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Are Amazon Resellers A Legitimate Procurement Option?.

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In this guest post, ASM Technologies' Iain Tomkinson argues against the use of Amazon resellers for procurement purposes. 

 

Resellers and procurement chiefs are increasingly being asked to procure stock through Amazon resellers. But why is this happening, what are the real risks, and what can procurement chiefs do about such requests?

 

The Amazon brand is synonymous with online shopping and good value. The company which started out as an online bookshop in 1995 has matured into the world's largest marketplace for anything from ebooks to toasters to bananas. The later addition of resellers onto the Amazon store has only served to broaden the selection of products available. However, while Amazon resellers may be great for consumers looking to snap up even more bargains, professional procurement chiefs really should do all they can to avoid them.

 

While the allure of a low price may be hard to avoid, you should apply the same standards to an Amazon reseller transaction that you would apply to any long-term procurement partner. While price is important, other factors such as sustainability, ethics, efficiency through the supply chain and support to the business are also key.

 

With that in mind, you, the purchaser, need to ask two fundamental questions of the reseller:

  1.      Will this transaction undermine the investment you, and your procurement partners, have made in your organisation's supply chain?
  2.      What new risks could this introduce to my supply chain?

Procurement organisations have invested significant amounts of time and resources to build sustainable supply chains. Procurement partners are chosen for their ability to meet strict requirements on a range of factors from the quality of their infrastructure, their financial exposure, business continuity credentials and many other factors specific to that business. Some partners play a major role in the organisations' corporate and social responsibility strategies and environmental compliance too. You cannot then ask them to jeopardise their own accreditation by purchasing stock from a reseller you found online.

 

Using untested resellers also adds a multitude of new risks to your organisation's supply chain. While there is no end to the risks that could be introduced, here are some of the main ones to consider:

  •        Quality – Are you buying a ‘grey' product? Since you don't have the same assurances of where the product came from, how can you        be sure of its origin or authenticity?
  •        Commercials – What legal and commercial risks could this transaction bring? Would it breach any exclusivity terms with other        suppliers? Does it come with the same levels of warranty and support?
  •        Non-compliance – Could this transaction risk your organisation's compliance to key certifications?
  •        Returns & support – What happens if the product develops a fault? Who is responsible for the return, if indeed you can return it at all?
  •        How reliable is the delivery? Can you afford for stock to arrive late or sporadically?
  •        How much stock can you realistically get, and how often? – If you cannot answer this question, walk away.

While no one can resist a bargain, if something looks too good to be true, it usually is. You should always ask the fundamental question - why is the product cheaper? What value is missing? If your own reseller cannot obtain the same product direct from the manufacturer for this price, how can an untested reseller on Amazon do so? Whenever business-critical stock is concerned, always remember to focus on overall value and never price alone.

 

Iain Tomkinson is director, ASM Technologies.

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