Amazon has long contended that it shouldn't be held legally liable for defective products sold by third-party merchants on Amazon.com, maintaining that the liability rests with the seller, not with the marketplace facilitating the sale.

It's a legal argument with parallels to those made by Facebook and other social networks about their own liability for content on their platforms.

But in a surprise twist, Amazon recently announced that it will directly compensate customers for valid claims of property damage or personal injury caused by third-party products sold on its platform, up to $1,000, or more in certain situations.

The program begins next week.

"It's a big deal because Amazon is coming to the table," offering to handle the problem for consumers and third-party merchants, said Venkat Balasubramani, a Seattle-based technology attorney and co-founder of the Focal PLLC law firm. 

However, as he notes, Amazon isn't accepting legal liability. In that way, it's also a strategic move that addresses Amazon's own legal and regulatory challenges.

Amazon is taking voluntary responsibility for defective third-party products on its own terms, trying to show that it's addressing the problem without the need for regulation or legislation. By maintaining that it's actually "going far beyond" its legal obligations, it's also seeking to avoid playing by other people's rules.

The move comes as a series of court rulings threaten to subject Amazon to greater liability for products sold on its platform, which could have vast financial implications for the company.

Legal commentator Eric Goldman once warned that it could even force the company to shut down its marketplace, focusing on first-party retail sales.

Another important backdrop for the policy is a suit recently filed against Amazon by the U.S. Consumer Product Safety Commission (CPSC), seeking to force the retailer to accept legal responsibility for recalling defective products sold on its marketplace.

"This is just Amazon seeing the storm coming, trying to get ahead of it, and covering their butts," said Jason Boyce, a former Amazon seller, founder of Avenue7Media, and author of "The Amazon Jungle."

Asked why the company decided to launch the new program now, a spokesperson said the move "builds on the continued investment we’ve made in helping sellers grow their businesses, and in protecting our store from fraud and abuse."

Amazon says it spent $18 billion in 2020 on logistics, tools, services, programs and personnel to support third-party sellers.

On this episode of Day 2, GeekWire's podcast about everything Amazon, we discuss the new policy with Balasubramani and Boyce, and explore the implications for consumers, third-party sellers, and the company.

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Gisela Hausmann had a unique perspective on Amazon when she started a job in 2019 as a front-line worker at one of the company's delivery hubs in South Carolina.

A native of Vienna, Austria, she had years of experience as a logistics professional, learning the industry from the ground up at FedEx, and working for a major ocean freight shipping company. She had also been following Amazon closely for many years as an independent author using its platforms to publish books.

To say that she thought highly of Amazon and its founder Jeff Bezos would be an understatement. Based on her experience as an early author on the Kindle and CreateSpace platforms, she especially admired Amazon's impact on publishing.

"I saw them doing the things that [authors] barely dreamed about, because this was so amazing that nobody even hoped that it could happen — then Bezos did it!" Hausmann says. "He was a god in my eyes. I call him the new Gutenberg."

Working at the Amazon Delivery Station did not give her the same feeling.

As she explains, the work itself wasn't the problem. After getting up to speed in her job stowing packages, she was able to exceed Amazon's productivity benchmarks. She didn't see or experience commonly reported problems in Amazon's warehouses, such as workers skipping bathroom breaks to keep up.

But she was surprised at what she describes as lackluster training, a lack of clear best practices, an apparent inability to turn input from well-meaning employees into operational improvements, and an overall disconnect between Amazon's leadership principles and the realities of its fast-growing delivery network.

After 468 days, Hausmann decided to leave due to what she described as an accumulation of frustrations.

She says she hadn't planned to write a book when she started the job. Her main objective was to work her way up in the logistics division of a company she admires. But she changed her mind after realizing that her first-hand experience, combined with her background, could provide some unique and potentially valuable insights for people interested in the company.

Her book, Inside Amazon: My Story, includes recommendations and ideas for Amazon, which she hopes might catch the attention of Amazon's executives as they work to fulfill the company's latest leadership principle of striving to be "Earth's Best Employer."

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Direct retail sales are poised to represent less than half of Amazon's business for the first time in its history — a fundamental shift that reflects the e-commerce giant's expansion beyond its roots as an online store.

Revenue from Amazon Web Services, Amazon Prime, third-party seller services, online advertising and other services added up to 49.3% of Amazon's business in the second quarter. It was a new high, almost matching the company's revenue from online and physical stores, and on a trajectory to surpass them in the future.

That's one of several takeaways from Amazon's second-quarter earnings report, released Thursday afternoon. On this episode of Day 2, GeekWire's Podcast about everything Amazon, we nerd out over Amazon's numbers.

Joining GeekWire co-founder Todd Bishop for the discussion are two online retail industry veterans who pay close attention to Amazon's business:

• Our podcast collaborator, Jason Boyce, former Top 200 third-party seller, founder of Avenue7Media and co-author of The Amazon Jungle.
• Andrea Leigh, vice president of strategy and insights at Ideoclick, a Seattle-based e-commerce technology and services firm that works with vendors to Amazon’s first-party retail sales, and third-party sellers. Leigh was an Amazon general manager and retail category leader for nearly 10 years.

Coverage of Amazon earnings:

• Amazon sales of $113B disappoint Wall Street but profits of $7.8B exceed expectations
• Amazon’s advertising business is surging amid industry-wide ad sales boom for tech giants
• Amazon boosting wages and hiring incentives to keep up in competitive labor market

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Amazon’s direct workforce rose by 500,000 people in 2020 — that's half a million people — to nearly 1.3 million employees. The extraordinary hiring, supporting the rapid expansion of Amazon's warehouse and delivery operations, raised the natural question: what would be the consequences of all that growth?

An eight-month New York Times investigation, published this week, provides much of the answer, telling the stories of warehouse workers caught up in an unforgiving, error-prone system that struggled to keep pace with Amazon’s growth, the unique challenges of the pandemic, and unprecedented customer demand.

The piece reveals the limitations of Amazon's automated HR technology, but it also demonstrates the impact of policy decisions by Amazon executives, including founder Jeff Bezos and operations-leader-turned-consumer chief Dave Clark.

Among them, according to the story: a conscious decision to encourage turnover and limit upward mobility among hourly warehouse workers.

Karen Weise, the Seattle-based New York Times tech reporter who reported the story with her colleagues, Jodi Kantor and Grace Ashford, speaks with us about their key findings on this episode of Day 2, GeekWire's podcast about everything Amazon.

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Prime Day is almost here. Actually, it’s two days. But who’s counting? Well, Amazon sure is. Scheduled for June 21 and 22, the annual sales event is closely followed by many Prime members eager for deals. 

Overcoming a lackluster 2015 debut and a 2018 online outage, Prime Day has become one of the most important annual events for the company, effectively creating a second peak season, six months after the traditional holiday shopping rush.

Providing a sense for the scale, Amazon says customers saved $1.4 billion during Prime Day last year.

Last year, Amazon delayed Prime Day to October due to the COVID-19 pandemic. It was previously held in July. This year, the lingering impact of the pandemic is both complicating Prime Day and raising the stakes.

On this episode of Day 2, GeekWire’s podcast about everything Amazon, we go behind the scenes of Prime Day with two e-commerce veterans: 

• Our podcast collaborator, Jason Boyce, former Top 200 third-party seller, founder of Avenue7Media and co-author of The Amazon Jungle.
• Andrea Leigh, vice president of strategy and insights at Ideoclick, a Seattle-based e-commerce technology and services firm that works with vendors to Amazon's first-party retail sales, and third-party sellers. Leigh was an Amazon general manager and retail category leader for nearly 10 years.

See GeekWire for more show notes and links to the topics we discuss.

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Amazon is at a pivotal moment in its history, facing growing regulatory and legal scrutiny just as a new CEO, Andy Jassy, takes the reins from founder Jeff Bezos.

Could a new leadership principle help to guide the company in its next era?

"Treat others as you'd like to be treated — employees, vendors, partners, brands, small companies, competitors, press, critics, community," his suggested leadership principle reads, in part. "Contribute and be a leading steward of your community. Foster and lobby not for your best interests, but for future innovation and competition's best interest."

It concludes, "Conduct yourself, both personally and as an organization, in a way your mom and your kids would be proud of. Always."

From the outside, it might sound like mere window dressing, but given the role that the existing 14 leadership principles play in Amazon's day-to-day operations, Rossman says the addition could have a real impact.

"You actually have to insert them into how you hire, how you operate every day, how you evaluate, how you think about strategy and operations," he says. "I think would push them to have to innovate in new ways and would work in conjunction, not in conflict with their other principles."

Rossman played a key role in launching the Amazon Marketplace business before leading the company's Enterprise Services business during his tenure at the company. He's now a business advisor on strategy, leadership and innovation. We talk about the company's next phase on this episode of Day 2, GeekWire's podcast about everything Amazon. 

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Wait, didn't Amazon win its battle with the union in Bessemer, Ala.? Yes, the vote came out in the company's favor, but the story isn't over yet.

The  Retail, Wholesale and Department Store Union is appealing the outcome to the National Labor Relations Board, citing what it contends were unfair tactics by Amazon during the vote -- which the company adamantly denies.

The NRLB hosted a virtual hearing that spanned many days before wrapping up earlier this week. A decision is expected in a matter of weeks, with the potential, at least, for a new vote.

And yes, one of the central points of contention is a mailbox.

On this episode of Day 2, GeekWire's podcast about everything Amazon, we're joined by Annie Palmer, a journalist who writes about Amazon and e-commerce for CNBC, who has been covering the NLRB hearing. Joining us is our podcast collaborator Jason Boyce, co-author of "The Amazon Jungle," and founder and CEO of Avenue7Media, an agency that works with third-party retailers on Amazon.

We also talk about Amazon’s decision to integrate its Prime Now speedy delivery service into its main e-commerce website and app. Finally, we follow up on the issue of Amazon cracking down on big third-party retailers on Amazon over the issue of fake reviews, and an assertion about those cases in the New York Times that Jason believes was misguided.

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An antitrust lawsuit filed against Amazon by the Washington, D.C., attorney general Karl Racine this week promises to test the evidence and allegations that have been marshaled against the tech giant by U.S. legislators and regulators.

The suit leans heavily on findings from the U.S. House Judiciary antitrust subcommittee last year, alleging that Amazon illegally manipulates the e-commerce market to its advantage by penalizing third-party sellers that offer products at lower prices on other platforms. 

But wait a second, isn't it a good thing for consumers — supporting the very purpose of antitrust law — for Amazon to promote the lowest-price products?

That is the essence of Amazon's response, and it's one reason the case is so interesting, promising to put the spotlight not just on Amazon's business tactics but on the potential need to upgrade antitrust laws and regulations for a new era of commerce. 

At first glance, the suit faces an uphill battle in at least a couple areas. However, the allegations in the suit ring true to the experience of Jason Boyce of Avenue7Media, a former Amazon third-party seller and GeekWire's collaborator on the Day 2 podcast. 

We talk about his experiences as a third-party seller, debate the relative merits of the antitrust suit, and consider the implications for incoming Amazon CEO Andy Jassy on this episode of Day 2, GeekWire's podcast about everything Amazon. 

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Customer reviews have become central to online commerce, playing a huge role in determining which products succeed or fail on Amazon and other sites. A study by Northwestern University’s Spiegel Research Center found that nearly 95% of shoppers read online reviews before making a purchase. 

But the authenticity of some Amazon customer reviews is coming under new scrutiny after a data leak exposed unidentified sellers coordinating to pay customers for fraudulent reviews. Products from device makers Aukey, Mpow and Tomtop were removed from Amazon after these reports surfaced.

"One of my complaints about Amazon is their inconsistency in enforcing their own terms of service. So I was really happy about the news," said former Amazon seller Jason Boyce, founder and CEO of Avenue7Media, co-author of the "The Amazon Jungle," and resident expert on GeekWire's Day 2 podcast.

"If they're not cleaning up bad behavior, violations of terms of service, it has a negative impact on the Amazon shopper," Boyce said. "If the shopper is reading and relying on reviews, and two-thirds of them are fake five-star reviews or even a third of them and they get this product and it's bad, that's bad for the Amazon customer."

Amazon "has proven over and over again" that they will go after people and companies behind pay-for-review systems, said Jeff Cohen, vice president of Marketing for Seller Labs, a company that offers software, tools and services for Amazon sellers to market their products and communicate with customers.

"Offering incentives for reviews is not something new or exclusive to Amazon," Cohen said. "But Amazon has to protect itself in a different way because it's looked at in a different way than others are in the space."

Amazon declined to comment on the specifics of the story involving Aukey and others, but said it's "relentless" in its efforts to police customer reviews, with "long-standing policies to protect the integrity of our store, including product authenticity, genuine reviews, and products meeting the expectations of our customers."

"To do this, we use powerful machine learning tools and skilled investigators to analyze over 10 million review submissions weekly, aiming to stop abusive reviews before they are ever published," an Amazon spokesperson said via email. 

Amazon said it takes "swift action" against violators, including suspending or removing selling privileges: "We take this responsibility seriously, monitor our decision accuracy and maintain a high bar."

We’re tracking the latest twists in the world of Amazon reviews on this episode of Day 2, GeekWire’s podcast about everything Amazon, with insights from Cohen and Boyce.

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Author and journalist Brad Stone of Bloomberg speaks with GeekWire's Todd Bishop about Stone's new book, "Amazon Unbound: Jeff Bezos and the Invention of a Global Empire," the follow-up to Stone's 2013 bestseller, "The Everything Store."

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