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Andy Jassy is soon to become the new Jeff Bezos. Does this mean huge changes are in store? Probably not. But agency executives and Amazon insiders think there are many improvements to be made. And they hope that Jassy's experience at AWS can help make a less siloed Amazon ecosystem.
The Federal Trade Commission just announced a $61.7 million settlement with Amazon over its alleged failure to pay tips to its gig delivery drivers. Across Facebook groups and Reddit forums, Amazon Flex drivers expressed pessimism about how much of that money they’d ever see -- and whether the decision will really mark a shift in how Amazon treats its drivers. “I do not think we are treated with the respect we deserve,” said one Amazon Flex driver of three years, who spoke to Modern Retail on the condition of anonymity, referring to the way Amazon engages with its drivers. “I feel we are just a number easily erasable.”
Amazon sellers have historically been far too small to reasonably consider going public. But as Amazon’s overall customer base ballooned this past year, so did the size of its top sellers. Per Jungle Scout, 2% of Amazon sellers now boast lifetime profits of over $10 million. The third-party vendor Pharmapacks, for instance, brings in at least $250 million in annual sales. For that upper tier of sellers, going public is no longer out of the question.
Sellers who spoke to Modern Retail noted that the 'Amazon's Choice' badge appeared to be harder to game than in recent years, and that the number of sales it drives -- while still very high -- has shrunk slightly. In fact, while badges still remain important to the Amazon ecosystem, the company is increasingly testing more human-centric, editorial recommendations in search results -- suggesting that it may be moving away from an algorithmic sorting system to a more human-driven one.
Amazon sellers are increasingly getting acquired. What started as a small, niche phenomenon in the early 2010s -- individual hobbyists buying and flipping Amazon businesses on the hopes of making a tidy profit -- has become a multi-billion-dollar industry. And as a result, the value of a third-party Amazon business is ballooning. This increase is evident on marketplaces like Empire Flippers as well as in the bids of larger roll-up companies -- but some experts see signs of a bubble.
While Walmart Marketplace is growing fast, it’s struggling to gain traction with its relatively clunky seller system that has proven to be especially difficult for smaller and inexperienced sellers to navigate. Meanwhile, those familiar with the program say there are a lot of issues that still need to be worked out. “As a seller, you really should be more established, more experienced, have a team to handle Walmart, because it’s not as intuitive as Amazon,” said Pauline Shiu, marketing director at Zentail, which manages listings for third-party sellers.
As Target and Walmart increasingly build up their e-commerce offerings, Amazon is trying to cling to its positioning in search results. As such, the e-commerce giant tweaked its algorithm to focus more on external search results. When customers type “leopard print bedding” into Google, Amazon wants to ensure that an Amazon product -- not a Walmart product -- comes up first. It's a small but important change, and signals a turning tide.
A new lawsuit alleges that Amazon was fixing the cost of ebooks through anti-competitive contracts with the five major book publishers. It's similar to an earlier one from 2012 involving Apple. These lawsuits offer a preview of what happens when two interrelated industries -- publishing and bookselling -- each become heavily consolidated. Publishing is one of the only high-profile industries to have recurring price-fixing problems, but as Amazon’s market share grows in other sectors, it might not be the last.
Amazon recently announced that it was cracking down on QAnon merchandise. Even if the company is truly shifting its approach to how it polices product listings, its ability to cut down on disinformation merchandise will be hamstrung by its own algorithms. As long as Amazon’s product recommendation algorithm takes a purely neutral approach — even to anti-vaccine or white nationalist products — it will continue to give them prominent slots in search results.
TikTok users are cashing in on affiliate marketing. #AmazonFinds TikTok is the successor to affiliate-focused recommendation publications like the New York Times-owned Wirecutter, where media companies earn their incomes by highlighting useful niche products. Except these TikTokers are building their product recommendation empires alone, without the backing of a legacy publication.
Amazon is getting rid of its Prime Pantry service. But, its death may be a signal of Amazon’s success breaking into the grocery industry. Now the company has gained a big enough foothold in the grocery business that it can streamline those early experiments that weren’t pulling their weight. And Pantry might prove to be the first in a series of future cuts.
Amazon just announced that it would buy 11 of its own cargo planes. The decision solidifies what many in the industry have long speculated: Amazon is starting to play a long game with its shipping network. “The fact that it purchased a plane is a very clear indication that it is there to remain, it’s a long-term commitment,” said one logistics expert.
Amazon sellers are increasingly being wooed by VCs and acquirers. These new firms tend to use similar tricks for finding and optimizing products -- redesigning product pages, reshooting product photos, adding keywords and so on. Amazon’s third-party marketplace could well become crowded with increasingly indistinct, algorithmic winners, accelerating a trend that has already begun on the platform.
A German startup called Razor bought out a seller’s three top-selling products. Razor is part of a growing ecosystem of Amazon seller acquisition companies, sometimes called seller “rollup” companies, that invest in successful Amazon products and pull them into a much larger Amazon product portfolio. Here’s a look at how this growing offshoot of Amazon commerce works.
Companies like Keyo, Grabango, Standard Cognition, Aifi, Zippin and Trigo have all worked on various types of cashierless technology. And despite Amazon’s tremendous power, these companies aren’t seeing their businesses shrink this year. If anything, having Amazon enter a new sector of the retail technology space seems to be a boost for the companies are already active in it.
Watch this on-demand webinar where experts discuss the changes to the back-to-school season and what it means for retailers now and in the future.
In 2020, Amazon Logistics delivered 4.2 billion parcel shipments, up from 1.9 billion in 2019. It now makes up, by volume, 21% of the parcel shipments in the U.S., behind the USPS (38%) and UPS (24%) but ahead of FedEx for the first time (16%).
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