The big picture: Amazon famously sells everything from A to Z (it’s right in their logo, after all), a strategy that has led to retail dominance and pushed the company’s value to unbelievable heights. Now that it has influence over the industry, change is apparently in order.
Major brand executives and people familiar with Amazon’s game plan tell The Wall Street Journal that the company is increasingly taking aim at products with low or non-existent margins. These products – think snacks or beverages – typically carry a low price but are cost-prohibitive to ship due to their bulk or weight.
Internally, they’re known as Can’t Realize a Profit, or CRaP, items – and Amazon wants to eliminate them.
One specific example cited by the WSJ was a six-pack of Smartwater bottled water from Coca-Cola Co. for $6.99. This used to be the default order option for Amazon’s Dash button for the product but in August, the default was changed to a 24-pack that costs $37.20. Furthermore, Coca-Cola will also start shipping these orders directly to consumers from its warehouses, sparing Amazon the expense of having to deal with logistics and shipping on its end.
The e-commerce giant has also reportedly pressured some brands to lower their prices and change packaging. Seventh Generation, a Unilever PLC unit that sells household products, recently created a larger pack of baby wipes and a six-pack of dish soap.
Amazon can get away with changing the rules because of its massive size and influence. Guru Hariharan, chief executive of Boomerang Commerce, said not being on Amazon “is not an option anymore” for big consumer brands.