Amazon has announced an upcoming dissociation from EU Distributors to control the cost. This decision has turned out to be favorable only for local and international brands. This way, by cutting out some middlemen, this giant e-commerce platform aims to establish direct links with brands to curb the spike in prices.
Since the invention of Amazon, these EU distributors have been serving as a bridge between Amazon and retail brands. But Amazon has decided to stop sourcing products this way. However, it doesn’t mean that distributors cannot function anymore. This time a distributor will work as a third-party merchant – selling goods on Amazon.
According to the notice viewed by World Branding Forum, distributors in the EU regions must stop this practice in the coming months. Adding to this; an Amazon spokesperson while talking to media group said, “As is common for all businesses, we regularly review our approach to product sourcing as we try to control our costs and keep prices low for customers.”
This news comes as a bombshell for distributors who are the major contributors to the Amazon vast platform. However, Amazon announced not implementing this plan until April to make this news less bitter.
The current global economic situation has largely affected the online retail business of Amazon. To curb the price, it took a tough step towards the largest layoff in its history. After shutting down of its numerous experimental projects and operating loss of $7.75 billion, now it has decided to restrict distributors’ role.
Following this proposal, Amazon has set an exception to this. For instance, if a person is an owner of a “Greek Perfume Brand” or has agreed with the brand, he can resume his work as a distributor.
This first-party model design by Amazon is a great initiative in reducing products’ cost. Quite often than not, a distributor always demands a profit margin. Consequently, it raises the purchase cost of the product.
This change could leave a long-lasting impact on distributors. According to Duffy, these EU distibutors are channelizing the funds to create their own brands. However, if Amazon implements this policy, it can snatch away a vast revenue stream from distributors.
