The e-commerce giant wants to reduce its colossal international losses, which amount to several billion dollars for the year 2022.
Amazon’s presence in Europe is less mature than in the United States. The costs are higher there and affect the company’s income very hard, which leads it to make major changes that will not be to everyone’s advantage.
$7.75 billion in losses
The company’s retail business has seen a downturn in recent years, particularly internationally. Last year was particularly difficult in this market: Amazon recorded three times more losses there than in 2021, namely more than seven billion dollars. Among the solutions to reduce this trend, which should continue in 2023, the giant has decided to remove some of its intermediaries with brands, after having already announced a massive layoff plan within its teams.
Affected distributors and wholesalers were notified of these changes in an email: As part of a supply policy deployed at European level, Amazon has decided to focus on supplying brands directly from their owners. “. This measure should be gradually implemented in the coming weeks and months.
In the same email, the American giant specifies that there will be ” always the possibility of selling these products to customers directly on our store via Amazon Marketplace, as a third-party seller “. This allows the firm to take a commission on each sale and charge additional costs for logistics and advertising, without having to buy and manage inventory directly.
Possible negative impact on product availability
This commission has only increased in recent years, and today averages 50% according to Bloomberg. Distributor margins should therefore drop significantly and radically change the supply chain, to the point of imitating the availability of products on Amazon. This is what a former executive of the company explains: Many brands do not sell directly to Amazon and rely on distributors to reach their customers, this latter decision is likely to have a negative impact on availability, and therefore on the overall experience of these. “.
At the same time, like traditional supermarkets, Amazon is seeking to better control its relationships with brands, and therefore to better negotiate its selling prices and the availability of products. The Amazon spokesperson explains: As is the case with all businesses, we regularly review our approach to product sourcing as we try to control our costs and keep prices low for customers. “.
Source : Bloomberg
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