Amazon is Drawing Increased Attention as Antitrust Chatter Grows

In the world of online retailing, Amazon is the proverbial 800-pound gorilla. The one-time bookseller has become a global juggernaut, allowing consumers to shop for everything under the sun from the comfort of their own home.

With annual revenue approaching $400 billion, it may seem as though it’s Amazon’s world and we’re just living in it. Earlier this year, a group of independent-business organizations joined forces to take aim at monopolies, with Amazon at the dead center of their target.

Small Businesses Feel the Squeeze

Over the years, Congress has enacted various antitrust laws designed to maintain a level playing field. The purported goal of such legislation is to prevent monopolies and promote a competitive marketplace.

In reality, these laws are only as strong as their enforcement. Larger companies have the means to play Goliath to the smaller companies’ David. In 2020, Amazon alone spent approximately $18 million to lobby against stricter antitrust measures.

It may seem as though fighting the retail giants would be a tall enough order. Adding insult to injury, many small businesses feel that industry organizations such as National Retail Federation (NRF) pay lip service to the idea of equal representation while quietly favoring their largest members.

Standing Up for Market Equality

In a proactive effort to regain some equitable conditions, more than 20 trade and business groups formed a coalition under the name, “Small Business Rising.” Members include organizations such as the National Grocers Association (NGA), the American Booksellers Association (ABA) and Institute for Local Self-Reliance (ILSR), a vocal critic of Amazon’s dominance.

Small Business Rising announced their formation and goals in an April 2021 press release. Amazon was specifically cited by name several times, making it clear what the organization sees as one of their biggest obstacles. As Stacy Mitchell, ILSR co-director stated, “concentrated market power” is the toughest challenge facing today’s small business owner.

The organization’s objectives call on policymakers to do the following:

*Break up tech monopolies, such as Amazon, to prevent them from cornering the online market.

* Add teeth to antitrust laws by making them stronger and more enforceable.

* Put a stop to mega-mergers and set higher criteria for regular mergers.

In addition, Small Business Rising is leveraging the relationships local business owners have with power players in their respective hometowns. Members are organizing meetings, seeking out media coverage and waging letter-writing campaigns.

The Rich Get Richer

The unprecedented conditions of 2020 served to magnify the gap between Amazon and other e-commerce businesses. While COVID restrictions created a surge in online shopping, small online retailers faced corresponding supply chain and distribution difficulties, making it hard for them to accommodate demand.

On the other hand, Amazon was able to draw on its significant resources to weather the storm and emerge stronger than ever. The company spent a reported $4 billion on “incremental COVID-19-related costs,” enabling it to successfully adjust its processes and policies.

In the face of mounting criticism during the last few years, Amazon has tried to brand itself as a valuable ally to small businesses, especially with Amazon Marketplace, its third-party online sales platform. Companies have responded by pointing out how Amazon uses prohibitive fees and data access for competitive advantage.

Grow Your Online Business with Medallion Fulfillment & Logistics

Are Amazon’s arbitrary and restrictive fees and policies helping or hurting your e-commerce business? Medallion Fulfillment & Logistics works with you by offering a full assortment of services tailored to fit your needs.

Contact us to learn more about our flexible and cost-effective fulfillment solutions, including our innovative Amazon replenishment warehousing service.

Does Amazon’s “New Normal” Come with New Problems?

Fulfillment Company Warehouse

In 2005, when Amazon debuted their revolutionary Prime membership program, the centerpiece was unlimited free two-day shipping. As Jeff Bezos declared in the announcement, it was “all-you-can-eat express shipping.”

In an effort to remain the gold standard of online shopping, many items have since been upgraded to next-day shipping. But as with many companies, Amazon has been forced to adapt as the pandemic altered the retailing landscape. What does Amazon’s “new normal” mean for the sellers who rely on their fulfillment services?

Fulfillment by Amazon: The Answer for Third-Party Sellers?

A year after Prime began, Amazon upped the ante by creating Fulfillment by Amazon. This program allowed third-party sellers to store their inventory in Amazon’s fulfillment centers, where the products were cataloged and shipped to customers. FBA sellers also benefited by having their products eligible for Prime.

How powerful is FBA? Research found that three-quarters of Amazon’s top 100,000 sellers utilize the program. The number jumps to an astounding 90 percent for sellers based outside the United States

How the Pandemic Changed Amazon and Online Retailing

While Amazon was already the king of online retailing, demand became even higher as the onset of the pandemic caused widespread closure of brick-and-mortar shops. The first blow to third-party sellers came in March 2020, when the company cut off inbound FBA shipments of everything but high-priority products such as medical supplies.

The essentials-only mandate eased up in July 2020, but that didn’t mean FBA was back to “normal.” Quantity restrictions went into effect, limiting the amount of warehouse space that would be allocated to new products or those with more modest sales history.

One of the benefits of FBA is that products could flow through the warehouse and out to customers on a consistent and reliable basis. Some sellers found their inventory limits didn’t match demand, causing out-of-stock situations and hampering their ability to grow.

Inventory Limits by Any Other Name

In an announcement dated April 22, 2021, Amazon proclaimed that they had listened to feedback from their sellers and were removing limits based on ASIN (Amazon Standard Identification Number, which is assigned to every item in the company’s catalog). The bad news? Limits were now being set at the account level.

Despite Amazon’s efforts to play this up as a positive change, sellers were devastated. As one explained, instead of impacting only a few of their items, the reduction in space now had to accommodate his entire product offering. Adding insult to injury, the change took effect on the same day as the announcement, leaving sellers scrambling to conform to these new restrictions.

The Fallout Continues

While the Amazon customer experience remains relatively the same, it’s a whole different story behind the scenes. Inventory limits and other changes, such as long-term storage fees being charged monthly instead of annually, make it clear that Amazon has positioned FBA for short-term supply.

Sellers no longer have the convenience of using FBA as a one-stop solution for their storage and shipping needs. More and more are looking already to turn to additional third-party logistics companies for backup warehousing. They also face the uncertainty of knowing that Amazon can and will change the rules with little or no notice.

Medallion Fulfillment & Logistics: Working to Promote Your Success

Do you sometimes feel like David fighting Goliath? Our Amazon replenishment warehousing service provides a cost-effective solution that’s responsive to your particular needs.

Features include:

• Lower storage fees

• Climate-controlled warehouse space

• Amazon-compliant labeling, packing and prep

• Software that interfaces with Amazon as well as the industry’s top shopping cart systems

Contact the team at Medallion Fulfillment & Logistics today to learn more and loosen the grip Amazon has on your ability to grow.

Smart Tips for Increasing eCommerce Sales – Many That Are Actionable with Minimal Effort

Does the term “marketing plan” conjure up visions of intricate programs requiring large investments of time and money? While it’s true that increasing ecommerce sales involves some effort, the adage, “Work smarter, not harder” also applies to online retailing.

Watch your sales grow when you incorporate these quick, easy and effective tips. Our ecommerce fulfillment services are ready to handle your needs every step of the way.

Honesty Is the Best Policy

How important is customer satisfaction? Studies show that companies have an average success rate of 60 to 70 percent when selling to existing customers, compared to 5 to 20 percent with new ones. Combine that with the five times more it can cost to acquire a new customer, and the picture is clear. Keeping existing customers happy is a top priority.

But you can’t assume that someone who bought from you once will buy from you again. If their customer experience falls short of the glowing promises made on your website, they won’t be back. Review your copy and make sure it’s consistent with your brand.

Foster a Sense of Trust

Thanks to the rise of social media, people post reviews about everything from restaurants to auto repair shops. Did you know that, according to Inc. Magazine, 84 percent of consumers trust online reviews as much as personal recommendations?

Leverage this power by placing genuine testimonials in strategic spots on your website, such as product and pricing pages. Another way to build credibility is by posting trust signals, which are logos indicating membership in professional associations and other reassuring information.

Create a Sense of Urgency

Social media has given rise to an astounding amount of acronyms, with one of the more popular ones being FOMO, or “fear of missing out.” If buyers are still on the fence, you can often tip the scales with limited-time offers such as discounts, free shipping or bonus gifts. Have your marketing perform double-duty with pop-up windows displaying opt-in offers, such as a 10 percent discount for joining your email list.

Avoid Information Overload

Have you ever been lured into an online rabbit hole, where you had to make so many decisions you finally became intimidated and quit? Having an extensive product offering may seem like an advantage, but it can backfire if it creates paralysis by analysis in your potential customers.

Stop trying to be all things to all people. Give shoppers well-defined categories and a carefully curated selection of options that will appeal to the broadest range possible without veering into overload.

Streamline the Checkout Process

Online checkout is another black hole in which customers frequently get lost. Business Insider reports that a staggering $4 trillion worth of purchases were left behind in shopping carts last year. For an ecommerce business, any abandoned sales are too many.

Make a purchase on your own website and see where the procedure ranks on the frustration scale. Note any specific bottlenecks or time-eaters and have them corrected immediately.

Optimize Your Site for Mobile Searching

If your website isn’t optimized for mobile searching, what are you waiting for? Mobile usage has already overtaken desktop usage, and the share continues to grow. Can you afford to be left behind?

When your site is optimized for mobile, your products are literally at buyers’ fingertips no matter where they are. Even if the sale isn’t converted during the first session, it’s more likely to close later because you’ve made it easier.

Medallion: Your Top Choice for Ecommerce Fulfillment Services

Partner with a fulfillment service that can grow along with you. Contact us to learn how Medallion Fulfillment & Logistics can handle your needs from both coasts today.

The Technology Behind Successful Ecommerce Fulfillment

Online sales in the United States have more than surpassed expectations. In 2012, online sales hit a record $226 billion, and accounted for 7% of all total retail sales. Experts projected $327 billion by 2016, but they were wrong… Total online sales in 2016 were $394 billion! If your fulfillment company isn’t participating in the ecommerce segment, no doubt you know that you’re missing out on an exceptional opportunity!

In this article, I’ll focus on the technological capabilities a warehouse needs in order to implement an ecommerce fulfillment service. The article isn’t going to be about listing the pros and cons of the Top 10 software programs on the market, because I don’t know your current capabilities or strategic goals. Instead, I believe that the most productive approach is to breakdown the process to help you identify where you can improve your systems.

Let’s talk about process integration. Ecommerce clients will typically approach a fulfillment company with an established business infrastructure. Integration means adapting your systems to plug into those of your customer. The processes that are frequently affected are:

  • Order Capture & Management
  • Picking/Packing & Shipping
  • Synchronizing Order and Inventory Status
  • Visibility
  • Client & Customer Service

Order Capture & Management

There are more than 300 ecommerce shopping cart companies on the market. Your company needs to be technically capable of adapting to the wide variety of methodologies for communicating with those carts. Orders from carts need to be harvested on a regular basis, controlled to insure none are dropped or duplicated, and converted into a form that is compatible with your system.

I believe this area represents the greatest technical challenge for fulfillment companies in the ecommerce space. Your tool bag for interfacing with a client’s systems must include a wide array of technologies, including the ability to interact with flat files, Application Program Interfaces, Web Services, File Transfer Protocol, call center systems, and the occasional manual-order entry. IT resources to plan the implementation and support this process need to be broadly skilled and creative. Administrative resources that perform the daily-order harvesting routines need to be highly attentive to detail.

Picking/Packing & Shipping

This process is probably the most straightforward. Picking slips are generated, product is picked and boxed, and shipping labels are applied using traditional fulfillment methods. Although there may be special requirements for packing slip and box branding, those requirements don’t vary much from conventional fulfillment. It is essential to operate at a very fast past as ecommerce performance is measured in hours and the volume of orders is measured in thousands per day.

Synchronizing Order and Inventory Status

Ecommerce fulfillment requires that the client’s shopping cart has the most recent inventory and order status information. Your systems need to regularly communicate inventory availability to the cart to ensure that a client’s customer is made aware of out-of-stock situations before placing an order. Customers also need to be able to reference the shopping cart to find the status of their order. Process synchronization between your operation and that of your client is an absolute necessity.

Visibility

Ecommerce fulfillment is very fast moving! We used to joke that customers would press the “buy” button and run to the front door looking for the UPS truck! With Amazon’s latest experiments in same-day delivery, this joke is almost a reality. Given the speed of ecommerce, it’s important for your clients to be able to have a real-time window into your process and inventory. At a minimum, clients should be able to see orders and inventory in near real time. The leading-edge, ecommerce fulfillment companies have taken a more pro-active stance by publishing “alerts” when important events are happening in the fulfillment process. Alert examples might include: Product X is running low on inventory; a new shipment of stock has arrived; or a customer has returned an order.

Client & Customer Service

The fulfillment process is heavily impacted by fast-paced marketing and promotional decisions. Ecommerce client support typically requires a designated coordinator to represent the client’s requirements to the fulfillment organization and to coordinate program changes. The volume and minutiae of detail often warrant the implementation of “issue logging” and “project workflow” processes within the organization. Given the pace of the business, these processes are best automated.

Some clients, particularly the Entrepreneur and Offshore segments, may ask the fulfillment organization to manage customer support. This might involve call-center work, authorizing returns, handling the occasional complaint, and so on. These client groups often have too small a volume to outsource their work to large call center. Having an arsenal of exceptional customer-support tools, therefore, positions you to capitalize on a good revenue opportunity.

In summary, successful ecommerce fulfillment relies on solid technical foundations. Warehouses and 3PLs must understand that ecommerce clients have very different needs (and expectations) for the technical aptitude, agility and pace of their fulfillment partners.  To fully capitalize on the ecommerce segment, your fulfillment service must meet–and exceed–these requirements.

Online Returns are Growing Faster than E-Commerce Sales

Return Policy

We have been writing about return merchandise more and more throughout this year as the business of reverse logistics heats up to a record pace.

When 20% of your revenue is in a revolving door, forecasting can get pretty dicey. Add to that the overwhelming percentage of customers who expect easy, inexpensive return options, and it’s clear no business can overlook the power of reverse logistics.

Incidentally, if you like statistics, this article is going to be a fun read. The numbers on the subject are compelling, to say the least.

Breaking Returns Records

In the U.S. alone, Statista estimates return deliveries will cost $550 billion by 2020, an increase of more than 75% in four years. If that seems pretty bleak for the bottom line, let me point out that this figure does not include inventory loss or restocking fees.

The rate of returns is always higher during the winter holiday season. In 2019, UPS predicted an impressive number of returns even before Christmas Day even arrives… to the tune of 1.6 million per day. Merchandise is literally flying back and forth, changing hands constantly. For statistics fiends, this means there are more than 18 returns per second before the holidays are over.

January 2 is typically the biggest day for returns, forecast at nearly 2 million in 2019 (an increase of 26% in a single year). But online sales are only projected to increase by around 12% in 2019, which means returns are growing at twice the rate of online sales.

New Models

The current digi-centric commerce model relies on returns. According to Shopify, a full 90% of customers “highly value” free returns as a key factor in their buying decision. And nearly 70% avoid buying from companies that do not offer completely free returns.

Online sales returns are now averaging 20%, with 30% for holiday orders and even as high as 50% for “expensive items.” This is more than twice the rate of brick-and-mortar retails. Ironically, the physical storefronts often limit returns to re-saleable merchandise and simply put it back on the shelves.

Online Returns Are Another Species Entirely

Amazon encouraged a “no questions asked” returns policy, but has recently begun to address the overuse of the policy. Many of the returns cannot be resold and end up on liquidation sites. Small sellers on the giant platform may end up losing significant revenue if they cannot minimize returns, since they don’t always have the option to refuse and remain in good standing with Amazon. And with Fulfillment by Amazon sales, the decision is out of the seller’s hands entirely.

So what’s the bright side?

Benefits of Reverse Logistics

When handled correctly, reverse logistics can actually improve your bottom line as we described in our guest post at Storeya.

Planning for returns is actually quite similar to planning inventory requirements. If you address it ahead of time and have a strategy in place, there is nothing to fear. Although it’s hard to adjust the mind set, your business will benefit from letting go and embracing the inevitability of growing returns volume.

Get out ahead of the returns spiral by offering alternative programs. For instance, the Amazon wardrobe program allows customers to buy clothing with the intention of trying it on and only keeping what they like. It’s a perfect example of embracing the problem. This way, the business is prepared and can also charge accordingly.

Zappos is another company who made it a policy early on to accept returns, for free, all the time. And although they struggled operationally, the customer satisfaction rate was very high. They found that customers who returned the most also spent the most overall.

Reverse Logistics Strategies

Of course, the strategy will vary greatly depending on your business category. Apparel is the number one returned product category, with over 50% of these due to sizing issues. In this case, providing detailed sizing information up front can help cut down on the number of returns. And including accurate images from all angles, preferably with 3D viewing and human models helps too. Beyond that, designing a loyalty program around returns, similar to the examples above, mitigates the inventory loss and manages customer expectations.

For products that are easy to restock, such as DVDs and books, focus on the packaging and restocking needs and streamline the process so it makes a lesser impact. These items don’t expire and they rarely show wear, making it easier.

However, vitamin companies need to have a clear policy to avoid restocking expired (or close-to-expiring) products, which will only make a bad impression on the next customer to receive the item. This factor can impact the supply chain even earlier in the process, to manage inventory with longer shelf lives to allow for returns without gumming up the works.

Proactive Management

In some categories, it may make sense to build the cost of returns into product pricing. Since an average of 20% of merchandise will be returned, consider factoring this into the margins from the beginning. There are many elements to evaluate for improving reverse logistics flow.

Embracing the New Normal

The bottom line is returns are the new normal. How your business handles them can make all the difference between loss and gain.

When you are ready to explore options for fulfillment services, Medallion Fulfillment & Logistics and Sprocket Express are ready to step in and handle shipping and return processing.