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There are a few avenues that lead to an item becoming an Amazon Warehouse Deal (AWD).
Customer returns, warehouse damage and products that get ‘lost’ within Amazon’s vast fulfillment network are the main culprits. If a brand decides not to create a removal order for an unfillable item, there’s a strong chance it may become an AWD, which involves Amazon selling ‘Like New’ or ‘Used’ versions of the product on the Amazon channel.
Lauren Sutehall, Bobsled Project Manager, has answered some FAQs about how to prevent AWDs below.
Hi Lauren! What are Amazon Warehouse Deals? And which brands on Amazon should be wary of them?
The threat of your products being used for AWDs is very real for almost all sellers and vendors on Amazon.
The first question many brands ask is, “But how is Amazon acquiring my stock to sell on the AWD website?” The answer is that when an order is deemed unfulfillable, the default setting is to allow Amazon to repackage the product. Amazon inspects relinquished products, completes a 20-point condition inspection, and resells them at deep discounts on their AWD page.
Amazon’s 20 point inspection will assign a rating from Acceptable, to Good, Very Good, and Like New (a.k.a. “Open Box” items).
What negative impact could Amazon Warehouse Deals be having on my Amazon business?
There are two major ways AWDs negatively impact brands.
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Undercutting RRP to an unfair level which can significantly impact revenue for brands.
In the example below, you’ll see that Amazon Warehouse is undercutting the sale of a computer by ~20% with their ‘Buy Used’ offer. By offering significantly lower price points, a savvy Amazon customer may understand that a ‘Used’ product sold by Amazon Warehouse may only have some slight external box damage. The product itself, having gone through Amazon’s 20 point test, will likely be the same quality as ‘Buy New’ offers, and there’s a strong chance many customers will select this discounted offer over the original brand owner.
Brands find themselves competing with Amazon to purchase their own products when they see ‘Sold by Amazon Warehouse’ on the product page. Image source: Amazon.com
Whilst uncommon, some brands report instances where Amazon ends up winning the Buy Box with AWDs, meaning the Amazon algorithm recognizes Amazon Warehouse as the dominant seller. Not only would this impact a brand’s sales, but when a brand loses the Buy Box, they are no longer eligible to run PPC advertising campaigns (the campaigns will become inactive for the duration of time that a brand has lost the Buy Box).
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Poor customer experience which leads to negative product reviews
While Amazon stresses that they perform a 20 point test to accurately gauge the condition of a relinquished product, sometimes these tests are inaccurate. When an order arrives looking worn around the edges, the customer may be inclined to visit the product page on Amazon and leave a negative review. Or sometimes a customer may simply select the lowest offer, unaware that this offer is in fact an AWD, and assume it’s for a brand new product, and feel disappointed when they discover they have purchased an item that’s not 100% aligned with their expectations. Unfortunately the brand owner has to deal with this feedback, although they had nothing to do with the “Like New” offer on their product page.
Customers can search specifically for AWDs by using the ‘Amazon Warehouse’ filter
How do I prevent Amazon Warehouse Deals?
The first step a brand can take to minimize the negative impact of AWDs is to limit the ways that Amazon can acquire your inventory. The default setting in every account is to allow Amazon to repackage relinquished items and restock them for sale. Once you’ve opted out, Amazon will not repackage unfulfilled items, instead they will return them to you. This is called a removal order.
But this comes at a cost.
The option to destroy orders (the option that can result in Amazon reselling your product with an AWD) is generally half the cost of a removal order. Below are the FBA Removal Order Fees, which are based on shipping weight.
Although removal orders are pricier, brands can always resell the returned items through other marketplaces where they retain control over the sales process and customer experience. Learn more about the specifics of this cost/benefit analysis process by reading the article below.
💡 Check out Who (Or What) Is Amazon Warehouse Deals?
When it comes to adjusting your account settings to minimize Amazon’s access to your brand’s products, a brand can either a) Set Automated Unfulfillable Removals to Return or b) Disable Refurbish Unsellable Customer Returns.
a) Set Automated Unfulfillable Removals to Return
- Log in to your Amazon Seller account & navigate to Settings>Fulfillment by Amazon
- Locate Automated Unfulfillable Removals & click on the ‘Edit’ button on the far right.
- Once you are in the right section of the dashboard, make sure you click ‘Enable’ for Automated Unfulfillable Removals & ‘Return’ for Return or Dispose.
- Select your preferred schedule:
- Weekly (on the 8th, 15th, 22nd and 28th) or Twice a month (on the 5th and 20th)
- In the Email address text box, enter your preferred email address.
- Provide the address and phone number for the delivery destination.
- Click Update.
Note: shifting from ‘Destroy’ orders to ‘Removal’ orders will incur the fees noted above.
b) Disabling Refurbish Unsellable Customer Returns
- Log in to your Amazon Seller Account & navigate to Settings->Fulfillment by Amazon
- Locate Refurbish Unsellable Customer Returns & click on the ‘Edit’ button on the far right.
- Make sure you click ‘Disable’
On AWD listing pages where brands see their products on offer, brands should diligently monitor the product information for any inaccurate details. If any inaccuracies are identified that could cause unsatisfied customers, brands can request changes to the listing page details.
Image source: Amazon.com
A more drastic method to remove Amazon’s ability to acquire your inventory is to transition from FBA to FBM. Fulfilling by Merchant ensures that the seller is keeping product out of the hands of Fulfillment Centers. But the major downside of this path is losing the SEO and on-page conversion benefits of taking part in Amazon’s fulfillment program (FBA).
Finally, it’s important to note that inventory being sold by other authorized or unauthorized third-party sellers could also end up as AWDs. So even though you can decide what happens with unfulfilled inventory through your Amazon account, you don’t get to decide how other sellers manage their account, even if you’re the branded manufacturer of the item being sold. Carefully monitoring third party sellers is a big part of protecting your brand on Amazon - read the article below to learn more.
How does Bobsled combat Amazon Warehouse Deals?
Amazon can be a minefield for brands and AWD is an example of a battle that brands face while competing on the marketplace. Bobsled is an Amazon-approved agency that specializes in controlling AWDs through the implementation of world class brand protection strategies. Read the case study below to learn more about how we help our clients manage their inventory on Amazon.
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