Warning to Amazon 3rd party sellers — Buyer fraud is on the rise and Amazon is not protecting the sellers at all

Recently we got a very disturbing email from one of our largest accounts. Before we will share some of the contents of this email please allow me to give you the brief background. This seller began with Amazon over 8 years ago. 4 years ago they approached us to help them launch their own brand of high-end DJ speakers, Dj cases and other DJ and musical products. The average cost of each item is well over $800. Due to the weight and size of the product, we advised to avoid FBA (Fulfillment by Amazon) and simply sell via FBM (Fulfilled by Merchant). As time went on and competition began to mount they looked for an edge and thought they found it with new program call SFP (Seller fulfilled Prime) without going into too much detail. Amazon sold them on the SFP program stating that it will follow all the same rules of FBA with the only difference that products were stored at seller premises and shipped from there using something called “Amazon Shipping API”. What was not disclosed and also not clear at all from the SFP user agreement was that when ever a buyer wanted to return an item for any reason, Amazon would simply provide them with the prepaid return label. Furthermore, once the item was confirmed as “arrived” back to the seller. Amazon would proceed to issue buyer full refund without the consent or authority of the seller.

Here is a portion of the email:

…What the slick Amazon salesman never informed us was that Amazon will have the right to offer free returns (at our expense) to any buyer requesting and worst of all refund buyers regardless of what they return, when they return it or how they return it.
It was not long before the Amazon gangs of frauds realized this when they began their all out assault. With the help of Amazon, they began using us as a dumping ground for fake, broken, missing Parts consumer electronics, appliances, and computer parts. In a matter of 2 months we received back over $250,000 of unsellable merchandise and Amazon kept sucking money out of us like a cow on milking day.
Our once 10 million a year e-commerce business turned into a rubble of garbage, literally garbage. Amazon is still to this day, nearly 30 days since we shuttered our company, laid off our entire workforce and helplessly requesting Amazon to close our seller accounts. Amazon proceeds to issue refunds to bogus claims. This is ALL without our consent and often well after 30 days, damaged, missing parts, counterfeit, different items and even at times without anything ever being returned at all. When they finally ran out of the $65,000 which they were holding in “reserves” they began charging our credit cards. We tried to close our accounts but these banks are still allowing these charges to come through.

We delved and did some more research into the matter. we wanted to see if this was an isolated incident or rather the trend of new buyer fraud which online shopping has been notorious for since its popularity began over 15 years ago.

The results we found in talking to our largest Amazon sellers were quite disturbing. When it came to SFP the number of fraudulent returns was simply staggering. Many sellers were wise enough, however, to abandon the program before any serious damage can be had. Unfortunately, this did not mean that they were out of the woods by any means. A few months back we issued a newsletter to our subscribing members telling that Amazon will no longer allow sellers to approve returns but rather Amazon will “Auto” approve and provide prepaid labels. We warned that many buyers will take advantage of this and return items they no longer needed (done using) without the discomfort of facing up to the seller. We further warned that buyers would certainly almost always lie about the reason for the return just to win a “free” return shipping label (charged to the poor seller of course). This move by Amazon came at a time when Walmart was buying out Jet.com which quite frankly began getting Amazon’s attention. Jet offered a unique return system which also provided return labels to buyers and a very easy streamlined return process. In response, Amazon went all out to out-do their Jet counterparts and decided to do it smack on the backs of their 3rd party sellers. While Jet allowed the seller to decide upon receiving the item whether or not labels should be covered or full refund should be issued. Amazon chose to only take the buyer’s word and if seller dared to not provide a full refund they almost always ended up with a negative feedback, A-Z claim and all the other goodies which bring a seller an inch closer to death (suspension).

In Summary, what does all this mean everyone? Not just sellers, also manufacturer’s, distributors and anyone else who will sooner or later be under the thumb of Amazon. Let me begin by saying that there is no simple solution. Amazon is still the leader and we will continue to prescribe it in proper doses to our clients looking to #accelerateyourbrand. One thing we will do much differently is to insist that our clients custom build their software to include Walmart, Jet and other marketplaces. We would also insist building brand outside Amazon using robust SMO (Social Media Optimization) offered in our Accelerate package. We will use our ties and connection to integrate them with EDI and other tools which will help them land deals with some big box stores. Hopefully, all these steps will move them in the direction to the touted invitation to 1P selling on Amazon Vendor Central platform. Once there they can simply hook up to our CloudNine solution and they can simply watch sales grow. At the same time, they will remain diversified and ready to capitalize on changes in buyer behavior online.

We would love to know your opinion on this article. User input is our #1 source of research which has enabled us to build custom software solutions for brands looking to grow online. Visit our site today at www.pandacloudsystems.com and tell us what you think.

Disclaimer: I and my team are a bunch of developers and e-commerce branding experts. We do not claim to be award winning blog composers compelling the grammar and other skills used by others. We save that for our those actually putting copyright into product information online.

)

Written by

Cloud solutions for medium to large companies. Customizable automation of tasks, purchase ordering, inventory management, catalog updates, Drop shipping EDI,

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade