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Steve Harmon - The Amazon Failure

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Amazon Has Become A Hoarder & Price Gouger Platform...
 

Steve Harmon

April 5 · Issue #30 · View online
Beyond the hype, inside the world of venture capital, tech, stocks and trends, from Silicon Valley to Shanghai, from veteran investor and entrepreneur Steve Harmon - followed by many leaders in finance and tech, see more: http://steveharmon.com

Amazon Has Become A Hoarder & Price Gouger Platform…

Price Gouging Runs Rampant On Amazon Marketplace
Lots of stories of hoarders with toilet paper, hand sanitizer, face masks have been in the media. But the one thing not mentioned is how such hoarding is even enabled.
Many of these hoarders use Amazon or eBay to try and resell their hoarded items at super inflated prices. Back in early March eBay at least banned sales of many of these items.
As for Amazon… let’s see our test experience–
Consider that if Amazon had price limit precautions in place that we may have never had any hoarding of any item since there would be no third-party place to easily sell it.
In other words, in my opinion, Amazon seems to have enabled much of the hoarding by not regulating its marketplace better. They let sellers name any price for items. That works in a perfect market. But in a hoarder-led market (which is imperfect and manipulated) it doesn’t. And Amazon doesn’t seem to get this or doesn’t care since it takes a cut of all sales.
The proof is in the listings on Amazon. Anyone can see.
You may recall seeing this article about the two brothers who drive all over Tennessee buying up wipes, masks and other items: https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html
In the article it says Amazon “cracked down” on price gougers … really? weeks later we still see even today lots of price gouging happening.
Proof that price gouging still exists on Amazon? Consider that a 500ml (16.9 ounces) bottle of hand sanitizer is listed there for $50. While many are hiking prices all over, the ease of listing and selling on Amazon makes it a price gouger’s favorite flea market. Don’t think that’s a high price? You can buy a whole gallon of this stuff for $50 elsewhere online.
Thank goodness there’s an entire web to buy things from. Amazon’s ‘prime delivery’ convenience suddenly looks like an empty value when sellers there charge 5x to 10x the price for an item…
A Can Of Beans
We did some price sampling to see how bad it is and it’s ridiculous what some sellers are trying to charge on Amazon for basic food items that you can buy RIGHT NOW at Walmart or major grocery stores for 90% LESS.
Scamazon
Scamazon
This same item is available at grocery stores for under $3, even under $2. That’s at least 80% LESS THAN AMAZON.
And it appears even ‘highly-rated’ sellers of other items could be holding back stock to inflate the price, and then saying 'order was lost.’ We got an email saying 'order shipped’ but the tracking number was fake.
The item was $19.99 when ordered and the next it was $29.99 … a 33% higher price. The seller is still allowed to do business on Amazon.
Amazon’s exec team is aware of this and their reply to us:
“Oh look, they’re a high-rated seller.”
Amazon turned a blind eye to this.
The Mask Fiasco
And then there’s the Amazon mask fiasco. Tons of sellers peddling so-called N95 or KN-95 masks that are little better than a napkin. You’d be better off putting on a Batman mask and walking around. At least you’d know what it is.
We ran some sample searches and found so many listings we found questionable, many intentionally misspelled the word M - as.k like this or other versions to maybe try and circumvent Amazon.
Or listings with N-9–5 intentionally labeled this way instead of N95 because they are NOT N95 masks.
I emailed Jeff Bezos about this. He had his exec team call me.
I asked what is Amazon doing to protect its customers? The words I heard from its exec team were centered on how great its sellers were. The crazy listings are still on Amazon.
Perhaps Amazon is just making too much money off this to stop it. What motivation does it have to stop? Price gouging laws?
Analytics
Here’s the fix Jeff:
Run price analysis on all your marketplace items for the past 90 days. You already have the backend analytics. Then see which sellers have bumped prices astronomically on what items and which are potentially violating state price gouging laws which went into effect weeks ago.
Remove those sellers from your platform. Refund any price gouging purchases to customers. Run price analysis on state emergency controlled items and remove sellers who violated those laws.
The Customer Is King
The thing Sears forgot when it dominated catalog sales was that new companies could overthrow its domain. Amazon is the new ‘catalog’ company of this era … but its weakness has been exposed.
In my opinion and experience searching and doing test buys on Amazon the past month, its marketplace has turned into a price gouging platform.
So, you and I and everyone as customers who made this platform a success in the first place have to hold Amazon accountable to be fair and price items IN LINE WITH LOCAL SUPERMARKETS AND PHARMACIES. And in line with price gouging laws.
Amazon stock (AMZN) is only as valuable as its on-going business value. If it chooses to ignore its customers and allow sellers to abuse the platform then thank goodness that customers can buy from Vons, Walmart, CVS, Costco and many, many others.
Without buyers it’s just a website with a smiley logo.
-steve
steveharmon@gmail.com
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