The Baldy Center Blog Post 46. 
Blog Author: Tanya J. Monestier, Professor, School of Law
Blog Title: What You Don’t Know About Your Amazon Purchases

You probably consider yourself a savvy online shopper. Perhaps you’ve shopped on Amazon dozens, if not hundreds, of times and believe you have a good handle on how it works. You likely know that Amazon sells goods itself and provides a platform for third parties to sell their goods. Many of these third parties warehouse their goods with Amazon, so that when you place an order, that order is “Fulfilled by Amazon.” You probably also know that some third-party sellers on Amazon may be less-than-legitimate, with names like JKUYIO and KYMMOOO. It’s likely that you avoid these sellers at all costs and stick with goods that are “Sold by Amazon,” which you trust. But beneath the surface lurks a hidden truth, one that could change everything you thought you knew about Amazon. Prepare to have your trust shaken by Amazon’s dirty little secret.

Amazon largely sorts its inventory by good, not by seller. Every unique good will have a single inventory identifier, regardless of who the seller is. So, if one hundred sellers are selling a Stanley water bottle—including Amazon itself—all those water bottles are pooled in inventory and sold interchangeably. If you purchase a Stanley water bottle “Sold by” Amazon, you’ll get a Stanley water bottle, but it likely won’t actually be “from” Amazon, since it will be just one of many Stanleys that could have been pulled from the pile. This “Stanley” could be a dangerous counterfeit, containing lead or other chemicals that leach into your water.

This inventory management practice is referred to colloquially as “commingling” — but Amazon prefers the more innocuous-sounding term “virtual tracking.” Regardless of what we call it, Amazon is lying to consumers about who their goods are truly sold by. Amazon represents to a buyer that goods are “Sold by” Amazon but then delivers goods that originated from a third-party seller, probably one based in China. Commingling is well-known in the Amazon seller community, but it is fair to say that the ordinary buyer has no idea that it’s happening and would not be pleased about it. 

If you want to know for sure whether the goods you are buying from Amazon are drawn from commingled inventory, you need to do some leg work after you receive the goods.  You need to go to your “Orders” and click on the “View Invoice” tab on the upper right side of the page.  There, your invoice will say:

• Sold by: [name of seller you thought you were buying from] 
• Supplied by: [same name as above OR “Other”]

If you see “Other” in the “Supplied by” space, your goods are drawn from commingled inventory. Recent legislation requires Amazon to disclose the actual name of the supplier of the goods so that customers can know who the goods are actually coming from. But Amazon doesn’t do this. Instead, they simply include the notation “Other” and hope no one will bother following up. I recently went on a wild goose chase trying to figure out who “Other” was on a particular Amazon purchase; I got nowhere.

In a recent article, I argue that the Federal Trade Commission should enjoin Amazon from commingling goods in inventory, as commingling constitutes unfair and deceptive trade practices within the meaning of section 5 of the Federal Trade Commission Act. Telling a buyer that their goods are from Amazon when, in fact, their goods are from KYMMOOO qualifies as a material misrepresentation. If buyers knew that Amazon was pulling this bait-and-switch, it would undoubtedly affect purchasing decisions. At the very least, Amazon should be forced to disclose to a buyer before a sale is made that the buyer may be receiving goods from a seller other than the one represented as the nominal seller.

You’ve likely heard the saying “buyer beware.” But how can buyers beware where the thing they should beware of is a closely guarded secret that Amazon is determined to keep under wraps?

RELATED LINKS

• INFORM Consumers Act | Federal Trade Commission
• SSRN article by Tanya J. Monestier, Amazon's Dirty Little Secret