Amazon’s Pricing Tactics Lead Brands to Yank Items

As The Information reported Tuesday (April 7), the eCommerce giant has in recent months brushed off requests from wholesale suppliers to increase what it pays for their products.

This has led brands to suffer costs related to tariffs and fuel prices, the report added, citing sources who work with consumer brands such as Colgate and Adidas and help them manage their relationships with Amazon.

As a result, some brands are dialing back their product selections on Amazon, the sources added, if not pulling some lower-margin products from the marketplace entirely. These companies are also listing items through outside sellers that sell on Amazon’s platform, which could increase brands’ costs and hurt profits.

Reached for comment by PYMNTS, a spokesperson for Amazon called the claims in the report incorrect, and said the company continues to expand its selection.

“Our annual vendor negotiation cycles have not changed, and they begin at different times depending on category,” the statement said. “As part of our standard process, we’re continually working with our broad, varied range of valued selling partners in our store on joint business planning, while maintaining broad selection and low prices for customers.”

The company also touted the breadth of its retail selection, and says it works with vendors on business plans and to understand their cost pressures, and provides updates as things change.

The Information report notes that Amazon’s apparent tough stance may be a reflection of a wish to hold the line on retail prices.

In addition, it could be part of a larger effort to maintain profit margins and to cushion the impact of increasing sales of lower-priced goods such as perishable items and paper towels.

It’s a strategy that seems to be working, the report said, as sales of everyday goods accounted for a third of all the products Amazon sold last year. Amazon has also invested more in faster delivery, including same-day and next-day shipping.

In other Amazon news, PYMNTS wrote last week about the company’s launch of a new card as it moved its small business credit card program to U.S. Bank and Mastercard, replacing its partnership with American Express.

“The card sits within a broader system that Amazon has been building for years,” that report said. “Amazon Business offers purchasing tools that include multi-user accounts, approval workflows and tax-exempt buying across a wide range of categories. The addition of a credit card integrates payments into that same environment, which would conceivably tighten the connection between sourcing and settlement.”