As a kid, each summer I sold popsicles from my house to neighborhood kids. It was a tidy business that earned me a new mountain bike within the first couple weeks of summer. Not bad for an 11 year old that didn’t have anything else going on. One of the neighborhood kids started buying a lot of my inventory. It turns out he was taking it door to door, marking everything up by 5 cents for his profit.
At first I was livid! He was stealing my customers! I complained to my board of directors (mom) and she explained that this wasn’t a bad thing. In fact, I was selling more product than ever.
A few months ago I received an email from a customer that wasn’t satisfied with one of my products. No problem, it happens from time to time. I love to exceed expectations in taking care of those issues, and turn detractors into fans. I was up to the challenge.
He mentioned he had purchased it on eBay, yet I had no record of him buying on eBay. I looked at the purchase history for Amazon and my direct sales, and I couldn’t find him anywhere. Finally, I found him listed as the shipping address, with a different person entirely listed as the buyer.
Here is what happened: I had my products listed on Amazon FBA. An Amazon Prime customer saw my product, listed it on eBay for a slightly higher price. When someone bought the product, they placed an order on Amazon and had it shipped to their customer using 2-day shipping included with their Prime membership. I call this the Prime Piggyback. I just made that term up, so don’t say it to other people and expect them to know what you are taking about.
Is this a good business model?
Technically speaking, Amazon doesn’t allow you to do this, so I am not sure how rampant this is. I started looking around and found my product on dozens of sales channels where I had not listed it. For the middle man, this is a low margin business ripe with customer service issues. However, it is extremely low risk as they carry no inventory. It is based on the simple principle of buy low, sell high. Isn’t that pure capitalism?
In the end I chuckled that I had a network of affiliates I wasn’t aware of, all facilitated by Amazon. For my disgruntled customer, I decided to refund the purchase to my Amazon customer and send them an email about the situation. I left it up to them to work out the refund with the disgruntled customer.
What do you think? Is it wrong to allow folks to resell products, or just another step in the retail cycle?
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