The Amazon site made a mistake. He sold advertisements to certain e-retailers on the platform to promote products that no one could ultimately buy. Losses amount to several thousand dollars for sellers.
Amazon is a (very) large company and like the others, it seeks to earn money. Inasmuch as e-commerce platformone of the means at its disposal is to sell your advertising services to e-retailers. With a budget defined by them, they ensure that their products will be displayed to people likely to buy them, to simplify. This system is largely automatedwhich can lead to sometimes costly problems.
Rob Robinson runs the company Computer Upgrade King, which offers high-end PCs for gamers. Its products are for sale on Amazon. In November 2023, he realizes that its sales fall sharply, which is unusual. This is where he notices that Amazon ads, for which he pays thousands of dollars every month, are distributed to buyers in California. Except that Rob has stopped selling his computers in this state. Result: the man has no made no profit on November and December 2023, as well as on January 2024.
Amazon sellers paid to advertise products you can’t buy
The entrepreneur of course reported the problem to Amazon who first denied any worries. The story had to appear in the media for the firm to agree to admit its wrongdoing. According to a spokesperson, the incident “affected a tiny fraction” from sellers on the platform. “We will contact and similarly reimburse all affected sellers, and are updating our processes to ensure that such advertisements will not be charged for in the future“, he adds.
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In terms of reimbursement, Amazon agreed to pay $15,000 to Rob Robinson, who estimates his losses between $200,000 and $300,000. We are far from the mark, especially since what he experienced continues to affect him: he thinks that it negatively impacted its conversion ratea very important measure which determines the popularity of a product And its display in Amazon search results. According to Rachel Johnson Greer, a former employee of the firm, the latter knew the risks associated with poor placement of advertisements since 2015. Bad publicity which the company, already subject to a complaint from the United States Federal Trade Commission, would surely have done well without.
Source: Bloomberg