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Amazon is buying products from some US retailers at full price to build global inventory

Updated: Oct 4, 2018

Amazon is trying to boost its catalog by telling tens of thousands of marketplace sellers in the U.S. that it will buy their inventory at full retail price.

In an email sent to sellers and obtained by CNBC, the Fulfillment by Amazon (FBA) team said that a new program is being rolled out where Amazon will buy products at full price from third-party merchants, then sell them to consumers across the globe.

"For a limited time, there will be no additional fees, and we will purchase inventory from you at your local marketplace offer price," the email said.

The new program, which follows a similar rollout in Europe, is the latest move by Jeff Bezos to build up a complete catalog, even if Amazon can't make much money on the products in question. In some cases, Amazon is approaching these third-party merchants after the manufacturer has declined to distribute the products through Amazon.

FBA is big and growing

With FBA, merchants pay a fee to have their inventory stored in Amazon's fulfillment centers and to make use of the company's supply chain and shipping operations. It's a huge piece of Amazon's e-commerce business: In 2016, the number of FBA sellers worldwide grew more than 70 percent, and they delivered more than 2 billion items.

For items that are in high demand, Amazon wants to be able to deliver right away, anywhere in the world.

An Amazon spokesperson confirmed the authenticity of the email and said that merchants can opt out of the new program at any time.

"When items are unavailable in a particular geography, we provide customers with selection from another marketplace," the spokesperson said. "This offers customers a wider selection of great brands and helps sellers increase sales."

But the program presents potential problems for sellers of particular brands.

Birkenstock, for example, doesn't allow its authorized retailers to sell the company's sandals to other resellers — including Amazon.

Last year, Birkenstock announced that it would stop selling directly to Amazon because of frequent counterfeits and inability to weed out unauthorized distributors. Birkenstock does allow certain partners to sell on the Amazon marketplace.

Some merchants that sell only Birkenstock products were sent the email and forwarded it to CNBC. Birkenstock USA CEO David Kahan said in a statement that any Birkenstock sellers that participate in the program would be breaking their agreement with the company.

"If Amazon is in fact soliciting our accounts in order to acquire our products so that they may resell those goods, that causes a serious breach in our agreement with our existing retail partners," Kahan wrote. "If indeed this is the case, we will take immediate action with any account that violates our agreement."

Last year, Amazon introduced Pan-European FBA, enabling merchants to sell their products across Europe and have inventory stored in any of the region's fulfillment centers at no extra cost.



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