The MSN.com contributor Eugene Kim has published an article highlighting how Amazon is blocking ads for unprofitable products and what we should learn from this.

Kim says, “As Amazon steps up its effort to show Wall Street it can generate profits, the e-commerce giant is aggressively blocking money-losing products from advertising on its site.

In recent months, Amazon has been telling more vendors, or brand owners who sell their goods wholesale, that if Amazon can’t sell those products to consumers at a profit, it won’t let them pay to promote the items. For example, if a $5 water bottle costs Amazon that amount to store, pack and ship, the maker of the water bottle won’t be allowed to advertise it.

The added stringency, which CNBC learned of from conversations with vendors and emails they received from Amazon as well as from outside experts, reflects a broader push to squeeze earnings out of a historically low-margin business. In its most recent quarter, Amazon posted $3 billion in net income, the highest in company history, while profit for the full year more than more than tripled to $10 billion”.

Amazon is aggressively blocking ads for unprofitable products as part of a plan to bolster its bottom line

MSN.com

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