I focus on original content on this site, and I don’t think I’ve ever reposted anything, but I read this article and it was too horrific not to share.
I’m going to let this story speak for itself. Here’s the bullet points:
- This seller had 55,000 DVDs at FBA warehouses
- They had their account shut down by
Amazonover one complaint. Not even a negative feedback – a complaint of a counterfeit DVD by a film company.
- They couldn’t afford to have the DVDs shipped back to them.
- Spoiler alert: It turns out the “counterfeit” DVD wasn’t even theirs (blame
Amazon‘s co-mingling program)
And it gets worse…
(Read the article below)
This article has me seriously reconsidering selling DVDs on
If you haven’t heard about this,
This is a really interesting (and terrifying) article.
Here it is, from Startup Nation:
“Third Party Sellers Need To Rethink The
Long time no talk. How are you? You’re looking good! How are the kids? How is your business doing? Did the doctor take care of that rash? Good. Good. Is your business growing? You hanging in there?
How am I, you ask?
Wow, is that a good question that does not have an easy answer. I think that before I answer that, I’d like to tell you a story. Do you have a few minutes? This is a pretty important story if you are a business owner and sell online. Ok, grab your coffee and pull up a chair.
For those of you who don’t know me, here’s a little back story. For 10 years I owned a company called Inflatable Madness, and even though we received 4 calls a week from people either asking for blow-up dolls or bouncy houses, what we actually did was sell used and new movies, music cd’s, video games, and books on eBay and
Around 4 years ago, everything collapsed very quickly. Resale prices for used media were plummeting as digital viewing and downloads kicked into high gear, eBay was steadily raising their seller fees, then the economy collapsed and our banks started calling in their loans, and finally our suppliers notified us that we had taught them how to sell used media so well that they were keeping their product that they usually sold us for themselves to sell.
So my business collapsed. It was the most traumatizing event of my life and I am still trying to get over it.
But, like you, I am an entrepreneur and the show must go on. I started another company that bought private collections of dvd’s, cd’s, and video games from people via several buyback websites. It was a great model – the customers sent us their product, we would receive the product in and pay the customer for everything that wasn’t scratched to hell or counterfeit, and then we would send all of the product to
For a long time I was very positive on FBA. I even blogged about it:
Also, we were doing very well with it. I ran a minimal crew and with minimal effort and we were generating numbers like this on
Time period 5/1/2011 – 10/31/2012
169, 013 units sold
I should also point out that we maintained an almost spotless seller record on
Still awake? Here comes the good part.
So, I woke up on a Monday in late October of 2012 with an email from
Within 48 hours,
So, just like that, my second business had been wiped out.
Hold the phone – there’s a lot more. Go get some more coffee
Well, I can’t really have a nice life just yet. Know why? Because I have 55,000 items stored at
We’re entrepreneurs – let’s do math!
55,000 x .50 = $27,500 + shipping to return my items
55,000 x .15 = $8,250 to destroy all of my items
Amount of money I have after the spectacular failure of Inflatable Madness a few years earlier = $0.00.
I try to explain my dilemma to
Amazonhas permanently closed my account. I have a large volume of items in the FBA program. I cannot afford either the .15 disposal or the .50 return fee. I would like to have my items returned to me. How can Amazonhelp me accomplish this? Amazon: Greetings,
I apologize for the current situation you are facing.
Unfortunately, there is no other way other than place a removal order or disposal order which will be charged of the amount you have already mentioned in your email.
We will not be able to exempt the removal or disposal fees in this case.
Please write back to us with your confirmation so we can go ahead with further processes for placing a removal or disposal order for your existing items in our fulfillment center
We look forward to hearing from you soon,
Me: I’m not sure you understood my original email.
Amazonhas turned off my account and cut off all of my income. I cannot afford either the .15 disposal fee or the .50 return fee. I feel that Amazonshould waive the return fee and give me back my inventory. Amazon: Greetings,
I deeply apologize and I completely understand your situation.
Please know that we will not be able to waive out the removal or the disposal fees as Sellers are not exempted of this fee. Therefore I kindly request you to create a removal order for the units present in the Fulfillment Center.
Sooo, there’s that.
Here’s where we start to go down the rabbit hole.
A few weeks later, I receive a phone call from another seller of dvd’s and music. Not just another seller – really they are the second largest 3rd party FBA seller of media on
He then very casually asks me how I was handling the lawsuit against me.
Exsqueeze me? Baking powder?
I tell him I have no clue what he’s talking about, and he points me to a legal website that states that I have been sued by a major DVD manufacturer/distributor for selling counterfeit.
This was at the end of October. I did not receive a single piece of paper about the case until mid-December. Sure enough, I was being sued for selling a counterfeit item on
I write to the attorney for the rights holder and explain that they’ve got the wrong guy and tell them all the reasons and statistics and track record of my company, and ask them to drop the case.
They don’t, and the case progresses through the courts while I helplessly watch.
The attorneys wait until the case passes a point of no return to actually send me the evidence they have against me. It’s a packet with photocopies of the
As you might expect, I cannot tell anything from these copies. The copies are in black and white and I can not find anything wrong with the boxset.
I again write the attorney for the rights holder and tell him that I don’t see any evidence of counterfeit, that it was a new sealed item, and that we obviously can’t open new items and inspect them because they wouldn’t be new anymore. They ignore me.
About a week later I had a dream. I was on a brand new cruise ship with a brand new crew and I was staying in a brand new cabin. The weird part was that I couldn’t find my cabin because they were all brand new and they all looked the same.
Within 2 minutes of waking up, I literally said “holy s**t!” out loud.
The item was new.
Which means it probably wasn’t mine.
In other words, the physical item I sent to
This time I got the attorney on the phone. I explained the situation to her, and she said “Mr Harmon, in California copyright law, we don’t have to prove that the item was yours – just that we bought the item from your user id on
So I called more attorneys, who were all willing to help me for $25,000. They would not verify what the rights holder’s attorney had told me, but they’d be happy to look it up for $25,000.
Ironically and suspiciously, a few days later my phone rang and it was an attorney from
“I’m just calling to inform you that there were no other sellers of that item that were in the co-mingling program,” the attorney said. Oh crap –
“I’m just calling to inform you that there were no other sellers of that item that were in the co-mingling program,” the attorney said.
Gang, I would love to be able to tell you that this story has a happy ending, but the fact is that I lost the court case. I’m the proud owner of a giant fine that will bankrupt me.
The title of this article is “Third Party Sellers Need To Rethink The
- I was an Excellent rated seller on
Amazonwith 97% positive feedback. We had never had a complaint for counterfeit, so the ratio stands at 169,013 to 1, or .00000592% . Amazonholds sellers to the highest standards in all of the 3rd party selling industry – that fact alone should have warranted some defense against this claim. Yet Amazonjust stepped aside and let a giant corporation obliterate me. I should also point out that the same company has sued over 80 other sellers in the same manner in the past 8 months.
- Once your product is at FBA, they’ve got you.
Amazoncan raise fees on you, which they have done, and they can even implement fees that didn’t even exist when you sent them the items. A few years ago, Amazonimplemented a new fee called a “long term storage fee” where they clobbered any seller with storage fees for items in Amazon’s warehouse for over a year. That one cost me $50,000 in product I was forced to destroy. As I’ve already explained, Amazonwill charge you a fee to return your product or destroy it.
- For the love of all that’s holy, NEVER agree to use
Amazon’s co-mingling program. If you do, my situation proves that you are liable for other sellers products, not Amazon.
To prove my co-mingling point even further, I recently ordered
This situation literally breaks my heart. I was a HUGE proponent of
Now? Yeahhhh not so much.
Kevin Harmon”Also, claim your free book: