Each week I share the top news that impacts brands and merchants who sell on Amazon. My digest for this week includes a new subscription model for Prime Pantry, new estimates of just how much third party marketplace sellers contribute to Amazon’s product assortment, a new process for Amazon to counteract package theft and fraud losses, and the door finally closing for one of three Amazon selling platforms.
Marketplace Sellers Account For 90% Of Products On Amazon
Analysts at Mizuho Securities recently calculated that as much as 88% of the product SKUs (stock keeping unit, a measure of unique product types) on Amazon.com are sold by third party marketplace sellers. Marketplace sellers are independent businesses and brands, some very large, that sell to customers on the Amazon platform, paying a percentage-based fee on each sale. If 88% of SKUs are stocked by third party sellers, it means that Amazon only holds inventory for around 12% of the products for sale on the website. This allows Amazon to free up capital it would otherwise have tied up in inventory, and spend it in other areas like expanding their fulfillment network.
But Amazon has recently come under scrutiny from consumers and businesses alike who claim that the retailer is allowing counterfeit products to be sold on the site. And thus a key drawback of the marketplace model comes to the fore: lack of control. Lack of control over inventory levels, pricing, quality, and potentially even if a given item is legitimate or not.
A New Subscription Model For Prime Pantry
Amazon announced plans on Friday to move its Prime Pantry service away from a flat fee of $5.99 per box to a $5/month subscription model. It makes good financial sense for Amazon, who benefits from reliable subscription fee income and the psychological effect on consumers of wanting to make the most of their monthly subscription.
Brands who sell on Amazon could benefit from incremental revenue increases consumers take out these subscriptions and spend more on the Amazon platform over time. But brands could be doing even more to benefit from a potential lift in sales. Read my full article on Amazon's shift to subscription models and how this impacts retailers and brands.
Amazon Retires Vendor Express Platform
Today, Amazon announced the retirement of its Vendor Express platform via email to current participants, and invited existing Vendors to sign up for a Seller Central (‘Marketplace’) account.
Vendor Express was a selling platform on that was a blend between being a fully fledged Vendor who sells on a wholesale basis to Amazon, and the relatively open marketplace where sellers interact more directly with consumers. It was a halfway house with all the cons of both models - unlike with the full Vendor Central platform where brands are assigned a real human being to negotiate wholesale terms, pricing, and to workshop other issues - brands on Vendor Express were relegated to algorithmic pricing of their products and no human support. And unlike on Seller Central, brands on Vendor Express couldn’t access many of the new promotional tools and programs like Brand Registry 2.0.
Amazon will stop issuing purchase orders through Vendor Express on May 21, 2018.
Amazon Logistics Takes Photos As Proof Of Delivery
Ending this week’s new roundup on a positive note for brands, Amazon Logistics is now taking photos of unattended deliveries. According to an update on Amazon.com:
Amazon Logistics (AMZL) may take a photo on delivery when a package is left unattended. Capturing delivery photos is intended to help customers see that their package was safely delivered and where.
Package theft carries an enormous cost for brands and retailers alike, with 31% of households claiming they have lost packages to theft. But what is not reported on as frequently is fraud from unscrupulous buyers who claim that their packages went missing. This is a big win for brands selling on Amazon who are ultimately carrying the cost for theft and fraud alike. Now, to get the other carriers to follow suit.
