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Amazon Denies Report its Cutting Thousands of Suppliers

The company is reportedly looking to streamline costs by halting bulk orders from thousands of its smaller suppliers

Amazon has found itself at odds with the news outlet Bloomberg over a recent report that the wholesaling giant could be making some big changes. But if the report is to be taken at face value, then it’s not Amazon that’s the true victim – its small and medium sized manufacturers.

That’s because Bloomberg is contending that Amazon is on the verge of a massive supplier purge. According to the report, the company is looking to streamline costs by halting bulk orders from thousands of its smaller suppliers in order to focus wholesale purchasing on major brands.

And while this doesn’t mean the moms and pops lose access to the Amazon customer base, it does mean that they’d need to transition from selling large quantities to Amazon itself, to selling items one by one to Amazon’s living, breathing customers on the company’s marketplace.

This accomplishes a few things for Amazon, according to Bloomberg. Not only does it allow for Amazon to relinquish the management of the sales process to the supplier, but it also falls in lockstep with a strategy that many businesses have been exploring as a cost cutting method – passing the inventory, and its related costs, to someone else along the supply chain.

Sources quoted anonymously said that those companies selling under $10 million in goods on Amazon annually would be the ones chopped from the wholesale buys – which isn’t exactly chump change for most businesses.

When confronted with the report, Amazon responded firmly, basically calling out Bloomberg for running what it says is a false story. In a statement to Fast Company, Amazon said it told Bloomberg before the story ran that the sources were wrong, and that it evaluates suppliers on an individual basis, meaning large scale reductions are not part of its business plan… a plan which it characterizes as thoughtful and considerate.

For its part, Bloomberg has acknowledged Amazon’s firm denial of the story, but appears to believe in the quality of its sources, as no corrections have been made. And whether or not you believe Bloomberg or Amazon, the story includes a bit of sage advice for Amazon’s existing small suppliers: prepare if you can. It can take up to 120 days to shift from an Amazon wholesale supplier to a marketplace seller, according to Anderson Salgado, CEO of Trisbell, a consulting firm that helps people sell products on Amazon. He adds that “smaller Amazon vendors should prepare now by learning how to sell on Amazon’s marketplace to make the transition more smooth.”

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