NEWS

Is Amazon on the brink of a small-supplier purge?

Published on: 5th June 2019

Thousands of small suppliers could see their bulk orders vastly reduced in the coming months, according to insiders.

Following a crackdown on counterfeit products two months ago, which involved the halting of thousands of orders and caused widespread panic among suppliers, Amazon.com is reportedly set to embark on a purge of small suppliers that could dramatically alter the relationship between the world’s largest online retailer and many of its long-time vendors.

In the next few months, bulk orders are expected to shrink for thousands of mostly smaller suppliers, according to people familiar with the plan. Amazon’s aim is allegedly to cut costs and focus wholesale purchasing on major brands, according to reports. The company aims to ensure adequate supplies of high profile, must-have merchandise, to help it compete with the likes of Walmart, Target and Best Buy.

As a result, the so-called ‘mom-and-pops’ that rely on Amazon for consistent revenue streams will now need to explore new ways to conduct business on the platform. Rather than selling in bulk directly to Amazon, they’ll need to win sales directly with individual consumers. The new approach would be one of the biggest shifts in Amazon’s e-commerce strategy since it opened the site to independent sellers almost 20 years ago. Although the plan could still be amended, or even cancelled, it’s currently reported to be moving forward.

“This is the kind of change that will scare the living daylights out of brands selling on Amazon,” said James Thomson, who organizes the Prosper Show, an annual e-commerce conference focused on Amazon. “Amazon usually doesn’t give a lot of lead time, and brands will be left scrambling. If they make this change soon, brands will have until the end of the summer to get their acts together or their holiday quarter will be at risk.”

However, Amazon has denied the reports. In an emailed statement, a spokeswoman said: “We review our selling partner relationships on an individual basis as part of our normal course of business, and any speculation of a large scale reduction of vendors is incorrect.”

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