Amazon, The Big Engine That Can’t

Sometimes when a company says they have great customer service, they don’t.

They may, though, have a hopeful program in place that aims to have great customer service, based on the fact they have bad customer service. Often this effort will be bolstered by advertising about how great their customer service is. In fact, often, if you want to know what a company is particularly bad at, just take a look at what they claim to be great at.

For Amazon, this dynamic is easy to see in the “Advantage” program.

Amazon HaystackThe warehouses Amazon continues to build around the U.S. are not justified logically. The programs they support are for small sellers (like me) and don’t work. The company is denying the complicated problem by just building more.

Big Words

“Amazon Advantage” is a program for sellers that falls between the bigger “FBA” (Fulfillment by Amazon) and smaller “Vendor Express.” The company makes a sport of giving things clever names, often which “express” the exact opposite of what they accomplish.

Vendor Express, for example, while I haven’t used it, is sure to slow down your operations. I took a look at “Express,” but was so confused at the time (about “Advantage”) I couldn’t pull the trigger. It was an ethical decision … a trust issue.

Then I bailed on Advantage.

I had found Advantage put me at a clear disadvantage in the eyes of my customers. The customers were also at a disadvantage, receiving products weeks after placing orders because of the convoluted system, and Amazon itself didn’t seem to get any advantage either, just a disappointed customer and confused vendor. The only advantage I can see using Advantage might go to Fedex, Amazon’s preferred carrier, which I have to pay money to for no reason other than to facilitate very long delivery times.

Unlike other platforms for small sellers, more of which are popping up as apps every week, for Advantage I had to proudly pay money to ship products to Amazon’s fulfillment centers. I felt very big and important doing this. Sometimes when the products sat there for awhile, I had to pay to have them shipped back to me.

The feeling of being big and important wore off quickly, when Amazon’s promise to give me more visibility under “Advantage” went wildly wrong, with other sellers able to hike prices for my CDs and ruin my prospects for sales on the better-looking pages I got. Red Rhino, just another seller, claimed to have many of my CDs for over six-hundred-dollars, and Amazon was no help. I was dead in the water and canceled all my Advantage products. After leaving the program, Rhino is still selling my CDs for $650, but he no longer gets the coveted “buy box” which appears to customers to be the official price.

Illogistical

Advantage is a scaled-down FBA, which is a longstanding program for middle-sized companies to let Amazon do fulfillment from its warehouses. FBA has no hidden redeeming quality. It’s selling point is better visibility and a proper page (not downscaled), but the benefit, in reality, is nebulous.

Medium-sized companies can warehouse things themselves or manufacture on demand. Essentially what Amazon is doing with these fulfillment programs is selling visibility, but the cost for the small guy is daunting and aggravating, and turnaround for delivery is paralyzed.

Amazon guesses what they need in inventory, or waits for an order then asks the vendor to send it to them so they can fulfill it; it takes forever. Products are shipped twice, once to the fulfillment center, then to the buyer.

Amazon is pushing the smallest version of FBA, “Express,” while courting cities to host big new warehouses. To me, as a vendor with an idea of how it works, the warehouses seem like graves the company’s digging for itself.

Despite its name, there’s no advantage to anyone using Advantage.

None of the fulfillment programs where Amazon holds stock in its warehouses as an efficiency play work as intended. In fact, they are an inefficient attempt not at efficiency but at distinguishing Amazon from eBay, Amazon’s number one internal problem since opening the jungle to the public seller.

How It Really Works

Here’s why.

There are three ways Amazon sells.

One, itself – it has its own inventory – how Amazon operated originally.

Two, big sellers it partners with. These big companies gain a presence, branding and visibility on Amazon, which takes a piece of the action. Simple and obvious. In this scenario inventory control and logistics need not be reinvented.

Third, the small seller, like me. We ruined Amazon from the first day they allowed us to sell there, and have been wondering if anyone cares about us ever since. In quantity, the little seller is significant. The only way Amazon can make money from the little guy is with little fees, creating thick bureaucracy to invent and collect these fees.

When Amazon opened up to little guys, a lot of people tried to sell things like used sneakers and old popsicles. Can you even imagine the policing, for legal reasons alone, that didn’t exist before the little seller started contributing? These are people with ideas!

dragon flyingAmazon’s primary purpose became not to help little guys sell, but to stop them from doing it wrong. Duplicate listings became rampant (not a problem on eBay because every listing is unique). If I had a widget, Amazon instructed me to list it on the page that already existed for that widget in the catalog. But there was no good function to stop me from creating a new page for the same item at a higher price, hoping buyers would land on my Amazon page and buy mine … the way eBay works.

Amazon surprisingly didn’t foresee, and couldn’t police, a daily onslaught of ugly, misspelled, duplicate listings being enthusiastically created, along with new attempts at policy circumvention thought up, by the new little guys.

Amazon-fulfillment programs driving the building of vast new warehouses is not a sign of increased sales for a profitable company, but a knee-jerk reaction using power and money to a huge failure to control its public selling platform by taking as much of it as possible under its wing.

Why, Why, Why?

In sociology it’s called a “control issue.” It could also be called simple complication … or maybe bureaucratic greed!

If you’re using an FBA program, Amazon gives you a decent looking page (for your unique products) and puts you in rotation for the “buy box,” which doesn’t exist on basic, scaled-down pages. You pay more in fees for sales, and pay for shipping to fulfillment centers for every product, and for shipping back to you when products don’t move. All this unnecessary shipping gives Amazon control of items on a SKU level, which, unlike eBay, is the language Amazon speaks.

Like a fussy parent, Amazon scolds its sellers “You have to barcode and pay for shipping all around the country or you can’t play! You have to send it to me so I can make sure you’re following the rules!” And this, oddly as a frog in a champagne fountain, is why Amazon is building expensive warehouses everywhere.

This is why I suggested it’s complicated. It doesn’t even make sense when you drill into it – I can envision the big board meeting – “Let’s make money by requiring our sellers to ship to our own warehouses for no good reason!” It reeks of bureaucratic band-aiding; they will fix the cowboy seller problem by downgrading the newbie seller and hiding them in the haystack, then use their existing inventory-management system, which is SKU-based, to eliminate the disrespectful use of their database by the selling public (who are used to eBay). You can’t beat it. It’s numerical. Problem shelved!

To use the SKU-system, the extra shipping and new facilities are just required layers. It makes sense … like a neverending membership to the Handyman Club of America! You have to pay to play!

When I said it makes sense, I hope you wondered where my head went just then! What Amazon did is expand its already-fine mid-sized FBA program, to compete with eBay, creating blueprint programs with simpler interfaces aimed at small sellers, which will never be appealing to small sellers, but requiring building huge new warehouses, just to stop people from destroying the A-database by doing what they were invited to do … as part of competing with eBay … list their stuff on Amazon. It gives new meaning to “unthinkable.”

Was the title of this section “Why, Why, Why?” … Good!

Three Easy Questions

Amazon is raising the bet because it has a lot of money, not because it has a good hand. Not only is its hand not winning, it’s not secret or surprising. The company’s poker face consists of its hoping you’ll think building “fulfillment centers” sounds like a positive thing. But in reality the next best move would be to fold, not build the warehouse.

The truth is simple for any non-expert to see:

1) Would eBay be better if it had warehouses where people had to send their products for fulfillment?

2) Would fulfillment centers be an improvement for any small seller platform?

3) Doesn’t it seem it would create unnecessary costs and delays?

You’ve Heard of Smart Phones?

Things are getting smaller, not bigger; more specialized and custom-fitted, not gargantuan, lumbering and cumbersome. Someone tell Amazon; they won’t listen to me! The company is a dinosaur walking the Earth, creating new enormous nests and promising to bring dino eggs that will produce mega tax dollars for its hosts.

But the entire universe is going in a different direction. There is no “one stop shop” mentality to support the gigantosaur anymore.

Amazon’s warehouses are built on the promise not that people will buy from Amazon; they didn’t need a new facility for that; but on the promise people – members of the general public – will sell on Amazon, and be impressed enough with the “advantage” of Amazon fulfillment to utilize it. Amazon’s most-basic seller functionality (“Have one to sell? Click here!”) does not require any new warehouses. If you’re following along … you may see the warehouse plan has zero justification.

The general public has always sold on eBay and Craigslist, not Amazon, and Amazon’s attempt to become a seller platform for the littles is failing in dimensional ways.

Phone apps like Poshmark and Letgo are threatening even eBay, the enormous real home for the little guy.

The Forest Is Black

Amazon has become so big its own management is lost in there somewhere. They thought us little sellers would keep them company in their confusion, but we’ve moved on already.

In the public eye, Amazon will continue to call its graves warehouses and tell the press they have promising eggs incubating.

But the future is no Flintstones cartoon. It’s a fleet-footed fickle-minded lady who buys used on the neat new platform her yoga friends told her about. Amazon’s becoming extinct in style; in the news, spending supersized dollars.

Maybe it’ll survive to sell a book someday … about its own demise.

It could be called “There Are Frogs In Your Champagne!”

Maybe I’ll write it!

Then again … maybe not!

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