Amazon is pushing “aggressive” and “painful” terms on its UK grocery suppliers as it calls for lower cost prices and longer payment terms.
As the retail giant continues to assertively expand into the UK’s grocery sector, it is putting pressure on suppliers who are increasingly reliant on its sales, The Grocer reported.
Amazon has sent newly proposed terms to many of its suppliers calling for lower cost prices, which it said “is essential for the overall health of your business on Amazon and may have an impact on the number of orders you receive”.
Alongside bigger marketing fees, Amazon is also understood to be calling for payment terms to be extended from 60 days to 90 days, or for terms to remain at 60 days with a one per cent discount.
Suppliers said they are given the option to either agree or disagree with the terms, and although they are able to push back would they are often forced to concede at least some of the new terms.
Currently Amazon’s grocery sales in the UK are below £1 billion annually, meaning it is not yet regulated by the Groceries Code Adjudicator, giving suppliers who depend on Amazon for a bulk of their sales little recourse.
“They are imposing aggressive terms to brands for whom they represent the majority of their business,” Young Foodies co-founder Theadora Alexander told The Grocer, adding that these terms were a “painful squeeze” on the sector.
“As a faceless robot, it is even harder and more intimidating than a normal buyer.”
An Amazon spokesperson said that it reviewed term agreements individually and did not unilaterally impose them on all suppliers, adding: “We strive to build successful, long-term relationships with our vendors, and work with them every day to help them be successful.
“We are always looking at new ways to help our vendors grow their business and offer a great shop window for products in the UK and around the world.”