
Amazon Is Poised to Unleash a Purge of Small Wholesale Suppliers - vl
https://www.bloomberg.com/news/articles/2019-05-28/amazon-is-poised-to-unleash-long-feared-purge-of-small-suppliers
======
mdorazio
To bypass the pay/nag wall:
[https://outline.com/9mHK5d](https://outline.com/9mHK5d)

Important to note that this "purge" is only for wholesale suppliers, not for
marketplace sellers like the title implies. Amazon is basically only going to
purchase products for resale from large suppliers, and will shove the rest
into the normal marketplace operations where they have to compete with
everyone else on actually selling and shipping their products direct to
consumers. Also of note is that this won't do anything to address the
criticisms of rampant counterfeit and/or garbage quality products on the
marketplace.

~~~
JohnFen
> Important to note that this "purge" is only for wholesale suppliers, not for
> marketplace sellers like the title implies.

Yes, but I avoid the marketplace sellers. I've been burned too often with
those -- if I'm going to roll the dice on that sort of thing, I'm better off
with eBay.

~~~
theturtletalks
What most people don't realize is that Amazon fees are 15% and most suppliers
do FBA which tacks on a more expensive shipping charge than you would have
otherwise with USPS.

eBay on the other hand charges 10% and sellers can ship items the cheapest
way. Those same suppliers on Amazon list the their items on eBay for cheaper
since they net the same after fees.

~~~
rootusrootus
I find a lot of things these days are actually slightly more expensive on
eBay. I also see a lot of duplicate listings by the same (or apparently the
same) seller with wildly varying prices. I still buy stuff on eBay once in a
while, but it's not the place to go anymore for the best deal. And after
you're accustomed to 1-2 day shipping from Amazon, waiting a couple weeks for
an eBay shipment is a non-starter.

~~~
theturtletalks
I think what you are finding are eBay sellers dropshipping the items from
Amazon directly. So those items will be more expensive since the sellers have
to make up the 10% eBay fee. I'm talking about the Amazon sellers that use
something like Channel Advisor and are listing the same products on eBay for
less. But finding those sellers takes effort in some cases.

~~~
rootusrootus
That may be exactly what happens on the back end. I only see it from a
consumer point of view. I can't reliably best Amazon prices by going to eBay,
I have to go somewhere like Walmart.

~~~
dawnerd
> I can't reliably best Amazon prices by going to eBay, I have to go somewhere
> like Walmart. reply

A lot of eBay sellers actually source from Walmart. I have. I works pretty
great... sometimes. Just gotta be quick about getting their clearance items or
pricing mistakes.

~~~
JohnFen
I intentionally refuse to do business with Walmart. That I may be
unintentionally helping them to make money bothers me.

~~~
dawnerd
Better watch out for third party sellers on Amazon then too. I know of a few
people that source from Walmart specifically for FBA.

------
_red
No one ever talks about eBay anymore....but when are we going to collectively
realize that they are the best of the "big tech" companies?

They've stayed remarkable true to their mission, haven't entered politics
(ironic given previous CEO), and continued to offer a good service.

Since the commingling of inventory is now so prevalent at Amazon, I find
myself using eBay more and more.

~~~
bredren
The best big tech company?

Maybe presently people have no major beefs with the organization.

But there have been more than enough negative actions by this company in the
past including:

Suing craigslist (and losing) for breach of fiduciary duty because it wouldn't
exploit its users enough. This was knowing that the shares were acquired in
conflict with the ownership and mission of craigslist.

eBay tried to get inside information from Craigslist while it was secretly
preparing release of Kijiji.[1]

eBay has been facilitating the sale of counterfeit items long before Amazon.
Many sellers were upset by the requirement to use PayPal anded even acted to
ban use of competing services.

So while the heat may be on Amazon, I would hold off on elevating eBay to some
superior ethical position.

[1]
[https://www.wsj.com/articles/SB120959923436057759](https://www.wsj.com/articles/SB120959923436057759)

~~~
nacs
Also, they own Paypal which itself has tons of issues (it had them before the
purchase and apparently those issues continue as regular HN posts show).

~~~
smeyer
>they own Paypal

They spun Paypal off into an independent company in 2015.

~~~
GarrisonPrime
Yes, technically the are separate. But given how tightly the systems remain
integrated, it appears that was just for show.

~~~
smeyer
>given how tightly the systems remain integrated

Ebay is moving away from its tight integration with Paypal and has a deal with
a new payment processor (Adyen) after it's current paypal deal ends in 2020.
Between that and the fact that they're two public companies with separate
freely traded ownership, it's hard for me to buy the argument that the spin
off was "just for show".

[https://www.ebayinc.com/stories/news/ebay-to-intermediate-
pa...](https://www.ebayinc.com/stories/news/ebay-to-intermediate-payments-on-
its-marketplace-platform/)

~~~
empyrical
Also (in Canada at least) they are using a service called "Shippo" for
shipping labels, instead of PayPal's shipping label service

------
mjevans
I would like tractability to original manufacturer, as well as any claims for
compliance with various safety and production quality standards. Pretty much
supplier transparency.

~~~
mikehollinger
So... blockchain for product quality? :-)

Yeah, I'd like to be able to be able to look into / find who's a member of the
bazaar and just fencing products, versus who's selling their own items
directly. For example - I wouldn't buy speakers from some random reseller. I'd
buy 'em from the original manufacturer, or the handful of "known" resellers
that we all know like the big box stores.

~~~
hn_throwaway_99
This was discussed in depth on HN a while back about why blockchain doesn't
really work well for supply chain management: [https://blog.smartdec.net/you-
do-not-need-blockchain-eight-p...](https://blog.smartdec.net/you-do-not-need-
blockchain-eight-popular-use-cases-and-why-they-do-not-work-f2ecc6cc2129)

------
swalsh
This is a big move, it transitions Amazon from a more traditional retailer, to
something more akin to a dropshipper. I'm reminded of Wayfairs Castlegate
business. The manufacturer now takes on the responsibility of forecasting,
they assume the risk of holding inventory, but Amazon still controls the
customer impact things like boxing and shipping.... and they get to do it at
the manufacturers cost.

It's quite brilliant actually.

------
JohnFen
> Amazon’s aim is to cut costs and focus wholesale purchasing on major brands
> like Procter & Gamble, Sony and Lego, the people said. That will ensure the
> company has adequate supplies of must-have merchandise and help it compete
> with the likes of Walmart, Target and Best Buy.

That would cut out most of my purchases from Amazon. It makes no sense to buy
stuff from Amazon that I can get from my local big-box retailer, after all.

~~~
throwayEngineer
I've already stopped using Amazon.

They are significantly more expensive than Walmart. Which is new, this was not
true 4 years ago.

They don't have the selection of stores like digikey.

They lost their purpose completely. I only use Amazon for Email due to modern
Email standards.

~~~
beauzero
Anecdotal, but that is what my wife did last year. Walmart having the online
order with local pickup serves us better and cheaper. It also removed the
biggest Walmart barrier for us which is going physically into the store.

------
chiefalchemist
IDK, sounds (mostly?) like a CYA move. That is, the Counterfeit Apocalypse was
coming, but this helps them dodge that. I would think similar for all the
bogus reviews and rating. I can hear it now, "Oh. Those? Those aren't __our__
products. We only list them."

I hate to sound like a cynic, but me thinks Amazon's legal team cooked this
up, or at least had a heavy hand in it.

~~~
secabeen
I wonder if they'll give all these small sellers the co-mingle option. If they
switch to a model where the original vendor pays the extra to not co-mingle,
it might indeed address the counterfeit copy. (Buy at MSRP from the original
vendor, and be assured that it's genuine, or buy a discount version from
another vendor, and take what you get.)

------
higherpayusa
Another ramification... many suppliers/vendors will now be "more directly"
competing with their own customers within the amazon marketplace. Whereas
before a vendor could sell a large quantity to Amazon and then smaller
quantities (at higher prices) to middlemen and let the middleman fight it out,
now they'll be a huge incentive to price in such a way that middlemen get cut
out.

If this sounds good (hey, no middlemen, better for us) consider this typical
situation (I know it well)... Retail company buys toys for sale in store, but
uses marketplace for overstock, offsets, and to keep products on shelves
fresh... Not a huge profit center, but an important part of "flow" \- now the
viability of that shrinks as suppliers squeeze prices upwards.

And the cycle continues... retailers have to raise prices to make up for what
little "volume" sales they do... people stop shopping retail because it is
"too expensive" and down go more independent stores.

------
baybal2
Alibaba tried the same thing. It did not go well

The result is well known. It quickly became apparent that very few people went
online to buy "upscale brand stuff," and it overloaded their logistics big
time

~~~
throwayEngineer
Amazon is no longer the lowest cost and highest quality store.

They have become just another store.

Moves like this show they are losing their benefits more and more

~~~
metalliqaz
"just another store"

Hah. Their picking and shipping logistics are far and away superior to any
other retailer. They offer free 1-day shipping to large swaths of the U.S. for
Prime members.

------
seem_2211
This sounds bad, but is honestly anyone surprised?

Client/customer concentration is something that every business needs to be
watching as a matter of critical importance.

The big boys will always play rough and negotiate things on their terms when
they can get away with it - be it the Government, Apple, Walmart or Amazon.

I have sympathy for the companies that are about to be put under immense
stress, but it should also be something that every business has already
planned for.

~~~
save_ferris
No, it's not surprising. The lack of surprise that a company's greed is
boundless shouldn't be the standard to which we hold them accountable for
their behavior. It's kinda hard to see how Amazon won't eventually collide
with antitrust forces at some point.

The rise of tech giants like Amazon has largely coincided with their
development of entire markets that they control. There's so much money to be
made establishing the market and taking small transaction fees as opposed to
just bringing a product to an existing market.

Not only did Amazon make money by creating the go-to online marketplace, they
captured tremendous amounts of data on what people were and weren't buying.
This allowed them to spin off cheaper versions of competing products,
undercutting the businesses that they were already making money from. They
dominate the sales channels, and now they're going after the vendors directly,
starting with the small, low-hanging fruit.

~~~
magduf
>It's kinda hard to see how Amazon won't eventually collide with antitrust
forces at some point.

Where did you get this idea? I don't see how Amazon, or anyone else for that
matter, could ever run afoul of "antitrust forces" in the US, because there's
simply no such thing in America any more. America hasn't enforced antitrust
law in ages.

They might have problems in other countries, but the US is by far their
largest market, and they have absolutely nothing to worry about here.

~~~
JumpCrisscross
> _America hasn 't enforced antitrust law in ages_

A lot of American antitrust enforcement is private. Witness, for instance, the
recent _Apple Inc. v. Pepper_ [1].

(We need more public enforcement. But claiming we have no antitrust
enforcement is false.)

[1] [https://www.scotusblog.com/case-files/cases/apple-v-
pepper/](https://www.scotusblog.com/case-files/cases/apple-v-pepper/)

------
Goronmon
So Amazon is going harder into the marketplace side of things, turning Amazon
from an online retailer into another version of eBay? This doesn't sound like
a positive move for me, but I guess that doesn't necessarily means its bad for
Amazon's profitability if other people don't mind rolling the dice on random
products by relatively unknown sellers and manufacturers.

~~~
corndoge
Doesn't this article say the exact opposite of what you just said?

~~~
cannonedhamster
No. Amazon is pushing smaller sellers into their marketplace platform which is
ride with counterfeits, thieves, and garbage products with fake reviews
purchased on Facebook. My wife and I stopped going to Amazon because product
quality started getting so bad. It's to the point that I trust Alibaba or eBay
over Amazon, which is a shame. I suspect there's a lot of less vocal people in
the same boat who've started exploring other merchants.

~~~
delfinom
Yep, I have been alot of stuff from Aliexpress lately because you can find
sellers that are quite reputable and actually support their shit somewhat.
Amazon? You find people reselling shit from Alibaba and not caring a thing
about it.

------
munk-a
I really hope this triggers some long needed anti-trust action against amazon
- controlling the market place and using that control to execute actions like
this is exactly what those laws are there for, this is the first step in a
consolidation to force suppliers into less profitable agreements and
individual bargaining.

------
kellrom
I partly blame GS1 for not moving fast enough to create an open supply chain
network (not just standards).

------
lostmymind66
This is why I would never base my business on a marketplace like Amazon. You
are always beholden to them and the reality is you aren't really independent.

~~~
bdcravens
Many small-time businesses are pretty much FBA only. That's why there's so
many similar products with little more than branding differences: this is done
in China and shipped to Amazon. There's probably not a small percentage of
4-hour-workweek types who are very unlikely to go from working from home to
staffing a warehouse and performing fulfillment, running an e-commerce store
and trying to figure out discoverability.

(though according to a sibling comment, that may not be what the article is
talking about - unfortunately I'm paywalled out)

~~~
CorpOverreach
I come across these very often. I find these "businesses" to be adding very
little value.

From a customer point of view, I have no issue shafting those 4-hour-workweek-
types.

------
FrancAn7
It might be better if it is clear that they are not an open marketplace
anymore, ever since amazon basics

------
trufflepig
would this just push the minor-large brands (aukey, anker, etc) into
marketplace? Or are these minor-large brands already in the marketplace?

~~~
notatoad
a quick spot check of a bunch of anker products shows they're already a
marketplace seller

~~~
erik_seaberg
Do they at least enforce that Anker products actually came from Anker and not
some scammer who's happy to burn my apartment down?

~~~
kevin_b_er
No. It should hopefully be well known by now that Amazon "commingles" all
inventory of a given item. You can never be sure if you'll get a well-made
counterfeit on the "marketplace". Even if you _PICK WHICH SELLER_ you get
whatever's in the bin that the overworked amazon warehouse sub-sub-sub-
contracted employee quickly plucks.

~~~
secabeen
Sellers can choose to not co-mingle, but then they have to put a separate UPC
code on the item.

~~~
jessaustin
Having done that, can they be sure that another seller won't try to horn in on
the new UPC code?

