What Really Happened With the Amazon Vendor Purge

Amazon.com has been taking steps to curtail the counterfeit goods being offered on its site, but its latest efforts have created confusion in the marketplace. Here, FN sheds light on what has been happening — and whom it affects.

Last week, vendors across a range of product categories, including footwear, began receiving routine order cancellations via emails from the e-tailer. The letters informed partners that, following a review, Amazon would no longer place direct purchase orders for that vendor’s products. The message further suggested that the recipients set up an account in its Seller Central platform, in which vendors are responsible for their own inventory.

News of the letters hit during the Shoptalk conference in Las Vegas, prompting panic and speculation among retailers and industry experts. Many experts suggested that the move was part of the company’s ongoing crackdown on fake merchandise, exemplified by its recent Project Zero initiative, which allows brand owners to have greater control over how and where their products are sold on Amazon.

The e-tail giant gave little explanation of its motives in this situation, however, simply issuing a statement to Bloomberg saying, “We regularly review our selling partner relationships and may make changes when we see an opportunity to provide customers with improved selection, value and convenience.”

Some experts viewed this as a financial maneuver, to net higher margins by putting the burden of buying, warehousing and shipping products on its vendor partners, leaving Amazon to simply take a commission for goods sold on the site. Erik Morton, SVP of product and strategy for CommerceHub, which helps retailers compete more effectively online, told FN there’s been growing speculation that third-party business on Amazon would become a bigger piece of its pie after recent layoffs in Amazon’s first-party retail group.

While profit margins may well have factored into the company’s decisions, signs certainly point to a widespread product cleanup. After effectively purging vendors from its direct-purchasing program, Amazon issued a second letter to some partners late last week, resuming business under new circumstances.

Two footwear companies confirmed to FN that they had received the follow-up letter, which offered a pair of options for conducting business with Amazon: either enroll in its Brand Registry or sign up for Seller Central.

“We prefer to source products directly from brand owners, so enrollment in Brand Registry will be important for vendors going forward,” Amazon said in the email, adding that it will continue to issue purchase orders from those in the Brand Registry. “If you are not a brand owner, we encourage you to consider selling your products directly to customers … via Seller Central.”

Only companies with a registered or active text or image-based trademark are eligible for the Brand Registry. Once approved, they are able to take advantage of a number of services, including Amazon’s ramped-up protective measures, which monitor the site for instances of infringement or counterfeiting.

Not all companies will be impacted by these moves by the e-tail giant.

Eric Harrison, president of sales at The Remac Group, said he views Amazon’s move as an effort, in part, to cut down on third parties’ not doing enough business on the site. For its part, his company has elected to invest in its own e-commerce platform and has hired a full-time staff member to manage its business on Amazon.

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