The Web Retailer News Digest for August 27th, 2021
In July we started to hear reports that Chinese sellers were being thrown off the Amazon marketplace. This seemed to be due to review manipulation practices that have been going on for years.
The full extent of the purge is now coming to light, via an organization that represents Chinese businesses. According to the Shenzhen Cross-Border E-Commerce Association, more than 50,000 Chinese retailers were expelled by Amazon, accounting for total sales of $15.4 billion.
The Association’s president Wing Xin said the affected businesses now cannot pay their suppliers or get loans, and their staff are facing unemployment. The whole industry of Chinese manufacturers selling directly on Amazon “has been almost completely broken”.
Amazon’s purge was larger than anyone realized
Of course, Amazon’s review policy applies to all sellers, regardless of where they are located in the world. But all of the sellers suspended as part of this enormous purge were based in China, according to Marketplace Pulse.
Some of the best known brands that are no longer available on Amazon include Mpow and Aukey. Their inventory has been frozen in Amazon’s warehouses while they plead with Amazon for reinstatement – an obscure and bureaucratic process that all too many sellers are familiar with.
Shenzhen-based sellers, representing around 35% of China’s entire cross-border ecommerce industry, were invited to a meeting with the city’s Commerce Bureau to discuss their experiences and plan next steps. In response, the affected sellers are being offered two million yuan (around $310,000) to establish their own independent online stores.
But while the very largest Chinese brands, such as Mpow and Aukey, might find some success through their own stores, most of the expelled businesses are unlikely to ever recover from The Great Purge.
But don’t expect this to be the end of Chinese sellers on Amazon. Yes, some businesses will close down but others will replace them and begin building new brands. Their review practices will be crystal clean, or they will invent new methods to hide behind when they decide to cheat the system.
Chinese manufacturers have many advantages over their Western rivals, and they go far beyond a willingness to buy fake reviews.
Read more at Bloomberg.
Other news this week
Amazon tries to recruit sellers to its defense
Last week Amazon’s Vice President of Customer Trust & Partner Support, Dharmesh Mehta, emailed all US-based sellers regarding legislation currently before Congress that Amazon says will be bad for sellers. Here’s some of what the company is telling sellers:
…if enacted, these bills would jeopardize Amazon’s ability to operate a marketplace for sellers, potentially resulting in hundreds of thousands of American small and medium-sized businesses losing access to Amazon’s customers and services. This would obviously hurt small businesses’ ability to generate the revenue they do today…
Amazon has set up a special website called Support Small Sellers that makes it easy for sellers to get updates about the proposed legislation. The website, however, says nothing about the bills that are supposedly so bad. So here’s a quick summary:
- The American Innovation and Choice Online Act – prohibits big digital platforms from favoring their own products or services on their platforms.
- The Platform Competition and Opportunity Act – prohibits mergers of big tech companies.
- The Ending Platform Monopolies Act – would break up big digital platforms that compete with third-parties on their own platforms.
- The Augmenting Compatibility and Competition by Enabling Service Switching – requires big tech companies to make consumer data available to competitors, so customers can switch over more easily.
- The Merger Filing Fee Modernization Act – increases fees for large mergers so federal authorities have greater resources to investigate them.
- The State Antitrust Enforcement Venue Act of 2021 – allows state prosecutors to stay in their preferred legal jurisdiction instead of moving to the defendant’s choice of court.
The one that Amazon is really scared of also happens to have the shortest and most emotive name: The Ending Platform Monopolies Act. So full marks to legislators for their marketing skills on that one.
This act could force Amazon to separate the marketplace from its own retail activities, and remove the advantages that FBA provides to third-party sellers.
The Online Merchants Guild put out a statement in response to Amazon’s request:
Importantly, much of what Amazon has said about these bills is self-serving. Amazon may have led you to believe that these bills threaten the viability of the platform’s FBA services thereby jeopardizing the competitiveness of its thriving third-party marketplace businesses as well as the hundreds of thousands of competing, small businesses across the nation. But the legislation doesn’t say that — Amazon does. Amazon is scared of the accountability that they are facing, you don’t have to be.
One thing is for certain, these laws do not seek to punish marketplace sellers. They are intended to remove the unfair advantages that Amazon and other big tech companies appear to have.
It’s not impossible that marketplace sellers could suffer if these laws are passed, because some sweeping changes would have to take place, but it’s not the inevitable consequence that Amazon would have you believe.
eBay launches CPC ads
eBay are expanding their advertising options with the launch of a new cost-per-click option. Confusingly, the existing cost-per-sale program Promoted Listings will now be known as Promoted Listings Standard and the new program will be called Promoted Listings Advanced.
Promoted Listings Advanced will use a typical CPC model, with a fee payable for each ad click. Unlike the standard program, advertisers will be able to select their own keywords and set a daily budget.
But perhaps the most important aspect of the new program is that it provides “preferred access” to the top spot of the search results, unlike Standard Promoted Listings which use the top four spots plus a number of other placements lower down the page.
The new CPC ads will initially only be available through the eBay API or third-party software providers including ChannelAdvisor and Teikametrics.
Read more at eBay Inc.
Also in the news
- Pan-European FBA adds support for Small and Light products. Read more at Amazon Seller Forums.
- Amazon UK opens deals submission window for Black Friday. Read more at Amazon Seller Forums.
- Etsy invites sellers to take part in Labor Day sale. Read more at Etsy.
- Etsy announces Design Awards winners. Read more at Etsy.
- Etsy listings without estimated delivery dates will not auto-renew. Read more at Etsy Community.
- Instagram Shop ads have been launched globally. Read more at TechCrunch.
Webinars in the week ahead
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips (Amazon).
For US sellers
Various dates: Amazon Small Business Academy Pathways series (Amazon).
Guess who is winning the delivery drone wars
Remember when delivery by AI-controlled drones was going to be the next big thing? Weren’t all the Amazon vans supposed to be replaced by swarms of creepy buzzing quadcopters by now?
Well this is one fight that Amazon has not been winning. Five years on from launch, the company recently cut over 100 jobs from its drone research division in the UK, amid claims of a dysfunctional operation with mid-morning beer-drinking and keyboard buttons being pinned down to automatically approve images.
Today, it’s Google that owns the largest residential drone delivery operation in the world, as it surpasses 100,000 deliveries. Its service in Queensland, Australia has delivered over 10,000 cups of coffee alone.
While some Australians are enjoying the wonderful convenience of using high-tech robotics from one of the world’s largest technology companies to avoid making a cup of coffee, other local residents are campaigning for the drones to be banned. Why? Well, mainly because of the horrendous noise.
Described as “like a Formula One racing car”, the drones can be heard making constant deliveries from 8 a.m. in the morning.
So for all the tremendous benefits available from delivery drones, such as the wonderful convenience of not having to leave your home (or heat up water) to get a hot drink, this innovation might never happen on a large scale for one simple reason: the unbearable noise.
Read more at Forbes.