An Amazon Store
Amazon says toy sellers must be compliant with security if they want to sell in the marketplace. But some sellers are not asked to submit security documents until weeks after they begin selling, leaving Amazon's marketplace open to potentially unsafe products, CNBC has learned.
Amazon reached out to a group of new toy sellers in recent weeks, asking them to submit the "necessary security documentation" for toys already available for sale, according to an email seen by CNBC. Amazon said the submissions had to be sent by September 9, 201
The email highlights a potential loophole in Amazon's product safety practice, which has come under scrutiny following a recent Wall Street Journal report that found over 4,000 unsafe or federally banned products sold on the Amazon marketplace, including certain high-level toys. The gap between selling and checking for security compliance can contribute to the proliferation of unsafe products on Amazon, experts say.
"This really speaks to Amazon's & # 39; move first and fix later & # 39; mentality," said Garrett Bluhm, founder of Vendient, an online sales consultancy.
Amazon's third-party marketplace is where independent vendors sell products directly to Amazon customers. Nearly 60% of all sales volume on Amazon came from third-party products last year, up from just 30% in 2008. Amazon had over 2.5 million active third-party sellers at the end of last year, averaging around 3,400 new sellers, according to Marketplace Pulse each day.
The tremendous growth of the third-party market has contributed to Amazon owning the US e-commerce market, but it has also been shown that it is difficult for Amazon to politicize effectively, leading to issues such as fakes and counterfeit reviews. The WSJ article revealed how Amazon's marketplace is not doing enough to protect consumers from potential health or safety risks, as thousands of products failed to meet security compliance or lack warning labels.
Amazon's spokesperson told CNBC that the company is requesting security documentation "very shortly after a product is listed by a third party seller. Recent documentation requests are part of Amazon's" long-standing product safety activities "and are" not a new program or as response to the Wall Street Journal article, "the spokesman said.
" All products offered in our stores must comply with applicable laws and regulations, and we regularly contact sales partners to request safety documentation to ensure that the products in our store meet the Consumer Product Safety Commission's security standards, "Amazon said in an email statement.
the necessary security documentation would be removed immediately, the spokesperson said. Without specifying, the spokesperson also said that Amazon is requesting compliance documents for some product categories before displaying a product. In a blog post published after the WSJ article, Amazon said it was blocking more than 3 billion suspected lists of "various forms of abuse, including non-compliance, before being published in our store."
& # 39; Move first and fix later & # 39;
The email address is pretty straightforward. "We are contacting you because we show that you can sell items in the Toys category," the email said, shared with CNBC by two third-party sellers. "As part of our ongoing work to provide the best possible customer experience, we confirm that your product meets the applicable mandatory safety standards."
It includes an Amazon help page that states that Amazon "can request toy documentation at any time to confirm compliance," with links to the safety standards of the ideal testing agency ASTM International and the US Consumer Product Safety Commission. It also states that sellers should have the correct certificates and test reports that meet the safety standards.
The policy of requesting documentation for some products only after they are on sale helps speed up the listing process and quickly expand Amazon product selection, according to Bluhm. Amazon prioritizes having the widest range of products for sale, creating a flywheel effect of attracting more customers and sellers to its site. This can result in lower prices, but often comes at the expense of poor product compliance oversight, Bluhm said.
"Customer engagement is often seen by Amazon as offering the widest range of products at the lowest possible price, while customer safety has in some cases been treated as an afterthought," he said.
Amazon uses automated tools to identify products that need more attention, according to Rachel Johnson Greer, a former Amazon compliance manager who now runs her own consulting firm, Cascadia Seller Solutions. But given the different products that require different types of security documents, it is almost impossible to check each new product to be in compliance before listing, she said. A better approach, she added, would be to set up a more stringent onboarding process for certain categories, such as toys and baby products.
"Amazon is not effectively tackling the problem," Greer said.
Some regulators are asking Amazon to be more responsible. Three Senate Democrats, Senator Richard Blumenthal, Senator Bob Menendez and Senator Ed Markey, wrote a letter to Amazon CEO Jeff Bezos last month, following the WSJ story, calling on the company to take steps to stop unsafe products on Amazon. In July, a federal appeals court ruled that Amazon could be held responsible for defective goods sold on the site by third-party sellers, challenging Amazon's long-standing position to deny liability for those products.
To ensure full security in line with all new product listings, Amazon would have to invest much more in personnel and technology, Greer said. While Amazon has implemented several new security protocols over the past year, including requesting certificates in certain subcategories, it is unclear exactly how Amazon will block all forms of bad actors, including those that can forge papers, she said.
"Amazon was built on customer trust – if they want to keep it, I think they have a clear commitment to doing better," Greer said.
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