Understanding Amazon’s Small and Light and New Selection Programmes
One common misconception is that if you’re selling low-cost items on Amazon, their fulfillment fee makes FBA unviable and you have no choice but to instead use FBM – Fulfilled by Merchant.
And this is often true and why I usually suggest looking for products priced at £9.99 and above, as the starting fulfillment fee of £1.38 really eats into your margins at the lower price points.
I personally hate FBM – to me it’s a big reminder of the eBay days which I just can’t go back to. When you’re used to Amazon fulfilling orders night and day without you having to lift a finger, it’s too hard to go back to packing and posting yourself. And yes of course you can hire staff to do this, which is what I did for my eBay businesses once they reached a profitable enough point, but this comes with countless headaches in itself.
That’s not even talking about all the other benefits FBA gives you, the main one being increased trust with customers, which means more sales and profit for us!
So does that mean you should completely ignore any product priced below £10? Well not exactly, as there is one big exception to this rule and that’s if your product qualifies for Amazon’s FBA Small and Light.
What’s Amazon FBA Small and Light?
It’s a programme offered by Amazon which gives sellers reduced fulfilment costs for eligible items.
There are 4 simple requirements:
- Price: The product must be £9 or less.
- Size: The product must not exceed 30 x 22.4 x 2.4cm .
- Weight: The product must not exceed 225g.
- Sales: The product must have a minimum of 10+ sales per month.
|£9 or less||< 30 x 22.4 x 2.4cm||< 225g||minimum of 10+ sales/month|
The 10+ sales a month only applies to existing listings so we can safely ignore that for our private label products as of course we’ll be creating the brand and listing so there’s nobody else to compete with.
And for the size requirement the product can’t exceed any of those dimensions on any one side, so for example 25 x 25 x 2cm wouldn’t qualify.
What’s the savings for products that qualify for Small and Light?
Well there are two different fulfilment fee options for FBA Small and Light, depending on the overall size and weight of the product.
As already covered the max size and weight is 30 x 22.4 x 2.4cm and 225g and if you meet these requirements the fulfilment fee is £0.82.
But further than that there’s also a lower fee for even smaller items. If you have a product that is 92g or less with max dimensions of 23 x 15 x 0.4cm then you’ll pay just £0.61 in fulfilment fees.
As a comparison, without Small and Light the small letter would have a fulfilment fee of £1.38. And the large letter would cost £1.66. That’s a saving of 56% and 51%, which is not bad.
With a £9 item, £1.66 in fulfilment fees is a large 18% whereas with Small and Light it comes down to 9%.
But don’t forget that this 50% reduction in fees is only for the fulfilment and you’ll still pay the same referral fee, which in most cases is 15%.
Let’s save money instead of complaining about Amazon FBA Fees
Off topic but it always amazes me the amount of people that complain about Amazon’s fees! 15% for the amount of customers and sales that they bring to you is insanely good value in my eyes and I’m sure anyone who’s run an ecommerce store and knows how much marketing and PPC advertising costs will agree with me!
Yet still you see constant threads about how Amazon are robbing sellers with “their insane fees”, it’s crazy!
But back to the topic at hand and while I still do suggest looking at slightly higher priced items, if you do qualify then FBA Small and Light offers a very nice discount which can mean the difference between going back to the days of fulfilling orders yourself and letting Amazon take care of all the hard work for you.
Also if you use Small and Light, check out Shopkeeper.com, a really useful FBA profitability tracking tool for sellers of all sizes, which will adjust your FBA fee estimates for SnL items as soon as your orders come in – even though the order is pending Shopkeeper will already be able to give you correct fee estimates which is a handy, unique feature.
What’s FBA New Selection?
And while we’re on the topic of saving fees, Amazon also recently announced that they’ve extended their New Selection programme for 2021. This Amazon FBA program gives you free monthly storage, free removals, and free return processing on eligible new FBA products. This offer applies to Amazon UK, Germany, France, Italy, and Spain.
You can enrol in the FBA New Selection programme here.
What are the eligibility requirements?
If you’re already selling on Amazon then the requirements are fairly simple – you just need to be a Professional seller and have an Inventory Performance Index (IPI) score of 400 or more, and it needs to be a new to FBA ASIN.
If you’re completely new to selling on Amazon then you’re automatically eligible, and in fact you actually get even more benefits, such as £80 in shipping credit when using Amazon partnered carriers to send stock to Amazon’s warehouses, and £160 in sponsored ads credits to advertise your listings!
There are a few more terms and conditions, which you can find here, but they’re all pretty straightforward and self-explanatory.
So this really is a great way to get started and launch on Amazon while saving on a lot of the usual costs.
We’re nearing the end of April now which means there are about 6 months until Q4 and the packed Christmas season, so it’s the perfect time to launch your own Amazon FBA business.
If you want an in-depth, 10 week course in which I cover everything you need to know to research, launch, and grow your own Amazon business, then take a look at Amazon Sharks.
In it I take you behind the scenes to look at my own Amazon business, showing you exactly what I did to reach £57,000 of profit in one month, and all the mistakes to avoid along the way!
And of course I also have plenty more guides and tips planned for the blog over the upcoming months, so stay tuned for that!
Otherwise, until next time.
All the best,