Today the Federal Reserve Chairman Ben Bernanke sounded more like a philosopher discussing, in a speech, the complicated nature of the ‘balance’ between two extreme fixes and philosophies in the credit markets. Perhaps he sounded less dogmatic than economists of the past, Greenspan and his philosophical side-kick Ayn Rand, for example. It is hard to remember.
Until recently I have always been a staunch proponent of free enterprise, laissez-faire capitalism and Atlas Shrugged. But that’s coming to an end. As an internet entrepreneur and someone who helped launch online retail way back in the days before online shopping carts and fraud protection, I have lived a life filled with the new technology, the new consumerism. My websites were some of the biggest and most active, embedded for example in Ebay.com where I still have over fifteen thousand feedbacks.
Ebay, with its current stock troubles and ambiguous new ‘auction listing’ philosophy, is not what bothers me. What really has me rethinking both government intervention (pro) and a deeper question about human nature, is Amazon.com and its myriad of embedded website departments and regulations and tactics.
I started with Seller Central, Amazon’s ‘innovative’ embedded (and shared) database program for partner sellers three years ago, give or take. Amazon came along with the big and diverse programs much more recently than Ebay, in or around 2005. Seller Central is a massive shared database that is ‘filled in’ and defined by the participating sellers, a blank database that should contain every real product SKU. It is manipulated by the independent sellers who fill out product details, pictures and item titles for availability to Amazon’s retail customers. It sounded like a good idea even though the 15% participation price tag (on average) seemed awfully high. Look at it this way. If a seller sold only $10,000 gross sales on Seller Central, Amazon took $1500 of it in participatory sales. This was taken up front before they paid the seller back for fulfilling the transactions. This is how it began.
From hidden fees to ambiguous and unorganized platform structures, my company seemed to become the proverbial starfish along for the high-priced ride into the evolution of the online marketing fantasy world.
Let me set it up for you. Amazon attracts the customers, processes the order with their merchant system, and then sends the orders to us. This order comes with an entire program of rules that are intended to maintain Amazon’s level of customer satisfaction. The orders have to be shipped within a short window and the buyer’s satisfaction is guaranteed by a program called A-Z. The problems began early and they fell into specific categories: problems with the Amazon database structure and problems with customer service/order processing. The first of the two problems was obvious. The orders fell under the strict guidelines of the Amazon programs but the database fell under the guidelines of the Wild, Wild West. Sellers were mis-posting pictures, mis-typing text and, most infamously, inserting spam taglines into the product titles advertising their website name. Amazon seemed to do nothing to fix this. There was a particular product title on a page that we needed, that was unchangeable and that read: We give you 5% off at blank blank .com and followed by the musical cleft symbol three times. Primary to this problem was the fact that Amazon not only made you use only this database, but they usually locked you out of it for editing unless it was an unused, unclaimed item. This meant that if you wanted to list your product, you had to basically borrow the page from their universal database, complete with all of its errors. You could do nothing to edit it unless you became the owner of the product page. The way to become the owner was never really spelled out and had something vaguely to do with being the highest performing seller on that item and in having the best customer satisfaction ratings. In addition, sellers found that they were unable to manipulate abandoned items ñ product pages that had no owners or other sellers. This of course started the customer service nightmare that became the individual seller’s responsibility and downfall.
The other problem area, order processing and, thus, back end customer service, was rife with Seller Central glitches. Orders would come into the seller’s boxes (to be shipped) that, for example, weren’t even processed or paid or that were already five days late. This would generate more service problems and would, of course, result in customer complaints, which would lower the seller’s performance rating.
While I struggled with these problems it was nonetheless true that Amazon was driving customers. In terms of orders generated, Amazon out-paced Ebay three to one with similar effort on our part. Because of this I trudged ahead even though we started to notice remarkable discrepancies in our Amazon payment reports. This was, as one might imagine, the most precarious of the early disasters. It turned out, among other accounting vagaries, that Amazon was assessing the 15% fee not only to our product sales, but to each individual shipping and handling charge. This amounted to hundreds of more dollars in vanishing revenues per month. We contacted technical support on numerous occasions and were never really convinced that anyone (though every single customer agent through email had the surname, Singh) provided any kind of consistent or helpful knowledge about this issue. We were told once that we could appeal this process and get full payment for the shipping and handling charges because shipping was entirely at the seller’s expense as the fulfillment agent. Another time they denied this and told us it was an antiquated policy that would nevertheless always be part of the system to which we had agreed.
It was then that we realized the Amazon A-Z system had been returning customers’ payments because of the problems associated with order processing and shipping. If an order came in to us late from Amazon, and we shipped it to the best of our ability, it could still potentially arrive past the standard shipping time-frame. In this case the customer could file an A-Z claim and Amazon would initiate a process that including notifying us and then refunding from our outstanding balance, including all shipping and handling charges. There were cases when we didn’t even know this process had occurred and it was our contention that some customers, being savvy, had even used the system to their benefit. Again Singh would answer us and fail to address our initial questions, with a pre-formatted email that may as well have been about toaster operations. There were cases in which we documented the delivery of the item and the satisfaction of the customer in every other area, and Amazon would still take the money out and give it back to the customer through the A-Z system. In one case the customer had merely initiated the A-Z claim early because he hadn’t understood the delivery schedule and, though the delivery was tracked and received a couple of days late, Amazon refunded the money anyway.
Amazon databases and policies created an environment in which the sellers were incapable of mollifying an already disgruntled retail consumer base (and a tough one that demanded miracles that were impossible in the new internet environment ñ problems not inherent in brick-and-mortar stores). Amazon made us create the databases, forced us to live with the consequences, and then punished us in subtle ways through the accounting.
I take some blame for all this, however. As these subtle practices became apparent I should have dumped Amazon despite their market share. Ebay continued to lose market share and auction sites like Yahoo Auctions were already crumbling or going under. Despite the need for that kind of marketing assistance (because that’s what it was) I should have realized the consistent nature of these flaws and pulled out. But I did not.
More recently, in the last year of this relationship (in total three years) we responded to Amazon’s multiple sales pitches to start our own embedded and branded website. This URL had to use Amazon as the host and merchant processor. The fees were reduced and Amazon offered no real marketing as a result. And this sounded great. It worked upon set-up for about three months until we realized the product placement program. Upon closer inspection I learned that Amazon was placing their products unchecked through the software onto the individual sites. Other companies’ related products (and unrelated), including Amazon’s own popular products, were being listed in our product pages. I went nuts over this because I realized that the numbers generated by our site were not resulting on our own revenues, but the revenues of the sellers who actually sold the item on our site. I tried to stop this with what I thought was at least a straightforward option to turn off product placement. Yes, it was possible to turn it off. But what I found shocked me again. There was no way to turn off the product placements without losing access to the shared database that was the primary tool for building your product lists. We had transferred our product lists from Seller Central in a seamless transition and had thought this would give us autonomy over the site. The dark secrets of the new database structure were starting to come out. I was told that if I turned it off, I would lose all the data associated with the database and my product pages would be utterly blank. I could recreate all three thousand of my products in order to avoid this amazingly disorganized placement strategy.
Why was it unorganized? Simple. When a customer created a multiple item order on an Amazon Seller Store (independent store) they could potentially buy the products from multiple sellers. The buyer was then charged separate shipping and handling charges for each item on his order and each order was then sent for fulfillment to each individual seller. What was the result? A customer so mad that even AIG scandals could provoke nothing close to that kind of ire. It is true that the customer should have seen the huge shipping charge at the bottom of his invoice, but this isn’t what today’s consumer does. He/she wants what he/she wants, and quickly. The stores became the recipients of this customer service nightmare again.
I called technical support three or four times and no Singh even knew what I was talking about. Hypothetically, one actually said that it seemed like a potential customer service disaster. Amazon now admits to this practice and says that it’s part of the experience. The customer need to see the bottom line, literally, and needs to cancel the order if the multiple shipping and handling charges seem excessive.
And that is true.
Nothing that I have experienced with Amazon is, or probably should be made illegal in a functioning economy. It is all part of a business philosophy that, if you research, has earned Amazon quite a reputation. An internet search of lawsuits filed against or concerning the media giant include:
Toys R’ Us,
Wal-Mart (yes, Wal-Mart),
BookLocker (owner of WritersWeekly.com),
Discovery Communications, and
Amazon sued the State of New York last year and lost.
Recently my company was banned from Amazon. Suspended. The reasons, of course, had to do with a computer evaluation of a series of feedbacks left by recent disgruntled customers.
Like any business we have inventory and manufacturer problems that create a small amount of negative feedback, but the majority of the service problems experienced by our customers were a result of Amazon’s lack of accountability for and dysfunctional set-up of the databases. The giant work-loss that we suffered while building Amazon’s shared database and surmounting their obstacles is a direct result of the system’s inefficiencies and our subsequent termination. There was, in addition, a huge problem for customers who didn’t know who to blame for ordering problems resulting from every aspect, from merchant processing to returns.
Jim Sala, author of The Atheist and two short story collections, has a BA in English with a minor in Business. He has an MFA in writing from Texas State. He has been an internet entrepreneur for fifteen years with an emphasis in innovative distribution. His publishing credits include literary novels, shorts and non-fiction books. Jim also hosts PhilosophyLive, a Web TV education program. He taught Philosophy at Texas State for 7 years and hosted many of the philosophy dialogues at the University. His philosophy emphases were Nietzsche and Rand. Jim lives in Austin and welcomes article comments and queries at the show email, PhilosophyLive-at-gmail.com.
MORE COMPLAINTS FROM AMAZON SELLERS
Seller reports store disabled, but Amazon still deducted fees from his bank account
Seller reports account was suspended and Amazon held $5380.00 of their money
“Amazon’s “A-Z Guarantee” provides no protection to sellers, and in essence means that any unethical person with a credit card can get anything they want for free!”
Sellers Report Amazon Glitch Re-Prices Inventory
“Seller Central: Unfair treatment”