Amazon reverses controversial vendor policy

Posted: 14 March 2019 5:53 pm News

Amazon has backed down on its vendor policy but the fallout may see selling partners rethinking their relationship with the company.

Amazon has walked back its recent decision to purge thousands of vendors and cancel wholesale orders, but despite the backdown will this decision cause suppliers to re-evaluate their reliance on the ecommerce giant?

While Amazon downplayed the purge as part of routine maintenance, stating, "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," it's believed they may be trying to push suppliers towards the more profitable marketplace model.

For established vendors who rely on wholesale orders from Amazon, the shift may present a number of problems and force them to adjust or re-evaluate how they do business.

Currently, Amazon's store stocks both products bought direct from wholesalers as well as from vendors who sell their goods directly on the Amazon Marketplace. Amazon takes a commission on each marketplace sale, and vendors are only paid once a sale has been made. Amazon also takes on less of the risk compared to buying the products wholesale, but has faced complaints that the marketplace is plagued by counterfeit products due to the ease with which a vendor can make an account and start selling.

In an attempt to address the counterfeiting issue, Amazon have since encouraged vendors to enrol in the Amazon Brand Registry, which lets brand owners and licensees prove they are authorised sellers of a certain product and protects them from unauthorised vendors. Going forward, only vendors enrolled in the registry will be able to get purchase orders automatically fulfilled.

Other companies have looked to emulate Amazon's success, with American retailers Walmart, Target and Best Buy all following Amazon's marketplace model in an attempt to boost sales. The Amazon marketplace currently accounts for more than half of the business's revenue, and the marketplace model has proven extremely profitable for the tech giant.

With Kogan.com today launching Kogan Marketplace, a platform that lets businesses sell directly to Kogan.com customers and seen as a local rival to the Amazon Marketplace, local vendors may now be faced with a similar dilemma in the future.

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