Why is Amazon footing the bill for defective products sold by marketplace sellers?
In the near future, Amazon.com shoppers that have a problem with a third-party marketplace seller will be able to bring their complaint directly to Amazon instead of having to take it up with the seller.
The change to the platform’s “A-to-Z guarantee” goes into effect September 1, allowing customers to contact Amazon with claims about defective products, according to CNBC. When Amazon receives a claim, it will vet it using a combination of insurance fraud experts and artificial intelligence technology. It will get involved with the seller if the claim has merit and will take matters into its own hands if the seller does not respond.
Amazon will also pay off claims of up to $1,000 in instances where products purchased on its marketplace cause property damage or injury, according to a report by Ars Technica. The payment will be made directly to customers at no cost to sellers with valid insurance. Amazon will also pay more on claims it finds to be valid that the third-party seller rejects.
Amazon will not admit liability in any case where it makes a payment and, while sellers will not be charged, new rules will require more of them to obtain product liability insurance. The change in policy comes as Amazon continues to be the subject of criticism and even legal action by the U.S. Consumer Product Safety Commission over facilitating the sale of dangerous and defective items through its marketplace.
Amazon’s third-party marketplace makes up the majority of the platform’s retail sales.
Other major retailers — including some of Amazon’s biggest brick-and-mortar competitors — have likewise seen their marketplaces making up more of their profits as e-commerce has grown more popular and have been investing in their expansion accordingly.
Walmart, for instance, last year partnered with Shopify to allow more small businesses access to sell on its marketplace. The retailing giant opened up its third-party marketplace for the first time to international sellers this year. Walmart’s online marketplace has been in operation since 2009.
Target has taken a more intentional approach to its marketplace expansion. The chain launched its Target+ marketplace in 2019, but rather than accepting all comers to the platform, it features a curated selection of products from third-party sellers that complement Target’s main line assortment.
- Amazon gives consumers easier way to file complaints for faulty goods from third-party sellers – CNBC
- Amazon’s plan to avoid lawsuits: Pay customers $1,000 when products injure people – Ars Technica
- Walmart Expands Its eCommerce Marketplace to More Small Businesses – Walmart
- Walmart opens marketplace to non-U.S. sellers, hears DoorDash drivers’ gripes – RetailWire
- Will a curated marketplace strategy be an online game changer for Target? – RetailWire
DISCUSSION QUESTIONS: Do you see Amazon’s decision to take on this responsibility somehow leading to a composition of more responsible third-party sellers? How might it change the dynamics of marketplace selling?