I listened to an interesting podcast on Global From Asia. It is entitled Amazon FBA Trends in 2018 with Danny MCmillan and Will Tjernlund.
These two guests shared their experiences and insights on the ‘Fulfilment By Amazon’ platform. I took a few notes that are outlined below.
Amazon is now a huge platform
Outside of China, Amazon often represents more than 80% of sales for e-commerce companies.
Many companies depend excessively on Amazon and have been trying to develop other channels (eBay, direct sales with Shopify…), but it has been very difficult to surpass the amount of sales generated on Amazon.
Amazon’s platform now has so much power, they have gotten stricter over time
Regulatory compliance and quality standards are enforced more and more tightly.
I think this makes sense. Amazon needs to differentiate its offer from Aliexpress, eBay, and maybe tomorrow a more aggressive and international Alibaba. If Amazon is synonymous with safe products that always work, while also being price-competitive, why go look elsewhere?
All the compliance-related expenses (i.e. quality inspections and safety testing) will make it harder for small vendors to be profitable, though. If your batches are small, all your margin can be wiped out.
Will Amazon push for quality at the expense of quantity?
There are suspicions about Amazon deliberately trying to make it harder to get listed on their pages. “It’d be best if we had 40 yoga mats to choose from, instead of 4,000”.
There are also predictions that Amazon might increase their monthly fee – for example up to 1,000 USD a month to be a member – in order to get rid of small and/or unprofessional vendors.
The cost of pay-per-click to be featured in the top search pages has also been rising quickly. That’s one more obstacle for small companies that want to sell their products on the FBA model.
“There are suspicions about Amazon deliberately trying to make it harder to get listed on their pages. ‘It’d be best if we had 40 yoga mats to choose from, instead of 4,000’.”
At least they’d be 40 yoga mats that have been put through a “reasonable” testing program (or so you’d hope). It’s a fine line they have to walk to enable smaller sellers to sell their products on the Amazon platform. As or right now, the FBA selling program is the Wild West for counterfeits and the little guys have to suffer because of it.
Good point! There is still work to do. But, once there are at least 40 yoga mats (to keep that example) that have reasonable proof of compliance, Amazon may change the rules and try to do some pruning.