“OMG!” was the exclamation in our company this week as we read two bombshell stories affecting Amazon sellers this week.  Walmart’s Shopify announcement was surprising and joyful for Amazon sellers.  (Good news?! Gasp!).  The story about bad actors causing safety hazards and deaths through sales of banned goods was sobering.  I’ll explain the trick and why Amazon needs to address loopholes in its system.

Walmart Partners with Shopify

Walmart’s announcement that Shopify stores will now show up on the Walmart.com platform was disruptive for Amazon but exciting for sellers.  Shopify store owners will be able to easily get their brands in front of Walmart’s 120 million+ monthly online visitors. Key benefits include:

  • No monthly fees to list on Walmart
  • Products, inventory, and orders synched – optimize sales on Walmart while managing the transactions on Shopify
  • Easy catalog creation
  • Unlimited products*

The caveats are–you must:

 

  • Be a US-based business with US tax ID
  • Have GTIN or GS1 UPC codes for your products
  • *Only list products eligible for sale on Walmart
  • Meet Walmart’s service requirements
  • Be approved/vetted by Walmart
  • Have previous marketplace-selling experience

Shopify anticipates 1,200 stores will be added to the Walmart marketplace this year. Considering that Walmart’s eCommerce business grew 74% last quarter (COVID bump), this move could make Walmart a serious alternative to Amazon.

Many sellers are fed up with Amazon and its heavy-handed tactics towards them.  Many are already selling on Walmart, but this move makes managing their Walmart inventory MUCH easier.  Walmart has always been a bit clunky compared to Amazon because the processes for adding inventory and getting started on the platform are time consuming.  Those sellers who have their own Shopify store already will find adding Walmart to be MUCH easier than what most Walmart sellers went through in the past.

Shopify already integrates with eBay and Amazon as well as Facebook and Instagram.  This is very appealing for MF sellers because they can now manage all their online sales channels in one place.  Additionally, they can build their own customer base and support online marketing efforts on social media.  This is very appealing for brands who are trying to build an audience.

Get Walmart's Seller Guide

For those who are interested in learning more about Walmart's seller requirements:

If you have questions about how the Walmart/Shopify integration works, Walmart has a lot of help articles:  Walmart/Shopify Q&A

This announcement removes one of the impediments for Amazon sellers to sell on Walmart and gives Walmart access to a much larger range of products. If they treat their sellers better than Amazon and provide a good sales environment, Amazon could start to lose dissatisfied brands and other third-party sellers to Walmart.

When Walmart announced its partnership and opening of its marketplace with Jet several years ago, they claimed that they would never suspend sellers because they would do a better job of vetting them up front.  I laughed out loud (in a roomful of 2000 Chinese sellers who didn’t get the joke) at their naivete.  Needless to say, Walmart does suspend sellers and has their own version of Seller Support and Seller Performance.

Their claim of better vetting is true though.  Suspensions on Walmart are less frequent and usually for simple things like performance issues rather than tricky policy issues like “review manipulation” or listing abuses.  They work with larger, more established sellers and are generally more responsive to sellers when there are issues.

Interested in merging your Shopify store with Walmart?

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Bad Actor Activity Can Be Deadly

This week’s story Amazon’s Enforcement Failures Leave Open a Back Door to Banned Goods in The Markup was sobering.  A lot of times when I talk about bad actor behavior, it is more along the lines of how they are cheating the system and hurting honest sellers. 

This story and this set of dirty seller tricks can also be deadly.  It’s a heart-breaking story.  I wanted to talk about it because as thorough as the journalist was, he couldn’t cover the part of the story of how bad actors get away with it.  I could only give him anecdotes, not hard evidence.  These are not normal sellers who made a mistake.  They use tricks to fool Amazon.

So often when an honest seller is taken down for selling a banned or restricted item, they get mad because there are other sellers who are selling that item – sometimes even Amazon itself.  I often tell them the algorithm will catch up with those other guys and to have faith in Karma.  But the truth is, some of these guys will never get caught because they’ve gamed the system. 

Since my client is honest, telling him/her how the trick is done is usually not productive and only makes them madder.  I say, “let’s focus on you” instead. 

The bottom line is that Amazon is not policing its banned and restricted goods and is sometimes even selling them itself because of flaws in its system.  Bad actors get around Amazon’s rules by:

  • Listing in a non-related category, like bongs in home goods/vases
  • Disguising the item. Pretending a banned gun part is a paperclip tray, for example (complete with picture!).  The buyers, however, know exactly what they are getting.
  • Getting the item into Amazon’s Choice. By using the trick of placing items directly into buyer shopping carts (from “account farms”) some of these items are labeled as Amazon’s Choice with very few sales and sometimes poor buyer reviews. This not only gets the item greater visibility in search, but Amazon’s algorithm and scoring system perceives this product to be “good” and less likely to be taken down for minor offenses. The badge is a shield, in other words.
  • Manipulating organic search. You know how when you go to the Amazon search bar and start typing, possible searches start to auto-fill? That may not be organic. Bad actors can manipulate that as well and put THEIR specific search terms at the top of the auto-fill list.  That’s why when the reporter typed in “pill press,” he saw “pill press for making pills Xanax.”  It wasn’t that tens of thousands of people were looking for pill presses to make fake Xanax.  It was a plant.  And when you clicked on the autofill, the bad actor’s listing came up first because they had optimized their listing for that keyword.
  • Knowing Amazon enforcement is run by an algorithm. The reporter, who was a brand-new seller, was able to keep listing banned parts even after the algorithm caught him a couple of times and took down the listings.  The “frequently sold together” feature on the listings are not tied-in to Amazon’s enforcement algorithm, so Amazon can’t figure out if a product is being used for illegal acts.  An example in the story was equipment to make hash oil using the highly dangerous butane method. 

In addition, Amazon announced last year that it was going to get rid of most of its Vendor Central employees and rely on the algorithm to make purchasing and replenishment decisions.  This could explain how some of these banned products ended up being sold by Amazon itself.  If the bad actors had access to Vendor Central and created their own listings, the algorithm would make the decision to buy and sell the item based on its profitability/volume algorithm.  No human would actually be looking at the item and saying, “Hey! This isn’t a paperweight! It’s a gun part!”

Warehouse workers are focused on checking in inventory and sending it out to buyers.  No one there is familiar with Amazon’s lengthy list of banned products, no one is going to raise the alarm.  They aren’t paid to do that, and they don’t have time to do that.

  • Understanding that Amazon is reactionary. Whenever a bad actor comes up with a new way to manipulate the system, they know they have months to possibly years before Amazon learns about their trick and stops them. They are constantly adding new keywords to the algorithm, but not all tricks can be caught by keyword (like the paperweight).  The manipulation of organic search has been around for more than a year (maybe longer) but Amazon hasn’t done anything to fix it yet.
  • Understanding that there is an acceptable level of failure in the system. Once a trick is getting media attention, Amazon might act. But one of the reasons so many bad behaviors are not fixed is because they may fall under the acceptable level of failure.  Just as Amazon finds a 2% defect rate to be acceptable in most retail goods, it has an acceptable level of bad actor presence and behavior on the platform.  That’s why you often see Amazon spokespeople saying things like “only X% of the goods on our platform are counterfeit/banned/dangerous” – fill in the blank here.  The numbers are small as a percentage, but huge as an absolute number.

Reporter Jon Keegan called Amazon, “…a virtual back alley where mostly third-party sellers peddle prohibited goods, some of which are used for illicit and potentially criminal activities.”  While there are many more honest than dishonest sellers on the platform, bad actors do a disproportionate amount of harm.

EPA Calls Amazon Out on Dangerous Pesticides/Chemicals

As an add-on to the story from The Markup, this NPR story from last week shows that even when Amazon is warned about specific products, it doesn’t always take timely action.

The Environmental Protection Agency ordered Amazon and eBay on June 10, 2020 to stop selling certain pesticide-containing products, many of which claimed to fight off and disinfect from the coronavirus.  The marketplaces are also forbidden to sell products with toxic chemicals like chlorine dioxide and methylene chloride which is federally regulated as a toxic substance.  Here’s the EPA order.

The EPA talked to Amazon about its concerns in April and filed the order in June because Amazon did not act.

You’ll also want to read the press release because it lists the keywords that Amazon is using to take down improper products.  Is it possible that Amazon will take down listings with these keywords that are NOT associated with these pesticides?  Uh, yeah.  So, take a peek and tune up your listings if any of them use these phrases.  Truth in advertising and unsubstantiated health claims are still hot buttons for Amazon.

Sellers Get Around Price Gouging Rules…For Now

I’ve always said Amazon sellers are among the most creative people in the business world.  In the latest Verge, we read that sellers are labeling goods as “Collectible” to get around Amazon’s price gouging rules and enforced price ceilings.  Sigh.

This loophole has existed for years but was rarely used until the pandemic.  If any of you were using this trick to sell high-demand/low-supply products, re-think your strategy.  Amazon will likely act (imagine a sledgehammer swatting flies).  My prediction is that they will:

  • Reduce the categories in which you can sell collectible goods.
  • Run all collectible items through a newly tweaked algorithm. (Cue false positives)
  • Punish the cheaters. This could be quite severe if they perceive it to be deliberate price gouging vs. accidental or minimal or due to supply chain cost increases.
  • There could be additional charges of listing abuse and seller code of conduct.

So far, we’ve not seen any account suspensions for the Collectible trick, but we do get price gouging cases every day.

To be clear, it is a listing violation to call something “Collectible” that isn’t.  Collectible is NOT for used items.  Think about a book, for example. There are tons of used books on the platform. Collectible books, however, require that you get approved and that you can distinguish a rare collectible from a mass-produced used book. It uses different language.

A collectible by definition is no longer being produced in that version and is rare (vs out of stock).  In addition, it needs to have all original parts and to be in useable condition. 

If you’ve recently listed items as collectible that maybe aren’t, I suggest you thoroughly read Amazon’s “condition” policies.  You may need to update some of your listings.  Normally suspensions for improper condition are rare.  Usually Amazon just sends out a warning notice.  But this time will likely be different because the improper conditioning was for the purpose of price gouging and not a mistake.

EU Takes on Amazon for Treating Sellers Badly

Margrethe Vestager, the EU’s antitrust regulator plans to file a formal complaint against Amazon over the way it treats third-party sellers.  Specifically, she’s interested in how Amazon uses seller data to create its own products.  While the fine is expected to be around $1B (which is peanuts to Amazon), this could have repercussions in the US as well.  Amazon may have to change how they do business.  All the uncomfortable scrutiny could cause reporters and regulators to wonder what else is Amazon doing that’s rottenly unfair?  Stay tuned.

In Case You Missed It…

  • The NYT Magazine wrote a fascinating story about how the pandemic brought Amazon to its knees. Do not miss this one.
  • Teikametrics put out a 12-page data report on the Initial Impact of COVID-19 on Amazon Sellers.
  • WSJ story on how over 1,300 Chinese Medical Suppliers to the US – including mask providers – used bogus registration data.   It gives insight into just what law enforcement, Amazon and regulators are up against in trying to keep our products safe and in trying to keep track of bad actors.  For me, it made Amazon’s Verification program even more compelling.
  • Another WSJ story about the gray market. A refrain I’ve heard often over the years is, “what’s the big deal about the gray market?” or “I won’t be able to make money if I don’t buy from the gray market.”  This story is a good case study of why Amazon doesn’t like the gray market.  It’s riveting and dismaying to see how many of our states and first responders were screwed during the pandemic.
  • Amazon is waiving the Amazon Pay Chargeback Dispute Fee until September
  • Amazon has split its Account Health Metrics dashboard into two. It is much easier to see what Amazon will suspend on (“contractual obligations”) vs. the less serious “Additional Indicators” which have no consequences for not meeting them.  What’s interesting here is that Valid Tracking Rate, On-Time Delivery Rate and Return Dissatisfaction Rate are now additional indicators.
  • Amazon Pantry will permanently close on June 30 in the UK. There is no indication that the US will follow, but it would make sense if it does.  When you have Fresh, Pantry and Whole Foods to shop from – with many overlapping items — it can get very confusing fast.
  • Free VAT Services from Amazon for a year. Amazon provides this service through its partnership with Avalara. It is designed to make life easier for sellers in the EU.  I wish Amazon offered this kind of service in the US.  My cynical guess is that dealing with VAT was such a headache for Amazon that they not only made registering for VAT mandatory for all sellers regardless of where they were based, but they decided to file for them as well.  For those sellers who use it, be aware that after the free year, VAT services will cost you €400 per year per country.

To be clear, my opinions – particularly about bad actors – are based on observation, client experiences/stories and confidential sources. If you have information that clarifies or corrects anything I say here, I’m all ears.  My goal is to share with the community so we can identify and protect ourselves from bad actors and their tricks.

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