Amazon has invited some of its third-party Marketplace sellers to join a new "Sold by Amazon" program, where the sellers' prices are set by Amazon's price automation process, the e-commerce giant confirmed to Retail Dive in an email.
The program, which an Amazon spokesperson said is invite-only and free, was first reported by CNBC, citing a "Sold by Amazon" invitation that had been sent to a seller.
Sellers can opt in or out at any time, and choose which products, if any, they would like to enroll, the company told Retail Dive.
As Amazon's retail operations shift to its Marketplace — the e-commerce giant now distributes 58% of its products sold through its third-party sellers — it must find ways to maintain control of its infamous trifecta of price, selection and convenience. "Sold by Amazon" accomplishes that, at least on price, by enticing sellers to use Amazon's own automating system.
The system is poised to further its selection goals as well, because Amazon is likely to focus its invitations to sellers with high volumes or who sell items in certain categories, according to Danny Silverman, chief marketing officer at Edge by Ascential.
An Amazon spokesperson positioned the service as a seller perk. "Sold by Amazon is a free, opt-in service that helps selling partners save time and increase sales by automating prices so they can consistently and effortlessly offer customers great prices," the spokesperson said. "At enrollment, selling partners are shown the minimum amount they will receive for a product and can choose whether they would like to participate. Participating sellers have peace of mind that they will never receive less than the agreed upon amount for that product."
That is, according to a description sent to Retail Dive, Amazon provides a "minimum payout amount" for each listing, which would be the seller's lowest possible proceeds (less applicable selling fees) regardless of how Amazon's system prices an item. If the minimum is set to $20, the seller's take will never be less than that (minus fees). Should Amazon set the price above that minimum (say $21), the seller gains as it would usually. But if Amazon sets the price at $19 (below the $20 minimum), the seller gets that $20 even though the customer only pays Amazon $19.
Plenty of sellers already use outside price automation platforms that set minimum price thresholds, according to Silverman. "This service displaces those solutions in favor of allowing Amazon to do the same," Silverman told Retail Dive in an email.
"Amazon's Flywheel rests on delivering an excellence shopper experience through the best selection at the best prices," he said. "Given recent moves to push more sellers away from direct buy and towards the marketplace, they need to find ways to keep driving the flywheel. This gives them that capability."