Amazon launching new furniture seller program
April 24, 2017,
AT THE MARKET— Amazon is pitching furniture stores here on a change coming to its marketplace designed to make it more competitive in the bulky furniture category by eliminating the national delivery requirement for its furniture sellers. (See related column and CNBC's subsequent coverage.)
Speaking to about 40 retailer members of the Furniture Marketing Group buying group here, Amazon representatives in the furniture category said the e-commerce giant hopes to launch the new “Unified Delivery with Services” change to its platform late in the third quarter.
And the cost: Amazon is asking for a $39.99 monthly fee for an unlimited number of listings as well as 15% on the product sale and 20% on the services, according to Brett Hobson, Amazon business development representative in the furniture category. He added that retailers can choose to roll their services into the product price and offer just one price to customers for that 15% fee. However, in that case, Amazon shoppers wouldn’t see a menu of service options.
Hobson said the biggest and toughest objection to overcome that he’s seen from furniture sellers during his career at Amazon is that they “don’t have the capability or experience shipping out of their region.
“You’ve got your own crew. You offer white glove, but to put your 300-, 400-, 500-pound product in the hands of a third-party freight company is a little bit daunting, and at the end of the day, it doesn’t always work because they’re not going to put the same care and attention into that process as your own crew will,” he said.
That’s where the Amazon change comes in. The mandate that stores must ship nationwide will disappear, at least for product that weight 50 pounds or more. Stores, instead, will be able to use a geo-fencing tool that allows them to pick and choose the zip codes within their region they want to ship to. They can expand beyond their typical boundaries — to possibly encourage customers that many not have the ability to make at trip to the brick-and-mortar stores — but there’s no pressure, he said.
“That’s the ultimate promise of this,” Hobson said. “We want to make it easier for you guys to provide the same customer services you’ve built your companies on and you pride yourselves on while reaching that massive customer base we’ve generated.”
While Hobson said Amazon aims to make it easier for stores to participate on its marketplace, it’s counting on gaining a new advantage, too — the ability to be more competitive in the heavy and bulky furniture category.
“It’s safe to say Amazon is very competitive in most of the categories we compete in,” Hobson said. “But in furniture, because we’ve kind of forced the seller’s hand when it comes to the nationwide shipping component, you will see a lot of the brands you guys specialize in are on our site, but you might be shocked from time to time by the price points and how inflated they are.
“That’ what I like most about this,” he said. “We will be able to be very price competitive because you don’t’ have to charge an extra $300 to $500 to cover your (shipping costs).”
At the meeting at FMG’s High Point headquarters, retailers peppered Hobson and the other Amazon representatives there with questions such as: Will the shopper know they’re buying from the store (yes); will stores be able to integrate their own financing options (not immediately); and can stores qualify for the coveted Amazon Prime (only if they can prove themselves capable of two-day delivery or stock their product in an Amazon fulfillment center).
“It bears further investigation,” Barb Tronstein, co-owner of Auburn Hills, Mich.-based Gardner-White Furniture, told Furniture Today following the presentation.
“I have to really crunch some numbers,” she said. “You don’t have (salesperson) commission. You don’t have the brick-and-mortar cost. But whether it makes sense is something I’m not willing to commit to right now.”
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