By Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands.
Many Amazon vendors are facing CRAP (Cannot Realise any Profit) and delistings right now. Even products with unchanged vendor cost prices are getting delisted.
The reason?
Amazon is facing cost challenges on multiple fronts:
- Costs to run their operations have gone up
- Vendors have changed their portfolio mix
- Inflation requires Amazon to spend more on generating demand
Products that fall into the CRAP bucket are characterised by high variable handling and shipping costs that outweigh the benefits of an active listing for the marketplace.
And these variable costs have gone up dramatically for Amazon over the past 24 months.
So what can vendors do if their products have been delisted?
Here are 3 proven ways to reinstate it:
1. Add value to your listing
If price matching is a constant headache that leads to low margins, many brands have successfully launched Amazon-exclusive product variations and bundles to differentiate their offer.
Amazon’s price algorithms acknowledge that these bundles are not identical and create additional value for end customers.
The resulting margins are significantly higher and ensure the listing remains active.
2. Review your cost structures
It’s good practice to review your cost structures of items at risk of being delisted.
You can either work on cost efficiencies with your suppliers and manufacturers, or with Amazon itself.
For example, you could align on cost price discounts in exchange for larger buying commitments (bulk orders) from your Amazon vendor manager.
Brands that want to go a step further and have the capacity can also switch to a vendor-flex solution. In this scenario, they ship the goods from their warehouses to the end customer instead of sending them to Amazon.
This comes at a huge cost-saving for the online marketplace, which vendors should leverage to overhaul their terms and cost price structure.
3. Prioritise Processes
Many brands find it difficult to recognise e-commerce as a completely separate sales channel. They want to sell the same product, with the same packaging and the same pricing structures offline and online.
However, in e-commerce, customers do not shop on a physical shelf. Consequently, a product’s packaging does not need to attract the attention it does in a brick-and-mortar environment.
That’s great because it means your teams can focus on designing e-commerce-friendly packaging that minimises fulfilment costs. Less packaging also means you can fit more products on a pallet, further reducing your cost structures.
For Amazon, this comes with the benefit of lower handling costs, often removing products out of CRAP.
For further insight and support, contact Martin Heubel here
