With the latest news out of Amazon and Frequent Flyer Program both changes and programs in general, I can’t help but see the similarities, and I don’t mean that in a positive way.
This past week, reports started of Amazon requiring sellers to provide receipts and in some cases, pay as much as $1,500 as a one time, nonrefundable fee, to get ungated in certain brands. This has been done, essentially with no notice, no communication from Amazon, and has created more and more fear-mongering among Amazon Sellers, or at least a subset of folks who offer services to Amazon Sellers.
Airlines, on the other hand, have made numerous changes their Frequent Flyer Programs, such as American’s first devaluation last year, and their changes to AAdvantage elite status more recently.
The Key Similarity between Amazon and Frequent Flyer Program Changes
What jumps out at me the most, is the fact that both Amazon and Frequent Flyer Programs can change the rules whenever they want. Worse yet, they can change the rules, and you pretty much have two options: Take it in the chin, or walk away. There’s often no negotiating, because they own the game.
That awesome iPad deal that you got over the weekend, is now gated when you try to send it in. You may have found a great product, but now your only option is to sell it on Ebay. That first class award flight to Bali that you’ve been saving up for just went from 67.5k to 110k miles. If you made Executive Platinum this year on miles, don’t forget, next year you’ll also need to spend $12k with American, in order to requalify. Or, you could look a the fuel surcharges that are slowly going away, many of which stuck around months, if not years after fuel prices dropped off of their highs.
As I write that, the idea that Amazon requires a nonrefundable payment of $1,000 for a brand ungating, and Airlines are now requiring upwards of $12,000 spending in their math, to get top tier status, seems really similar.
Is there a solution?
The answer I think most folks go to first is regulation. I’m convinced that every time there’s a no-notice devaluation on the Frequent Flyer Program side, that the idea of regulating the Frequent Flyer Programs will gain traction. I’m not sure that is so good for those of us who maximize the program, I’m not so sure the programs would even continue to make sense for airlines, if they were heavily regulated.
For Amazon though, I think the answer is different. The brand restrictions are due to a rise in counterfeit products passing through Amazon’s warehouses. But rather than restrict many popular brands, Amazon could instead amend their receiving processes, whether its comparing the received product to the Amazon listing photographs, or something. Should Amazon’s actions be regulated? I’m not even sure how that could happen, but, I don’t know that it would help.
The one thing that I think both Amazon and Frequent Flyer Program changes result in, are lagging indicators. Its not ideal. You see, they make the changes, and then it takes months, if not years, to see the impact of those changes. By the time you do see the impact, people’s habits have changed. For example, American may not see the impact of their elite status changes, until December 2017, more than a year away. Amazon, on the other hand, could see a bad Holiday Season in 2016 (Sellers call this Q4), but those numbers won’t really be reported out until January or so.
Whether it is December, 2017 or January, 2017, it will be too late to recover. Sure, Amazon can reduce some of their brand restrictions, but, the 4th quarter is what makes most retailers and resellers’ years. That’s why the Friday after Thanksgiving is called Black Friday, because retailers finally make it into the black ink, vice red ink, in the ledger. Amazon reacting in January, might save 2017, but 2016 would hurt a great many.
American, on the other hand, will likely see a decline in flights from their high level elites in 2017, as we make our decisions of where to spend our travel dollars early. Many of us have no intention to requalify for 2018, and our spend will reflect that. The question is, whether American can react in time, or make meaningful change.
Ultimately, we must play by others’ rules in many, many aspects of our lives. It is an unfortunate reality. It is most striking though, to see two completely different industries, act so incredibly similarly. That said, I think it is important to understand the various Amazon and Frequent Flyer Program changes, and to understand the programs in general, so we can better adapt to those rules.
What do you think?