Editor’s Note: Post and headline updated with comment from Amazon
Amazon today denied a report that it is preparing to stop making bulk orders from thousands of mostly small vendors, a move that threatens to upend the tech giant’s relationship with many of its suppliers.
Amazon refuted the report from Bloomberg saying that the tech giant planned to cut off orders from wholesale sellers. The tech giant issued the following statement: “We informed Bloomberg prior to publication of their article that their story and sources are wrong. We review our selling partner relationships on an individual basis as part of our normal course of business and any speculation of a large scale reduction of vendors is incorrect. Like any business, we make changes when we see an opportunity to provide customers with improved selection, value and convenience, and we do this thoughtfully and considerately on a case-by-case basis.”
Amazon previously halted orders from some wholesale vendors in March, instead encouraging them to sell directly to consumers via the third-party marketplace. That development sparked panic among suppliers, concerned that one of their biggest sources of consistent income would dry up.
A few weeks later, orders from Amazon resumed. But this time around, citing “people familiar with the plan,” Bloomberg reports that bulk orders from Amazon will drop off permanently.
The trend will mostly focus on small, mom-and-pop wholesalers. Per Bloomberg, Amazon will continue to make wholesale purchases from brands like Procter Gamble, Sony and Lego to make sure it has adequate supplies of everyday items as it battles other big retailers like Walmart and target.
Not having the guarantee of regular purchase orders from Amazon creates a lot more risk for vendors that could be stuck with unsold inventory. However, selling on Amazon’s marketplace instead of directly to the company gives sellers more control over prices and other aspects of the transaction.
Such a shift would represent one of the biggest changes to Amazon’s e-commerce strategy since the tech giant opened up the platform to independent retailers two decades ago. Per Bloomberg, it is part of a larger initiative to continue increasing the variety of products on the platform without adding more managers to oversee it. Encouraging suppliers to sell items themselves lowers Amazon’s risks and costs of purchasing, storing and shipping items on behalf of sellers.