Amazon Has Ceded Control of Its Site. The Result: Thousands of Banned, Unsafe or Mislabeled Products

From The Wall Street Journal:

Many of the millions of people who shop on Amazon.com see it as if it were an American big-box store, a retailer with goods deemed safe enough for customers.

In practice, Amazon has increasingly evolved like a flea market. It exercises limited oversight over items listed by millions of third-party sellers, many of them anonymous, many in China, some offering scant information.

A Wall Street Journal investigation found 4,152 items for sale on Amazon.com Inc. ’s site that have been declared unsafe by federal agencies, are deceptively labeled or are banned by federal regulators—items that big-box retailers’ policies would bar from their shelves. Among those items, at least 2,000 listings for toys and medications lacked warnings about health risks to children.

The Journal identified at least 157 items for sale that Amazon had said it banned, including sleeping mats the Food and Drug Administration warns can suffocate infants. The Journal commissioned tests of 10 children’s products it bought on Amazon, many promoted as “Amazon’s Choice.” Four failed tests based on federal safety standards, according to the testing company, including one with lead levels that exceeded federal limits.

Of the 4,152 products the Journal identified, 46% were listed as shipping from Amazon warehouses.

After the Journal brought the listings to Amazon’s attention, 57% of the 4,152 listings had their wording altered or were taken down. Amazon said that it reviewed and addressed the listings the Journal provided and that company policies require all products to comply with laws and regulations.

“Safety is a top priority at Amazon,” says a spokeswoman. Amazon uses automated tools that scan hundreds of millions of items every few minutes to screen would-be sellers and block suspicious ones from registering and listing items, using the tools to block three billion items in 2018, she says.

“When a concern arises,” she says, “we move quickly to protect customers and work directly with sellers, brands, and government agencies.”

Amazon declined to make executives available for interviews.

. . . .

“There are bad actors that attempt to evade our systems,” Amazon said of products in violation of its policies that appear on the site, adding that “should one ever slip through, we work quickly to take action on the seller and protect customers.”

. . . .

Amazon’s struggle to police its site adds to the mounting evidence that America’s tech giants have lost control of their massive platforms—or decline to control them. This is emerging as among the companies’ biggest challenges.

. . . .

Some lawmakers have begun calling for more regulation of the companies. Courts have begun challenging the firms’ interpretation of their legal protections, and regulators are scrutinizing them. Tech companies say they aren’t illegal monopolies and have generally pledged to address issues such as misinformation and privacy.

Amazon’s common legal defense in safety disputes over third-party sales is that it is not the seller and so can’t be responsible under state statutes that let consumers sue retailers. Amazon also says that, as a provider of an online forum, it is protected by the law—Section 230 of the Communications Decency Act of 1996—that shields internet platforms from liability for what others post there.

. . . .

Last month, the U.S. Court of Appeals for the Third Circuit held that a Pennsylvania customer could sue Amazon over an allegedly unsafe product. The court said Amazon could be considered a seller under Pennsylvania law, in part because the company had no vetting process to ensure that third-party sellers were accessible and available for consumers to sue if they were harmed by an item, leaving consumers with no recourse in many cases. The court also held Amazon had considerable control over third-party sellers and could prevent sales of unsafe items. Amazon has asked the appeals court to review the decision.

. . . .

Last year, the Environmental Protection Agency fined Amazon for letting people sell unregistered pesticides. Amazon agreed, without admitting wrongdoing, to pay a fine and set up new systems to stop such sales. Earlier this year, Washington state’s attorney general and Amazon filed a settlement in state court over state allegations that the company allowed school products on the platform that contained lead and cadmium above federal and state limits. Amazon didn’t admit wrongdoing.

Amazon tells customers, on its payments site: “We want you to buy with confidence anytime you make a purchase on the Amazon.com website.”

On its site aimed at third-party sellers, it says customers “know and trust us, and that trust extends to you.”

Third-party sellers are crucial to Amazon because their sales have exploded—to nearly 60% of physical merchandise sales in 2018 from 30% a decade ago, Amazon says. The site had 2.5 million merchants with items for sale at the end of 2018, estimates e-commerce-intelligence firm Marketplace Pulse.

Amazon doesn’t make it easy for customers to see that many products aren’t sold by the company. Many third-party items the Journal examined were listed as Amazon Prime eligible and sold through the Fulfillment by Amazon program, which generally ships items from Amazon warehouses in Amazon-branded boxes. The actual seller’s name appeared only in small print on the listing page.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

PG says this report hurts Amazon. By PG’s assessment, the WSJ has generally been neutral or positive in its past coverage of the company, so this criticism comes with substantial credibility.

As depicted in the article, Amazon’s response is immensely ham-handed.

The quote from the “anonymous spokeswoman” was pure PR babble and Amazon’s refusal to make an executive available for comment was an even more stupid move. The WSJ is going to print a major story that has taken weeks of work criticizing Amazon on a Friday and no Amazon executive is available for a comment on the preceding Monday, Tuesday, Wednesday or Thursday?

Amazon has been a very smart company in the past and Jeff Bezos has been a superb voice for the company.

PG has to admit that the Bezos divorce/other woman story made him worry that Bezos would become too distracted to provide the brilliant leadership that has been very beneficial to the company (and its customers) in the past.

Another Distracted-Bezos concern that has been floating about in PG’s mind is a common pattern in US corporate management history, particularly in tech companies. This pattern sometimes appears when a founder/CEO has a strong personality and clear, unconventional vision for what the company is and how it will operate.

PG is thinking of Steve Jobs and Apple, Bill Gates and Microsoft, and Sam Walton and Walmart as examples. (Walmart is not a tech company, but during its developing years, made brilliant use of computer technology to successfully manage its explosive growth.)

This pattern is that the magnetic CEO either doesn’t attract or drives away executives who have similar personalities and talents, so continued excellence suffers without that CEO because the leadership and innovation qualities of the next management layer down are lacking.

A prime example is Apple. Whatever virtues current CEO Tim Cook possesses, in PG’s digitally humble opinion, he’s no Steve Jobs.

Sales of the iPhone, which accounted for 59% of Apple’s revenues in Q4 2018, have been flat, compelling new features have disappeared and purposely-leaked news of future iPhone innovations has been received with far less enthusiasm than in prior years.

Anticipating some pushback on the Microsoft example, PG suggests that Gates was technically charismatic for the tech audiences of his time.

If, as PG fears, Bezos/Amazon is another example of this pattern, he wonders if Amazon will lose its way in ebooks and books as well. While there is some Amazon Derangement Syndrome at work in recent stories about counterfeit books and copyright violations in listings by some sellers, especially those headquartered outside the US, the lax oversight of sellers by Amazon described in the WSJ article may be reflected in its book business as well.

PG regards the reported behavior of allowing Chinese firms to sell almost anything they want to sell on Amazon while the company accepts no responsibility for the sellers’ bad behavior as a disturbing indication that executives below Bezos lack the firm commitment to customer satisfaction that powered Amazon’s ascendance to its current position.

Amazon’s defense position that it is not the seller in lawsuits by Amazon customers for damages caused by defective products may be legally correct, but this sort of behavior by Amazon will undercut customer confidence that Amazon is a quality company selling quality products and a good place to shop. A typical American consumer has absolutely no ability to obtain reparations from a Chinese merchant for defective products.

If, as the OP suggests, many parts of Amazon’s ecommerce offerings are devolving into online flea markets, Amazon’s reputation is headed downward.