Amazon Making New Push to Shift Vendors to Its Marketplace

Based on reports we are receiving, Amazon appears to be making a new wave of changes to how it is purchasing inventory from vendors.

We’re hearing that Amazon is doing three things.

First, starting last week, Amazon reportedly sent out Direct Fulfillment suspension notices to many vendors. “Direct Fulfillment” is an Amazon program that allows vendors to drop-shop goods directly to buyers. For instance, some vendors will set up full pallets this way for B2B selling to other businesses.

Second, this week, some vendors are reporting that Amazon’s regular bulk purchase order volume is down significantly — some by over 50%. Our understanding is that these vendors have not yet received explanations from Amazon as to why their purchase order volume has substantially decreased.

Third, some vendors are reporting receiving the following message from Amazon:

I would like to inform you that our internal team have reviewed your business with Amazon and strongly believes that Amazon customers would be better served if your products were made available through Seller Central. As we are constantly looking for ways to improve the customer experience we recommend you to setup Seller account to continue your business with Amazon.

Based on what we are hearing, it appears that larger vendors (i.e. those doing several million in annual sales on Amazon) are not affected by these changes thus far. However, smaller vendors are being pushed to become marketplace sellers on Seller Central.

“This is a big deal, because the vendor platform is invitation-only in the first place,” says Blair Anderson of Anderson & Associates, which provides manufacturers with full-service Amazon management and advice. “Vendors were a slightly protected side of the business.”

Big picture, it sounds as though Amazon is deprioritizing smaller vendors on the whole, though this could be a signal that Amazon will increasingly push vendors of all sizes to shift part or all of their operations to its marketplace. We’ll continue to track developments.