Amazon “imposes aggressive terms” on grocery suppliers

Amazon is reportedly proposing tougher terms on its grocery suppliers, including requests for lower cost prices.

The new terms proposed by the retail giant, seen by The Grocer, reveal requests for lower prices, bigger marketing fees, and longer payment terms, with the option to move from 60 to 90 days or remain on 60 with a 1 per cent discount for quick payment, or 75 days with a 0.5 per cent discount.

According to the publication, the company’s terms sheet also said: “improving product costs is essential for the overall health of your business on Amazon and may have an impact on the number of orders you receive.”

It said that suppliers have felt life has become more difficult for sellers and brands on Amazon “in the light of record Amazon revenues following the pandemic’s online uplift.”

Young Foodies co-founder Theadora Alexander told The Grocer that the new terms were “a painful squeeze on absolutely everything commercial”.

“They are imposing aggressive terms to brands for whom they represent the majority of their business,” she said. “As a faceless robot, it is even harder and more intimidating than a normal buyer.”

Alexander also urged the Groceries Code Adjudicator to review governance as the retail giant has become “even more powerful” and is playing an increasingly large role in the grocery market.

As it stands, the grocery adjudicator does not regulate Amazon because it requires sales of over £1 billion.

A spokesperson from Amazon said: “We strive to build successful, long term relationships with our vendors and we work with them every day to help them be successful. We are always looking at new ways to help our vendors grow their business and offer a great shop window for their products not only in the UK but also around the world.”

Amazon regularly reviews individual agreements with suppliers and negotiates contracts directly with vendors once they reach the end of their terms.

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