Amazon, because it is cutting European distributors

Amazon, because it is cutting European distributors


Amazon's decision to cut about 20,000 European distributors could be good for the Italian sector and consequently also for consumers. Roberto Liscia , president of the Netcomm consortium, and Mattia Vergerio , co-founder of Scuola Ecommerce , are convinced of this, who shared a reflection on the emerging scenario with

Amazon will no longer purchase supplies from its European distributors In the coming months, the Seattle company, which has decided to review its product procurement method, will interrupt its relationship with over 20,000 vendors

Amazon vendors: why have they been reduced?

Amazon claims that every action Auditing your product procurement system is key to both cost control and keeping prices low for customers. " For this reason we have decided to focus on sourcing some products for our European stores directly from the brand owners - confirmed the company -. We will continue to source products from wholesalers and distributors if they own the brand or have rights of exclusive distribution". It will also continue to work with wholesalers and distributors "who may choose to sell these products to customers directly on our store through the Amazon Marketplace as a selling partner." In summary, starting from April, all vendors, precisely suppliers, who do not own their own brands or who do not have exclusive brands will be cut.

" The issue of wholesalers is a problem in the world, but even more so in Italy due to the numerous levels of distribution. This is the reason why a fruit bought at 1 from a farmer then turns into 10 in supermarkets. From the point of view of rationalization, I see it as an opportunity for cleaning, for efficiency", explains Liscia.

Of the same opinion is Vergerio who deals daily above all with small and medium-sized companies: " I know of entrepreneurs who, as vendors, limited themselves to sorting pallets. They bought for 1 euro and sold for 1 .5 to Amazon without doing anything. And no one could compete with them because they had a contractual power over quantities that was difficult to scratch".

A mechanism that has been going on for years and which has also been convenient for Amazon because the the goal was to have more and more customers, even at the risk of eroding margins. Obviously, as the experts reiterate, the ecommerce entrepreneurs who have ridden the wave of the lockdown and consequently recorded an incredible increase in sales are now in trouble.

" But not all of them actually: those who have invested again in the company and perhaps even expanded abroad continue to grow; the others have remained at a standstill - says Vergerio -. The central theme is that today Barriers to online entry have risen: now solid planning is needed for an ecommerce business".

It is no coincidence that the free Accelerate with Amazon training program, inaugurated in November 2020, has supported more than 35,000 SMEs and startups in the digitization process. Above all, over 65% of these have decided to start their own online business and over 55% have extended their business abroad. In 2021 alone, this cross-border activity generated around 800 million euros in sales for the over 20 thousand Italian SMEs involved, of which 60 million outside the EU.

How to do ecommerce in this new phase

For Liscia, ecommerce is entering a new phase: “ Initially there was consumer literacy, but Covid changed the paradigm and therefore it is now understood that services must be paid for. Accessibility has an extraordinary value, which used to be snubbed ”. Amazon and many other sellers have always focused on competitive prices, free shipping and other services because the user had to be convinced to try the new digital sales channel. But now that model is no longer sustainable and the value chain needs to be re-established. Liscia talks about a new season: a phase of finding the balance between product, precisely value and service.

It is as if Amazon went back to its origins. On the one hand, it rationalizes the number of suppliers (vendors) by aiming directly at a dialogue with the brands or exclusivists; on the other, it allows over 20,000 Italian SMEs (sellers) to get involved in its marketplace. " Even the Amazon Basics product lines have never worked too well and are decreasing, because Amazon is good at selling, but the focus on products that entrepreneurs, even small ones, have is totally different; really another level," adds Vergerio .

According to Liscia, the future is multi-channel, i.e. maintaining a physical store and combining it with the online sale of a selection of products. A strategy that Vergerio also recommends and which in the case of a totally ecommerce business could be declined in multi-brand. " I often suggest having a showcase on Amazon with a brand and if you have the opportunity to become a vendor with a differently branded product line and applying a lower price. So the one sold in volumes by Amazon becomes a coquette for the latter ", concludes Vergerio .

Liscia also underlines that environmental, social and corporate governance (ESG) should be included in the equation: " The consumer must understand that the time has come to be more responsible on environmental sustainability, the work of logistics and also the returns policy. The time of 'I give you everything for free' is over".

Italian ecommerce with great potential

The numbers of Italian ecommerce and the forecasts are clear. According to a recent study by Netcomm, in collaboration with The European House – Ambrosetti, the Italian ecommerce and digital retail value network generates almost 71 billion euros in revenues. In practice, it represents the third force among Italian economic activities by incidence on the turnover of the private sector. The prospect, according to another study by Netcomm in collaboration with Statist a, is that two thirds of the Italian population will buy (also) online in 2023, allowing the country to position itself in fourth place in Europe by diffusion of the sector.

The keystone will be to better integrate digital and physical channels, in an omnichannel perspective. " The various lockdowns imposed by the pandemic have also highlighted this: as soon as possible, people have returned to the stores to experience a real shopping experience, which, however, will have to change profoundly to adapt to the new digital behavior of the consumer ", points out Liscia. In summary, the suggestion is to abandon the typically dualistic vision that you see in contrast online and physical; large platforms and small and medium-sized enterprises. " Digital commerce is an ecosystem to all intents and purposes, and as such it must be conceived, with a view to synergy and collaboration between the players operating in this market", concludes the president of Netcomm.

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