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Don't Get Duped by Shady Third-Party Sellers

When it comes to online shopping, not all sellers are created equal.
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Third-party marketplaces on sites like Amazon and Walmart are meant to provide consumers with more options, but after a little digging, we found that in many cases, the benefits are overshadowed by what looks like an online version of the Wild West in terms of product pricing.

The Internet has no shortage of e-tailers, and for good reason. According to the latest numbers from Pew Research, eight in 10 Americans today are online shoppers. This means that e-commerce is more competitive than ever before. From dollar-store pricing models to subscription-based approaches like Amazon Prime, retailers are getting creative with how they draw shoppers to their sites.

Walmart began placing extra emphasis on their third-party marketplace last year. Why? Bao Nguyen, a company spokesperson, told TotalRetail that investing in its third-party marketplace is part of its strategy to expand the company's selection of items.

"Our assortment on Walmart.com has grown from less than 2 million four years ago to 9 million now through a mix of first-party and third-party items, and we aim to be in the tens of millions of items in the next few years," he said.

The stakes are high; Walmart is currently the second most-visited e-commerce site in the U.S., right behind Amazon. But online shoppers may want to proceed with caution.

A Tale of Too Many Prices

Ideally, the third-party marketplace would offer items that are normally unavailable online, and prices would be competitive across the board. Unfortunately, that's not what we've seen as the norm.

As someone who does a great deal of online shopping, primarily through Amazon Prime and Walmart's ship-to-store option, I rarely come across any incentive to stray away from first-party sellers, especially since prices for third-party sellers are all over the place. You really have to do a lot of digging to make sure you're getting a fair price.

Take this 96-count of Caribou K-Cups, for example. At one point, Amazon was selling them directly for $47.99 with free two-day shipping through Prime. While this product is currently only available through third-party sellers, the markup is pretty high, ranging anywhere from $53.50 to $60 for the same item. It's even higher if you buy through a Walmart.com third-party seller (pictured above). One price here lands at $74.95 -- a markup that also comes with four-day shipping, not two. But the steepest third-party price increase is almost laughably over the top; $198.37 for the same exact item, with an even longer delivery time.

The scenario plays itself out again and again across different categories. One of the most staggering examples we found was among diaper sellers. Take this 216-count pack of Size 1 Huggies Little Snugglers, which you could purchase directly from Amazon for $31.89 (or 20% cheaper if you're an Amazon Family member).

Now for a fall-out-of-your-seat price gouge -- Amazon third-party seller BooksMan777 is selling the same pack of diapers for $101.97! That's not counting the extra $5.44 you'll pay for shipping. Perhaps the craziest part here is that the link says there are only three left in stock, which begs one very obvious question: Who's paying this much for these diapers? The price is more than $70 higher than Amazon's.

 

Let's jump over to electronics. You can currently get a 17.3-inch MSI laptop for $4,599 with free shipping if you buy directly through Newegg. But the same item bought through GeekZilla, a Newegg third-party seller, lands at $6,099.15 -- a $1,500 difference.

Is All of This Kosher?

According to a 2016 Forbes report, the phenomenon is something known as "retail arbitrage." This is when sellers buy items, typically at a discount, then try to resell them at higher prices in order to turn a profit.

The same report adds that Amazon's arbitrage policy is unclear. We did find some general rules regarding pricing, but nothing too strict. In a nutshell, Amazon sellers are encouraged to list items at any price they feel is fair, as long as they aren't selling them cheaper elsewhere. (Pricing policies for third-party sellers at Walmart and Newegg are less clear.) However, if you do come across what you consider to be price gouging, you always have the option to leave an honest review of the seller, which could impact their future sales.

Of course, it's difficult for online shoppers to discern if a third-party seller is trying to pull the wool over their eyes. (There are plenty of honest sellers out there who are playing by the rules.) This is why your best bet is to shop around.

Sites like camelcamelcamel are handy for tracking the price history of items sold on Amazon. I'm also a big fan of Wikibuy, which takes the hassle out of comparing prices. It also comes down to being mindful of the little "sold by" text. This sounds simple enough, but not all sites go out of their way to highlight third-party sellers. If an item is sold out on Walmart.com, for example, third-party offerings often look as if they're presented by Walmart. One way around this is to take advantage of "Seller" or "Retailer" filters whenever possibly to specify that you only want your search to include items sold directly by Amazon, Walmart, etc.

Why Are Third-Party Sellers Even a Thing?

It doesn't take a retail expert to see that buying directly from the retailer is a better bet for shoppers. Considering the usual perks -- like lower prices, easier returns, and free shipping—it makes us wonder why stores even offer a third-party marketplace at all. What's in it for them?

As Nguyen mentioned above, it seems to be partly about expanding their offerings; third-party partnerships open the door to massive selection, presumably making the site more attractive to online shoppers. But, while online retailers are trying to offer more value through a wider selection, consumers are left to fend for themselves when it comes to pricing, shipping and customer service.

There's also the fact that sellers pay to hawk their items on these high-traffic platforms. Third-party sellers on Amazon and Walmart, for example, fork over a cut of their earnings directly to the retailer. Amazon charges even more if sellers opt into their fulfillment program.

What we're getting at here is that online mega-brands reap two big rewards for hosting third-party sellers: They expand their selection and they turn a profit in the process. As a consumer, I can't help but feel a little bit duped by the whole arrangement. There's a lack of transparency that has turned me into a slightly more cynical online shopper.

I now make it a priority to only buy directly from the retailer. This requires a bit of additional work on my part within each platform, which is both annoying and time consuming; I wish I could just trust that this website I love isn't going to rip me off. But when I see $200 K-cups pop up on my screen, it's hard not to get peeved. (C'mon, Walmart!) Unfortunately, it looks like the third-party marketplace is here to stay.



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About the Author
Marianne Hayes Contributor

Marianne Hayes is a freelance writer, wife and mother in Tampa Bay. After earning a degree in journalism and creative writing from the University of Central Florida, she spent nearly a decade getting lost in New York City and Los Angeles before making her way back home again in 2014. Marianne's writing has appeared in a variety of publications including The Huffington Post, Forbes.com, LearnVest, The Daily Beast and more. When she's not writing, Marianne is usually cruising her local bookstore with her two daughters.

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And what about the third party sellers, manufacturers, promoting their wares on SD. Contacting SD'ers to try their product and post a "positive" review and even offer a free gift for doing so.
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Our community has rated this post as helpful. If you agree, why not rep barryfallsjr?
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"However, if you do come across what you consider to be price gouging, you always have the option to leave an honest review of the seller, which could impact their future sales."

I'm not sure it's fair to leave negative feedback for someone just because you don't like the price.
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Quote :
I now make it a priority to only buy directly from the retailer. This requires a bit of additional work on my part within each platform, which is both annoying and time consuming; I wish I could just trust that this website I love isn't going to rip me off.
This article is part extremely interesting and extremely terrifying. Third party sellers are the life blood of these marketplaces, as retailers like Walmart and Amazon often use their dominant position in the marketplace to bully smaller (and even larger) manufacturers and brands into submission. The RA 3P's you reference are truly the scum, but there are plenty of extremely good 3P's that provide as good or better service/pricing as Amazon or Walmart. That's like saying "I only go to dealerships for auto repairs because there are shady car repair places in the world".
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I've tried to shop on the walmart with the 3rd party sellers. I read the reviews and found for some items, they are selling fake, damaged, and have terrible customer service for returns. Even on Amazon, some items are listed as a OEM goods, authentic, genuine items; but seeing the reviews they aren't one bit reassuring. A lot of them are fakes and amazon and walmart allowing them here with out a good vetting is terrible. I'm okay with brand name stuff but if it the quality is there, its not a big deal but with no quality and crap service; why have them at all.
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#6
Quote :
Quote from barryfallsjr
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"However, if you do come across what you consider to be price gouging, you always have the option to leave an honest review of the seller, which could impact their future sales."

I'm not sure it's fair to leave negative feedback for someone just because you don't like the price.
barryfallsjr"However, if you do come across what you consider to be price gouging, you always have the option to leave an honest review of the seller, which could impact their future sales."

I'm not sure it's fair to leave negative feedback for someone just because you don't like the price.
​Isn't that against Amazon's TOS to leave negative seller feedback for price?
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Our community has rated this post as helpful. If you agree, why not rep knoxdogs?
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This article fails to mention that Amazon is a marketplace subject to the supply and demand rules of economics. Nowhere does it say an item has to sell for MSRP. If there is strong demand and the supply is scarce, then the seller can charge a premium. If there is a lot of supply and less demand, then often the item will sell for a fraction of MSRP (I don't hear any complaining from buyers when that happens). It's unfair to say that sellers are duping you or scamming you for charging a higher price. You go to the movies and pay $10 or more for a Coke and popcorn, yet you can buy a Coke and popcorn at Walmart for a fraction of that. The seller has to take all the risk and invest the capital upfront buy items for resale. In addition, there is a lot of time and labor involved in finding, preparing, managing, storing, and shipping the items to Amazon. As with anything else, it is the consumer's choice whether or not they want to buy an item for the given price. Thrifty shoppers may choose to price shop, while busy shoppers may opt for convenience.
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Quote from knoxdogs
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This article fails to mention that Amazon is a marketplace subject to the supply and demand rules of economics. Nowhere does it say an item has to sell for MSRP. If there is strong demand and the supply is scarce, then the seller can charge a premium. If there is a lot of supply and less demand, then often the item will sell for a fraction of MSRP (I don't hear any complaining from buyers when that happens). It's unfair to say that sellers are duping you or scamming you for charging a higher price. You go to the movies and pay $10 or more for a Coke and popcorn, yet you can buy a Coke and popcorn at Walmart for a fraction of that. The seller has to take all the risk and invest the capital upfront buy items for resale. In addition, there is a lot of time and labor involved in finding, preparing, managing, storing, and shipping the items to Amazon. As with anything else, it is the consumer's choice whether or not they want to buy an item for the given price. Thrifty shoppers may choose to price shop, while busy shoppers may opt for convenience.
The examples used in this article aren't products that are scarce or hard to get, yet the sellers are still charging way more than what could be considered a reasonable markup. $198 for 96 K-Cups is not in the realm of reasonable when you can get them for $48 from several other retailers.
$100+ for 216 diapers from one of the most readily available diaper brands is not a supply/demand issue, it's a dishonest business practice issue. A $70 markup is not the same as a $3 markup on soda at the movie theaters.
If you add a 10-20% markup on items that are hard to get, or if you can provide a faster shipping solution, go for it. But when you charge several hundred percent more than Amazon, for items they have in stock, you don't have honest intentions and it's not a matter of convenience.
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Quote from zeekai
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I've tried to shop on the walmart with the 3rd party sellers. I read the reviews and found for some items, they are selling fake, damaged, and have terrible customer service for returns. Even on Amazon, some items are listed as a OEM goods, authentic, genuine items; but seeing the reviews they aren't one bit reassuring. A lot of them are fakes and amazon and walmart allowing them here with out a good vetting is terrible. I'm okay with brand name stuff but if it the quality is there, its not a big deal but with no quality and crap service; why have them at all.
Anker is why I love amazon. I also buy from under armor on amazon.
Buying from manufacturers on amazon is ok but I always use fake spot.com when I buy third party.
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Loads of honest hard working third party sellers on multiple platforms subscribe to SlickDeals. Now I have to wonder why. Thanks for painting us all with a big nasty brush.
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Quote from JohanM1228
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The examples used in this article aren't products that are scarce or hard to get, yet the sellers are still charging way more than what could be considered a reasonable markup. $198 for 96 K-Cups is not in the realm of reasonable when you can get them for $48 from several other retailers.
$100+ for 216 diapers from one of the most readily available diaper brands is not a supply/demand issue, it's a dishonest business practice issue. A $70 markup is not the same as a $3 markup on soda at the movie theaters.
If you add a 10-20% markup on items that are hard to get, or if you can provide a faster shipping solution, go for it. But when you charge several hundred percent more than Amazon, for items they have in stock, you don't have honest intentions and it's not a matter of convenience.
How is it dishonest you where aware of the price before you bought it.
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Quote from JohanM1228
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The examples used in this article aren't products that are scarce or hard to get, yet the sellers are still charging way more than what could be considered a reasonable markup. $198 for 96 K-Cups is not in the realm of reasonable when you can get them for $48 from several other retailers.
$100+ for 216 diapers from one of the most readily available diaper brands is not a supply/demand issue, it's a dishonest business practice issue. A $70 markup is not the same as a $3 markup on soda at the movie theaters.
If you add a 10-20% markup on items that are hard to get, or if you can provide a faster shipping solution, go for it. But when you charge several hundred percent more than Amazon, for items they have in stock, you don't have honest intentions and it's not a matter of convenience.
Something to keep in mind, is many of these seasoned 3PS use an automated pricing system. Meaning, they set some boundaries (example - how much to markup if you are the only seller, or the only seller with a positive feedback score of X or above, or how much to markup if you are the only seller in a certain condition) - and the automated program takes over. What you see is a snapshot before the very human 3PS looks at their Pricing and adjusts it manually. That's where some of the crazy pricing comes from.
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Do you really think that any 3rd party seller has the buying power of Amazon or Walmart. Many distributors and manufacturers have told us to go buy the product from Walmart or Amazon because we could buy from them cheaper than any discount they could give us. As far as prices being all over the place from 3rd party sellers this is true, but still no different than what I have seen in physical retail stores all my life. Many times I have seen huge differences in pricing on identical products in major retail stores.
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Quote from JohanM1228
:
The examples used in this article aren't products that are scarce or hard to get, yet the sellers are still charging way more than what could be considered a reasonable markup. $198 for 96 K-Cups is not in the realm of reasonable when you can get them for $48 from several other retailers.
$100+ for 216 diapers from one of the most readily available diaper brands is not a supply/demand issue, it's a dishonest business practice issue. A $70 markup is not the same as a $3 markup on soda at the movie theaters.
If you add a 10-20% markup on items that are hard to get, or if you can provide a faster shipping solution, go for it. But when you charge several hundred percent more than Amazon, for items they have in stock, you don't have honest intentions and it's not a matter of convenience.
To some buyers having Prime shipping from 3P sellers may be a convenience worth paying more for. Others might have an Amazon or Walmart gift card (or Discover cash back) they want to use and thus are inclined to pay more for a particular product. And still for others they trust Amazon's customer service and thus don't have a problem buying from a 3P seller and paying more because they know Amazon will take care of them in the event of a problem.

Bashing "retail arbitrage" is not fair. Obviously we should call out those selling counterfeit items. But "real" retailers do this pricing nonsense all the time. I can walk into one store and pay $20 for an item or walk into another and pay $40 for the same thing. Is store #2 being dishonest? No.

The world of retail arbitrage is cutthroat and not for the faint of heart. There are all kinds of restrictions on listings and scammer buyers you have to deal with. You're at the mercy of the site you list on and whatever quality of buyer that attracts (not very high on Amazon). You're competing with many other 3P sellers, many of whom use automatic repricers and some who use dirty tactics to get you kicked off a listing. Often times you can list something on Amazon that they're not currently selling and then Amazon comes along and undercuts you with automatic repricing!

>A $70 markup is not the same as a $3 markup on soda at the movie theaters.
No, you're right. What the movie theaters are doing is far worse. They're taking 10 cents worth of soda and charging $6 for it. That's more than double what you'd pay in a restaurant (with unlimited refills) and 5900% markup over cost.

And lastly I will just point out the obvious. Just because someone has K-Cups listed for $198 doesn't mean anyone is buying them at that price. That seller is probably hoping to be the only listing left when everyone else goes out of stock temporarily. That might be a foolish retail strategy, but it doesn't in any way make them dishonest.
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Last edited by epicd2012 May 8, 2017 at 05:53 AM.
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Not shopping around to compare prices does not mean that the person deserves to be ripped off. Yes, we all know it's not a smart thing to do, but the fact that this bizarrely backwards 'if you're dumb enough to fall for it' attitude is somehow absolving the price gougers of wrong-doing, its ludicrous. And it helps keep them in business by creating this atmosphere where people expect to see the ridiculously priced items, and instead of being outraged, they smugly think to themselves that only a moron would pay that. Soon, other Amazon sellers see these prices and jack theirs up too, as well as sellers on the other major websites, until the only items available are the overpriced. Buyers see the prices, think that it must be the going rate, and buy it. Yes, they should've looked harder for a better price. But that doesn't make it right what many of these 3P sellers are doing (and before you protest, notice how I said many, not all. I shop Amazon marketplace all the time and I know that not all of them are unscrupulous). The defensive attitude I keep seeing where these online price gougers are concerned is really strange to me, since we don't defend other types of unscrupulous pricing in this way. Like when my mother-in-law needed new brake pads on her car, she took it to a this shady little repair shop who tried to charge her over $500, and it would've worked if she hadn't called us from the shop to tell us what she was doing and casually mentioned the price. Luckily they hadn't started on her car yet, so my husband gave that mechanic a piece of his mind and took back the car. We went to a good shop we knew to be trustworthy and had the same work done for less than a hundred bucks. We know she's an easy target since she's old and soft-spoken, and honestly, she's not the brightest bulb in the box. But not once did we say it was her fault, or that you can't blame the mechanic for trying to get as much money as he could out of her. If he can get it, why not? Hell, its his right to put a million dollar price tag on his work if he so chose. But that doesn't mean it's right. He was trying to take advantage of an easy target. That's what the price-gougers do on Walmart and Amazon's online stores. If the companies aren't going to do anything about it, we should at least have the decency and self-respect as customers to say that it's a terrible thing to do. If we defend them and blame the customers, it only serves them, while many people get screwed.
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