Once again, it appears Amazon is pulling the carpet from underneath its vendors in a bold surprise move. While Amazon has not made an official statement, rumors are swirling that Amazon.com, without warning, has stopped purchasing products from many of their wholesalers, instilling fear amongst their vendors. Without any official communication at this time, Amazon vendors have stopped receiving their regularly scheduled POs for the week. As panic sweeps the community, many vendors are turning to forums, community channels, and social media sites in hopes for some form of clarity on the situation. With a clear lack of information from Amazon and reportedly thousands of vendors impacted, the time is now to consult with an Amazon-focused agency.
The abrupt shift from Amazon is a clear attempt to encourage vendors to sell directly on their marketplace, shifting to Seller Central. Amazon, looking at the bigger picture, can now offload the cost of purchasing, shipping, and even storing products. All the while, Amazon can continue to charge suppliers for these services, while also pocketing a commission on every transaction, which is a much more secure strategy. Amazon remains to be buyer-centric. The company is determined to raise profits within its core e-commerce business, even if that means disrupting relationships with its loyal suppliers. The unfortunate reality of the situation is that many suppliers need to source products from manufactures months in advance. Vendors will need to act quickly in shifting to an appropriate sales tactic if the expected orders do not arrive.
CEO Dan Brownsher, of Channel Key, a LA-based e-commerce business, selling more than $100 million of goods on Amazon annually has already spoken out. He states, “If you’re heavily reliant on Amazon, which a lot of these vendors are, you’re in a lot of trouble.” The only related statement to come from Amazon reads, “We regularly review our selling partner relationships and may make changes when we see an opportunity to provide customers with improved selection, value, and convenience.” The company continues to decline specific inquiries on the situation. A lot of the panic was noted at the recent ShopTalk conference that drew in a crowd of over 8,000 retailers in LA. Many vendors have stated that Amazon simply stopped submitting routine orders on a large variety of products, usually without any explanation.
With Amazon’s rapidly evolving platform, it is crucial to choose your Amazon partners wisely. Walmart, Target, and Best Buy have all adapted Amazon’s online business model. Amazon will generate e-commerce revenue of $317 billion this year alone. This figure represents 52.4% of all online sales in the U.S, according to EMarketer Inc. With Amazon, once again shifting the marketplace, more vendors will now be forced to sell on the marketplace directly or run into the risk of getting stuck with unsold inventory said the CEO of Marketplace Valet, Will Land.
If you haven’t already done so, put together a contingency plan. Continue to stay cool and go about your business as usual on Vendor Central. Continue promoting, advertising, etc… The goal is and always has been to keep sales momentum steady and ensure a painless transition when a shift occurs. If it is all a little too overwhelming, come talk to us. With our 32 years of experience in the industry, we have the foundation to guide your brand through these troubled waters.