Lollipops are flying around Amazon, and it looks like we’re the suckers.
Amazon is unable to prevent a coterie of sellers from shipping Sam’s Club products to consumers – which is against Amazon policy – the maker of Dum-Dums told Bloombergadding that it likely cost the company “millions”.
“It’s become a tsunami that we can’t control,” said Mitchell Owens, e-commerce manager at Spangler Candy Co, which makes Dum-Dums.
What is dropshipping?
Dropshipping is a process where people can earn money, often learning from online tutorials, how to ship an item from a retailer to a consumer, using Amazon, and keeping everything profit you can get, the outlet wrote. You are not supposed to ship direct to Amazonbut, as Owens argues, there are far too many people doing it for the platform to stop them.
“There’s a whole cottage industry that encourages people to start their own businesses selling on Amazon and shipping directly from other retailers,” Owens told Bloomberg.
Essentially, sellers can, easily and for free, writes Bloomberg, list 500 Dum-Dums on Amazon, for a dollar less ($25) than Spangler’s price. When someone places an order, the seller goes to Sam’s Club, buys the Dum-Dums for $15, and ships it to the customer who bought it for $25, earning $6 per sale after shipping. Amazon.
The tsunami of sellers
It’s a tidy diagram. Owens said he used to flag sellers, but that has become more unmanageable over the past six months, possibly due to people working from home looking for easy side hustle online.
Essentially, Owens told the outlet that by the time he complains, new ones have already popped up.
He estimated the scam “cost him millions of dollars in lost business and legal fees,” the outlet wrote. “Amazon is too big to listen to anyone,” Owens told Bloomberg. “If you get your hands on someone, they’ll be like, ‘I don’t know what to tell you. Even if it violates our policy, there’s nothing we can do about it.'”
Bloomberg also spoke to two salespeople participating in the lollipop programs, who largely dodged questions. One person, Ali Haider, who teaches people how to dropship (but said he’s never encouraged people to do lollipops), said that while it’s against Amazon policy, it’s quite easy.
“You can do it from anywhere in the world,” he told Bloomberg. “Following this model is not a problem.”
“We do not allow sellers to ‘ship’ to other retailers, and our policy prohibiting this behavior is a long-standing one. We monitor a variety of data and signals to detect, investigate and enforce violations of this policy,” an Amazon spokesperson said in an emailed statement.
Sam’s Club highlighted its drop shipping policy, which states that dropshipping resellers are people who list their products on a third-party site and are only allowed to ship to 10 addresses for free. “Our merchandise is only for our members who pay a membership fee,” he adds.