Amazon Weekly News: September 19, 2017

Time for this week's recap of Amazon news! If you're selling on Amazon, take a look. It's always good to keep up with the big news related to the fast-moving world of Amazon. I select the most important news updates to share each week, which you can sign up to receive right here.

 

Toys 'R' Gone

Toys ‘R’ Us Inc. filed for chapter 11 bankruptcy protection late Monday night, a development driven partly by an unsustainably large debt load and partly by consumers increasingly going online for their toy purchases.

Like Amazon, Toys ‘R’ Us was an industry disruptor when it first arrived on the scene. Years later, Toys ‘R’ Us struggled with the rise of discounters like Wal-Mart. and Target. More recently, the retailer has really struggled as growing amounts of its business have been siphoned off by Amazon.

The Wall Street Journal points out that the internet has changed behavioral drivers of toy purchases. Kids don’t watch free-to-air TV much anymore, so brands can’t reach their target market through TV commercials. And they can’t target kids on Facebook either!

At the industry level, this is only the latest in a long line of established retailers going under in recent months: “A Toys ‘R’ Us restructuring would add to a list of more than 20 retailers, including RadioShack and Payless Shoe Source Inc., that have filed for bankruptcy since the beginning of 2017. “

 

Amazon plans to open its third fulfillment center in Mexico

Reuters reports that Amazon is building a third fulfillment center in Mexico. The fulfillment center is reported to be one million square-feet, will be located 25 miles north of Mexico City, and will double Amazon’s existing in-country warehouse space.

Amazon posted $253 million in sales in Mexico last year, more than double the year before, according to market research firm Euromonitor International. Still, this is far less than the $435 million in sales that incumbent leader MercadoLibre reported.

According to the Reuters article: “Amazon’s Mexico push comes amid talks to revamp the North American Free Trade Agreement, which could benefit the Seattle-based retailer if the United States persuades Mexico to raise a $50 limit on the value of online purchases that can be imported duty-free.”

Meanwhile, Amazon is eating into Wal-Mart's second-place position in Mexican e-commerce. This chart illustrates Amazon's quick growth in the last couple of years.

A real-time experiment in product safety

I’m both horrified and fascinated by this real-time experiment to get lab tests of questionable products found on Amazon. My colleague Rachel Greer at Think Cascadia who’s running the experiment is a product compliance specialist. She undoubtedly sees her share of horror stories from opportunistic sellers who don’t properly test their products according to national safety standards. Since Amazon learns about problems with products through consumers, many sellers believe they don't need to worry about compliance. This will be worth following.

 

A day in the life of an unauthorized seller

Chris McCabe, an ex-Amazonian and consultant who helps Amazon sellers get their accounts re-instated, provides a valuable opinion piece. He’s seen a big uptick in distributors and resellers getting their accounts shut down because brands have reported intellectual property violations directly to Amazon.

In this article, Chris outlines some of the arguments that distributors have made to defend their business model. But he argues that Amazon’s allegiance is to brands, rather than distributors. Amazon is also inclined to shoot first, and ask questions later.

This article should be a wake-up call to distributors and resellers about the future of their business model (we actually just published an article explaining two options that distributors have to ensure the sustainability of their businesses).

This piece is also insightful for brands, as they can catch a glimpse of the thought process of the unauthorized sellers of their products on Amazon.

 

That's all for this week's news recap. Stay tuned for the next one!