Painful? Yes. Inconvenient? Absolutely. Costly? Potentially.
Amazons Supply Chain Standards. They came out of nowhere and hit third-party sellers (and resellers) pretty hard. Manufacturers too. In this first of two blogs about the standards, we focus on seller responsibility and the standards, themselves. Next week’s blog covers ways to find manufacturers and other partners who line up with these standards to ensure your business can comply with them.
As of Jan. 19, 2023, third-party sellers and manufacturers selling on Amazon must comply with the Amazon Supply Chain Standards, which are detailed in a 21-page document. It covers labor rights and respectful workplace conditions, health and safety, protection of the environment, and transparency and ethical behavior.
We can all agree that standards are a necessary, even positive, part of doing business in a global market. Many sellers I know welcome the standards. They see them as valuable tools to ensure products are safe, sustainable and ethically sourced. They say it ultimately leads to a better marketplace, increased customer trust and loyalty (and, of course, sales).
Others aren’t so keen. They say such standards are overly restrictive and burdensome, that it makes it harder for small and mid-sized businesses to compete. Across the board, most sellers say the standards are difficult to understand and interpret, much less implement; that such standards add exorbitant burdens and costs in a world facing economic crisis.
And what about enforcement? Can Amazon really enforce these standards? Will they? How? Consider the volume of sellers, sellers across the globe, in countries with laws vastly different than U.S. laws. It’s almost unimaginable how this can be done thoroughly and consistently.
Regardless, when selling on the Amazon Marketplace, it is always best to operate under the assumption that Amazon is on your front porch and knocking on the door. Have your “bug-out bag” of essentials ready to go (everything you need to disclose information about the origin and manufacture of your products). Know, for a fact, that you can prove compliance with relevant laws and regulations.
Here are 5 best practices for every seller to initiate for complete standards compliance (without breaking the bank).
5 must-dos for seller standards compliance
- Understand the policy. Read the policy and get familiar with it, then start working on the specific requirements outlined in it.
- Conduct regular product safety assessments. It seems obvious to say, but we’ve had hundreds of sellers admit they have rarely, if ever, tested their products. Conduct safety assessments of your products once a year to ensure safety documentation is up to date. If changes to the product or the industry standards for the product type have changed since the last audit, use an independent, Amazon-approved testing lab, and confirm your products meet industry standards–and comply with Amazon’s guidelines. Need help finding a lab? Start here.
- Properly label and package products: Make sure all products are properly labeled and packaged to meet Amazon’s requirements for the
product category and item type.
a. For products fulfilled by the merchant, see Amazon’s Guidelines for specific standards related to various categories of items that could be classified as “dangerous.”
b. For products fulfilled by Amazon, see this page in Seller Central to review packaging and prep requirements to ensure products can be
safely stored and shipped by FBA.
- Maintain accurate and COMPLETE product information: Keep accurate and up-to-date product information for Amazon, including information about the origin and manufacturer of your products. Keep these documents close, handy and in a digitized format so you are ready to share them at a moment’s notice.
- Monitor your supply chain: Know, monitor and manage the entire supply chain, from the sourcing of raw materials to the manufacturer of your products. Turning a blind eye to one section of the chain can shut ASINs and accounts down immediately. Analyze and dissect the supply chain to ensure compliance with Amazon’s standards.
How do I comply?
The new standards say sellers will be responsible for their sourcing partners, and whether these partners effectively address:
- Labor Rights and Respectful Workplace Conditions
- Health and Safety
- Protection of the Environment
- Transparency and Ethical Behavior
Sourcing partners include manufacturers, importers, distributors, logistics companies and others – anyone acting as a node in your supply chain.
So how do sellers comply? What if you’re a manufacturer, a private-label seller, or simply a reseller? No matter the type of Amazon seller, you can do the following to determine ethical practices, product safety and environmental sustainability:
- Research suppliers: Thoroughly research potential suppliers, including their manufacturing processes, materials sourcing and labor practices.
- Ask for certifications: Look for suppliers that have certifications, such as Fair Trade, Rainforest Alliance, or Global Organic Textile Standard (GOTS), to indicate that the products they produce meet high standards for ethical and sustainable practices.
- Visit factories: If possible, visit the factories where the products are made to assess the working conditions, environmental impact, and ethical practices firsthand.
- Engage in open communication: Regularly communicate with suppliers and ask questions about their practices and policies related to ethical sourcing and environmental sustainability.
- Join industry organizations: Consider joining industry organizations, such as the Fair Trade USA or Rainforest Alliance, to stay informed about the latest developments in ethical and sustainable business practices.
- Evaluate products before purchasing: Carefully evaluate products before purchasing, taking into account factors such as materials sourcing, production processes, and environmental impact.
- Be transparent: Be transparent with customers about the products you sell and their origin, and share information about your efforts to source ethical and sustainable products.
There’s also a litany of resources that can validate the quality and commitment of your suppliers. It seems a tall order to verify such compliance. So how do you know a supplier operates and provide the best in product safety, environmental impact and worker safety? Start here:
- Industry organizations and certifications: Look for suppliers who are members of industry organizations and have earned certifications, such as Fair Trade or LEED, that demonstrate their commitment to product safety, environmental impact and worker safety.
- Supplier directories: Use supplier directories, such as ThomasNet, to find suppliers who specialize in ethical and sustainable products.
- Trade shows: Attend trade shows and industry events to meet suppliers in person and get a firsthand look at their products and practices.
- Customer reviews and ratings: Research supplier reviews and ratings from other buyers to get a sense of their reputation and track record in the industry. This is why it’s important to be engaged with other sellers and seller-specific networking groups.
- Supplier questionnaires and audits: Conduct supplier questionnaires or on-site audits to assess their policies and practices related to product safety, environmental impact, and worker safety.
Next week, we share the second of this two-part series, which details how to best position your business for operating under these new standards. We’ll talk about how to find and choose the best manufacturers for your products, industry organizations that provide best practices and relevant industry certifications.
So, what’s your experience with Amazon Supply Chain Standards? We welcome your feedback.
Of course, we’re always here to help sellers in every way we can. Contact us.