The Web Retailer News Digest for January 8th, 2021
Our first news roundup covers around two and a half weeks, and it turns out that is a long time in the ecommerce industry.
We have news of marketplace sell-offs and IPOs, a new law in the UK requiring marketplaces to collect VAT, the implications of Brexit finally going into effect, and stacks of stories, announcements and policy changes from Amazon.
First let’s take a look at everything Amazon has been doing.
There’s some rare good news this week: Amazon policy changes that benefit sellers (a little) rather than squeezing them even harder, for a change.
First, Amazon has lowered the IPI (inventory performance index) threshold from 500 to 450. This means that stock held in FBA can move a little more slowly through the system before storage limits are imposed. There is no change to restocking quantity limits, which remain in place.
The second nugget of good news is the postponement of annual FBA fee increases until June 1, 2020. Sellers who were expecting to get hit by shipping fee increases early this year will… still get hit by shipping fee increases, but later this year. Amazon, never one to shy away from saying how generous they are, wrapped this up with a little bow on top just in time for Christmas.
Some minor Seller Central improvements have come in the form of a new bulk image upload tool, and a new report under the Pricing Health dashboard makes it clear if offers are not eligible for the Buy Box because your prices are too high.
Not so good is a new requirement for merchants selling through Amazon Business in the UK and Europe. It is now a requirement for sellers to keep their Invoice Defect Rate under 5%. An invoice “defect” is failing to upload an invoice by the end of the next business day after an order is shipped. Amazon is clearly intending that business buyers always have a proper invoice on the day they receive their orders, and never have to request an invoice manually.
Amazon has reminded merchants selling pesticides that they need approval from Amazon, and their products need EPA registration numbers. Actually, the announcement talks about “listings classified as pesticides” rather than simply “pesticides”. This is apt, because Amazon has classified DVDs, toys, stamps and an automatic toilet bowl flusher as pesticides, and – in typical Amazon fashion – has proven reluctant to change its mind about those designations.
Amazon in the news
Amazon wasted no time in telling the world about its record-breaking holiday season, publishing a blog post about it on December 28th. A story from GeekWire highlights that third-party Amazon marketplace sales increased more than 50% worldwide, compared to the same period in 2019.
In other news underlining Amazon’s size and clout, we learned that it has surpassed Boeing as Washington’s biggest employer, with 80,000 employees in the state.
That milestone is given a different slant by Amazon’s pledge to spend $2 billion on affordable housing in Washington, Arlington and Nashville – its three major office hubs in the US. Does the arrival of Amazon’s highly-paid office workers in an area cause such a housing price crisis that billions are needed to create homes that locals can actually afford?
Of course, it’s a different story for Amazon’s warehouse workers. Bloomberg (via DC360) reported that more than 4,000 employees in nine states rely on food stamps.
As Amazon dominates the ground, it turns its sights to the sky. Amazon has purchased 11 aircraft from pandemic-struck airlines to join the Amazon Air logistics network. Last year, Amazon launched an international air hub in Germany, along with operations at 11 US airports.
We sometimes forget that many Amazon initiatives do not work out. Anyone for a Fire Phone? This week, we learned that Amazon’s healthcare joint venture Haven, entered into with Berkshire Hathaway and JPMorgan, is being disbanded. It’s not because the program failed entirely, but that the three companies never really did anything together. Three years ago, the announcement that these huge corporations were cooperating to lower the cost of healthcare gave established medical companies a scare. Today, normal (and expensive) business has resumed.
Amazon’s product safety problems continue. The FDA issued a release warning for consumers to avoid “male enhancement” and weight loss products sold on Amazon and eBay. Why? They purchased the products and tests revealed dangerous drugs, including active pharmaceutical ingredients that are only legal to buy with a prescription. All 26 of the products the FDA purchased on Amazon, and 80% of the products purchased on eBay, contained prescription-only drugs.
Lastly in Amazon news, the new companies that specialize in buying up Amazon FBA brands are gaining more and more attention. ModernRetail says Amazon sellers are getting “Silicon Valley-ified”, while DC360 argues that the proliferation of these companies is great for Amazon merchants. But what do we call them? Are they buyout firms, roll-up companies or FBA acquirers? None of those really seem to roll off the tongue.
eBay has been working on its marketing initiatives, with a near-incomprehensible Santa Sneaker Drop which “aims to engage sneakerheads with a gamified AR experience during the climactic holiday shopping crush”, according to Marketing Dive. In other words, eBay gave away 500 pairs of collectible sneakers over three days leading up to Christmas.
eBay has also rolled out its own payment system to more categories, including collectible coins and bullion, according to EcommerceBytes. eBay Managed Payments has been slowly replacing PayPal since 2018. The companies split in 2015 following pressure from an activist investor, but agreed to work together for five years.
eBay has put out its annual update on carrier shipping rate changes. Interestingly, UPS rates remain at 2020 levels for sellers using eBay Labels to print their postage. There’s no word on whether this is a deliberate benefit for sellers or a glitch that will be “fixed” in time. If so, let’s hope that eBay takes as long to fix it as the other bugs on the site!
Walmart dipped a toe into the world of live commerce, with its first shoppable video stream on TikTok. The hour-long Holiday Shop-a-Long Spectacular featured ten TikTok creators showcasing Walmart’s own clothing brands. With a deal for Walmart to buy a stake in TikTok still pending, and the reasons for Walmart’s interest unclear, this is the clearest indicator yet of how the company sees the video-sharing social network playing a role in its business.
Walmart also announced home pick-up for returns. The new, free, Carrier Pickup by FedEx allows shoppers to leave orders at their door for FedEx drivers to collect.
Around the world, Amazon India added 150,000 sellers in 2020, and over 70,000 Indian businesses have achieved cumulative exports of $2 billion using its Global Selling program, says mint. India is one of only two success stories for Amazon in Asia (the other is Japan) but the market is competitive, with Walmart-owned Flipkart close behind.
In China, Gucci is the latest brand to join Alibaba’s Tmall Luxury Pavilion. High-end brands have flocked to Tmall’s luxury platform, with 200 companies including Balmain, De Beers, Burberry and Marc Jacobs. This is in stark contrast to Amazon’s luxury effort in the US, which has been slow to attract brands.
Brexit and cross-border ecommerce
More than four years after the UK’s referendum on leaving the EU, Brexit finally took effect. In the UK government’s trademark style, a trade agreement with the EU was signed at the last minute on December 30th. Unsurprisingly, few businesses fully understand the consequences of the 1,246 page agreement, but resources are available for UK businesses from the likes of Amazon, eBay and the government.
Amazon’s Brexit announcements include changes to the Amazon Partnered Carrier program, free VAT services for one year, automated long-term removals from FBA being disabled across the UK and Europe, and a bunch of new year webinars.
Helpful materials on Brexit are much thinner on the ground for businesses in the US (and elsewhere) who have been trading with the UK under EU rules. Wherever you are, if you want to know about Brexit, take care with any information that’s more than a week old!
Amid the Brexit confusion (Brexfusion?), at least the situation regarding VAT on online marketplace orders shipped into the UK is clear. That is because the UK was ready in advance (well, November) with a new VAT scheme for imports. The first part is that every shipment to UK customers under £135 in value will be liable for VAT, and it will be down to the online marketplace to collect it. There is no change in the VAT rules for orders above £135 in value.
This is similar to the marketplace facilitator laws for US sales tax that became widespread in 2020, except that the UK government has not thought of a catchy name for it. Despite the clarity in the law, how it will work in practice is not so clear. Confident announcements of compliance have come from Amazon and eBay, but many US sellers have simply decided to stop shipping to the UK, including Captain Kirk.
Unlike Amazon and eBay, LEGO marketplace BrickLink is not ready just yet, probably because it was too engrossed in its new Christmas toys to care about Brexit.
Cross-border ecommerce is also getting a little more difficult on the other side of the Atlantic. The USPS has said that shipments into the US which do not have electronic customs data sent into advance will be sent back to the country of origin, as a consequence of new legislation that aims to stop illegal drugs being imported through the mail.
Other ecommerce news
Corporate activity in the world of ecommerce includes used fashion platform Poshmark filing for an IPO, and eBay announcing the sell-off of its Korean website. eBay has once again been under pressure from activist investors, this time demanding the sale of non-core assets like StubHub and Classifieds.
We also learned that dog-treat subscription box retailer BarkBox is to go public via a SPAC deal, where investors lay down hundreds of millions of dollars for shares before they even know what they are investing in. In this case, it turned out to be bully sticks and pigs’ ears. Nice.
The astronomical online sales of the holiday season are expected to shrink by $115 billion this month, as customers return a large proportion of their purchases and gifts. The UK’s Royal Mail has even christened 4th January as Takeback Monday – the day that most Brits will return unwanted Christmas presents bought online. Who benefits from all those returns? Parcel carriers like Royal Mail, of course.
Staying with logistics, regular drone deliveries have become a step closer to reality in the US, as the FAA said small drones will be allowed to fly over people and at night. The companies working on drone deliveries include UPS, Google, Amazon and Walmart.
And finally, readers may have noticed that President Trump was in the news this week. That’s right, the big news is that Shopify has shut down the Trump Organization’s TrumpStore.com. People shopping for late Christmas gifts will no longer be able to enjoy sale prices on items such as a lovely green Trump dog lead ($29.99), a pink Trump golf towel ($9.99) or a set of five magnets featuring Trump golf resorts ($10.00).
At least the Wayback Machine has a copy saved for future generations to enjoy: