Amazon Promotions - I just cost my company USD $45,000 with one assumption.
Posted by Chris Thomas on April 09, 2015. 40 Comments
While I was out having dinner with some new friends here in Hong Kong last Thursday (the eve of Easter Friday 2015), I 'sold' $53,000 worth of my Hibermate sleep masks on Amazon.
When I got home very late, admittedly slightly inebriated after a big meal and a few 'reds' and feeling quite tired, I quickly checked my Amazon seller account before I went to bed.
What I saw nearly floored me. We'd pretty much sold $53,000 worth of stock in the 4 hours it took to have dinner...
I had a feeling in the pit of my stomach that something was wrong. This was totally, totally, totally not normal. My account had been selling maybe 10-12 units a day 'at best' up until now.
My mind began to race. Had Amazon suffered a glitch? Was my product somehow miraculously featured on a US morning show that had created some kind of insane demand?
I quickly checked my order dashboard.
It provided no information, other than there were over 1,000 'pending orders'.
See an example below:
You can't click those greyed out pending orders... There's no way to see who placed them, pause them or even cancel them; as a seller you don't know anything. You only get information about the order once it's been shipped by FBA.
Then I remembered something...
2 days earlier I'd been emailed by an Amazon customer who wanted to change the colour of his order from Black to Pink for his girlfriend as he'd made a mistake during the ordering process.
I created an Amazon promotion code with a 100% discount and emailed him back letting him know he could order a new Pink one free of charge if he used the code. I joked that I was new to Amazon and that I'd not set up a promotional code before so I hoped it worked ok... I also quipped please not to share the code and that a review would be great if he had time...
But now I was frightened.
Had he taken advantage of my naivety and trusting nature and shared the code with all his friends, then had social media taken care of the rest?
I instantly cancelled the code, but the gate was now well and truly shut after the horse had bolted.
I could barely sleep that night as I had no visibility about what was going on. Were they legitimate orders or had the code leaked? I'd only find out once Amazon started shipping...
When I woke up early the next morning, my worst fears were realised.
200 orders had already been shipped by Amazon FBA and 99.9% of them had the 100% discount.
Even worse there were still over 800 pending orders!
I felt sick.
Not only that, it was Good Friday.
That's a bit of a problem when you're on a chat to Amazon asking them to cancel all pending orders using the promo-code to blame and their technical team are short staffed...
It was like having your 'hair caught in the machine' with the off-button just out of reach, and slowly, painfully being sucked in with no way to stop it...
With every passing hour, Amazon was fulfilling more orders and there was nothing to do but watch them go.
My Amazon 'case' was 'in progress'.
Of course, I emailed the customer I sent the code, asking him if he'd shared it. He said he hadn't and I believed him, as you'll see in a sec...
Now I was totally confused. The code had got out out, but if he hadn't shared it, then how did anyone find out about it?
I quickly Googled, "where does an Amazon Promotional code show" and found this link; and there, buried in the fine print, was the answer...
"We display your promotion on the product detail page only when your offer wins the Buy Box. We do not guarantee that any particular seller's listing will win the Buy Box. For more information, see How the Buy Box Works."
I don't even know what a 'Buy Box' is!
Being an Australian, I hardly ever use Amazon as they rarely ship to Australia... (no offence to Amazon).
I've been using Shopify for years, and before that, Magento. Every time I created a promotional code, it was something I had to promote. I had assumed it was the same for Amazon and I didn't even think to check before I created it for my customer. I thought it was private.
But you know what they say about assumptions...
I just tried to do something nice for someone I didn't even know and it had backfired spectacularly.
Finally, after watching helplessly as 703 free orders worth USD$42,144 were being fulfilled by Amazon, on Saturday the 5th of April I got this message....
From: Amazon Seller Support <firstname.lastname@example.org>
Date: 5 April 2015 8:35:56 am GMT+8
Subject: RE: [Case 1371928731] issue with promotion, tracking ID Money Off 2015/04/02 24-35-58-28
Greetings from Amazon Seller Support,
Regarding to your concern about issue with promotion tracking ID Money Off 2015/04/02 24-35-58-28, a total of 330 FBA Orders were successfully cancelled.
The other orders were too far away on fulfillment process and we were unable to cancel them. Please let us know if you need further assistance from our side.
Thank you for selling with Amazon,
Amazon.com Seller Support
The bleeding had stopped... Phew. (ish)
Next I tried desperately to salvage at least some unbiased (but you know, hopefully positive) reviews from the folks who scored a free Hibermate by emailing as many as possible. It turned out that almost all the free orders went to a community of Koreans who's (obviously) second language is English - understandably their reviews have been 'patchy' in terms of their making sense, but I'm seriously super grateful for their help!
Finally, to rub salt into an already festering wound, I had to pay almost $2,500 USD in Amazon for Fulfilment fees, bringing the total cost of my mistake to nearly USD$45,000.
Still, it's not all bad.
Post script: October 2015. This is the forum in question that shared the code:
More about this story in the video about my business below:
I've also started a new podcast about eCommerce and Amazon - with more of a focus on Amazon Australia...