As I noted in my article on Big Tech’s linkages to China, Amazon is basically a giant fulfillment service for Chinese third-party sellers.
Three years ago, third-party sellers topped Amazon’s own sales. They now make up 58%. Who are they? If, like most Americans, you shop at the giant dot com retail monopoly, you’ve already waded through a stream of random shop names, fake misspelled reviews, and counterfeit products while searching for just about anything. What happened? China happened.
Between 40% to 48% of top third-party sellers on Amazon are operating out of China. The massive growth in Chinese third-party sellers has been fairly recent and transformative.
What Amazon Prime members are really buying is membership in a club that helps third-party sellers from China push counterfeit and imitation products to Americans. Amazon acts as a middle man, charging Chinese sellers and American customers for handling listing, shipping and sales..
What happens when the products are defective? Amazon would like to insist that it’s just a fulfillment service. Sorry, no.
The dispute centers on a lawsuit filed by Kisha Loomis, who purchased a $370 hoverboard on Amazon in 2015 as a Christmas gift for her son. She sustained burns to her hands and feet trying to extinguish a fire started after her son plugged the device in to charge it.
Amazon collected a $39.99 subscription fee from manufacturer TurnUpUp, and a 15% referral fee totaling $55.50 from Loomis’ purchase. Amazon collected around $110,000 in fees from roughly $736,000 worth of hoverboards TurnUpUp sold on Amazon from September through December 2015, before Amazon’s own investigation of fire or smoke incidents triggered by defective hoverboards caused it to pull the product from its marketplace.
You’ll be hugely surprised to learn that behind the gibberish name was exactly who’s behind 99% of the gibberish product names filling Amazon.
TurnUpUP was a name used by SMILETO, a company based in China, to sell its products on Amazon.
Of course it is.
The panel cited these facts in rejecting Amazon’s argument that it functions merely as an “an online mall” that carries no responsibility for product defects.
“Owners of malls typically do not serve as conduits for payment and communication in each transaction between a buyer and a seller,” Judge Sam Ohta, a Los Angeles County Superior Court judge who sat on the appellate panel in the case, wrote in the majority opinion.
Ohta also noted that when it comes to consumers looking for compensation for their injuries, “Amazon may be the only member of the distribution chain reasonably available for an injured consumer to recover damages.”
That in a way gets at the core of the issue.
American consumers can’t hope to recover any damages from some warehouse in China. But if Amazon insists on destroying American business and dumping Chinese garbage across the country, it can at least be held liable for the harm it causes. And the resulting measures should at least hopefully slow down the rate of Chicom product dumping.