Thursday, March 21, 2019

"Amazon is blocking ads for products that lose money" (AMZN)

From Fast Company:
Amazon is tidying up its bottom line, and wholesale vendors are feeling the squeeze. The Everything Store is telling its vendors that it won’t promote products that it takes a loss on as a result of storing and shipping fees, according to CNBC. In order to promote those products with paid advertising, vendors must cut the cost of the product for Amazon.
CNBC obtained an email from Amazon to one of its vendors:
“One or more of your products no longer qualifies for advertising because the sale of this product on currently results in a loss to Amazon.” The email goes on to say that the brand must “lower the product’s cost” to Amazon in order to become eligible for advertising again.
The change comes as some analysts are expecting a slowdown for Amazon’s e-commerce business. “This year, we expect Amazon will generate roughly $440.83 billion in worldwide retail ecommerce sales, a 19.8% increase over 2018. This represents a slowdown in growth from a 22.4% increase in 2018,” eMarketer wrote in February.

It also appears to be part of a broader shift  toward focusing on its marketplace for third-party sellers. Selling direct produces lower margins for Amazon than selling through third parties on its marketplace. In December the Wall Street Journal reported that Amazon was eliminating products that couldn’t turn a profit from its lineup. This refusal to advertise products that it takes a loss on is likely part of the same new strategy....MORE