If you’ve been selling your products on Amazon, you may have heard of CRaP, Amazon’s term for products that ‘Can’t Realize a Profit.’
Amazon is continually comparing product deals on all eCommerce sites, so it can offer consumers the best possible deal at any time. When online resellers don’t have a MAP (Minimum Advertised Price) or choose to ignore it, Amazon can do the same. This means that businesses miss out on profits, and the ensuing race to the bottom ensures that the product ‘CRaPs out.’
This often happens when products are marked down by retailers due to a promotion. Amazon quickly follows suit. But when that promotion ends, eCommerce sites find Amazon’s discounted price and match it, creating massive profitability issues.
This is becoming a common problem. “Many of our partners come to us frustrated and don't know what to do because of crapped-out or ‘can’t realize a profit’ products. This often happens because of resellers undercutting MAP pricing and violating price policy. We help them gain back control of their pricing and in turn gain back their product margin,” says Tyler Park, Pattern Senior Brand Manager for Quay Australia, John Masters, and Zebra.
Preventing CRaPped-out products
When Amazon’s algorithms mark a product as CRaP, it’s no longer featured on personalized feeds, free advertising is a thing of the past, and users can’t see it as one of their recommended products. CRaP products also can’t be featured within any AMS campaigns since Amazon marks them as ‘ineligible.’ Over time, Amazon stops ordering these products for their vendor partners.
This is why it’s a good idea for all businesses to implement MAP pricing. And we’re now seeing more and more companies establish policies which pinpoint the minimum price at which an authorized seller can advertise their products. While this requires a lot of monitoring and enforcing of those MAP policies, it can prevent the downward slide which leads to a product CRaPping out.
While many businesses naturally want to take part in big deals, you may want to consider the larger impact. This often means sacrificing a significant margin, in the hopes that the volume will still make it profitable. Unfortunately, offering better costs to one consumer will generally lead all other eCommerce sites to list your products for that price as well.
What if your products are already CRaPped-out?
If your products are already CRaPped-out, all is not lost. There are a number of things you can do to make your products profitable for Amazon again.
First, consider your supply chain. Many businesses have managed to cut the amount that Amazon spends repackaging their products- thus making it more cost effective. Ship In Own Container (SIOC) packaging is one way to do this.
Some of the most common CRaPped-Out products are those with a low retail price and high weight. These include items like pet food, potting soil etc. Consider ways to package these products differently- for example, different packaging sizes or bundles.
Amazon’s Subscribe & Save program is an excellent option if you’re selling replenish-able products. These are shipped in the cheapest/slowest way to customers, saving Amazon money. These loyal customers also become unhappy when their products are removed from Subscribe & Save, which can help buy you some time while you explore other options.
Amazon’s other platforms have different distribution methods and economic models that could be the best place for your CRaP products. These include Prime Now, Amazon Fresh, and Prime Pantry.
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