The Dangers Of Selling On Amazon And Horror Stories From Real Amazon Sellers

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Right now, selling on Amazon is almost too easy. All you have to do is find a product with good margins/demand, list it on Amazon, and it will eventually sell because Amazon’s audience and reach is so vast.

The Dangers Of Selling On Amazon And Horror Stories From Real Amazon Sellers

When my wife and I first started selling on Amazon last year, we sold over 60 units in a matter of 8 days with just 3 products listed online with no reviews. Amazon is seriously that powerful.

But with any business with low barriers to entry, there’s always going to be a ton of competition. Right now, with all of the various Amazon courses and tutorials out there pushing private label selling, Amazon is slowly getting flooded with a bunch of me too sellers.

Don’t get me wrong, the market is still far from saturated but I foresee Amazon turning into another EBay in a few years or so. In fact, I’m already seeing a few warning signs which I’ll describe in this post.

To me, Amazon is like a drug, a drug that promises you quick sales in a short period of time while making you addicted and dependent on their marketplace.

When I interviewed various ecommerce business owners, there were 2 main schools of thought.

  • Go all in and ride the Amazon wave for as long as it lasts.
  • Proceed with caution, think long term, and divert some resources to your own branded site.

Sales and revenue might be great right now, but things can turn on a dime and you have to make sure you have a fall back plan just in case…because Amazon doesn’t really care about you.

The best advice I can give is that you place at least 20% of your resources on your own branded platform instead of going all in on Amazon. Or else here’s what could happen…

Note: The following are real stories that either I or my close colleagues have experienced first hand from selling on Amazon. While Amazon is great way to make money right now, you have to be careful and not put all of your eggs in Amazon’s basket.

Amazon May Ban You For Factors Beyond Your Control

banned

If you do a little Google searching, you can easily find stories of Amazon entrepreneurs losing their businesses practically overnight. But as with anything on the Internet, I like to take everything I read with a grain of salt.

After all, the seller could have sold counterfeit goods or violated Amazon’s terms of service and got banned for legitimate reasons.

For this article, I decided to do some of my own research and reached out to a few banned Amazon sellers for their side of the story.

Long story short, after talking to several sellers, one common theme emerged. The threat of getting banned is quite real, can happen unexpectedly, and often times can be out of one’s control.

In fact, the #1 number threat of getting your Amazon seller’s account revoked is by getting a string of negative feedback on product quality policy violations.

I also learned that there are supposedly “negative feedback” services out there that will leave an array of bad seller feedback for a nominal fee.

But anecdotes aside, I reached out to a few 6 and 7 figure sellers who had been banned on Amazon and here’s what they had to say.

The first seller was making over $1.5 million in sales over the last few years and was suspended for product quality policy violations.

Out of over 8000 products that were shipped that year, six customers complained to Amazon that their product arrived used or damaged. In addition, a small percentage of customers also listed the item as “defective” or “didn’t match the listing” as their return reason.

First off, all of the products cited were brand new and the listings all accurately matched the products being sold. (I took the seller’s word for it)

But here’s where it gets interesting. According to Amazon’s policies on return shipping.

When you return an item using the Online Returns Center, and the reason for return is not a result of an Amazon error, the cost of return shipping will be deducted from your refund unless your item qualifies for a free return.

Amazon’s policies always favor the buyer in almost all cases. And savvy customers are well aware that customers can bypass return shipping fees by stating their product arrived damaged or that it did not match the listing.

So let’s say Joe Schmoe wants to make a return and doesn’t want to pay for return shipping. Why not just mark it as defective or inaccurate? There’s no penalty for the buyer and the seller has everything to lose.

Side Note: One time, a buyer purchased a bunch of our napkins, used them for a party and soiled them, and then returned them for a full refund stating that the item was not as expected. We had to eat the cost.

This particular seller had metrics that never fell below targets (98%+ positive feedback, 99%+ on time delivery, 99%+ tracking information, .11% defect rate, 0.00% cancellation rate, and fast customer response times). He’s had less than five A-Z claims ever and the majority of which were immediately refunded.

While no one will ever know the true reason why he was banned, the upshot was that he was stuck with $180,000+ in liabilities and $350,000+ in retail merchandise in stock that he could not move.

Amazon froze over $10,000 in his account for months and he had to lay off 1/3 of his staff.

Moral of the story: Never depend on Amazon, eBay, NewEgg, Rakuten, or any other marketplace as your primary stream of revenue because your business can literally disappear overnight. These companies can close accounts for any reason, including but not limited to complaints of any kind, policy violations that may not be valid or eliminating you as a competitor to make higher profits.

Focus on multi-channel selling with your own store/site at the forefront to ensure you can never be “deleted”.

Other Sellers Will Copy You

copy machine

I actually have my own personal horror story to share here after only selling on Amazon for a year. A few months ago, I was checking up on my listings when I noticed that products from our online store were being listed on Amazon without our permission.

When I took a closer look, I discovered that a seller under the name “bee” had stolen all of our product photos and all of our product descriptions and were selling our items on Amazon!!!

They literally ripped everything off! They stole our photos, our verbiage and even our product numbers. It was wholesale piracy on a large scale with over 400 SKUs.

When we sent an email to Amazon, they sent us an automated response asking us for documentation on each and every product to show proof that we owned the photos and descriptions.

To put together a thorough response would have taken a ton of work and time and we were unable to get a human to take care of this for us. Fortunately, we politely reached out to the vendor and they took everything down without a fight.

But what if they refused? We could have been mired in a battle for months and forced to navigate through a series of automated responses for over 400 products.

While it’s easy for a customer to file a complaint on a seller, it’s much harder for a seller to file a complaint against another seller. Be aware!

Other Sellers Will Hijack Your Listings With Copycat Goods

hijack

While getting all of your products copied and stolen doesn’t happen very often, there is rampant piggy backing of Amazon listings happening all the time.

Even if you sell a private labeled product under your own brand and ASIN (Amazon product number) on Amazon, there is nothing stopping another seller from piggy backing on your listing and undercutting you on price with a counterfeit item.

For example, let’s say I sell linen napkins that are clearly labelled with my own brand and label. An unscrupulous seller could sell poorer quality linen napkins under my same Amazon product number and undercut me on price even though it’s not the same item.

In the worst case scenario, a customer might buy this counterfeit product, be unsatisfied with the quality and leave bad feedback on my product even though it’s counterfeit!

The best way to fight this is to actually purchase the product yourself as a customer and then file an AtoZ complaint against the fraudulent seller.

What a pain in the butt!

Conclusion

As with all things in life, if something sounds too good to be true, then there will always be unseen disadvantages. Don’t get me wrong. There is still a ton of opportunity to be found from selling on Amazon.

But I caution you to not put all of your eggs in one basket.

With Amazon, you do not own the platform. You do not own your own brand. You can be banned at any time. And there are unscrupulous sellers and customers everywhere.

Spend at least a portion of your time and resources on your own branded platform to ensure the long term longevity of your business.

Do you have any Amazon horror stories to share? Please tell me in the comments below.

photo credit: Photography is dangerous

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33 thoughts on “The Dangers Of Selling On Amazon And Horror Stories From Real Amazon Sellers”

  1. I don’t have an experience in Amazon selling, but I have been successfully freelancing on Elance for years. I still have my own portfolio and promote MY BUSINESS before everything else. If anything happens on Elance, I’ll still have my business.

    PS: to be even more precise, Elance is actually now UpWork (merged with oDesk under a new name). My profile already had to suffer (I need to re-test for my skills, re-create my portfolio etc.).

    It’s already a set back, but my main business is not there, fortunately

  2. I’m currently embroiled in a fight with Amazon over their delisting of an item of mine because it contains apricot oil, which they claim is dangerous. Doesn’t seem to matter to them that there are 6,000 other products listed that contain apricot oil. It’s been 2 months and they’re still “working on it” :/

    1. Hey Carole,
      I’ve heard lots of stories similar to yours. I have one colleague who’s been waiting for 6 months on one of their products. Good thing he’s got a bunch and it’s not that big of a deal.

  3. Andrew says:

    Such a great post. Amazon is getting flooded with a lot of unscrupulous sellers from all over the world looking to make a quick buck. It can be a tremendous pain trying to deal with all of that. And the bigger you get on Amazon, the more issues you run into. Amazon staff is quite responsive in resolving issues in our experience, but we did experience our own horror story once when a hot selling item was inexplicably delisted due to customer complaints. Turns out Amazon was taking returned items and putting them back into regular inventory without properly checking for damage. So customers were receiving used and damaged products when they were expecting something brand new. Amazon of course is aware of stuff like this but they’re much more likely to protect buyers.

    1. Keith says:

      Andrew, the same exact thing happened to me. My two best-selling listings were removed several weeks ago for “Used Sold As New” complaint(s). I only sell new products and they come directly from the factory, so the issue must have been with Amazon’s warehouse. I’ve been waiting almost 4 weeks for a response from Seller Performance. It’s very frustrating. Were you able to get your item relisted, and if so, how long did it take?

      1. Hey Keith,

        It really depends. Sometimes it can be just 2-4 weeks, sometimes it can take months.

    2. Hey Andrew,

      So the Amazon staff is “responsive” but not helpful. I always get a response…an automated-like response:)

  4. If you sell on Amazon, you should periodically check eBay for your products. Several of our Amazon listings were copied and listed on eBay by foreign sellers. There is a process you can go through to have them removed but you have to have the identical images and/or text on your own company website to prove the listing information was stolen. This is particularly concerning to us when our products are only sold in the US for various reasons and these other sellers are offering to ship our product overseas. I’ve had four of our products removed from eBay and have found a few sellers in the Amazon forum who think it is perfectly fine to jump on your listing, inflate the prices of your branded items, and use you as a dropshipper. Not cool.

    1. Robin says:

      As a buyer, I have had this happen to me twice. I purchased two items on eBay and they came to me in Amazon Prime boxes with an Amazon invoice inside that said it was a gift invoice. I was not happy about that at all. If I had wanted to purchase those items from Amazon, I would have purchased them myself.

      1. Yes, dropshipping through Amazon happens all the time. But I think that practice will slowly decline as the prices start to equalize.

      2. Lisa says:

        Robin, The reason for that is because some sellers sell on both Amazon and eBay. The seller sends all of their inventory to Amazon’s fulfillment centers (using FBA-fulfillment by Amazon) and lists them on Amazon and eBay. If an item sells on eBay, the seller directs Amazon to ship the item to the eBay buyer. That creates two sales channels for the seller and Amazon ships quick with a tracking number. It is a win-win for both buyer and seller.

    2. Sarah says:

      Ive had something similar happen to me although its probably not as shady as your instance. But i purchased a particular paper that i like on Amazon only to have it shipped by Costco.

      Im sure this is perfectly fine with Costco but the idiot seller lost me as a repeat customer because I now buy it directly from Costco at a fraction of the price.

    3. Yes! That has happened to us too. It’s like playing whack a mole!

    4. Lisa says:

      I read about this same thing happening to another seller and what he did was so awesome. He did 2 things. First he raised the price of his product really high and then ordered it from that eBay seller. He placed 10 separate orders back to back. When the eBay seller went to buy and ship the product, he found out that he actually would be losing money. He didn’t want to have a string of cancelled orders because his metrics on eBay would be bad and they would ban him. He begged the guy to cancel his orders and promised to never do that again. The other thing the seller did was switched his Amazon listing to zero units available and again, he went to that eBay seller and made multiple orders back to back. When the eBay seller went to order from the Amazon seller, there was no inventory. So ta-da! You don’t even need to bother Amazon or eBay. Just take care of it yourself just like this seller did.

  5. Cindy Bendel says:

    Ugh, Amazon. I know the pain of having your marketing images taken and used in the Amazon Marketplace. Unfortunately it’s all too common, when I took my best selling products and did a search I found 53 listings using my images. There are numerous stores with thousands of counterfeit products so I’m not even sure how to find all my work in that marketplace. Amazon’s infringement reporting process is a pain and it took several rounds before they removed the listings. And guess what happened? The thieves listed them again in a new store. It’s an endless battle, I wish Amazon would do something.

    1. I agree. I’m not 100% sure if there’s an easy way for them to enforce it. Image stealing is still quite rampant on EBay today.

  6. JP says:

    Steve – and others,

    Does anyone have any insights into getting un-banned from Amazon? Just last night I talked w/ a friend who has a 7-figure Amazon biz, and for 3 weeks has been banned due to the issues mentioned in this article. (His products were legit – but had a few customers who used the complaints mentioned above)

    He is patiently awaiting a response – and doesn’t want to push hard and get a permanent ban. Are bans lifted? How long? Any insights would be truly helpful. Thanks

    1. Keith says:

      JP — sometimes suspensions are lifted. Currently, the “Seller Performance Team” — which handles this — is extremely backlogged, however. My account was not banned, but two of my listings were removed. I’ve been waiting 4 weeks for a response from Seller Performance. I’ve been hearing it can take up to 5 weeks or more to get a response.

    2. The only thing that I can say is that it helps to know someone who works at Amazon who might be able to divert some attention to your account. Other than that, you are placed in the same queue as everyone else.

  7. You actually missed the biggest one. If you have a successful product Amazon WILL back door you directly to the manufacturer, cutting you out. I always warn my customers, don’t ship directly from your ODM to Amazon, sit in between because with that simple packing slip, Amazon can destroy your business with your own market research.

    1. Sarah says:

      Im not sure I entirely understand. Does that mean they will start selling successful products you sell and eliminate you as competition?

    2. Yes! COmpletely agree with you on that one. I have a colleague who got an offer from Amazon to sell his products wholesale to Amazon. He politely declined and found that Amazon started working with someone else which greatly degraded his sales. They have all the sales data.

    3. Christine says:

      I have experienced this first hand. I have changed my strategy multiple times to find items they don’t sell. I am seriously considering pulling the plug on my biz there for stuff like this and many other issues.

  8. Robin says:

    I have increasingly become fed up with Amazon as a buyer.

    I have had to return more items this year than all the years in the past, I was truly shipped the wrong items or damaged or expired goods. I have ordered several items and had my orders cancelled because the seller didn’t really have the items. I have seen items listed at ridiculous prices like $1,199 for a $9.99 item.

    I don’t trust the review system because they lump all similar products into the same review list. Widget A from Seller A might be great, but Widget A from Seller B might arrive poorly packed with shipping damage.

    I get annoyed by the Add-On Only item program. I can’t purchase a $4.99 item with adding another $30 to my cart.

    I was completely turned off by Deals for Prime Members only. I feel like you increasingly have to join the club to get good deals, and I refuse to do that.

    My trust in Amazon has been eroding steadily over the last couple of years.
    Ordering on Amazon is no longer fun, and it takes longer and longer to order to check who is really selling the item and checking the seller’s reputation in addition to the confusing mix of product reviews. I don’t feel like they are doing quality control over who sells what.

    For me, Amazon is becoming more and more like eBay, not trustworthy and not fun.

  9. Very well written Steve. Thanks for the insights. I started selling on Amazon today and this article comes in very handy in ensuring I keep an eye on customer satisfaction.

  10. Even without all the horror stories, you should be diverting some of your time/money/effort into building your own web store, brand, or whatever. Who wants to be completely reliant on a third party for all of their success? That’s just asking for trouble!

  11. Thanks so much for writing this article! Much of what is being said about Amazon is 100% accurate. I work for an American-owned but China based importing company that specifically helps online sellers, and I’m afraid sellers do share some of the blame. Many online sellers are failing to do their product sourcing properly because they’re using outdated guides that worked a few years back but still appear everywhere on the internet. First, they seek out the cheapest manufacturer possibe on Alibaba because they’re testing their business. This leads to them being connected with middlemen and scammers. The deluge of sellers asking for the lowest possible MOQ means the best suppliers just ignore them and move on. And all too often, sellers fail to do a quality control inspection on their goods prior to shipping them to FBA because they just care about sales. As a result, Amazon has started to get very stringent with product quality issues. It really is the sellers responsibility to ensure their goods come from a reputable supplier. No, Alibaba star ratings are not a good indicator because they can be purchased when a supplier joins the site. Sellers should also be testing their goods with a quality control inspection prior to sending to FBA, especially if they’re customized for private label. These are inexpensive (about $200 to have someone go to the factory and check your goods). Defects are common in manufacturing, and smart sellers make sure their order includes recompensatoin for defective units prior to them being shipped to Amazon. Walmart would never put items on the shelf without a qc check and online sellers should follow theri lead. You’re exactly correct that this problem has come from too many folks jumping on the bandwagon without fulling understaing how to import safely. And we agree, the Amazon wave will only last so long. Amazon sees sellers as middle-men driving up the price to line their own pockets, so they are now training Chinese manufactureres to list their products on Amazon themselves. It is those same suppliers who are now undercutting the sellers on Amazon, and frankly, wouldn’t you if you were them? Steve is entirely right that the best strategy is multi-channel selling and that’s why we’re huge fans of this blog!

  12. Lucy Beveridge says:

    omg yes.amazon have been running me ragged for months now refusing to close my buyer and seller accounts and pay me what they owe me from my last sale . managers have been routinely ignoring my attempts to escalate the problem and I even had to change my credit card number to stop Amazon from taking money from my account literally ANY time that they felt like it- even asking my card provider to block them wasn’t enough because they just continued to steal money using a different code. The stress they have caused has made me so exhausted and I’ll that I’m barely able to function and they STILL have not done as I asked.

  13. guido says:

    I don’t see the point on making your own online store. Who’s going to buy from your store if they can just go to amazon?
    Not to mention the chances of anyone actually finding your store in the first place…

    1. There are very good reasons to have your own online store, and yes, people CAN find it on Google; at least they can find mine. People will buy from you if your postage is reasonable, since Amazon’s postage is very high. And with your own store, you are not forking over 100% of the purchase price to Amazon (I get only that high postage to cover printing, postage, and a few cents of profit,)

      If you also sell on Amazon, your Amazon listings will appear on Google ahead of your own store, and it does indeed cannibalize your own sales.

      Finally: while Amazon calls itself “customer-centric,” it treats its own customers – the people who pay Amazon to sell there – not even like hired help, but like slaves who need the lash applied severely and often. The real hired help wield the whip and function as overseers to the slaves, and they would make Simon Legree look kind. Amazon’s whole relationship with its sellers is based on punishment. “Standard shipping” has to be sent the same or next day, and you have to report it within the same time period; they DO NOT accept flimsy excuses like three-day blizzards that close the state highway system and shut down the mail. You do it ANYWAY, or YOU WILL BE PUNISHED.

      I put my own listings on “vacation” until the end of a spell of impossible weather, but after a particularly nasty reply from one of their reps (three weeks late – they don’t keep to such a strict schedule themselves), decided to stay “on vacation” until spring – or maybe forever.

  14. Andrew Nobbs says:

    I would not use Amazon again to sell, their whole system is set to keep the customers happy by instant refunds leaving you with the selling costs, postage and possibly the non return of products.

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