For the longest time, Amazon has received criticism over its pricing policy that does not allow sellers to have control over the pricing over their products. To get into a little more detail, the policy was such that sellers were forced to raise their prices on other selling platforms in order to maintain the integrity and potential margin.
This was unfair to customers, of course, who could be getting the products for a lower retail price, but there was no way around it. In lieu of the situation and growing criticism, Amazon has tweaked its pricing policy and introduced a new initiative called ‘Sold By Amazon’ to resolve this very issue. ‘Sold by Amazon’ basically gives Amazon control over the pricing over the products that they sell and ship, allowing them to cut prices and offer discounts by providing a settlement or payout to the sellers.
How Does It Work?
In order to be a part of the ‘Sold by Amazon’ initiative, sellers have to register with Amazon. They can also choose which specific products they want to include in the project, so if they want to run a test drive of sorts, then this is a good option as well. Once a product has been registered with Amazon, and it is up for sale, Amazon will then have to wait until a particular unit is bought.
Once it is bought from the site, Amazon will then approach the related third-party sellers and buy the product from them in order to ship it forward. This way, the customer gets the base retail pricing while the margin is balanced in the form of a payout to the seller to maintain their profit margin.
The Pros of the Project
‘Sold by Amazon’ has a bunch of advantages for customers and sellers, lower pricing for customers and maintaining their position in the market for sellers. This does wonders for customer/seller trust as well, with Amazon playing the role of a helping middle man between the two parties.
There may be some instances where it may cost Amazon a bit more to keep up the initiative when it comes to paying the balance to sellers. However, this will sort itself out soon enough when more sellers choose to sign up with SBA.
Projections for SBA
Future projections seem very encouraging for SBA, seeing a significant increase in revenue as well as a boost in customer references and reviews. Although it may have taken a little time to catch on, sellers are starting to warming up to the idea, making it a success with all parties involved in the selling and distribution industry.
With this new initiative in play critics, customers, and sellers alike are at ease because it protects all parties in the event of a sale. Customers get standardized retail rates while sellers are compensated with a margin of their own.
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