(Bloomberg) — Paul and Rachel Baron were one of Amazon's success stories. The washable swim diapers they designed for their toddler son quickly became a best-seller, as Amazon's algorithm worked its magic. Satisfied parents left five-star ratings and glowing feedback, helping the pair rise in diaper search results and drawing more shoppers to them. The momentum seemed unstoppable.
Then one scathing review changed everything.
“The diapers arrived used and covered in poop stains,” one shopper who gave them a one-star rating wrote in a review. “This couldn't be more disgusting!! Someone must have used them and returned them but the company simply didn't check the items and sent them out as if they were new. The stains were not minor either. I was extremely uncomfortable.” What's worse is that the review included a photo of the stain for all to see.
This shouldn't have happened. Amazon.com has promised to inspect returned items for problems before selling them. But consultants who advise merchants on how to navigate the online marketplace say selling returned items as new is a big, and growing, problem. When the practice generates negative feedback, merchants say, the damage grows exponentially.
In interviews, two consultants said they've experienced returned items being sold as new, leading to longer wait times to help clients deal with the issues. A longtime Amazon returns worker said the sheer volume of returns makes it difficult for employees to thoroughly inspect items before restocking. Earlier this year, Amazon introduced a new policy for the first time allowing sellers to instruct sellers not to resell returned items. Leslie Hensel, an e-commerce consultant who works with Amazon merchants, welcomed the new policy on LinkedIn last month, writing, “Better late than never.”
The Barons have repeatedly told Amazon that they are not at fault and that the reviews should be removed, but they remain on the site and have caused lasting damage. The couple say they are $600,000 in debt, including a mortgage against their home, and that filing for bankruptcy is likely. They say they make enough money from selling diapers to pay off their debts and order inventory, but that they cannot make a living off it.
“The last four years have been an emotional disaster,” says Paul Baron, “and shoppers might think they could just return soiled diapers to Amazon and get their money back without suffering any hardship, but we're a small, family-run business and this is our mortgage payment.”
Amazon removed the review hours after Bloomberg published the story.
“When we learned of this incident four years ago, we immediately improved our product returns process to prevent these types of used items from being returned and sold as new,” Amazon spokesman Chris Oster said in an email. “During the return inspection process, our teams are instructed to open the box every time to ensure the inner seal is intact. Since making these improvements several years ago, we are not aware of any additional incidents involving these types of products. More recently, we updated our policies so that returned products of this type cannot be resold under any circumstances. It is extremely rare for mistakes like this to happen, and when they do, we take them very seriously to improve the experience for customers and sellers. We have no data to suggest that this was an isolated incident. We removed the negative reviews in question and are investigating why they weren't removed earlier.”
The Barrons' entrepreneurial journey began 10 years ago, when they were enrolling their newborn son, Beauregard, in swim lessons. However, the swim diapers they bought were tight around his legs and had to be removed like pants, making cleanup a pain. So the Barrons turned their frustration into an idea: a reusable swim diaper with adjustable snap closures that were easy to remove.
The couple used their credit card to place their first order with a factory in China and launched Beau & Belle Littles on Amazon. Soon, the business was doing $1 million in sales. They appeared on the Rachael Ray Show and were featured in Forbes. Their success is the kind of small business that Amazon loves to promote, especially at a time when regulators are accusing the company of hurting independently owned businesses.
“My dream was to earn enough money so that Rachel could stay home, so I started this job,” Paul said. Rachel could have worked as an assistant, but they say that would have barely covered childcare costs.
Barron's was executing on a plan to triple its annual sales to $3 million in 2020, but the review came as a shock. The diapers had rated four stars or higher by hundreds of buyers, but the photos of the stains were too good to pass up. More than 100 shoppers voted the toxic review “helpful,” raising awareness. The algorithm suddenly worked against Barron's, and sales plummeted.
“That should be common sense,” Rachel says. “Why would something like diapers be put back into stock for resale?”
The amount of time Amazon employees spend inspecting returns varies depending on the item, according to the former employee. But overall, employees shouldn't visually inspect each return for more than a minute, this person said. If a package appears sealed, employees will often assume it's unused without even opening it, this former employee said. But it's not always clear whether the item is in pristine condition, because the seal is often a sticker or zipper, this person said.
The breadth of Amazon's catalog exacerbates the problem: the company sells hundreds of millions of products. Amazon employees who process returns may only see a particular product once and may never develop expertise in a particular category. While it may seem unlikely that soiled diapers would be resold, Amazon sells fake soiled diapers as joke gifts.
Amazon says it doesn't allow reviews about packaging or delivery issues, or about the condition or damage of the product. The guidelines seem to prohibit reviews about soiled diapers because they suggest the product has already been used, and the Barrons hoped a simple note would resolve the issue. But their emails went unanswered. Paul remembers being passed from one department to another and spending hours on the phone. The seller's support rep acknowledged that the used diapers had been resold in error, but told him he couldn't remove the review, he said. The couple tried the well-known jeff@amazon email address that supposedly goes to founder Jeff Bezos himself, but nothing happened.
Amazon knew reviews could be misused when it designed the system, according to a person involved in the project. Executives realized it would be impossible to hire enough people to adjudicate every disputed review. They decided the best course of action was to encourage as many real reviews as possible so fake ones would disappear, this person said. The company also doesn't allow companies to respond to critical feedback, unlike Google and Yelp.
“When a used item is resold as new, there should be a very simple dispute process that allows the seller to remove the review,” said Jason Boyce, a longtime Amazon seller who now runs a consulting business for online retailers. “But that process hasn't worked for a long time.”
In the same month as the diaper review, the Barrons received an email from another customer who ordered swim diapers on Amazon for a trip to the lake, only to receive soiled diapers. Rather than leave a critical review, the customer emailed the business owner directly.
“I received the swim diapers today via Amazon and upon opening them I noticed they had stains and mold on the inside, most likely having been used previously,” the email said.
Rachel said that while Amazon shouldn't resell used diapers, it does sometimes do so and it's out of Amazon's control. She apologized and sent the buyer a replacement.
“It had some stains on it and I don't know if it was poop or not,” shopper Jessica Salerno told Bloomberg. “The store owners were really accommodating when I contacted them. I'm really disappointed that this happened.”
The Barrons have long suspected that the initial reviews were fakes from competitors looking to sabotage. Merchants have been known to buy competitors' products and leave bad reviews in the hope of boosting their own business, a tactic known as “sniping.” With more than 2 million sellers competing on Amazon's site, the competition is so fierce that merchants have even gone so far as to bribe Amazon employees to give their own products an advantage and get an edge over competitors. According to a 2020 federal indictment, one scheme being sold was a “takedown,” in which sellers would leave critical reviews of competitors' products to hurt their sales.
As it turns out, the diaper reviews were real. Erin Elizabeth Herbert, a teacher in Redlands, California, admitted to Bloomberg that she left the review to stop other shoppers from having the same experience. The diapers she received were soiled with human waste and hadn't been washed, Ms. Herbert said, and looked like someone had used them on the beach and washed them in the ocean. Ms. Herbert said she got a refund from Amazon and ordered swim diapers from another company.
The Barrons “reached out to me, told me they were very embarrassed, and offered to send me a new product,” she said. “They explained that Amazon handles all returns and shipping. I always intended to update the review to reflect that, but got busy and never did.” Herbert had completely forgotten about the review until Bloomberg contacted her in June.
The Barrons tried unsuccessfully for a year to have the reviews removed, even though they followed Amazon's instructions. Now the couple are trying to salvage their once-promising business: Paul works as an e-commerce consultant on the side, and Rachel is looking for a logistics job.
“Amazon talks big time about supporting small businesses, but they're not,” Paul said.
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