The Amazon Lockdown: How Unforgiving Algorithm Drives Suppliers to Favor Amazon Over Other Retailers

ProPublica

As locked-down shoppers have flocked to buy food, medicine, cleaning supplies and personal care products on Amazon, the retailer has in turn upped its suggested inventory levels for many manufacturers that sell their products on its platform. It has also expanded purchases of certain essential products that it sells directly to shoppers, often buying two or three times as much as it did before the pandemic, executives said.

The heightened demand has forced both third-party sellers on Amazon’s platform and its direct suppliers into difficult decisions over where to send inventory, consultants said. Often, like Rise Bar, they’re favoring Amazon ahead of other retailers. Third-party sellers like Spenuzza don’t have to keep as much merchandise in stock as Amazon recommends. But if they run out on Amazon, where “best seller” status and a listing’s position in search results are linked to availability, the impact on sales could be devastating.

This pattern makes it harder for Amazon competitors, such as grocery and discount chains that have remained open during the pandemic, to keep coveted items in stock. “Everybody in retail realizes there’s limited access to certain stuff, so you better get there first,” said James Thomson, the former business head of an Amazon team that recruits third-party sellers and now a consultant to brands working with the company. “The difference is that Amazon can afford to pony up the cash all at once and say, ‘Back up the trucks, we’ll take it all.’” Thomson called going out of stock on Amazon a “cardinal sin” […]

 

via The Amazon Lockdown: How an Unforgiving Algorithm Drives… — ProPublica

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