|EcommerceBytes-NewsFlash, Number 2746 - February 23, 2012 - ISSN 1539-5065 1 of 3|
eBay sellers have found a way to offer free 2-day shipping on their orders - without paying a cent to any shipping carrier - with help from Amazon, in what could be called creative retail arbitrage. Not only that, the sellers carry no inventory, making their business virtually risk-free.
While sellers have been using Amazon as a drop-shipper for years (perhaps to their colleagues' surprise), what's unusual about some of these sellers' business models is that they use an Amazon Prime account, which costs $79/year, to get free 2-day shipping on all orders, allowing them to offer free expedited shipping on their eBay and online listings.
However, Amazon spokesperson Mary Osako said the company does not allow sellers to use Amazon Prime for commercial orders, citing Amazon Prime Terms and Conditions. While small businesses are allowed to purchase Prime membership, the terms state, "Prime members are not permitted to purchase products for the purpose of resale or to ship to their customers or potential customers using Prime benefits."
Using Amazon Prime gives these sellers a tremendous advantage over other eBay sellers who must either pay for shipping themselves or else charge a shipping fee to buyers. And because these sellers are able to offer free shipping, they automatically earn a 5 out of 5 DSR rating on shipping criteria, helping them maintain their Top Rated Seller status on eBay.
According to Chris Green of FBAPower, who helps sellers use FBA on Amazon, many online sellers use Amazon (and other retail sites) as drop-shippers and use software to help them manage the process. But Green was not sure how many people might be using their Amazon Prime accounts to send orders, and those who do so may not realize it's against Amazon's terms, he said.
Amazon Drop-Shipping, Not to Be Confused with FBA
Green said packages from Multi Channel Fulfillment FBA look different than items that are ordered by the seller from Amazon, though they both arrive at the buyer's door in an Amazon-branded box.
Drop-shipped orders have Amazon branding on the inside, as well as promotional material from Amazon partners. "Even if marked as a gift, the source of the product would be evident" on the packing slip for drop-shipped orders, he said. "Multi Channel Fulfillment orders would only have the box logos, and it's possible that the customer thinks the seller is just re-using Amazon packaging." But they would not have Amazon branding on the packing slip, he said.
Orders Sent Using Amazon Prime Shipping
The eBay orders arrived in Amazon-branded boxes with Amazon-branded packing slips that indicated the items were "gifts" - sent by the recipients themselves (the "gift from" field displayed the name of the buyer). The name of the eBay seller was nowhere to be found on the box or inside the package.
EcommerceBytes contacted Christina Holmes, who confirmed she was proprietor of ShoppingSpreeLLC on eBay, but refused to answer questions about her business model and her use of Amazon to source products.
ShoppingSpreeLLC has 269,924 total feedback- 13,354 positives, 68 neutrals and 126 negatives in the last month alone.
ShoppingSpreeLLC received occasional feedback on eBay referencing that she used Amazon to send the goods, such as these comments dating back to 2006: "Deal worked great... surprised when shipped from Amazon," and, "Arrived eventually - from Amazon! Hmmmm... Perfect condition. Thanks."
More recently the seller received a negative feedback with the comment, "they buy the product on amazon and sell 4 higher on here. shame on you," to which ShoppingSpreeLLC replied, "Sorry for confusion we use "Fulfillment by Amazon" to store/ship our inventory."
But if ShoppingSpreeLLC is using Amazon's Multi Channel Fulfillment service, there's no indication why the items we ordered were sent as "Gifts" with our own names displayed as the sender rather than with a packing slip showing the seller's business name.
eBay and Amazon.com Policy
EcommerceBytes asked Amazon's Osako if there was a limit to the number of addresses a Prime account could send to and are awaiting her response.
We also asked eBay if drop-shipping on Amazon was allowed. Spokesperson Johnna Hoff, contacted on February 17th, said she was still researching the issue and would get back to us once she had an answer.
Winning Even with Returns
Ironically, sellers suspected of using Amazon Prime to send eBay orders with free shipping have policies that ensure they still make a profit even if eBay customers return their orders. They do that by charging a set fee for returned items sent with free shipping.
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Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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