Becoming an Amazon FBA seller is possibly one of the easiest ways to start a business on Amazon. Not only are you getting exposure from selling on one of the biggest eCommerce platforms in the world, but becoming an FBA seller also means getting access to Amazon’s robust fulfillment system. This (along with other perks) allows FBA sellers to focus on areas like product sourcing and inventory management, rather than spend them on matters like shipping and packaging.
For FBA sellers with goods that meet certain weight, size, and price requirements, they could opt into the Small and Light Program. This helps them cut down on FBA shipping fees in exchange for their goods arriving slightly slower to their customers.
But in August 2023, Amazon officially ended support for the Small and Light Program, replacing it with the Low-Price FBA model. Here’s what you need to know about this change—and how to succeed as a seller despite it.
While there may be other factors involved in the decision, the official statement of Amazon for the reason behind ending the Small and Light Program is to simplify seller fees while providing everyone with access to their faster fulfillment options. It’s a move that was designed to make paying for fulfillment far easier for sellers while also not making any more differences in the speed of the fulfillment of orders.
Amazon’s replacement for this program is Low-Price FBA rates, which took effect on the 29th of August 2023. Any items that were previously enrolled in the Small and Light Program will be priced according to the new regulations moving forward, though Amazon also clarified that these same products “will not be subject to holiday peak fulfillment fees” for 2023. These fees will apply from October 15, 2023, through January 14, 2024.
Here’s a quick rundown of what sellers can expect from Amazon’s Low-Price FBA fees:
However, both types of sellers will now gain access to faster fulfillment options, which were not previously available under the Small and Light program or without raising FBA fees across the board. Aside from streamlining its fulfillment center operations, this price adjustment/fulfillment speed change is also Amazon’s own effort to simplify fulfillment fees and concerns for its FBA sellers.
But is the “Low-Price FBA fee” model better than the “Small and Light Program”? There are some distinct advantages and disadvantages to this change, most of which you’ll have to figure out if it’s worth the cost as an FBA seller.
By far the most significant benefit to sellers is that the switch to Low-Price FBA fees means that you no longer have to worry about slower fulfillment times whenever you’re shipping small products. Previously, sellers would have to be content with paying slightly lower FBA fees in exchange for slower fulfillment speeds. But this kind of delay could drastically affect customer expectations and negatively affect their experiences, depending on the product they’re selling.
Amazon bringing the fulfillment speeds in line with their other fulfillment options means that while some sellers will have to pay slightly more in fees, they’ll also get the assurance that their products can now enjoy faster shipping to their customers.
The other significant benefit is that with the introduction of the Low-Price FBA fee model, there’s no longer any need for sellers to conform to the original guidelines for the Small and Light program. If your products cost $10 and below, they automatically fall under Low-Price FBA regulations, and you no longer need to adjust your products to meet any criteria.
The introduction of the Low-Price FBA fees means that customers who had enjoyed the previous lower fees of the Small and Light program will now have to pay slightly more in FBA fees to continue using Amazon’s fulfillment options. Additionally, only around 20% of customers consider shipping speed as a crucial factor when deciding to complete a purchase.
For sellers who relied on the Small and Light program to cut costs, the removal of the program would likely mean that they’ll try to recoup the added costs by increasing the prices of their products. This would mean an increase in prices overall across their entire storefront, depending on how many of their products are affected. Depending on the range, this price increase may not be well-received by their customers.
Removing the Small and Light Program also meant the removal of some of the other perks that come with selling low-weight and low-cost products like free discounts for products priced at $5 or lower that are categorized under “Consumables.” Overall, while the Small and Light Program did require some legwork for your products to qualify, the payoff could help your business with costs in the long run.
Amazon’s Low-Price FBA fees are here to stay—so sellers need to start accommodating the changes they’ll have to make in their businesses to make sure that their bottom line stays profitable. While the exact details of your strategy may change depending on your goals, here are some approaches you can take for the short and long term:
While this is by far the easiest way to compensate for any additional costs that you may incur from switching to Amazon’s Low-Price FBA fees, you’ll need to handle any price increases carefully. Keep in mind that this price increase will not always be well-received by your audience, and you may have to bear the brunt of the price changes for the first few months after the switch in fees.
Some ways you can make this process easier for your business and your customers include:
The important thing to keep in mind with this step is that you need to work closely with your customers to weather the pricing changes. The worst thing that you can do as a storefront is to make your buyers feel like they must bear all the brunt of the price changes, even if the price changes may be necessary.
You should only increase prices when you are sure that there’s no other way to keep selling the specific product otherwise. Even if the price increases aren’t that significant, what’s important is to not upset the expectations of your customers. Listen to their feedback, and adjust your price increases accordingly.
If price changes aren’t possible without hurting your bottom line or alienating your audience, the next thing that you can do is to change your product sale strategy. Many products may often have cheaper or low-cost alternatives—and if you’re scared about the possible drop in quality about buying variants of your original products, you can try to find deals on your existing products elsewhere.
Some ways you can make this process work better for your business include:
Product sourcing is rarely a one-off discussion with your provider; it’s an ongoing relationship that can change over time. This includes the costs of sourcing your product from them, which you can negotiate depending on the projected sales of your product under Amazon’s Low-Price FBA fees.
The possible shortcoming of this approach is that it heavily relies on your capability to discuss things with your product source. Some providers aren’t willing to budge on costs no matter how high fees are increased, while others may adjust their prices far too high for your bottom line to shoulder. However, it’s still an approach that you should consider going for, as it’s less of a hassle for your business in the long term.
When you can’t change prices or do anything about how you source your product from providers, the last thing you can do is change your product. This may mean altering the product so it doesn’t fall under the Low-Price FBA fees, dropping the product from your storefront, or replacing it with a similar product that still has the same features and/or functionality.
Some ways to make this process more efficient for your business include:
This approach relies on your business’s capability to shoulder the costs of the change and your own study and research about the products that you’ll be replacing them with. It’s also an approach that’s easier for brands that already have a loyal customer base, as they’re more likely to be receptive to changes to your product line.
You can consider this approach as the compromise between changing prices and changing product sources, but it’s arguably the approach that requires the most work. Since you’ll need to make sweeping changes in your operations, you’ll need to put in significant work to make sure that your business transitions from the price changes smoothly.
The Low-Price FBA fees were Amazon’s way of trying to balance the pricing for their fulfillment service and simplifying costs for sellers. But is this system better than the Small and Light Program?
The answer to this question really depends on your products and if you’ve been enrolled in the Small and Light Program from the very beginning. For sellers that are just starting their Amazon journey, the Low-Price FBA fees can be something that they take into consideration before they start sourcing products and writing their listings.
Existing sellers that were under the Small and Light Program need to make more adjustments to their products and operations, but they get the benefit of drastically simplified fees and faster fulfillment times. They also have several options to offset the higher charges, like changing products or talking to their providers.
Overall, there’s not much that sellers can do about the Low-Price fees apart from either dropping their products out of the category or complying with the new rules and charges moving forward. But while the increase in FBA fees can’t be avoided, sellers can adjust their storefronts and products to help with the change.
Even after Amazon’s switch to the low-price FBA model, the concerns of Amazon FBA sellers remain the same: efficiency and profitability. Your business can overcome these two challenges, but there are tools and platforms out there that can drastically help with this process.
Some of your options include:
If you don’t want to use tools outside of the Amazon platform to optimize your operations, Amazon Seller Central has the FBA Revenue Calculator to help sellers get an idea about their potential profit margins. If you have an Amazon Seller account, you already have access to this tool with no further charges needed.
The FBA Revenue Calculator can give sellers a rough idea of how much it would cost to sell a product—which, given the higher pricing of the Low-Price FBA model, is essential to making sure that you hit your profit goals. It’s a great tool for beginner Amazon FBA sellers and can help experienced sellers make decisions quickly with actionable data.
While this tool does work well for FBA sellers, the insights that it offers are not very detailed. If you want to glean more in-depth insights and critical data that can ultimately affect how efficient or profitable your operations are, you’ll be better off with other tools.
As a comprehensive marketplace management platform, Threecolts has several features that can help Amazon FBA sellers operate their business better, choose the best-selling products, and ultimately turn a profit. These tools are all designed to be both accessible and information-driven, allowing sellers to achieve the ideal balance between data-driven information and insightful reporting.
One of the best tools available for Low-Price FBA sellers is SellerBench, which improves your inventory management and profit recovery. With the higher fees of the Low-Price FBA model, you’ll need to make sure that your inventory is stocked with ready-to-sell products without any lost profits or mismanaged stocks and recover any missing profits from potential gaps in your inventory management.
Another Threecolts tool that sellers can use is FW Profit Analytics, which can help give you a more accurate idea about your potential profit margins when choosing products as an Amazon FBA seller. It’s like Amazon’s FBA revenue calculator, but it has more insights collected from more sources, allowing you to seamlessly transition from product research to sourcing products—crucial for Low-Price FBA sellers.
For sellers focusing on product research, Jungle Scout’s Product Database can help fine-tune searches for specific products. You can search by category, product listings, or prices, with Jungle Scout also showing the possible suppliers you can contact for the products you’re looking for. You can even do some competitor research while doing this, as it also displays the percentage of how many other sellers have invested in a specific product.
Picking the right products is crucial for getting your start as an Amazon Low-Price FBA seller since you’ll need to balance the fees with the cost of purchasing your products. Doing extensive research on where you source your products can help you balance these costs, ensuring that you still get to sell competitively while keeping costs low.
Jungle Scout also has several other useful features like keyword research and product listing optimization, which help you create better listings for your Amazon products. This makes them far more likely to show up when people search for your specific type of product, increasing exposure and potential sales.
Despite the slightly higher fees of the Low-Price FBA program, Amazon compensates for this price increase by giving sellers access to reliable and fast FBA fulfillment options. With the help of marketplace management tools like Threecolts, sellers can offset the additional costs from the Low-Price FBA program and increase their profits in the long term, allowing them to sell what they want without worrying about their bottom line.
To get started with managing your marketplace business, visit Threecolts and browse the tools that you can use today.