The Web Retailer News Digest for January 29th, 2021

Above: Inside Walmart’s Alphabot fulfillment center system.

A short post on Amazon’s corporate blog this week talked about how the company detects and removes offensive products listed for sale on the marketplace.

It offered some impressive stats, such as how Amazon reviewed 10,000 product listings every day in 2020, and removed over two million products for violating their Offensive and Controversial Materials policies.

We can draw some important conclusions from this brief glimpse into how Amazon polices their marketplace. They are the complete opposite of the picture Amazon wants us to see.

Gimme context

One estimate of the number of different products for sale on the Amazon marketplace is 340 million. Amazon’s post points out that they offer “hundreds of millions of products”, so this figure is at least in the right ballpark. To put it in perspective, 340 million is more than the entire population of the US. Every citizen could be given a unique product from Amazon and there would still be ten million plus to spare.

Amazon says that they review 10,000 product listings each day, to see if they are offensive. That’s 3.65 million products in a year or, to put it another way, approximately 1% of all the products being offered. So 10,000 per day is only a tiny fraction of the products listed for sale.

Amazon says that they removed two million products from the site in 2020, and 75% of those were taken down by automated tools. That means half a million offensive products were left on the site to be found by staff, customers and anyone else with the motivation and time to report them. In other words, half a million products that promoted hatred, violence or intolerance were allowed onto the site.

Finally, Amazon boasts that staff spent more than 5,000 hours over the course of the year, manually “walking the store” to check that products complied with their policies. The number of working hours in a year is around 2,000, so that’s two or three Amazon staff spending their time browsing the site looking for transgressions among 340 million product listings. To review every product just once over the course of a year, this team would need to look at around 20 listings per second.

Walking the everything store

“Walking the store” seems like a great analogy. But doing this at Amazon is like the owner of a shopping mall, one the size of a country, squinting through binoculars from a mile away to try and work out if any of the units being rented are selling anything that they shouldn’t.

Amazon’s post was about offensive products, which are not very relevant to most Amazon sellers. But Amazon’s policies on product authenticity and safety certainly are. Many sellers have been taken down by bogus reports of inauthentic products being sold, or by review comments with keywords that were interpreted by Amazon’s algorithms to be product safety complaints.

Robot kicking man out
An Amazon seller being thrown off the marketplace by an algorithm…

What Amazon’s post has put into focus is their overall philosophy on managing the product catalog. Sellers are free to list products with minimal checking upfront, so algorithms are relied upon to detect many issues and remove listings automatically. Then customers (and rights holders etc.) can report issues when they find them. Amazon also reacts to bad publicity in the press or social media, as confirmed in their post, and staff perform a relatively tiny manual spot-check.

This laissez-faire approach, letting sellers flood the marketplace and then picking off just the worst offenders, or those unlucky enough to get “caught”, was always going to lead to the chaotic Amazon marketplace that we have today.

Amazon announcements

Amazon is to launch a full localized website in Poland. This will be Amazon’s first move into Eastern Europe, and its seventh European website overall. Currently, the leading ecommerce website in Poland is the hugely popular Allegro, which has enjoyed an Amazon-like 36% share of the market. Although Amazon has not had a local ecommerce presence in Poland, it already has ten fulfillment centers in the country. As a result, key programs like Prime should be much quicker to launch there than in challenging markets like Australia.

An Amazon policy update has confirmed that drop shipping orders to customers from retail sites, commonly known as online arbitrage, is not allowed. The new policy states that the seller (and only the seller) should be identified as such on all packing slips, invoices and packaging. As arbitrage relies on shipping from ordinary retailers, with no knowledge or prior agreement to use them that way, sellers will find it impossible to meet this requirement. The practice is also banned on eBay, but many sellers are undeterred.

In the UK, Amazon is tightening the screws on sellers shipping their own orders under the Seller Fulfilled Prime (SFP) program. From the end of June, SFP sellers will need to ship orders at the weekend and have an order cut-off time for same-day dispatch of 4pm or later. For sellers, Seller Fulfilled Prime has been a popular program, allowing them to offer products with the Prime badge but without having to use FBA. Many have complained that the new rules will make it impossible for them to continue with SFP.

Amazon has made some minor fee reductions in Europe, including reducing the customer returns processing fee, and continuing the referral fee promotion for Clothing, Shoes and Bags. Tamebay pointed out that the doubling of the closing fee in the Books category, announced in July 2020, has still taken effect this week as planned.

A new FBA shipment creation tool with the unimaginative name of Send to Amazon is in beta testing, says SellerEngine. The system allows sellers to create reusable packing templates which provide box content information, weight and dimensions, and prep and labeling details for SKUs, so they do not have to be re-entered for each shipment.

Finally, Amazon is expanding its FBA New Selection program, which aims to get new products into FBA by offering free storage, free removals, and free returns processing for a limited time. The scheme will now allow oversize items and offer promotional credits for sponsored ads. The limit of 500 ASINs will be removed, and free storage for apparel and shoes will be increased to 120 days.

Amazon in the news

A new book by technology consultant and academic Robin Gaster, reviewed in DC360, estimates Amazon’s revenue for each of its main business units. The results show Amazon first-party retail making a huge loss of $32 billion, adding weight to the argument that Amazon uses predatory pricing to drive out competitors.

Here is DC360’s chart:

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Amazon Prime now has 142 million members in the US, according to research reported by MarketWatch. The peak season in the fourth quarter of 2020 was unusual, as more shoppers opted for annual Prime membership instead of taking a monthly subscription just for the festive period.

Marketplace Pulse has an insightful article on the decline of reselling – conventional retailing – on the Amazon marketplace. The percentage of top Amazon sellers with a retail model (indicated by more than 1,000 products being offered) has fallen from nearly 40% in 2016 to only 10% in 2021. “Selling on Amazon has become synonymous with building private label brands because the reseller business model stopped working.” writes Marketplace Pulse Founder and CEO Juozas Kaziukėnas.

Display advertisers on Amazon using DSP will now be able to target shoppers who have demonstrated environmentally friendly behaviors, such as buying products with the Climate Pledge Friendly badge, across categories including food, beauty, clothing, consumer electronics and home. DSP is Amazon’s platform for advertising across Amazon websites and devices, for traditional display ad buyers. It is not generally used by Amazon sellers, but the ads can appear on sellers’ listings.

Finally, Brexit-related delivery problems continue as Amazon temporarily suspends small parcel deliveries between the UK and EU under the Amazon Partnered Carrier Program.

eBay news

eBay has put out an annual list of the most expensive items bought in 2020. Items featured include:

  • A $350,000 Lamborghini Countach
  • A $20,000 pair of Air Jordan sneakers
  • A $30,000 X-Men comic book

eBay has announced some minor fee reductions in the Business & Industrial category. Sellers need to be enrolled in Managed Payments to get a couple of percentage points shaved off their final value fees.

Less understandable than the Brexit-related shipping problems are the delays in shipping parcels between the US and Canada, announced by eBay.

Walmart news

Walmart is turning “dozens” of stores into fulfillment centers, and working with multiple robotic fulfillment technology providers to test different systems, reports CNBC. The developments are tailored to the fulfillment of online grocery orders, which have rocketed during the pandemic. However, they also demonstrate that Walmart recognizes the importance of investment into ecommerce fulfillment systems – an area where they have lagged far behind Amazon.

Here’s a video from Alert Innovation, one of Walmart’s suppliers, showing their Alphabot system which compacts a whole fulfillment center into a dense structure inhabited by small wheeled robots, and largely inaccessible to humans. It looks a lot like an elongated Borg cube, but even more terrifying.

In case a tie-up with the Borg isn’t enough to show how focused Walmart is on building its fulfillment capacity, local government documents have revealed the company’s plan to build two giant ecommerce distribution centers near Dallas. The new facilities will cover a total of 1.9 million square feet.

Other marketplaces

Alibaba-owned Tmall Global is enhancing the support it provides to brands and retailers from outside China. A new registration system guarantees onboarding within 30 days, while operations and content support are promised to help sellers succeed on the marketplace. Tmall Global helps foreign brands sell their products on the Tmall marketplace, with no requirement to have a company or bank account registered in China.

Etsy has updated its listing categories, adding four new categories for face mask accessories along with new categories for shelving and barware. The face mask accessories include ear savers, lanyards, cord locks, charms and tags. Just when you thought the pandemic couldn’t get any weirder, you can now buy a crocheted ear loop extender with a ponytail hole, in a choice of six lengths and 15 colors. Etsy has enjoyed a renaissance during the Covid-19 pandemic, driven by home-made face masks.

Secondhand fashion marketplaces The RealReal and Tradesy are in the news this week. The RealReal has opened a physical store in Brooklyn, while Tradesy CEO Tracy DiNunzio has given a short interview with Modern Retail about the company and used fashion in general.

UK marketplace OnBuy has announced annual year-on-year growth of 800% and seven million monthly users. The company, modeled as a British anti-Amazon, is launching a new round of funding and plans over 140 dedicated country websites.

Another UK marketplace, Notonthehighstreet, is in talks to be acquired by US private equity firm Great Hill Partners, reports Sky News. Notonthehighstreet mainly sells gifts, often handmade by small UK-based businesses. The marketplace has also released a new report this week, covering the main trends in the products being sold there.

Webinars in the week ahead

Amazon and eBay will be announcing their Q4 2020 financial results in webcasts next week with Amazon first on Tuesday, February 2nd, followed by eBay on February 3rd.

Stripe is hosting a webinar on February 3rd with speakers including the Wish marketplace’s Product Management team leader. The “Resilience in Retail” webinar also features research findings from a survey of hundreds of online retailers around the world.

In the UK, The Delivery Conference 2021 goes virtual on February 2nd and 3rd, and the Department for International Trade (DIT) hosts a webinar about selling on New Zealand’s Trade Me marketplace on February 3rd, with a “masterclass” on selling overseas the next day.

Amazon advertising’s webinar program continues as ever with 22 webinars in six languages, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips.

And finally

Elon Musk bought a hat for his dog on Etsy. This seemingly banal (and slightly odd) purchase led to the stock market having a fit, after Musk tweeted about it on Tuesday.

In his first tweet, Musk declared “I kinda love Etsy”, then explained a few minutes later that he had “Bought a hand knit wool Marvin the Martian helm for my dog”. Etsy stock promptly gained 9% and the company told Musk “we love you to Mars and back”. Pictures of the dog hat that raised Etsy’s value by over two billion dollars soon followed.

But that was not the Tesla chief’s only foray into ecommerce this week. A spat between Musk’s SpaceX and Jeff Bezos’s Kuiper Systems over satellite altitudes led to a public response from Amazon that accused SpaceX of trying to “smother competition in the cradle”.

Did Amazon feel a twinge of hypocrisy when accusing a rival of attempting to drown out competitors? Or is the transformation of Bezos and Musk into warring Bond villains, fighting for control of outer space, too much of a distraction? Mwah-ha-ha-ha.

Jeff Bezos as Dr Evil in The Economist


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