4 ms·

Did you read the full article? They aren't dropping other brands/sellers from the platform. They just aren't going to buying from them anymore. Currently, they

by knd775 7y ago

Did you read the full article? They aren't dropping other brands/sellers from the platform. They just aren't going to buying from them anymore. Currently, they buy from some high volume brands directly and then sell the products themselves. They are going to stop doing this with smaller brands, who will now need act as sellers on the platform.

JohnFen 7y ago
Yes, I read and understood the full article. The thing is that I won't do business with Marketplace sellers -- that place is a snake pit full of badness. I only buy items from Amazon that are fulfilled by Amazon. If Amazon isn't holding the inventory and fulfilling the order themselves, then I'm not interested. I'll be going to eBay instead.
- knd775 7y ago
  Third-party sellers still generally ship their items to Amazon warehouses to be sold. Orders for these items are still "Fulfilled by Amazon". Nothing in this article changes that.
  - JohnFen 7y ago
    Well, then I don't understand what the article says at all. Can you summarize it for me? What is the change being discussed? What does it affect? To explain my confusion, here's a quote from the article: > Amazon secures inventory two ways. The company buys products directly from wholesale vendors, reselling them like a traditional retail store, and it lets independent merchants post their own products on the site in a marketplace model similar to EBay Inc. or a consignment shop. About half of the goods sold on Amazon come from independent merchants, and the change will push the marketplace share of revenue even higher.
    - tomschlick 7y ago
      Basically this: Currently Amazon buys a ton of products wholesale from companies and sells them directly. As in Amazon is both the seller and the fulfillment. What is happening: Amazon will only do that for the largest brands like Lego, P&G, etc. Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
      - JohnFen 7y ago
        OK, I confess that I am a total idiot, but I don't understand what you're saying here at all. It also doesn't seem to be what the article is saying. > Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. As opposed to whose brand? Isn't this how it's worked for years already? > This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock. But you just said that Amazon will still be carrying the stock. I am so very confused here.
        derefr 7y ago
        It's about whose balance sheet the stock is on. If Amazon buys an iPhone, and then lists it for sale on the Amazon store, that's Amazon's iPhone. If Amazon doesn't manage to sell it, Amazon has lost money. If Amazon does sell it, they capture the profit margin between the price they bought it at, and the price they sold it at. Apple, who sold Amazon the iPhone originally, has no further business relationship with the person that buys the phone from Amazon; after the initial sale, it became Amazon's phone to sell, and their customer relationship to have. This is the traditional "retail" sales model. Amazon is only a retailer for a relatively few products—and now fewer. For any other brand that shows up on Amazon, Amazon is acting as a Logistics-as-a-Service provider to that business. If you buy a Samsung TV on Amazon, then it's coming from an Amazon warehouse, but Amazon does not own that TV; Samsung (or someone else, maybe a retailer!) does. Samsung (or whoever) are effectively renting warehouse space from Amazon to hold their TVs for them, paying Amazon to deliver their products, etc. in the same way that a developer would pay Amazon to hold data in S3 and deliver messages over SNS. If Samsung wants that TV back, Amazon has to give it back. It's not Amazon's property. But nor did Amazon have to buy it. It's neither an asset nor a liability on their balance sheet. They possess it only in the sense that a self-storage business possesses the contents of a storage unit; or in the sense that FedEx possesses a parcel while delivering it. This is the https://en.wikipedia.org/wiki/Consignment https://en.wikipedia.org/wiki/Consignment model of sales. The Amazon store is effectively a consignment store. Well known examples of consignment: • Commercial art galleries where the works are for sale. The gallery doesn't own the works; the artist is renting space to display and attempt-to-sell their work. • Brick-and-mortar book stores. (New) book stores don't own their stock of books; the books' publishers do. The book-store-as-storefront has some limited power to declare sales, but mostly sales are "ordered" by the publisher. When a book store can't sell enough of a book, and have left-over stock that looks like it isn't going anywhere, they must nominally "return" the stock to the publisher by destroying it (i.e. by ripping off the covers, like this: https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why_are_the_covers_ripped_off_these_books_at/ https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why...) Amazon, as a consignment storefront, doesn't make money off the sale itself; nor can they set profit margins or declare sales. Instead, they make money by charging the supplier for their logistics services. In some consignment businesses, this is a simple flat pay-per-use fee; but for the Amazon store, this is taken as a cut "off the top" of the supplier's gross revenue from the products sold.
  - dirkg 7y ago
    FBA is very very different from being sold by Amazon. Its a cancerous scheme that charges ridiculously high 15% fees for the privilege of being listed on Amazon.
    - dralley 7y ago
      It's cancerous, but in the same way that Apple/Google/Valve charging (even higher) margins to allow software on their storefront is cancerous. We should fix this problem universally.
dirkg 7y ago
Their definition of 'smaller' is <$10m sales/year, which is gigantic and basically excludes maybe 95% of the myriad products Amazon now sells. If I'm not buying from Amazon I have no reason to shop there. Its just another marketplace and I like ebay a lot more for that.
- derefr 7y ago
  I don't think you understood what the parent commenter's point. Nothing has been excluded. Those brands will just turn around and sell on Amazon themselves. All the same products will be available. The products will just now be listed as sold by by their manufacturer, and "Fulfilled By Amazon"; rather than being sold by Amazon. It's the difference between a chain coffee shop in a bookstore being staffed by employees of the bookstore, or being staffed by corporate employees of the coffee-shop chain. Either way, you can go into the bookstore and get coffee. It's just a matter of who's getting the profit margin and dictating sales deals. Also, most big-ticket name-brand items on Amazon are already sold by their manufacturer, because that's a better deal for the manufacturer. For example, iPhones on Amazon are sold by Apple, because not even Amazon has enough bargaining power to get wholesale prices from Apple. This has always been the case. It's only the medium-sized businesses, large enough to matter to Amazon's bottom line, but small enough for Amazon to bully, that Amazon was acting as a middle-man for. They're giving some of that up, because the profit margin they were capturing as a middle-man, which was previously enticing to them, is now too slim to matter to them.
kevin_b_er 7y ago
They're dropping those brands into the midden heap that is the "marketplace" where you can't be sure of what you're getting. If Amazon was selling it directly, you had some confidence they were buying from that seller. No longer. Amazon buys are now just as risky as Ebay ever was.

by knd775 7y ago

JohnFen 7y ago

Yes, I read and understood the full article. The thing is that I won't do business with Marketplace sellers -- that place is a snake pit full of badness. I only buy items from Amazon that are fulfilled by Amazon. If Amazon isn't holding the inventory and fulfilling the order themselves, then I'm not interested. I'll be going to eBay instead.

knd775 7y ago
Third-party sellers still generally ship their items to Amazon warehouses to be sold. Orders for these items are still "Fulfilled by Amazon". Nothing in this article changes that.
- JohnFen 7y ago
  Well, then I don't understand what the article says at all. Can you summarize it for me? What is the change being discussed? What does it affect? To explain my confusion, here's a quote from the article: > Amazon secures inventory two ways. The company buys products directly from wholesale vendors, reselling them like a traditional retail store, and it lets independent merchants post their own products on the site in a marketplace model similar to EBay Inc. or a consignment shop. About half of the goods sold on Amazon come from independent merchants, and the change will push the marketplace share of revenue even higher.
  - tomschlick 7y ago
    Basically this: Currently Amazon buys a ton of products wholesale from companies and sells them directly. As in Amazon is both the seller and the fulfillment. What is happening: Amazon will only do that for the largest brands like Lego, P&G, etc. Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
    - JohnFen 7y ago
      OK, I confess that I am a total idiot, but I don't understand what you're saying here at all. It also doesn't seem to be what the article is saying. > Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. As opposed to whose brand? Isn't this how it's worked for years already? > This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock. But you just said that Amazon will still be carrying the stock. I am so very confused here.
      - derefr 7y ago
        It's about whose balance sheet the stock is on. If Amazon buys an iPhone, and then lists it for sale on the Amazon store, that's Amazon's iPhone. If Amazon doesn't manage to sell it, Amazon has lost money. If Amazon does sell it, they capture the profit margin between the price they bought it at, and the price they sold it at. Apple, who sold Amazon the iPhone originally, has no further business relationship with the person that buys the phone from Amazon; after the initial sale, it became Amazon's phone to sell, and their customer relationship to have. This is the traditional "retail" sales model. Amazon is only a retailer for a relatively few products—and now fewer. For any other brand that shows up on Amazon, Amazon is acting as a Logistics-as-a-Service provider to that business. If you buy a Samsung TV on Amazon, then it's coming from an Amazon warehouse, but Amazon does not own that TV; Samsung (or someone else, maybe a retailer!) does. Samsung (or whoever) are effectively renting warehouse space from Amazon to hold their TVs for them, paying Amazon to deliver their products, etc. in the same way that a developer would pay Amazon to hold data in S3 and deliver messages over SNS. If Samsung wants that TV back, Amazon has to give it back. It's not Amazon's property. But nor did Amazon have to buy it. It's neither an asset nor a liability on their balance sheet. They possess it only in the sense that a self-storage business possesses the contents of a storage unit; or in the sense that FedEx possesses a parcel while delivering it. This is the https://en.wikipedia.org/wiki/Consignment https://en.wikipedia.org/wiki/Consignment model of sales. The Amazon store is effectively a consignment store. Well known examples of consignment: • Commercial art galleries where the works are for sale. The gallery doesn't own the works; the artist is renting space to display and attempt-to-sell their work. • Brick-and-mortar book stores. (New) book stores don't own their stock of books; the books' publishers do. The book-store-as-storefront has some limited power to declare sales, but mostly sales are "ordered" by the publisher. When a book store can't sell enough of a book, and have left-over stock that looks like it isn't going anywhere, they must nominally "return" the stock to the publisher by destroying it (i.e. by ripping off the covers, like this: https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why_are_the_covers_ripped_off_these_books_at/ https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why...) Amazon, as a consignment storefront, doesn't make money off the sale itself; nor can they set profit margins or declare sales. Instead, they make money by charging the supplier for their logistics services. In some consignment businesses, this is a simple flat pay-per-use fee; but for the Amazon store, this is taken as a cut "off the top" of the supplier's gross revenue from the products sold.
- dirkg 7y ago
  FBA is very very different from being sold by Amazon. Its a cancerous scheme that charges ridiculously high 15% fees for the privilege of being listed on Amazon.
  - dralley 7y ago
    It's cancerous, but in the same way that Apple/Google/Valve charging (even higher) margins to allow software on their storefront is cancerous. We should fix this problem universally.

dirkg 7y ago

Their definition of 'smaller' is <$10m sales/year, which is gigantic and basically excludes maybe 95% of the myriad products Amazon now sells. If I'm not buying from Amazon I have no reason to shop there. Its just another marketplace and I like ebay a lot more for that.

derefr 7y ago
I don't think you understood what the parent commenter's point. Nothing has been excluded. Those brands will just turn around and sell on Amazon themselves. All the same products will be available. The products will just now be listed as sold by by their manufacturer, and "Fulfilled By Amazon"; rather than being sold by Amazon. It's the difference between a chain coffee shop in a bookstore being staffed by employees of the bookstore, or being staffed by corporate employees of the coffee-shop chain. Either way, you can go into the bookstore and get coffee. It's just a matter of who's getting the profit margin and dictating sales deals. Also, most big-ticket name-brand items on Amazon are already sold by their manufacturer, because that's a better deal for the manufacturer. For example, iPhones on Amazon are sold by Apple, because not even Amazon has enough bargaining power to get wholesale prices from Apple. This has always been the case. It's only the medium-sized businesses, large enough to matter to Amazon's bottom line, but small enough for Amazon to bully, that Amazon was acting as a middle-man for. They're giving some of that up, because the profit margin they were capturing as a middle-man, which was previously enticing to them, is now too slim to matter to them.

kevin_b_er 7y ago

They're dropping those brands into the midden heap that is the "marketplace" where you can't be sure of what you're getting. If Amazon was selling it directly, you had some confidence they were buying from that seller. No longer. Amazon buys are now just as risky as Ebay ever was.