Can you rely on Amazon to help build your business?

David Brackin, managing director of Stuff U Sell, the leading eBay trading assistant in the UK and a regular Tamebay contributor, reviews his experiences with the temptations of Amazon Shipping, likening it to Faust, and strongly advises the sanity of having alternative back up carriers with the lesson that the best price isn’t always the best service.

Stories tell of the legend of Faust, a bored scholar who made a pact with the Devil to be given command of earthly powers of magic and knowledge for 24 years, and afterwards for his soul to suffer eternal damnation in hell. He has some fun, but overall it’s a poor deal and ends badly (as these arrangements usually do).

Last year Amazon launched Amazon Shipping — their third-party shipping service — to great fanfare through a tie-up with a Linnworks integration. We mostly sell on eBay, but this service allowed us to ship our eBay sales through Amazon shipping. This represented an extremely attractive fully-tracked 24hr service for less than Royal Mail were changing us for a 48hr service, it was a highly tempting proposition – but is building Amazon into a critical part of your business a Faustian bargain?

A lot of customers were pleased with the service– cheap and fast is what consumers want when it comes to delivery – although it was clearly a service that was launched quickly to pick up Q4 business and was still very much being built and improved. Loss rates, at around 5% in some instances, were high compared with other carriers with failures throughout the delivery network. Pick-up was clumsy with a driver often spending an hour in our warehouse to scan packages into his van with his own phone instead of a proper scanner. Getting an overview of where packages were overall in transit was impossible except on a packet-by-packet basis, and complaints about failed delivery from customers were common. However their claims process for lost packages was very smooth easy and efficient (a positive relief compared with Royal Mail’s) making up for a lot of the problems.

General wider industry problems also affect a new carrier. eBay refused to accept tracking for the first few months which gave us great problems — and still even a year on and after talking with both parties and getting the public tracking page built, it often requires a phone call to resolve a claim where a customer service agent thinks that Amazon tracking means a drop-shipped package.

So overall, it provided a good and improving service at a great price and with impressive speed. After 6 months of set-up and teething we were happy to settle down and worry about other problems. But Amazon’s way of doing things has always been to let others spin-up its flywheel, and then take the spoils for themselves.

Stories abound of the product lines that sellers source which are then snapped up by the big beast for 1P sales when marketplace data shows that there is volume and margin. And sellers who use FBA were unceremoniously thrown under the bus when the coronavirus lockdown started: warehouse capacity went to Amazon’s core retail business and forecast delivery dates for the stock held hostage in them was pushed out to weeks. Instead of enjoying the lockdown online boom, FBA sellers were cut-off. Indeed we were approached at that time to list more of our inventory as Seller-Fulfilled Prime to make up the gap and SFP sellers saw a huge boom.

We’ve definitely had some fun with Amazon this year.

Attendees at this year’s online LinnAcademy will have seen the Amazon Shipping country manager talk about how good their service is. But I noticed that she didn’t mention how much time they’ll give you when they pull the rug. As we started Q4, an email appeared saying “thanks we’re stopping Amazon Shipping for you in three weeks”. I didn’t believe it at first — no further explanation and even our excellent account manager was in the dark about it. It seems they just decided to cut back our area – perhaps to handle the extra capacity they expect for Q4 themselves? At the same time the simple claims process has just got harder and if you try to print one label over your forecast volume, the computer says no. Perhaps these are temporary measures to cope with an overstretched business at peak, but given the lack of openness and communication to customers, there’s no way to know.

In some versions of Faust, he repents and is saved by angels at the last minute, and so it was that I was grateful we’d kept some volume with Royal Mail and had recently started working with their excellent Business Growth Team in Bristol. Royal Mail has often seemed a little faceless to deal with, but this team provided dedicated account management and is staffed by knowledgeable people who have the right connections and know how to make the Royal Mail organisation work for the customer. They have been able to set us up with a much better deal (beating Amazon’s price if not speed) and accept our Q4 volume with good grace – all within a few days. Impressive redemption.

Unlike Faust, we’ve learnt some lessons over this year – it can be a tremendous springboard using the size and scale of large businesses like Amazon to grow, but when you build them into a core part of your business you are vulnerable to their changing whims. Increasingly for the marketplaces and service providers, the power to attract smaller merchants like us will lie more in being a reliable partner more than simply having the best one-off offering.