Consumers face significant risks with Black Friday on Amazon

It’s that time of year again — a time when families and friends gather together to share a Thanksgiving meal. Of course, like it or not, there’s also the retail side of this annual holiday. “Black Friday,” as the day after Thanksgiving has come to be known, probably has more of a jaded past than many of us realize. Indeed, historians believe the term was first used in 1869 to signify a crash of the U.S. gold market. Nonetheless, today the term is ubiquitous with the day-after-Thanksgiving sales that have consumers flocking to local shopping centers in droves. Industry watchers predict that this year’s Black Friday sales will top $87 billion.

Of course, the internet — and Amazon in particular — has tweaked Black Friday even further. Indeed, Amazon extended its holiday sale through “Cyber Monday” — a day of online sales that Amazon coined in order to exploit Thanksgiving sales into the following work week. This marketing decision was no small feat for Amazon. In 2018, for example, the online retailer was reported to rake in nearly $18 billion between Thanksgiving and Cyber Monday.

significant risks

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Many shoppers enjoy the convenience of this online shopping extravaganza. They don’t have to get in their cars, brave the crowds, stand in long lines, or fight over limited in-store inventory. What those shoppers may not know, however, is that there are significant risks that come with making Amazon their exclusive holiday shopping venue.

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The trouble with Amazon’s holiday sales

According to Bruce Anderson, co-founder of eEnforce (a leading brand protection firm for hundreds of global brands) there is a flood of household name products being sold on Amazon that are potentially unsafe and shipping directly from China. In many cases, these are not the products those brands intended for the marketplace. In some instances, they are cheap knockoffs. In other instances, they are genuine products picked up by Chinese distributors at rock bottom prices due to being damaged, expired, or discontinued.
In a recent interview, Anderson stated that “leading brands like Zippo, NIKE, PUMA, Wilson, Casio, NGK, Plantur, JB Weld, and numerous others are facing significant challenges with defective products bearing their brand name being sold for cheap on Amazon. These products are shipping from Chinese sellers and pose potential safety and quality control risks for holiday shoppers.”

Anderson also notes that even though not all of these products are counterfeits, they still may pose significant risks. In particular, he wants consumers to be hyper aware of where their online products are coming from. “Just because a product is sold on Amazon,” Anderson warned, “doesn’t mean Amazon is the true seller.” In fact, Amazon sells over half its products through an army of over 10 million third party retailers (“TPRs”) who peddle products through virtual storefronts that they purchase from Amazon. To the consumer, a TPR-sold product looks just like any other product sold by Amazon. In truth, however, many of these products were obtained by the seller through illegitimate means. This allows for sales on Amazon at prices far below the manufacturer’s Minimum Advertised Pricing policy. Unfortunately, those products may also be dangerous.

What buyers need to know

In light of these risks, Anderson’s firm has put out a sort of “primer” for online holiday shoppers. Here’s a list of things consumers need to know when considering “too-good-to-be-true” deals on Amazon:

  1. Just because a product is a name brand does not mean it is safe. Many times the brand doesn’t even know these TPRs are selling the company’s products on Amazon.
  2. Just because a product is cheap doesn’t mean you should buy it. Brands put a lot of time and resources into protecting their consumers. Those protections may go out the window when a product is sold by an unauthorized TPR.
  3. Just because an online product listing shows packaging that looks like the brand’s packaging does not mean it comes with the manufacturer’s money-back guarantees or other warranties. The brands that are most concerned with these protections typically provide a list of authorized retailers on their website, along with information about warranties, guarantees, and safety standards.
  4. You cannot assume Amazon will have your back if you purchase a faulty product from an unauthorized TPR. Amazon is a profit-driven entity and, as such, does next to nothing to police its site for illegitimate sellers.

How should consumers protect themselves?

According to Anderson, consumers can take steps to protect themselves from unscrupulous TPRs on Amazon. His firm suggests that buyers take the following measures before purchasing a product at rock-bottom pricing on Amazon:

  1. Read the product reviews. If a popular product from a trustworthy brand is receiving dozens of negative reviews on Amazon, there’s a good chance that product is a knock-off or has otherwise been illicitly obtained by the seller (as part of a “damaged goods” lot, for example).
  2. TPRs that have virtual storefronts on Amazon will have their own site listing with the mega-retailer. Click on the seller name and study their reviews. If you see lots of complaints about things such as the seller not honoring a money-back guarantee, you should probably move on.
  3. Visit the manufacturer’s website to look for a list of authorized online retailers. If your seller isn’t on that list, purchase the product elsewhere.
  4. If you’ve already purchased a product and are concerned it may not be genuine, Anderson suggests you analyze the following:
    a. Does the packaging look like it came from the original manufacturer? Many brands, like Apple, pride themselves on their packaging. Packages that appear cheap, ripped, dented, or that contain spelling errors likely signal a problem.
    b. Does the packaging contain indications of products safety inspection controls, such as the United Laboratories logo? If not, there may be cause for concern.
    c. If the product is perishable, inspect it to make sure it is fresh. If it has an expiration date, make sure the product is not at or past that date at the time of purchase.

What if you’ve already purchased a faulty product?

So, what happens if you’ve already ordered a product on Amazon, had it delivered, and suspect that it is faulty? According to Anderson, there are some simple steps you can take that may not only help you get your money back, but might also help the brand to protect itself in the marketplace.

First, document everything. Save any and all emails concerning your purchase. Take note of the order, shipping, and delivery dates. Take pictures of the packaging, product, or anything else that simply doesn’t seem right about the purchase.

Second, post a review on Amazon. If possible, post the review on the page for the precise seller you purchased from. Make sure that your review flags which seller you purchased from.

Next, contact Amazon for information on returning the product for a refund. If you speak to a real person, share your concerns about the seller.

Finally, notify the brand directly about the faulty product. Share all of the information you have gathered about the purchased with their customer service representatives. While they may not be able to replace your product if you’ve purchased from an unauthorized source, your information will help the brand put a stop to illicit online sellers.

Fortunately, many people will buy products on Amazon from legitimate sources this week and will never have to worry about these issues. If you’ve been a victim of these online scams, however, knowledge and communication are your best tools.

Since 2012, eEnforce has become the only online protection and enforcement firm that maintains the legal licensure and capabilities to identify unauthorized sellers down to their EIN or social security number and then legally enforce compliance with a brands trademark. Their unique ability dwarfs the approach of most MAP software companies due to eEnforce’s ability to pierce the anonymity of online unauthorized sellers, force their permanent removal, and exposure of their distribution leakages sources within their distribution supply chain. Their proven process and cost efficiency has allowed eEnforce to work with over two-hundred brands that range from Global Fortune 100 brands, to smaller brands expanding their online sales. You can learn more at www.e-enforce.com or contact media@e-enforce.com.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver