The end of Amazon FBA Small and Light – how does this impact online arbitrage?

Small and Light was designed to make it viable for sellers to sell low-value, light products that otherwise would have been unprofitable to sell via FBA. So how will the change in this service affect your online arbitrage business? In this article we’ll tell you everything you need to know about it, including the most important part – what it means for your profit margin.

What was the Amazon small and light program?

Small and Light was an FBA programme that was designed to make it more cost effective for sellers of lower-value products to compete on Amazon. Whenever an item is sold and the merchant is using FBA, Amazon charges a fee to the seller to cover the cost of packing and shipping the item to the customer. However, typically, lightweight or smaller items would be charged at the same rate as heavier or bulkier items.

The Small and Light program was introduced by Amazon so that merchants selling smaller lightweight items priced less than $10 would receive reduced fulfilment fees. Although the service was cheaper, it was slower – Amazon was able to fulfil for a lower price because they used slower less-expensive shipment methods. The small, light, and inexpensive products were still Prime eligible, but took longer to ship.

As an Amazon seller, you weren’t automatically enrolled into Small and Light, and any items you wanted to sell using this service had to be registered in your Amazon Seller Central account and approved by Amazon first. There were also several criteria that products needed to meet in order to qualify. These were:

• The product could weigh no more than 3lbs
  It had to cost less than $12
• The product had to be brand new
• It had to have dimensions of 18 x 14 x 8 inches or less
• The ASIN had to have sold at least 25 units in the past month

The Small and Light program had two different levels – “small standard” and “large standard.” You would then be given a pricing spectrum based on the weight of the item. Some products, such as clothing or those containing lithium batteries would also be charged an additional fee, even if they fell into the above criteria.

Of course, Small and Light doesn’t exist any more, and as of the end of August 2023, there is a new programme in place for items that previously would have met the criteria for Small and Light.

What replaces the Amazon Small and Light Program?

Amazon is replacing Small and Light with a similar programme called “Low-Priced FBA.” This programme is a lot less strict than Small and Light, and likely will mean that items you previously wouldn’t have been able to get approved on Small and Light will now be approved for Low-Priced FBA, increasing your profit margin when you arbitrage smaller and lightweight items.

The criteria for qualifying items has been simplified quite significantly – the only criteria being that the product has to cost less than $10 rather than $12. All of the other criteria have been removed. The other benefit is that you don’t need to register your products for Low-Price FBA within Seller Central – if your products qualify you’ll automatically benefit from the discounted fulfilment rates.

The new Low Price FBA rates promise to offer fulfilment rates which on average would be $0.77 per item lower than the current standard FBA fees for these products. Perhaps the biggest change, however, is that even smaller items will be shipped at the same speed as regular items through Prime – the previous practice of having Small and Light items shipped via a slower shipping method has been abandoned.

These benefits sound great – a lot of the restrictions have been removed so more sellers can take advantage of this programme, and shipping speed has increased so customers are much happier. Along with the reduced fulfilment fees, this seems like a great deal – but scratch the surface a little and in some cases, you could find yourself paying more per item than you were before.

Obviously, as the criteria has been relaxed, it’s possible that you have an item selling for less than $10 that previously didn’t meet the criteria for Small and Light but does meet the criteria for Low-Price FBA – in which case you’d be saving 77 cents per unit against the regular FBA rates. However, if you did previously meet the criteria for Small and Light, you’ll now be paying 30 cents more using Low Priced FBA than you did previously. So effectively, Amazon have relaxed the criteria but have increased the per-unit fee.

This might not seem a lot but it will add up, especially if your profit margin on the items you arbitrage is already quite thin.

How can SourceMogul help?

If you have found yourself hit by the increased charges which come from the retirement of the Amazon Small and Light program, the key to your success is going to be in maximising the profits you can make on the products you’re selling to absorb the higher fulfilment costs.

Finding profitable products to resell on Amazon can be a chore – you need to spend time trawling online retailers and manually comparing the prices to similar products that are already for sale on Amazon to see if there’s any opportunity for a profit. This is where SourceMogul can help. It lets you quickly and easily find profitable products by scanning hundreds of major retailers including Walmart, Target and Kohls, that you can then resell for a higher price. Not only that, it also lets you calculate shipping costs and taxes, so you can ensure you always know how much each product you sell is going to make you.

What are the benefits of the new Low-Price FBA rates?

Despite the fact that Low-Price FBA can be more expensive, there are a lot of benefits that mainly affect those who previously wouldn’t have qualified for Small and Light.

As we’ve mentioned already the first benefit is that you don’t need to enrol for it. If your product qualifies, you’ll automatically get the lower rates. This is going to save you a bunch of time in the long run that you can spend finding new products to sell using SourceMogul.

Bar far the biggest benefit over the original Small and Light program to your online arbitrage business comes from the fact that you’ll now get your orders dispatched as quickly as all other FBA orders. So why does this matter? Let’s run over some of the main reasons this can help your online arbitrage business grow.

Improved customer satisfaction

Customers love getting their orders delivered as quickly as possible. Now your orders are going to be delivered as quickly as other FBA products on Amazon. There is definitely a culture perpetuated by Amazon that “Prime Shipping” effectively means “as fast as possible” – and this wasn’t the case with Small and Light.

Often this didn’t make sense to customers as they wouldn’t have been aware of Small and Light and would have been expecting their deliveries as quickly as possible. Now, with Low-Price FBA, this isn’t an issue and customers will get their orders just as quickly as other Prime-eligible items.

Better customer reviews

Many customers factor the speed of their delivery when writing a review for you and your product. With faster delivery available, you’re giving a better customer experience which will result in more positive reviews.

Improved customer retention

By offering a good overall shipping experience, customers are more likely to come back and use you again if they need to order the same or similar product.

Stand out from the competition

Now you’re getting quick delivery, you’re able to stand out from other smaller competitors that aren’t using FBA or aren’t able to get the FBM Prime badge.

In conclusion

Overall, it’s not surprising that Amazon moved away from the Small and Light program. They’re on a mission to make themselves the ‘go-to’ marketplace for every type of product and they know that shoppers want their products delivered as quickly as possible.

By switching to the new Low-Price FBA rates model, they can not only simplify their own internal logistics, but they can also make sure that customers are getting their products as quickly as possible, meaning they’re more likely to shop on Amazon in the future.

Whether you like it or not, the Amazon Small and Light program is gone for good. The best thing you can do now is ensure you can find profitable products you can to resell on Amazon to make sure you keep your profit margins tight.

Using a tool like SourceMogul to help you do this, is going to be the fastest and most convenient way to do this.

FAQ’s about Amazon Small and Light

When Is Amazon Small and Light ending?

After 17th July 2023, sellers were no longer allowed to register new products for the scheme. On the 29th August 2023, all products that were enrolled in the scheme had to be removed.

Is Amazon Small and Light ending outside the US?

Yes. Although the program ended first in the US, it’s also soon to be followed by all European countries including the UK. European sellers will be unable to enrol new products into the Small and Light program after the 14th September 2023, with the program ending completely on the 29th September 2023. All qualifying products will automatically roll onto the new Low-Price FBA rates pricing structure.