In one of the biggest shifts to its e-commerce strategy in its history, Amazon is pivoting away from making bulk orders from smaller suppliers to cut costs by moving to wholesale purchases from major brands.
“This is the kind of change that will scare the living daylights out of brands selling on Amazon,” James Thomson, who runs an Amazon e-commerce conference called Prosper Show, told Bloomberg.
According to three people familiar with the plan that spoke to the news service, Amazon will, in the coming months, cut orders from smaller suppliers in order to cut costs by focussing on massive brands – on the scale of Procter and Gamble, for instance. Its aim is to bulk up supplies of important products that will help it to compete with the big box retailers it is trying to unseat, most notably of all: Walmart.
Amazon’s stock is either sold by Amazon itself, having bought products from suppliers like a typical retailer, or through its marketplace system, in which sellers post their own listings.
According to Bloomberg, it’s all to do with scale. Such a move would allow the company to provide a greater product selection but without having to employ more people to look after it. Smaller suppliers will, if this initiative comes to light, have to do the selling themselves.
For many of these smaller suppliers (who supply less than $10 million worth of product), this will mean that they will no longer do business with Amazon by selling bulk orders to the company but will have to bring in shoppers one at a time. Though the plan is not set in stone, the sources say, it is currently moving forward. Amazon disputes that any large-scale reduction of vendors is under way.
What it does represent, however, is a further move toward being a platform connecting sellers with buyers. According to Statista, marketplace sales have consistently accounted for just over half of Amazon unit sales since Q1 2017.
“This is the kind of change that will scare the living daylights out of brands selling on Amazon,” James Thomson, who runs an Amazon e-commerce conference called Prosper Show, told Bloomberg.
According to three people familiar with the plan that spoke to the news service, Amazon will, in the coming months, cut orders from smaller suppliers in order to cut costs by focussing on massive brands – on the scale of Procter and Gamble, for instance. Its aim is to bulk up supplies of important products that will help it to compete with the big box retailers it is trying to unseat, most notably of all: Walmart.
Amazon’s stock is either sold by Amazon itself, having bought products from suppliers like a typical retailer, or through its marketplace system, in which sellers post their own listings.
According to Bloomberg, it’s all to do with scale. Such a move would allow the company to provide a greater product selection but without having to employ more people to look after it. Smaller suppliers will, if this initiative comes to light, have to do the selling themselves.
For many of these smaller suppliers (who supply less than $10 million worth of product), this will mean that they will no longer do business with Amazon by selling bulk orders to the company but will have to bring in shoppers one at a time. Though the plan is not set in stone, the sources say, it is currently moving forward. Amazon disputes that any large-scale reduction of vendors is under way.
What it does represent, however, is a further move toward being a platform connecting sellers with buyers. According to Statista, marketplace sales have consistently accounted for just over half of Amazon unit sales since Q1 2017.
Sourced from Bloomberg, Statista
