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Amazon Can’t Take Its Leverage For Granted

Monday April 1st, 2013 - 1:27PM

Barely a week goes by it seems without hearing about a move by Amazon that stings vendors and retailers.

The latest: Some Amazon marketplace merchants are grumbling over handling fee hikes to cover distribution cost increases. 

Meanwhile, some Amazon vendors are frustrated by recently imposed “frustration free” packaging mandates and shipping prep chargebacks.

Mounting Dominance

Add these to the list of Amazon-directed laments by the trade: MAP pricing indifference, sales tax exemptions and myriad other factors presumably abetting a mounting advantage by the biggest online retailer against brick-and-mortar and online competitors alike.

Make no mistake, however. While some Amazon tactics might be unpopular and seem unfair, the company rightfully has earned every morsel of its online retail dominance. To suggest otherwise is to suggest its vendors and merchant partners have been unwitting or unwilling participants in Amazon’s escalation. That’s nonsense.

Here’s the catch. As willing as suppliers and merchants hungry for a stake in Amazon’s surging share have been to comply with the e-tailer, Amazon can’t take such leverage for granted, especially as competitive options emerge.

Some Amazon merchants displeased with the increasing fees are considering jumping ship to fast-developing online marketplaces from the likes of Google and Walmart. And some suppliers reportedly are cutting off Amazon while others are digging in on efforts to make only select segments of their offerings directly available to Amazon.

Pioneering Vision

Target’s agreement to buy Cooking.com and Chefs Catalog is yet another example of a veteran retail anchor counterpunching Amazon, hoping to loosen Amazon’s grip on a major portion of the e-tail consumer goods market. 

Amazon’s pioneering vision and innovative effort to achieve its preeminent e-commerce status— while shepherding the validation of an entire channel— have benefitted consumer product industries in need of reliable new portals to sales growth. Amazon is a class-leading merchant worthy of a reasonably extra effort by its suppliers and merchant partners.

Agile Foundation

With such status comes leverage, to be sure. It also comes with a responsibility to sustain a cooperative, agile business foundation that can’t be undermined by the power such leverage wields.

It can be a difficult balance to enact stiffer operational rules necessitated by the scope of a fast-expanding business while staying sensitive and nimbly responsive to trade partners. 

The challenges of dealing with Amazon in essence are no different than how this industry has had to adapt for Walmart, Bed Bath & Beyond and other retail market leaders with the scale required to enforce strict demands.

Building a dominant position in business has its privileges. Mandating more from resources is among them.

Take nothing for granted, though.

Even Walmart, the biggest, most efficient retailer in the universe, has wobbled from misguidance when only a few years ago that seemed unfathomable.

Amazon has earned every bit of its powerful success, to the great benefit of the housewares industry. But leverage, by itself, is not always an impenetrable shield in business.

If it gets to the point where more than a few are willing to stand up and oppose such leverage, it might sting.

—peter Giannetti