AmazonFresh will drop third-party sellers at the end of the month
- As of May 30, AmazonFresh will no longer sell goods from third-party vendors as part of the platform’s Local Market Seller program, according to Business Insider, citing an email the company sent to the vendors. These companies have been selling their products alongside AmazonFresh products.
- This change comes on the heels of Amazon’s purchase of Whole Foods last year and as Amazon expands its Prime Now grocery service, which is part of the company’s integration with Whole Foods. In February, Whole Foods launched Prime Now delivery in select markets and confirmed plans to expand to more markets this year.
- An email obtained by Business Insider indicates that Amazon will buy more products wholesale, and indicates there will be more opportunities for local sellers in the future.
This decision may not seem like a big surprise to those following Amazon’s moves since the e-tailer purchased Whole Foods last year. In November, the company began scaling back its Fresh service in a handful of markets with no explanation. Simultaneously, Amazon started stepping up its speedier Prime Now service while integrating Whole Foods delivery. The company also tapped Prime Now’s Stephenie Landry to lead AmazonFresh, fueling rumors about a merger of the services.
The move to drop local vendors makes plenty of sense as Amazon seeks more efficiency and centralized control in the increasingly competitive grocery delivery space. Still, this local vendor section isn’t small – generating more than 1,000 search hits.
The decision is also another example of Whole Foods and Amazon turning their focus away from small suppliers. In September, The Wall Street Journal reported that brand reps would be barred from Whole Foods stores, and that the retailer was instituting additional merchandising fees. Cottage suppliers, which have historically been the lifeblood of Whole Foods assortment, have reported strained relations with the company, and have begun shopping their goods to other retailers.
The scale-back addresses the high costs of sourcing from lots of different companies, and it means selections will be more consistent. But small vendors help food retailers differentiate from competitors. By turning away these suppliers, the companies could be missing out on opportunities to discover new must-have products.
In its recent email, Amazon told vendors they're “going to have lots of different ways to get food to customers,” and the company asked them to “stay tuned” for more options. This cryptic message may provide some relief to local suppliers who have taken advantage of Amazon’s vast audience for exposure.
It’s hard to subscribe to the idea that Amazon will abandon local vendors altogether, especially as the demand for local food continues to grow. But as Amazon continues to put significant resources behind its Prime membership and Whole Foods integration, it may just be waiting to achieve that desired efficiency before finding the appropriate channel for local offerings. There are plenty of potential options, as CFO Brian Olsavsky noted in a recent earnings call: “There will be a lot of integration, a lot of touch points and a lot of working together as we go forward.”
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