When compared to its standard FBA fees, Amazon’s Small and Light program offers much lower fees for small and light products that get priced under $7. Small and Light enables you to sell a broader range of products and implement new strategies to grow your business with Amazon.
Amazon’s standard FBA fees often don’t make sense when you’re selling products below a specific price point. For example, if you’re selling a product that retails for $10 and costs $2.80 to ship, plus the 8% Amazon referral fee, marketing fees, and cost to make your product, you’re likely looking at a break-even margin or losing money.
In the past, it made sense to sell lower-priced products directly to Amazon through its Vendor Central Program. With this program, Amazon buys your products at a wholesale price and sells them online. Brands using Seller Central didn’t benefit from selling low-priced items through Amazon’s third-party marketplace, until now.
What’s FBA Small and Light Program?
The FBA Small and Light program is pretty straightforward. It offers reduced fulfillment costs on qualified items that fit the following criteria.
- 10 oz or less
- 16 x 9 x 4 inches or less
- $7 or less
- Fast-moving Amazon Standard Identification Number’s (ASINs)
This new program has significantly lower FBA fees than the standard FBA rates, providing you with better margins and savings for your customers, too. Its alternate Prime delivery timeline is what makes this possible. With Amazon’s Small and Light program, Prime customers still get free shipping, but orders arrive in 3 to 5 business days versus two.
Cost-Savings with FBA Small and Light
Let’s look at an analysis of the potential cost-savings and improved margins you might see with FBA Small and Light versus standard FBA fees.
FBA Small and Light Fees
It’s important to note the following:
- Mixed orders containing items from both order types will be charged fees based on items priced greater than $5.00 and less than or equal to $7.00. Items with a sale price greater than $7.00 will be charged standard FBA fees.
- The Small and Light standard packaging rate is for every package and you should round up to the nearest whole oz when calculating “weight handling.”
Small and Light Fees Compared to Standard FBA Fees For a Specific Product
In addition to the lower fees that come with the FBA Small and Light program, customers who choose to purchase more than one unit of your product in a single order will save. We’ve crunched a few numbers for you below, to demonstrate this. Margin Analysis A: Single Unit Order Fees Margin Analysis B: 5 Unit Order Fees
How FBA Small And Light Improves Your Margins
The main benefit of Small and Light is that as you sell more units in individual orders, the healthier your profit margins will become. If you’re questioning whether you should use Small and Light, try crunching your numbers using the above table before enrolling in Amazon’s Small and Light program.
The Pros and Cons of FBA Small and Light Program
Lower fees, better margins, and savings for your customers are all great perks to using Amazon’s Small and Light program. However, it’s still not the perfect solution for all brands.
Amazon’s Small and Light Pros
- Reduced fulfillment fees mean you’ll have better product margins
- Your customers will also save money
- For brands selling tens of thousands of units a month, saving $1 – $2 per month can be a huge saver, especially if you’re already on a tight margin
- You can test new markets and expand the reach of your product lines with international fulfillment
Amazon’s Small and Light Cons
- When using Small and Light, products don’t get the Prime badge, but they do still show up if customers sort or filter by Prime-eligible products
- Orders ship for free between 3 – 5 business days for Prime customers, instead of the preferred two days
- We have seen cases where brands adopted Small and Light and saw a decrease in sessions because the Prime badge no longer appears
Best Practices for Amazon’s Small and Light Program
It’s crucial to test sales and marketing strategies while you’re learning what works best for your e-commerce business. It’s also important to follow Amazon’s guidelines when enrolling in the Small and Light program. Here are a few tips from us:
- Thoroughly review Amazon’s Small and Light enrollment guide
- Follow the FBA Small and Light packaging requirements
- Only enroll ASINs with sales of 25 units or more in the last four weeks
- Price your items competitively and monitor what your competitors are doing
- Be sure to crunch your numbers, in some cases using standard FBA may be more cost-effective, depending on the price and weight of your product as well as the order size
- A/B test various products to see if switching to Small and Light hurts your overall sessions and conversions for a specific product
- If you typically sell your products in a pack, adopt having a single pack option so you can test selling a single unit in Small and Light
Amazon’s Small and Light program is an accommodating solution for brands that sell small, lightweight, and inexpensive products. Whether small and light products are the livelihood of your business, or you’re looking to extend and diversify your product offerings, the FBA Small and Light program can be a cost-effective fulfillment option for many sellers.