Third Party Sellers Need To Rethink The Amazon FBA Program
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Step 1: User A purchases a shrinkwrapped DVD with excellent packaging from a counterfeiter in China.
Step 2: User A sells the DVD to an FBA merchant, who forwards it on to Amazon.
Step 3: User B buys the DVD from Amazon; due to commingling they get the counterfeit DVD. Before they can open it they get hit by a bus.
Step 4: User B's executors sell the DVD back to an FBA merchant, who forwards it on to Amazon without a second thought (since it's a shrinkwrapped DVD straight out of Amazon's warehouses.
Step 5: User C purchases the DVD from the FBA merchant, opens it, and finds its counterfeit.
In short, the FBA/commingling stuff means that merchandise you buy directly from Amazon can be untrusted. In turn that means that, as an FBA merchant, even merchandise that came directly from Amazon can be untrusted. Any shrinkwrapped DVD that has passed through an Amazon fulfillment warehouse is actually of entirely unknown provenance; it could have been purchased at a stall in Shanghai for all you know. And if your business relies on never selling a counterfeit DVD, then that means nothing you buy or sell can ever touch an Amazon warehouse.
I doubt this is a real concern (this is the first I've heard of any issues with counterfeiting and FBA), but it's still an interesting structural flaw. Given Amazon's volume, they're probably shipping out multiple counterfeit DVDs right now, under their own shipping label as well as that of various FBA merchants.
Fascinating.
Not to disagree, but as someone who lives in Shanghai and occasionally buys pirated DVDs, the quality (for a western show) is generally at least as high as you'd expect of official merchandise. I got all of Futurama on many fewer discs than the official stuff uses, at no visible hit to quality.
I find it unlikely that a user, as opposed to a media company running stings, would ever complain.
I'm trying to point out that the concept doesn't apply to software (and in this sense, digital video files are "software"). The majority of people care about the legitimacy of software only because they don't realize that it has no impact on quality, that software is completely unlike physical objects in that regard.
Now, there are counterexamples in the world; a Chinese producer of sunflower (I think) seeds became massively successful by taking the innovative step of branding his product ("Idiot Seeds") instead of selling it as the commodity "sunflower seeds". But I don't think that's the main force driving fear of bootleg DVDs.
I am unsure of the reason why the person you responded to wanted a "real" DVD, so we'll have to see if they respond to you.
I am also not very well versed on DVD ripping techniques. If you are: Are they 100% lossless?
dd if=/dev/cdrom of=name_of_disc.iso
Ripping to video files, instead of to a disc image, may or may not be lossless depending on the format you're targetting, but the norm (again, I believe) is to be lossy, since you can achieve really large amounts of compression.
All that said, it's really not that difficult to judge video quality directly; what you can't perceive literally doesn't matter. In my ripped video of The Princess Bride (completely legit, in that I ripped it myself from a DVD I owned), I eventually noticed that color was occasionally washed out, but only because I was going frame-by-frame trying to get good images of the swords. I would never have known otherwise.
It's about who you are supporting. People get upset when they find out they are supporting industries that are detrimental to the very franchise they are buying into.
How happy do you think someone who wants locally grown produce would be if they found out some dude was just importing stuff and selling it as locally grown at a farmers' market?
tl;dr It's about who the money is going to.
It's funny that you brought up Futurama, which is a show near and dear to my heart. I loved that show when it was on Fox and I bought the box sets for every season after they came out. So did a lot of people. The DVDs sold so well (not to mention that the healthy ratings rebroadcasts were getting on Adult Swim) that they made several direct-to-DVD movies. Those sold so well they made several more seasons of the show.
Futurama is far from the only show to be saved by brisk DVD sales. If counterfeit DVDs were tolerated, if nobody bought the first run of DVDs and the direct-to-DVD movies, the show probably would have died.
(The fact that the latter seasons kinda sucked isn't important...)
The point is, if a content creator makes something I like then I want them to be compensated. Buying counterfeit DVDs costs me money but the buying power of that money does not go towards supporting the stuff I like.
the quality (for a western show) is generally at least as high as you'd expect of official merchandise
I got all of Futurama on many fewer discs than the official stuff uses, at no visible hit to quality
If you got Futurama on many fewer discs than the official edition, it is extremely likely that the quality was not "at least as high as you'd expect of official merchandise." You may not have noticed it, in your viewing scenario, but it is almost guaranteed that your copies were compressed at a much higher level of compression loss. That, and the physical media itself is of unknown quality.
As a user, I would complain. Loudly.
My viewing scenario was a 16:10 17" screen (I believe 1440x9XX) and Bose headphones. That beats the resolution expectations of broadcast TV, and definitively crushes the audio expectations.
Full disclosure: I've watched Futurama in the form of torrented episodes （quality varies), chinese bootleg DVDs (high quality), and official DVDs (also high quality).
May I ask about your experience with Chinese DVDs?
That said, I was assuming the scenario of a counterfeit DVD that would play on any standard DVD player. Sure, there are more efficient compression algorithms now, but most aren't supported as standard on every DVD player out there. The base DVD specification is rather limited in codec support.
Those Futurama counterfeits - which compression algorithm are they using? Will they play on all standard dvd players?
I can think of a couple scenarios -- (a) my error, it's actually the same number of discs, but packed into one box instead of four boxes; (b) they're nonstandard, but still recognized as DVDs by VLC; (c) (highly speculative) something about the limited palette of cartoons makes them more susceptible to compression, and that was exploited.
For what it's worth, the reason I included the qualifier "(for a western show)" is that I once bought a set of bootleg DVDs for a chinese TV show, and they were compressed to the point where I found them unwatchable. They still played through VLC; my best guess is that DVD-making software was used on ripped, heavily-compressed video files. It is entirely possible that something similar was done for my Futurama discs, although no compression was visible in that case.
The original scenario is counterfeits getting mixed in with official stock on Amazon. If the counterfeit uses a compression algorithm that works on all DVD players, it won't take any fewer discs as compared to the original. If the compression algorithm chosen is something more efficient (such as H264), and uses fewer discs, it won't work on many players, and the whole "I find it unlikely that a user, as opposed to a media company running stings, would ever complain" as voiced by thaumasiotes, is no longer valid.
You make good points, and I don't object to the things you've said. I wish my situation was less fuzzily-defined. :/
Just as a side note, I say all of this as someone who does not agree with the MPAA nor copyright law in the US.
or the original copy sucked in the first place.
I can buy an original cd or blu ray and the case and the disc and everything are extremely cheap.
Just like you used to be able to get OReilly books in good quality ink and one day the new newsprint paper was yellowing right there on the Barnes and Noble shelves and the ink had a strange gloss to it.
Some original products simply suck and that's why a counterfeit can get close.
Amazon should in fact change their FBA policy so that they label the provenance of every FBA item that enters their warehouse. This situation as it stands now threatens to hurt the entire FBA program. They want to keep good sellers and identify the wrongdoers, otherwise they are allowing this structural flaw to persist. Not doing anything to mitigate it now that this seller has publicly brought this to light probably opens them up to liability for negligence in future cases.
Wow... that's a really good, low-tech solution.
"Your item must be a non-media product (you cannot send in books, CDs, VHS or DVDs without stickers)."
It seems Amazon actually no longer allows co-mingling of media products.
A friend's company have massive counterfeit problems with Beats by Dre headphones. In their case it's people buying genuine product from them, buying cheap (but cosmetically good) copies, and returning the copy (saying it's the original) for a refund. Testing every return isn't something most companies do so it had become a major issue by the time they'd worked out what was happening.
No reason why the same cosmetically convincing product couldn't screw up FBA co-mingling.
As best as I can tell, it seems that commingling is happening today, and may account for the bulk of FBA transactions (due to a few very large/old vendors still doing it), but the overwhelming majority of FBA vendors cannot commingle, many have no idea that commingling even exists, and if you signed up today you would not be able to commingle.
"80 companies were sued in the past 12 months".
Where did the new counterfeit items come from? Is someone making them and feeding them into these guy's pipeline? How does that happen?
How were there enough counterfeits to sue 10 companies a month? What did the purchase history look like for his last buyer of a new "the mentalist"?
Did the author mean to imply that Amazon might have shipped a forged copy that Amazon procured?
Why is the tone of the article so glib? Why was it posted on a site like that, and where is the follow up, now that it's a year later? And whats with his next article about selling xbox games in June
I'm a cynic and conspiracy theorist, but I can't help but wonder if this tribe of amazon merchants found a source for "new" DVDs that was too good to be true, and looked the other way while passing them to amazon. A more outlandish theory would be that the rights holders set these guys up to destroy huge volumes of used merchandise.
My first thought when reading the OP was that this is what probably actually just happened
Your cynicism may or may not be justified in this particular case, but as a general principle it's not a great idea to be an Amazon supplier. It's too easy for Amazon to say "screw you" or for buyers to scam you, as I discovered the proverbial hard way: http://jseliger.wordpress.com/2013/02/16/is-amazon-coms-mark... .
And I must say, I always wondered why Amazon seemed to be so "fair" to apparent competitors. Looks like "seemed" was right.
Also emphasizes the wisdom I read a while ago about YC not touching music related startups with a 10 foot pole. Media with insane rights holders does not sound like a safe domain to play in.
It's kind of like companies selling their premium soap under one label, and then selling the excess inventory to private label brands.
However here we're talking about direct competitors in selling new goods. Look closely at the right items, and you'll see that Amazon sometimes does two amazing things: if someone else is offering something new for a lower price, they, not Amazon will get the sale if you just click on the Buy button. (Of course, I'm often willing to pay a bit more to get it directly from Amazon.) If 2 or more including Amazon are offering it at the same price, Amazon sometimes rotates who gets the sale if you just hit the Buy button.
That's what I meant by "fairness", although I couldn't find any examples of this just now (ADDED: that might be because according to another commentator in this topic they only offer this for highly rated merchants). Then again if Amazon is analyzing my purchasing habits, they know a) I prefer to buy direct from them and b) for most of what I buy from them unit wise (but not price), I always check out lower priced new and used offers from their merchants.
And, yeah, especially with how much media I buy that's out of print, it's win-win-win for them. But to the extent this story is true ... well, it was a "new" item that was claimed to be counterfeit.
Amazon was a reseller for a product we launched on Kickstarter. Our product was a precision optic, made in the USA. A few months in, a counterfeit knock-off of our product was manufactured in China and distributed in great quantity. The counterfeit items had the same bar code and nearly identical packaging (except it said "Made in China"). The knock-off wasn't optical quality and took lousy pictures.
Third party FBA sellers were buying the counterfeit unit and stocking them at Amazon. These would appear as "Other Sellers" on our product page, and would usually be selected by default because of crazy low pricing. Amazon co-mingled the counterfeits with their own inventory of genuine goods that we sent them. They began to draw from the counterfeit stock for their own sales instead of the real deal. Customer reviews tanked.
We figured out what was happening since we knew these other sellers weren't legitimate, and we received counterfeit returns. We were able to ask Amazon to shut down the sellers, but the tainted goods remained in inventory. Amazon was either unwilling or unable to screen their inventory to eradicate the counterfeit goods. Since they were useless in fixing the problem we just stopped selling to Amazon and labeled the product page as counterfeit.
Is that how law works in USA, forget finding if the claimant has a case just destroy the little guy?
As this was a tort case, assuming it's like English law (big assumption), then the measure of guilt is the balance of probabilities. On balance with the evidence available did the defendant commit copyright infringement? Doesn't appear so - there's one DVD that no one can actually link to the supplier.
Also "He lost the lawsuit". Wasn't he just the CEO of an LLC?
When people scream and scream and scream about tort reform in the US, this sort of stuff is mostly what they're talking about. There are a wealth of lawsuits filed every year which have no reasonable basis that do nothing but make lawyers rich.
But he never showed up. Moral of the story: buy insurance. Budget for legal in the same way you budget for accountants.
(I am asking honestly, the last time someone I know said something along these lines they just said "Oh my god, that is terrible" then promptly did nothing and just hoped for the best.)
When you're kicked off, Amazon very clearly says (I'm paraphrasing) "If you appeal, explain why this happened and how you're going to prevent it from happening again". At this point, your only option (if you want to continue selling on Amazon) is to suck up your pride and do exactly that. You can not argue against their decision. You have to tell them you messed up and tell them you're going to fix it, whether or not you messed up and whether or not you're actually going to change anything. It's essentially that simple. Just try to make your "changes" sound as bullet proof as possible, and if possible, mention that you've already implemented them.
I am by no means excusing Amazon, mind you. I completely sympathize with the OP, and dealing with Amazon in any way is the worst kind of bureaucratic BS I've ever dealt with. (It once took me over 6 months to get the title of a book corrected, and during that entire time I had the book in my possession and sent Amazon copious pictures of it with the corrected title.) The only reason I knew how to write successful appeals was because another seller once told me. Otherwise, I would have done exactly the same thing, and suffered exactly the same problems.
edit: I should add that it seems as though all correspondence with Amazon is handled by very very low level employees, and there always seems to be a checklist or script they're always working off of. Unless you hit certain points on their presumed checklists in your emails (including your appeals), nothing gets done at all.
What went on after his official appeal (including talking to his "amazon contacts") is the bureaucratic BS I briefly mentioned. Almost nothing gets done that way, especially if one's previous official attempts (ie. the official appeal) were already concluded (and failed).
But he didn't mess up; if anything Amazon did. Kafka would be shaking his head with a resigned sigh at how Amazon set up their system.
There is nothing that terrifies Amazon management like a "?" email.
Not true, the ":(" email is much much worse.
Big companies do it all the time and smaller companies that don't have the financial means to defend themselves loose because justice is blind to everything except money.
A seller needs to have 'good' feedback to show up in the More Buying Choices box on a listing - getting a couple of silly negatives ("I ordered the wrong item and they sent me what I ordered! 1/5") on a Friday night can push you down so you only show up on the Used and New page for the weekend resulting a lot fewer sales.
I also recall that buyers leaving 4/5 instead of 5/5 carried more weight than it should've done, because then you didn't have 'perfect' feedback
URK! Could you be a bit more specific? I rarely give out 5 stars, since in my mind "Excellent" requires something above and beyond "normal", "Good" service, which is the expected level.
Does this just matter for the rare bird who has a 100% rating or thereabouts?
It probably matters less for sellers who shift a lot of stuff, but there was always the problem of annoyed customers being more likely to leave feedback. It can get pretty serious because your whole account can get suspended out of the blue if your feedback goes too far south.
Perhaps a better system would be to assume that customer is fully satisfied if they haven't left a negative rating after x amount of days.
For example: My mother has an enormous collection of DVDs, some of which she rented from the local DVD rental shop, loved, and then purchased a (new) copy from Amazon "just so she owns a copy" but has never rewatched it or even unwrapped it. As I don't watch DVDs, in the (hopefully long away) event of her passing, I'd be highly inclined to see if I could find someone to just take the entire collection off my hands for a reasonable sum. In theory, some of those DVDs, including "new" shrinkwrapped DVDs could end up as FBA merchandise.
In fact, it's entirely possible that she has a shrinkwrapped, counterfeit DVD right now without even knowing it (due to commingling, who knows where the DVDs she orders, overwhelmingly from Amazon, actually came from?); a timebomb waiting to take out some FBA merchant if it ever finds its way back into Amazon's supply chain (which isn't unlikely).
The more I think about it, the more FBA and commingling seem like utter disasters. It's mixing untrusted merchandise into a "trusted" pool; I can't know if the DVD I buy from Amazon came from Amazon or not.
This guy ran a sort-of successful business that was utterly dependent on Amazon fulfillment services without a good contract. No human at Amazon had any incentive for his business to continue -- not even a salesman. So when Amazon decided he was done, he was out of business. At least the email support guy felt bad about it.
At the same time, he's utterly dependent on Amazon. Fast shipping and outsourced fulfillment with the Prime tie-in keep him in business.
HNers should think about that when they make decisions that lock them into various tenant-based technology stacks.
Anybody else have experience with Amazon FBA for textiles/apparel?
For instance - could it be that Amazon was historically guilty of passing on a large amount of counterfeit goods via 3rd party resellers, and they are now just being overly strict as a counter-reaction?
Or is this an issue of Amazon being forced to respond this way, similar to Youtube taking down 3rd party videos?
I'm curious, as this is a very damning report against them, and behavior like this could kill them as a preferred supplier for used goods resellers.
The theory that this results in a side effect of Amazon destroying massive quantities of used merchandise, since that's the cheapest option for the target, is just about as plausible. A number of rights holders have been whining about used media, now that it's a LOT more durable than in the bad old, pre-polycarbonate, pre-digital era.
Similarly with the tort case for alleged copyright infringement - were Warner/Sony/etc. CEO's fined for their companies infringement of the music for the "you wouldn't steal a car" ads a while back?