Skip to comments.Amazon Merchants Say SKU Limits Will Decimate Their Bottom Lines
Posted on 03/06/2014 8:12:57 PM PST by 2ndDivisionVet
A number of Amazon.com sellers are furious over an abrupt change that limits the number of novelty items theyre allowed to sell. Reuters
Entrepreneurs who have built their livelihoods around the massive retail ecosphere that is Amazon.com Inc. (NASDAQ:AMZN) are once again being reminded who is running the show.
According to a number of third-party Amazon merchants, a recent change that limits the amount of items theyre allowed to sell on the Amazon Marketplace is going to devastate their bottom lines. Last month, the Seattle-based retail giant began informing some merchants that SKU caps are being imposed on novelty items, a broad category that can include anything from T-shirts to gag toys. In some cases, sellers say they are being limited to 100,000 items; in other cases the limit is said to be as low as 25,000 items. Some longtime marketplace sellers say the abrupt cap is a strange way for Amazon to show its appreciation for their loyalty to its platform.
We have built our family business solely on Amazon, but this pretty much means the end, said one frustrated seller, who asked not to be identified because of ongoing efforts to convince Amazon to reverse the decision. There are many merchants affected the same way that we are, and it looks like merchants are getting extremely desperate. Many companies, including mine, had to lay off people.
Other sellers have been grumbling about the change on message boards and chat rooms, saying they are now being forced to manually reduce the number of items in their inventory or risk having their accounts shut down. As is typically the case with Amazon policy tweaks, they say news of the change came without warning in a comply-or-else email offering no recourse for appeal.
Erik Fairleigh, a representative for Amazon, referred IBTimes to a help page explaining the change but did not respond to questions seeking additional information about why the policy is being instituted now and how Amazon decides which accounts are affected. According to the help page, the change is an effort to reduce clutter and help customers find novelty items more easily:
For sellers who list a large number of novelty SKUs or SKUs that are similar to each other and which have not received customer interest, Amazon has instituted SKU limits. Sellers who are impacted by these limits are contacted by Amazon and expected to actively reduce their number of ASINs below their limit. Sellers who fail to do so within the allotted time may have their accounts suspended.
Posting on the Amazon UK Seller Central message board, one merchant wrote that the need to reduce the flood of inferior products is understandable, but that Amazon has essentially thrown the proverbial baby out with the bath water by arbitrarily limiting sellers ability to diversify and expand their inventory. [W]e were not harming or clogging the search system for anyone, the merchant wrote. And yet, we will lose sales, Amazon will lose fees, and the customer will lose the opportunity to purchase a unique item. I am still in shock that Amazon would act so draconically, and so suddenly.
Some sellers who sell novelty clothing items say they feel the change unfairly targets their inventory, which can include numerous SKUs per design when different sizes and colors are accounted for. Going to cause a massive headache for us, one seller wrote.
In January, the Seattle Times reported that Amazons more than two million Marketplace sellers generate tens of billions of dollars and account for about 10 to 15 percent of its total revenue. As of last year, third-party sellers accounted for about 40 percent of products sold through Amazon.com. Many of those sellers are entrepreneurs who have spent years growing and maintaining their inventories. Others are reluctant competitors whose brick-and-mortar businesses have been squeezed by online commerce to the point where selling on Amazon is the only alternative.
Merchants often express frustration over being at the whims of a company that, according to its own terms, can pull the rug out from under them, without warning, at its sole discretion. In March 2013, a class-action lawsuit was filed on behalf of Amazon sellers who claim Amazon unlawfully withheld their payments as it investigated their accounts, and in some cases closed them without explanation.
In an email, one merchant affected by the new SKU limits said that feudal-like reality is now becoming all too apparent. What can we do? the merchant wrote. We are a little family business up against the giant.
“For sellers who list a large number of novelty SKUs or SKUs that are similar to each other and which have not received customer interest, Amazon has instituted SKU limits.”
I know people close to me who sell on Amazon. If this is the case, you could compare this to Ebay. People don;t realize that Ebay places a cap on sellers (especially new ones) under a certain amount which is ridiculous. Then every month, you have to “interview” with these clowns and make your case to raise the limits. Back to Amazon, then the solution is to buy more barcodes for the SKU’s (ironically cheaper when buying bulk on Ebay)
Well then, looks like they (Amazon) are seeking their own demise.
I don’t understand limiting SKUs unless there is some sort of extra bandwidth capacity associated. Is Amazon trying to limit the number of offers a seller can make? Maximizing thus band-width?
eBay and Amazon have been on the warpath for a while now. Siding out small timers and such. The people who built them are now anathema to them.
They may go to Hell.
I recently read about a new company called Yagoozon, Inc. It was recently named the #11 fastest growing company in the world and the #1 fastest growing company in the Retailing space. The kid started it with $40, selling toys, novelties, costumes etc on Amazon and did $20M in sales last year. I’d think there would be enough in there for Amazon to get their share and be happy, and to encourage more like him.
WTF is a SKU?
Stock keeping unit
Thank you. I was unsure if they were talking about barcodes.
I stopped going to Amazon when it started to look like a Five-and-Dime store on the internet.
My business is conducted on Ebay and Craigslist. Right now there isn’t any because people do not seem to be buying.
i just got scammed on Ebay for the first time in many years of occasional use. And Ebay quickly covered everything I lost with their buyer protection agreement.
I really wasn’t expecting to get all my money back, especially not so fast and easily. I saved so much using it I could easily factor in a loss and be way ahead.
I guess I’m naturally skeptical of guarantees like that.
In certain clothing categories, there are so many false results that it is very difficult to find what you want. Customers are unwilling to sort through hundreds of dubious results, and this is how they are trying to curb the problem.
I went to buy a hooded animal scarf for my daughter before Christmas, looking for a specific brand. There were literally hundreds of results, only a few of which were the brand I specifically searched for. Part of the problem seems to be that the vendors add popular keywords to items that only sort of fit the description in hopes that you'll see and buy their product.
I suppose that Amazon could police keywords, but then they'd end up arguing with vendors over the definition of what "is" is. This seems like a more even-handed way to fix the problem.
Customers won't stick around if it takes them hours to find a product.
If this was the case, I would think the problem could be solved by keyword categorization.
I guess they're trying to spread the impact, but they'd probably be better off by just cutting loose a bunch of their redundant vendors, then increasing their selectivity on the ones they choose to affiliate with.
I have a shop on Etsy and I know that they do police the tags and the other Etsy members will report a shop if the items are mistagged.
Good point Laz. Our system has excellent ways of pulling up the slack. 2 or 3 new competitors will waitin in the wings to rush right in. Come 2016 or so, Amazon will have to explain to investors why revenues and profits are flat/down.
Open competition? Wow! What a concept! I wonder how the feds can screw this one up.