It’s that time of year when Brands/Sellers on Amazon start to gear up for holiday sales. A few years ago that would mean something really wonderful was about to happen, you could pretty much bet on 75% of your yearly revenue being generated in just a few months, but today…not so much.
All we hear about these days is Amazon Amazon Amazon. Amazon buying Whole Foods Market and Sears to Amazon Basics private labeling everything from batteries to mens shirts. Free Shipping. original content and the NFL with Prime, Americans are finding comfort in Alexa and Dash Buttons so they don’t have to do anything but consume, consume and consume from the luxury of their LazyBoy sofa.
Will agoraphobia be an epidemic in 10 years?
I’m not writing this because I care so much about the way we consume – that’s a personal choice. It’s really about the way Amazon treats Sellers and is using the consumer. Sellers were the foundation of Amazon, but today Amazon is eating them for lunch.
2-3 years ago one could launch a new brand on Amazon with great success – it was a wonderful platform for that reason – it was fair and it worked. Today the story it quite different. Amazon has quietly used Brand Sellers to test market products. Slowly but surely Amazon will pick the cream of the crop and create their own IP and eliminate the Registered Brands with strong category sales with an Amazon made IP product. This is clearly their mandate for Amazon Basics. “See what sells and then let’s make our own”.
About 2 years ago Amazon created a new division called Amazon Exclusives for artisans in all categories. It was suppose to be like a partnership, one that would help the artisan build their brand and reach millions of customers via Amazon’s powerful reach and support. It required that the artisan/brand give 100% exclusivity to Amazon for an addition 5% fee from the basic fees. Amazon promises went undelivered.
Then there is Amazon Vendor Express – a creepy mix between Amazon Retail Catalog (direct wholesale distribution) and Amazon Seller Central (Sellers/Brands control listings). Since Amazon Retail is by invitation only, Amazon Vendor Express gave Sellers possible entry into Amazon Retail, but what happens is you get caught in a vortex that is impossible to get out of, even after the items are delisted in Vendor Express. It’s a real mess and it is not recommended. You are asked so send in 6 items for free to be tested even if, like us, we had already sold 1.2 million dollars in sales – Amazon still had to test our product.
There is Amazon Lending or what I like to call the Bank of Amazon. An invitation only program, it’s great for cash flow for marketing and inventory needs but what happens is your marketing spend to drive traffic to your listings on Amazon and outside of Amazon – goes to waste as Amazon inserts the competition in the center of your listing page and directs the consumer attention away from your Brand, in our case they list the competition with a “Best Seller or Amazon Choice” banner smack in the middle of our Trademark Brand Listings.
Then, of course, there is Amazon bidding against your key terms in search. Amazon controlling the bid on the competitive products that you are listed against. Amazon marketing services – another money sucker as Amazon. Key search terms increased in 1 year time from about .17 cents to $3.00. Doesn’t that seem a bit odd?
Today there is no winning on Amazon – unlike 2 years ago. It’s only pay for play and the winner is always Amazon.
With $1.3 million in sales from the launch of a personal care item (we own the IP) in 11/2014 to 5 variations of that same item in 9/2016, we were headed for phenomenal growth – holding strong at 30% each month until Amazon Retail listed our main competitor and crashed us over night in their algorithm. A 70% drop in sales in October of 2016, nearly one year ago, has been impossible to turn-around.
Here’s our facts:
On an average as a brand we pay Amazon 40%-60% of each sale in fees. Our item is light-weight, stackable on the shelf, and retail lists between $21.00 and $24.99 – we are competitive in pricing and our item is made in USA to the highest standards.
When invited for a Lightening Deal the fee of $300 to $500 for Cyber Monday and Black Friday is on top of the substantial mark-down, FBA fees (mandatory) and listing fee, yet there are no guarantees Deals will run. BUT, one is expected to ship inventory to FBA warehouses by a mandated date to stay qualified. If FBA is bogged down and a product sits on the dock for weeks, even months, Deal is cancelled. There is now excess inventory in FBA and warehouse fees applied from date it arrived on the dock. December and November 2016 warehouse fees are triple.
If you want to play in Amazon’s playground get ready to leave with a few broken bones. Last year FBA was behind schedule and we were charged $12,000 for inventory that sat on the dock for Cyber Monday/Black Friday DEAL. Needless to say the Deals were cancelled yet we were left holding the bag on the inventory allocated to those deals and sitting in FBA. Amazon just didn’t care, although it was their fault.
Word on the street (that came out of a recent Top 50 Seller Conference in Seattle) is that Amazon is gearing up for Anti-Trust breakup of the company in 2020. What does that tell you about their ethos?
When Amazon uses, sellers and consumers to test market products and categories for their own benefit and gain market share without having to spend a dime in market testing…isn’t that deplorable behavior?
When Amazon controls so much of our lives isn’t that the essence of Big Brother? Isn’t Amazon slowly killing the environment with its delivery truck’s carbon footprint and waste of cardboard boxes. They already make shipping a box for an average person unaffordable with the dimensional weight rules put in place by carriers in 2015. That came to be because Amazon was shipping tiny little products in big giant boxes, creating waste, and taking up too much space. Their actions and carelessness directly affect consumer’s pockets but most consumers don’t attribute the high cost of shipping packages back to Amazon. They want it that way so you will even by more from their PRIME. Paper, cardboard, etc., it all comes from trees and we need our trees!
Amazon is crushing entrepreneurship, where it was at one time considered a best friend now one can’t afford to NOT list their product on Amazon – the sad truth is it’s a long haul and an expensive one.
As America grows lazier and fatter because it’s just a touch of a button or the sound of a voice to have whatever one wants at the door within 1 hour…how can anyone think Big Brother is not watching.