Dive Brief:
- A recent session led by Amazon Business Director and General Manager Rob Green at the NAW 2017 Executive Summit seemed to confirm a "bipolar" relationship between Amazon and the hundreds of distributors in the room, according to a report by MDM.
- During the session, a distributor reportedly asked whether Amazon mines data from transactions made by "Amazon Business sellers," wherein distributors can place products online and handle pricing at minimum, but potentially shipping and customer service as well.
- MDM reports the answer was unsatisfactory for many at the conference, as Green cited both a firewall that handles Amazon Business sellers' data differently from vendor data, while noting data mining is a key part of Amazon's business model.
Dive Insight:
The MDM report on the National Association of Wholesaler-Distributors (NAW) reveals a question that is top of mind for vendors and distributors alike: will sellers who distribute on Amazon Business have their buyer data mined, and therefore used by Amazon to increase the e-tailer's competitive advantage?
It's a difficult dilemma for vendors, according to Retail Dive, as the rise of consumer expectations and benefit of e-commerce often force companies to work with Amazon, despite the fears. Yet, Amazon does little to dispel the fears, and in fact, a few incidents where the e-tailer appears to offer its own version of a vendor's product only exacerbates distrust. Such fears have driven some brands, such as luxury apparel companies, to turn to other distributors that offer e-commerce capabilities in order to avoid working with a direct competitor.
In fact, the market appears to be maturing to the point other logistics giants are entering the space to take the edge of Amazon's e-commerce advantage. FedEx recently released a new fulfillment option, for example, that proposes to manage e-commerce inventory and delivery for small and medium businesses, removing the conflict of interest faced with Amazon since the FedEx does not sell its own products.
It is undeniable working on Amazon's platform, or Alibaba's for that matter, offers the advantage of a known online marketplace, but the costs are beginning to scare some companies and key logistics partners away. How and if the company responds to the increased competition will be interesting to follow ... perhaps a good first step would be clarifying its data mining policy, based on the comments in MDM's conference report.
