Hibermate

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Amazon Promotions - I just cost my company USD $45,000 with one assumption.

Posted by Chris Thomas on April 09, 2015. 34 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...

Seriously?

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  <merch.service05@amazon.com>
Date: 5 April 2015 8:35:56 am GMT+8
To: "chris@hibermate.com
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,

Leo B.
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.

No-one died

 

Post script: October 2015. This is the forum in question that shared the code:   

http://www.ppomppu.co.kr/zboard/view.php?id=ppomppu4&no=59588

More about this story in the video about my business below:

 

 

March and April's website and Amazon Income reports (plus a bit of an annoying "deletion of reviews" preview by Amazon) ...

 

Comments

Hi, If all mentioned by you is true, but kindly let me know do you have that much units available in FBA when actually you are getting 10-12 ordees.
Posted by Ankit Gupta on September 13, 2016
Hey Chris, This is horrible to read – even though I heard the story again – thanks for coming on the podcast – its live today https://www.globalfromasia.com/new-design-problems/
Posted by Mike Michelini on August 23, 2016
You brought back the gut-wrenching feeling I had when this happened to me (Koreans, too! What is up with that?). $8,000 of inventory GONE before Amazon stopped the madness. The Koreans took over my buy box for the next 2 months, reselling my inventory that they had just gotten for free. Knots in my stomach for daysss
Posted by Megan Cox on August 16, 2016
Would love for Amazon to look into this Korean group. I just experienced the exact same thing after giving out a coupon code. Just so happens, 283 Koreans (yes, I’m assuming based in the names of the purchasers) got a killer deal on my product.
Posted by Brad on July 06, 2016
Ouch Chris this is painful! You mentioned you were selling 10-12 a day before, after the sudden spike of sales, did your daily average increase? Did the promotion hurt you on the short run but on the long run it helped? I’m so glad I came across you online just now, I literally wanted to create a promo code and drive people to give me reviews! I would’ve had my own blog post!
Posted by Nitesh S on July 03, 2016
wow… was about to do a trial promotion on our Korean products and Face masks. Now i’ll stick to sale promotion lol. So sorry to hear your loss! Good man for taking it in your stride!
Posted by Baifumei.tw on February 10, 2016
Hey Anthony, seriously glad my post was able to salvage something for you! Really sorry to hear about your situation too. Definitely worth reaching out to those ‘customers’ who received a ‘complimentary’ product and asking for an unbiased review… It’ll be time consuming if you don’t use a product like www.salesbacker.com which automates the process seamlessly. Amazon has to do something about its promotions system. Its broken.
Posted by Chris @ Hibermate on January 17, 2016
Man! If not for this post I would have watched my entire inventory go to waste. I woke up and looked at the 31 emails stating Amazon has shipped my orders and felt funny. I logged into seller central and saw a $1.80 balance. I then noticed that all of these orders were under a promotion of which I’d only shared with 25 people. For a full day I watched more and more orders being shipped. I thought someone had set me up. I then typed in Amazon promotion killed my business and found your post. When I got to the part about Amazon stopping the orders I jumped out of bed and ran to the computer. It was 2am. Luckily they were able to stop some of them. So glad for this article because Otherwise I would have been out of my entire inventory. The mention of review request is also great because if we have to pay for it, we may as well benefit.
Posted by Anthony on January 17, 2016
Hi Matt Audette, thanks for the comment. You know I thought about creating an online video course which walks you through every single promotion set up within Amazon in layman’s terms. You could maybe charge $20 or more – it could save people thousands. With the huge amount of FBA’ers getting into the game, I’d say the old adage of selling, ‘picks to the miners’ could be quite profitable (think Greg Mercer’s Jungle Scout, Ryan Moran’s The Tribe, ASM etc) those are the guys making real money. In Scott Voelker’s The Amazing Seller group on Facebook, there’s someone being wiped out of inventory by this pitfall almost every day. Amazon needs to do something! And while it’s not, its a huge opportunity. The problem I have is that I’m just too busy to set something up… Over to you!
Posted by Chris @ Hibermate on November 21, 2015
Thanks for sharing your story Chris. Ouch! I have to say, way to handle it in stride though! It occured to me that I could build an easy promo tool for us small FBA’ers starting out. Amazon’s promo system leaves a bunch of easy pitfalls like what you ran into to lost most or all of our inventory. I JUST bought FBASafe.com – there’s nothing there yet, but I would love to hear your thoughts on how such an easy, safe promo tool should look so us small FBA’ers don’t make one of 5 or 6 easy mistakes there are to make and get cleaned out of our inventory anymore.
Posted by Matt Audette on November 21, 2015
This is really a scary thing to think about happening to anyone or any company. Obviously you work for a big enough company that they could deal with that big of a loss. That is why it is so important for newbies to spend a little extra and hire a professional to set everything up and help them with marketing. One that I found that is excellent is called Super Profit Flow. They have a 15 phase marketing strategy that is really pretty cool. You can find out how they help at this address http://superprofitflow.com/amazon-product-marketing-services/ But all in all I’m amusing you were able to keep your job and at least you got some great reviews!
Posted by Julie on September 25, 2015
It’s crazy how often this happens. this is definitely the most costly promo code mistake i’ve heard of tho i put together a guide on properly setting up promocodes to stop other new sellers falling into this trap http://www.dan-moody.com/#!How-to-properly-set-your-Amazon-discount-coupons-for-product-launch-and-not-get-scammed-by-Koreans/cuhk/55b3e0790cf24f011b6728f0
Posted by dan on July 27, 2015
Oh my gosh, I’m so sorry this happened to you~! This is not the first time I have heard of a community of Koreans getting a hold of a discount code for Amazon. At first I thought – why not adjust the inventory to 0 = then realized, it is FBA – you cannot adjust the inventory~! What a nightmare~! I’m so afraid to create any kind of discount code, honestly. I have been on Amazon a couple of years now and have not created a single promotion because of horror stories like yours. I hope it hasn’t left you homeless or in any dire situation. It does often seem nice guys finish last and no good deed goes unpunished. To a better selling future for you~! Let it be good karma paid so far forward nothing but good can come to you now~!
Posted by Anita on June 06, 2015
So sorry to hear this. From your words you sound like a really nice person. Hope that you get over this.
Posted by Shane on June 06, 2015
So sorry to hear this. From your words you sound like a really nice person. Hope that you get over this.
Posted by Shane on June 06, 2015
how did you manage to keep your seller account? I cancelled 20 orders in 1 day and they suspended me for life
Posted by Ariel on June 06, 2015
Thanks for the amazing feedback and advice guys, really appreciate the support!
Posted by Chris on June 05, 2015
Please be careful everyone. I hear that they have professionals Trawling the internet sites for unsuspecting newbies who make one simple mistake and you could lose everything. Do your business mindfully. Money off not % off. And remember to uncheck the box so that it doesn’t appear on your page.
Posted by Ada on June 05, 2015
this literally happened to me last week. Sub a different item and it’s exactly the same. Hard to believe they haven’t setup some sort of safety net for that.
Posted by Mike on June 05, 2015
If you wanted to give one guy a free one, you could have just done a multi-channel order and had it sent to them.
Posted by Art on June 05, 2015
i feel for people who get ripped off. These guys deserve jail time . Back a few months back I pleased with Amazon to come up with one time codes and they listened .. Shortly after I Created a software to automate the delivery of the codes. Find it here http://AzonVIP.com/feeder many satisfied customers
Posted by Dean on June 05, 2015
Just wondering if you could ‘slightly’ raise the selling price of your products for a period of time to ‘balance’ out the huge blowout? You could explain to your customers why you are doing it. Alternatively run another special type deal or work on ways to bring more $ in… Just wondering about all the customers that have purchased before… maybe if they all could recommend your product to others? Anyway just ideas. :o) m
Posted by Martin on June 05, 2015
I agree with Travis Jamison. It sounds like the group who wiped out your inventory are scammers and will most likely resell your product they got for free. I didn’t think about Amazon being scraped for free codes, but it makes sense, if you can scrape Wikipedia for information, then you can scrape Amazon for promo codes. I wonder if alerting Amazon to the scammers would have any benefit because you would be flagging the customers who ordered in bulk as scammers?
Posted by Jeff on June 05, 2015
Same thing happened to me in March..
Posted by Kevin on June 04, 2015
Just happened to fall on your story although I don’t know you. The exact same thing happened to me a few months back when a “friend” sent my offer to his list – runaway coupon. I lost approx. $7,000.00 in costs related to product and fees from Amazon. The person I did promotion with would not let me cancel any orders once they got to pending – he said that his customers service was more important…so people, read up on these promotions with coupons. Amazon now can create “unique Code” for each individual coupon, I believe. Thanks fpr sharing.
Posted by Had Same Experience! on June 04, 2015

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