Amazon shopping cart will no longer favor FBA sellers!

With the development of cross-border e-commerce, even Amazon, a unicorn, is facing increasing pressure. For example, it is frequently subject to antitrust investigations. Recently, Amazon reached an agreement with the European Union on antitrust issues, and the content of the agreement involves sellers' shopping carts.

In addition, the entry of TiKTok and Temu into cross-border e-commerce has also made it feel threatened. Previously, Amazon expanded its small and light commodity program and raised the upper limit of eligible commodity prices from $10 to $12, which was generally believed to be a response to Temu's low-price strategy. Recently, there was news that Amazon began to imitate TiKTok and launched a similar function in the app.

Agreement reached with the EU, non- FBA products will get more opportunities

According to foreign media reports, Amazon has reached an agreement with the European Union to resolve a long-standing antitrust complaint.

The EU's antitrust investigation into Amazon began in 2019 and brought two charges against Amazon in 2020:

1. Amazon uses sellers’ data to make profits. Amazon uses the convenience of the platform to collect data such as product quotes, order quantities, and store profits from third-party sellers, and then, with the support of massive data, it sells the best-selling products through its own business.

Second, Amazon is more partial to sellers who operate their own businesses and use official services. At the same time, the EU used this as a breakthrough to conduct an in-depth investigation into Amazon's "Golden Shopping Cart" and "Amazon Prime Membership".

Three years into the investigation, Amazon compromised on the second charge, with the report saying it had pledged to give rival products more visibility in the "Buy Box" section of its website .

It also agreed to provide an alternative offer for buyers who are not in a hurry to get the goods, and that sellers using Amazon Prime membership will not be locked into Amazon's logistics services and will be free to decide which delivery company they want.

Overall, it is good for third-party sellers, especially sellers who ship their own products. As we all know, FBA sellers will get the "buy box" faster than sellers who ship their own products, and if sellers who ship their own products want to get the shopping cart, they need to offer more discounts.

I believe sellers are aware of the importance of the golden shopping cart. About 80% of sales on Amazon are generated through the buy box. In other words, grabbing the golden shopping cart is equivalent to grabbing an order.

Now that the agreement has been reached, it means that self-shipping sellers have more chances of their products being ordered.

There is only so much of the pie, and as one thing increases, another decreases. The opportunities for sellers who ship their own goods increase, while the opportunities for FBA sellers and Amazon's own operations naturally decrease.

However, seller Leon believes that the impact on FBA sellers and Amazon self-operated sellers is limited: "For sellers who have overseas warehouses and can deliver by themselves, it will have some effect, such as large items, but for those shipped from China, there will not be much advantage, after all, the cost of air transportation is also very expensive."

He added: " Although the system is equal, customers have preferences. For example, in China, due to the advantages of speed and trust, JD.com's self-operated and JD.com delivery are always chosen by more consumers. "

Another seller, Gary, has a similar view: "Amazon has the initiative, so it is difficult to evaluate the display opportunity. In addition, other logistics are not mature now, so it is estimated that most overseas buyers will still choose FBA."

He also said that if this agreement is reached, the ultimate beneficiaries will be local European sellers. "They don't have to send their products to Amazon warehouses, they have local advantages, and they save on storage fees, handling fees, delivery fees, etc."

However, in the case of inflation, if a product that is not urgently needed arrives a few days late but can get more discounts, I believe consumers will still be tempted.

It is understood that the agreement is expected to be announced on December 20. Once the agreement is formally reached, Amazon will be required to fulfill its commitment for at least five years.

The reason why Amazon chose to "bow" this time is to avoid potential fines under the upcoming Digital Markets Act ( DMA ). If Amazon violates DMA rules, the consequences will be serious. It may face potential fines of up to 10% of its global revenue , and if it fails to change its ways, this proportion will increase to 20%.

It is also worth noting that the EU's success is very likely to be replicated by the United States. In 2020, the Wall Street Journal published a report claiming that Amazon used seller data to design competing products. The U.S. Securities and Exchange Commission has also begun investigating the company's use of third-party data. In addition, the Senate has also asked the Department of Justice to investigate Amazon.

Launching features similar to TikTok, giants feel threatened

According to the latest data from App Annie , TikTok will have more than 1.5 billion active users in 2022. As the number of users grows rapidly, TikTok's e-commerce is also developing rapidly.

In addition to opening sites in Southeast Asian countries such as Indonesia and Malaysia, TikTok Shop has also expanded to Europe and the United States. Recently, there are reports that after the launch of the UK site, TikTok Shop has begun testing in the United States. The "2023 Social Media Trends Report" released recently shows that TikTok has been downloaded 4 billion times in the United States in the past four years.

The rapid development of TikTok's e-commerce has made the world giant Amazon feel threatened. According to foreign media reports, Amazon announced on Thursday that it would launch a shopping feature called Inspire in its app . Users can buy products while browsing videos and photos. People familiar with social media must know that this is very similar to TikTok , but it is more like a mixture of TikTok and Instagram .

In Inspire, photos and videos in users ’ customizable feeds will display product links in the bottom right corner of the post.

Amazon said Inspire, which is currently only available in the Amazon shopping mobile app , will be available to some customers in the United States in early December and will be rolled out nationwide in the coming months .

Currently, if users want to use Inspire, or check whether they have permission to use this feature, they can open the Amazon shopping app and click on the " light bulb " icon in the navigation bar. If you don't see the " light bulb " icon, you will have to wait for a while .

After clicking the light bulb icon, Amazon will provide users with up to 20 interests to choose from, such as interior design , travel, plants, skin care, etc. Once users select the topic of their interest , they can start browsing.

Currently, there are three objects that can create content in Inspire : users, Amazon influencers, and brands.

Among them, product reviews submitted by users that inspire other users to buy may appear in Inspire. People who participate in the Amazon Influencer Program and their photos and videos posted to the Amazon Influencer Store are also eligible to appear in Inspire.

On the seller side, if you are a supplier or seller registered in the Brand Registry and have an active brand store, the eligible photos you post to your brand posts will be eligible to appear in Inspire.

Currently, more and more online platforms are exploring social commerce opportunities due to the success of TikTok. In 2021, global social commerce sales reached US$492 billion. According to Accenture data, global social commerce sales are expected to reach US$1.2 trillion in 2025.

Forbes reports that social commerce sales account for 10% of e-commerce sales, but this is expected to grow to 17% in the next three years, so Forbes expects this new feature to provide Amazon with an opportunity to increase profits.

Overall, this feature is currently beneficial to both sellers and Amazon as it has the potential to significantly boost sales.

In fact, Amazon has long been trying to use social media to attract shoppers and inspire purchases. In the past few years, it has launched Amazon Collections , Amazon Stream, and Interesting Finds , which is similar to Pinterest , but none of them have attracted much enthusiasm. I hope Inspire will not follow their old path.

Amazon

TikTok

Inspire