retail news in context, analysis with attitude

The Los Angeles Times has an interesting piece about a "hustle" that violates the rules of Amazon's third-party Marketplace, but about which very little seems can be done.

An excerpt:

"Mitchell Owens recently discovered that mysterious entities were selling bulk orders of Dum Dums lollipops on Amazon for a couple of bucks less than the price charged by his company. Owens, who runs e-commerce operations for Spangler Candy Co., was concerned the sweets could be potentially dangerous counterfeits.

"So he placed an order from one of the Amazon merchants. A few days later a 500-pack of lollipops arrived on his doorstep. They weren’t counterfeit and — strangely — had been shipped directly from Walmart Inc.’s Sam’s Club.

"Owens had stumbled upon a price arbitrage scheme on Amazon.com Inc.’s imperfectly policed online marketplace.

"The hustle works like this: Sellers, often guided by how-to tutorials on YouTube, TikTok and Instagram, scour the internet for products with lower prices than on Amazon. Then they post the items on the website, wait for someone to place an order, purchase the product from another retailer, have it shipped directly to the customer and pocket the difference … They never actually touch the merchandise, a practice known as drop-shipping. The scheme is a violation of Amazon’s policy, which prohibits merchants from shipping products from other retailers, but the perpetrators are betting that they’ll elude detection amid the clutter of the company’s vast web store.

"With Dum Dums, the sellers are leveraging a yawning price gap between Sam’s Club, which rewards its members by selling a deeply discounted 500-pack for about $15, and Amazon, where Spangler sells its exclusive 400-pack for about $26. Sellers can charge $25 on Amazon to lure price-conscious shoppers and pocket about $6 after subtracting Amazon fees."

The story notes that "in the last six months, the number of merchants selling Dum Dums on Amazon has proliferated so quickly that Spangler can’t keep track of them. Owens believes that a concurrence of forces — the work-from-home trend, rising prices and online tutorials — has prompted more people to seek side hustles."

You can read the story here:

KC's View:

This is kind of crazy … and it certainly explains why, on occasion, we've ordered something from Amazon and it has arrived in a box from some other retailer.

I'd like to think that Amazon could better police this issue and enforce its rules, but maybe it is just one of those things that is impossible to regulate to any significant degree, short of shutting down the marketplace.