When the price is too good to be true, it likely is. A few years ago, GoPro has a serious problem, unknown sellers were offering stolen GoPros on Amazon.com at a discount.
It wasn’t the volume of stolen GoPros that was the problem, the percentage of sales was low. The discounted pricing created a domino effect as competitors tried to match the low price. First, Amazon cut its price to compete, next came Best Buy and Walmart. According to sources interviewed at The Information, the thefts undermined GoPro’s pricing strategy.
What isn’t clear is if the stolen goods intentionally railroaded GoPro or if the sellers were just trying to make a quick buck.
Amazon is widely considered to be a trusted website dealing with legitimate stores. I would expect sites like eBay or Craigslist to have stolen goods, anyone can sell there, that’s the premise of the platforms.
The problem isn’t that Amazon is selling stolen goods, though that is a problem, it’s that they are in a unique position to affect prices. Shoppers can easily click on the lowest price of any good, forcing competitors to react.
There is no public data on how often stolen goods are sold on Amazon, but GoPros problem isn’t isolated. August Home makes smart door locks and Sonos has a range of wireless speakers, according to The Information, both have run into similar issues.
They claim that Amazon wasn’t helpful when they raised concerns about stolen goods, even though the platform has strict policies against it.
GoPro went to extreme lengths to stabilize their pricing, hiring a tough ex-Marine to track sellers offering GoPros at unauthorized discount pricing. Sometimes legitimate stores tried to violate their GoPro contracts other times warehouse workers running a scam. More often than not it took a phone call to resolve the problem but the real problem remained these unknown sellers.
Anyone can open a shop on Amazon and they offer warehouse storage to fulfill your order faster. To consumers, buying a product from an outside seller is indistinguishable from buying from Amazon. We can even ship the product back to Amazon, no need to deal with the original seller.
GoPro ended up buying cameras to track serial numbers, staked out warehouses and shipping ports, and there was even a rumor they took on an organized crime ring.
What is interesting is that if Amazon provided the serial numbers of products, brands would be able to track stolen or counterfeit goods. In 2016, Amazon did a trail with InComm Product Control, an inventory tracking service which would have provided them with a way to shut down the sale of counterfeit and stolen goods. But Amazon decided not to use it.
Not everyone is convinced stolen goods on Amazon are a big problem. Grey market has been manufactured by or with the consent of the brand but is sold outside of the brand’s approved distribution channels. They are 100% legal and capitalism dictates that if you can sell a product at a lower price, you should. That’s a pretty accurate definition of the game.
In the US half of all online shopping, searches start on Amazon and with the government subsidies for their warehouses and distribution centers they show no signs of slowing. As more and more Germans begin to accept online shopping as an accepted practice we need to pay more attention to the impact they have on competition. The shopping dynamic is being reshaped upsetting the supply chain exerting tremendous pressure on pricing and margins.
We should be wary about giving over so much power to a company who technically doesn’t need to make a profit. Their business model is different than those that have to build goods to sell on their platform.
It’s clear that Amazon’s dominance is encouraging a new wave of different and more interesting retail models to counter-act the homogenization of retail we are in the midst of.
However, if history has taught us anything, in a race to the bottom, there are no clear winners.
Source: The Information