This Labor Day stunned Amazon sellers woke up to find out that they were profiteers. They had violated Amazon’s Fair Pricing Policy and Seller Code of Conduct. While perhaps some truly were profiteers, our clients were not. They were tripped up by making several common seller mistakes. Here’s how to make sure that you do not make the same mistake in the future. Even if you were not affected this time, it doesn’t mean you won’t be next time.
Here’s what happened. On Sunday night, the State of Florida tweeted (when did our lives become so dramatically affected by freakin’ tweets?!?) it’s usual anti-profiteering message to request that citizens turn in those who jack up prices in an emergency. It is a crime in Florida and many other states to take advantage of an emergency to profit off of scarce commodities like gasoline, water, food, building materials (for securing or repairing your home), first aid kits and more.
They and many news outlets started showing screenshots of bottled water prices on Amazon which was about $39.99 a case at the time. While this was somewhat higher than normal, it was not THAT much higher than normal. Buying bottled water online is expensive anytime of year because water is HEAVY. You don’t buy bottled water on Amazon normally unless you are an office/business that values time over a few dollars. People who buy water on Amazon know they are paying a lot in shipping because it is heavy. They choose to do so out of convenience.
In an emergency, however, news outlets and States look at the prices on Amazon vs. the prices in the local grocery stores. So now that case of water which might be $5-$10 in the store is selling for $40 and everyone is outraged.
Amazon has been battered in the press lately for selling unsafe products, fake reviews, fraud and counterfeits on the platform and more. They leapt into action and Monday morning at 7 AM Central saw the notices go out. Unlike during the last disaster where sellers were suspended for profiteering, Amazon added the Seller Code of Conduct to the charge. This is scary because sellers rarely recover from a SCOC. It’s the big guns and I’m worried on behalf of my clients.
It is cynical for me to say, but I believe that takedown was written in the hopes that reporters and States would see it and realize that Amazon has policies against profiteering and that they take action on stuff. Twitter, at least.
As we dug into why our clients were suspended, we learned that our clients:
- Sold commodity items that are subject to profiteering charges
- Got tripped up by their repricers
- Made common mistakes like listing all their products at a high price and relying on their repricers to adjust the price
- Treated all their inventory the same in terms of repricing
- Did not adjust their pricing and rules once a state of emergency was declared
These were not profiteers looking to benefit from a tragedy. These were people with bad repricer rules selling a product they did not realize required vigilance.
In the case of one client, she sold three cases of water in the past week – more than she normally sells in two months. She’s a drop-shipper who lists many products that only sell occasionally. She has thousands of products and just wasn’t thinking about how her inventory could be vulnerable or part of the news about Hurricane Dorian.
She was aghast when she realized what happened and felt terrible about the buyers. She refunded and/or cancelled the orders of everyone who had bought from her with a letter of apology.
She also thought through all her inventory, her repricer settings and her team of people that help her manage her account. She searched for any other items in her inventory that might fall under profiteering rules and deleted them. In her case, water was an anomaly. She mostly sells in categories that are not affected.
One of her ongoing strategies is to internally flag products that she lists as being possibly affected during a disaster. This way if something is coming or something suddenly happens like tornados, fires, mudslides, earthquakes, etc., she can immediately pull up the relevant listings and make sure her prices are normal and competitive. She will close listings where there might be a problem because of the weight of the product. She will use tools like CamelCamelCamel to determine the average price over the past year for the product.
Alternatively, she will just close the listing until the emergency is over. Given her current distress over this situation, I’m guessing she’ll probably just close the listings.
The repricing issue is a bit more nuanced because many sellers feel they are selling below what they should be making on a lot of their inventory. If they ever have the situation where they are the only seller, their prices go up to where they think it should be. Some sellers are even bound by MAP agreements where they must keep their prices at a certain level – one that Amazon might disagree with. As sellers we are all aware of how hard Amazon tries to get us to lower prices on everything – often below cost or even below the minimum Amazon fees.
They suppress the buy box; they send us annoying emails and make it so we can’t even advertise our products if some other seller on some other platform or company website is selling it for less. The idea of “Fair Price” as defined by Amazon is the lowest price anywhere which is just not reasonable.
I don’t have any advice as to what your ceiling price should be on a product except to say that you probably don’t want to raise it very much from the average price. Even private label sellers/brands get suppressed if a similar product is being sold somewhere else for less. This plays hell for my clients who are offering what Amazon considers a commodity with a label vs. a truly unique offering.
For people who sell food of any kind (even gourmet frou-frou stuff), recognize that you are vulnerable to profiteering charges. If your product is geographically limited and not able to go to the affected area, you might be OK, but it’s a risk. Remember it’s an algorithm and false positives are the norm. You must decide for yourself if you are OK with defending yourself later if they take you down improperly.
If you are one of those people who speeds up your listing process by making everything the same price and having your repricer adjust it, make sure it either reprices immediately or that you have different prices/rules for products vulnerable to profiteering charges. I have clients, for example, that will have a $100 price for some cheapie product that sits there on the listing for days because they are the only seller.
Additionally, as exhausting as it is, you need to be aware of how world events will affect your business. We are all in a lather lately over tariffs and the trade war with China, but everything matters. FDA court cases or rulings, bad PR for Amazon, EU law changes, anti-trust lawsuits worldwide, sanctions, civil unrest…the list goes on and on.
My clients were accidental profiteers. Hopefully we can get them back. I hope this blog keeps other sellers from getting suspended in the future.
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- ecom Chicago. Cynthia returns to Chicago in October (October 16-18, Elk Grove Village, IL).
- Cynthia will also be attending the Conversations Conference in Austin, TX Sept 13-15. Find out more HERE and please say hi!
- Even Amazon’s own products are getting hijacked by imposer sellers. “Not even Amazon itself is safe from getting hijacked,” states this recent article by The Verge. That entire story is HERE.
- “Amazon’s sales platform may be too big to police,” says Casey Newton of The Verge in an article released today. Read that HERE
- Even the Wall Street journal has joined the recent chorus of media outlets concerned about the Amazon platform. In an extensive article, the WSJ’s opening volley is “Just like tech companies that have struggled to tackle misinformation on their platforms, Amazon has proven unable or unwilling to effectively police third-party sellers on its site” . That article is HERE but may be behind a paywall.
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