Amazon to Cut Smaller Wholesale 1P Suppliers
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Two months ago, Amazon.com Inc. halted orders from thousands of suppliers with no explanation. Panic ensued — until the orders quietly resumed weeks later, with Amazon suggesting the pause was part of a campaign to weed out counterfeit products. Suppliers breathed a sigh of relief.
Now a larger, more permanent purge is coming that will upend the relationship between the world’s largest online retailer and many of its long-time vendors. Generally speaking, vendors selling less than $10 million in products each year on the site will no longer get wholesale orders from Amazon in the next few months, although that will vary by category, said the people, who requested anonymity to speak about an internal matter. 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.
The mom-and-pops that have long relied on Amazon for a steady stream of orders will have to learn a new way of doing business on the web store as a 3P seller. Rather than selling in bulk directly to Amazon as a 1P seller, they’ll need to win sales one shopper at a time. It’s one of the biggest shifts in Amazon’s e-commerce strategy since it opened the site to independent sellers almost 20 years ago. While the plan could be changed or cancelled, it’s currently moving forward, the people said.
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How Much is Free Shipping REALLY Costing You?
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Gone are the days when you could actually make money on shipping. Merchants are all too willing to move to a free shipping model without being aware of the entire cost of shipping a package. If you’re offering free shipping, it’s probably costing you 30 percent MORE than you think. If you talk to many companies that offer free shipping and ask, “How can you afford this?” Their answer: “I work the cost of shipping into the product.”
There are many other costs involved in shipping a product in addition to postage. Are you monitoring your delivery area surcharge (DAS) or extended delivery area surcharge (EDAS)? Most carriers have these charges.
A good exercise for companies doing ecommerce order fulfillment is to look at your average monthly packaging, warehouse labor and credit card fees, then divide that total by the number of packages you shipped
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Google Moves into Amazon Marketplace’s Turf
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Google is positioning itself as a direct Amazon Marketplace competitor with a revamped e-commerce offering. Shoppers will have a personalized homepage on the existing Google Shopping tab, where they can filter results based on features and brands, read reviews, and watch videos about products.
For example, if a shopper is looking for headphones, they can filter for wireless and a preferred brand.
The blue shopping cart on the item shows shoppers they can seamlessly purchase what they want with returns and customer support, backed by a Google guarantee. This new shopping experience will merge select features of the Google Express e-commerce service with the Google Shopping online product search and price comparison platform.
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Walmart to Offer Next-Day Delivery Without a Membership Fee
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Marc Lore, president and CEO of Walmart eCommerce, announced that Walmart will begin rolling out next-day delivery for more than 220,000 items on its website, including pet food, diapers, paper towels and laundry detergent, this week.
The nation’s largest retailer said Tuesday it’s been building a network of more efficient e-commerce distribution centers to make that happen.
Customers must spend at least $35 to be eligible for next-day delivery. “NextDay” delivery will be available first to Walmart.com customers in Phoenix and Las Vegas, Lore said, and will expand to Southern California later this month.
NextDay delivery is a being positioned as a complement to Walmart’s same-day Grocery Pickup and Delivery options, and free two-day shipping on millions of items. The program figures to boost Walmart’s e-commerce sales.
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Amazon Wants to Help Its Employees Quit and Start Delivery Businesses
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Amazon announced that it wants to help its employees quit — so they can start their own delivery businesses. Tthe e-commerce giant said that it’s expanding its Delivery Service Partner program to include an incentive for current Amazon workers
The program promises up to $10,000 in startup costs for employees who partake in the program. Amazon is also throwing in the equivalent of three months of an employee’s most recent salary to help soon-to-be entrepreneurs get their fleet of delivery cars off the ground.
The program is Amazon’s solution to its last-mile delivery problem where the company is trying to compete with legacy players like UPS and FedEx.
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5 Tips to Track Down Unauthorized 3P Sellers
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In the era of online reviews and SEO, the impact of unauthorized ecommerce sellers ranges from lost revenue to damaged relationships with authorized sellers to questionable brand integrity. If you want to protect the integrity of your brand, unauthorized third-party sellers should be a big deal.
In order to protect themselves, the first step for online retailers is collecting the basic facts about these ecommerce sellers: Who they are, what they’re doing and where they are operating. In short, brand manufacturers first need to figure out who the seller is and how to reach them.
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Post Office Wants to Shift Focus from Mail to Ecommerce Deliveries
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USPS has floated a new proposal to Congress that would see it reducing mail delivery from six to five days a week while expanding packaging deliveries to seven days.
The shipping world has changed dramatically over the past decade. Since 2007, total U.S. mail volume has declined 31% to 146 million pieces, including a 41% drop in first-class mail, its most profitable product. At the same time, ecommerce has exploded, offering a way to plug the lost revenue while also adding burden to USPS operations as it handles more packages. USPS has already started to dip its toes into 7-day a week delivery to manage the 20 million packages it averages daily. It now delivers some Amazon.com packages on Sundays and also other ecommerce retail fulfillment during the busy Christmas holiday season.
The agency lost $3.9 billion in 2018, its 12th straight year of losses. According to the agency, this move better reflects the market conditions and would save it billions of dollars per year. Republican and Democratic members of Congress, however are opposed to making a change to mail deliveries.
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70% of Consumers Worry About the Environment, While 52% Have Changed What They Buy
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American consumers are prepared to reward manufacturers, retailers, and others offering products that benefit the environment as long as any additional costs associated with providing those benefits are not transferred to them in the form of higher prices.
Earth Day 2019, an A.T. Kearney study of 1,000 US consumers’ sentiments on environmental benefit claims found that more than 70% of consumers consider their impact on the environment when shopping. But, even as topics like climate change continue to make headlines, only 52% have shifted their purchase decisions—although this is improving, with 66% intending to shift within the year. Why haven’t they changed? The answer is they want the businesses that serve them to change first.
While nearly 80% of respondents would consider delayed shipping if the environmental benefit was clearly articulated, they are unlikely to settle for higher costs in exchange for environmental benefits.
“What we see in these findings is that the consumer market may be more receptive to buying green products than they were in years past,” said Greg Portell, an A.T. Kearney partner involved in the study. “But, they don’t want to sacrifice quality or pay higher prices to benefit the environment.”
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Ongoing Labor Shortage Underscores the Need for Optimization
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A national unemployment rate hovering around 4% is a good thing for the economy but makes life difficult for managers of distribution and fulfillment centers. Finding sufficient staff is a problem that’s not likely to go away soon, so companies are looking to maximize productivity and reduce inefficiency.
This special report from Multichannel Merchant explores ways ecommerce and direct-to-customer merchants are creating optimized warehouses to address labor shortages. This includes tactics like incentives, space optimization and investment in a modern warehouse management system (WMS).
In the MCM Special Report you will learn:
- About the shift from centralized DCs to smaller regional fulfillment centers
- About leveraging existing WMS capabilities like labor management and order flow
- About the advantages of a modern WMS, including granular KPIs and volumetric data
- How more efficient space utilization can fuel opportunistic buys that capture more sales
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Amazon Gives Brands Power to Delete Counterfeit Listings
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Amazon.com has launched Project Zero, a program that enables brands to designate counterfeit product listings on the e-tailer’s site for removal. Amazon is providing each product with a unique code that can be scanned to determine whether a product is authentic or counterfeit. The online retail giant launched a new anticounterfeiting program, called Project Zero, that it says would better protect brands from scammers by letting them designate listings for removal, rather than going through a cumbersome reporting process with Amazon.
The company has been testing it with roughly 15 brands for a few months, and will now start inviting selected additional companies to participate. Amazon said it wants all brand owners to join the program eventually but declined to specify a timeline.
As part of Project Zero, Amazon also is including a tool that generates a unique code for each product unit that the brand can print onto existing packaging or attach onto items using a sticker. The codes can then be scanned to ensure a product’s authenticity when it enters an Amazon warehouse.
In shifting some monitoring duties and authority to brands themselves, Amazon is taking an unusual step. Other tech companies use outside contractors to help monitor their platforms but don’t generally let users remove content. Amazon, for example, has required brand owners to report suspected counterfeits to an internal team that would investigate and decide whether or not to remove them.
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