Lollipops are flying around Amazon, and it looks like we’re the suckers.
Amazon isn’t able to stop a coterie of sellers drop-shipping products from Sam’s Club to consumers — which is against Amazon’s policy — the maker of Dum-Dums told Bloomberg, adding that it likely has cost the company “millions.”
“It became a tsunami we can’t control,” Mitchell Owens, leader of e-commerce at Spangler Candy Co, which makes Dum-Dums, told the outlet.
What is drop-shipping?
Drop-shipping is a process where people can make money, often learning from tutorials online, on how to ship an item from a retailer to a consumer, using Amazon, and keeping whatever profit you can get, the outlet wrote. You’re not supposed to drop-ship on Amazon, but, as Owens argues, there are far too many people doing it for the platform to stop them.
“There’s an entire cottage industry encouraging people to start their own business selling on Amazon and drop-shipping from other retailers,” Owens told Bloomberg.
Essentially, sellers can, easily and for free, Bloomberg wrote, list a 500-count of Dum-Dum’s on Amazon, for a dollar less ($25) than Spangler’s price. When a person puts in an order, the seller goes to Sam’s Club, buys the $15 Dum-Dums, and ships it to the customer who bought it for $25, profiting $6 a sell after Amazon fees.
The tsunami of sellers
It’s a tidy scheme. Owens said he used to report the sellers, but it has become more unmanageable in the past six months, possibly driven by people who are working from home and looking for easy, online side-hustles.
Essentially, Owens told the outlet, that by the time he complains about them, new ones have already emerged.
He estimated the scam has “cost it 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 actually get a hold of someone, they’ll say, ‘I don’t know what to tell you. Even though it’s violating our policy, there’s nothing we can do.'”
Bloomberg also talked to two sellers participating in the lollipop schemes, who largely ducked questions. One person, Ali Haider, who teaches people how to dropship, (but said he never encouraged people to do lollipops), said even though it is against Amazon policy, it’s pretty easy.
“You can do this from anywhere in the world,” he told Bloomberg. “Following this model is not a problem.”
“We do not allow sellers to ‘drop ship’ from other retailers, and our policy prohibiting this behavior is longstanding. 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 pointed to its drop-shipping policy, which says that drop-shipping resellers are people who list their products on a third party site and are only allowed to ship for free to 10 addresses. “Our merchandise is meant solely for our members who pay a membership fee,” it adds.