Tag Archives: Amazon Marketplace

We are All Search Hostages until the Internet is Free of the Big Three: How they Block Your Life

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This is a tiny snippet from an upcoming exposé of the inner workings of the nightmare produced by Facebook, Google and Amazon

Isn’t it funny that the so called bursting of the dot-com bubble in 2000 which resulted in a nearly 75% drop in the tech heavy NASDAQ index by March, 2000. Ultimately, among survivors and upstarts, the winner-takes-all saga led to no less than three trillion dollar companies.

If the internet is, or at lest was, a dead end for any company trying to profit, how could these few have profited so obscenely in such a short time?

Most of the answers to that question attempted for the last two decades have been blatant hero worship and “to the victors go the spoils” nonsense with hardly any media attention paid (at least until around 2016) to the deeper, and darker, story that explains this regrettable paradox.

While the truth, particularly when it comes to tech and the internet, is often maddeningly complex, hiding behind a veil of complexity is a standard technique for anyone wants to keep their billion dollar golden geese a secret, shell companies, offshore banking, derivatives and “CDOs” and the like all benefit from being opaque and complex.

And while the absolute details would take mountains of pages to explain, mainly to explain away all the contradictions, the base issues are at the same time, in many ways, insanely simple.

Fraud, Ponzi schemes, illegal monopolistic behavior, all the usual suspects are not only present but rampant and rancid like a planet sized pile of moldy cheese.

And those are the larger threads, the ones that fit into a framework of past anti-trust cases and prior greed fueled crime sprees.

The devil as they say, is always in the details. Here are a few, some general and others much more specific, that point to how we could have gotten to this absurd destination.

Google and the “hiding engine” from hell

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While it is lovely that Google “allows” us to find out Lucille Ball’s birthday with a single click – or the capital of Afghanistan just as easily, what if you are looking for something a little less obvious? What if the information you need is worth something? What if you need fair, honest advice or even wisdom?

You’re out of luck. Since the entire basis for this business to to charge you (or somebody, regardless) for information that is, in reality, publicly available (the internet is public after all and the information on it does not belong to google), the primary function of Google’s vaunted trillion dollar algorithm is to hide any information of value from you until they have extracted a price.

Since they are known as a “search engine” this is counterintuitive but it will make more sense as we delve into the other two “winners” of the dot-com era. Each of these three companies share this one thing in common. They are all build to exclude, hide and criminally manipulate essentially public information for the benefit of a private enterprise. k?

Facebook and the lure of “exclusive membership”

As has been well documented, to the extent of having been memorialized in a feature length hollywood film, the fast start in membership that Facebook achieved was based on two “triggers” related to exclusivity and “hiding” of information. The first was, during the initial launch at harvard and for a period of time at various other colleges and universities, a requirement for membership was “proof” that you were a student in the form of an “edu” suffixed email. This added popularity to the site as those joining felt they had not only potential access to others where they went to school, but also would not be associating with non-students, or in the extreme initial example, not socializing with non-harvard people.


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While this seems innocuous enough and a great marketing ploy, indeed it was heralded as genius by hundreds of sycophantic scribes, the next bit is where the system that exists to this day became an engine for corporate greed at the expense of virtually the entire world population.

Once you join Facebook, you are “allowed” to have contact only with “friends” that authorize you to do so. But the recommendations for “friending” those people, other than from your own laborious manual searching, are controlled by Facebooks algorithms.

This is a familiar tune. The real purpose of this structure was not to give you exclusivity or for you to benefit from the “wisdom” of the algorithm, but to block private and, in particular, business entities from coming in contact with you without first paying Facebook. In other words, using its log-in membership system and proprietary software labyrinth as a private, separate internet sphere, it was able to build the largest network of phantom tool booths the world has ever seen and now collects hundreds of billions simply because “the public” has opted-in and has no idea what an open alternative would look like or the damage that has been done by this harmless seeming “social platform”.

The real potential of networked human communications, a.k.a. the internet, is almost totally lost to history, with the surviving structure entirely based on the systems that these three giants have constructed with a view to nothing more than private, personal enrichment.

While this opinion may seem harsh, looking at the inner workings of the software and who financially benefits vs. who loses (a.k.a. everybody else) will, in time expose one of the greatest swindles ever perpetrated on the public, in this case the entire world population, or at least the population of internet users across the globe.

Amazon and the alleged layers of deceit and corruption beyond all imaginings

It is fairly common these days to hear criticism of Amazon and “worlds richest man” Bezos, which is understandable since the operation is so massive and, like any huge concern, likely to step on a few toes here and there, regardless.

Naturally there is also plenty of hero worship, particularly the insane love of “Bezonomics” and a cult of personality toward the founder and CEO for, well, stepping on the most faces of any human, other than perhaps Genghis Kahn.

Again, the real devil is in the details. It is easy to defend any criticism of the company by pointing out the “good” that it has done or continues to do and to create a “straw man” argument that the company should somehow get “credit” for those things and that they somehow offset any valid critique.

That is like saying someone who succeeded in getting elected president by bribing millions of voters should therefore be allowed to wage war or imprison anyone he likes since he has earned “credit” by doing right by those who were bribed.

There a little story, told to us by an anonymous source, who’s stories have all checked out before, that illustrates the system at work when you step onto the private property of Amazon’s web site.

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Again search is at the center of the story, as is the requirement to log in and agree to terms and conditions. This is tantamount to agreeing that you are leaving the public sphere and are agreeing to abide by the rules and be subject to the whims of the private entity on whose “sole property” you are now “standing” / shopping.

In that private world Amazon, and by extension Bezos, not only play god, they are god.

To illustrate this fact let’s say you have a 7 year-old child that loves a certain children’s character and you want to buy a book that has “pop-up” cut-outs to entertain and delight. And this exact item can be found via “search”.

Naturally, you type in the name of the book or character and perhaps add “pop-up”. What shows up in the “search” results is exactly what you are looking for. It’s the precise item and it looks exactly as you had hoped. Then you look at the price. $50. Hmmm that’s a little high you think. With a little further research you find out that the “MSRP” for this item, a.k.a. the list price is $30 which seems a bit odd.

You keep trying to search and click any link on the site that will lead you to the same item at a more reasonable price – but that is only available “used” and you will not purchase a used item for your child!

In the end you rationalize, it must be a very rare item to have such a high price, and since the Amazon search results “must be scientific” there are apparently no lower priced copies available. So you buy it.

This scenario was repeated hundreds if not thousands of times for this one product over a period of several months. And likely was repeated millions of times over a period of years across thousand, if not millions of items. So what?

The search is rigged, that’s what. How do I know? The person that related this story was the seller, in 2014, of over 1000 copies of the item at $50. He did not create this fraud, merely piggybacked on what Amazon itself had set up. Only they have control of the search results.

What’s the big deal you say, after all there were no cheaper units available so it is just “surge pricing”; supply and demand, right?

Wrong. There was, after all, another listing of the same item, expertly hidden by Amazon, where only a hacker or software expert could find it. On that listing, for those that Amazon chose not to swindle, was the exact same item for the standard, heavily discounted, price of $16 or nearly 50% off the list or MSRP. You see, the result is, regardless of who is selling the item, Amazon earns triple (triple the fees) when the price is higher, as in this example.

This is not an isolated “mistake”. Many who have experience working inside the Amazon system have seen literally thousands of similar examples all tied to this “malfunctioning” search engine.

What’s more a calculation of the possible financial benefits during the time in question amounted to nearly the entire reported net profit of the entire company. It was common knowledge that the company was reporting little or no net profit during many years, even as it remained a darling of stockholders.

And if any one would bring such a specific case to Amazon’s attention? Naturally they would blame the seller, software issues, the moon and the stars, anything but admit that they use every inch of their private real estate for one purpose and one purpose only, to maximize the amount of money that ends us in their accounts.

And many who are reading this still don’t get it. “Why not?” It’s capitalism after all! To the victor go the spoils! Hail Ceasar! Heil Hitler. It’s your internet. Not theirs.


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Wall Street Journal Slams Amazon at Peak of Holiday Buying Season: “Are you Buying (Actual) Garbage?”

In a Feature article WSJ does an Investigative Report but Leaves out the Real Dirt

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In an article with a date stamp of December 18, 2019 at 3:38 am, WSJ released a scathing report detailing how potentially millions of sellers are allegedly scamming the public by selling discarded and remaindered good through Amazon’s marketplace.

The aim of the investigative piece was to show that Amazon did not pre-qualify or filter its selling accounts in any way and that pretty much anyone can sell anything, at least for a while, until Amazon shuts them down.

In order to add drama to the account and to emphasize how disgusting this situation can be for the buyer, WSJ set up its own marketplace “storefront” and listed items, literally found in a dumpster, for sale on Amazon. The items included a discarded jar of Lemon Curd.

While the interaction with Amazon ( a nicety afforded the Wall Street Journal) was amusing, with Amazon repeating the phrase “Amazon’s high bar for product quality” repeated over and over, for the most part the article, while well researched, totally misses the point.

The Real Rot is not in the Garbage Being Sold but Amazon’s System that Is a Machine Designed to Destroy Legitmate Retail

As is well documented in the, now ancient, saga of how Amazon killed off all competitors in the Book selling business, it has always been a clear goal of Amazon to bankrupt its competitors by any (legal?) means. These extreme tactics have not been abandoned now that all products are target for sales monopolization.

Further, regarding selling products out of dumpsters, for many years Amazon’s system has not only encouraged such desperate methods on it’s marketplace it has made them virtually impossible to avoid. In the WSJ article the question of the motivation of the sellers and why they “prefer” to sell, literally, garbage is never addressed.

It is even implied that they are just “poor” and one seller is even quoted as saying that he started selling products out of dumpsters because “he didn’t have money to buy products”.

It was also mentioned that one of the sellers “couldn’t make money as a photographer” and so he decided to start selling trash from dumpsters.

This is so incredibly misleading that it is difficult to even begin to deconstruct.

The List of Omissions from the WSJ article is Mind-boggling

While it is great to see some of the common practices that make up over 50% of sales on the Amazon platform exposed, omitting the real issues, the built-in ugliness of the system itself, is inexcusable.

First of all, no human sells products out of the trash as a first resort. To imply that these are “poor” people and therefore somehow taking advantage of Amazon’s lack of oversight is utterly ridiculous. Somehow in a “serious” exposé WSJ manages to make Amazon look like the victim. You have got to be kidding.

The fact is that Amazon is based on a system of undercutting, through various tactics, legitimate commerce, especially competing eCommerce, by forcing prices, after fees, to a level well below traditional wholesale levels. This means that anyone, large company or small individual, must source products at an unrealistic “impossible” price level in order to be competitive. Hence the popularity of the dumpster.

Who is the Real Victim? We all are.

That bears repeating: It is not possible to make a single cent on the Amazon marketplace by buying an item legitimately through a wholesale distributor and then adding a retail mark-up as has been the system for centuries (except in cases of price-gouging and other anomalies).

To use a different method to put this into perspective, remember that jar of Lemon Curd from the dumpster? Here’s the rough general breakdown for a similar product based on a 10$ sale price on the Amazon Marketplace:

Price of item “shipped” (free shipping) = $10 (rounded off for illustration purposes)

Cost of shipping and handling = $4.50

Various Fees to Amazon = $4.50

Remaining amount retained by seller = $1.00

Since the cost of this product at wholesale is around $5 and the seller must also survive, the only acceptable price for the seller to acquire the jar is $0. Dumpsters do not charge. Therefore this is the default system for sellers that work 7 days a week to try to make even a modest income.

The absurdity of this is off the charts. Even if you debate the details +- .50 in each category, etc., this is nevertheless the system that gets your Lemon Curd to your porch. A more wasteful and backward system could not be devised if you tried. Thank “modern” finance and devious minds for this wonderful invention of commerce.

The Amazon system is based on these concepts:

A. Set marketplace fees at a level where the maximum allowable “profit” for the third-party seller, after fees, is effectively zero. Fees are added to everything. A “variable closing fee” for the sale itself, fees on storage, “pick and pull” fees, shipping fees, on and on and on. These apply, at varying but always astronomical levels, through the “Fulfillment by Amazon” program and for sellers that ship and warehouse their own goods as well.

B. Encourage Chinese and other gray-market suppliers to maintain the system and “impossible” price level at below wholesale cost. Next, sell Amazon Branded products as an “alternative” and source these at the lowest possible cost to insure no legitimate seller can compete.

C. Cover all this with “no questions asked” returns (paid for primarily by the 3rd party sellers themselves) and by taking massive losses due to unrealistic shipping speeds. These ultra fast speeds serve as an attack against other companies such as Walmart, that can not be crushed by A. and B. above due to size and other market advantages.

The key objective of this strategy is to destroy legitimate retailers and brands at every level. Large brands like Nike, who recently ended a short-lived arrangement to allow its products to be sold on Amazon, are hurt by a relentless cheapening of the brand and a stampede of inferior knock offs and other damaging effects.

Smaller independent retailers are either bankrupted or forced to reduce costs of supply to well below standard wholesale prices. If you are thinking “fell off a truck” you are on the right track.

As a dramatization of the problem it can be said that to sell on Amazon, and realize any profit at all, your source must be either couinterfeit, aftermarket rejects, stolen or….. wait for it….. from a dumpster.

So, to be clear, the “dumpster divers” so lovingly described in the WSJ feature article are not just “poor” they are an inevitable result of a system, built on endless greed by the “richest man in the world” in order to have a virtual monopoly in US online sales (can’t survive without selling on Amazon is the mantra) and to insure future growth by literally destroying all legitimate competition.

Please let me know when this background “color” will be included in the next hard hitting investigative piece from the Journal.

Sunshine Behind the Clouds and the Future in your Hands

Finally, it is all of us, consumers that control the quality of the products and the purity of the supply chain that fulfills sales, online or otherwise. While it is ceratinly convenient to go online and visit either Google, Facebook or Amazon, competition online is, no less than in traditional commerce, essential to maintaining standards of quality and service.

For all Amazon’s “high standards” a deeper look at the system they have in place clearly shows that it is profit for amazon on every sale – and more importantly using income by gouging smaller marketplace sellers to attack larger competitors with unrealistic shipping cost structures, that is most important, not the quality of goods.

For now they will continue to “bribe” the public with a powerful cocktail of virtually instant delivery and “no questions asked” returns. But does that make you feel better about the dumpster sourced lemon curd you just ate? What about the poor seller than has been forced into dumpster diving to have a shot at the huge success of a $20,000 per year income, which Bezos gets in a microsecond. Maybe there are better places to buy your lemon curd.


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Amazon Allegedly Allowing Chinese Sellers to Deceive Consumers and Paralyze US Vendors

Amazon finally Admits to Facilitating Safety Issues and Fakes in Online Product Listings

Chinese products listed on the e-commerce site have been known to present a multitude of issues for US sellers on the platform. Consumers are also put into potential risks whenever purchasing an item from overseas on Amazon’s site. Counterfeitsunsafe goods, and items that lack the necessary US FDA approval, despite including the logo, are among some of the problems that have frequently occurred. 

On the U.S. site, Amazon doesn’t require a seller’s locations to be disclosed, which makes it harder for Chinese sellers to be held accountable when fake and unsafe goods are identified after shipping.

When consumers attempted to sue Amazon in court proceedings in the past, Amazon’s argument was that they held no burden on product liability, claiming that the items in question were neither manufactured nor sold directly by the company and that they merely allowed those items to be listed for sale.

An extremely dangerous case happened when a customer purchased a hoverboard on Amazon from a third party seller and the board exploded and resulted in the buyer’s house catching on fire and burning down. In that 2016 court proceeding, Amazon won the case and was not held responsible.

However, for the first time ever, Amazon is finally admitting that such risks actually exist. The 2018 Securities and Exchange Commission (SEC) file stated “Under our seller programs, we may be unable to prevent sellers from collecting payments, fraudulently or otherwise, when buyers never receive the products they ordered or when the products received are materially different from the sellers’ descriptions. We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies”  

Whether Amazon can be held liable in court for damages that result from this passivity appears to be another story.

Mysterious Third-Party Chinese Vendors Lack Accountability on Amazon’s Seller Platform

Chinese sellers within the Amazon marketplace could represent a significant portion of the third-party sellers. Although Amazon does not publicly disclose any data of sellers’ location on the Amazon.com US site, according to Market Place Pulse, approximately 38% of the top sellers are based in China and 44% of China sellers were calculated among the 5 marketplaces (France, Germany, Italy, UK and Spain). 

The majority of Chinese sellers, more than 79%, utilize Amazon Fulfillment (FBA) services that allow for customers to receive items quickly. This has resulted in US sellers struggling to compete in the market while also allowing customers to experience the same shipping experience regardless of the products’ origin.  

Legitimate US Companies Can’t Compete with Rampant Flock of Fraudulent Chinese Vendors

This insurgence of sellers from China are affecting US sellers that have sold products imported from overseas because they are not able to provide competitive prices against Chinese suppliers that are now selling the same products on the site. 

In an interview with the WSJ, a US based company that sells goose-feather duvets claims that they’ve struggled to compete with Chinese sellers that claim to sell the same quality goods but are counterfeits. This US company bought the Chinese “equivalent” and had the materials tested and found that they were duck feathers, instead of its proclaimed goose-feathers, and were being sold at a fraction of the price.

These deceptive listings not only hurt the customers that believe that they are purchasing one thing but actually receive another, but they are also killing a number of legitimate companies’ chances to make a living. The company brought the testing results to Amazon’s attention and the counterfeits were removed. However, the burden of responsibility in locating vendors that sell “fakes” should not be on the third party seller’s shoulders.

Consumers have also been deceived into thinking a product is great based on 5 star feedback when, in actuality, a string of companies have been proven to directly influence inauthentic reviews by bribing customers with gift cards in exchange for a high rating.  


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Attorneys General Initiate Antitrust Probe against Google: 30+ States will announce on September 9

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According to “a source knowledgeable about the probe” and quoted by Reuters and The Washington Post in stories today, more than 30 attorneys general will announce the investigation next week.

In response to the news Google issued the following statement:

“We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector”

Google representative Jose Castaneda

The source also intimated that the probe would be focused “on the intersection of privacy and antitrust”, but did not give any further detail.

In July, the US Justice Department announced that it would begin a broad investigation into the possible anticompetitive practices of the largest technology companies. It has been considered likely that Google, Amazon, Facebook and possibly even Apple would be in the crosshairs.

The Federal Trade Commission, who are also responsible for the enforcement of antitrust violations, is looking into Amazon and Facebook and whether they have abused their dominance in online retail and social media, respectively.

Google, after having large fines levied against them in Europe in March for antitrust violations relating to online advertising, will now face the task of changing the outcome of similar accusations of misconduct in the US.

Amazon also has had difficulties coming out on top in European cases. Only yesterday in Paris, the Commercial Court handed down a verdict against the online giant, resulting in a 4 million euro fine and a demand that 7 key clauses in their agreement with “marketplace seller partners” be brought into compliance with French laws.

Meanwhile, Facebook is also under scrutiny as they are under investigation by the FTC for a potential breach of antitrust regulations. Similar to Google in the European case mentioned above, the probe into facebook involves its social media, digital advertising and mobile applications.

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In a separate matter, Facebook is also under scrutiny by the European Commission in questions relating to its new Crypto Currency “Libra”. A more general inquiry into its possibly anticompetitive behaviors within the EU in also underway.

Overall, it appears likely that these various probes are only the beginning, as all of the massive tech companies mentioned are already the target of governments and politicians, particularly in the US and Europe.

In a peculiar twist, both Republicans and Democrats in the US seem to agree on at least one thing, that these companies are too big and too powerful and should be investigated at minimum and potentially targeted in antitrust actions for illegal behaviors.

The Trump Administration, AOC, Elizabeth Warren, even Joe Biden have come out in favor of breaking up big tech at the hands of the government, after serious violations of antitrust law have been established.


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Amazon must pay 4 Million Euros in France for Unfair Practices: Verdict Could Pave Way for US Decisions

Most significant aspect is not the tiny fine, but the requirement that Amazon change it’s marketplace seller agreement on 7 of 11 practices that were deemed unfair

In a related development to our opinion piece published yesterday, the commercial court in Paris fined the giant US firm for clauses in it’s mandatory agreement for sellers that were found to be abusive and unfair.

In an exclusive story published (in French) by Next INpact the verdict was explained based on ongoing local coverage of the story.

In the article, which you can read in a google-generated translation provided below, it is noted that, similar to the US marketplace, in France approximately 60% of the income for Amazon’s online retail sales is generated by third-party sellers, using the Amazon Marketplace. Total sales are approximately 5 billion Euros per year.

Screen Shot of the Court Document (can be downloaded as PDF below

Of the 11 clauses that were scrutinized in the suit – 7 of them were deemed to be in violation of:

”Article L442-6 of the Commercial Code prohibits “to submit or attempt to subject a trading partner to obligations creating a significant imbalance in the rights and obligations of the parties”.

– Next Inpact reporting on the verdict in the commercial court of paris

Some examples of the offending clauses are summarized in the verdict, which will sound very familiar to US marketplace sellers:

“one of them allows Amazon to modify at any time, without notice, and in its absolute discretion the contract binding to sellers.

Result: either the seller resigns or he loses a significant share of turnover. A clause deemed “exorbitant of French law and contrary to all uses” concludes the decision.”

Nextinpact.com

“Another clause pinned, the one that allows Amazon to terminate a contract with immediate effect “for any reason and at any time by simple notification.

‘A contractual condition much too “general, discretionary and imprecise”, considers the court which notes the absence of notice and proportionality.”

“In the end, the court ruled that 7 of the 11 clauses pinned by Bercy were clearly unbalanced to the detriment of third-party sellers.“

nextinpact.com

With US anti-trust actions potentially moving forward at anytime, it is doubtful that this ruling, although representing little more than a “parking fine”, will be overlooked by prosecutors seeking to build a future case against the giant retailer.

As follows the full, rough, translation of the original article:

EXCLUSIVE.

The Paris Commercial Court sentenced Amazon to a fine of 4 million euros. The platform is also obliged to amend seven clauses under penalty. In question, the existence of a significant imbalance to the detriment of third-party sellers passing through this marketplace. Next INpact releases the judgment of 2 September 2019. In 2015 and 2016, the Directorate-General for Competition, Consumption and Fraud Control launched several surveys of marketplaces accessible in France. The goal? Gauge this sector and update any anti-competitive or restrictive practices.

Three companies stand out, all related to Amazon: Amazon Payments Europe, Amazon Service Europe and Amazon France Services, respectively APE, ASE and AFS. In December 2017, Bercy revealed his procedure initiated before the Commercial Court in July 2017. The administration recalled the ban on restrictive practices. Article L442-6 of the Commercial Code prohibits “to submit or attempt to subject a trading partner to obligations creating a significant imbalance in the rights and obligations of the parties”.

It claimed for this purpose in particular a civil fine of 9.5 million euros. The importance of this amount is easily explained. The company generates in France a turnover of over 5 billion annually.

And more than the majority of sales (60%) are made by third-party sellers, those using its marketplace. During its investigation, the DGCCRF identified several clauses that constitute a significant imbalance. They relate to contracts linking third party vendors with Amazon.

The jurisdiction of the French courts

Over the 49 pages, only APE, which deals with the part “payment”, could finally be put out of cause, not the other two companies. In this respect, Amazon France Service has been considered as a commercial partner of ASE, associated in the development of marketplaces.

ASE has also tried another circumvention: to oppose to the court the clause that attributes jurisdiction to the Luxembourg courts, while ensuring that two thirds of its sellers would be installed abroad.

The blow of the sword touched the water: the provisions in question being police laws, they are not subject to contractual conditions.

A significant imbalance

In the body of the decision, three points were sought: the existence of an economic bid, obviously unbalanced contract clauses and finally a possible rebalancing for the benefit of sellers in the benefits of using this platform.

The criterion of the tender was retained without difficulty, by the combination of several ingredients. Vendors face non-negotiable clauses. Amazon enjoys an economic power without equivalent.

The site is even essential for small third-party sellers, boosted by the network effect (or snowball).

“Amazon is obviously one of the” superstars “of the Internet, which this network phenomenon explains the exponential growth.

11 clauses were identified by the Minister of the Economy in his procedure.

For example, one of them allows Amazon to modify at any time, without notice, and in its absolute discretion the contract binding to sellers. It is up to the seller to look for this information published in the conditions of the site.

Unhappy, he can still terminate the contract, “but then without having had time to find a substitute,” said the court.

Result: either the seller resigns or he loses a significant share of turnover. A clause deemed “exorbitant of French law and contrary to all uses” concludes the decision.

Amazon was unsuccessful in arguing that trading with 170,000 vendors was impossible in an automated process. What the court told him was that “the automated system, precisely because it is, would work just as well with notice.”

With a certain malice, he also recalls that billions of transactions are made every day and that Amazon is in perfect ability to send them a letter on the order, and another on the state of delivery.

discretionary clauses

Another clause pinned, the one that allows Amazon to terminate a contract with immediate effect “for any reason and at any time by simple notification.”

A contractual condition much too “general, discretionary and imprecise”, considers the court which notes the absence of notice and proportionality.

Similarly, Amazon offers the possibility of imposing limits on salespeople based on “performance factors” without explaining their scope and the consequences of non-compliance with the evaluation criteria.

Still in the same vein, the platform is sanctioned for having the freedom to prohibit or restrict access to the site “at its sole discretion”. According to Amazon, the idea is to fight against the sale of dangerous products.

Only problem, the consular judges have not found this clarification in the contract. Same fate for the part that authorizes ASE to refund a customer even in case of non-return of the product of the third-party seller.

An imbalance not compensated by the benefits removed

In a logic of “balance”, the court then examined whether the imbalance of most pinned clauses was not offset by a series of benefits for sellers:

consumer confidence for Amazon, tools sharpened to facilitate management commercial operations, in addition to the storage of products.

The judges mainly recalled that these different benefits are not offered, but have as counterpart “the level of the various commissions paid to ASE by the third vendors”.

And these different benefits also benefit ASE for its own products and attract more and more third party sellers.

“On the other hand,” he says, “some of the shortcomings, especially those relating to business performance indicators, are such as to allow Amazon Service Europe to use a stipulation to, after testing a new product on a market. launched by a third-party seller, favoring the sale of his own to determine that of the third-party seller after aligning his price “.

7 censored clauses, 4 million euros fine

In the end, the court ruled that 7 of the 11 clauses pinned by Bercy were clearly unbalanced to the detriment of third-party sellers.

Amazon will have to modify them. 3 will remain intact, and one has been modified during the procedure. Amazon will have to modify them within 6 months, on pain of 10,000 euros per day.

Rather than the 9.5 million euros defended by Bercy, the court has finally revised down the fine to 4 million euros, especially given the good faith of Amazon, and different “positive steps” since the opening of the procedure.

Note however that the DGCCRF had requested the parameters of the algorithm used, from the United States, to highlight the products in the “Buy Box” Amazon … In vain.

The court finally refused the publication on the grounds that the press release of Bercy dated December 18, 2017 had been very widely (disseminated) and that this judgment should suffer a similar fate.

Download the judgment of the Commercial Court of Paris of September 2, 2019 news available until tomorrow. Posted on 03 September 2019 at 16:27 By Marc Rees


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Amazon Counterfeit Problems Go Deeper than Anyone Realizes: Observation

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Articles that Purport to Expose the Issues Assume Best Case Scenario:

This article will have a lot of links. Following them you can see the spate of articles recently published on Amazon’s problems with “marketplace” inventory. Even if you don’t look at the articles, the number of links shows that this is a situation that is being followed by the press.

But none of these articles even begin to hint at the deeper underlying problems. “Tip of the iceberg” would be putting it mildly.

The observations in this article are based on candid conversations with long time sellers on the Amazon Marketplace platform. As is typical, none of the sellers would agree to be named, for fear of retribution by the giant online retailer.

Reading titles of articles like “Amazon May Have a Counterfeit Problem”, the sellers we spoke with could only laugh at the equivocation and doubt. This, apparently, is not a “maybe” thing for those with intimate knowledge of the situation.

“The real situation is that Amazon’s fee structure and shipping requirements only allow for counterfeit, illegal import or “gray market” products (such as returns that are still “new” but not factory sealed) to be sold at a meaningful profit.”

– anonymous marketplace seller

There are plenty of lawsuits by well known manufacturers who claim there is a big problem with fakes selling on the Amazon platform. Daimler AG, the company that produces Mercedes-Benz products, filed a lawsuit in Washington State, and Birkenstock, the European shoe maker, has complained loudly and publicly about the situation, and ultimately pulled their Brand from the site altogether.

The problems go much deeper than this. According to the sellers we spoke to the issue is literally built into the entire inventory of more than 500 million products listed on the site.

One reason why this is not fully reported, or even spoken of, is the fear of retribution.

A second reason is the way Amazon uses a legal strategy of “having it both ways”; customers feel like they are always buying from Amazon itself when buying on the site, or at least that they are protected by Amazon. At the same time when bigger problems do arise, suddenly, the marketplace is a pseudo-public area which can not be directly linked back to Amazon and for which they claim to have no liability.

But it is the third reason that shields the mega-site, more than anything else, from bad publicity: the fact that, in order to understand the issues thoroughly, a deep investigation into its history and business practices is required.

Apparently, according to our extremely experienced sources, it all goes back to the time, before 2008, when Amazon was still primarily an online bookstore (For years, in fact, the site’s tagline was “Earths biggest bookstore”).

Ponzi Reinvented for the Digital Age: with the blessing of the US Gov.

The “business model” at that time was simple yet brutal; buy books directly from publishers at the full wholesale price and sell them for that same amount with “free” shipping (for prime members).

And in doing this they accomplished many things, all near and dear to their founder’s heart:

-Annihilate all book sellers, online or off, since selling at zero margin could only be done by losing billions, which, in-turn, only an online Wall Street financed “dot-com darling” could afford.

-Addict the suppliers (publishers) to the steady flow of sales, with the percentage from Amazon relentlessly rising until it is the only significant buyer.

-Preemptively destroy any online seller by putting the barrier to entry so high that it would be suicidal to even try to compete (see the diapers.com saga)

-Brain-wash the public into thinking that it was “normal” to be able to buy products at wholesale prices (with free shipping) and that there was nothing “fishy” about the fact that only Amazon could afford to do it (by losing billions, on paper).

An Offer they Couldn’t Refuse: Sell or Die

From a Businessweek / Bloomberg story about how Bezos forced Diapers.com, owned by Quidisi, out of business (buying them out after the strong-arm mafia-like practices outlined below):

“Quidsi could now taste its own blood. At one point, Quidsi executives took what they knew about shipping rates, factored in Procter & Gamble’s (PG) wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diaper category alone.

When Bezos’s lieutenants learned of WalMart’s counter-bid, they ratcheted up the pressure, telling the Quidsi founders that (Bezos) was such a furious competitor that he would drive diaper prices to zero if they sold to Bentonville.”

-report published in Businessweek and recounted in “The EVerything store”

All of this was a spectacular success, for Amazon, as can be attested to by the recently acquired “richest man-in-the-world” title. Amazon lost billions per quarter for decades and, and, yet, as the “last man standing” eventually turned that around into the creation of the world’s richest human. All stemming from virtual monopoly in online sales of ALL products in the US (over 50%, with the second largest online seller at 6.6%). Imagine even one other online retail company with more than 20% and it’s easy to see there is no “competition” for Amazon and no real alternative for buyers or sellers.

And what about sellers on the Amazon Marketplace? Did they benefit from the massive success of the platform (as they contributed more than 50% of revenue to the giant retailer)?

All the anecdotes of “some guy in Minnesota” who resells Walmart clearance items, aside, the only winners in that part of the story were and are …wait for it… counterfeiters, illegal importers and gray market sellers. Oh, and Chinese “no-brand” factories that sell on Amazon in the US.

Why?

It seems that, square in the bullseye of Amazon’s hit-list, in addition to anyone that sells anything who’s not on Amazon, is the very group that has kept the company afloat all these years: The millions of, mostly small, sellers on the marketplace all trying to eke out a living.

They have zero leverage and no where else to go to sell online (remember virtually all the customers are already locked into the Amazon platform due to the “bribery” of too-good-to-be-true prices and free shipping), therefore, they can be gouged with impossible fees.

The fee structure is, as you might expect, complicated, but fees are the highest of any online marketplace and never fall, only rise, which they do often, according to sellers. For items at lower price points deducted fees can be as much as 50%. The real costs are hidden in fees like “variable closing” and other made-up monikers to obfuscate the real reasoning behind the math. But in practical terms, selling a $8 item can cost up to $4 in added fees.

But, and this is the complicated bit, even that might work for a legitimate seller if not for the fact that, in many cases, the seller is competing against Amazon itself! And, as you have seen above, prices have no bottom limit as profit is not required for Amazon to “win”.

To wrap this mind-boggling concept up with a bow: if any company wants to realize even 1 cent of retail profit after fees, selling on the Amazon Marketplace, it must acquire the goods for roughly 70-90% below standard retail prices, and even that might not be sufficient.

Who can do that? Chinese no-brand factories shipping directly to the US with subsidized USPS shipping rates, counterfeiters, illegal importers and gray market sellers. Period.

A thorough investigation of the millions of sellers currently selling on Amazon would, without a doubt, say our sources, turn up not just a few bad apples, but a system that is virtually rotten to the core. Beyond even Elizabeth Warren’s wildest fears.


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In Understatement of the Century, Treasury Secretary Mnuchin says Amazon “destroyed the retail industry”

Teeth or not in Inquiry? Jawboning or action for Targeted Tech?…

Commenting on the antitrust review announced by the Justice Department on Tuesday, in an interview on CNBC, Mnuchin said that “it is good that the attorney general is going to look into this”.

Also saying that Amazon has “limited competition”, “hurt small businesses”, and that it was “absolutely right” for the Attorney General to look into “these issues”.

Read More: Is Jeff Bezos soon to be World’s First Trillionaire? No Chance in Hell. Here’s Why

On Tuesday, the Justice Department announced via press release that it would initiate a review to determine if major online platforms had “reduced competition, stifled innovation or otherwise harmed consumers”.

”The Department of Justice announced today that the Department’s Antitrust Division is reviewing whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”

Department of Justice Release from Tuesday, July 23, 2019

Interestingly, the idea of some kind of antitrust action against Amazon, Google or Facebook is one that is gaining traction among Republicans and Democrats alike. Senator Elizabeth Warren in particular has often spoken of the need for intervention.

Read More: A Bully with a “Nice” Promise is Still just a Bully: Big tech Behemoth Plays Coronavirus Card

Each of the “market-leading online platforms” have built-in defenses against traditional antitrust actions, which have traditionally looked for dominant companies where consumer prices were directly impacted by use of monopoly profits (such as in United States v. AT&T and later, v. Microsoft).

In the case of Facebook and Google, profits are hidden behind “free” products and services which allow the companies to claim that no harm comes to consumers as a result of their power. Naturally, the idea that the products and services come without cost is losing credibility in light of the many scandals and instances of harm, monetary or otherwise.

Kindergarten Colors and “Consumer Obsession” while Evil Lurks Beneath…

In the case of Amazon, it is even more complex, since, as a company famous for enormous losses rather than profit, all while using various loss leader strategies to prove that it is “consumer obsessed” and not a monopoly at all.

Indeed, Amazon’s response to the Justice Department’s press release was, through a spokesman, that Amazon accounts for “less than 4% of US retail sales” and that “small and medium-sized businesses are thriving with Amazon”. Not mentioned was the dominant 50% share of the online sales market.

By comparison the second largest online sales channel, eBay, for 2019 is estimated to reach 6.1%, while Walmart’s online platform has an approximate 4.6% share.

Rarely has the media been able (or willing) to unravel the deeply complex history of Amazon’s strategies – which can be traced all the way back to the incredibly favorable pricing of it’s stock during the dot.com bubble boom and it’s “stealth” transformation from “The World’s Largest Bookstore” into “The Everything Store” over a ten year period.

The closest definition for its business behavior is as a “monopsony”, which can be defined as holding a monopoly over suppliers or labor, not consumers.

And this is where the “hurt small businesses” comes in. Any small retailer wishing to survive, let alone make a profit, must have online sales in some form (ask Walmart if you doubt that online sales are a necessary requirement for a brick and mortar retail business in 2019) and the domination in that area – that is to say the control of the customers, by Amazon is so extreme that joining the Amazon Marketplace is the only option (other than trying to survive with 90% fewer online sales).

And the Marketplace is controlled with an iron fist by Amazon. For example, since around 2006 all communication between Amazon Marketplace sellers and their buyers is handled by an encrypted, anonymous messaging system designed to prevent sellers from obtaining any direct email addresses from buyers.

This amazingly elaborate system is a glaring indicator, hiding in plain sight, that Amazon views its “selling partners” as anything but.

Although third-party sellers accounted, for example, for 50% of paid units sold on Amazon in 2016, every customer was considered to belong 100% to Amazon and zero percent to the seller.

With fees that can total up to 50% (they use a complex exponential sliding scale which makes it impossible to quote any exact figure) the seller is doomed to have no brand value and no “good will” value as long as it agrees to cooperate on the platform. Not selling on Amazon, unless extremely well capitalized (such as a start-up with hundreds of millions of dollars), is a death sentence.

Naturally, the waters remain muddy, since examples of the precise opposite can be pointed to – if you are a manufacturer and your products are extremely cheap (you are probably in China) and you like to offer your margin to Jeff Bezos as “his opportunity” and, particularly if your products will harm an Amazon competitor that refuses to sell on Amazon, the red carpet will be laid at your feet.

3 Brands Take Over Earth, Almost No-one Notices

It’s odd, as an observer, to note that there is not a single “brand success story” that can be pointed to as having built their brand through the Amazon third-party Marketplace. Could this be more than a coincidence?

”What I am glad we never did and that we’ve avoided so far is being on Amazon”

Jen Rubio, co-founder and chief brand officer of Away

Take, for example, Away Luggage, who went from being a “direct to consumer” start-up founded in 2015 to recently reaching a valuation of over one billion dollars and who made it a point NEVER to sell on Amazon;

She added that a “deal breaker” was that Amazon does not share customer data with vendors.

”Just sticking to our guns and not going on the [Amazon] platform was important for us”

Jen Rubio, Away

In our own recent interview with a long time Amazon Marketplace seller, who insisted on not being named, “or my children’s lives would be in danger”, he stated that many more behaviors towards seller “partners” are anything but collegial.

One of many examples is the “co-mingling” policy. As with much of what goes on behind the scenes at Amazon, this is an opaque, complex concept where all products that reside in any Amazon warehouse (supplied by various sellers participating in the “Fulfillment by Amazon” program) are considered to be “co-mingled” once they arrive.

When an item is purchased from a particular seller any item from any supplier is “picked” and shipped to the buyer. If that item is somehow inferior or even counterfeit, the seller whose name is on the order is automatically blamed although there is no way to trace the item’s true origin.

Our anonymous interviewee stated that, in one case, he was put out of business and even sued as having sold a counterfeit item, even though all his inventory was purchased from the original authorized manufacturer, and he could prove it.

Why didn’t he fight the false and obviously bogus accusation? $50,000 to $100,000 in Legal fees and no chance of any remedy other than, perhaps, re-instatement with no guarantee that the same thing wouldn’t happen again 2 days later.

One could get the impression, surveying the various accounts from sellers, across many walks of life, that Amazon’s perspective is not only that it is unimportant what happens to a particular seller that runs into problems on its platform, but that the demise of any seller is a “win” and that harm to any seller is harm to a competitor, even if that entity is technically a “Marketplace Partner”.

If true, this is as disturbing as any “consumer harm” effected through higher prices, as the sellers, who are also consumers let’s not forget, are just as trapped in the platform’s private “hell” as any consumer who is forced to pay higher prices as a result of monopolistic behavior.

Stories like the one above are “out-there” by the thousands but, strangely, hard to find online. A search on Google (oh yes, one of the other companies being scrutinized by the Justice Department) for “Amazon harms sellers” would often, in the recent past, bring up nothing but links to Amazon itself and how it is harmed by “counterfeit sellers” as if all the problems on the platform are created by the “other guy”.

Interestingly, even that is beginning to change, and there are more and more articles by reputable outlets such as Forbes , The Verge and INC who are daring to take information publicly gathered, as in our case, often from anonymous sources fearing retribution, and report on it without fearing similar retribution to its own organization. It seems likely more such stories will be published in the coming days and months. And perhaps, as they say, one day, the chickens will come home to roost.


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