Amazon is planning on focusing on larger suppliers to serve as vendors for the company’s own retail business, in a move that would push off smaller merchants to sell their items on its marketplace, according to Bloomberg.
The change may seem like a minor detail but it would mean a big shift for businesses that sell to the ecommerce giant in bulk. They’ll have to become merchants on Amazon’s marketplace—meaning they’ll sell their goods themselves to customers rather than to Amazon for resale. Those merchants will have to adapt to selling directly to consumers on Amazon’s marketplace, where sellers post their products, buy ads from the company to promote them, and pay Amazon fees.
Bloomberg reports Amazon will cut down on wholesale orders from vendors from which it buys less than $10 million worth of products. It’s part of an effort to continue automating different aspects of its business, rather than having individual managers handle a vast pool of vendors.
If these merchants are forced to sell on Amazon’s marketplace instead of to the company for resale as vendors, it could also mean more more recurring revenue for Amazon. Amazon collects various fees from merchants on its marketplace, who also pay Amazon to promote their products via the company’s growing ad business.