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Month: February 2019

Why liquidation inventory can be 3P kryptonite

February 20, 2019 1 Comment

As major retailers clean out their warehouses post-Q4, the secondary markets are filled to bursting with liquidation inventory. Third-party sellers can find a treasure trove of hot deals across every category – all for pennies on the dollar. What could go wrong?

By Lesley Hensell

Everything. In fact, things could go so wrong that you lose your Amazon seller account permanently. Liquidation inventory has been a hotly debated topic in the Amazon 3P world for a decade. Many experts in the space excitedly tell their social media audiences about the killing they made on auction inventory or lots of overstocks. “After all,” they point out with dollar signs dancing in their eyes, “Amazon doesn’t say anything in terms of service about liquidation inventory. It’s totally OK!”

True, Amazon does not specifically address liquidation inventory in the ToS, nor anywhere in the help section. But a little common sense will tell you that liquidation carries elevated levels of risk. Consider the shortcomings of liquidation products:

  • In almost all cases, it’s impossible to prove the chain of custody for the products. In other words, you cannot show it is authentic if asked for invoices, or if you field an intellectual property complaint.
  • The products might be counterfeit. Some of the most popular sources of liquidation inventory are Amazon fulfillment centers. But much of this inventory comes from third-party sellers, and some of it is outright fake.
  • The items are often returns. They’ve been opened, used, or refused because they don’t work. Even if you have a great inspection process in place, these pieces are only fit for resale as used, or at best, open-box.
  • Shelf-wear has taken a toll. Inventory on the secondary market has been through the wars. It’s traveled to multiple warehouses, stores and customers. Boxes are worn, torn, faded, discolored and dirty. It often just doesn’t look new.

green crystal representing liquidation inventory kryptonite

Consider a few tales of woe from fellow Amazon sellers who became Riverbend Consulting clients:

  • A large private-label seller decided to expand his Amazon catalog. He purchased a large lot of Amazon FC liquidation inventory via Woot! Almost immediately, he was hit with a slew of IP complaints – more than 100! The vast majority of the brand owners refused to remove the complaints, and his account was deactivated.
  • A relatively new seller ran across an opportunity to buy name-brand phone cases and accessories from a chain of convenience stores that was closing. When Amazon demanded invoices, he could only show PayPal confirmations. Amazon deactivated his account.
  • An experienced, long-time seller bought closeout housewares from an auction company, which sourced the items from big-box retailers. The seller inspected the boxes and saw they were sealed, so he sent the inventory to FBA. When the coffee makers he had purchased were sold to Amazon customers, they reported finding moldy coffee inside. Clearly, these were returns that had been re-sealed at the warehouse of the big-box retailer. The seller’s account was suspended.

Happily, all three sellers above became Riverbend clients and were reinstated. But it wasn’t an easy process, and there are costs associated with any account suspension. Their Amazon appeal letters were complex and required a great deal of research, work and implementation.

Is there a time and place for liquidation inventory? Here’s the unpleasant answer to that question: Maybe.

It all depends on your personal risk profile – and the risk profile of your business. Many sellers move liquidation inventory quite successfully. If you’re determined to sell liquidation, it’s important to know the risks. In addition, take the steps to mitigate that risk whenever possible:

  1. Be reasonable in your sourcing. Ask yourself – how trustworthy is the chain of custody for these items? For example, a recent client purchased liquidation inventory from a large liquidator that buys directly from big box chains and has the invoices to prove it. Clearly, this carries less risk than buying from a no-name liquidator on eBay.
  2. Perform serious quality inspections. Liquidation inventory cannot simply be stickered and shipped to FBA. Plus, your team must research to ensure you understand what the items were supposed to look like, what pieces and parts are included, whether the original box had seals, etc.
  3. Adjust your ideas about condition. Conservative is the way to go. If it is even possible that an item was opened, don’t grade it as “new.”
  4. Put serious thought into brand choices. Intellectual property complaints abound on the Amazon platform. Certain brands carry much higher risk than others. It makes sense to stay away from liquidation inventory for premium brands and high-dollar items. In addition, many consumer electronics items would make more sense in the Renewed (certified refurbished) program.

If you find yourself at the wrong end of a suspension that involves liquidation inventory, don’t hesitate to contact us at  Riverbend Consulting. Contact us.

Lesley is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s  experience with Amazon compliance gets accounts back up fast.

Filed Under: 3P, Account Health, Amazon, Gating, General Tagged With: 3P, Amazon, Amazon reinstatement, Amazon seller, Inventory, Liquidation

Fake ungating invoices are the new fast track to losing an Amazon account

February 4, 2019 Leave a Comment

“You are a counterfeiter.”

Do you assume your Amazon seller account would never be labeled as fencing counterfeit goods? Think again. Fake ungating can get you shut down.

By Lesley Hensell

Amazon is on a mission: detect and shut down counterfeiters. Unfortunately, many sellers are engaging in a behavior that can get them branded a counterfeiter and permanently banned from the platform – even if they never purchased, listed or sold a questionable product. Fake ungating.

fake invoices, disguise glasses

Several of our recent clients submitted forged invoices to Amazon’s category department in an effort to be ungated at the category, brand or ASIN level:

  • Many don’t want to invest in expensive inventory that they ultimately cannot sell if their ungating effort fails.
  • Some submit real invoices, but Amazon doesn’t accept them. There are many reasons this can happen.
  • In too many cases, we’ve been told that “someone on the forums” or “a web site” said submitting a fake invoice was the ticket to being ungated.

Our clients had no intention of selling fake goods. Some of them already had true, verifiable inventory sitting in their warehouses. So what harm could a fake invoice possibly do?

As my colleague Kelly observed today, “Clearly, Category is reviewing these invoices and then connecting to Seller Performance to bring down the hammer of rage and justice.”

In other words, what is submitted to Category for ungating does not stay in Category for ungating. Amazon expects sellers to submit true, verifiable, real invoices – every single time. Think about it. If they cannot trust your invoices for ungating purposes, why would they be able to trust your invoices for verifying item authenticity or condition if a buyer complains?

What happens when a seller submits an invoice?

  • It is reviewed by a machine and by a human.
  • The machine compares it to other invoices in Amazon’s massive databases. The human compares it to common sense and other variables.
  • If fraud, editing or other shenanigans are detected, the invoices are referred to Seller Performance.
  • Seller Performance deactivates the account immediately.
  • The seller is given an opportunity to appeal.
  • Seller Performance rejects the appeal and notifies the seller that their funds will be help by Amazon – PERMANENTLY – for counterfeit/fraud.

It’s swift, ugly, and difficult to reverse.

How can you prevent this happening to your company? Riverbend offers these suggestions:

  1. Establish, explain and pound into your team that you have a no-tolerance policy for manipulating, editing or modifying documents.
  2. Create layers of review for any and all invoices submitted to Amazon. Require the purchasing department to sign-off on all invoices as true before they are submitted. In addition, require a management-level sign-off.
  3. Assign your most trusted team member to manage submissions of invoices to Amazon.
  4. Do your research on what barriers to entry exist for being ungated in various categories and brands. Knowledge is power.
  5. Don’t try to do too much too soon. Many new sellers think there’s a “holy grail” category or brand that they MUST sell, and then will do questionable things to achieve that goal.
  6. Seek advice from reputable sources. If you are having difficulty with Amazon, or they are rejecting your invoices, reach out to someone who knows how to work with Amazon the legitimate, right way. For example, a recent client who submitted fake invoices tried submitting real invoices first – but was rejected. At one glance, our team knew why they were not accepted.
  7. Avoid advice from people who think they can fool Amazon and its amazing fraud-detecting technologies. This includes anonymous people on forums, IG influencers with no profile picture, random sellers and Twitterers.

One fake invoice can end you on Amazon – permanently. It’s not worth any new product to sell or category to compete.

If your valid and true invoices aren’t being accepted by Amazon because they suspect fake ungating, give us a call. Or, if you need help ensuring your submissions to Amazon are safe – every time – Riverbend Consulting can help. Contact us.

Lesley is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.

Filed Under: Account Health, Amazon, Gating, General Tagged With: Amazon, Amazon reinstatement, Amazon seller, ASIN

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