Amazon prepares to purge thousands of small independent suppliers
Amazon is reportedly poised to launch a purge of thousands of smaller suppliers in an effort to cut costs and focus wholesale purchasing on major brands.
According to Bloomberg, three sources close to the matter said that thousands of smaller “mom-and-pop” suppliers will soon see bulk orders from the online giant dry up.
The move is designed to shift away from independent suppliers, favouring brands like Sony, Lego and Procter & Gamble to ensure they have enough big-name supplies to compete with its physical rivals Walmart, Target and Bestbuy.
Meanwhile the suppliers being shunned will need to focus on selling items directly to customer via Amazon’s marketplace, rather than selling wholesale directly to Amazon and letting it manage the retail side.
According to the sources vendors selling less than $10 million in products annually will no longer receive bulk orders from Amazon, though this could vary by category.
Should the plan go ahead, it would mark one of the largest shifts in Amazon’s ecommerce strategy since opening its platform to independent sellers.
In response to the report, Amazon told Bloomberg: “We review our selling partner relationships on an individual basis as part of our normal course of business, and any speculation of a large scale reduction of vendors is incorrect.”
The news comes as Amazon continues to shift towards a “hands off the wheel” approach as it tries to keep its range of products expanding while keeping costs to a minimum.