Amazon Product Hunting. According to a Wall Street Journal survey, Amazon is attacking products with little or no profitability - products that are expensive to deliver, heavy or bulky - by asking sellers to change the packaging and take care of them of delivery.
This new strategy shows the search for a better profitability of its e-commerce activity.
Some products sold on Amazon are not profitable, and the company wants to change that.
According to the Wall Street Journal, the e-merchant has decided to review its sales strategy for products with low or no profitability and is pushing the big brands it distributes to change their use of the platform.
Bottled beverages or snack foods are one of those products, internally called "CRaP" for "Can't Realize a Profit" ("Cannot Make a Profit").
Often sold directly by Amazon for less than $ 15, they are expensive to deliver because they are heavy or bulky, and therefore bring a non-existent margin, or even make them lose money.
PACKAGING CHANGE
After years of focusing on growth, Amazon is now focusing on profit from its e-commerce business.
It, therefore, attacks these CRaPs, either by withdrawing them from the sale or by asking its manufacturers to review the packaging in order to sell them better.
As a result, while certain Dash buttons (which allow certain products to be ordered at the press of a button) triggered the purchase of a pack of six bottles of water from the Coca-Cola Company, the firm informed its customers that the purchase default was 24 bottles.
This August decision with Coca-Cola saw the order drop from $ 6.99 to $ 37.20, raising the price of the bottle from $ 1.17 to $ 1.55. A decision that goes somewhat against the principle of Dash: order regularly in small quantities.
And the decision is not only about costs and volume: it was also decided that the food manufacturer would send its products itself, thus avoiding storage costs for Amazon.
Changes that increase costs for companies, which are forced to accept, otherwise they will no longer appear on the platform and lose a significant portion of their income.
NEW STRATEGY
Removing or transforming low-profit products "is something we do and work on with our salespeople all the time," Amazon CFO Brian Olsavsky told The Wall Street Journal, adding that this has not changed. the company's profitability in 2018 according to him.
He recalls that like other sellers, Amazon makes changes in its inventory when a product sells poorly or is not profitable.
This concern to improve the profitability of its e-commerce activity comes as Amazon has relied in recent years on the success of its cloud platform, Amazon Web Services, which has made it profitable and has increased its valuation.
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