If you visit Amazon Warehouse Deals, you will see a ton of product available in 30 departments. It’s like an entire marketplace unto itself. There you can find a variety of different category items at shockingly low prices – even, perhaps, the products that you sell.
Can they do that?
Sure. When Amazon gets a return that they classify as unsellable, it may not actually mean that they can’t sell it. They can’t sell it as one of your items because the packaging is damaged or it’s missing a part, but they can certainly repackage it and sell it on Amazon Warehouse Deals.
Despite the confusion about this part of the Amazon website, it’s a cut and dry entity – part of the Amazon.com group that focuses on discount merchandise. From the beginning, Amazon Warehouse Deals was opened for the purpose of selling all those products that don’t fit the marketplace’s high standard. In short, this is where you can find used, refurbished opened, or returned items, whether warehouse-damaged or not. It’s not surprising, since not all of the returns that Amazon gets go back into seller inventory.
What Does Open Box Mean?
When you see the term open box on Amazon Warehouse Deals, it can mean different things depending on who’s doing the selling.
If it’s Amazon, it usually means an item that is used but still like new, refurbished, returned, or with packaging that was damaged at the warehouse – either from an accident or because Amazon had to open it to check if it works. Regardless of the reason, the fact that Amazon is still selling it means that the item is in good condition and works. Amazon has very strict standards about the condition and function of the items that they sell, so any “open box” item on Amazon Warehouse Deals is guaranteed to be in good order. Note that all items on Amazon Warehouse Deals are advertised as being in good condition, although some customers have experienced issues with their orders.
If you see an open box deal from a third party seller, caution is advised. Amazon has strict guidelines for product condition, but “open box” does not mean the same thing on third party stores. The term is actually used for computer games and software exclusively, where the item is no longer in its original packaging or case, but still functions perfectly. Anything else that is marked as open box can be anything that the seller defines it to be. The same standards for an item being sold by Amazon cannot be hoped for.
Why Does it Matter?
In a nutshell, any seller should be concerned about Amazon Warehouse Deals because they are winning the Buy Box. Clearance sales are often priced below what a third party seller could afford, and the exact same items – returned to Amazon or disposed of – could be resurfacing at bargain prices.
Most items on Amazon Warehouse Deals are originally from sellers, vendors, and brands. If they are found to be functional, Amazon relists them at a discount. Amazon shoppers are bargain-wise, and many will troll Amazon Warehouse Deals waiting for that item that they want to pop up at 50% off. Who needs the original wrapping anyway?
How Can this Happen?
With the same Amazon customer service, fulfillment options and return policy, many customers jump at the chance to purchase products at a good discount where there isn’t really anything wrong with the item itself.
Make no mistake, Amazon can sell your products under these conditions without even so much as a by-your-leave. It’s completely within policy because Amazon pays you for the product when they issue a reimbursement.
The default for unfulfillable and reimbursed items in Seller Central gives permission to Amazon to repackage and resell the product. No matter how closely you guard an exclusive product, you can very well end up competing with your own product for the Buy Box.
Reimbursements don’t cut it
You might think that reimbursements are beneficial for your brand since you make a profit even though the product wasn’t actually sold to a customer. It also makes things a lot easier since you don’t have to deal with processing returns.
What you may not be seeing is the next step, where you have lost control over the customer experience. Once that product is sold through Amazon Warehouse Deals, you are out of the picture. It’s your product – possibly with your branding all over it – but your hands are tied.
Your branding can backfire
Remember that customers don’t usually think twice about your connection to their purchase, other than if they are happy in the end or not. They don’t really care about the whole process and that they bought something that was resold in a sense and no longer in the condition it was in when it left your hands. They will tend to blame you, the seller, because that’s the name they see.
You may have gotten your margin, but you will also likely get a bad review because their expectations (however unjustified) weren’t met – and you also get all the negative impact of that negative review.
Amazon makes a real effort to please customers, but their quality control system isn’t stellar. They make mistakes. Similarly, if a customer thinks that “like new” means in the original packaging with no signs of wear, they will probably get frustrated when they receive a product that is nothing like the images on your listing.
Pricing gets pushed down
Because Amazon Warehouse Deals sells discounted product, the pricing of the Amazon offer is usually affected. This means tougher competition, and at the same time, reduced control over the product. Moreover, Amazon Warehouse Deals can list the product as a special offer, which will most likely lead to winning the Buy Box. Amazon Warehouse Deals is part of Amazon, so it gets precedence as the dominant seller.
You are essentially competing against yourself with a disadvantage right there. The Amazon Warehouse Deals item is more likely to sell because it’s discounted, and your products aren’t eligible for PPC advertising until the Amazon Warehouse Deals listing is closed.
And it isn’t wise to just ignore it and wait it out. It’s completely possible that an Amazon Warehouse Deals offer can remain active, which can bring your sales to a grinding halt.
What you Can Do to Protect your Brand
If you are dealing with a customer return, know that Amazon may not actually dispose of it in the way you think. If it’s sellable at a discount, it’s going to end up on Amazon Warehouse Deals. If you determine that this can hurt you, it’s better to either let a customer keep a damaged product or have it returned to you.
If a product is lost or damaged in an Amazon warehouse, you may want to reconsider simply getting a reimbursement. If that item is found or if it’s just the packaging that was damaged and the product still works, it will also probably find its way to Amazon Warehouse Deals.
Since the default in Seller central is to have the item reimbursed, you need to remove Amazon’s option to repackage your products. Opt out and have unfulfilled or damaged product returned directly to you. You will have to pay for the cost of returns, but you will save a lot in opportunity cost down the line. Figure out the value of lost Buy Box potential plus brand control and carefully compare that to return shipping. Remember, you can always resell those items on another marketplace where you retain control over the process and the customer experience.
If you don’t want to do either of the above, your third option is to get involved. You can suggest changes to offers on your products listed as Amazon Warehouse Deals where you see incorrect information. This will at least help manage customer expectations and avoid unhappy returns.
Contact us today if you need help with growing your Amazon sales