Amazon Inc. abruptly stopped buying products over the last two weeks from many of its wholesale vendors, encouraging them to instead sell their products directly to consumers on Amazon’s marketplace.
It’s the company’s latest move to boost profits at its core e-commerce business, even if that means disrupting relationships with longtime suppliers and potentially limiting customers’ choices. Thousands of vendors are affected, according to estimates from consultants who help clients sell on Amazon.
Pushing suppliers onto the marketplace — rather than selling their products itself — lets Amazon offload the risk and costs of buying, storing and shipping the merchandise. Instead, the company can charge suppliers for these services and take a commission on each transaction, which is much less risky. The strategy is part of a larger effort to reduce overhead by getting more suppliers to use an automated self-service system that requires no input from Amazon managers.
“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,” Amazon said in an emailed statement, declining to answer specific questions about the move.
The abrupt cancellation of orders was a big topic of conversation this week at the ShopTalk retail conference, which drew more than 8,000 retailers, brands and consultants to Las Vegas. Some attendees said Amazon stopped submitting routine orders last week for a variety of products, often without explanation. The drought continued this week, affecting more vendors and leaving them frustrated about the lack of communication from Amazon.
One vendor who has been selling products to Amazon for five years said he got a canned response when he inquired why his routine weekly purchase order never came through. The response gave him no clarity about his standing as a vendor, he said. Read more