Every now and then Matthew Frank, whose company makes Tovolo-brand ice-cube molds and trays, will slow down shipments of his kitchenware to Amazon.com Inc. AMZN +3.63% and then conduct test buys as the Internet retailer’s stock runs low.
What he finds after cutting back the flow of his products: Knockoff products rise to the top, said Mr. Frank, chief executive of ICI USA LLC, which owns Tovolo.
The phenomenon doesn’t just reflect a problem with unsavory sellers. It is also a result of the way Amazon manages inventory in its network of warehouses across the U.S. As more third-party sellers have signed up to offer products through Amazon and use its order-fulfillment services, the Seattle-based giant has allowed many to pool their inventory with supposedly identical items supplied by other sellers-in essence commingling products from third-party merchants with those supplied directly to Amazon by the brands themselves.
In other words, a product ordered from a third-party seller may not have originated from that particular seller. If the bar code matches, any one that is on the shelf will do.
The system has enabled Amazon to make better use of its warehouse space and keep a wide variety of items in stock around the country. The idea is to give Amazon flexibility to ship certain products based on their proximity to customers, speeding delivery times. For third-party sellers, it saves them the trouble of having to label individual items sent to the Amazon warehouse. The bar code takes care of that. But the practice has in some cases led to mix-ups between counterfeit and authentic products, even when they are sent by Amazon itself.
The commingling program, whose participation is voluntary for third-party sellers, is one of a number of Amazon policies that have hurt the giant retailer’s relationship with makers of branded goods.
“It’s very frustrating to see this happen,” Mr. Frank said.
Amazon declined to comment.
An Amazon instructional video on its official YouTube channel explains how the inventory commingling works. Items entering Amazon’s warehouses, whether from suppliers or third-party seller who have opted into the program, are sorted by bar code. When shoppers buy those products from Amazon or a third-party seller that uses the company’s fulfillment service, Amazon will ship them from the combined inventory, typically taking products from the warehouse nearest the customer.
Sometimes, fakes can get mixed in. Justin Dunham, a mathematics professor in Kansas City, Mo., said his wife bought him what was supposed to be a Tovolo King Cube Ice Tray from Amazon. A receipt for the $8.50 purchase shows it was sold by Amazon, not a third-party seller.
The tray was flimsy, water spilled easily and it broke after a few uses, Mr. Dunham said. He later picked up an authentic Tovolo ice tray at a kitchenware store and saw the difference. “The ice cubes slide out much more easily, and it’s more stable when full of water,” said Mr. Dunham, who didn’t ask Amazon for a refund. “I definitely wish I’d gotten the correct tray the first time.”
A few other Amazon customers also complained in reviews that the trays they received were imitations. It wasn’t clear which seller supplied the trays to the warehouse.
ICI USA’s Mr. Frank said he first complained to Amazon about the fake ice trays over a year ago and asked that Amazon store Tovolo merchandise only with items from authorized distributors. He said he hasn’t received an answer to that request, but said he was told that third-party sellers now have to paste a label on their products that would allow individual items to be traced to individual sellers if customers complain.
Amazon declined to comment.
Amazon’s inventory commingling “has been causing a lot of angst” for makers of branded goods that are trying to curb unauthorized sellers of their products on the site, said Wes Shepherd, chief executive of Channel IQ, which monitors online prices and sellers for brand owners and other clients. Commingling inventory makes it harder for manufacturers to identify leaks in their distribution network.
“You don’t really know whose product it is,” he said.
Read more at The Wall Street Journal.