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To compensate for the loss of the price war, Amazon "passed on" the cost to the supplier

2018

       Amazon, which is caught in a price war, is reportedly passing on costs to suppliers and limiting shoppers from buying a single, low-cost product to offset rising shipping costs. People familiar with the matter said the e-commerce giant was shifting its strategy and was raising logistics costs for drinks, diapers and other bulky products, which were expensive, one person said. Amazon is also preparing to control the amount of cheap items shoppers buy toothbrushes, soap and lipstick; it is hard to make a profit unless it is a large order. Amazon declined to comment. Amazon suffers millions of dollars a year in losses to keep inventory and deal with price battles with retailers such as Wal-Mart. But as the company sells more and more household goods, Amazon can no longer afford these costs. Logistics costs-the cost of storing, packaging and shipping goods-surged 43 percent to $25 billion in 2017, surpassing the 31 percent growth in revenue that year. Amazon has been carefully monitoring the cost of distribution for each product. The platform will deduct inventory costs from the fees paid to suppliers, and now Amazon is raising the deductions, according to people familiar with the matter. Another person familiar with the matter said Amazon plans to lower the threshold for "add-ons" products this year, with consumers buying more than $7. 

        In recent years, Amazon's designated low-cost health and personal care products, known as "add-ons," have been available only when consumers have been shopping for more than $25. These products include Kimberly's toilet paper. Procter & Gamble's toothbrush, Johnson's baby wash, etc. Amazon lowered the bar mainly because some consumers were reluctant to increase their purchases in order to buy "add-ons" products, resulting in a drop in sales of small packaged toothbrushes and hand sanitizers. At the expense of the supplier. In an effort to crack down on rivals, Amazon is trying to slash prices. Boomerang Commerce said prices for 13 products, including pasta, cranberry juice, coffee and ballpoint pens, dropped 38 to 75 on Amazon this month. Amazon needs to cut prices because Wal-Mart is closing the gap. Ecommerce analytics compared the prices of more than 20,000 products sold by two retailers and found that Wal-Mart 's average price was only 1.8 percent higher than Amazon's. Amazon is trying to cut costs and impose them on suppliers-a strategy that Wal-Mart has been using for decades.

  

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