Mar 06 2019

Plan B (Brick and Mortar) should always come before plan A.

Seeking more control over brands, Amazon pulls the plug on thousands of vendors

By Hilary Milnes / digiday

On Monday, tens of thousands of Amazon vendors didn’t receive their weekly purchase order replenishments from the retailer, according to several Amazon-specialized agency executives working with brand clients with wholesale businesses on Amazon. The move appears to be permanent, according to some vendors, and signals one more way Amazon is seeking to control how companies sell on its platform.

According to agency execs, there are several characteristics tying together vendors whose purchase orders got pulled: They’re businesses doing $10 million or less in sales volume on Amazon per year, and they don’t have assigned vendor managers at Amazon. Many of them also specialize in “oversized” goods, selling bigger, bulkier products that have a higher cost to ship.

Initially, vendors on Monday received an automated response from Amazon saying it was a technical glitch, and that orders would resume the following week. And for some that opened a customer service ticket, that was the case — they were told the order notice was, in fact, in error. But on Tuesday, thousands of other vendors received responses from Amazon that said the move was actually permanent, and that Amazon has decided the business would perform better as a third-party seller on Amazon’s marketplace.

“It’s fairly obvious at this point that Amazon is starting to dictate where certain brands and how certain brands can sell on their platform,”

“It’s fairly obvious at this point that Amazon is starting to dictate where certain brands and how certain brands can sell on their platform,” said John Ghiorso, the CEO of Orca Pacific, a full service Amazon agency. “The days of ‘If you want to be first party, third party or both, that’s up to you as a brand’ are over. It’s mostly financial data behind the decision making: Total revenue, catalog size, profitability.”

One vendor received the following message in response from Amazon: “A huge set of vendor codes belonging with Amazon are being deactivated as the products listed under such Vendor Central accounts have more potential sales if associated to the Seller platform of sale on the Amazon website,” according to an agency who compiled responses.

continue reading at digiday

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