Amazon Was Sucking in Quidsi's Inventory Over a Year Before Shutdown (cnbc.com) 32
Amazon's explanation last week that it was closing Quidsi because the unit was unprofitable didn't sound much like Jeff Bezos. The Amazon founder is famous for operating retail businesses at such slim margins that rivals can't compete. Quidsi employees had another reason to be surprised. From a report: As recently as late 2016, at Quidsi's quarterly all-hands meeting in Jersey City, NJ, executives from Amazon headquarters in Seattle spoke to the unit's 250-plus workers and affirmed the parent company's commitment to Quidsi's business, according to multiple people who were in attendance. One of the executives to present was John Boumphrey, Amazon's vice president who oversees baby products, and the direct boss of Quidsi CEO Emilie Arel Scott, said the sources, who asked not to be named because the meeting was confidential. Yet last Wednesday, with the first quarter coming to a close, employees were informed that Amazon was shutting Quidsi down and laying off hundreds of workers, ostensibly because the division was unable to make a profit. The diapers, toiletries, beauty products and pet care items sold by the various Quidsi brands would all be available on Amazon.com, the company said. [...] In the fourth quarter of 2015, Amazon started redirecting inventory from Quidsi's three fulfillment centers -- in Nevada, Kansas and Pennsylvania -- to Amazon's own massive network of warehouses, sources said. That process continued throughout 2016 and is still underway, two people told us. Quidsi's facilities were running out of capacity.
It should have been obvious. (Score:5, Insightful)
Re:It should have been obvious. (Score:5, Insightful)
Re: (Score:2)
Not a surprise for those who sell 3P on Amazon (Score:5, Informative)
My wife has been selling as a 3rd-party Fulfilled By Amazon (FBA) merchant since 2011. As a work-from-home mom, this keeps the majority of the items in Amazon's warehouses for quick turn-around, as Amazon mixes the 3rd party items in with their own to provide a larger catalog. As the business expanded, we began to dabble in wholesaling (buy direct from the manufacturer, list on AZ, send it to the FBA warehouse, profit) and life was good.
What we began to notice was that, on the really popular selling products, Amazon started to list their own Sold by Amazon along side the FBA program inventory. Understandable, it's their platform, their listings. Then we started going to tradeshows, and hearing from the manufacturers that Amazon was secretly buying out the same products, and we had to say no, we can't compete against Amazon on Amazon (since they take 15% of the sale when you use their listing service). Over time, we lost the pop lines, and more of our regular inventory sits and sits, waiting for the long tail.
Ultimately, what Amazon is collecting is sales data. The 3rd party sellers take the risk, make the sales, and Amazon takes a slice of the profit. At some point, they calculate if there's enough margin, and they go direct to the manufacturer and cut out the 3rd party sellers, and take all of the profit. They did the same thing with the private labeling, where they calculate which commonly produced products are in demand, and they move them into their Amazon private label system.
So, it is not surprising that Amazon is doing the same thing internally, making divisions within the company compete against one another. With their household divisions, they often deal with manufacturers directly under the Amazon Family brand of private labeling. Quidsi (as Diapers.com) sells 3rd party goods (Pampers, Huggies, etc) through wholesale contracts that Amazon would simply have better buying power over; everything the smaller division does could be managed at higher volumes by the parent company, hence lower costs and higher profitability.
Re: (Score:1)
That... That is unbelievably scummy. To my knowledge not even Walmart goes *that* far, and few places are better known for destroying local businesses than they.
How exactly is any startup, small business owner or individual supposed to compete without strict regulation?
Re: Not a surprise for those who sell 3P on Amazon (Score:2, Informative)
But but but free market right? Right?
Re: (Score:3)
How exactly is any startup, small business owner or individual supposed to compete without strict regulation?
Well, they just provide a better product or a better price on their own. If they can't do that, then there's no need for a "small business owner or individual" to be attempting to enter that market, as Amazon must be doing a better job. If you're worried about a natural monopoly, then take a look at the two monopoly chapters in The Machinery of Freedom [daviddfriedman.com], and that will put your fears to rest. In short, any attempt to abuse market power will lead to Amazon being uncompetitive in the market -- which will eventu
Re:Not a surprise for those who sell 3P on Amazon (Score:4, Insightful)
As long as you only define "abuse market power" as "charge too much".
Just a minute, I'm getting new orders from Bezos... if I want to keep buying products from Amazon, I need to park my car to block you in whenever possible.
1 piece of advice (Score:2)
uhh walmart is a different proposition.
you don't get to go into walmart and put your stuff for sale on the shelves.
however, if you're selling something online now I have just 1 piece of advice: get your own product range direct from the supplier. just buy it branded differently from the factory, buy your own barcode codes - and keep selling on amazon.
if you're just buying wholesale something, how the fuck would you compete against anybody else really? I mean the factory/provider could just list their stuff
Re: (Score:2)
My wife has been selling as a 3rd-party Fulfilled By Amazon (FBA) merchant since 2011. As a work-from-home mom, this keeps the majority of the items in Amazon's warehouses for quick turn-around, as Amazon mixes the 3rd party items in with their own to provide a larger catalog. As the business expanded, we began to dabble in wholesaling (buy direct from the manufacturer, list on AZ, send it to the FBA warehouse, profit) and life was good.
What we began to notice was that, on the really popular selling products, Amazon started to list their own Sold by Amazon along side the FBA program inventory. Understandable, it's their platform, their listings. Then we started going to tradeshows, and hearing from the manufacturers that Amazon was secretly buying out the same products, and we had to say no, we can't compete against Amazon on Amazon (since they take 15% of the sale when you use their listing service). Over time, we lost the pop lines, and more of our regular inventory sits and sits, waiting for the long tail.
Ultimately, what Amazon is collecting is sales data. The 3rd party sellers take the risk, make the sales, and Amazon takes a slice of the profit. At some point, they calculate if there's enough margin, and they go direct to the manufacturer and cut out the 3rd party sellers, and take all of the profit. They did the same thing with the private labeling, where they calculate which commonly produced products are in demand, and they move them into their Amazon private label system.
So, it is not surprising that Amazon is doing the same thing internally, making divisions within the company compete against one another. With their household divisions, they often deal with manufacturers directly under the Amazon Family brand of private labeling. Quidsi (as Diapers.com) sells 3rd party goods (Pampers, Huggies, etc) through wholesale contracts that Amazon would simply have better buying power over; everything the smaller division does could be managed at higher volumes by the parent company, hence lower costs and higher profitability.
Wow, that is pretty evil.
I mean, from their standpoint, it makes sense. They will trawl through their data on what sells and try and sell it themselves. The sellers do all the market research for them.
Even taking a 15% commission on sales and then using your own data against you is scummy and evil.
I have no idea how you'd protect yourself against Amazon in this scenario. They have your sales data and possibly sales data of your competitor. They can come in and undercut anyone anytime.
Re: Not a surprise for those who sell 3P on Amazon (Score:5, Informative)
"Amazon cuts out middle-man; film at eleven."
So company A sells company B's products through Amazon. Amazon notices and starts selling company B's products directly. Doesn't this mean that company A didn't need to exist?
It's not like company A made their own product and Amazon decided "hey those are cool, lets make them ourselves and sell them cheaper" and now company A is screwed.
So company A had a shitty business model, and Amazon made that business model moot by buying their customers and cutting out the, now useless, middle men.
Company A had to do market research. Company A orders, markets and sell hundreds of products of which one or two sell well. They sell products from Company B-Z which makes slight variations of many products which they will only make once ordered by Company A.
I would agree with you if Company B created and marketed these products and Company A was just buying from them and putting them on Amazon.
It seems like Amazon is making Company A do the work of finding out what sells and then swooping in and selling them. Amazon has no intention of buying hundreds of items and then figuring out what sells. They want to let someone else do the hardest work of what sells and then undercut them.
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It seems like Amazon is making Company A do the work of finding out what sells and then swooping in and selling them.
I'm willing to buy into the underdog when greedy corporations are involved, but let's re-think "making company A do the work". I'm pretty sure Bezos didn't emerge from the shadows at put a gun to someone's head and say "you're gonna sell shit on our site or else".
I think being an Amazon marketplace seller is like being a real estate agent in 2005. People think they have some kind of genius business sense until it turns out they don't, they're just cogs in someone else's machine.
How to translate exec speak (Score:4, Informative)
...executives from Amazon headquarters in Seattle spoke to the unit's 250-plus workers and affirmed the parent company's commitment to Quidsi's business...
When high level execs come out to tell you how important you are, they are massaging your ego until they can afford to layoff/fire you. Been there, had that done to me, it sucks and we should all feel sorry for the gullible suckers at Quidsi.
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When high level execs come out to tell you how important you are, they are massaging your ego until they can afford to layoff/fire you.
Also known as diplomacy.
Diplomacy is the art of saying 'Nice doggie' until you can find a rock.
-- Will Rogers
There's a lesson to be learned here. (Score:3)
Executives lie all the fucking time.
Par for the course (Score:3)
2 weeks before I was told my workplace was due to shutdown we heard from corporate head office that there are no plans to divest assets in our country.
1 week before I was told my workplace was due to shutdown I joined a project them that had just had a $150million project to build a new splitting tower sanctioned to move into detailed engineering, and I had just finished commissioning a previous $40million project on site.
The day of the announcement I heard about it on the news an hour before we were informed.
Employees are always the last to know.
Huh? (Score:2)
Who or what the fuck is Quidsi? A quick search showed they sold diapers. Really helpful summary here.
No news (Score:2)