Amazon Abruptly Stops Buying Wholesaler Products
Amazon suddenly quit purchasing wholesalers’ products, which sent many of them into a frenzy.
What the company is looking to do is have vendors sell their products directly to consumers via its marketplace. Amazon can increase its profits by relieving itself of the cost to purchase, store and ship products. Amazon does charge suppliers for the services, taking a commission on every transaction. This is less of a risk than outright purchasing the goods.
The company has been trying to increase its profits at the primary e-commerce business even if it means upsetting its relationship with longtime suppliers. Since suppliers often get their products from manufacturers weeks to months in advance, they need to change sales tactics soon if the anticipated Amazon orders fail to come in.
For those who use Amazon heavily – many vendors are – they may be in for some trouble. If Amazon goes through with this all, it can put a lot of people out of business. Amazon’s push of putting suppliers onto the marketplace is one part of the company’s effort to decrease its overhead by encouraging sellers to use the automated self-service system – no managerial input.
Amazon said it’s constantly looking at the selling partner relationships, making chances where customers are able to get a better experience – better convenience, more value and better selection.
With the sudden order cancellations, panic ensued and over 8,000 consultants, brands and retailers came to the ShopTalk retail conference in Las Vegas. According to some, Amazon quit turning in routine orders for various products with no reason given as to why. The lack of orders continued, with more vendors affected by the move. The real problem is that lack of transparency on Amazon’s part.
A five-year Amazon vendor said he received a canned response when he asked why the routine weekly purchase order was never fulfilled. He said the response provided no clarity about his vendor status.
Amazon has been working on its marketplace with over half the products sold in 2018 coming from marketplace merchants, which may be worth $250 billion.
More Amazon vendors will need to sell on their marketplace and find themselves with a lot of unsold inventory. He said the big checks are lucrative, which is making it hard for vendors to change.
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