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IMO, this is only applicable to smaller players. Amazon still wants to play in the private label space and they're not going to delist Tide or Bounty or Crest.

IMO, this is only applicable to smaller players. Amazon still wants to play in the private label space and they're not going to delist Tide or Bounty or Crest. They're in true supplier relationships with those brands and will continue to fulfill those orders while negotiating co-op and pricing with the supplier. The smaller players will get squeezed for a little while but I don't think it will take long for them to leave the platform. If they can't get subsidized fulfillment, they will simply move to a D2C model where they don't have to pay Amazon 15% plus $1200/year and can control pricing. The most obvious way they will lose out, to me at least, is in advertising. They still have to pay for CPC on Amazon, but it is much more effective at generating sales than AdWords or Facebook on a brand-owned site.

petra 8y ago
So in the past, why did Amazon purchase from the smaller guys, and didn't go straight to the manufacturer ?
- binarysolo 8y ago
  For prospecting purposes - it's only worth it to engage with manufacturers if you do X million of dollars on their product, so why not have a smaller vendor do all the legwork to grow the listing, prove the product, then cut them out. Source: mid-sized Amazon 1P/3P vendor, mid-millions rev.
- zebrafish 8y ago
  Manufacturers have large minimum order quantities, are slow to integrate with, and have business policies like chargebacks, business rules, fees, etc. that the retailer will have to negotiate around. The little guys have none of that and will bring in tons of traffic to the site, making it a more attractive option for manufacturers who will bend their rules to get a piece of the pie.
gcb0 8y ago
> They still have to pay for CPC on Amazon, but it is much more effective at generating sales than AdWords or Facebook on a brand-owned site. amazon ad network is useless if you are not selling trhu amanzon itself. unless you can compete on price, then since your ad will be show to someone who just bought a product in most of the case, maybe you can hope they will cancel the amazon order and buy on your d2c site.

petra 8y ago

So in the past, why did Amazon purchase from the smaller guys, and didn't go straight to the manufacturer ?

binarysolo 8y ago
For prospecting purposes - it's only worth it to engage with manufacturers if you do X million of dollars on their product, so why not have a smaller vendor do all the legwork to grow the listing, prove the product, then cut them out. Source: mid-sized Amazon 1P/3P vendor, mid-millions rev.
zebrafish 8y ago
Manufacturers have large minimum order quantities, are slow to integrate with, and have business policies like chargebacks, business rules, fees, etc. that the retailer will have to negotiate around. The little guys have none of that and will bring in tons of traffic to the site, making it a more attractive option for manufacturers who will bend their rules to get a piece of the pie.

gcb0 8y ago

> They still have to pay for CPC on Amazon, but it is much more effective at generating sales than AdWords or Facebook on a brand-owned site. amazon ad network is useless if you are not selling trhu amanzon itself. unless you can compete on price, then since your ad will be show to someone who just bought a product in most of the case, maybe you can hope they will cancel the amazon order and buy on your d2c site.