This week, the WSJ reported that the pandemic forced many traditional retailers into ecommerce. No great surprises there.
But this latest wave of interest in ecommerce was different from those that went before it. In recent years, retailers would head straight to sign up on Amazon, believing that its digital streets were paved with gold. You just needed to get on there and sales would come to you.
This time, they are seeing the downsides of selling on Amazon, such as the lack of control and minimal scope to build a brand, much earlier in their ecommerce careers. Shopify has a lot more awareness among retailers now, even those who have zero experience of selling online.
That’s why many businesses gave Amazon a wide berth and headed straight to Shopify to start their digital sales.
Small businesses strike back
While Amazon had a great 2020, growing their share of US ecommerce from 36% to 38%, Shopify had a storming year. Its Gross Merchandise Volume (GMV) was up 96%. Yes, the 1.7 million merchants using Shopify collectively doubled their sales last year. Their online revenue last year is now thought to be equivalent to 40% of the total sales on the Amazon marketplace.
What diehard Amazon sellers might not realize is that Shopify is no longer just a technology company. It has expanded into a range of services that help level it up to Amazon in other areas, such as warehousing, fulfillment and financing.
Traditional retailers can sell their existing stock and send out orders from their stores (many of which are still closed). But these new services also provide easy access to loans, so they can expand their product range, and fulfillment services, so they can lighten the workload of shipping orders to customers.
Amazon has started to see the challenge, although they are rather late to the game. After shutting down its previous Webstore offering in 2015, Amazon recently bought a small Shopify competitor called Selz, and also has its own secret team called “Project Santos” working on a similar system.
It’s too early to tell what Amazon’s part will be in this new resurgence of independent ecommerce. Perhaps this will be one of the few areas where their brand is a disadvantage, and it will be too late to catch competitors who are well ahead of them in both technology and reputation.
Read more at The Wall Street Journal.
Prime Day 2021 – business as usual?
In 2020, Prime Day was delayed for three months amid FBA processing problems and the prioritizing of “essential” products. This year, however, it looks likely that the sale event will take place in its usual slot in the first half of July.
In Europe, the Prime Day submission window is already open for Lightning Deals and Prime Member Vouchers. The deadlines for submissions are April 23 and May 28 respectively, suggesting that Amazon does intend to go ahead with the event as normal.
Prime Day is Amazon’s largest global shopping event exclusively for Prime members, and has been running every year since 2015, usually in the summer when online shopping is at its lowest seasonal level.
Annual fee changes are on their way
Amazon took the unusual move of postponing annual fee increases at the end of last year. The company announced the postponement then in their typical crowing fashion, declaring “While many other companies have passed along costs through surcharges and fee changes in 2020, we have absorbed over $5 billion of those costs on your behalf.”
Now the kind, generous and angelic Amazon has retreated and the fee increases are coming, on June 1st. It’s a complex set of updates, covering FBA fulfillment fees, referral fees, returns processing fees, removals and disposals fees, and FBA Small and Light fees.
To be fair, some fees will go down or even be eliminated. For example, returns processing fees are down for apparel and shoes, and have been removed entirely for watches, jewelry, luggage, handbags and sunglasses. Fulfillment fees are up, although the increases are fairly modest.
The biggest increases seem to be in FBA removal and disposal fees. Those are up across the board, and are particularly high for oversize items. This is one area where Amazon’s direction of travel has not changed. Inventory that unnecessarily takes up space in its warehouses attracts all manner of charges and limits. The message is clear: only send in products that sell, and ship them to FBA on a frequent basis and in smaller quantities.
Read more at Seller Forums – US Announcements.
Amazon B2B sales hit $25 billion
In 2015, the same year that Amazon canned its Webstore product, it also launched its new business-friendly purchasing solution Amazon Business. B2B online sales had been locked up pretty tightly by established players like Grainger before 2015, but data released this week shows just how successful Amazon Business has been in taking market share.
Amazon Business has reached $25 billion in annual sales globally and, just like Amazon’s sales overall, more than half of this is from third-party sellers. Amazon said public entities are its fastest growing customer segment, with 45 US states and 90 of the 100 largest cities and counties signed up to Amazon Business.
Read more at Amazon Business.
Updated clothing photo rules cause confusion
Amazon has asked sellers in the UK to review its latest product photo requirements for clothing, and reminded sellers that “failure to meet our guidelines may result in your ASINs being de-prioritized in, or suppressed from search.”
Unfortunately, Amazon hasn’t been entirely clear about what has changed in the requirements, or if particular parts are being targeted for compliance.
Attention was drawn to the need to show products on models, although the UK requirements actually state that clothing for adults can be shown on a model or simply lying flat on a surface. The US requirements, in contrast, say that clothing should be photographed on a model. Note that the UK and US policies are consistent in that children’s clothing should be photographed flat.
Confusion followed on the Seller Central forum thread where this was announced. Sellers complained that shots of underwear on models were frequently rejected, and that the request for diversity of models would be prohibitively expensive.
Read more at Seller Forums – UK Announcements.
COVID-19 boosted ecommerce by $183 billion last year
Adobe has published a report on ecommerce in 2020, based on its ongoing Digital Economy Index.
COVID-19 increased ecommerce sales by $183 billion, almost as much as the entire 2020 holiday shopping season. For 2020 as a whole, $813 billion was spent online, a 42% increase over 2019.
Adobe expects 2021 to be the first trillion-dollar year for ecommerce in the US.
Read more at Adobe Blog.
Webinars in the week ahead
March 25: Ecommerce in the Nordic countries (register here)
All week: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips (register here).
For US sellers
March 22: How to navigate Amazon Seller Central (register here)
March 25: eBay Seller Tools A-Z (intended for sellers in the Northeast – register here)
For UK sellers
March 23: How to make delivery and returns to the EU friction-free (register here)
March 24: Amazon – Brexit frequently asked questions (register here)
March 25: Amazon – get prepared for “deal events” (register here)
Stranger than fiction
Amazon’s inspection process missed 98% of fraudulent returns
Last Friday, the US District Court of Rhode Island sentenced Michael Chaves to 30 months in federal prison for operating a fraudulent product return scheme, as well as other charges.
Following the arrest of Chaves in June 2020, details of the case were released which included the following eye-watering statistics on the scheme, which had been operating since March 2017:
- 30 Amazon customer accounts were used.
- 10,795 orders were placed, with a total value of $714,000.
- 7,200 items were returned to Amazon.
- 149 of the returned items were flagged by Amazon as potentially fraudulent.
Let’s make the entirely reasonable assumption that those 7,200 returned orders were part of Chaves’ scheme and not simply the result of bad purchasing decisions. This means that Amazon picked up 149 out of 7,200 fraudulent returns – a hit rate of 2%.
In other words, 98% of Chaves’ returns were accepted by Amazon. Apparently, many of the returned items were in their original packaging, and were made to weigh a similar amount to the original products. It hardly takes a master criminal to know that these are obvious steps if you are going to abuse the returns system.
Other descriptions of how the scheme was run included:
- A commercial truck tire was ordered and two pieces of wood were returned.
- A pair of Apple Air Pod Pros were ordered and a pack of mini light bulbs were returned.
- A stabilizer bar link kit was ordered and some dog treats were returned. Yes, dog treats.
Now, I don’t know what a “stabilizer bar link kit” looks like and I’m sure a lot of people don’t. But I think I could tell the difference between one and a pack of dog treats.
It says something when a return fraud scheme can run for three years and over seven thousand orders, and only 2% of those were flagged by Amazon’s inspections process. Just tossing it on a scale and looking at the package really doesn’t cut it. Try opening the boxes, Amazon.