5 ms·

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 ar

by 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.

by 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.