The reply from Amazon's support Twitter is the indication of a far larger problem in most business. Namely, it's easier to deal with the consequences of "mistakes" than it is to not make them.
e.g.
- the "fines" Google and Facebook keep getting for breaking privacy and other laws which are laughably small.
- customer support teams not dealing with serious customer issues until they get attention (viral tweet, front page HN etc)
- monopolies in most forms: e.g. the big-tech anti-poaching agreements
Generally I'm all for "it's easier to ask for forgiveness than permission" but that assumes that you are acting in good faith but still sometimes screw up. It seems like "screwing up" has become a good way to ensure short-term profits and as everyone is obsessed with KPIs and OKRs at a 1-week to 3-month time frame, the incentives are all wrong.
And "mission statements" and "cultural values" are too synthetic to come close to fixing this.
> Namely, it's easier to deal with the consequences of "mistakes" than it is to not make them
What we're seeing is a widespread use of "fractional fraud".
Transactions and business lines that are 1%-5% fraudulent are unlikely to be challenged, but have a huge effect on profitability.
The best example I've seen is Bunnie Huang's deep dive on counterfeit SD cards [1]. Margins on SD cards are like 1%, so blending in defective cards at a 1% rate can double your profit. Another example is retail trade payment for order flow. A major broker-dealer was just sanctioned for front-running its clients.
As long as your defect ("mistake") rate stays below your customer's response threshold, you can keep doing it. It is impossible to overstate how important social norms are for policing this kind of misconduct.
I legit thought this was going to end up in a loop where there was never any donkey and it was the same scam the original farmer pulled. Dead non-existent donkeys all the way down.
Sorry, not a native speaker. What does it mean to "raffle somebody off"? (Edit: googling it says: "dispose of in a lottery", which makes me wonder: why is there such a specific verb in the English language? I have never even thought of "disposing of anything in a lottery")
A "raffle" as distinct from a "lottery" in American English differs in how the prize is decided, and what kinds of things are typically the prize.
Typically a lottery runs in one of two ways: with pre-decided winning tickets, or a number that's drawn after the tickets are distributed to decide which ticket (if any) is the winner. In this way, the odds of winning are mostly independent of the number of tickets sold. The prize is usually money.
A raffle works by selling tickets, and then picking exactly one of those tickets to be the winner, making the odds directly dependent on the number of tickets sold. The prize is usually a physical object, and not money (though there are exceptions, e.g., a 50/50 raffle).
Thanks for the explanation. I'm familiar with the both forms of gambling, but for some reason, I've encountered "lottery" as a term a lot more; "raffle" I hardly knew, until now. Thanks!
Usually raffles in the US are for charity or fundraising purposes. You can't run a lottery usually, as those run against gambling laws. You can run a raffle, where an item worth $X (and usually donated so X=0) will be given away to the owner of a random ticket which costs $Y. The runner of the raffle sells N tickets. Your profit/fundraising is $YN - $X.
Often raffles are sold significantly below expected value. A popular raffle to support a charity is called a 50/50 raffle. This is where the winner of the raffle receives 50% of $YN, and the charity receives the other 50%. Buying a ticket isn't a good financial decision, but it's for a charity, and you can end up winning, so they are popular.
From what I understand, the game of bingo is similar to lottery in the sense that the participants can and do decide the contents of their tickets themselves. Is organizing bingo OK in the US or does it run against the gambling laws?
The event itself is called “a raffle” and the verb comes from that.
The technical difference, vs a lottery, is that a raffle always has exactly one winner, drawn from all of the entries. In most lotteries, it’s possible for no one to win or several people to share the prize.
Raffle also implies that the event is a smaller, one-off event, usually with non-cash prizes and often for charity. A church might have a raffle to raise money for a new roof, using prizes donated by the parishioners. This is in contrast to lotteries, which are usually run by the government, feature cash prizes, and occur on a fixed schedule.
A raffle is a game of chance. You "buy into" the raffle and get a ticket that goes into a hat or bowl. The person doing the raffle chooses a ticket at random and the person that owns that ticket is the winner.
It's not really about "disposing" the donkey it is about giving other people the chance to win the donkey...that is dead
Anyway, to the fellow confused people, here's the simple English version: Kenny made the donkey a prize of a lottery he organized, and didn't tell the participants the donkey was dead.
I think you forgot the last few lines, where the guy who won ended up telling a friend at the bar how he won the donkey but the donkey was dead all along. And then an irate mob descended upon Kenny's farm, burned down his house, put him against a tree and shot him, and then took his $998.00 and bought rounds for everyone back at the bar.
> Another example is retail trade payment for order flow. A major broker-dealer was just sanctioned for front-running its clients.
You can say Robinhood. Their agreement says that they can't do anything to imply that it was incorrect, like threatening to sue people for talking about what got them sanctioned.
Hang on a sec. Mixing in defective product is literally fraud.
Payment for order flow is not only legal, but good for retail investors. It, and practices like it, are the only reason joe schmoes can go buy 2 shares of TSLA in their robinhood account (actual traders deal in round lots - 100 shares. Price levels featuring less than 100 shares aren't even protected price levels!).
There's also the technicality of the wholesalers technically providing a very small (<=1 cent) price improvement, but retail investors don't care about that.
I really object to the frankly callous and irresponsible bandying about of financial stuff like this. It damages trust in what is potentially one of the best-regulated and most efficient systems in the world.
I also want to note that, assuming you're referring to Citadel's 700k fine, 1) the SEC's description of what happened is too vague to really infer what's going on, 2) my guess based on their description is that they essentially had a bug that technically constituted trading ahead of a small, small % of client orders (though it does not seem like it was actually getting an advantage by doing so, since it was a bug) and 3) this is all corroborated by it being only a 700k USD fine, which is comically small for a fine from both the SEC and for a firm as large as Citadel. This was the lightest of slaps on the wrist from a regulator who will absolutely destroy firms with fines when they have hard evidence.
If anyone wants to look deeper into this, Matt Levine has written extensively at this point on the subject of the payment-for-order-flow boogieman.
Depending on the product, there is an expected and accepted defect rate. This can be very high in situations where detecting and removing the defects would cost more to the supplier than the customer would spend handling the defects. If you deal in dirt cheap electronic junk (think novelty holiday junk) the rate can be as high as 10%. Bottom of the market SD cards are getting close to that standard.
From the perspective of law, it matters very much how that defect rate is reached, because intent matters more than the outcome itself.
If you have a 10% defect rate for unavoidable causes, that sucks. If you have a 10% defect rate because you chose to cut all corners and cheap out on every aspect of your manufacturing and testing, that sucks but it's legal. However, if you have a 5% defect rate and intentionally choose to mix in extra 5% of known defective units - that's fraud.
Depends on the industry. There are industries where high defect rates are an accepted norm. These are not necessarily codified. For example: if you order fresh fruit/vegetables in bulk, a certain percentage always arrive below acceptable quality. That is simply a norm in the industry. You are free to inspect/reject as much as you want, but nobody will want to sell to you if you make a lawsuit out of every bad apple.
I honestly don't think any country in the world actually cares about monopolies or the abuses by these companies. Apple no longer has to pay a fine the EU gave them. The same will likely happen to the 2 billion+ fines they gave Google.
So far, no amount of fines, or laws, has actually changed anything as far as Facebook, Apple, Amazon, Google or Microsoft are concerned. They're still in dominant positions, where AI or computer made decisions can devastate the "little guys" like being wiped off Google (or the play store removing your app), or the horror stories of businesses on Amazon.
Truth is, they're too big, and at this point, can't be stopped. Laws won't work, fines won't work. They haven't so far, and I doubt they will in the future.
Apples fines were because EU commissioners demanded Ireland charge them higher tax rates. The courts ruled they were wrong in doing so. Not an anti trust issue at all.
Do you really want to live in a world where bureaucrats can issue fines without recourse?
> So far, no amount of fines, or laws, has actually changed anything as far as Facebook, Apple, Amazon, Google or Microsoft are concerned.
That seems like hyperbole. E.g. all the three big EU-Google anti-trust cases (Shopping, AdSense, Android) resulted in Google changing their practices on the issues in question.
> The same will likely happen to the 2 billion+ fines they gave Google.
> Truth is, they're too big, and at this point, can't be stopped. Laws won't work, fines won't work. They haven't so far, and I doubt they will in the future.
First of all, Google has paid their EU fines. Secondly, I think you misunderstand the nature of what's going on with these fines. A combination of strong trade agreements and savvy tax jurisdiction selection has left most EU countries with little capacity to tax US tech companies, so they have resorted to fines. The play is old hat at this point. Pass a piece of vague legislation that probably applies to the target company's activities, then fine them before clarifying the law to the extent that the company can actually avoid breaking it. Rinse and repeat. The EU fined Google a few billion dollars last year, and the year before, and now this year, and they will surely do it again next year and the year after that. This is just a roundabout means of taxing Google. It will of course never change anything about Google, except that each year once the law is clarified Google's lawyers will make sure that they are scrupulously no longer violating this year's new regulation, but the extent of the regulation and the value of the fines is calibrated to not be so high that it would actually drive Google to extract itself from EU jurisdiction.
Now that it's clear they've lost their tax battle with Apple I expect the EU will begin fining them as well.
I can't speak for all the companies listed, but I know we've spent a lot of SDE time ensuring we're compliant with GDPR and various privacy laws. Building new systems and changing existing systems (on the scale of dozens, probably 100+, of individual teams). It's more likely that it's hard to quickly change the direction of large ships. I've certainly seen my leadership (and engineers) take things like GDPR compliance extremely seriously, to the point that I've seen it as a cultural shift over the last couple of years.
But from a business POV, it makes sense. Assuming that they have a million returns monthly, and from those only a dozen are scams (I have no idea about the real numbers, just guessing), it would be way more expensive to them to do a deep inspection on every returned item than do a soft/cheap check on the returns. When something falls throught the cracks (and the user find out), customer care will just send a new one (usually it's hassle free) and the company absorb the damage from that one scam, which it's usually cheap.
I know it hurts when amazon relies on real customers to do their deep inspection, but it's all about costs. I don't expect this to change.
I would love to stop using amazon for a million reasons, but this is not one of them.
The HDD swap isn't unique to Amazon either, this is something that has plagued retail since birth. There was always jokes about "rocks in the box" in the 90's when I worked at an electronics store.
You hit the head of the nail though, it's a calculated loss / cost. With retail they dealt with physical theft way more than this and anticipated up to 10% of inventory loss for a plethora of reasons. It's not surprising the thieves have transitioned here. I would expect that between this and mixed inventory, these issues are far more common that people would think.
While amazon is at fault for passing it back on, I imagine they make it right. They have always fixed issues for me with no hesitation. It sucks, but I wouldn't get out a pitchfork unless they denied it. And like I mentioned above, Amazon isn't unique, any company has this happen.
The question is where does the discount from my doing their inspection for them go? It doesn't go to the prices, they're the same everywhere. It doesn't go to the shipping, that's my Prime account.
I'm not sure i'm following. Your inspection is something you would do with any product purchased. If your request is a discount or price because you found something that was wrong, then that would be between you and Amazon. I've never received anything other than a new item when it's happened at other retailers like BestBuy (This exact scenario with wrong HDD in external chassis).
I would argue that just like they bake in issues, you as a consumer have to account for that in your purchase decision.
There's no perfect answer, but i'm not sure you would be entitled to anything beyond them fixing the issue in a responsible manner. If you want something beyond, it's within your right to request that from them and theirs if they accept it. I will say, often if you have issues on individual packages with delays, they extend your prime by X days.
Oh, you mention that Amazon's prices are not low, and they are the same everywhere. I missed that part.
I don't buy on amazon very much, and I'm in Canada. But I don't see prices lower than Amazon frequently. Usually on other huge companies like best-buy or walmart. But they usually offer the same return policy and I'm pretty sure they face the same kind of scams.
But hey, that's my experience. You might have experienced something very different.
TBH nowadays in the USA I'm seeing significantly cheaper prices on ebay vs amazon for many things. Ex: an HDMI capture card was $13 on ebay vs $20-25 on amazon. Shipping is a bit slower, but something has to give.
well, Amazon prices are low. And I'm not ignoring the fact that they also can do that because they run a huge monopoly that crushes the mid-size business and destroys the competition, I'm just pointing that they are low. Usually lower than the competition. That's basically your reward.
Imagine that mister Bezos start spending millions of dollars and employing an army to do deep-check into every item returned. Who's paying that bill? Amazon's stockholders won't. You will. I will.
But, as I said in a previous post, I'm not defending Amazon's behavior. I'm just pointing out that it's all about cost and the vast majority of users benefit from this as well (with lower prices and no-question-asked-return-policy), while a tiny-tiny minority of them might face an inconvenience of returning an used item from time to time.
While your premise is true, any supplier giving Walmart seconds has their days numbered. Walmart runs such a tight ship around their supply chain that it'd neither go unnoticed nor unpunished.
What appears to be Walmart getting factory seconds is usually Walmart demanding a custom variant of a product. Walmart uses their own consumer research and sales (and just as importantly, returns) data to form strong opinions on optimal price points, margins, feature requirements, warranty periods, materials, etc for a given product/category, and they'll use their volume to get a manufacturer to create a custom variant of a product with what Walmart considers an optimized design/bill of materials.
It's true the "Walmart version" of a product is likely less robust than the non-Walmart version, but that is the result of explicit and precise demands formed from actual consumer behavior. Manufacturers then have to consistently and reliably fulfill Walmart's orders to those exacting demands; that's rarely achievable by binning seconds to Walmart. Especially so for product variants that require actual BOM changes. Rather, it usually entails dedicated production runs, with all of the level of care and QC as the original product's manufacturing.
While this worked before, I think this is going to get wrecked by the efficiency of Amazon’s process.
Where a generic product like a selfie light ring smartphone holder is improved by various merchants until a winning design and price point is clear.
THEN Amazon selectively considers making their own version and pricing it. Or Amazon just keeps pulling their fees.
If IP protection prevents an Amazon Basics version, Amazon doesn’t have to create a version in cooperation with the brand—-it just promotes it to compete with the brand’s own e-commerce.
With Nike, it is only recently the checkout and delivery came anywhere near what Amazon would do for the same shoes, same price.
There's the type of generic/private label stuff you mentioned, which both Amazon and Walmart do. Amazon originally had a major competitive advantage here in that they could leverage insights from their own sales and third party sellers in order to inform decisions for AmazonBasics (and their other private label brands). But Walmart also introduced third-party sellers to their ecommerce platform. Amazon's sheer volume of third party sales still gives them a leg up over Walmart in this area, but the type of risk-free consumer intelligence Amazon gets from third-party sales data is no longer something only they have.
Then there's retailer-specific SKUs of branded products, which is what I was referring to before. Amazon does this as well, but they take a fundamentally different approach to it that doesn't really impact the effectiveness of Walmart's approach. Amazon-specific SKU variants will likely have the "same" product as the standard SKU, but have unique packaging that's optimized for shipping. Walmart-specific SKU variants are optimized to sell the greatest volume possible while being considered "good enough" by consumers, and usually result in actual product changes in order to meet the price point, reliability, and feature set Walmart deems necessary to do so.
Because they have different optimization functions in their approach to retailer-specific SKUs of branded products, Walmart's approach is likely to continue working for Walmart, at least for their B&M sales. They'll start to have some of the same optimization concerns as Amazon as their ecommerce sales grow, but will be able to benefit from all the experience manufacturers and packaging companies are currently gaining from their current work with Amazon.
Is this still true? I recently went to a Walmart for the first time in a decade+, and it was obvious most of the items weren't seconds, they were just cheaply made. Even higher-end retailers with outlet stores have just started making lower-end merchandise specifically for outlet stores.
I meant seconds in the sense of second-quality items: ones that wouldn't pass QA for their primary distribution channels, whether that's high-end department stores or their own storefronts.
That's different from secondhand items, which are items that had been previously sold, used, and then refurbished to be sold again.
Walmart doesn't sell 'seconds' as you might normally consider. They do often receive inferior quality merchandise from their suppliers, often under the same SKU. This is how they compete on price. It's like the mattress business, at scale.
When it comes to some products, especially the more expensive ones like televisions, certain retailers will get custom SKUs. The products will have a feature added or removed or be in a slightly different color.
The idea is to short circuit the price match guarantees that they heavily promote.
If the SKU is the same, wouldn't this open everyone up to the problem in which a buyer buys one item from the expensive retailer (better product) and one from the cheap retailer (inferior product), then returns the inferior product to the more expensive retailer (keeping the better product at the cheaper price)?
This can and does happen. Though, for most items, the net gain you'll realize probably isn't worth the effort.
Consider this from Walmart [1]. Mobile 1 5W-30. Something I buy frequently, but not from walmart. Walmart's site doesn't list a SKU, but you can see the UPC code from one of the pictures.
Same exact SKU as Advance Auto [2]. The problem? I know for absolute fact that the containers that hold the oil look totally different (and Walmart's online photo does not reflect reality). I don't buy motor oil from Walmart because this is the crap they pull. And it's not like this just recently happened or the manufacturer recently switched. I've compared the containers across years and several states now.
Maybe the packaging is just different but it really is the same oil on the inside. I don't trust Walmart enough to find out.
An even sneakier trick is changes to product models without changing the model name.
I’ve seen Camelbak use cheaper parts on the “same” backpack, for example.
This happens on Amazon a lot, you see reviews saying “I bought this three years ago it was great, new one uses cheap xyz.”
I think you largely are going to see every business, Amazon merchants, brands, etc get away with whatever they can to cut costs, so long as it doesn’t have widespread effect on brand perception.
I've seen this a lot with clothing/footwear. Things like logos that used to be stiched on are now printed, material type will change, etc. Some of these don't really matter (like logos) but are easily noticed and indicative of design changes you don't see.
> The reply from Amazon's support Twitter is the indication of a far larger problem in most business. Namely, it's easier to deal with the consequences of "mistakes" than it is to not make them.
In general I agree that this is a problem. But I don't see how this is an instance of that. I mean, how are they supposed to respond? "We will find the customer that scammed us and sue him. We will find the employee that checked this item and fire him."
You could start taking photos during the inspection of the returned item and before sending it, send a photo to the customer to confirm it’s what they ordered? You could establish a policy where you offer posted discounts (and lose money) if items aren’t as described? You could involve manufacturers in the re-certification process such that for high value items there’s maybe an extra shipping expense and time delay to market but the item’s quality could be verified before resale? You could strictly accept and sell only new items, putting returned or third-party FBA items in less efficient markets but completely isolated from the main market of trusted goods from known validated sources in your supply chain?
Amazon's example is completely different from that of Google or Facebook.
- In Amazon's case, it is only Amazon that is that victim of its mistakes: if they decide it's more efficient to give money to scammers than to avoid getting scammed, I couldn't care less.
- In the case of Google and Facebook, they're not the victims for disrespecting their user's privacy, their users are. So, regulators should keep making the fines larger until it really really hurts them.
The victim isn't Amazon, it's the next customer who buys the returned product--which wasn't even necessarily labeled as such.
Now if Amazon included a guide with returned products, instructing customers what to evidence of fraud or tampering to look for? That would be a different story.
You're the victim if you didn't realize it was the wrong item within the return period, which is a lot more common especially among people who aren't as intimately familiar with the technical details
Plenty of people have been scammed on microSD cards, a common target for this fraud, because they didn't know how to properly test them and never pushed the capacity until after the return period.
No, the next customer will just return it as well.
It's a mild inconvenience, the customer is hardly the victim. I'm for regulation of bad corporate actors, but punishing for mediocre customer service is going too far.
If they're buying something as "new" and getting something that has been returned and is not factory sealed then they're getting ripped off. This time the buyer caught it, but what if it had been swapped for the same item with 80% of it's expected life used?
Even though the HDD was a warehouse deal, Amazon is getting scammed in the "new and sealed" department as well.
When I bought a new NZXT AOI cooler Amazon sent me the original box with a fake seal sticker on it. The original contents were taken out and the box was filled with an old used Corsair cooler and some random electronics. Even the manual was replaced with one for a pull up bar.
Amazon could have known the sticker was fake because it was just a blank sticker without a logo and the box should be completely sealed in plastic when new.
They might not. Less technically savvy users may not realize that the performance on their "new" video card is less than it should be. Or they might realize too late and miss the window on their return. Or they might just give up because uninstalling the device, packaging and returning it is too much of a pain in the ass.
If this is a "mild inconvenience" to the individual who has to deal with identifying that their product is not what they ordered and returning it, are you suggesting that Amazon--a company with a $1.4 TRILLION market cap--is somehow the real victim?
As a user I am totally happy with Amazon's service. They shouldn't change their entire setup and make things a lot more expensive for everyone based on these infrequent use cases.
And Amazon customer support is awesome. Your bullet 2 is false.
e.g.
- the "fines" Google and Facebook keep getting for breaking privacy and other laws which are laughably small.
- customer support teams not dealing with serious customer issues until they get attention (viral tweet, front page HN etc)
- monopolies in most forms: e.g. the big-tech anti-poaching agreements
Generally I'm all for "it's easier to ask for forgiveness than permission" but that assumes that you are acting in good faith but still sometimes screw up. It seems like "screwing up" has become a good way to ensure short-term profits and as everyone is obsessed with KPIs and OKRs at a 1-week to 3-month time frame, the incentives are all wrong.
And "mission statements" and "cultural values" are too synthetic to come close to fixing this.