|Wed Feb 26 2014 21:58:32|
What's Behind Amazon's Selling Limits?
By: Ina Steiner
Amazon wants to pull in the reins on novelty and print-on-demand items offered by third-party merchants, and like everything else it does, the move is most likely data-driven - and in this case, there will be casualties.
Amazon is limiting sellers on how many novelty SKUs they can list - some are limited to 25,000, others, 100,000. (See Wednesday's Newsflash article.) Many of the products impacted are in the clothing category, such as novelty Tshirts that can come in a variety of sizes and colors as well as designs - so while a limit of 100,000 may sound generous, it's far from 100,000 "products."
Amazon likes products that sellers can fulfill quickly and are in perfect condition. But let's say a seller lists an "I'm with Stupid" tshirt in 3 colors, 4 sizes and 2 styles. The seller doesn't print every permutation of the tshirt until they get an order, because that one tshirt design alone would take up a lot of room, and they might never sell any "extra smalls," for example.
As I mention in tomorrow's Newsflash story, one seller speculated that Amazon could be working on a deal with CafePress, but here's another theory: is it possible that Amazon looked at its data and found novelty SKUs had a slower-than-average delivery time (and possibly even a higher order defect rate) and weighed that against giving consumers choice?
But Amazon can continue to give shoppers choice without actually listing novelty items: Amazon is presenting sellers with an option: advertising through Amazon Product Ads.
Update 2/28/14: A commentor below said Amazon does not make Product Ads available in the Apparel category. That is correct - Apparel & Shoes are not open to Product Ads sellers at this time. Apologies for the oversight, and please keep that in mind when reading the rest of this post.
From a seller's point-of-view, it may feel more like an eBay pricing model - you have to pay upfront - but with some advantages over an eBay listing, including no commission fee if/when the item sells, and the ads lead directly to the merchant's own website.
Product Ads come in various flavors, but some look just like a regular Amazon listing - the orange button on the listing ad says "Visit this Site" instead of "Add to Cart." Starting last November, Amazon also began commingling Product Ad offers on the Offer Listing Page.
Since many novelty items are unique, the cost of the ad may not be prohibitive since there isn't a lot of competition - and sellers only pay if someone clicks on the ad. And for sellers who also list non-novelty SKUs on Amazon, could moving to Product Ads for novelty items actually improve their seller performance on Amazon?
Another potential advantage to listing novelty items through Product Ads: sellers can capture those customers who click on those ads. The customer belongs to them if they make a purchase on their website, and sellers can entice them to sign up for their email newsletter whether they make a purchase or not.
That's not to minimize the impact this new policy has on sellers. For some or perhaps many sellers, the move will have a devastating impact on their business. How do you take a million or five million SKUs and winnow them down to 100,000?
One thing is certain: between eBay selling limits and now this move from Amazon, marketplace sellers are having a rough time of it.