Amazon block arbitrage traders from Amazon business
It would appear that Amazon are clamping down on arbitrage traders, although perhaps not as hard as you might expect. We’ve had a couple of reports in the past week that Amazon have downgraded accounts on Amazon.com from business accounts to personal accounts.
The big difference (which really matters in arbitrage as you’re only trading on price) is that Amazon Business offers price discounts just for businesses on millions of products across Amazon. This means that if you can snag a business account you’ll get better prices than you’d see on a personal account giving more opportunity to sell at a higher margin on another marketplace – often on eBay.
It would appear that Amazon don’t appreciate arbitrage and have downgraded accounts saying “We have determined your usage of Amazon Business does not fit with the services we provide. Your business account has been converted to an Amazon personal account”.
On the one hand you have to feel sorry for the arbitrage community who have spotted a loophole and exploited it – whether or not you like the practice of arbitrage, those using arbitrage to make a living are legitimately running a business. However from Amazon’s perspective they’re offing discounts on products and asking their third party merchants to offer additional service under the expectation that the business purchasing is the end customer, not simply someone who will take their products and turn them for a quick buck.
The only thing that surprises me is that Amazon don’t appear to be closing accounts – they’re merely downgrading them to personal accounts and removing the business benefits. It’s almost like they’re turning a blind eye to arbitrage so long as they don’t also have to fund arbitrage with lower pricing.
The abritage between Amazon and eBay suited Amazon because it would turn eBay shoppers into Amazon shoppers. For the reason those buying from eBay would get their packages delivered from Amazon. The buyer would then realise what has happened and realise the product was cheaper on Amazon and hence it would then turn an eBay shoppers into an Amazon shopper. EBay would then lose customers and Amazon would gain customers. The eBay Amazon arbitrage benefited Amazon.
Today with walmart jet.com it is the opposite people are buying from Amazon and the package is delivered from walmart s jet.com. Which hurts Amazon because people then realise the product is cheaper at walmar t jet.com and it draws buyers from the future away from Amazon and to walmarts jet.com.
That is why Amazon is today clamping down on Arbitrage it is because of walmart s jet.com.
It would be bad business practise of Amazon to ban the accounts because that would be the loss of a customer. Downgrading the account from business to personal with the loss of benefits is the right move and should stop arbitrage.
Arbitrage ultimately takes business from one site to another because people realise products are cheaper elsewhere. If a person buys from Amazon and the package is delivered by walmart s jet.com. Then people know walmar t is cheaper. The next time they buy anything they then go and check out walmart s jet.com prices. Meaning Amazon loses business.
On another note, Ebay may throttle dropshipper listings ( who 90% use Amazon products ) but they will never get rid of dropshippers as they need all the sales they can get in order to increase their 2018 Q2 growth – but thats highly unlikely