The Amazon Marketplace Deception | Flee While You Can

Chris Burns011 mins
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Originally posted on Housakicks

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Before I divulge the reasons behind my decision to shut down my Amazon store , I want to make sure folks understand that it wasn’t birthed out of anger. Amazon is the largest third party merchant marketplace worldwide; the substantial amount of traffic the platform gets is enough to ensnare sellers and brands into thinking they desperately need Amazon to thrive- and that’s where the danger lies . The very first reason why you shouldn’t make Amazon your primary destination for reaching your customers is actually the main reason why people join the marketplace -traffic

Traffic

I was selling a pair of a very unpopular Jordan retro on Amazon and that shoe alone garnered as much as 100,000 views within a couple of days. The more traffic you get, the more items you are likely to sell, that’s simple logic. But what most sellers forget is that while you rely heavily on Amazon’s traffic, you undermine your own platform ( website, online presence ), basically you ‘re building somebody else’s dream and the little monetary dividends you get out of it blind you to that reality. Sellers do not have a long term view of their business. The quick profit and the immediate gratification prevent sellers from building their own brand or online presence. But I’m sure some will say to me: ” Well we ain’t worried about building or own brand, we just want to sell our products”. Hopefully my next argument answers that objection- the yoke of slavery.

Yoke of Slavery

I used these harsh words for a purpose. The more you sell on Amazon, the more you depend on them. I know of several sellers who have completely made amazon their primary distribution channel. And the implications are dreadful. Sellers are at the mercy of Amazon and the consumers’s gimmicks; as much as they will like to deny it, the majority of sellers on Amazon live in constant fear. They are controlled by the consumer and go out their way to satisfy unreasonable demands for fear of losing their Amazon selling credentials. The fear factor is very real and Amazon thrives on that ; customers know how much control they have so they buy often frivolously and impulsively because they can return the item whenever they want . You know this is my third reason – returns

Returns

Amazon returns are the most ridiculous returns I’ve ever have to deal with and I’ll give you examples of some of the worst cases I’ve encountered.
.Shoe size ( customers constantly use the lame excuse of the wrong size to return an item they bought impulsively). My return rate as it pertains to “sizing issues” is about 30%.
.Item too expensive ( buyers think Amazon has the cheapest price so they buy the item and days later they want to return it because they found it cheaper on Footlocker or so). My return rate based on “pricing” is probably about 10 to 15%.
.Item returned after excess use ( I’ve had individuals who purchased shoes and will want to return it after using the shoes for 8 months because the soles are wearing out).
I could sit hear and tell you how returns have literally ruined my payouts. And now Amazon has even made it worse. One used to be able to control whether to accept or reject a return but I’ve noticed that now it’s automatic. And the worst part is this- the customer demands that the sellers pays for the return label ( even when the customer is at fault), and once the item is returned , there is little the seller can do to reject the returned items even if it’s not in its original condition. There are worst cases I’ve failed to mention here, I could write a book about some of the most unbelievable things customers have tried to get away with. That leads me to my final point- payouts.

Sellers Will Be Soon Charged up To $1500 To Sell Adidas & Nike Shoes On Amazon

Payouts

All sales may look like they are final, but they aren’t final. I’ve already showed you how returns can easily ruin sellers. Major retailers can get away with massive returns but a small business owner can’t. Even though you may get a $5000 payout, if you sustain a 30% return rate for every payout, you might only end up with $3000 or even less once you process the returns. Here is the danger: the returns often occur 2 weeks after the payout. So you see how much of a horrendous system Amazon is. If you’re a small business owner with a low capital ( let say $10,000). Suppose you buy $10,000 worth of products and list them on Amazon. And let’s assume that you sell all of them within a week with a 25% mark up. So you’re making about $2500 for a $10,000 investment. Now let’s also assume that your payout comes a week after you sell your items. Now your hands are tied and your business is on standby, you have virtual money that you can’t touch for another week. So you can’t invest anymore and you’re losing money because you can’t purchase anymore inventory until you receive your payout. Now let’s say you receive your payout and you sustain a 30% return rate ( and let’s equate that 30% to $600). So now your profit is $2500-$600=$1900. And I forgot that Amazon selling fees are also 15%, so you aren’t really making $2500 on a $10,000 investment. You may end up with $800 profit or a little less every two weeks if you’re lucky on a $10,000 investment. Now if you think this is a good system for a small business then more power to you. Amazon only works for major businesses not small timers.

There might be flaws in  my argument but I’ve given you enough reasons to consider building your own platform. You are free to agree or disagree with my propositions. All I know is this, you’re giving away 15% of your profit, living in fear, disregarding your own online presence, putting up with unreasonable returns; if you are enjoying it then by all means stay on Amazon and keep on keeping on.

If You Resell Nike on Amazon You’re Dead and There is a Date for Your Demise | WSJ

Here is a video from my partner Chris that explains in detail how he dealt with this.

 

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