Amazon Does Not Want Your CRaP (Can’t Realize any Profit) Products
Amazon does not want your CRaP; that is, products that Amazon (through all its algorithmic genius) Can’t Realize any Profit.
Originally a term used internally by Amazon, it has grown in the industry and is now synonymous with one of the largest issues Amazon retailers are facing: Amazon not selling, buying, or advertising CRaP products. To understand what this means for marketers, we will review the definition, criteria, impacts, and potential solutions for dealing with Amazon’s CRaP.
What is CRaP?
CRaP is deemed by Amazon to be a product that they cannot realize any profits on based on their algorithm. This product-focused philosophy is causing shockwaves for CPG brands, as their traditional brick and mortar retail partners typically look at a brand’s performance across a wide product suite when determining profitability.
How Does CRaP Happen?
There are a few reasons:
- Amazon crawlers match external eComm pricing
Amazon will always match an eComm website’s price. This quickly becomes a vicious cycle as a retailer can mark down a product due to a promotion, and Amazon will follow suit. When that promotion ends and the site sends its own respective crawlers to determine the best eComm price, it finds Amazon’s discounted price and matches it. This continually creates a profitability issue across multiple online marketplaces.
- Amazon is holding on to too much inventory
Amazon does not like to hold too much inventory. If it finds that it’s holding too much for too long, Amazon will mark down your product’s price to get it out of the warehouse. A functional impact of decreasing the price is that Amazon reduces its margin. Once Amazon reduces a product’s margin, that product is now on its way to become a CRaP product.
- Expensive shipping
Products with a low cost-to-weight ratio are tough to ship and maintain a high margin. For these types of items, it may be worth looking into labeling as Pantry-only items to reduce their ability to become CRaP.
- Marketing can make it worse!
As a marketer, I hate to say it, but marketing can make your products CRaP more quickly. If your product is suffering from any of the above issues and you decide to market that product via Amazon’s AMG product suite or an external traffic source, your increased sales and traffic volume will feed Amazon’s CRaP algorithm at an accelerated rate as well. The impact is that your product will hit the CRaP threshold faster than if you didn’t market all.
The Impacts of CRaP
CRaP can be a major headache for online retailers and their marketing teams as top-tier revenue products can be marked as such. When an item is marked as CRaP, there are tremendous impacts felt through an Amazon retailer’s revenue:
- Amazon stops featuring CRaP products on free advertising and personalized feeds, presented to users as Recommended Products
- Advertisers will not be able to feature CRaP products within their AMS campaigns, as they will be marked as “Ineligible” for advertising
- CRaP items will not be eligible for the Subscribe + Save program
- Can impact negotiating Level of Service & Service Level Agreements with Amazon
- Most importantly, Amazon will stop ordering CRaP products over time for their vendor partners
What Can Brands Do About Their CRaP?
Retailers can take on a few different strategies for managing their CRaP:
- Bundle: Look to bundle your low cost-to-weight ratio products with lighter, more shipping-friendly products to mitigate Amazon’s CRaP rating algorithm. For example, create a unique child ASIN for combining a camera lens set with its matching camera.
- Explore Your Amazon Pantry: There are a few different ways to list your items to avoid being labeled as unprofitable. For example, if you are able to list your CRaP products as a Pantry product, you will minimize the cost-to-weight ratio associated (as it will need to be shipped with multiple other Pantry products), thus minimizing CRaP indicators.
- Unique Product Offering: Reduce any chance of Amazon products being mapped to another retailer’s product, and the price compared, by creating marketplace-specific products. By doing so, brands will only have to focus on shipping profitability, and less so on wrangling their various online retailers.
- Minimum Advertised Price Policies: One of the core ways to improve products being continually marked down is to get a better handle on who is selling your product and enforcing a MAP policy. Controlling MAP pricing will allow brands to ensure none of their products have the capacity to be reduced beyond any level of margin/profitability.
For questions or more information about how to avoid and manage CRaP products, reach out to Rise.