[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!