Over the years I've talked to more than a few Amazon third-party sellers (or "3P" sellers if you're into the industry lingo) and they all have one thing in common - a continuous and occasionally paralyzing fear of suspension. They dread the "you've been suspended" email which can come at any time and with little warning. In fact, I am still trying to find an Amazon seller who has not been previously suspended, been threatened with suspension, or at least invested time in fearing suspension.
Fun way to do business, don't you think?
Amazon has succeeded beyond all expectations because they have delivered on their promise of an online retail experience that is second to none. Customer experience is the only thing that matters to Jeff Bezos, so it is the only thing that matters to Amazon.
You can order Pop Tarts with your Prime account when your alarm first buzzes in the morning and they very well may be sitting on the doorstep before you head off to work. What a world we live in! This incredible, seamless customer experience is the result of an extremely high bar that Amazon has set for themselves and for their army of third-party sellers.
The bar is high and it is only going to get higher.
In our opinion, the long game for Amazon is going to play out in two steps.
1) Amazon will diversify their own business into as many product and service categories as possible. This is already happening. Ask the thousands of sellers that have listed a product and had great success for a short time only to see Amazon begin selling the same product, or similar products, at a smaller margin with free two day shipping. Happens every single day. One visible example is that Amazon is now manufacturing their own athletic apparel to better compete with brands like Nike, Under Armour, and Adidas.
2) Amazon will allow a smaller network of larger, established third-party (3P) sellers to continue operating in categories where Amazon chooses not to do business. These will be the sellers that are able to meet the ever-changing customer experience expectations. This step is starting right now, albeit slowly and quietly.
Let's face it. We are at "peak" Amazon right now. There are more than two million third-party sellers
doing business on Amazon. Amazon knows this is simply too many. They know, in the long run, it will be too challenging to continually deliver an amazing customer experience with so many third-party sellers involved. A bigger army isn't always a better army!
Their solution? Attrition. Keep applying pressure and let those who can't stand the heat get out of the kitchen.Amazon wants you, their third-party sellers, processing every order and every return as if the very existence of your Amazon seller account depends upon it.
That's because, well, it does. I'm here to tell you, this is all intentional. This is the atmosphere Amazon wants. Jeff Bezos wants you to feel like you're operating within a pressure cooker! It's the best way to keep the customer experience at a high level.
Does it all seem a bit harsh? Sure. But what is the alternative? Not selling your products on Amazon? That's a tough pill to swallow.