News that affects Amazon sellers has been abundant this month – from counterfeit programs to infringement lawsuits to political actions and more. Read on to see what it means to you.
Jeff Bezos Releases Annual Letter to Shareholders
This year’s shareholder letter from Jeff Bezos, released on April 11th, had important messages about and to sellers:
- He praised Amazon’s third party small and large sellers, even showing the percentage of business done by third party sellers in the past 20 years. The results are staggering. In 1999, third party sellers made up 3% of sales. Last year? 58%. “Third-party sellers are kicking our first party butt. Badly,” Bezos stated. “We helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build.”
- The letter then took a strange turn when Bezos decided to pick on eBay. “The compound annual growth rate for our first-party business in that time period is 25%. But in that same time, third-party sales have grown from $0.1 billion to $160 billion – a compound annual growth rate of 52%. To provide an external benchmark, eBay’s gross merchandise sales in that period have grown at a compound rate of 20%, from $2.8 billion to $95 billion,” Mr. Bezos wrote.
That single statement caused eBay’s stock price to tumble: CNBC eBay Stock Slides On Bezos Comments. Ouch.
- Bezos then attempted to reduce Amazon’s importance in online retail. “Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores,” Mr. Bezos wrote.
You can read the complete 2018 Annual Letter To Shareholders right here. My take? Bezos was laying the foundation for Amazon’s news that they were pulling back in China and transitioning out of the 1P business altogether.
Amazon Fights Counterfeit with Project Zero
We went in-depth on this in our last blog: Amazon Project Zero – What Does it Mean for Sellers? For brands this is a good news story. For 3P sellers, it could be a problem. Sellers need to understand how this program may affect their business model.
Will Congress Regulate Amazon?
In March, Senator Elizabeth Warren released a long statement expressing her concern that many of Silicon Valley’s tech giants were out of control and unregulated.
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation,” Warren wrote in a Medium post about the proposal. “That’s why my Administration will make big, structural changes to the tech sector to promote more competition—including breaking up Amazon, Facebook, and Google.”
Breaking up Amazon is not the answer for helping sellers. Her approach shows that she doesn’t quite understand how Amazon works. She’s right about how Amazon hurts small businesses and stifles innovation, though. Warren’s a bulldog when it comes to consumer causes, and I hope she will consider the plight of millions of US Amazon sellers whose small businesses are hurt by Amazon’s actions against them or – just as bad – inaction to protect them.
The platform is rife with corruption, counterfeit, bad actors and sellers hurt by a so-called partner that refuses to talk to them when something goes wrong, that suspends them capriciously and then is slow to respond to their many, many appeals. Most of these problems are fixable by Amazon, but the company only seems to respond to external pressure to act. In the seller community, we know that improvements, programs for counterfeit, etc. are not because Amazon cares about its sellers but because it is in its own interest to do so and/or the move benefits buyers.
What they seem to forget is that sellers are among Amazon’s biggest customers as well. Warren’s running for office and talks about what her administration will do. I’m hoping that Senator Warren won’t wait until after the election to start advocating for a fair and level playing field for sellers.
Bad Actors Get National Attention
Speaking of pressure…the media has been publishing stories about Amazon’s bad actor problem. BuzzFeed News just released a bold story that clearly stated the crux of the problem: “Amazon is so slow in responding to cases, by the time Amazon resolves your issue, you’ve lost so much money you might as well do black hat,” he (Davide Nicolucci) said. “It’s crazy. It’s a war.”
The Hustle published a story about fake reviews earlier this month that stated: “You have to play the game to sell now, he (Steve Lee) says. And that game is cheating and breaking the law.” The author was discouraged by how easy it is to scam the review system on Amazon and lamented: “it’s hard to reason how such a product, peddled by a ragtag troupe of e-commerce scammers, managed to game one of the world’s premier technology companies.” That’s the $64,000 question.
Amazon’s own practices, policies, programs and algorithms are at the heart of a lot of this bad activity. Internal corruption and acting proactively against black hat service providers deserve more attention than they are currently getting. Amazon has a lot of control over solving these well-known problems. Honest sellers get frustrated by the weeks (!) it can take to get simple issues resolved and how Amazon’s policy of laissez faire means that bad actors are on the same level as honest sellers. To put it another way, Amazon doesn’t discern or mediate in disputes. Liars can say anything, destroy your business and get away with it again and again.
Some of these black hats have inside guys at Amazon who protect them. It is very hard for honest sellers to compete.
And, forget about help from law enforcement. The wheels of justice grind slowly, and online sellers don’t have that kind of time. A few days or weeks without income is enough to bankrupt most Amazon businesses.
At the end of February, the FTC announced its FIRST lawsuit against a seller for fake paid reviews on Amazon. This was nearly five years after the actual infraction. So Amazonverifiedreviews.com is officially out of business. One down, hundreds to go. And while some of you will point out to me that Amazon has sued thousands of fake reviewers on Fiverr and other sites, the fact is most of these reviewers are John Does. Amazon doesn’t know who they are. No one is accountable.
Infringement Lawsuits on the Rise
We’ve seen an uptick in civil cases for infringement lately. It’s been the wild west. The winner in each case tends to be the one that understands how Amazon works the best. I feel badly for sellers who are getting screwed again because they aren’t savvy enough to understand the tricks that are being played against them, or they can’t explain it in a way that the judge understands.
One case that I read this week involving PopSockets was actually awesome, and I recommend it as a blueprint for the correct way for a brand to protect its rights and win in court. In this case the good guys look likely to win.
PopSockets built a compelling case against the defendant because they DO understand Amazon. Their evidence was carefully gathered. They used actual reviews to document the damage the defendant was causing their brand. They attempted a cease and desist first (delivered to the seller’s offices).
The defendant tried to evade them by changing their storefront name. Are you not entertained? The seller didn’t know two important things – 1) your merchant ID never changes and 2) Amazon will turn over all your seller information if they are given a subpoena. Brands can file and get information on multiple infringing sellers for around $2,000…if they know what they are doing. We’ve seen this done successfully by our clients in the past. Changing their seller name makes them look bad. I’m rooting for PopSockets.
Amazon Fires Thousands of Wholesale Vendors
We also went in-depth on this recent snafu, which terrified thousands of Amazon wholesalers and left them in the dark for a week: Amazon Kills Off Thousands of Wholesale Vendors – What Does This Mean to Amazon Sellers?
The bottom line here is that this is yet another example of what appears to be a change in Amazon’s sentiment towards its Vendors. As with our first story of the Letter to Shareholders, Amazon is focusing on Brands vs. Resellers of Brands. They make more money off of 3P sellers than their own direct purchases. By buying directly from brands through Brand Registry, they reduce counterfeit and their liability if counterfeit is found on the platform. They are forcing distributors/resellers into a third-party selling relationship and walking away.
Part of me was happy at this news because I hoped it meant that bad actors would no longer be able to manipulate Vendor Central to take out other sellers. Time will tell. Affected wholesale suppliers have 60 days to make the transition.
Amazon Outperforms Google for Product Searches
Amazon’s advertising business is continuing to grow at a shockingly high rate for one simple reason: last year, more than HALF of all product searches on the internet occurred on Amazon.com. In fact, Amazon has unseated long time search juggernaut Google for the first time ever.
If you are an Amazon Seller and you not using Sponsored Products or Sponsored Brands, Amazon’s self-service ad platform, on your listings, you are losing a share of search on your items, and it is literally getting worse by the month now.
You can read more about the potential of advertising on Amazon right here: What you need to know about Amazon’s growing ad business. We at eGrowthPartners are currently handling PPC, enhanced brand content pages and Amazon storefronts for several brands large and small. Let us know if we can help you drive more sales and increase your conversion rates on Amazon.
How Can We Help You Today?
In addition to account and ASIN reinstatements, we help brands enforce their rights on e-commerce platforms (100+ worldwide) and grow their businesses through Amazon advertising campaigns, PPC, creation of enhanced brand content listings and Amazon storefronts.
Whether you are dealing with counterfeit, trademark infringement or copyright issues, let us show you the best way to remove bad actors while staying compliant.
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