[Fiveplus]

The text in that attached screenshot is the key giveaway, "Now that most sellers maintain inventory levels that keep products close to customers..."

This looks like a signal that Amazon's fulfillment network has reached a saturation point where the 'distributed cache' model of commingling is no longer necessary for speed. Ten years ago, commingling was a necessary optimization. If seller A (county A) and seller B (county B) both sold the same widget, Amazon treated them as a single distributed liquidity pool to guarantee 2-day prime shipping nationwide without forcing every small seller to split their stock across 10 warehouses.

Now that Amazon has moved to a highly regionalized fulfillment model (where they aggressively penalize sellers who don't have stock distributed across regions), the computational and reputational overhead of commingling outweighs the diminishing returns on shipping speed. For all intents and purposes, they have traded the operational complexity of physical sorting for the software complexity of forcing sellers to manage regional inventory better.

[aserafini]

My recollection (admittedly worked for Amazon >19 years ago) is that there was never any computational overhead to commingling. In fact, the opposite was true: there was a computational overhead to tracking which vendor a specific piece of inventory of a given product came from instead of assuming that all inventory of that product was fungible.

This affected returns as well. For multi-sourced products, we could never guarantee that overstock or damaged items were returned to the original supplier—only that the product matched. Suppliers complained about this a lot.

[withinboredom]

Worked with a guy that used this to his advantage. He sold CD's and DVD's through FBA. He would get them "new enough" looking via buffing them out (often making them unplayable), shrinkwrapping them, and then hope whomever got them wasn't him that got the commission for that sale and instead the person who bought "from him" got one of the actual new ones. He made a killing off of this since "used" inventory was incredibly cheap for a whole pallet of them.

[gottorf]

By "used this to his advantage", it sounds like he was just a fraudster?

[withinboredom]

He called it "arbitrage". But yeah, I agree.

[BiteCode_dev]

No it's not fraud, it's a growth hack. And it's not lying, it's advertising, it's not spam, it's a cold email, it's not patent trolling, it's IP protection.

But maybe it's maybelline.

[immibis]

Fraud is legal now. In the USA, at least.

[boelboel]

Fraud is good, these companies need their revenue so they can create an all powerful AGI. If you don't allow them to scam they'll lose against the chinese

[user3939382]

You got downvoted but this bizarre logic is really what passes in SV.

[xnorswap]

Does this story have a happy ending such as a conviction for fraud?

[withinboredom]

Yeah. He got banned from Amazon eventually (selling counterfeits). Wife divorced him. Lived in his car for awhile (he called me begging for a job). He got his life back together, eventually.

[fc417fc802]

Honestly Amazon deserved it for engaging in commingling in the first place. The happy ending would have been them discontinuing the practice 10 years ago.

[greenavocado]

The vast majority of theft and fraud goes unpunished

[ajkjk]

There was some overhead to commingling once it got extended to FBA, because in order to increase commingling they did attempt to track inventory provenance information even on commingled inventory.

My first job out of college in 2013 was working at Amazon on one of the teams that was implementing inventory commingling at the warehouse level, and my first big project was implementing this process into the receiving software, which is when inventory arrives at warehouses from vendor/seller trucks and employees scan everything to make database records that lead to paying for the goods. Note: in Amazon lingo "vendor" means a provider of goods that are legally purchased and owned by Amazon in the warehouse, while "sellers" are FBA sellers that maintain ownership of their goods and basically rent Amazon's warehouse services.

The big software undertaking was determining, at inventory receive time, whether we trusted the seller enough to allow their inventory to be commingled with others. If yes we would be "virtually track" the provenance: store in the database a record of the vendor, but if the item became commingled (according to UPC scans as it moves around the warehouse) with other sellers' inventory, blur the information so as to not falsely attribute provenance when it was no longer known. The whole project was based off the cost:benefit analysis that the efficiency and customer experience benefits outweighed the cost of not being able to attribute damage to the correct vendors (particularly the fact that you could ship a customer a product from the closest warehouse that it had it, instead of transshipping it from the warehouse that had the one owned by the person they bought it from).

In cases where sellers were not trusted enough to commingle there were alternate processes that were supposed to track their items individually; the most granular was "LPN" receive, license-plate-number, where every product got an individual UPC to distinguish it from all others. This was borrowed from Zappos, whose one warehouse in Vegas was initially the only one who used this process; I was told that was because the online shoe business heavily relied on letting customers do loads of returns and so it was implemented out of necessity early on. One of our projects was rolling LPN out to more of the North American network. But it was a lot more expensive (in the stickers, labor, data management, and picking inefficiency) so it was dispreferred whenever possible.

At the time the whole commingling initiative was regarded to be a big win for both Amazon and customers. It was fairly janky from the beginning, though, and I'm not at all surprised that sellers (and to a lesser extent vendors) began taking advantage of it as soon as they began to realize how it worked. There were a lot of initiatives around the time I left to provide better accountability in the whole process, but it is ultimately an arms race between Amazon and the merchants and my impression is that for many years Amazon was losing.

It is amusing that they're ending it. I never heard how things were going after I left, but had the impression externally that it was ending up being a disaster, and knowing how it works on the inside it's not a surprise. In hindsight trusting FBA sellers to not become essentially malevolent actors seems comically naive.

[jonhohle]

I worked on Prime and Delivery Experience until 2013 and commingling was considered relatively taboo due to the destruction of customer trust that would likely result. It was an obvious optimization. There was already an issue with return fraud and resellers listing fraudulent items that weren’t commingled under the same product listing. I was pretty shocked when it launched after I left.

It turned out pretty much the way we figured it would.

[bombcar]

Commingling really only makes sense in a weird world where Amazon is the final retailer for various distributors selling the same exact product in which case why doesn’t Amazon cut out the middle men and buy it directly?

Commingling ten distributors sets of Energizer batteries makes sense, but not as much sense as just buying direct from Energizer. They don’t lack the volume.

[jonhohle]

Amazon doesn’t just fulfill Amazon.com orders. Anyone can send inventory to Amazon and use them for fulfillment on their own e-commerce platform. The distributors don’t know Amazon is going to be fulfilling orders from several of their retailers.

Even on Amazon, it’s not uncommon to find several new listings for an item fulfilled by Amazon from different sellers (including Amazon). That’s beneficial for Amazon because they don’t need to own all of the inventory and the sellers get a listing with good reputation to leverage if Amazon goes out of stock. In the perfect scenario everyone wins - Amazon makes money, the seller makes money, and the product is still available to the customer. You get all that without commingling, but with it, you also save physical storage volume.

[ajkjk]

FBA gives them an economy of scale that you can't get with just internal staff--every retail inventory requires account managers and oversight, whereas with FBA you just set up a platform and let the economy sort itself out (while skimming your cut). It is not that different from Apple's app store being a better business model than commissioning all the apps themselves. Anyway the distribution world is much messier than you might think. Allowing everybody to individually optimize whatever they way (say, finding a cheap wholesaler and then reselling via FBA) is hugely advantageous for them. Although I would guess that in the last decade the efficiencies have largely been exploited now.

also, you're probably aware of all the made-up brands which sell like, thousands of versions of staples like HDMI cables on Amazon... all of that exists because FBA made it possible for people to start random business in consumer goods, basically by (my understanding) using Alibaba to find manufacturers and FBA to find customers and connecting the two. It's all exhausting now because the fake brands have crowded out the real ones, but for a long time that was what the economy becoming more efficient looked like (at least in one sense... maybe not the sort of efficiency that actually benefits the customer, though, since in practice a lot of the gains were found by capitalizing on Amazon's reputation to sell cheap stuff for more than it was worth).

[bruckie]

> Energizer batteries

I see the point you are trying to make, but Energizer batteries are a bad exemplar for it. Even if all of the batteries are the exact same SKU, some of them may be 10 years old and some of them may be fresh from the factory. I've had this happen with several (perishable) products from Amazon.

[bombcar]

That's an entirely separate but related issue - stock rotation has to be managed, and commingling (in theory) helps alleviate the issue. Removing it means that you may find quite old product sold alongside brand new.

(I suspect but have not proven that Walmart actually rotates UPCs/SKUs on identical product so they can remainder it out).

[SoftTalker]

In fact I can say that any time I've bought a battery on Amazon I've received a very old one that didn't last very long, if it worked at all.

[foobarian]

Wow, lots of insiders contributing lore in this article's comments. I appreciate you all!

[tzs]

> Ten years ago, commingling was a necessary optimization. If seller A (county A) and seller B (county B) both sold the same widget, Amazon treated them as a single distributed liquidity pool to guarantee 2-day prime shipping nationwide without forcing every small seller to split their stock across 10 warehouses.

I don't see why that required commingling. When I click on a Foo in my Amazon search results show me the Foo from whichever of A or B is close enough to meet the 2-day shipping guarantee. If I care which of A or B it actually comes from I can click the option to see other sellers and decide if giving up 2-day shipping is worth getting my preferred seller.

[SPICLK2]

Or a signal that Amazon has reached the required level of incumbency that it doesn't need to worry about speed any more.

[embedding-shape]

Or also signal that they've learnt about exactly how many of us stopped using Amazon because we got tired of receiving counterfeit products because of the commingling...

[AmVess]

Or the mountain of returns they have to deal with on a daily basis. I signed up for Xmas, bought some things. ALL of them returned. This isn't a counterfeit issue on my end, but the simple fact that everything they sell is garbage.

[NetMageSCW]

>but the simple fact that everything they sell is garbage

No, the simple fact is everything you bought was garbage. They sell plenty of standard, known brand items that are just as good as bought from anyone else.

[boelboel]

If you buy known brands from amazon you're bound to get counterfeit at some point. Only buy disposable garbage on amazon.

[shermantanktop]

I order a lot from Amazon and it’s never happened to me (to my knowledge), and yet other commenters report 100% fraud rate across multiple items in the same order.

Methinks one of us wrong.

[embedding-shape]

Not sure what Amazon could do about the products being trash though? If you feel unsure about it, why don't you go inspect the item in some store in person, instead of guessing and buying it by delivery?

[macNchz]

Historically retailers have employed buyers in charge of selecting products that would appeal to the store’s customers. A customer will likely have different expectations, and have an existing understanding of what sort of products they’ll find if they’re shopping at, say, Nordstrom vs Dollar Tree vs a guy on Canal Street in NYC.

Amazon sort of threw this out with the steady movement towards blending third party sellers in with products they sell directly. They made it less and less obvious and easy to filter based on seller over time, so now you have all sorts of junk from the digital equivalent of street vendors mixed with normal products, and it’s up to the shopper to figure it out. They tolerate tricks and fraudulent behavior from those sellers much more than they should.

Amazon could, if they wanted, make it easy to filter for products that have been selected by a buyer who has a relationship with the vendor, and are directly sold by Amazon themselves, but it’s seemingly more profitable to allow third parties to peddle garbage en masse.

[nikole9696]

Not the person you're replying to, but for me, everything I buy on Amazon is bought because I have no B&M retailers that sell it. Even my local B&M stores usually have vastly reduced stock compared to what they have online (looking at you, Old Navy, Eddie Bauer and similar, who only carry petite sizes online).

[thayne]

Something I've seen a lot is a product that looks like it has good reviews, but if you read the actual reviews it is clear they were reviewing something other than the listed product. I think what happens is they swap out a quality product for trash on the same listing so that the trash a bunch of good reviews that it didn't earn. If Amazon cracked down on that, it would help a lot.

> why don't you go inspect the item in some store in person

Because a lot of times, there isn't a local store that sells it. And honestly, a lot of the stuff at local stores is trash too, sold in packaging that makes it difficult to tell before you buy it.

[TingPing]

No physical store sells most of what’s on Amazon. That doesn’t imply it’s bad either.

[fn-mote]

That’s essentially their conclusion, right?

Amazon could manage QC; other large stores do. (Admittedly not as large as Amazon.)

The quality/price/speed you see at Amazon & Aliexpress are market segment choices.

[Ritewut]

[flagged]

[mindslight]

I used to be like you. But overall the return culture changed drastically - "no fault" returns where stores have zero care to hear about how their items are defective. And then Amazon's constant games with pricing has pushed me into "buying" (ie caching) something if it's a good deal, and then making the actual purchase decision of whether I want it sometime later. Much better than "I'll think about this tonight", and then going to buy it and the price has jumped 30%, making me feel like a sucker.

If I've already got pending Amazon returns to do, adding something to the queue costs me very little. If the queue is empty, then I'm a little more deliberate. But this time of year Nov-Jan is great for this, as the return dates are further out and all on the same day Jan 31 so it doesn't catch me by surprise.

The slow spiteful shipping also pushes me into this behavior when I'm in the middle of a project. Order a few different types of a thing, decide exactly what I need when I'm in the middle of doing, and then when I'm done with the project, return the pile of leftovers.

It's felt like something enabling this dynamic has been waiting to break for years now, but so far it hasn't. The only time I've gotten pushback from Amazon is a nastygram interstitial for a while after I returned a motherboard that I opened and tested (the manufacturer could have avoided this return by documenting the IOMMU groups, but once again... return culture). I have no idea if the problem there was the opening (seemed to be fine under their published policies), or whether something else happened to the item after I handed it to their return agent and they blamed me.

[pooper]

I see hundreds of tweets by @amazon that reply to people complaining how deliveries miss the dates that amazon dot com promised but then amazon dot com probably delivers so many packages every day that I think it is a bit of column A and a bit of column B here.

[tempest_]

This makes the same classic mistake about social media about social media that my boomer dad makes.

100s people a day or even an hour is not a lot of people. It might feel like it is because in person it is but for the over 20 million packages they deliver daily it is rounding error.

[crazygringo]

To the contrary. At least in my area, there are more items with 1-day shipping than ever before.

A few years ago, most stuff was 2-day. Now most stuff is 1-day. And it's constantly popping up options for same-day too.

[Bombthecat]

Here in Germany, Prime delivery increased from one day to two days. Makes it also easier.

[ethbr1]

> They have effectively traded the operational complexity of physical sorting for the software complexity of forcing sellers to manage regional inventory better.

Also total warehouse capacity and warehouse-warehouse freight capacity. +X% inventory duplication (to achieve regional inventory) at Amazon-scale, along a long tail distribution of products, must be non-negligible.

[NetMageSCW]

In my recent experience Prime is isn’t two day often enough for Amazon to be concerned about where they ship from.