Amazon is bringing about big changes in Europe. According to recent newspaper articles, it is going to reduce its relationships with distributors on the Old Continent and favor sourcing some products directly from brand owners. The new strategy has just been launched and will probably cause big changes to relationships within the marketplace.
Amazon itself released comments on the news. It pointed out that, like other companies, it is committed to periodically reviewing its approach to product procurement. The obvious goal in mind is to control costs and keep prices low for end customers.
This is precisely why Amazon will continue to source products from wholesalers and distributors who own the market or have exclusive distribution rights. Therefore, the other wholesalers and distributors may see their relationships with the U.S. company change radically. The company confirmed that it is giving two months’ notice to prepare for these changes.
Who will be impacted by this change?
According to initial assessments, there could be at least 20,000 European retailers with whom cooperation would be discontinued. However, these figures were denied by Amazon. Nonetheless, the marketplace did not provide any estimate of its own, thereby leaving the analysis open to speculation.
Then, as for the potential impact on the supply chain, it is still unclear what might happen to consumers. Some argue that those in greatest danger could be the end customers. They could risk having to pay for many of those shipments that are now free because included in Amazon’s Prime service.
What effects will there be?
Even before that happens, one of the possible immediate effects could be that many brands will no longer be able to fulfill shipping with Prime. They will therefore have to post their products directly on the marketplace instead of selling to Amazon, resulting in several scenarios. Less product choice or higher costs for the user, as sellers will add shipping costs to the cost of the product.
According to other analysts, however, there is the danger that consumers will be forced to buy multipacks (multiple units of the same product). This option would allow the seller to bear the impact of logistics costs and thus include them in the final price without adding to the cost for the buyer.
However, remember that these are only critical assumptions. Instead, the main scenario is the one foreshadowed by Amazon itself. Its sources deny any possible additional price increase for customers, with the clarification that free shipping is not at risk. Similarly, they state, neither are the breadth and depth of the product section.
Actually the same sources state that it is even possible the change will benefit the distributors involved. They might well turn into sellers themselves. They could continue to sell their goods on Amazon by leveraging its international user base to grow sustainably.