Fulfilled by Amazon and have Professional Selling accounts in Amazon’s Brand Registry, a trademark registration system that Amazon pushed sellers to earlier this year. According to the SBA overview on the Seller Central portal, the program “provides a new, hands off the wheel selling experience for FBA listings that is designed to help Sellers grow their business.” Amazon began Sold by Amazon at the beginning of August on an invite-only basis to select sellers, and has yet to open up brand enrollment to all eligible sellers as the program starts out in testing mode.
According to Amazon, SBA doesn’t cost anything additional to FBA, which charges sellers a fee to store and ship items from Amazon’s warehouses with Prime Shipping. With SBA, Amazon also exerts control over the product’s sale price, by dynamically pricing products to make sure Amazon’s prices are lowest.
This is framed to sellers as a competitive advantage. Since only brands in Amazon’s Brand Registry can apply for SBA, the pitch is that SBA will guarantee that the brands themselves won’t be priced out of ownership of Amazon’s buy box by other gray market sellers that focus on undermining retail prices. The buy box all but ensures the product listing on Amazon that will get sold over competitors, and sellers “win” the buy box by offering the lowest price. For brands selling dozens or hundreds of products on Amazon, keeping up with price competitors can become an endless game of Whack-a-Mole. With SBA, Amazon does that work for the brands, while making sure that it has the best price across other marketplaces like Walmart and eBay.
But sellers should be wary when forfeiting control over any aspect of their business — and particularly pricing — to Amazon. According to analysts, SBA is a short-sighted strategy for brands looking to drive up sales by laying claim over the buy box, a slippery slope that could have damaging ramifications down the line....MORE
