Amazon… a tale of scale, data and my way or the highway (and not a tropical tree in sight!)

First up, some facts, Amazon is:

• Largest eCommerce retailer in the world (nothing new there then)
• The 5^th Largest Retailer in UK, for every £100 spent in a UK Retailer, £4 is on Amazon
• In the US – 8 out of the top 10 retailers get more traffic via their Amazon page than their own brand site
• Research shows that consumers are using Amazon more and more like a search engine to find brands/products rather than on a conventional search engine like Google.

If you sell stuff to end consumers, you cannot afford not be in the game with Amazon, which means Amazon has unprecedented power and how they behave and treat suppliers really is important… for everyone!

Salitix have been working with suppliers for some time to work out how you get a non-standard query not only re-paid, but simply presented and onto Amazon’s ‘Vendor Central’ portal. It has been a frustrating process. What we know is that Amazon will deduct any amount it believes is due, when it wants to. The onus is then immediately on the supplier to reconcile and challenge if they believe the charge is not due.

From our pool of clients and brands, what this seems to mean is big lists of charges that are being disputed and taking a very long time to resolve, often because the process is on-going (never ending). Often it becomes hard to know where the list starts, or ends and what has, or has not been resolved (if anything). But because Grocery trading volumes have been comparatively small (to date), it’s easy write off and view as a cost of doing business… chasing single digit discrepancies has a shelf life for most suppliers with a business to grow.

As we all know, the rise of the internet and the products and services it has bought, often at low cost – has bought fantastic benefits and improvements to our material lives. What we talk about less is the changing concept of ‘service’ from those providing the service, whether it be the 20-mile journey you now need to make to find a physical bank, or the dystopian labyrinth of the dreaded automated phone service, or worse still the gobble gook of the algorithm ‘service bot’ you can ‘chat’ with immediately! Until now, this has tended to be reserved for the Retail environment, i.e. what the end consumer has to deal with… but Amazon is changing all of that. When you think about it, when you have a company as big as Amazon, a supplier at x thousands (millions even) of revenue with them, is much like the account holder who spends a few 100 quid each year to get their internet service. What the supplier gets with Amazon is a faceless matrix of a system, designed systematically and entirely to serve Amazon, not the supplier. As one Amazon business controller said to me recently ‘you literally get exhausted trying to work out how to work it out… and give up’.

What is less understood is that Amazon, despite the comparatively small scale of its UK Grocery trading, already conducts as many as 4 separate forensic reviews of that trading with its supply base and many of those disputed charges are in fact audit claims! This is where the ethics of what is going on get greyer. Amazon is enabling a 3^rd party to assess its trading platform, review and submit claims that once ‘imagined’ are systematically deducted, with the onus being on the supplier to prove the claim is invalid (as opposed to the auditor proving their claim is valid). This harks back to the bad old days when the Big Grocers, before the GCA and GSCOP and the Tesco investigation all those EON’s ago in 2015, would simply deduct what they felt entitled to and then leave it to the supplier to somehow show that the money was not owed… and we know what that meant! The onus should never be on the claimed against having to ‘prove’ that the claim is invalid, the claimant must always be responsible for providing the evidence and proving that the claim is valid. GSCOP has enshrined this principle much to benefit of the marketplace as a whole.

So where does this leave us? At a point of departure. Amazon are now under the auspices of GSCOP and the new CCO is likely to be busy indeed dealing with requests from suppliers interested to find out how current trading practices will change to better reflect the code. And this is exactly where we are at – making enquiries to find out how Amazon plans to provide a fair process that enables their audit claims to be recognised as just that and guarantee that no deduction is made without specific consent, and then how Supplier claims will be managed and settled within the aspired to 60 days stipulated by the BP statement on Forensic Auditing published by the GCA and voluntarily signed up to by all Retailers regulated by the code and, we assume, Amazon?! I’m sure that Mark White will be asking them to, if they have not already done so?

The future should see an environment where Amazon can no longer summarily deduct and if it does, must provide a process for resolution, while any query from the Supplier must be dealt with efficiently and fairly via a transparent, replicable process… pie in the sky? We don’t think so because Amazon are serious about their business in the UK and that means they will be just as keen as Tesco and the others were to meet and maintain the minimum standards required for trading in the UK Grocery market. At Salitix, we are confident that we will soon be able to prove to suppliers that we can manage and deliver a sales reconciliation for them on their Amazon trading which results in claims getting paid as part of business as usual.