[commandar]

> they would let random retailers fill the order with fake products

What made this all particularly insidious is that Amazon not only commingled inventory, but actively refused to track where inventory came from.

This meant you only needed one fraudulent seller to poison the entire inventory pool and there was no way know where the bad product came from because Amazon actively avoided being able to track it.

That's the aspect of it that always felt particularly malicious to me.

[fuzzehchat]

Amazon don't check returns either. It's a nightmare if you use their FOB service. We've had product returned, not checked and then shipped to another customer who then pputs in a claim because they didn't get what they ordered - because Amazon didn't check the return. Amazon then claim you're selling counterfeit goods.

Entirely why we no longer use their service and ship direct for amazon orders. Some people still try the trick but we always put a claim in and amazon after they automatically give a refund to the buyer, and Amazon pay it. So Amazon pay twice. Maybe the cost of just accepting that loss is less than having someone check the return.

[FredPret]

The bad part here is letting “poisoned” inventory in.

Adding vendor tracking adds a layer of ERP difficulty that isn’t practical for bulk, cheap items.

You either have to have serial numbers (unique per item, not just a product identifier barcode) or you have to physically segregate inventory by vendor, which is not practical.

If the vendor doesn’t serialize the item, then Amazon has to add it on receipt. Certainly not worth it for $10-20 item.

[Mikhail_Edoshin]

Russia has a working system that tracks retail sales of individual cans of beer, bottles of milk and such. Initially it was introduced to track things like shoes and furs that were massively counterfeited, but then expanded to include other goods. So now in a grocery store you use it, for example, for all milk products (milk, cheese, ice cream, etc.), vegetable oil, beer, mineral water. Technically you just scan a different barcode (QR code). There's also an app you can use to scan the thing and get more information, such as the exact producer. The general idea was to fight counterfeit goods, but as a side effect it also enforces shelf life rules or may help to find a drugstore that has a specific drug.

So it is possible and not that expensive even as a country-wide system for goods that cost around $1 (a typical can of beer).

[orthoxerox]

And yes, it does have additional codes for larger-scale packages. So a pack of cigarettes gets its own code, a carton gets its own code, a box of cartons gets its own code. A wholesaler can just scan the box and the system updates the status of every pack inside.

[tstrimple]

What am I missing about this? Couldn't the scammer just replicate the QR code of a legit shop? I thought the point of counterfeit goods was to fool you into buying them instead of the real thing. I guess part of the process would have to be verifying that every shipment of goods received was accurately tracked from a valid "ship from" address, but I have to imagine there's a lot of common warehousing in use for bulk goods. I'm not understanding how the QR code helps solve that.

Maybe a unique bar code per-item that includes some private hash information that makes it unique to the producer? Sort of an electronic signature for physical goods? Then if there's a centralized database, copying the QR codes wouldn't do much good. You might be able to slip in one if it is sold before the real version. But each subsequent copy could be caught.

[morkalork]

This is fascinating in the context how they use and abuse intermediaries to buy and smuggle western tech into Russia. If every chip were that well tracked, it would be a lot easier to clamp down on it..

[paradox460]

Fwiw this was the original vision of upc

[Retric]

They didn’t need to actually track things internally, add a sticker or even have someone stamp the vender code to the item listing the vendor when you’re adding the item to the bins and if the customer complains you can likely use that sticker to track who added the item after the fact. Critically you don’t need some 6 digit number for vender code, every new vender for a given item gets a number for that item, software can remember the relevant mapping.

If some vender is adding fraudulent items to the system based on some thresholds you set, charge the vendor to manually sort those specific products out.

Odds are they would make up the ~5 cents per item just dealing with less fraud. However, you don’t need to track every item rack the first few thousand items from a vender and you can scale back tracking as they prove themselves. At scale this could be almost arbitrarily cheap.

[Barbing]

>Odds are they would make up the ~5 cents per item just dealing with less fraud.

They’d be better stewards of the industry, but aren’t the odds that everything they’ve done for the past decade has improved their bottom line?

This is the company whose policies have effectively forced their drivers to use plastic bottles as toilets.

[Retric]

There’s many illegal things which can boost a companies bottom line. Quite often the law cares about what’s a reasonable effort which is a very different standard than what maximizes profits.

Something which may or may not decrease their bottom line but definitely significantly reduces counterfeit items ending up in customers hands is going to be considered reasonable even if it’s not profit maximizing.

[FredPret]

That’s a really clever and simple plan but doing anything like applying stickers, correctly, by hand or robot, can add cost ranging from $<surprising> to $<shocking>.

Maybe they have a variation of your idea where they inkjet a serial number onto a conveyor belt of incoming items or add a super-cheap chip of some kind.

[diab0lic]

> or you have to physically segregate inventory by vendor, which is not practical.

The headline seems to indicate that the geniuses in logistics at Amazon have figured out how to make it practical!

[londons_explore]

My understanding is every individual item is tracked in an Amazon warehouse - so Amazon knows that the 67th item in a box from supplier X was shipped to user Y.

They don't just track quantities of SKU's like most other retailers.

[gonzobonzo]

This always confused me. You have a bottle of glue sold by company X. Then you have 87 different people "buying" the glue in bulk, having it sent to Amazon, and selling it on Amazon as if it comes from their store:

Buying option 1: Company X glue from store A. Buying option 2: Company X glue from store B. Buying option 3: Company X glue from store C. ...etc.

But then Amazon says, "actually, these are all the exact same bottles of glue, so we'll thrown them all into the same bin, and no matter what "store" the people buy them from, we'll just grab them out and send them to the customer.

Now even without counterfeits, this is weird. What exactly is the point of store A, B, C, etc.? Company X sends the bottles to Amazon, they get put in one big pile, you buy them on Amazon, and Amazon takes them out of that one big pile and sends them to you.

The only thing purpose of the "stores" when you co-mingle inventory seems to be:

1. Plausible deniability for counterfeits. Hey, they told us they bought it from company X, we had no way of knowing they didn't.

2. Getting money from people trying to get rich quick in the marketplace. Some people will try all sorts of cuts to boost their Amazon sales in the hope that it will pay off later.

[jandrewrogers]

The reality is more complicated than you are assuming. A shockingly large number of vendors grossly mismanage their supply chains such that Company X can actually be legitimately undercut by reseller Company A on Amazon even though Company X produces the product! The mechanics of it are convoluted but legit, and there is a huge ecosystem of companies that arbitrage the legions of producers that are bad at managing their global supply chains.

Amazon has an interest in allowing these resellers of legitimate products to exist because it pushes down prices from the primary vendors, lowering prices for the customer. The primary vendors end up competing against themselves indirectly but they have no one to blame but themselves. This is the milieu in which counterfeit products exist.

If the producers of these products were consistently competent at managing their supply chains it would be much less of an issue because it would clear the field of resellers arbitraging the mismanagement, leaving only Company X and the counterfeiters which is a much easier problem to solve because you don’t have to worry about banning legitimate resellers. But that isn’t where we are.

[rocqua]

Is the arbitrage you are describing just "buy in another country and ship more cheaply"?

[jandrewrogers]

That’s one way but far from the only one. Producers like to do things like make random deals through their myriad divisions to offload inventory to a random reseller very cheaply that ultimately finds its way onto Amazon at a price that undercuts cost of the original producer’s contract on Amazon. The cost of sales are not the same on Amazon even if you are selling the same product, so they can legit undercut you. You also have different divisions of the same company around the world all selling on Amazon under different contracts competing with each other (which Amazon tacitly encourages AFAICT).

Smart companies put contracts globally that have Amazon implications under a single person who can see across every deal. If they sell to someone with a restriction on Amazon resale, they will mark those goods so that they can track it if it shows up on Amazon. However, there are so many fly-by-night resellers that this is a losing proposition, so many don’t bother with those resellers anymore because enforcement yields nothing.

The vast majority of companies are naive and not very smart about any of this. People that know how to systematically set up a sales program that is profitable and resistant to arbitrage on Amazon get paid a lot of money in industry. It isn’t that hard but most companies can’t seem to figure it out.

[mcherm]

That's one approach. There is also "buy it at a discount, resell it without much markup" and "buy it earlier, store it until prices rise", and plenty of other ways to perform this arbitrage.

[yencabulator]

> What exactly is the point of store A, B, C, etc.?

To externalize risk away from Amazon.

[PeterStuer]

Amazon has many requirements for vendors. Having them tag SKUs with a vendor id would be minor.

I stopped buying from "fullfilled by Amazon" as the level of fraud was just insane.

[account42]

How much do you think printing a barcode costs???

[josefx]

> Certainly not worth it for $10-20 item.

Really? Adding a unique ID at the point of entry costs that much?

[jazzyjackson]

I read it as "For items in the ten to twenty dollar range, its not worth adding a vendor label" and I don't suppose its the cost of the sticker, but how much longer does it take the warehouse worker to take it from a shelf and put it in a box if they add a sticker to every item? +5% ? +10% ? +100% ? (It takes very little time to put an item in a box, I could see adding a sticker doubling this...)

[SteveNuts]

I thought Walmart has been doing this with their vendors for many years

[FredPret]

These things can have complications when you take into account all the edge cases. And paying humans/robots to do anything really adds up.

But at their scale, maybe they found a plan that works!

[bapak]

> Amazon actively avoided being able to track it.

Is that real? I find it hard to believe that Amazon effectively accepted stock from third parties "as is" and lost track of where it came from. It's more likely that they don't tell you than they don't track.

[AnssiH]

No, it is not true, just a common myth.

In the seller documentation they say they can track the source of commingled inventory - they achieve this by never putting them on the same physical shelf location.

Also mentioned by Amazon spokesman in e.g. this article: https://archive.is/ra6RT

> Amazon can also track the original seller of each unit

[0manrho]

A fair point and important distinction, but so is the difference between "we CAN" and "we WILL/DO". That "myth" didn't come out of thin air. It's a result of of amazon not doing that unless they felt it financially prudent to do so/until enough people bitched about it.

The OP article is exhibit A for how common of an issue this was.

[mcherm]

We know that they would not provide such tracking for those conducting fraud investigations. You can believe they intentionally didn't track the source or that they intentionally refused to share the information to root out fraud; either one is a very bad look for Amazon.

I'm glad to see this change.

[hnlmorg]

That’s a worse situation then because Amazon would then be intentionally withholding data in counterfeiting investigations.

[kotaKat]

It wouldn't surprise me. Amazon knows where every item is in its FC and knows the motions of every item's placement, from the grand scheme of things.

It's not that hard to then track back from an order exactly what bin or tote or shelf the item was pulled from, then look at what shipment(s) that bin's items came from to figure out what supplier it came from.

They know the counterfeit goods came in and were stowed to bin XYZ and they know that someone pulled from XYZ...

[privatelypublic]

They know where every item is- if not, how do FBA folks get their stuff back?

[woleium]

Its co-mingled, so you may not your stuff back, you just get similar stuff back. That is if you pay to get it back. It’s usually cheaper to let them flog it off cheap on prime day