Sometimes, a good idea can go too far. That’s the case with the pending US legislation known as The SHOP SAFE Act of 2021. Designed as a vehicle to protect consumers against counterfeit goods that might pose health and safety risks, the act has multiple issues that almost certainly will result in unintended consequences that threaten to turn ecommerce marketplaces upside down for sellers and shoppers alike. Led by Etsy, numerous US companies and marketplaces, including Shopify, OfferUp, and Craigslist, have banded together to lobby against the act. The goal is to get it removed from another piece of legislation it was bundled with.
SHOP SAFE is an acronym for Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce. It was added to the America COMPETES (Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength) Act of 2022, a similarly controversial bill intended to enable better US competition with China. Both have been passed by the US House of Representatives, and await a passing vote by the US Senate along with a presidential signature to become law.
Let’s look at what’s in (and not in) SHOP SAFE that has businesses and marketplaces worried, what the consequences of SHOP SAFE becoming law could be, how Etsy and other concerned parties are responding, and what might happen next.
Etsy leads the fight vs SHOP SAFE and why it matters
SHOP SAFE was pushed forward in the US in response to a rash of major retail thefts around the 2021 holiday season, including train robberies. The idea was to make counterfeit or stolen goods more difficult to sell by creating “proactive measures for screening goods” before they can be listed for sale and “a program to expeditiously disable or remove” any potential counterfeit products. In addition, there are requirements for determining and listing products’ country-of-origin and creating a system for reporting bad actors.
While these are valuable concepts on the surface, the reality of how the act imposes them is the issue. The Center for Data Innovation (CDI) notes that “the act’s broad language would place an undue burden on online marketplaces to police third-party sellers and their listings while exposing these platforms to additional liabilities and raising the barrier for businesses to sell online, ultimately hurting consumers by reducing their options.”
Regarding the pre-screening and verification of goods, the CDI goes on to say: “Requiring the platforms to preemptively and exhaustively review all potential products’ listings creates an expensive and challenging undertaking for platforms to effectively comply and could ultimately discourage new platforms from creating marketplaces. It may also lead to platforms removing legitimate listings or removing third-party sellers in an abundance of caution, ultimately reducing consumer options when shopping online.”
These are only some of the issues that SHOP SAFE could potentially cause. In an extraordinary blog post, Etsy called out the act for “treating local artisans the same as global manufacturers” (thus giving larger companies the advantage in the marketplace), “creating pre-screening requirements that don’t apply to handmade and custom items,” and “creating a system where anyone can make false or baseless claims” against alleged bad actors in a marketplace.
Clearly, the SHOP SAFE act has the potential for disastrous consequences to marketplaces, sellers, and shoppers. Etsy and 38 civil society organizations, trade associations, and companies are actively lobbying Congress to stop SHOP SAFE, and instead pass the more limited and better written INFORM Act. The group also sent a joint letter to Congress opposing the legislation because it “marks a fundamental change to how individuals and businesses across the country communicate, engage and conduct business online, and threatens to undermine free speech, innovation, and consumer choice.” We’ll continue to monitor this story as it develops.
Pandemic boosts US ecommerce, but sellers are feeling the pinch
While the pandemic-motivated shift to ecommerce was noticeable over the past two years, now we have an accounting of the financial impact in the US. The latest report from Digital Commerce 360 indicates that 2020 and 2021 added an extra $218.53 billion to ecommerce’s bottom line. What’s more, the pandemic accelerated the expected overall growth of ecommerce ahead of future projections. The report notes that:
“Overall in 2021, consumers spent $870.78 billion online with U.S. merchants, up 14.2% from $762.68 billion in 2020. If the pandemic would not have happened, Digital Commerce 360 estimates ecommerce sales would not have reached $870.78 billion for two more years, until 2023. And online sales would have only reached $754.33 billion in 2021.”
While ecommerce sellers did well during this period, they are now absorbing rising costs due to inflation, supply chain and logistics issues, and increasing marketplace fees. A comprehensive breakdown by EcommerceBytes found eleven incidents of 2022 fee increases affecting sellers on marketplaces such as Amazon, eBay, and Etsy, along with fulfillment fee increases by USPS, FedEx, and UPS.
The costs of the pandemic’s side-effects on the ecommerce system are being passed down to sellers, and there’s little recourse for sellers but raising prices. In fact, research from Adobe has shown that happening for 20 consecutive months, as the ripple effect hits customers square in the wallet. This scenario will likely continue to play out until the pandemic ends, with marketplaces being the true winner and sellers fighting to sustainably increase their margins.
At this point, it’s clear that Amazon.com has become a reality show. Each week the mega-corporation and marketplace gets involved in outrageous scandals and then balances it with an equal amount of good news. Many people complain and protest, but even more continue to throw money at it. The heck with Survivor or Eurovision – Amazon.com is the world’s most successful reality show, and the drama keeps on coming. Get your popcorn ready, because here’s the latest Amazon news round-up.
First, the good news: according to a recent study by PYMNTS, Amazon accounted for nearly 60% of all online retail purchases in the US last year, indicating the company’s increasing stranglehold on ecommerce sales. Its share of domestic retail has doubled from 28.1% in 2014 to 56.7% in 2021. Amazon has even surpassed Walmart, whose retail empire includes an enormous brick-and-mortar infrastructure, to seize the lead in total US retail sales by 9.4% compared to Walmart’s 8.6%. Amazon also recently mended fences with Visa over high transaction fees to resume global credit card processing, and added MGM’s film library (including James Bond, Rocky, and other classic properties) to Amazon Prime video in an $8.45 billion transaction.
But as always, scandals happened. First, the FTC began a probe into Amazon’s use of “manipulative online interface tricks” to get users to sign up for Prime and make canceling a Prime subscription excessively hard. Unfortunately for Amazon, leaked internal documents show that the company was aware of the practices, even going as far as to have a project [Code name: Iliad – no, we are not making that up] designed to find ways to make subscriptions more difficult to cancel.
And there was more bad news. Following the US Congressional investigation report into Amazon’s anti-competitive self-preferencing, the Confederation of All India Traders (CAIT) has urged Indian agencies to begin a similar probe. Finally, a resurgent COVID-19 outbreak in China is likely to lead to delays in orders, as significant lockdowns are disrupting production and fulfillment. While Amazon certainly didn’t get the final rose this week, it’s important to remember that, unlike a reality show, there are real people involved and real consequences.
For sellers who rely on the Prime badge – and Amazon’s relentless promotion of the service – to get more sales, a possible decrease in Prime buyers could have a significant impact. More supply chain disruption due to the pandemic is also not positive news, especially with orders being placed for the upcoming Prime Day. While the good news is that the increasing sales growth of the marketplace means increased opportunities for sellers, there’s always the uncertainty that comes with Amazon: What’s going to happen next week?
Also in the news
Webinars in the week ahead
Various dates: Amazon advertising’s global webinar program continues with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization, and tips. Amazon.
For US sellers
March 22, 24: Amazon Small Business Academy Pathways Series March. Amazon.
March 23: Building your brand identity with Amazon Advertising. Amazon.
March 23: Amazon Ads – Tips for optimizing your budget and bids. Amazon.
March 23, 24, 25: Best practices for Amazon resellers. Amazon.
March 24: The Future of the Web Expert Series. Tiniuti.
March 24: Amazon Ads – Tips for optimizing your keywords strategy. Amazon.
March 24: Amazon Ads – Strong products, strong ads: Pick ASINs that help improve your performance. Amazon.
For UK sellers
March 22: Amazon Ads – Tips for optimising your budget and bids. Amazon UK.
March 24: Amazon Ads – Tips for optimising your keywords strategy. Amazon UK.
March 24: Amazon Ads – Tips for optimising and expanding your targeting strategy. Amazon UK.
March 25: Amazon Ads – Live advertising support: Chat with our advertising specialists. Amazon UK.
Various dates: Amazon webinars covering selling, fulfillment, SFP, advertising, and Amazon Business. Amazon UK.
Amazon robots trap fulfillment worker in a maze – are they sending a message?
And finally, a viral video posted by an Amazon warehouse worker last week was a scene straight out of dystopian future-shock horror series “Black Mirror.” In the TikTok clip posted by @robotman77, the worker is navigating a series of narrow corridors of shelving while looking for products to fulfill an order. Without warning, the robot-powered shelves begin moving to cut off his access. As he begins to panic, he becomes lost in a maze, as more robots and shelves cut off his escape from the depths of the fulfillment center.
In a text caption on the now-removed original video, @robotman77 writes, “The robots at work trap me. It took me like 15 minutes to get out.” While reports like from Amazon workers don’t happen often, it’s not totally surprising considering how much effort Amazon has put into automating its fulfillment processes to maximize efficiency. It probably happens more often than we know about, because @robotman77 adds, “It can sometimes get crazy. Them robots like to mess around.”
Given Amazon’s track record of trying to keep a tight lid on what goes on in their warehouses, it’s no surprise that the original video was removed. Fortunately, it has been uploaded to Sunlay’s YouTube channel.
Looking at the big picture, the idea of robots trapping humans in a maze has a certain resonance. It’s like the algorithmic marketplace bots trapping Amazon sellers in a maze of ever-changing rules, rising fees, and random account suspensions – and sellers are always trying to find their way back out. Or like the beleaguered fulfillment center workers, constantly trying to find their way out of a maze of COVID-19 outbreaks, low wages, or impossible performance metrics.
Are the more than 200,000 Amazon warehouse robots sending us a message with their actions? And if so, what could it be? Is it a warning of an upcoming robot revolution against humanity? A call for robot labor unions? Or is it something simpler and more direct?
Our money is on “Welcome to Amazon. You’ll never get out of this maze. Beep Boop.” And just to be safe, keep a watchful eye on your Roomba. You never know.
Read more at Newsweek.