Amazon has introduced major changes to its delisting procedures, following controversy over how its algorithm-based systems has led to companies being culled with as little as 24 hours’ notice.
The Grocer can exclusively reveal Amazon has made a new commitment to provide “reasonable written notice” when products are red flagged by its system, known internally as CRAP (cannot realise a profit).
The move comes just days before the launch of the Groceries Code Adjudicator’s latest supplier survey, which will include Amazon for the first time since it was designated under GSCOP in March last year.
The Grocer has previously revealed that Amazon has been accused of continuing to delist products at short notice, without the same level of communication as traditional supermarkets under the code.
However, this week Amazon bosses wrote to grocery suppliers on its vendor platform setting out a new commitment over transparency.
“Suppliers will appreciate there are circumstances which can cause a product to become economically unviable to continue to offer to our customers,” it says.
“We recognise this is challenging and, when it happens, we’d like to work with you to address it. This is why we want to reassure you that you will always receive reasonable written notice in advance whenever our review process flags that we will potentially consider taking steps in relation to your products.
“Any notices will be sent by email to the primary contact on the vendor account.”
Amazon said the notice periods would vary “depending on each individual case.”
Under GSCOP a retailer must provide “reasonable notice” to the supplier of a decision to delist, including written reasons for the retailer’s decision, though there remains a huge grey area over what counts as reasonable.
The latest changes to Amazon’s CRAP system follow moves in August last year when it committed to ensure there would always be human intervention to prevent products being delisted if it meant businesses potentially going to the wall.
“We know that we need our suppliers’ help if we are to provide our customers with a broad product range, at competitive prices,” Amazon says in the letter to suppliers. “Following designation, we have established new processes to improve our communications and ensure we are treating suppliers in a fair and transparent way.”
It said it hoped the changes would give suppliers “more certainty” and help foster a “more supportive relationship.”
Martin Heubel, founder of Consulterce, an e-commerce strategy consultant and former Amazon senior category manager, said Amazon, which recently announced major job cuts across its business as well as the closure of three UK warehouses, had begun to make improvements to the way it dealt with suppliers but that it still had much work to do.
“Amazon’s adherence to a general penalty notice period seems to be increasing,” he said. “However, the ‘reasonable’ notice period is still quite short at three to four weeks, while brands expect the industry standard notice period of three months that they are used to from other retailers.
“As a result, the frustration level on the brands’ side remains high. Account managers and their leadership teams often feel that they do not have much time to meet Amazon’s demands, while the buyers themselves often do not demonstrate the pace to conclude the cost price and trade terms negotiation cycle as quickly as possible.
“Whether it’s related to Amazon recent headcount consolidation or the recent round of layoffs in its retail division – it’s a point of friction that remains a core challenge for most brands selling to Amazon.”
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