Will you end up on Amazon’s Naughty List this Festive Season?
By Orla Power, Director of Marketing, Luzern eCommerce
“CraP” (Can’t Realize Any Profit) An unfortunate Acronym for an unfortunate situation for many Brands on Amazon during the busiest shopping season of the year. How can you avoid this and remain on the “Nice” list?
CraP is the actual Amazon acronym (created by their Finance team) for items that, according to the eCommerce heavyweight “can’t realize any profit”. This list is not something you want to end up on. CRaP typically refers to products sold on Amazon for less than €17/£20 but can be expensive to ship e.g. they are quite heavy or bulky. Due to their relatively high weight or size and costly shipping, they don’t make Amazon enough of a profit. Low per-unit prices with hefty shipping costs, therefore, are at risk of ending up on the CrAP list. It’s not just heavy or bulky items that are at risk. Any item can be at risk of getting dropped if there’s too much inventory in Amazon’s warehouse for that product.
Amazon has not been slow in taking action and clamping down on any items they deem to be unprofitable on its site.
So, what does being called out as ‘CRaP’ actually mean for brands?
- Amazon Marketing Services for the products can be marked as “ineligible” for advertising.
- A CRaP listing can be blocked from “Subscribe & Save”. Only items in good standing can be in Subscribe & Save. Subscribe and Save is a program giving access to a special store and marketing programs. If you carry consumable products, you want to be in Subscribe & Save.
- Amazon is seriously clamping down on CrAP product lines. They are reducing promotions of these items across their site. Amazon is also requesting that many big brands and vendors change how they package items, or they will stop stocking and shipping them from Amazon fulfilment centres.
How can you prevent your products from ending up on the Naughty list?
Consider a blended 1P/3P strategy with a solid 3P partner, like Luzern, and Reap the benefits of 3P even as a 1P seller to ensure you don’t get de-listed.
The Amazon Hybrid model refers to selling goods directly to Amazon to be sold on the platform, known as first-party Vendor (1P) whilst at the same time selling goods on Amazon via a partner or vendor, known as third-party Seller (3P).
With a hybrid model, Brands can sell part of their SKUs directly to Amazon (1P) and the rest via the marketplace (3P). Amazon is typically selective about the SKUs that they carry, ensuring they sell the most profitable. That could leave the Brand not being able to sell other SKUs or getting the dreaded CRaP status. However, this does not have to be bad news. By selling 3P with Luzern, you can gain better control of pricing, realise better margins and proactively control SKU range and selection.
The upshot is that with a two-pronged approach you can invest in a strategy that you can control, enabling you to target your customer and present your Brand, your way, on Amazon using a 3P partner. This complements your 1P strategy with Amazon meaning you can lessen the dominance of Amazon whilst reaching your customers via 3P. In reality, consumers don’t particularly care as long as they find and buy the Brands they want with ease on Amazon.
More and more brands use a Hybrid Model to take back control and protect their Brand presence, position against and beat competitors and grow online sales, profitably.
We believe that a hybrid model is the safest approach if you’re not already selling 3P as we can help you stay in control of pricing and the customer experience, plus obtain sales beyond 1P by extending your inventory across 3P.
Packaging - To Wrap or not to Wrap?
Brands may need to reconsider the actual design of their products and particularly how they are packaged. Anything that can be done to reduce weight, wastage and bulk, such as bundling items up with more cost-efficient items and drastically reducing the amount of extra packaging used helps to reduce costs. With the added bonus of increasing the sustainability of your brand.
Should you need to remove items from Amazon due to CRaP status consider selling them as a 3P. Luzern successfully manages this Hybrid model for leading brands across the globe, ensuring they stay in control of pricing, maintain the direct relationship with their customers, whilst extending their inventory and driving sales of additional product lines beyond 1P.
Luzern helps brands manage their products and pricing and can ensure items can still be sold. Global Brands trust Luzern as their go-to 3P seller if they are at risk or have already received CRaP status.
Talk to a Luzern eCommerce Amazon Expert today to see first-hand how we help brands to grow sales, profitably on Amazon and other marketplaces.
So What’s next?