Here is How Bad Amazon Price Gouging Detection Fails

As states issued stay-at-home orders because of the coronavirus pandemic and more shoppers went online to purchase essential goods in March and April, law enforcement officials called on Amazon and other online marketplaces to address thousands of complaints of price gouging.

In late March and most of April, the focus was on essential products such as toilet paper, paper towels, tissues, food, sanitizers, cleaners, masks, etc.

However, as local stores started to catch up on inventory, and stay-at-home orders were loosened, media reports and law enforcement focus of price gouging on online marketplaces appeared to wane.

Also, online marketplaces said they developed more automated tools and restricted categories from new sellers to curb the problem of sellers taking advantage of the situation.

While it certainly is better than it was in March and April, price gouging is still flourishing on Amazon and other marketplaces.

A recent article by The Verge describing price gouging on Amazon got me looking again at the marketplace and see if what they claim is true; sellers misclassifying items as collectibles to bypass automated detection.

Fitness products have been one of the hottest selling items online as people were stuck at home and looking to stay healthy with most gyms closed due to coronavirus restrictions.

Anyone that went online over the last few months found it was difficult to find some fitness products, especially if you were looking for brand name products.

The Collectibles Work-Around

If you search for “Bowflex SelectTech 552 Dumbbells” on Amazon, you will likely come across this listing.

The first thing you notice is there is no buy box because Amazon has no inventory in its warehouses.

But Amazon provides a link to “See All Buying Options” and it also displays “Collectible (18) from $884.99 + FREE Shipping” notice.

What? These Are Collectible Items Now?

Let’s look at the offers from the marketplace sellers and top to bottom (showing 8 out of 10 offers here), all are marked as “collectible” with the total price delivered ranging from $884 to $1199.

Some sellers are offering “free shipping,” many are offering a what appears to be a calculated shipping cost of $64.49 to my zip code, but one seller even wants $192.03 for shipping!

Most sellers have a few ratings, but several sellers appear to be brand new as Amazon shows “Just launched” under the seller name.

Usually, new sellers are on a short leash with marketplaces, but apparently not when selling “collectibles” on Amazon.

So, let’s compare these prices to what Bowflex shows on their website. Manufacturers usually display suggested retail prices (MSRP) to protect retail sales channels.

On Bowflex, the price for the same dumbbells sold as a pair is $329. Compare this to the pricing on Amazon that starts at $884 delivered, almost three times the MSRP.

Not a great deal, is it?

The Amazon listing is the primary listing for this product on their platform. This is evident from the over 7,000 reviews Amazon shows for the dumbbells and that it uses almost all official Bowflex graphics, images, video, and other intellectual property.

So, this is not some rogue listing where a seller copied official images and just launched a brand new listing that Amazon knows little about.

Clearly, Amazon has historical price information on this specific listing (ASIN) and apparently the best way to circumvent automated gouging detection is to classify the item as a collectible. 18 sellers did so!

Just to prove the point Amazon should have this pricing data and how obvious it is there are “pricing issues,” here is three months of pricing data from CamelCamelCamel.com an independent and free Amazon price tracking tool.

It is pretty clear that Amazon places no weight on the item condition of “collectible” when it comes to its listings, regardless of history of the product on its site.

Supposedly, Amazon uses price ceilings as one way to combat price gouging. But how and when that seems to be secret. And it does appear percentage-based price changes are not considered as apparently 300% didn’t trigger a review!

But it gets worse!

Amazon Renewed

Not everyone knows that Amazon operates an official refurbished store called “Amazon Renewed.” The tagline for the store is, “Shop Refurbished, Pre-Owned, and Open-Box Products on Amazon Renewed.”

Amazon vouches for the products in its store by stating, “Products on Amazon Renewed have been inspected and tested by qualified suppliers to work and look like new, and come with the Amazon Renewed Guarantee.”

Great deal right? This is where shoppers can save money on items and still have the full backing from Amazon. As it says in the listings:

“Product works and looks like new. Backed by the 90-day Amazon Renewed Guarantee.”

“This product has been professionally inspected and tested by Amazon-qualified suppliers. The product may have minimal scratches or dents, and a battery with at least 80% capacity. Box may be generic and accessories may not be original, but will be compatible and fully functional. This product is eligible for a replacement or refund within 90 days of receipt if you are not satisfied.”

Do these dumbbells look familiar, found under the Amazon Renewed label?

You got it, $1190.96 for the same Bowflex dumbbells, but offered under the disguise of an “Amazon Renewed” listing.

Most buyers reading this listing would assume this is an Amazon listing and wouldn’t notice that Amazon says “Ships from and sold by Murloc Express.” Instant Credibility one might say.

So, is Murloc Express an “Amazon-qualified” supplier as the listing implies? Or was the seller able to use the “Amazon Renewed” listing for this product to add inventory to the item? Maybe another loophole or bug on the Amazon platform!

The answer is that Amazon restricts using ASIN’s (the internal product codes) of refurbished items under its Amazon Renewed name only for use by previously authorized sellers.

Yes, this is an authorized, pre-screened reseller for Amazon Renewed!

As you can see from the right side of this screen, which is a screenshot of the back-end for sellers to add inventory to Amazon on existing product listings, it requires prior approval.

Not every seller can add listings to the Amazon Platform using the Amazon Renewed ASINs. Here is the wording when a seller tries:

• Currently you are not approved to list Certified Refurbished ASINs. Learn more
• Refurbished condition: You cannot list the product in this condition.
• New condition: You need approval to list in this brand.

Unlike the items being sold on the primary listing for these dumbbells, there is no indication this item is being sold as a collectible.

Instead, this item is sold as fully vouched for product with the full support from Amazon!

The good news appears that once a buyer finds out they got fleeced, Amazon will allow them to return the product… or will they if used?

Again, this is a product with price history and there is even buyer feedback from last year that says, “Refurbished and you save $7 what a rip off(sp). Just buy new.”

To me, this confirms last year this item was priced much closer to the Bowflex MSRP than the current price of $999 plus shipping.

And this again begs the question, is a 300% surge in pricing over previous sales prices okay at Amazon? And if not, why are there no apparent controls to flag such items?

These are not new listings. I have found some sellers that have created new listings for the Bowflex dumbbells trying to avoid detection by making changes from the primary listings.

Often they change titles (such as only selling one dumbbell), avoid UPC codes, manufacturers SKUs, etc.

I can understand how that might be more challenging to sort out in an automated way.

Although, Amazon’s AI is good at suggesting what I want to buy next, so shouldn’t it be as good to find rogue listings, especially if they use manufacturer product images or text?

Is This Price Gouging?

The laws around price gouging can be vague and vary from state to state.

Fitness equipment is not essential product category and one can find many dumbbells on sale on Amazon for far less money.

These particular dumbbells seem to be out of stock on most reputable websites, so one could argue that if people want this item, allow sellers to list them at any price.

If a buyer is willing to pay over three times the street or manufacturer suggested retail price and the item is not a need, but a want, who cares?

Well, Amazon built a reputation for providing new products at affordable prices and there should be some expectation buyers are protected from obvious price gouging.

Even Amazon believes consumers shouldn’t have to worry about this problem.

“As people across the country focus on protecting the health and safety of their families and communities—and stretching every precious dollar—one thing they shouldn’t have to worry about is being taken advantage of by bad actors seeking to profit off the COVID-19 crisis. Yet, unfortunately, we’re seeing a nationwide surge in complaints about price gouging.”

 

From Blog Post by Brian Huseman who oversees public policy for the Americas at Amazon

Amazon Seeks Federal Legislation to Solve Price Gouging

On one hand, Amazon says that obvious price gouging is not good business and it wants to protect customers from “the most egregious bad actors.”

“Legislation should also help law enforcement target the source of the problem. Specifically, pricing prohibitions should apply to the party who actually sets the price of a product. In addition, clearly defining the scope of products that would apply to the statute will help both state attorneys general and the FTC zero in on the most egregious bad actors.”

 

From Blog Post by Brian Huseman who oversees public policy for the Americas at Amazon

But it sounds a bit hollow when there are obvious instances of “egregious” problems on the site that it apparently can’t fix… Or does Amazon feel a 300% price surge is not egregious?

Even if Congress would pass a law to help define price gouging better, it would take technology to find these “egregious bad actors.”

It seems to date, Amazon has not figured out a way to flag listings when prices jump 300% and that this price increase could be a problem. And until such “advanced technology” is developed, asking for new laws appears a bit premature.

Note: Here is The Verge article that also includes additional examples of items they found on Amazon that seem to take advantage of the collectible loophole.

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