Amazon's Growth Causing Concerns Among Suppliers: Report

Amazon has undoubtedly grown over the past several years, having entered into nearly every space of the consumer market, and that is allegedly beginning to concern some suppliers and manufacturers. Those concerns stem predominantly from how much influence Amazon's position as the world's largest online retail shipper gives the company when it goes to the negotiating table. More specifically, the company has dominated the online retail space to the point at which at least 21 publicly owned companies generated at or above 10 percent of their respective revenues in the 2017 fiscal year through Amazon's site. While that percentage may not seem particularly high, it is important to remember that many of the companies, including those that don't surpass the 10 percent mark, are also selling products through any number of other major retailers. Those include both brick-and-mortar and online locations ranging from Walmart to Target and Costco.

Bearing the breadth of any given company's sales in mind, 10 percent actually represents a substantial amount of business. Moreover, Amazon's influence goes beyond wholesalers and suppliers. With regard to air cargo shipments, no less than 29 percent of Air Transport Services Group's revenue stemmed from Amazon over 2017. Meanwhile, the company responsible for the data center equipment on which Amazon runs its web services - namely, Applied Optoelectronics, saw at least 58 percent of its sales coming from Amazon over 2017. That has, as might be expected, forced some companies to adjust their production and operating procedures in order to keep up with demand generated by Amazon's enormous presence and to remain relevant as shopping shifts more toward online retailers. Some companies such as Lifetime Brands have gone so far as to implement policies centered around Amazon's often harsh reviewers, with a renewed company focus on creating products that consistently earn 5-star ratings. That could be seen as a positive thing but the shift in consumer habits has also given Amazon a huge amount of influence when negotiating, with some reports stating that companies worry that it has far too much influence. For example, one unnamed supplier reportedly claims that Amazon reviews its contract annually, applying pressure to set pricing and gaining added benefits from each new deal. As per CNBC, the company alleges that Amazon effectively forces it to buy more of its ads or pay for more of the product transportation costs stemming from Amazon moving items between warehouses.

With that said, there have also been concerns expressed by other companies about Amazon's relationship with any given supplier's customers. Amazon has become a key way for a given brand to interact with customers, which could inadvertently give more brand recognition to Amazon than to a manufacturer or supplier. According to some experts, Amazon essentially has control over how much of the data about sales and consumers a given company has access to, though there haven't been any confirmed instances of Amazon abusing its access to that information or withholding it.

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