Amazon has long touted its relationships with the small businesses who sell on its platform as helping them “reach hundreds of millions of customers around the world.” But Bloomberg reported on Tuesday that the e-commerce giant is about to cease bulk ordering for “thousands of mostly smaller suppliers,” which could have a devastating effect for those mom-and-pop operations. Amazon, however, disputes the report.
“We informed Bloomberg prior to publication of their article that their sources and story are wrong,” and Amazon spokesperson told Gizmodo in a statement by email. “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. Like any business, we make changes when we see an opportunity to provide customers with improved selection, value and convenience, and we do this thoughtfully and considerately on a case-by-case basis.”
Because Amazon controls a huge chunk of market share, the company wields immense power over the sellers on its platform—everything from reportedly pushing brands to change their packaging to dictating which brands can and cannot advertise their products on its platform. Citing sources familiar with the matter, Bloomberg reported that smaller vendors that are currently turning around less than $10 million in sales will now no longer receive bulk orders from the company.
The report states that Amazon also hasn’t renewed contracts with some small businesses and hasn’t filled open positions that would otherwise be handling those vendor relationships. Instead, it will turn to bigger-name brands like Procter & Gamble to help it stay competitive and cut costs.
According to Amazon itself, half of all of the items sold on its site “come from the millions of small and medium-sized businesses that have chosen to grow their business on Amazon.” While Amazon disputes Bloomberg’s report, it is known for pulling the plug on products known as “CRaP,” internal slang for “Can’t Realize a Profit.” Bloomberg claims the apparently forthcoming move will affect thousands of businesses that must make the switch from Amazon wholesaler to independent marketplace vendors, which a former vendor manager told Bloomberg can take up to 120 days and could make or break those businesses’ holiday sales.
If correct, it would certainly seem that Amazon is looking to cut back costs imposed by more than just a few individual vendors who aren’t selling as well as the company thinks they should be. As Bloomberg noted, it also comes at a time when Amazon must increasingly compete with big box stores trying to mimic its successful model with online sales.
If nothing else, this move would seem to reaffirm the incredibly precarious position that all businesses that sell on Amazon—but especially the smaller ones—face as the company works to boost its bloated bottom line and make Jeff Bezos, already the world’s richest man, ever richer.