Amazon’s War on “CRaP”

After years of prioritizing growth over profit, Amazon has shifted their priority in the U.S. from selection to profitability. “CRaP” is an internal acronym for “Can’t Realize a Profit” once the fully loaded cost of the item is considered, including shipping and warehousing costs. These are often items that are large, bulky, heavy, or have low average selling prices. To keep bulky, low priced items like paper towels and heavy products like bottled water available to customers, Amazon has limited some products to the Prime Pantry service. With Prime Pantry, customers are required to meet a minimum dollar amount for each order, which then ships through a separate logistics system that makes it more cost effective for Amazon.
In order to avoid a product becoming CRaP, some manufactures have chosen to start shipping products from their own facility in a method called Direct Fulfillment or Drop-ship. Tide recently redesigned their packaging to conform to Amazon’s ships in own container (SIOC) policy. These solutions give Amazon a greater margin by allowing the manufacturer to absorb the cost and time of picking, packing, and/or shipping products.
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