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The Information exclusively reports that Amazon's assignment of product "badges" on its site, labeling items as coming from small businesses or Black-owned businesses, sometimes are inaccurate.

Here's how The Information frames the story:

"What do a bottle of shampoo made by Johnson & Johnson, a lamp from a Chinese seller and an Arc’Teryx jacket all have in common? Amazon has labeled them all as coming from American small businesses.

"Amazon began adding a 'Small Business' badge to items on its U.S. site about a year ago, pitching it as an effort to “help customers who want to support small businesses while also enjoying the convenience and security of shopping in Amazon’s store.” But the tag has lately popped up on items sold by large companies and overseas merchants. In addition, Amazon has categorized some products as coming from Black-owned small businesses that actually come from companies that are neither small nor Black-owned.

"Amazon’s rollout of the Small Business badges coincided with an effort to enlist sellers in its battle against proposed antitrust legislation in the U.S. The company is arguing that regulating its marketplace would kill American small businesses. The rollout also came amid mounting pressure from e-commerce rivals, chief among them Shopify, that painted themselves as more merchant friendly.

"Amazon says only products from U.S.-based small businesses that employ fewer than 100 people and take in less than $50 million in annual revenue are eligible for the Small Business badge. But a cursory look by The Information shows that Amazon has bestowed the badge on items from multinational corporations with thousands of employees, as well as items sold by overseas merchants."

You can read the entire story here.

The story notes that "Amazon says only products from U.S.-based small businesses that employ fewer than 100 people and take in less than $50 million in annual revenue are eligible for the Small Business badge."

KC's View:

To some extent, the degree to which this will look bad for Amazon will depend on whether these are random mistakes, or the result of negligence tied to Amazon's focus on optics rather than reality.

The Information makes the point that when it reached out to Amazon with specific examples, the badges were removed from the items that it cited.  But the badges remained on items that it did not identify for Amazon and that did not qualify for them.

“We are committed to ensuring that the badge is a helpful shopping tool for customers to discover small business brand owners, and we are continuously auditing and refining the information used to award the badge to ensure a trustworthy and accurate experience,” an Amazon spokesperson tells The Information. “If the badge is awarded in error, we move quickly to make appropriate updates.”

Here's the thing.  These badges aren't just being used to aid sellers that can benefit from being identified in this way.  They also are a tool for customers who choose to spend their money with specific kinds of businesses.

We have focused here a lot in recent months about the perception - much of it fed by new leadership - that Amazon is focused on priorities other than customer satisfaction and the shopper experience.  This may be another example of of what we've been talking about.

Over the years, I have often quoted a Latin proverb:

Trust, like the soul, never returns once it goes.

This is something about which Amazon may have to back to school, and something to which all its competitors need to pay attention.