Amazon's conference for third-party Marketplace sellers will be held online Sept. 1-3, and will ... [+]
Merchants selling on the Amazon
Strategic decisions around inventory and supply chain, best ways to defend against counterfeiters and “black hat” bad actors, fallout from a back-to-school season that resembles no other and just staying current with Amazon’s ever-changing rules keep online forums buzzing as third-party merchants commiserate about today’s challenges.
Next month brings a new forum called Amazon Accelerate, a free, virtual conference that Amazon announced last week. The event’s keynoter is Jeff Wilke, the CEO of Amazon Worldwide Consumer who joined Amazon 20 years ago. Billed as its largest U.S. event designed to help Marketplace sellers navigate “a strong finish to 2020 and beyond,” the three-day event for small and medium-sized businesses (SMBs) will take place online Sept. 1-3.
SMBs have seen record sales on the Marketplace since the pandemic hit, Wilke wrote in a recent blog post. Wilke, whose upcoming retirement was announced after the event was unveiled, noted that U.S. third-party merchants sold 3.4 billion products on the platform during the year ended May 31.
On balance, challenges for SMBs are on the rise, too. Newly imposed inventory storage limits at Amazon fulfillment centers, competition from Amazon’s expanding line of private label products, faster delivery requirements and increasing threats from unscrupulous players keep Amazon sellers up at night. Marketplace merchants and Amazon experts shared what they see as key issues and questions bubbling up for sellers as the holiday season nears.
Defense against bad actors: While merchants fear account suspension should they unwittingly run afoul of Amazon’s extensive and sometimes hard-to-interpret terms and conditions, shady parties willfully violate the rules to game the system and steal sales through black hat tactics.
“Every seller I know is investing heavily in brand building but constantly putting out fires with people ‘hijacking’ listings, selling fake products or other black hat products,” said James Kelly, co-founder of Jagerita Holdings, whose apparel brands like Damn Near Kilt ’Em sell on Amazon.
“Amazon needs to give sellers more information to assure us their platform will remain the premier place to invest energy for launching new brands and products,” he added. Prior to co-founding the direct-to-consumer brand incubator, Kelly worked at Amazon on various Marketplace teams.
Fahim Naim, a former Amazon category manager, agrees: “The number of fraudulent ‘hijackers’ who add an offer to a listing—despite not having the inventory—is rapidly rising,” said Naim, who founded consultancy eShopportunity after leaving Amazon. Naim said banned practices such as product knockoffs, paying for customer reviews and posting negative reviews on competitor products are also increasing so merchants would be eager to learn what Amazon is doing to fight fraudulent seller tactics.
Inventory limitations: In preparation for the upcoming peak selling season, Amazon last month imposed restrictions on inventory storage for some third-party sellers using its warehouses and Fulfillment by Amazon (FBA) program. This change, affecting merchants who do not meet sell-through thresholds due to low velocity or unavoidable pandemic-related supply chain disruption, leaves some with questions about how they will be impacted.
“Many sellers are extremely worried that the current inventory restrictions placed will limit their Q4 sales, and there is much ambiguity on how these limits will evolve over the next few months,” Naim said.
Mike Zhang, founder and CEO of Fenrici Brands, had a similar observation. “For those who have storage restrictions—due to past performance impacted by the pandemic—will there be an opportunity for increased space allowance based on performance before the end of the year?” said Zhang, when asked what he thought sellers’ might be thinking about going into the holiday season.
Founded in 2018, Madison, Wis.-based Fenrici Brands generated $1 million in sales and turned a profit its first year selling backpacks, lunchboxes and thermoses on the Amazon Marketplace.
Another question Zhang thought sellers may be thinking about given Amazon’s temporary shipment restrictions on new items: “Are there any plans to support sellers to bring in new products and generate significant sales volume during the holiday season?”
He also thinks sellers will be seeking advice on supply chain planning, now that this year’s Prime Day has been postponed and will fall much closer to the holiday selling period. Last year’s Prime Day was in July; Amazon has not announced dates for 2020 Prime Day, though some expect it to be in October.
New Delivery Speed Requirements: On Tuesday, Amazon notified third-party sellers who handle their own shipping under the Seller Fulfilled Prime program that beginning in February 2021, they must support Saturday delivery and pickup for products carrying the “Prime” badge, which promises delivery to customers in two days’ time. Amazon said the change is part of its transition from a two-day delivery promise to one-day delivery program.
“And, sellers will have to do that for the entire footprint of the U.S.,” said Timothy Seward, founder and CEO of ROI Revolution, a Raleigh, N.C., digital marketing agency. Under the current program, sellers can limit sales of their Prime-eligible products to specific geographic regions where they are sure they can meet the two-day delivery window.
Satisfying new delivery speed and national coverage requirements by the February 2021 effective date can be especially burdensome for smaller sellers with limited resources.
Seward said there will always be new operational issues for Amazon Marketplace sellers to contend with and it’s important to strategize for the long term.
“Broadly speaking, what sellers are interested in is, ‘How can I market better using the tools of the platform, to evangelize my product and increase sales?’ ” he said. “How can I take advantage of the updates and the changes within the Amazon advertising ecosystem to be able to make the sale, to bring people to my brand versus another?”
One Amazon expert told me next month’s Amazon Accelerate event isn’t about addressing tactical questions; most sellers won’t be satisfied with Amazon’s answers, anyway. He said smart merchants will instead focus on getting a deeper understanding of the platform, its priorities and to look for cues on next steps so sellers can better align their goals with Amazon’s goals going forward. That’s the way to succeed, he said.
Topics likely to arise, he predicted, include how Amazon plans to use influencers, enhancements to Attributions, the analytics dashboard brands use to track advertising performance across channels, and growing importance of video for advertising as well as the product detail page.
In addition to Amazon’s Wilke, who will keynote the Accelerate virtual conference, other Amazon executive speakers include Dharmesh Mehta, vice president of customer trust and partner support; Christine Beauchamp, president of Amazon Fashion; and Devesh Mishra, vice president of worldwide supply chain. The event, which will include live question-and-answer sessions, is for both existing Marketplace sellers and also those considering selling on the platform.
Jeff Cohen, vice president of marketing at Seller Labs, and a speaker on the Accelerate agenda, suggests event participants go in with an open mind. “At the end of the event, rank your to-do list and focus on the actions that can truly move your bottom line,” Cohen said. “It’s Amazon's job to make you aware of everything they offer. It’s your job to determine if it makes sense for your business and apply it.”
Update: This story was updated on Aug. 23, 2020, to reflect news that Jeff Wilke, who joined Amazon 20-plus years ago, will retire in first quarter of 2021, according to an Aug. 21, 2020, filing with the Securities and Exchange Commission.
