Wholesale suppliers that sell items directly to Amazon have reportedly stopped getting purchase orders from the tech giant, and are instead being encouraged to sell directly to consumers via the third-party marketplace. Vendors heavily dependent on Amazon are concerned that these changes could have a major impact on their businesses.
Forbes detailed how some suppliers are receiving notifications about technical issues with the ordering systems, while others are being told not to expect future purchase orders. Bloomberg reports that this trend started in just the last two weeks, and it is meant to boost the profitability of the company’s core e-commerce business.
Bloomberg reports that these developments have created panic among vendors. It was a big topic of conversation at the Shoptalk Retail Conference in Las Vegas this week, and there is fear that these changes could put some wholesalers who are heavily dependent on Amazon out of business.
Why Amazon might do this: Amazon has long been rumored to be pursuing a more streamlined setup for its third-party suppliers. Amazon has two different platforms for sellers, Vendor Central and Seller Central, and merging them would speed things up on the backend and require fewer man hours. Bloomberg notes that encouraging suppliers to sell items themselves is more profitable for Amazon because it lowers the risks and costs of purchasing, storing and shipping items on behalf of sellers.
What it means for vendors: Not having the guarantee of regular purchase orders from Amazon creates a lot more risk for vendors that could be stuck with unsold inventory. However, selling on Amazon’s marketplace instead of directly to the company gives sellers more control over prices and other aspects of the transaction.
What Amazon is saying: Amazon issued the following statement in response to our inquiry: “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.”