May 28, 2019

Amazon reportedly prepares purge of small suppliers

An Amazon's fulfillment center in Baltimore. Photo: Erica Pandey/Axios

In yet another win for bigness and big companies, Amazon may be leaving the small suppliers who rely on its platform in the dust.

What's happening: Amazon is culling its supplier list, getting rid of small players in favor of big brands and conglomerates like Procter & Gamble, Sony and Lego, which offer wholesale prices, reports Bloomberg.

Why it matters: With the rise of supercenters like Walmart in the 20th century, smaller manufacturers and businesses were effectively banished from main streets. Now, Amazon, which has already been grabbing market share, may purge them from the web, too.

  • "Efficiency and profitability are the issues here," says James Thomson, a former Amazon executive who now consults for sellers on the platform. Amazon is trying to slash away costs in its retail business and working with primarily major suppliers will help the company do that.
  • For example, when it comes to products affected by the trade war, conglomerates with deep pockets have options, including shifting production out of China, to keep tariffs from turning into price hikes. Smaller suppliers can't do the same.
  • Amazon reportedly told some smaller suppliers that it will only pay 5% more to buy products that are tariffed 25%, per the Washington Post.

Small companies still have the option of selling directly on Amazon's website, but hunting for individual customers amid an ocean of products and users is much messier than selling in bulk to the behemoth, Bloomberg notes.

  • On top of that, Amazon has increased the cut it takes from merchants per sale since it first opened up its platform to third-party sellers.

In a statement to Axios, Amazon strongly disputed the Bloomberg report:

"We informed Bloomberg prior to publication of their article that their sources and story are wrong. We review our selling partner relationships on an individual basis as part of our normal course of business and any speculation of a large scale reduction of vendors is incorrect. Like any business, we make changes when we see an opportunity to provide customers with improved selection, value and convenience, and we do this thoughtfully and considerately on a case-by-case basis.”

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U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

More than 62,300 U.S. health care workers have tested positive for the novel coronavirus and at least 291 have died from the virus, the Centers for Disease Control and Prevention reported on Tuesday. COVID-19 had infected about 9,300 health professionals when the CDC gave its last update on April 17.

By the numbers: More than 98,900 people have died from COVID-19 and over 1.6 million have tested positive in the U.S. Over 384,900 Americans have recovered and more than 14.9 million tests have been conducted.

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  1. Global: Total confirmed cases as of 11:00 p.m. ET: 5,589,626 — Total deaths: 350,453 — Total recoveries — 2,286,956Map.
  2. U.S.: Total confirmed cases as of 11:00 p.m. ET: 1,680,913 — Total deaths: 98,913 — Total recoveries: 384,902 — Total tested: 14,907,041Map.
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World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

There are no COVID-19 patients in hospital in New Zealand, which reported just 21 active cases after days of zero new infections. A top NZ health official said Tuesday he's "confident we have broken the chain of domestic transmission."

By the numbers: Almost 5.5 million people have tested positive for the novel coronavirus as of Tuesday, and more than 2.2 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 14.9 million tests).