Amazon Weekly News: October 10, 2017

Time for the weekly recap of Amazon news! It's always good to keep up with events related to the fast-moving world of the Amazon ecosystem. I select the most important news updates to share with subscribers each week, which you can sign up to receive right here.

 

Amazon tests ‘Flex’ delivery service: pick up from 3rd party merchant, deliver to consumers

Amazon Flex is different to the FBA model where merchants ship inventory to centralized fulfillment centers, which, in turn, does create time and cost inefficiencies for merchants. In the 4th quarter, we often see that it can take Amazon 2 weeks to receive our client’s inbound inventory at its fulfillment centers. 

For Amazon, this is another step towards efficiency, and since in 2016 they spent $18.5 BN in fulfillment infrastructure, this would enable them to cut out a lot of these costs.

Now that Amazon has built great centralized fulfillment capabilities, it wants to focus on the critical “last mile”. 

Amazon attempted to solve the problem of allowing merchants to ship directly to consumers while maintaining 2-day delivery with its ‘Seller Fulfilled Prime service’, launched a couple of years ago. However, the program is very tricky for merchants to manage. The 2-day shipping costs through carriers are often  prohibitive for large sections of the country, Amazon imposing almost impossible strict performance requirements on merchants in this program.

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This seems to be a step in the right direction. Under this program, Amazon will presumably take more ownership for the delivery experience even though it will be implemented by the same third-party carriers (at least initially). It should be great news for merchants who have their own warehousing and fulfillment capabilities but still want the benefits of having their products be Prime-eligible. 

It also makes me think about how Amazon could use this model to roll out international launches faster, without the huge infrastructure required to build an equivalent network as in the US. Australia, for example, is such a large geography with a relatively small population that, critics say, the Amazon FBA model couldn’t possibly be economical. This is one way that Amazon could implement Prime in Australia by 2018.
 

Luxury brands refuse to be wooed by Amazon

The Wall Street Journal cites Swatch as one of the brands that have most recently tried to strike a deal with Amazon, but failed after Amazon wouldn’t commit to maintaining pricing.

 Luxury brands, apparently want the same treatment as Nike, who managed to score a landmark deal with Amazon to maintain minimum advertised prices and not allow third-party merchants to sell their catalog of products. Amazon typically does that only for the biggest brands, say WSJ’s sources.

Amazon will take swift action against sellers distributing counterfeit products but put the problem of resellers listing products below MAP back in the laps of brands.

This has become a major sticking point for luxury brands who need to maintain pricing integrity across their sales channels in order to keep their exclusive allure intact.


 


Amazon Fined $295M In Back Taxes in the EU

The EU says Amazon avoided paying tax on 75% of its European sales by making an illegal deal with Luxembourg, and now owes €250 million ($295 million) in back taxes.

 

Amazon acquires 3D body scanning startup

Chain Store Age describes Body Labs as “a 3D scanning platform that uses artificial intelligence, computer vision, and body modeling to accurately create an avatar-like image of a customer’s dimensions” and points to Amazon’s recent investment in the fashion category as the rationale behind the acquisition. With devices like the Echo, which already take pictures of the user, 3D body scanning could help with fitment (and associated returns), and even custom manufacturing of clothing. 

 

Businesses who partner with Amazon have higher confidence in the future

Amazon is a fairly polarizing topic for brands & retailers alike. Amazon can be viewed as a sales & marketing channel or as a foe to be fought. Those who adopt a pragmatic approach of partnering with the retail giant, generally feel more positive about the future. 

Businesses that consider Amazon a competitor, and those that consider it a sales driver, have very different revenue expectations over the next 12 months, according to a new CNBC/SurveyMonkey Small Business Survey

Bleak outlook for Black Friday?

Turns out I’m not the only one horrified by the spectacle of the Black Friday rush. According to a new PwC study, only 35% of consumers who will shop during Thanksgiving week, say they will do so on Black Friday, compared to 51% in 2016. 

Consumers have come to expect a prolonged shopping season which ranges far beyond the once-exclusive deals found on Black Friday. Still, Americans are expected to spend about $680 billion this holiday season, up 4% from last year, according to estimates from the National Retail Federation.

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Amazon changes how product prices are displayed

Starting in mid-October, there will no longer be a separate field for “sale prices” set by third-party sellers. Sellers must only include List Prices or MSRPs that are current and correct. Presumably, Amazon will penalize sellers misusing this field to make their products seem like a better deal than they actually are. 
Instead, brands using Seller Central should use the ‘Promotions’ tool to create a percent off, buy one get one, or free shipping deal which will display to customers on the product detail page.

Source: Amazon Seller Central News Headlines. 

 

Amazon incentivizes Grocery sellers with Referral Fee Discounts

Amazon is offering a limited-time referral fee discount on Grocery products, for a full year, from October 15, 2017. For products priced at $15 or less, the referral fee (a percentage based commission applied to the sale price of the product), will be slashed from 15% to just 8% of the total sales price. 

It is a huge incentive for food and grocery brands to list products on Seller Central, as it may have been cost-prohibitive to do so before. Taking a significant hit on fees in this category reiterates just how important it is for Amazon to expand their food and grocery catalog.


This is all the news I have to share with you this week. Stay tuned for my next update!