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