For a long time, Amazon vendors were having a bad gut feeling about a whole thing. Something stinks there but it is not easy to put your finger on it. Old saying is that every fish stinks from the head so in this case, the head is Amazon itself.

Isn’t Amazon built on the backs of countless vendors and re-sellers offering their products on their platform? No doubt it is, but why would Amazon want to work against own vendors? Doesn’t make sense, right? No, and yes, it is more complicated than that.

“First of all, how hard could it be?” thinks I

Amazon is a trillion dollar company. Amazon platform and overall presence dominate the Internet. Google any product imaginable and there will be Amazon selling it at a low price. You would think that means if you are part of Amazon FBA (Fulfillment by Amazon), you have a good product that people want and it is priced right you should be selling truckloads, right? Eeeeeee (baaad tone), not exactly.

I can speak for ourselves. A company I work for sells items that one can also find on Amazon. “Thanks to Amazon” we are experiencing a dramatic decrease in sales. We sell uncommon products, smart cards, and readers and there are no overly many competitors. Still, after a noticeable drop in monthly sales we searched on Google and sure enough, whatever you write to find there is an Amazon page selling it.

Joining the enemy

There is also an old saying "When you can’t beat them, join them". So we decided to join the enemy, signed up, sent 5 items in sufficient quantity and started every working day by opening fulfillment by Amazon page.

For starters, their warehouse lost 2 of our selling items. Each box we sent contained 10 small packages. 2 were lost right at the receipt process. Never to be seen again. How hard it could be? Open a brown box and count 10 small bags with parts. They were properly packed and labeled by the bar code as requested. Still, whoever opened boxes couldn’t complete even that simple task.

Actual sales was more like throwing shit at the barn door and see if it will stick. In 3 months we sold 2 (two!) items at an average total price of about 30 dollars. During that time we were promptly deducted storage, shipping, and monthly fees. After 3 months we decided that enough is enough, pulled remaining stock back and closed FBA account. Our experiment cost was about 300 dollars.

It is far cry from what other people lost but we learned a valuable lesson. Amazon selling is not for us as it is not for 99% of other sellers as well. It is like super sport, or entertainment industry where only top few make all kinds of money and everybody else lingers on the edge of profitability or disappears in obscurity with a bitter taste of losses.

Where did we fail?

Again, not easy to pinpoint.

We searched through our own moves and looked at possible mistakes. We had FBA account with free next day delivery. We priced products less than other vendors. We had inventory available in an FBA warehouse. We tried to the everything right.

We did not advertise with Amazon. Our impression was that the same product will be listed on the Amazon search page in ascending order according to price. That should take care of product listing being on proper place positioned right. It doesn’t even have to be on top but at least there on the first page and let the buyer decide.

And then there are experts

YouTube is full of videos of people who made hundreds of thousands on Amazon and they are so inclined to share their success secrets with the whole Internet.

Just recently I read an article about a couple of “wizards” like that selling courses how to successfully sell on Amazon to the public. They made money selling some stuff so why not help others do the same? Just follow easy steps and advice to the letter and success is all but guaranteed. Oh yes, first pay thousands for the course.

The article was properly titled as “How to lose tens of thousands of dollars on Amazon” Medium link HERE.

I urge everyone who wants to sell on Amazon to go to YouTube and NOT look for “wizards” like Behdjou and Gazzola described in that article but rather watch videos of people who reveal how they were cheated in process and mistakes they made. Search on Google will reveal plenty of forums and articles like this one. Please do it BEFORE you sink your last money or worse, dip into credit cards to pay for dubious advice.

Amazon is running an unfair business

Over months we learned about Amazon unfair practices among many is competing with own sellers and what not. Word “unfair” proved to be a gross understatement. We found that Amazon is actively copycatting reseller products. What that actually means?

Vendor develops a product. Let’s say as simple as a stand for a tablet computer or fancy looking sunglasses. A $9.99 thing.

Whoever created anything knows how expensive and complicated it can be to create a product from scratch. Make tools, find a manufacturer, organize production, control over the manufacturing process, pay through the nose for samples, travel, market it, create WEB site, social media sites, scrap bad batch, ship good product, send payments to everybody and his dog. Now product is ready for the sales. Finally, somebody throws in a brilliant idea: “We should do it through FBA. We’ll sell a shitload of this on Amazon, right?”

Sure enough, the product is in some ways innovative, dirt cheap (otherwise it will not be anywhere close to first page results) and sells like hotcakes. Exciting times, finally success!

But have to pay all those expenses and fill up holes in credit cards used to prop up a product sales. It seems like it doesn’t matter that Amazon makes money from the moment products enters the FBA warehouse. Sales will set everything right. Then sales start lagging. Reduce price yet again, post better images, better description. Still no avail. Product sales lingers. Was all this a good idea? It is true, nobody put a gun on your head that it has to be done through Amazon. You just go with the flow.

You are actually feeding a monster. It is truly very hard and risky. Amazon system is rigged in such a way that it destroys small businesses, not builds them up. It is not a business opportunity like Uber, where every participant has a pretty much same chance to make money as a next driver. Model is such that it forces vendor into razor-thin margins. Amazon acts as a search engine for products. If you are not on the first page you are pretty much nowhere. Irrelevant to the buyer. Bleeding money on every level.

Monster is out there to destroy you. How? They don’t have geniuses sitting at PC stations inventing great new products. What they have is the best sales reporting money can buy. That means some little guy runs the report and gets a listing of the best selling products in any category. Then other guy picks up that list and says: “Oh, we can do that!”. He calls China: “Can you make such tablet stand for less, 100000 pieces?”.

Chinese are everything but fools, “can’t” is not in their vocabulary. Sure they can, especially if Amazon is buying. They’ll make it, Amazon will sell it effectively screwing up the original vendor. If you think this scenario is far fetched read this …

Amazon India caught red-handed and ordered to remove 400000 products from shelves!

There you have it! It wasn’t really advertised in media but we got wind of it. It is actually a huge thing confirming everything bad and more. Indian Government recognized that Amazon is killing their small businesses effort and commerce on the large scale. They issued regulation where:

• Amazon is declared as a sales platform, service provider

• Sales platform like Amazon cannot compete with own vendors by manufacturing products

• Sales platform like Amazon cannot have an ownership stake with own vendors and give them an advantage in the selling process

Example of other sales platforms that are not doing this? eBay. They are running re-sales and marketing platform and act as a middleman in process of sales. That’s it. They don’t manufacture a diddly squat. Amazon on other hand is a different story.

How much is enough?

You see, Amazon is run by cunning foxes. They thought of everything and enabled every possible venue to squeeze the last cent from the process. Not only that now there are Amazon manufactured and branded products, like batteries, computer parts, bulbs … but they also invested in various vendors that proved to be successful in the first place. So now by having a stake in those companies they are getting indirect profit from sales.

The single small vendor simply cannot compete with machinery like that. They sink into oblivion slowly or fast, still paying fees while clutching on Amazon platform by fingernails.

I am glad to say that at least authorities in India weren’t fooled enough to let everything go on. In very commendable effort they recognized a scheme Amazon is running and issued regulations to put things right and give vendors a fighting chance. Amazon tried to weasel their way out of that mess but Indians would have none of it.

Also there is a stir in the EU where they found product imitations to be so clear that the EU has launched an investigation to examine the ethical and legal implications of Amazon copying its own customers.

Hopefully similar things will happen in USA and Canada.

IMPORTANT STORY EDIT

A reader wrote a comments to this story. Ticked off by my views he took time and effort to write what exactly happened.

I found his personal experience honest, compelling and telling even more than what I wrote about Amazon. It’s probably similar to what thousands of merchants experience dealing with Amazon but others are yet to come forward and say what is there to be said. I daresay that language is perfect and reflects the mood correctly.

I want to share it with you, so this is contribution from Josh 12:

“We sell retail furniture from a real world store and tried using Amazon, we ended up losing money on every sale. Closed the acct after a month and Amazon tried to charge us some kind of $30 dollar fee. I just closed the bank acct they had and told them to go fuck themselves.

The only way to make money on Amazon is to be Bezos or an investor, long term they will fuck us all. I won’t buy or sell anything with scum like that. Sooner or later the pitchforks and torches will come out, I’d be very afraid if I was Jeff ‘all for mezos’”

“Haha, nope, I know a few stores who tried and failed, I don’t know anyone who has made any money selling on Amazon.

Some of the wholesalers we used to deal with did well, but only because they sold below the wholesale cost they gave the retail partners, like us. So basically they made money by selling below the retail price, had almost no employees and only had to pay for a warehouse.

Most of them ended up getting screwed in the end because they burned us so we wouldn’t carry their stuff, and as soon as Amazon saw what was selling well they just started selling that below the cost the wholesaler got, Amazon can buy way more from the manufacturer and got a better price.

It’s a race to the bottom that only Amazon can win.

We know some manufacturers that ended up out of business because Amazon was demanding lower prices then they able to produce for and once all their other customers were gone, because they couldn’t compete with Amazon’s buying power, all that was left was Amazon demanding below cost pricing.

It’s crazy that we let this happen, as a society, eventually there won’t be any local retail and that means no local whole sale, no local or national manufacturers means no jobs, and no jobs means no money. How are municipalities supposed survive once that happens?

Need to crush this thing, but its already out of control and almost no one will boycott Amazon because it has scammed the system to have the lowest prices, and it’s so misunderstood people love it.

Also they built all of this on a business model of not having to collect sales tax, and now that they finally have to collect it’s too late, so many local businesses are already wiped out.

There you have it. I hope you learned something from this contribution because I did!

Thank you for fighting this behemoth with me and the few of us who don’t want to let our lives be taken over by huge corporations with no sense of social responsibility.”

And don’t you worry about results from this article, no Amazon was hurt while writing it.