Amazon: a billion-dollar business with pseudo-brands |


Status: 02/12/2021 09:29

On Amazon, customers can only buy thousands of brand-name products – often mass-produced. What is opaque to customers and entails risk is lucrative and almost risk-free for Amazon, such as panorama-show research.

Christian Baars, Sebastian Friedrich and Annette Kammerer, NDR

Everything is very simple, promise self-proclaimed experts and online consultants. Everyone can get rich. “Selling 55,509.66 euros in just 30 days” or even “six million a year”, everything seems possible. The supposed magic formula is called “FBA”.

The acronym stands for Amazon’s End-to-End Sales Processing Package: “Fulfillment by Amazon” (FBA). Merchants using the service only have to ensure that their goods reach Amazon’s warehouse from the manufacturer. The big corporation takes care of just about everything else – payment process, packaging, shipping, customer service – including shredding returns and unsold new goods.

The FBA business is booming

Thanks to the Amazon service, a completely separate industry has flourished for several years, the so-called FBA business. Retailers use special software to find gaps in the market on Amazon – mainly in the price segment below 100 euros. They then order bulk goods through other platforms such as Alibaba in China. Producers offer their products there in large numbers. Attraction: Brokers can have their own logo and name printed on it. In this way, they can present their goods on Amazon as “branded” products – and offer them at a multiple of the purchase price.

Nicklas Spelmeyer knows the business. The 23-year-old presents himself in numerous YouTube videos as a successful businessman and consultant. He says the opposite panorama, helped 500 people start the FBA business. In one of his films, he says that he started selling cold smoke generators for smoking meat or fish.

Currently, it offers pans and pots. A climbing tree for cats will be coming soon. It’s hard to find something that can’t be sold on Amazon, says Spelmeyer. Currently, he also sells panniers. He officially registered his brand “Forrider” two years ago. It presents itself on Amazon as a young, dynamic, bicycle-loving company: “We build bicycle bags with passion,” he says there. They are actually produced and supplied by a Chinese company.

“Completely Opaque”

Spelmeyer does not find this reprehensible. Things would just be assembled all over the world. “I wouldn’t say that just because he comes from China, there can be no passion behind it,” he says in an interview panorama. And: The dealer pretends to be the manufacturer in the FBA system.

Problem for customers: they can’t see where the products are coming from. By whom and how they are produced remains “completely opaque,” says Iwona Husemann of the North Rhine-Westphalia consumer advisory center. For example, for bicycle bags, the manufacturer on the Amazon website is “Forrider” and the print says the Berlin-based company. Nowhere is it written that the bags are shipped from China.

Amazon: $ 1 billion pseudo-brand business

12/2/2021 8:58 a.m.

Also: “Most consumers don’t know they don’t buy from Amazon at all,” says Husemann. The group only sees itself as a kind of intermediary between dealers and buyers. If there is something wrong with the product, Amazon is not responsible in Europe.

“Most of these sellers probably never hold their products in their hands,” says Amazon expert Juozas Kaziukėnas. by Marketplace Pulse, a US research firm. It describes FBA trading as “a kind of computer game” – albeit with physical products. This can be catastrophic when selling potentially “unsafe”, “unsafe” or “counterfeit” products. “Anything can go wrong,” says Kaziukėnas. Because this is not only bags and pans, but also helmets, toys for children, electronic equipment and medical products.

Lots of dangerous products

Two random samples from last year show how great the risk is: from the European consumer association BEUC and from the Danish Chamber of Commerce. They both ordered and tested products from third-party sellers on platforms, including Amazon. Result: Many of them were dangerous and should not be sold.

And that poses risks not only for customers but also for sellers, explains Mark Steier, once one of the most successful Ebay dealers in Germany and now an e-commerce expert. You can brand quickly through the FBA system and thus make a profit. On the other hand, many would underestimate the risk. “They overlook when, for example, products cannot be sold in that country because they do not meet safety standards.”

That’s why Steier urges Amazon to be more accountable: “Without such a platform, the business model would not exist. This means that if I am the inventor of this business model, I also have a lot of responsibility. ”

Safety is the “top priority”.

Amazon was reluctant to be interviewed on the subject, a company spokesman said when asked NDR and “Süddeutsche Zeitung” that Amazon’s sales partners are independent companies but must adhere to the terms of sale. Amazon requires all products offered to comply with applicable laws and regulations. Customer safety has the “highest priority”.

The group has “developed reliable programs to ensure that the products it offers are safe and compliant.” Suspicious companies would be blocked before they could register or post any offers.

Business for Amazon is almost risk-free

Overall, this business is almost risk-free for Amazon, and at the same time very profitable. About 40,000 German retailers sell products on Amazon, and about half use FBA. In addition, there are hundreds of thousands of third party dealers from over 100 other countries that also sell goods on the German Amazon website. They all pay high fees and often a lot of money for advertising to appear prominently on the platform. Juozas Kaziukėnas of Marketplace Pulse estimates that dealers would receive around 20 percent of the selling price. Amazon collects 40 to 50 percent. The company did not answer the question about these specific numbers.

But one thing is clear: According to MarketplacePulse, Amazon made about $ 300 billion worldwide from this business in 2020 – about 50 percent more than in the previous year. In Germany, it was almost EUR 30 billion, or about 63 percent of retail sales, the Cologne Retail Research Institute estimates.

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