While purists may bemoan the fact that Thanksgiving can’t get a standalone season to call its own, retail fans have jumped two feet first into the holiday shopping season as the retail world has more or less decided that Black Friday is just too limiting.
Why have a day dedicated to holiday retail when one can claim the entire month for savings?
And given that the numerical predictions for holiday retail 2016 have been strong across almost the board — or at least reasonably on pace to not disappoint — the rush to get into the shopping season is not very surprising. If the good times are going to roll, it stands to reason that the merchants who have had a hot-and-cold 2016 thus far would like to see them get rolling.
But as the season is heating up (metaphorically speaking), there is a small but increasingly vocal group of retailers who are feeling less festively fun and more grumpily Grinchy: Amazon Marketplace sellers.
Amazon will very likely be a busy place this year during the holiday season. Online spending in November and December is projected to increase 17.2 percent — more than five times the rate of total retail spending, according to eMarketer. Additionally, Amazon remains the U.S.’ top eCommerce spending destination. Which makes sense, given the 65 million or so Amazon Prime members estimated to be in the U.S. as of the end of September. Amazon is itself projecting a strong holiday seasonal season and expecting to clock-in between $42.3 million and $45 million in Q4 2016 sales. All of that is good news for marketplace sellers — the busier Amazon is, the more likely they are to catch consumers’ eyes and capture some of that sweet holiday season conversion.
So why isn’t everyone dancing underneath the mistletoe?
Because being a seller has its price — one that literally went up this year — as well as requirements that are getting a bit stricter than they have been in the past. Some of those retailers, although happy for the traffic, are finding they are chafing a bit under the new rules.
Keeping The Goods Moving And Shelves Clear
Regular readers know that Amazon has spent the last half of 2016 building warehouses far and wide in an effort to ensure that when it can deliver their goods wherever they are ordered and whenever Amazon said they would deliver them. And the retailer is not kidding around about optimizing that space — it’s pushing their merchant partners to be similarly efficiency-minded this year.
Translation: If it’s not for Christmas, please don’t put it in the warehouse.
“We’re trying to incentivize sellers to wait to send us the Easter-themed cookie cutter sets,” said Cynthia Williams, vice president of fulfillment by Amazon. That’s not actually a joke, either — last year, 600 such sets arrived in the fourth quarter.
As it turns out, money is a great incentive (who knew?). So Amazon this year is doing something different: variable pricing for warehouse space. For the first time, it is charging its sellers a premium for storing merchandise in its warehouses during November and December. It will be lowering its fees for fulfilling orders, as it doesn’t want to chase merchants partners away for Christmas. However, Amazon wants to make sure that if their merchant partner puts it in the warehouse during the holidays, they actually plan to sell it during the holidays.
On some merchants, it’s having the desired effect: Apparel retailer Brian King realized he could see his costs go up an unacceptable 30 percent this year — and has such rethought how he sends goods to Amazon for storage.
“We’re trying to be more efficient in what we’re sending,” he said, noting that he’ll send a series of smaller shipments instead of a single large one every 90 days.
Other merchants have grumbled, noting that it increases their costs at exactly the time of year when they are hoping to recoup losses and adds complexity to their supply chain management that they sought to avoid by working with Amazon.
Other retailers, like “everything” dealer Jordan Malick, are less sympathetic.
“The people who grumble about the fee increases tend to be the sellers who are ruining it for everyone else,” he added, including those leaving merchandise that won’t sell sitting in Amazon’s warehouses.
One Return Policy To Rule Them All
While the bulk of marketplace retailers report taking the new storage fees in stride, more attention-getting has been the recent expansion of Amazon’s guaranteed returns to third-party sellers who handle shipments outside of Amazon’s fulfillment centers. Previously they had not been subject to automatic returns, and instead sellers had been able to review them on a case-by-case basis — and to charge restocking fees.
That exemption, it seems, is over as the following email went out earlier this fall: “Dear seller, Starting on November 1, 2016, US seller fulfilled returns that are within Amazon’s returns policy will be automatically authorized, and Amazon will provide customers with prepaid return labels on your behalf.”
If the vendor does not agree with the return, they are to officially take it up with Amazon via a filed complaint.
It’s unclear how many vendors will be impacted by this policy change, but about half of Amazon’s eCommerce business is from marketplace sellers, who number in the millions — and early social media reaction has been intense in some quarters.
“Automated returns are really going to send shock waves,” said Fred Ruckel, who sells a cat activity play mat on Amazon called the Ripple Rug. “People are suddenly going to get thousands of returns after Christmas.”
Will it be enough to walk from Amazon? Probably not — as long as Amazon continues delivering customers in droves. But as Amazon reins in its marketplace more — curtailing paid reviews and making sure its merchants show the same dedication to customer satisfaction — it is raising the walls of its garden some.
It will be interesting to see how and if it changes what grows inside.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More