February 7, 2011, 4:01 PM

Big retailers let their Amazon channel run dry

Macy’s, Buy.com and Gap are out as third-party sellers on Amazon.com.

Paul Demery

Managing Editor, B2B E-commerce

Lead Photo

Consumers can no longer buy products from Macy’s Inc., Buy.com Inc. and Gap Inc. on Amazon.com Inc., as each of the three retailers has joined smaller retailers in pulling their products off of Amazon.com’s marketplace in recent months.

Ever since Amazon.com Inc. started letting other retailers sell through its e-commerce platform as third-party sellers, there has been a “swinging pendulum of support and pull-back” from major retailers concerned about the ability of Amazon, No. 1 in the Internet Retailer Top 500 Guide, to use marketplace retailers' sales information for competitive purposes, says Scot Wingo, CEO of ChannelAdvisor Corp., a company that helps retailers sell through their-party e-marketplaces.

Other concerns expressed by retailers have included a lack of control over how their products appear on Amazon.com and difficulty in communicating directly with Amazon account managers.

“We didn’t want to give them information on product pricing and sales that Amazon could potentially use against us,” says Neel Grover, president and CEO of Buy.com, No. 32 in the Top 500 Guide. Buy.com, which stopped selling through Amazon in October, operates its own e-marketplace for third-party sellers and has a strict policy of not competing against them, he adds. Amazon does often sell the same products as retailers selling through its marketplace, and at times at a lower price, retailers say.

Amazon did not immediately return a call for comment.

“Macys.com previously sold product through Amazon.com but has discontinued doing so,” a Macy’s spokesman says. “We believe that Amazon no longer represents a productive source of customer business for Macys.com.” Declining to be more specific about why Amazon's customer base no longer suits Macy's, he adds that the multichannel department store retailer is aggressively marketing its online merchandise assortment through its physical stores as well as online "as part of an omnichannel strategy."

The Macy’s spokesman also notes that Macy's, No. 20 in the Top 500 Guide, “has enjoyed its partnership with Amazon.com and wishes its marketplace concept continued success.”

Efforts to reach Gap, No. 23 in the Guide, for comment were unsuccessful. A search on Amazon.com today for Gap showed product listings indicating the products were no longer available on Amazon.

Smaller retailers have also decided to stop selling on Amazon. Richard Sexton, president and founder of furniture retailer Carolina Rustica, which operates a single store in addition to CarolinaRustica.com, says he decided to stop selling on Amazon.com last fall because of the lack of control he had over how many of his products appeared on Amazon. For products that were not exclusive to Carolina Rustica, Amazon often listed them next to inaccurate product images and descriptions, he says. This could confuse shoppers and leave them disappointed if they received a product that was not what they had expected. “Customer expectations could be different from our ability to deliver,” he says.

Sexton adds that Amazon’s service to third-party sellers had declined steeply in recent years. When it began selling through Amazon nearly a decade ago, Carolina Rustica had a dedicated account manager, but in recent years was only able to communicate with Amazon through a generic customer service e-mail address—and a reply could take a day or two, Sexton says.

That process became quite onerous when, after discontinuing feeding its product information to Amazon, Carolina Rustica had to use the generic e-mail process to ask why it was still being charged a fee for loading product data, Sexton says. “We couldn’t pick up a phone a talk to anyone,” he says. “It was like an e-mail black hole.”

Instead of selling through Amazon, Carolina Rustica is focusing on other e-marketplaces including Shop.com, Become.com, PriceGrabber.com and TheFind.com, sites where it is easier to upload and control product information, Sexton says. He adds that he’s also planning to join the marketplace on Sears.com and considering Buy.com.

Wingo says that many retailers selling on Amazon also have been concerned that Amazon can use information on their product sales to assist the merchandising and marketing efforts of Amazon.com and other retailers selling through Amazon.com. Another concern is that Amazon could use retailers’ product information to deal directly with their product suppliers and cut the retailers out of the selling loop, he adds.

Wingo notes that he’s unaware of any proof Amazon does this, but that such concerns have nonetheless led to retailers re-thinking their strategy of using Amazon as a selling platform.

Amazon recently reported that 34% of total units sold in the fourth quarter stemmed from its marketplace.

Sexton will speak on site navigation at next week’s Internet Retailer Web Design & Usability Conference in a session entitled “A navigation plan of action.”

Comments | 11 Responses

  • This article fails to mention the reason why we pulled out of Amazon. Amazon has been aggressively enforcing their stringent communication policies. Their requirements were too onerous to accommodate. We deemed them cost prohibitive to support the channel. I imagine there are 1000's of other merchants our size and smaller who are experiencing the same thing.

  • This article's so true. We sold on Amazon.com until we noticed they were buying products we were selling at high margin with strong conversion rates. Cut us out, and went straight to the manufacturer. It only took them three months. And who can forget Borders and Toys R Us dropping off for the same reasons. We sell everywhere but Amazon now. So sleazy.

  • @Julie_Carley it's messed up what they did to Borders. Eventually caused them to fall. American jobs will be lost. Did you know that Amazon buys variations of their competitors names, and redirects them to Amazon.com?????? For example, drop Boarders.com into your browser (many Borders customers mistakenly drop an "a" in). They try to mislead people. Anything to gain an advantage over EVERYONE. And who the heck messes with Toys R Us??? If I recall, Toys R Us won millions from Amazon since they completely violated their contract. They walk all over the little guys. Everyone is little compared to Amazon.

  • The article, and subsequent comments, show that Amazon needs to do some serious soul-searching. Like the other merchants, we terminated our agreement with Amazon last year, but only after they soaked us for a few month's of fees. There are lots of other merchant-friendly shopping sites out there who are aggressively courting your business. Amazon is the 800-lb gorilla, but use enough of the alternatives and you will still get pretty good coverage, without losing all of your proprietary product info. If Amazon allowed us to use only our proprietary info for the products we sent to them, and made it easier to terminate the contract, we would reconsider. But for now...

  • Found this news story on tradingmarkets.com/news/stock-alert "In 2001, just as Internet commerce was beginning to thrive, the company made the mistake of turning its online sales over to Amazon, a competitor, which gained vital customer information such as purchasing habits. "It's unheard of," Greco said. "It's as if Coca-Cola asked Pepsi to distribute Coca-Cola." At the time, Borders prided itself on providing an eclectic selection that would better appeal to the serious book reader and strove to be less "cookie-cutter" than other large bookstores, said Gary Balter, an analyst with Credit Suisse. Amazon was able to lure those serious readers away from Borders by prompting them with suggestions of related books based on their purchase. "That was their target customer," Balter said. "If you're a serious book reader you can now go online, see similar books and you don't have to go through shelves.... It's more convenient." In 2008, the company ended its relationship with Amazon and rolled out its own online sales operation, but it trailed behind the more seasoned online operations of Barnes & Noble and Amazon, Greco said."

    • I would ask, as an investor, for the name of the idiot that turned Border's online sales over to Amazon. I'd like to ensure that that name does not appear anywhere in management of those companies in which I invest. Indeed, were we to follow that person's career, I submit a tidy profit could be made by investing in the competitors of a company who hires this person.

  • instead of selling your products on other marketplaces, use WinBuyer solutions to create your own marketplace and gain from offering products from other vendors on your site.

  • Our company chose to terminate our relationship with Amazon for the exact reasons listed in this article. There have been countless times where they have taken a new, unique product we uploaded and gone direct to our supplier, completely cutting us out. Having to deal with misinformation their site provides to customers, which leads to US getting bad feedback, also proved to be way too time consuming and made selling through them not very cost effective at all. From a supplier perspective, I don't see the value in selling through Amazon. Sure, you can reach a great deal of people, but they operate on very low margins and essentially "cheapen" your brand, causing the supplier to make less and making their product much less attractive to other sales channels.

  • Class-action lawsuit possible? We are a very small internet retailer, in business since 1996. At first, our relationship worked well with Amazon, in spite of the stringent requirements for never allowing backorders, etc. in the early 2000s. We finally had to end our relationship - primarily because we weren't allowed to backorder an item even for a day, but then Amazon continued to charge us fees month after month on our AMEX card. We sent emails, left phone messages (generic mailbox), and received repeated guarantees that our account was closed, only to be charged again the next month. AMEX had some deal with Amazon that they wouldn't block charges from Amazon, so the only way we could stop the madness was to get new AMEX cards with numbers unknown to Amazon. We did finally get AMEX to do a few chargebacks when we showed them the emails from Amazon assuring us that we would not get charged again. Amazon's response was to blacklist us from ever trying to sell anything on their platform, including personal items! Even after all this, we STILL got a bill from them!!! From reading the above responses, I just wonder if there are grounds for a class-action lawsuit...

  • When I purchased ActiveForever.com 7 years ago, Amazon was a blessing, and the business model brilliantly supported our desire to dominate our medical equipment and supplies niche. While speaking at conferences, I would proudly boast about our love of, and outstanding success and ratings with Amazon. Then, rules kept changing, Amazon kept poaching our best sellers, turning their backs on us when their most astute customers abused their power of "negative reviews" to steal from us. Then, when we noticed our agreement with Amazon was expiring this year, we tried to find out who and what we needed to communicate to insure our contract DID NOT AUTO-RENEW LONG TERM; we wanted it to default to month-by-month, to transition out, and we couldn't get a straight answer. So, we sent a note in, communicating as clearly as we could, but someone, somewhere in their organization chose to disable our account on the spot. Took us a few minutes...in somewhat of a panic, to get someone else to enable it since we didn't have our transition plan in place yet. This put the icing on the cake. We're looking forward to driving our alternative strategy to continue to dominate our niche, and we avidly agree with all of the common comments. I do hope we can influence a massive shake up and cause a life enhancing change on the mass merchant and shopping engine fronts. Love, Erika

  • Amazon offers poor merchant customer service and I can relate to it's email black hole. However, on a positive note, using Amazon Product Ads I've seen higher Average Order Values and Revenue.

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