Google's New 'Shopping Actions' Take A Swipe At Amazon
Each week I share the top news that impacts brands and merchants that sell on Amazon. My digest for this week includes Amazon requiring copies of personal identification for sub-users on its UK seller platform, Google's launches a "Shopping Actions" program to compete with Amazon, tensions rise between grocery vendors and Whole Foods, and why Amazon is not to blame for the demise of Toys "R" Us.
Amazon Requires Passport Copies For UK Seller Account Users
Amazon is now requiring proof of identity, including copies of passports and proof of residential address, for sub-users of Seller Central in the UK. These authorized users may be employees, consultants or agency staff who are being granted limited access to the account by the owner.
Amazon does not require proof of identity for authorized users in other markets, making it an odd new policy that appears to be isolated to the UK site.
New ‘Shopping Actions’ By Google Takes On Amazon Directly
Google’s new initiative will index product catalogs from retailers like Target, 1-800-Flowers, Home Depot, Costco and Ulta, creating a universal Google Express cart, according to an announcement on the AdWords blog yesterday.
Instead of charging these retailers based on clicks through to their site (the most common paid search fee model), Shopping Actions charges on a cost-per-sale model, earning revenue from sales generated from these placements.
Google insists that “No organic rankings are impacted or changed,” in response to speculation that preferential ranking would be given to these merchants ahead of Amazon. But this is just the latest of Google’s attempts to regain ground from Amazon in consumer product searches.
Other similarities between Google’s latest retail play and Amazon include one-click re-ordering, voice-enabled shopping that is enhanced by purchase order history, and instant checkout using saved payment credentials.
Tensions Rise Between Whole Foods And Suppliers
The Washington Post reported that grocery vendors have been asked to contribute to a new servicing fee which will charge vendors for Whole Foods' efforts to centralize its merchandising with their preferred retail strategy firm.
In the grocery industry, many vendors engage independent brokers who ensure products are displayed and stocked optimally in stores (amongst other responsibilities). But Whole Foods wants to centralize this function with its preferred retail broker firm, Daymon, and for vendors to foot the bill - to the tune of 3 to 5 percent of sales for this service.
As CNBC says, “one key advantage that it could give them (Whole Foods) is data. Brokers represent multiple brands and work with multiple retailers. Cutting them out of the process means Whole Foods limits the number of people that know what goes on in its stores and who can share that information with others”. Vendors often have long-standing relationships with these brokers who represent their brands to other retailers. A meeting was scheduled yesterday between Whole Foods and select vendors to discuss this change.
Amazon Did Not Kill Toys “R” Us
Last week the toy retailer filed documents with the court wind-down its U.S. business and liquidation of inventory in all 735 U.S. stores. Some were quick to assert that Amazon is responsible for the demise of Toys “R” Us, but the reality is that unsustainable levels of debt and demanding investors, combined with the business model of traditional retail, were a toxic combination for Toys “R” Us.
Amazon, on the other hand, has a brilliant and defensible business model. Only 12% of SKUs (stock keeping unit, a measure of unique product types) on the site is carried on Amazon’s balance sheet, according to research by Mizuho Securities. The remaining 88% of SKUs are stocked by third party sellers. This means Amazon provides the online selling platform and in many cases the fulfillment infrastructure, in exchange for a cut of the sale and fulfillment fees. The inventory they choose to hold can be strategic – products from brands that they want to keep a close eye on to ensure availability.
Though Amazon is often criticized as killing traditional retail, the reality is more complicated. It is the combination of Amazon being a catalyst for changing consumer behavior and the delicate business model of traditional retail that is causing these companies to groan under their own weight.
This is all the news I have to share with you this week. Subscribe to our newsletter to make sure you receive my news recap next week!