Theories behind bad feedback for FBA sellers

FBA sellers are definitely more susceptible to negative feedback than normal sellers. We have seen this many, many times:

We've run this experiment for several months - self-fulling some items, and sending in some items to FBA.

In many instances, we would fulfill the exact same book, in the exact same condition (i.e., Used - Very Good). The delivery time is the same. Our self-fulfilled items receive 5-star feedbacks, but about 5-10% of the FBA orders receive 3-star or 1-star feedbacks (never any "2's" for some reason).

We've also looked at the reports submitted by other FBA sellers - their feedback ratings usually hover around 94-96%. That's pretty bad. If these sellers only fulfill via FBA, receiving 5% negative feedback from FBA orders, some of these sellers risk having their accounts suspended.

We've explored many theories about why FBA orders receive much worse feedback than self-fulfilled items. The FBA warehouse does make a few errors, but not terribly excessive.

This is the heart of the problem: When people order directly from Amazon, they expect new items, not used.

They may have ordered a used book, they may have even read your description. But when it arrives in the mail, and they see the Amazon logo on the box, they're conditioned to expect to see a new book in that box - no matter how well you described your book, some customers are simply disappointed with anything that's not new.

To make matters worse, the customer's order history page does not pull up the description or condition of the book - just the title. So they have no way to reference what they just bought.

We have cut & pasted the description to remind the customer, "Yes - You ordered a used textbook with two or three highlighted passages". Every time, the customer comes back and says, "No, I would never have done that - I was expecting a new book." Eh-hem?? You bought this book at an 80% discount, and you were expecting a new book??

They have simply forgotten what they ordered!!! That's an accurate description of roughly 5-10% of the FBA customers. Remember that "Amazon Prime" members are the primary consumers of FBA items (because they get free shipping).

But don't let the name "prime" fool you - these are not good customers. As a rule, they are spoiled, bratty, over-consumers. They order copious amounts of items online, and forget what they've ordered. One "Prime" customer read a book, and a year later decided she didn't like it so she got a refund!! (A separate entry details this account)

Amazon knows this all too well, and have even begun rescinding "Prime" membership from buyers who return too many items. Amazon knows when to pull the plug on a bad customer, but they don't care how much these people abuse and knock around 3rd party FBA sellers. They will complain, return the item, or leave bad feedback.

So is the solution to sell only new books on FBA? Think again. When ordering a new book, FBA & Prime customers expect it to be new-new. That is, absolutely free of any blemish or flaw.

Remember, FBA is a warehouse. No matter how clean it is, there will be a small amount of dust. Books are put on a conveyor belt before packed, where they may pick up a small ding or two. Sometimes humidity seeps into the warehouse, and the cover curls a little bit. None of these things really bother me as a consumer, but FBA will issue a refund for any reason, any complaint.

FBA really works best for packaged items, things in blister packs, or DVDs that are factory sealed ... not books.


Thinking about joining Amazon's FBA? You may have missed your window. Penny sellers on FBA ruining any chance for success

If you're a book seller who has been thinking about joining Fulfillment by Amazon, you have probably missed your window.

FBA was never great - they launched about two years ago with LOTS of bugs, and have been slowly improving their service (and correcting their many glitches).

But now, these idiot "penny" mega-sellers have got on board, just about ruined any chance that a regular book seller has to make money. They are, in fact, ruining Amazon for all sellers. (click to enlarge this example we found today)

See this recent example of a John Grisham book. Just one month ago, the book had a good sales rank, and used prices starting at $1.00 + shipping (new prices starting at about $3.00 + shipping). Not great ... but now, the penny sellers are using their FBA status to ruin it for everyone.

And ...get this... they are selling most of their books at a LOSS. That's right, they are literally paying Amazon and the customers to take their books.

This example is an average of what we've seen over the last few weeks (November 2009). It is by no means the worst. In this case, the mega-sellers are selling the book at a loss of about 60 cents per book. In some cases, they lose several dollars per book.

Keep in mind, there is no opportunity to make money on shipping/handling, since FBA sellers do not get reimbursed for s/h. Also keep in mind, losing 60 cents per sale is their best case scenario - there are many other fees & contingencies which may cause them to lose even more money.

For example:
  • If there is a weight error, they may lose a couple dollars per book
  • If the book is returned, they face a 5% restocking fee
  • If the customer complains, they lose an additional $2.50 on this order (which is not reimbursed - remember, FBA sellers receive no A-Z protection)
  • If the item is in storage for more than a month before it sells, it accrues fees while it sits there
  • Click here for our list of "12 Passive FBA Fees, Not Disclosed Up Front"

The first question is: Why do they do this if they're losing money? There are lots of ideas on the Amazon discussion board as to why penny sellers do this. Some say they try to build their brand and earn customers - which simply doesn't work. Amazon customers shop on - the strategy of converting their customers to be loyal to your site is ridiculous.

Some say they t make money on handling - and maybe these sellers are too stupid to realize you don't get shipping or handling credits for FBA items!!

My theory is that they have a staff who don't pay attention, and are paid by quantity not quality. I've been to book warehouses like this - there is little oversight, they cut corners and don't hire an accountant. So nobody actually looks at their statements line-by-line to see how they are losing money, and how much money they are losing.

Notice two other things: first, the prices aren't just low - they seem to drop the prices by 10 and 20 cents at a time. Stupid pricing model, especially for a low dollar item to start with.

Second, their feedbacks are awful. Some have 5% or more negative feedback, which could get you suspended. I'll write more about that later.

So, if FBA is no longer viable for book sellers, does it work for anyone?

FBA seems to work best for importers of things like clothing lines, toys from China, etc. In the surveys we've seen, most of the FBA users are manufacturers and businesses who import 10-12 product lines per year (say, stuffed animals, baby toys, cell phone accessories, etc), send the entire truckload to FBA, sell maybe 50% of their inventory during the Christmas season, then pay FBA to throw away/dispose of the remaining inventory.

(FYI - the warehouse charges an additional 60 cents per item to throw away your things, even more for non-media items).