Times of crisis: Amazon shuts down Merch

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Now that public and economic life in Germany has been drastically reduced, online trading is becoming particularly important. How is it then that Amazon is switching off its print-on-demand service, Merch?Initially, the shutdown is said to be limited to the USA. In England and Germany, the service will remain in place. However, the e-commerce news platform, Wortfilter.de, reports that restrictions are already apparent here as well. Retailers complained that they could no longer upload new motifs. In American forums, on which we have taken a look around, the outcry is great, the annoyance as well, as questions remain unanswered and at the same time many users have lost their income

An enticing business model

The enticing business model that has made it easy for designers, for instance, to enter the merchandising market without investing in their own website, without online advertising, without purchasing and stock-keeping, and without their own production equipment such as a printing press or other devices, may now be taking its toll on retailers.

Merch by Amazon (MbA) is a classic print-on-demand service that allows you to produce merchandise items such as T-shirts in your own design. Registered users can upload designs and use them to create T-shirts and other products which are then offered on Amazon.

As soon as an interested party buys the product, the item is printed on demand by Amazon’s partners and delivered to the customer via prime shipping. However, the designer does not receive the full sales price, but a royalty from Amazon, which can for example amount to almost 20% of the proceeds. This means, for instance, that for a T-shirt sold at a price of just under 20.00 Euros, a little under 4.00 Euros remain.

The Merch by Amazon platform, launched in the USA at the end of 2015, is now so popular that new designers are only admitted after an application. The original idea was to offer a way to sell one’s own merchandise without much effort. From this idea MbA quickly developed into a serious player in the T-shirt business and attracted more and more users. Since summer 2018, Merch by Amazon has also been involved in the market in Germany and Great Britain as an alternative to previously popular t-shirt platforms such as Spreadshirt and sees itself as an important addition.

From an international perspective, many small businesses live from selling such individualized T-shirts via Amazon Merch. This is now over for the time being. Even the cleverest business models have their downsides.

Shutdown due to lack of personnel?

Amazon states the reason for the shutdown as being the prioritization of shipping to individual categories. Because more people are shopping online in the current crisis, products that are in high demand are either not in stock or supplies are stagnating. These include household and personal care products, food, baby products and pet supplies. This is why Amazon says it prefers these products in the incoming goods department so that they can be received and dispatched more quickly.

“Now that stationary shops have been closed down and have been classified as non-essential, online trading seems to be gradually overtaxed. We will continue to monitor and report this development.” – Bernd Zipper.

The flipside of the coin: all products that do not belong to these highly demanded categories are delivered much more slowly. Chip.de reports that Amazon no longer delivers many products or that customers receive their orders much later. For jewelry or clothing there are waiting times of 3 to 4 weeks, for books and software the indicated delivery time is on average 10 days. Or – as in the case of Merch by Amazon – nothing happens at all.

The reason for prioritizing may still be the changed delivery behavior at Amazon, but could it also be the shutdown of the print-on-demand service, which is supposedly very successful?

However, there could also be a completely different reason: lack of employees. There are persistent rumors that only 40% of Amazon employees in the USA show up for work. It was not for nothing that Amazon announced last week that it wanted to hire 100,000 employees in the USA.

A glance at the USA makes one cringe at the prospect. With more than 140,000 reported cases (as of March 29), there is no other country in the world where there are as many corona infected people as in the USA. Corona hotspots are San Francisco, New York – and Seattle, home of Amazon. Already at the beginning of March, the e-commerce company confirmed that an employee in Seattle was infected with the corona virus. Further cases followed in other Amazon logistics centers. In the meantime, strikes are said to have already taken place, as employees are exposed to unacceptable risks of infection and refuse to work.

This can have brutal consequences in America. Unlike here, small and large companies alike are firing their staff in droves. There is hardly any protection against dismissal, and short-time work is not available in any case. Moreover, given the fact that there is no extensive health insurance network in the USA, as there is here, the people who are put out on the street are hit particularly hard.

My Take: Many online merchants were still able to record strong year-on-year growth in January and February 2020. However, from the 12th calendar week onward, the growth rate declined rapidly. In the meantime, stationary shops, which were classified as not essential for survival, have been closed and online trade seems to be gradually overstrained. At Amazon, in Germany, products are sorted by importance and prioritized as important goods for daily use. Even Amazon seems to be reaching its limits and can no longer maintain the supply chain in terms of timing. We will continue to observe and report on this development. 
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Times of crisis: Amazon shuts down Merch
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Times of crisis: Amazon shuts down Merch
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Now that public and economic life in Germany has been drastically reduced, online trading is becoming particularly important. How is it then that Amazon is switching off its print-on-demand service, Merch?
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Beyond-Print.net

Founder and CEO of zipcon consulting GmbH, one of the leading consulting companies for the print and media industry in Central Europe. The technology and strategy consultant and his team actively support practical implementation in a wide variety of customer projects. His work involves developing visions, concepts and strategies for the players active in the print production process across a wide range of industries. His areas of expertise include online print, mass customization, strategy and technological assessment for print, and the development of new strategies in the print and media environment. Bernd Zipper is the creator and chairman of Initiative Online Print e.V. and, in addition to his consulting activities, is an author, lecturer and sought-after speaker, orator and moderator. His visionary lectures are regarded worldwide as trend-setting management recommendations for the print and media industry. (Profiles also in Xing, LinkedIn).

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