We live in a gig-based sharing economy. We share rides via Uber and Lyft, homes via Airbnb. We even have our groceries delivered by everyday people driving everyday cars.
But while everyone is fixated on the Ubers of the world, few are paying attention to the ways in which Amazon is tinkering with this transformational service model and applying it to fulfillment, delivery and more.
Over the last several years, Amazon has quietly built up a portfolio of gig services, including:
Amazon FBA Onsite
Read on to learn more about each of these—and why FBA Onsite may be the most innovative of them yet.
Amazon Flex Program
The Amazon Flex app gives regular people the chance to pick up delivery jobs for a range of Amazon’s services, like Prime Now, Amazon Restaurants, and Amazon package deliveries. Drivers are paid $18 to $25 an hour to make deliveries from their own vehicles. Amazon Flex promises the ability to “be your own boss, set your own schedule, and have more time to pursue your goals and dreams.”
Amazon’s last-mile delivery service, Amazon Logistics, is powered by a growing number of independent contractors or “Delivery Service Partners.” It’s intended to complement official providers (UPS, USPS and FedEx) by employing everyday drivers, walkers, cyclists, and other motorists to achieve 7-day or same-day delivery. Partners enrolled in Amazon Logistics can help themselves to Amazon’s delivery technology and vehicles while observing certain stipulations and leasing fees, though they are not Amazon employees. For a $10,000 startup cost, they can build a small business of up to 40 delivery vehicles.
Amazon Shipping now offers its marketplace sellers the ability to ship orders via Amazon Logistics instead of UPS, FedEx or USPS. The rates for this service, which include parcel pickup from the seller’s warehouse, are rumored to be as much as 10% lower than the rates that UPS and FedEx offer small- and medium-sized merchants. Amazon Shipping is now being rolled out in cities beyond Los Angeles and London, according to the Wall Street Journal. It’s safe to assume that Amazon will expand this offering to merchant shipments beyond its third-party marketplace. And you can bet that Delivery Service Partners will play a major role in supporting the execution of Amazon Shipping.
Amazon FBA Onsite: a ‘Groundbreaking’ Program
Rumored to be the most groundbreaking of Amazon’s gig services, FBA Onsite combines the best parts of FBA and Seller-Fulfilled Prime (SFP) to bring shipping rates down and to widen access to the coveted Prime badge. The program invites independent fulfillment center warehouses—mostly owned or operated by Amazon Marketplace sellers—to become nodes in the Amazon Fulfillment Network. Any Amazon orders fulfilled from these warehouses become eligible for FBA-only programs, like Prime, Subscribe and Save, and Small and Light.
The FBA Onsite program is Amazon’s latest move against warehouse congestion. By leveraging existing fulfillment center infrastructure, it relieves the burden on Amazon to build more fulfillment centers or overcrowd existing ones.
What Are the Benefits of FBA Onsite?: A Seller's Perspective
He further explains the process: Amazon flies engineers to set up your warehouse and integrate its Amazon Onsite WMS (Warehouse Management System) software. Afterwards, you can simply move items into the “node” to make it available for Prime offers, as opposed to sending inbound shipments to an FBA warehouse.
Aside from avoiding Amazon FBA storage and inbound shipping fees, participating sellers potentially benefit from:
A customized rate card: “I’m assuming the pricing won’t be as sharp as traditional FBA because they have to guarantee 2-day shipping to sites all across the USA from one location instead of across a network of fulfillment centers.”
No longer having to spend time or money prepping inbound shipments to FBA
No longer having to account for wait times while restocking inventory at FBA
Ability to remove items from the warehouse to avoid long-term storage fees
The return process: all returns go back to an Amazon fulfillment center and are set aside (not placed into their fulfillment network) to be batch shipped back to the warehouse on a regular basis
Customer service: Amazon still handles all customer service and returns
What Are the Drawbacks of Amazon FBA Onsite?
Many of the consequences have yet to be seen, since FBA Onsite was only launched a year ago to a purported 50 sellers. However, the same seller raises a few concerns:
Returns will be processed by an FBA facility, so any abuse that currently happens there will still happen
All returned items to the FBA facility need to be sent back to the seller’s warehouse, so the seller will be charged an extra $.50 return fee for every FBA return
Amazon can deputize your warehouse to act fully in their name as an Amazon fulfillment center, i.e., install their WMS software on your servers, require you to physically assign items to a node to “replenish” FBA inventory (which is then reported to Amazon’s fulfillment network that they have more items in their MFN fulfillment network)
If you have extra capacity in your warehouse, you’ll likely take in additional packages and fulfill them for Amazon on behalf of other sellers
The Verdict on Amazon FBA Onsite
While there are still many unknowns about the program, Amazon FBA Onsite may represent a transformational change to the Amazon Marketplace. It enables Amazon to support third-party (3P) FBA sellers with lowered costs and accelerated supply chains, while opening up space for them to build up their first-party (1P) retail business.
The program is currently invitation-only, but we expect it to expand to more high-performing MFN and SFP merchants soon, falling in line with Amazon Shipping, Amazon Logistics and Delivery Service Partners as yet another gig-based sharing program.
However, review manipulation is only one tactic among many that unscrupulous sellers are using. Here are several other underhanded practices that are cropping up. Beware of suspicious activity that resembles these—and avoid succumbing to them yourself.
8 Common Black-Hat Tactics
Click farming. A seller will hire bots or workers in “click farms” to search for their products on Amazon, then click on their listings repeatedly or add items to their carts. The increase in click-throughs and engagement is intended to trick Amazon’s algorithm, so listings will appear higher in search results.
Sabotaging competitors with negative reviews. A seller will post negative reviews on a competitor’s listings to hurt their reputation and/or get their listings suppressed by Amazon. The seller may even mark negative reviews as “helpful” via other fake buyer accounts to make those reviews more visible to shoppers.
Sabotaging competitors with positive reviews. A black-hat seller will generate and post dozens of carelessly fake and unverified positive reviews on a competitor’s product—raising red flags in Amazon’s system.
False brand infringement claims. In this instance, a hijacker will claim to be the brand owner or manufacturer of a product, then file an infringement claim against a reseller. Amazon usually acts quickly in such cases and will suspend the reseller’s ASIN. While a reseller can get his/her ASIN reinstated, it may require some chasing—Amazon will want to hear from the brand “owner,” who won’t typically won’t respond to these requests. If this happens to you, your best bet is to ask the real brand owner or manufacturer to write a statement to Amazon confirming that they did not make the claim.
Posting a bogus safety claim. A hijacker may actually buy a product from a legitimate seller, then post an over-the-top negative review claiming that it was dangerous. The hijacker will cram words like “hazardous,” “risk,” “choking,” and “fire” to trigger an immediate removal of the listing.
Counterfeit switcheroo. There are a few ways that counterfeiters can nab sales from another seller. The most common way is for a counterfeiter to list his/her inventory (of knockoff goods) to an existing listing. Or, counterfeiters may buy their competitor’s product themselves, then return a counterfeit version. They will subsequently complain to Amazon and/or leave a review claiming that they received a counterfeit. To protect yourself from this, take a page from our Brand Control playbook and serialize individual units of your product.
Hacking listing content. A bad actor finds a listing for a product that’s only slightly different from the one they’re selling. They start selling on the listing and submit a new title, description and image that matches their product rather than the original. People who buy the original product then complain that it’s “not as described,” and the original seller gets suspended.
Posting prohibited content. A seller may also upload vulgar or controversial images to a product listing, or change copy to include outlandish claims, leading to the listing’s immediate removal.
How to Protect Yourself from Black-Hat Sellers
Keep in mind that Amazon is aware of these issues and getting better at detecting abuse. In early 2019, the company introduced Project Zero, a program that lets sellers automatically remove counterfeit listings without involving Amazon. It’s expected that Amazon will continue developing tools and processes to handle multiple types of hacks, especially as new scams are being publicized.
In your day to day, you’ll also want to be vigilant in monitoring your Amazon store. Pay special attention to your high-performing listings. If you see any suspicious activity, report it right away and don’t stop at opening a case with Seller Support. Escalate the issue to a team or category manager, and do so the right way. You don’t want to haphazardly put together a complaint or POA, only to get rejected for submitting confusing material.
Finally, you’ll want to take proactive measures, like getting your brand registered, to receive more protections from Amazon. Stay away from any questionable practices yourself—follow the mantra that if something seems sketchy, it probably is!
8 White-Hat Tactics that You SHOULD Consider
So if you want to power up your listings the right way, consider these tactics.
Make sure your product data is complete. The more detailed your product descriptions, the greater chance you have of getting ranked on Amazon and earning your consumers’ trust. Heed expert tips on how to optimize each component of your listing. And if the idea of manually enriching all of your listings makes your eyes glaze over, take advantage of Zentail’s SMART Types system, which automatically adds essential attributes to your listings. It’ll also format your listings according to Amazon’s requirements so that your ASINs remain compliant.
Take advantage of Amazon’s Enhanced Brand Content (EBC). EBC is available to any registered brand. It allows you to add custom imagery and text to capture your consumers’ attention, and to build trust around your brand. It’s easy to use, so if you can, why not put your best foot forward?
Offer product bundles and kits. List your products as multipacks or special bundles to offer your customers a good deal and create unique, non-competitive ASINs. Of course, you’ll want to first read up on Amazon’s ground rules for bundling. You’ll also want to look into tools like Zentail’s inventory and kitting automation to ensure that kits/bundles don’t come at the cost of accurate inventory.
Cross-promote your Amazon listings on social media and other websites. Leverage multiple channels to drive consumers to your Amazon listings. This increase in engagement can improve your ranking in Amazon’s search engine. You may want to even consider investing in advertisement to gain initial traction on new or slow-selling items.
Take advantage of the Early Reviewer Program for new products. Amazon created this initiative (available to any U.S. registered brand) to address the fact that new products often have trouble selling because of their lack of reviews. If your product is enrolled in this program, Amazon will solicit reviews for up to a year or until your item receives five product reviews, whichever comes first. You can enroll any ASIN with fewer than five reviews that costs more than $15. To participate, you’ll also have to pay $60 for each SKU in the program (but you only pay after you receive your first review).
Improve text matches. Ensure that your titles and descriptions include the right keywords, in addition to related keywords, without sounding robotic. Cut out any sales fluff to make room for genuinely helpful and descriptive content.
Make sure your products are readily available. Unsurprisingly, Amazon will de-emphasize listings that are out of stock. Once your listing goes out of stock, it’s reportedly harder to recover your rank. So before you get to this stage, establish a reliable method for syncing quantities to the actual inventory in your warehouses and/or inbound stock. Use inventory thresholds to avoid stockouts, while employing an automated forecasting tool to keep you ahead of demand.
Ensure your pricing is competitive. You don’t have to be told twice—pricing matters. It’s the second-most highest factor when it comes to winning the buy box (second to your fulfillment method). Even for brand owners, having a competitive price is key to earning a top spot. For resellers, the best type of repricer is, hands down, an algorithmic repricer. An algorithmic repricer will adjust to buy box winners in real time without killing your profits. In fact, it’ll incrementally increase your price to keep you winning at the highest possible price.
The competition on Amazon is only intensifying with time. But as we reported earlier this year, though the number of third-party sellers seems to be growing, 28% of sellers are dropping out year over year. The ones who remain not only deliver great service and products—they employ white-hat tactics to increase brand visibility, without putting their ethics on the line.
Of course, many are also tapping into automation to make managing these tactics exponentially easier. Zentail is an industry-recognized COM platform that helps in this manner. With AI-powered automation and an easy-to-use interface, Zentail simplifies your workflows and multiplies your productivity. Manage every aspect of business in one place to move fast and unlock new opportunities for growth on Amazon.
Contact us at email@example.com for more information or to speak with one of our seasoned Amazon experts.
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Built by online sellers who've been around the block, Zentail is today's no.1 commerce operation management (COM) system. We help brands and resellers accelerate their growth on Amazon and expand to new channels. See whether Zentail is right for you—reach out to our team today. Contact us: 888-366-8458