Amazon Weekly News Digest - August 14

WITH BOBSLED FOUNDER & CEO KIRI MASTERS

 

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Dear Bobsled Clients,

I hope that this news digest helps you interpret and analyze the rapidly changing world of selling on (or to) Amazon.

I welcome your feedback on this new initiative!

KEY TAKEAWAYS

Pardon me, but I’m skeptical of Amazon’s new charity donation program

Giving Amazon the benefit of the doubt - I think its great they are giving sellers the option to donate their unfulfillable FBA inventory to charity, and potentially divert tons of products from landfill. I’d love to see, for example, unfulfillable beauty and apparel products going to a great charity like Dress For Success rather than ending up in landfill.  

But the skeptical side of me also wonders - what's stopping these charities from turning around and flipping these products back on Amazon? Or selling these products on to Amazon resellers? 

I also don’t like that they just auto-enrolled all sellers in this program. If you don’t want to be part of it, you need to opt-out now (if you’re a current Bobsled client we can do this for you today).

What you should do instead: if you’re using FBA, always get your inventory returned to you, then you can donate it to local charities yourself and control the process. You also can get a tax benefit for doing so. 

Further reading: Tamebay: Amazon FBA disposal Inventory to be offered to Charity

‘Sold by Amazon’ program reprices seller offers

What it is: Amazon launched a beta program called ‘Sold by Amazon’ last week, which lets Amazon control the prices on enrolled FBA products in exchange for a minimum payout to sellers. "When a customer purchases a SBA product, Amazon will purchase the product from you, and sell it to the customer," Amazon explains on its website. To shoppers, these offers appear as ‘shipped by’ and ‘sold by’ Amazon - hence the name of the program. 

Why Amazon is doing it:

  • Some media coverage suggests that this is another test in Amazon’s potential move to combine Vendor and Seller channels. 

  • It shows how Amazon is increasingly focused on relationships with brands, rather than with resellers - only sellers who are Brand Registered can use the program. 

  • It helps Amazon know that they can have the most competitive prices online - and get merchants to agree explicitly on this point. 

Should you consider it? 

  1. The major downside of this program is that you can’t run and PPC advertising on enrolled products, nor Lightning deals. A brand I spoke with last week who enrolled some of their products found that their revenue actually went down during the beta test due to this factor. 

  2. Brands that have a specific pricing strategy should also stay away - while Amazon is an expert repricer (apparently repricing items up to 2.5M times per day), they don’t understand the potential channel conflict that pricing can produce.  Amazon will be looking to reprice your products in comparison to other sales channels and offer the best price. 

  3. Brands that are having trouble with maintaining the buy box (due to unauthorized sellers) might do well to consider the program, since SBA guarantees that the brand won’t lose the buy box due to price. Since only Brand-Registered brands can use the program, resellers will in theory be left out in the cold.  

Further reading:

Digiday: ‘A slippery slope’: Amazon wants to control third-party sellers’ product pricing

Ecommerce Bytes: Amazon SBA treats sellers as suppliers

Onsite Associates - a deep dive into Amazon’s publisher program

Have you noticed various Editorial Reviews on Amazon when you search for terms like “best frypan” or other research-oriented search queries? Turns out they are all part of Amazon’s wider affiliate program, where the publishers, like Purewow, The Wirecutter, and others all get a commission on the sales that their content helps to generate on Amazon. 

What does this mean for brands? If your products are featured in these reviews, its probably going to be a great thing for your sales! The downside is that if your brand is left off of these lists. A third party (the publisher) is developing this content and making product recommendations, but that publisher also happens to be compensated by Amazon for resulting sales. 

This is the challenge that some brands have with the affiliate marketing world  in general - it's hard to see where the incentives lie. 

Further reading:

Digiday: ‘They revel in keeping it messy’: Amazon’s Onsite Associates program is rewarding, but risky for publisher

Second video option for storefronts

First spotted about a month ago, you can add a "background video" to your Amazon storefront that silently autoplays and is on a loop. The video must be between 2 and 20 seconds in length. Here are two good examples of storefronts using this new-ish feature effectively: ECS Boards and Native Deodorant

MENTIONED IN THIS EPISODE

  • I interviewed Charlie Cole, Samsonite’s Global Chief Ecommerce Officer on my podcast episode that aired yesterday. This discussion with Charlie was a huge highlight for me in researching my upcoming book, Amazon For CMOs

  • Senators Question Amazon’s Product Search Process. Last week I wrote about the various antitrust accusations that Amazon faces. The latest is around Amazon’s use of the “Amazon’s Choice” badge, seen on popular products. The argument here is that the algorithm for designating these products still appears to end up rewarding products that are found to be inferior or misleading in their claims.