Going from 5 sales a day to 100 on Amazon happened faster than we could have imagined. In 2017 the small and light program finally had all the ducks in a row. Prime badge, Buy Box share, $15 max price and super low FBA fees. How low were the FBA fees?
FBA fee's at $1.50.
Plus, multi unit orders didn't have to pay additional pick and pack fees and so multi unit orders shipped for $1 less for each additional unit.
We sold 10k units a day in this program. It was amazing how much reducing products by $1 helped us against the competition. I wanted to find more products. I built a program to find the best small and light product opportunities across Amazon. This program that later became what you might know as SmartScout.
The good parts of Small and Light didn't last forever. First they got rid of the multi unit benefit. Then they raised the FBA fee and finally, the killer was reducing the maximum sale price to $7. With these changes we fully exited Small and Light.
But since standard FBA fee's are growing a lot and with Small and Light's announcing a $10 maximum. For many, it could be used as an add-back if you're able to show a higher margin.
This week Amazon announced Buy with Prime. I believe this will be Amazon's first effective counter punch to a growing competition from Shopify. Everyone trusts Prime. Inclusion of this brand will be an easy decision to many DTC websites. The checkout process kills conversion rates. Now, having customer credit cards and Prime FBA bundled together is a win win and I predict this to be a hit for both brands and Amazon.
Shopify has already had to realize that fulfilment is more expensive than they originally. Walmart and Shopify have yet to show the guts needed to counter the FBA program. You must prepare to invest billions. Not one, but tens of billions to match Amazon. And even if they stomach that, they are still 10 years late to the party.
Why will Amazon FBA continue winning? Amazon has robots picking, FCs near every metro area, competitive wages and the highest recruitment of employees in history. In any competition for king of e-commerce I will choose Amazon every time because of FBA. Amazon FBA is the reason I quit my day job to become an entrepreneur. It unlocks time for millions of sellers and I predict it will unlock time for a few million more.
