Best Buy lays off 5,000 workers as it shifts focus to online sales

Snow outside of a Best Buy store in Oklahoma City, Oklahoma, on Feb. 17, 2021.

Enlarge / Snow outside of a Best Buy store in Oklahoma City, Oklahoma, on Feb. 17, 2021. (credit: Nick Oxford/Bloomberg via Getty Images)

Best Buy says it has trimmed its headcount by 21,000 over the last year as the pandemic has accelerated the company’s transition to selling online. Most of those losses were due to attrition—including workers who were furloughed during the pandemic last year and then chose not to return to work. But Best Buy says that in recent weeks it formally laid off 5,000 workers. The company now has about 102,000 workers—including employees in its retail stores and corporate headquarters.

A company will often lay off workers because it is struggling. The last year has certainly been a challenging period for some brick-and-mortar businesses. This week, for example, electronics giant Fry’s shut down all of its stores.

But that doesn’t seem to be the situation at Best Buy, which has weathered the pandemic fairly well. In the last quarter, same-store sales at Best Buy’s brick and mortar stores were up 12 percent compared to a year earlier. Meanwhile, online sales were up an impressive 89 percent.

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#best-buy, #layoffs, #online-retail, #policy

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TikTok is being used by vape sellers marketing to teens

TikTok has a vaping problem. Although a 2019 U.S. law made it illegal to sell or market e-cigarettes to anyone under the age of 21, TikTok videos featuring top brands of disposable e-cigarettes and vapes for sale have been relatively easy to find on the app. These videos, set to popular and upbeat music, clearly target a teenage customer base with offers of now-unauthorized cartridge flavors like fruit and mint in the form of a disposable vape. Some sellers even promote their “discreet” packaging services, where the vapes they ship to customers can be hidden from parents’ prying eyes by being placed under the package’s stuffing or tucked inside other products, like makeup bags or fuzzy slippers.

Interest in flavored, disposable vapes that appeal to teens and young adults, in particular, has been growing in the wake of the FDA’s Juul crackdown.

In February 2020, the FDA first began to take enforcement action against illegally marketed e-cigarette devices, including those offering flavors besides tobacco or menthol, as well as those targeted towards minors — an action that was designed to target Juul.

As a result, disposable vapes like Puff Bar were adopted by some young people who were still in search of flavors like bubblegum, peach, strawberry and others. These cheaper disposables were easy to find, and continued to be available at convenience stores and gas stations.

But they’re also all over TikTok, ready to be shipped with anyone with a way to pay.

What’s more, when this content is reported to TikTok, it’s not always taken down.

TechCrunch found vape sellers marketing on TikTok who have been using the app to communicate with customers through both videos and comments. They also direct viewers to what appear to be illegally operating websites. Their TikTok videos often show off the seller’s current inventory of vapes, including disposables like Puff Bar in teen-friendly flavors.

Essentially, the sellers are using TikTok as a way to create vape advertisements they don’t have to pay for that are capable of reaching young consumers — an audience whose interest in vaping hasn’t necessarily declined because of the FDA’s action.

According to nonprofit tobacco control organization Truth Initiative’s latest study, use of Juul decreased between 2019 and 2020, but it remains the most popular e-cigarette brand among 10th and 12th graders who were current vapers at 41%. The report also found that disposable products such as Puff Bar (8%) and Smok (13.1%) have gained during this time.

“Taken together, the 2020 National Youth Tobacco Survey (NYTS) and the new e-cigarette sales data report illustrate how the current federal policy enabled youth to quickly migrate to menthol e-cigarettes (especially Juul menthol pods) when mint-flavored products were removed from the marketplace, and for inexpensive, flavored disposable e-cigarettes such as Puff Bar to soar in popularity,” Truth stated in September 2020.

“With kid magnet names like cotton candy and banana ice, the market share of disposable products nearly doubled in just 10 months from August 2019 to May 2020,” it said.

The scale of the problem on TikTok is also significant.

Today, U.S. teens account for an estimated 32.5% of TikTok’s U.S. active users, according to third-party estimates published by Statista. The company has around 100 million monthly active users in the U.S., it said last year.

Meanwhile, videos tagged with popular vape and e-cigarette brands and keywords have racked up hundreds of millions of views.

For example, the hashtag for leading vape brand Juul (#juul) has 623.9 million views on TikTok, as of the time of writing.

Puff Bar, the maker of a single-use vaping product with Chinese origins, has 449.8 million views for the hashtag #puffbar. Other brands have some traction, as well. #NJOY has 55.3 million views, #smok has 40.1 million views, and British Tobacco’s #Vuse has 5 million views.

These are just the views associated with the hashtag itself. For every search, there are multiple variations. For instance, #puffbars, #puffbarplus and #puffbardealer have 66.8 million views, 9.6 million views and 8.9 million views, respectively. Tags like #juulgang (590.4 million views) have become popular enough that anti-vaping content creators have adopted them as a means of counter-programming against vaping content.

These trends are particularly concerning given the large, young demographic that uses TikTok. A third of its U.S. users may be 14 or under, in fact.

In the U.S. App Store, TikTok is rated for ages 12 and up and on Google Play, its content rating is “Teen.” But while TikTok has modified the default privacy settings for young people’s accounts and has been quick to block other controversial hashtags in the past (like those around U.S. election conspiracies), it has allowed vaping-related content to remain easy to find.

In addition to the popular vaping hashtags prevalent on TikTok, we uncovered numerous vape sellers operating under obvious account names such as “@puffsonthelow,” “@PuffUniverse” and “@Puffbarcafe,” for example. Their pages were filled with vape videos boldly marketing their current selections, hashtagged with vape-related terms like #puffbarchallenge, #puffplus, #vapetricks and others.

In some cases, we found vape sellers had even tagged their videos with #kids and other trending tags.

Knowing that their target market is often teenage vapers, many videos depicted how the seller could package the vape inside another product or hide it in the stuffing so parents wouldn’t find out. We saw videos of vapes packaged underneath candy, inside makeup bags, inside socks, underneath other lager products, and more.

Through links published to the account’s profile or referenced in the videos, TikTok users are redirected to the sellers’ websites or even Discord channels where they would only sometimes be presented with an age verification pop-up.

Often, they could just add items to a basket and check out. Many sellers also directed their customers to pay using PayPal, Venmo and/or Cash App, instead of accepting standard credit card payments.

None of this is legal, according to the Campaign for Tobacco Free Kids, a leading American nonprofit focused on reducing tobacco consumption, particularly among youth.

“It’s illegal to market these products or to engage in marketing that appeals directly to anybody under the age of 21,” Matt Myers, the president of the Campaign for Tobacco Free Kids, told TechCrunch. “And it’s illegal to actually conduct a sales transaction without age verification.”

Image Credits: TikTok screenshot

Plus, he adds, clicking a box on a website that says “I’m over 21,” does not qualify as a legal age verification for making these sales.

The FDA hasn’t issued specific guidance around online retail, but the law is clear that checking IDs is required to ensure retailers aren’t selling to underage users. That’s not happening with a pop-up box, and often there’s no box at all.

In addition, the FDA reminded TechCrunch that Congress recently established new limits on the mailing and delivery of e-cigarettes and other tobacco products through the United States Postal Service and through other carriers, which should limit access to these sorts of products through online retail purchases.

Myers, however, points out that the current FDA guidelines have made enforcement of this sort of “social” vape marketing more difficult than necessary.

“The images you’re seeing, the use of influencers, and the kinds of offers you’re seeing are governed by a federal standard by the FDA, which is very broad and very general,” Myers says. “The FDA’s failure to articulate clear, specific guidelines means that everyone is in a constant what I call ‘whack-a-mole.’”

Enforcement, then, often depends on the FDA stepping in, which Myers says happens “on a very sporadic basis.”

“In many respects, the behaviors, the actions and the things you’re seeing do violate the law. But the mechanisms for implementing it that were put in place under this past administration are woefully weak and inadequate,” he says.

Image Credits: screenshots of TikTok

Another complicating factor is that public health groups — like the Campaign for Tobacco Free Kids, for instance — don’t have a relationship with TikTok, as they do with other social networks.

Over the last couple of years, over 100 public health groups came together to ask leading social networks like Facebook, Instagram, Twitter and Snapchat to clamp down on tobacco-related content and the use of influencers in marketing. As a result of these efforts, Facebook and Instagram implemented new rules to prohibit social media influencers from promoting tobacco-related products and developed algorithms to pick up on that sort of content.

Overall, the health organizations have reported seeing a reduction in tobacco and vape content on top social platforms, but these efforts have not yet included TikTok.

The Campaign for Tobacco Free Kids has not given TikTok a comprehensive review, Myers admits, due to the app still being relatively new.  But from what the organization has seen so far, TikTok is of growing concern.

“We’ve seen some of the most egregious marketing, use of influencers, direct offers of sale to young people [which] appear to be gravitating over to TikTok,” Myers says. “And we don’t see any evidence that TikTok has actually done anything.”

TikTok can’t claim ignorance of the problem, either.

Image Credits: TikTok screenshot

When a vape seller who unabashedly advertised “no ID check” was reported to TikTok through its built-in reporting mechanism, TikTok’s content moderation team said the content didn’t violate its guidelines. This same response was given when other vape sellers were reported, as well. (See below.)

TikTok claims this shouldn’t be happening. The company told us that it will remove accounts dedicated to posting vaping or e-cigarette content as soon as it becomes aware of them, and will reset account bios that link to off-platform tobacco or vaping sites.

It also says its Community Guidelines prohibit content that suggests, depicts, imitates, or promotes the possession or consumption of tobacco by a minor, and content that offers instruction targeting minors on how to buy, sell, or trade tobacco.

Image Credits: screenshots of TikTok reports

Reached for comment over whether it was aware of the problems on TikTok, an FDA spokesperson said it does not discuss specific compliance and enforcement activities.

However, an FDA spokesperson said the agency will closely monitor retailer, manufacturer, importer, and distributor compliance with federal tobacco laws and regulations and take corrective action when violations occur. In addition, the FDA said it conducts routine monitoring and surveillance of tobacco labeling, advertising and other promotional activities, including activities on the internet.

What’s been making matters more confusing is that the FDA has been accepting premarket applications for flavored vape devices, but has so far refused to list which companies — Puff Bar or otherwise — may have filed for these. That means health organizations don’t know which products the FDA has under review.

However, the agency told TechCrunch that regardless of whether a premarket application has been submitted, it’s enforcing lack of marketing authorization for any product where the manufacturer “is not taking adequate measures to prevent youth access to these products.”

That statement would then include these online Puff Bar retailers and their TikTok marketing efforts.

The FDA added that it has taken action against Puff Bar, specifically, in recent days.

It sent a warning letter to Cool Clouds Distribution, Inc. d/b/a Puff Bar, last July, notifying the company that it was marketing new tobacco products that lacked marketing authorization and that such products, as a result, were adulterated and misbranded.

Earlier this month, as part of an ongoing joint operation with the FDA, U.S. Customs and Border Protection seized 33,681 units of e-cigarettes, which included disposable flavored e-cigarette cartridges resembling the Puff Bar brand, including Puff XXL and Puff Flow, we’re told.

TikTok confirmed the activity we’re documenting is in violation of its guidelines and policies, but could not explain why there’s been such a disconnect between that policy and its enforcement actions.

“We are committed to the safety and well-being of our TikTok community, and we strictly prohibit content that depicts or promotes the possession or consumption of tobacco and drugs by minors,” a TikTok spokesperson told TechCrunch. “We will remove accounts that are identified as being dedicated to promoting vaping, and we do not allow ads for vaping products.”

#apps, #e-cigarette, #e-cigarettes, #electronic-cigarettes, #fda, #online-retail, #smoking, #social, #social-media, #tc, #teens, #tiktok, #tobacco, #united-states

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Target sets sales record in Q2 as same-day services grow 273%

Following Walmart’s pandemic-fueled earnings beat posted on Tuesday, Target today also handily beat Wall St. expectations to deliver a record-setting quarter across a number of key metrics. The retailer on Wednesday announced its strongest quarter to date for comparable sales, which grew 24.3% in Q2, driving Target’s profit up 80.3% year-over-year to $1.69 billion. Online ordering was particularly popular, Target noted, with digital sales growing 195%. Same-day services like Drive Up, Order Pick Up and Shipt also grew by 273%.

In the quarter, Target topped estimates for revenue, same-store sales, adjusted EPS, and gross margin. It reported $23 billion in revenue, vs. estimates of $19.82 billion. Its record-settinbg 24.3% increase in comparable sales was well above the expected 5.8%. Earnings per share came in at $3.38 vs. the $1.58 forecast. And its GM was 30.9% instead of the expected 28.98%.

The company attributed its sales growth to a number of factors, including its ability to remain open amid the pandemic as an essential business, its customers’ overall trust in the Target brand, its ability to get customers to shop across its product categories, its digital services, and most notably, the return of customers to its stores in Q2.

The latter item doesn’t necessarily mean Target shoppers were walking the aisles, however.

Instead, it speaks the investments Target made ahead of the pandemic in bridging the gap between online ordering and its physical stores. In Q2, Target’s In-store Order Pick Up grew more than 60%, as shoppers headed inside Target to pick up their web orders, for example.

Target’s Drive Up service, which allows customers to shop online then pull up in designated parking spots to have orders brought their car, was up by more than 700% in the quarter.

And Target’s Shipt same-day home delivery service Shipt was up 350% over last year.

That means that for much of what Target customers think of as “online shopping,” their sales were actually being fulfilled by Target’s stores. In fact, Target said its stores fulfilled more than 90% of its second-quarter sales.

Image Credits: Target

To build out its digital fulfillment services, Target took a tech company-like approach in leveraging internal engineering teams capable of iterating quickly on new ideas. A team of eight, including four engineers, originally built Drive Up starting back in April 2017, for instance. By summer 2017, Drive Up was being tested in internally. It then rolled out to Target’s home market by that fall. And as of August 2019, Target’s Drive Up service was available nationwide.

The retailer has also made key acquisitions to aid its e-commerce operations, including its $550 million deal for Shipt in 2017, and more recently, its acquisition of same-day delivery technology from Deliv back in May. It has also integrated Shipt’s same-day service directly into its own website and app, instead of relying only on Shipt’s dedicated brand to reach Target shoppers.

The results of these efforts are now paying off in a pandemic where customers don’t necessarily want to browse stores’ aisles in-person to shop. And that has led to Target seeng what Yahoo Finance today described as “tech company-like growth” for its retail business.

Richmond Drive Up

Store opening at Target Houston – Richmond on Wednesday, Nov. 8, 2017 in South Richmond, Texas. (Anthony Rathbun/AP Images for Target)

Target’s Chairman and CEO Brian Cornell additionally noted the company has added $5 billion in market share in the first 6 months of 2020, during which time it’s added 10 million new digital customers.

“Our second quarter comparable sales growth of 24.3 percent is the strongest we have ever reported, which is a true testament to the resilience of our team and the durability of our business model. Our stores were the key to this unprecedented growth, with in-store comp sales growing 10.9 percent and stores enabling more than three-quarters of Target’s digital sales, which rose nearly 200 percent,” he said. “We also generated outstanding profitability in the quarter, even as we made significant investments in pay and benefits for our team. We remain steadfast in our focus on investing in a safe and convenient shopping experience for our guests, and their trust has resulted in market share gains of $5 billion in the first six months of the year,” Cornell continued.

“With our differentiated merchandising assortment, a comprehensive set of convenient fulfillment options, a strong balance sheet, and our deeply dedicated team, we are well-equipped to navigate the ongoing challenges of the pandemic, and continue to grow profitably in the years ahead,” he said.

The pandemic has played a role in what customers bought, too. Target said its sales were up across all five of its core merchandise categories. This was led by the strongest sales in electronics, a category that was up 70% year-over year due to people staying at home for work, school and entertainment, leading to more purchases of things like computers or gaming systems. Electronics were followed by home products, which were up by 30%, then increases of 20% for the beauty, food & beverages, and essentials categories. Apparel even shifted from a 20% decline in Q1 to double-digit growth in Q2. Customer basket size also grew 18.8%, as people shopped for more items on their Target runs.

Like Walmart, Target also saw a boost from government stimulus checks, which will likely taper off next quarter. But Target declined to offer further 2020 guidance, saying that the COVID-19 crisis makes consumer shopping patterns and government policies unpredictable.

 

#e-commerce, #ecommerce, #online-retail, #online-shopping, #pandemic, #retail, #shopping, #target

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DHL acquires stake in Link Commerce developed by MallforAfrica

DHL has acquired a minority stake in Link Commerce, a turn-key e-commerce company that grew out of MallforAfrica.com — a Nigerian digital-retail startup.

Link Commerce offers a white-label solution for doing digital-sales in emerging markets.

Retailers can plug into the company’s e-commerce platform to create a web-based storefront that manages payments and logistics.

With the investment one of the world’s largest delivery services looks to build a broader client-base globally using a business built in Africa.

DHL is trying to get their hands more into global e-commerce…across the world and they figured our platform was a good way to do it,” Link Commerce CEO Chris Folayan told TechCrunch.

Folayan originally founded MallforAfrica, which paved the way for Link Commerce. DHL’s investment in the company —  the amount of which is undisclosed — has roots in collaboration with Folayan’s original startup.

MallforAfrica began a partnership with DHL in 2015 and launched DHL Africa eShop in 2019. The sales platform is powered by Link Commerce and has brought more than 200 U.S. and U.K. sellers — from Neiman Marcus to Carters — online to African consumers in 34 countries.

DHL AFRICA ESHOP MAP

Image Credits: DHL

Similar to MallforAfrica’s model, Africa eShop allows users to purchase goods directly from the websites of any of the app’s partners.

For the global retailers selling on Africa eShop, the hurdles that held back distribution on the continent — payments, currency risk, logistics — are handled by the underlying Link Commerce operating platform.

“That’s what our service does. It takes care of that whole ecosystem to enable global e-commerce to exist, no matter what country you’re in,” Folayan told TechCrunch in 2019.

Link Commerce was built out of Folayan’s startup MallforAfrica.com, which he founded in 2011 after studying and working in the U.S.

A common practice among Africans — that of giving lists of goods to family members abroad to buy and bring home — highlighted a gap between supply and demand for the continent’s consumer markets.

With MallforAfrica Folayan aimed to close that gap by allowing people on the continent to purchase goods from global retailers directly online.

MallforAfrica and Link Commerce founder Chris Folayan, Image Credits: MallforAfrica

The e-commerce site went on to onboard over 250 global retailers and now employs 30 people at order processing facilities in Oregon and the UK.

MallforAfrica’s Africa eShop expansion put it on a footing to compete with Pan African e-commerce leader Jumia — which went public on the NYSE in 2019 — and China’s Alibaba, anticipated to enter online retail on the continent at some point.

The Link Commerce, DHL deal won’t change that, but Folayan has shifted the hirearchy of his businesses to make Link Commerce the lead operation and Africa one market of many.

Image Credits: Link Commerce

“We changed the structure. So now Link Commerce is above MallforAfrica and MallforAfrica is now powered by Link Commerce,” Folayan explained on a recent call.

“Right now the focus is on Africa…but we’re taking this global,” he added.

Folayan and DHL plan to extend the platform to emerging markets around the world, where other companies may look to grow by wrapping an online store, payments, and logistics solution around their core business.

That could include any large entity that wants to launch an international e-commerce site, according to Folayan.

“Link Commerce is focused on banks, mobile companies, shipping companies and partnering with them to expand globally,” he said.

That’s a big leap from Folayan’s original venture, MallforAfrica.com

What began as a startup to sell brand name jeans and sneakers online in Africa, has pivoted to a global e-commerce fulfillment business partially owned by logistics giant DHL.

#africa, #alibaba, #ceo, #china, #chris-folayan, #delivery-services, #dhl, #e-commerce, #economy, #jumia, #mallforafrica-com, #marketing, #neiman-marcus, #online-retail, #online-shopping, #oregon, #retail, #rocket-internet, #tc, #trade, #united-kingdom, #united-states

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Walmart is piloting a pricier 2-hour ‘Express’ grocery delivery service

Record usage of grocery delivery services amid the COVID-19 pandemic has led to delayed orders, fewer open delivery windows, and an inability to even book a delivery time slot, on occasion. Walmart now hopes to capitalize on the increased demand for speedier delivery with the introduction of a new service that allows consumers to pay to get to the front of the line. The retailer confirmed today it’s launching a new Walmart Grocery service called “Express” which promises orders in 2 hours or less for an upcharge of $10 on top of the usual delivery fee.

The service has been in pilot testing across 100 Walmart stores in the U.S. since mid-April. Walmart says it plans to expand the service to nearly 1,000 stores in early May and it will be offered in a total of nearly 2,000 stores in the weeks after.

Some Walmart customers may have recently received a push notification alerting them to the launch.

To use Express delivery, you first fill your online Walmart Grocery cart with the $30 minimum required for delivery orders or more. The Express service offers over 160,000 items from across Walmart’s grocery, consumables, and general merchandise categories. At checkout, you’ll see an option beneath the calendar where you pick a delivery date to select the Express service. In many cases, there may no other standard delivery time slots available for the current day or even several days out, which makes the Express service even more appealing to shoppers who need their orders sooner.

Though Walmart is officially promoting Express as a “two-hour” delivery service, in the weeks it’s been piloting the program Walmart has been able to deliver these orders within 56 minutes, on average.

In our tests, we were shown an Express fee of $18.90 to receive a delivery in “55 mins or less,” the app informed us today, April 30. There were no other fees. Without choosing the Express option, the next available time slot was not until next week, on Monday, May 4.

A price of $18.90 is close to — but is not exactly — a $10 increase over Walmart’s typical delivery fees of $7.95 or $9.95, depending on time of day. But we understand the plan is to make Express a flat $10 upcharge moving forward. (Walmart hadn’t been planning to officially announce the launch until next week, so pricing is being updated.)

Like Walmart’s other grocery deliveries, Express deliveries are handled by Walmart’s external network of delivery partners, which vary by market. The retailer won’t comment on if those additional fees are split with their partners, or how, if so.

There could be backlash against a system like this, given how it favors a wealthier customer at a time when food and other critical supplies have run short. During the pandemic, store shelves have often been bare as consumers hoarded things like toilet paper, hand sanitizer, and Lysol cleaners. Now, consumers are being warned that meat shortages are expected soon.

In addition, the pandemic has already exposed the income divide between those who can afford to shop online and low-income customers, who can only use their SNAP benefits (food stamps) in physical stores — except in a handful of states where a USDA pilot has been running. And now those with the means will be able to gain another advantage: paying to get to the limited supplies first.

Walmart says it’s doing things to mitigate these types of concerns, however.

For items where the inventory is so limited it can’t guarantee delivery, it’s removing their availability from the online grocery service. Plus, the retailer says it’s not pushing back standard delivery orders to accommodate the high-paying Express customers. Instead, the Express service is being made available on top of Walmart’s existing grocery pickup and delivery capacity.

The Express service wasn’t dreamed up because of the pandemic, Walmart says, but it did play a role in terms of the timing of the launch.

“The demand that we’ve seen during the coronavirus pandemic is making us push forward and expedite the development of some services that we may have been thinking about,” a Walmart spokesperson explained. “But demand has pushed us to innovate more quickly,” they added.

Walmart is not alone in experiencing a crush of online grocery orders due to the COVID-19 pandemic.

The company and others have seen a record number of downloads for their grocery apps in recent weeks. In fact, demand for online grocery as well as other e-commerce orders has been so great that Walmart hired 150,000 new workers out of a pool of over a million applicants a full six weeks ahead of schedule, and is now hiring 50,000 more.

Meanwhile, Walmart’s online grocery rivals — Shipt, Instacart and Amazon — have also been hiring hundreds of thousands of new shoppers between them. Amazon had to implement a waitlist system for new Amazon Fresh and Whole Foods Market pickup and delivery customers due to the rise in online grocery shopping. And Instacart made several adjustments to its app to help better prioritize orders and open up more delivery windows.

In Walmart’s case, its ability to launch Express isn’t solely due to its new hires, we’re told.

The company already employs a workforce of 74,000 “personal shoppers” who dedicate themselves to pulling for online grocery orders. Walmart says Express is powered by these personal shoppers, only some of which may be the newly hired store associates.

“We have an opportunity to serve our customers no matter what life calls for,” said Tom Ward, Walmart senior vice president, Customer Product. “Whether it be a last-minute ingredient, medicine when a fever hits, or the item you didn’t know you needed when checking off your chore list, time matters. Express is a solve for that,” he said.

Updated 4/30/20, 6:35 PM ET with additional expansion details and exec quote. 

#e-commerce, #ecommerce, #grocery, #grocery-delivery, #online-retail, #online-shopping, #retail, #walmart

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To fight fraud, Amazon now screens third-party sellers through video calls

Amazon is piloting a new system aimed at validating the identify of third-party sellers over video conferencing, the company announced on Sunday. The technology is a part of a series of seller verification processes that Amazon uses to combat fraud on its platform, which the company claims stopped 2.5 million suspected bad actors from publishing their products to Amazon in 2019.

Earlier this year, Amazon began testing a process where seller verifications were handled in person. But due to the coronavirus outbreak and social distancing requirements, the company says it pivoted to live video conferencing in February.

The pilot program is now running in a number of markets, including the U.S., U.K., China and Japan. To date, over 1,000 sellers have attempted to register an account through the pilot experience, Amazon says.

To vet the sellers, Amazon’s team sets up a video call then checks that the individual’s ID matches the person and the documents they shared with their application. The Amazon associates also lean on third-party data sources for additional verification. In addition, the call may be used to provide the seller with information about problems with their registration and how to resolve them.

“Amazon is always innovating to improve the seller experience so honest entrepreneurs can seamlessly open a selling account and start a business, while also proactively blocking bad actors,” an Amazon spokesperson said about the new initiative. “As we practice social distancing, we are testing a process that allows us to validate prospective sellers’ identification via video conferencing. This pilot allows us to connect one-on-one with prospective sellers while making it even more difficult for fraudsters to hide,” they said.

In addition to video conferencing, Amazon also uses a proprietary machine learning system to vet sellers before they’re allowed online, it says. This system analyzes hundreds of different data point to identify potential risk, including verifying whether the account is related to another account that was previously removed from the marketplace, for example. The sellers’ applications are also reviewed by trained investigators before being approved.

Seller verification is only one way Amazon has taken on fraud, however.

The issue continues to be a serious problem across online marketplaces, where sellers hawk counterfeit items and scam consumers. Some retailers, including Nike and Birkenstock, have found the the hassles aren’t worth the risk of dealing with Amazon, as a result.

While the retailer has long been accused of avoiding issues around fraud, it’s more recently pledged to spend billions to address the problem and has inserted itself into legal battles with fraudulent sellers and counterfeiters in recent years.

For example, it  it filed three lawsuits in 2018 in partnership with fashion designer Vera Bradley and mobile accessories maker Otterbox over counterfeits. It has also sued sellers buying fake reviews and others involved in the fake review industry. 

Last year, Amazon announced an initiative called  Project Zero, which introduced a range of tools for brands to use to help Amazon fight fraud. The brands can opt to provide Amazon with their logos, trademarks and other key data, allowing the retailer to scan its billions of product listings to find suspected counterfeits more proactively.

Another tool, serialization, allows brands to include a unique code on their products during manufacturing, which can later be scanned to verify that a purchase is authentic. This tool, now known as Transparency, expanded to other markets last summer, including Europe, Canada and India.

But unlike these earlier efforts, seller verification aims to cut down on products being listed in the first place –not just removed once listings go live or stopping fraudulent products from being shipped to customers.

 

#amazon, #e-commerce, #ecommerce, #fraud, #marketplace, #merchants, #online-retail, #retail, #sellers, #third-party-sellers

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