Can Amazon regain supplier trust?

Dominic Sacco shares his opinion on the recent issues distributors have had with the online retail giant
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During a networking drinks evening at a distribution channel event a few years back, I got chatting to a sales director from a well- known vendor.

We had an open chat, discussing everything from the state of the channel to sales successes and our thoughts on new technologies.

We soon got onto the topic of industry bugbears – and the sales director immediately shifted the focus of the conversation to Amazon and other big etailers. Over the next half an hour or so, he openly vented his frustrations over dealing with the major etailers and the headaches caused by price-cutting.

He was afraid that retailers engaging in a race to the bottom over price would harm his business – and the channel as a whole. It’s an opinion shared by several other executives within the industry and a topic touched on regularly by members of the trade press, not just within IT, but other verticals too.

Incidentally, I have just recently learned that around this time in late 2014, a couple of tech distributors cut their ties with Amazon.

“We don’t supply Amazon anymore,” said a senior executive at one of the suppliers. “They track all online sales across Europe to make sure their price points are better. Amazon are so big, it can be hard for smaller disties to manage their prices. They have made it more difficult to compete.”

Earlier this year, reports circulated online suggesting Amazon owes seven figures in unpaid invoices overall to a range of distributors, going back years in some cases. The etailer allegedly claims it hasn’t received certain deliveries, while several suppliers have told PCR they have done – and has proof of delivery as evidence. It’s believed that problems with Amazon’s internal systems may be to blame.

Now, Steve Riordan, the managing director at Smithie UK – a tech distributor affected by this issue – has called on other suppliers to unite and discuss how to resolve these ongoing payment issues with Amazon.

“Everybody is scared [of speaking up] but I don’t care what anybody thinks anymore,” Riordan told PCR. “Why are these people getting away with it? In the industry there are millions of pounds sitting on people’s balance sheets that Amazon won’t pay.

“Amazon owes us an awful lot of money and it’s crippling this industry. We need to sit down and talk [with other disties] and get around the table. I’m happy for my name to go out there because we’ve got to put a stop to this.”

Since PCR published the initial article online around Riordan’s comments, Smithie says that Amazon has agreed to pay them around 30 per cent of what’s owed – with further negotiations ongoing.

A small handful of suppliers told PCR they would be happy to enter discussions with Smithie over the matter, while others are distancing themselves from the situation and aren’t concerned by it.

Suppliers like VIP Computers say they have a healthy working relationship with Amazon.

Other distributors have told PCR that Amazon has offered to pay half of what’s missing, with the distie expected to foot the remaining half of the bill.

It’s no secret that Amazon has not had the best public image over the past few years.

In late 2013, Panorama and The Guardian published in-depth undercover reports on the etailer, reporting low pay and tough working conditions. Last year, The New Year Times wrote a big expose? on the stressful nature of some of the job roles at the company.

But Amazon is working to improve its perception. It is paying back money it owes to some suppliers, according to reports, and is continuing to grow its revenues and employee numbers. In fact, it has almost a quarter of a million staff worldwide.

Amazon has always kept itself to itself, much like Apple. If it could channel some of its interest in growth and ambitious developments (like drones) into partners, there’s no reason why it can’t keep its suppliers and their respective industries happier in the future.

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