Amazon has got away for years claiming it’s outside the scope of GSCOP. Sales of food and drink, but also toiletries and household goods, and petfood, and booze, and nappies, and batteries, were huge even before the pandemic. And yet it’s only now that Amazon’s grocery sales are somehow deemed to exceed £1bn.
As a result it’s been able to continue with practices that would be inconceivable under the Grocery Supplier Code of Practice. Practices like being placed on the so-called CRaP (or Can’t Realise a Profit) list, in which, without warning (or even notification), a SKU can be delisted if it’s not making a profit (even if the range as a whole is doing well). And its definition of ‘profit’ is debatable to say the least, including all sorts of costing and pricing calculations over which no human has control.
No more. The dark arts of the automated Amazon algorithms, the changes to Ts&Cs, the lack of transparency, the unexplained ‘charges’, all of this will be in scope now that it’s answerable to Mark White, the Groceries Code Adjudicator.
The consequences of this change are considerable: if Amazon were found in breach of the code, it faces the prospect of a fine of 1% of its UK sales. At £23.6bn in 2021 (vs £13bn just two years ago), according to last week’s results, that’s a tidy £236m for the Treasury to trouser, and more than enough for White to justify bolstering his team, as he’s now doing, in readiness for a queue of complaints, and the challenge of challenging Amazon.
What makes this prospect all the more compelling is quite how Amazon manages the threat. For all that it can turn the screw in different ways on its suppliers, as we’ve seen it do in the past when faced with extra costs, Amazon’s systems and procedures aren’t set up for legislation like this. The whole model relies on automation rather than category development and buyer relationships. It’s Amazon that writes the rules – computing rules, which are not easily unwritten – and abiding by the rules of others, the rules that its competitors are governed by, will be completely alien.
White is looking forward to meeting Amazon’s code compliance officer, he says. Who will want that job?
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