Foods for $13.7
billion in 2017, it's become an ever
more popular place to buy food items.
With Amazon Fresh, Prime members get
groceries delivered for free in two
hours from local Whole Foods
stores in select cities.
But outside Amazon Fresh, there's an
entire section of food sold through
Amazon's regular e-commerce platform.
It's called Grocery and Gourmet, and it
launched in 2006 with 14,000 dry
grocery products available.
Today, it has hundreds of thousands
of items sold by millions of
third-party sellers. Chances are you can
find your favorite variety or
obscure flavor on Amazon.
And if you're a Prime member, many
of them will have free one-day
shipping. But there's a downside to
the convenience created by Amazon's
huge marketplace. Some of these
food items sold through third-party
sellers are arriving expired,
stale or tampered with.
That focus on selection, relentlessly
offering more stuff, allows those
expired or unsafe foods to
fall through the cracks.
I do buy my creamer there because I can't
get it in the store where I live
now. It was chunky and curdled and
that's when I noticed the expiration
date was I want to say
two or three months before.
It was shocking. They m ailed us
actually like over a year old brownies.
I've never experienced
anything like that.
Like, it tasted disgusting.
It tasted like, I
don't know, cardboard.
A CNBC analysis found expired hot
sauce, beef jerky, granola bars,
Doritos, coffee creamer
and baby food.
We wanted to find out why expired food
ends up on Amazon and what's being
done to cut back on the problem.
Amazon currently just has the potential
for a massive liability, and
they're certainly trying to take steps to
clean things up and make the
products that are being sold
through the platform more reliable.
To understand how expired food gets
on the Amazon marketplace, it's
crucial to understand who
is selling it.
Consumers have this false sense of
security that because it's coming from
Amazon, it must be OK.
But what consumers really have to know
is they're not buying from Amazon.
They're buying from somebody else.
Amazon's algorithms work behind the
scenes to automatically suggest a
seller when you shop. These listings
are actually official brand names
appearing there. So it looks really
official that it's coming from like,
let's say, Kraft. People don't know
that there's a big third-party
marketplace right behind the listing.
While Amazon sells its own groceries
through its Fresh program, the
Grocery and Gourmet section is mostly made
up of products sold by third
parties. 3PM Solutions, a data
analytics firm that specializes in
e-commerce, analyzed Amazon's 100 best-selling
food products for CNBC in
October. Of the sellers that had over
1,000 customer reviews in the last
year, 40% had more than five
customer complaints about expired goods.
Almost four months later, 3 PM found
that all these sellers are still
active and at least 50% of them
have had more customer complaints of
selling expired products since the
initial story ran in October.
I would hope that Amazon is reading
these stories in the news and
understanding that third-party sellers are
abusing their platform and
selling these types of products and
doing everything possible to clean it
up and start to
protect consumers better.
In a statement, Amazon told CNBC, "We
require selling partners to abide by
strict product quality guidelines and
our teams have robust practice
systems in place to prevent expired
goods from being shipped to
customers." Amazon told CNBC it will
terminate bad actors for violating
its policies around expired foods.
But the question that we should be
asking is: how often are you checking
to see if these sellers
are following your guidelines?
Amazon told CNBC that it
happens in very isolated incidents.
3 PM says it's noticed a pattern
among 150 million customer reviews of
more than 2
million third-party sellers.
Sometimes you're buying from very
unprofessional sellers that are
literally just trying to unload product and
make a quick buck and they
don't care about your safety.
Among the recent food products that
customers say arrived expired or
tampered with are various coffee creamers,
Doritos, Fiji water bottles and
Similac baby formula.
In order to be eligible for its
fulfilled by Amazon program, food and
beverage products must have a minimum
remaining shelf life greater than 90
days. Amazon says items within 50 days
of the expiration date at the time
of arrival at a warehouse will
be marked for disposal by Amazon.
Bulk items must also include
extra time for consumption.
Amazon cites an example.
A 240-count bottle of daily supplements
must have a remaining shelf life
of 240 days plus an additional 90 days
at the time of check-in at the
fulfillment center. And Amazon takes
product safety really seriously.
The problem is just how big Amazon is
and it just is really difficult to
police a system that big effectively.
Amazon says it has millions of
sellers worldwide, including at least
800,000 in the U.S.
Third-party sellers make up 58 percent
of merchandise sold on Amazon.
Amazon as a company, they have
a $1 trillion market cap now.
A big part of their growth
has been opening up the third-party
marketplace. That's the only way you can
get that volume and that huge
growth as a company.
The thing is, that growth needs to
be tempered for the reasons of safety
for the consumer. And this issue is
more and more important as a growing
number of shoppers head
online for their groceries.
A recent report by Nielsen and
the Food Marketing Institute found online
food and beverage sales will
top $143 billion by 2025.
And last year, 44 % of U.S.
households purchased food and beverages online,
up from 39 % in 2017.
I know of sellers who've sold
chips, crackers that are expired, ramen
packets that are expired
and also flavored waters.
Although many of these grocery items
are sold by third parties, Amazon
gets a cut of each sale and
provides the selling platform, which makes
culpability a hot topic.
It's not just a flea market, a local
flea market where a few goods are
going to be sold. Folks can go on
there and sell at scale expired items,
items that can harm consumers.
And ultimately, Amazon needs to be liable
for that harm that's caused in
order to induce Amazon to take
the appropriate action to protect consumers
from those types of sellers.
So where are third-party
sellers getting expired merchandise?
The short answer is: it's usually changed
hands a few times before it ends
up on Amazon. So-called banana box
stores sell pallets of goods deemed
unfit for sale at
normal grocery stores.
Think overstock, discontinued items, returns
or inventory that's been
damaged, like when a
pallet gets knocked over.
If you go to a banana box store,
probably two-thirds of the stuff in the
store is expired.
Closeout sales and liquidation warehouses
are other common sources.
For example, a U.S.
company cancels an order, so the
overseas manufacturer sells it at a
discount to a liquidation company who
then sells it on Amazon.
Another example: even though Starbucks closed
all its 379 Teavana stores
in 2018, you can still buy Teavana sugar
and fruit tea on Amazon in 2020.
From sellers who purchased
it from closeout sales.
Now the problem with passing
visual inspection for anything that's
liquidation or that has some sort of
broken supply chain is that no one
knows how it was
stored in the meantime.
You don't know if it got overheated.
You don't know if it got dinged and
now there's a hole in the seal.
You don't know if it was too cold.
Plastic gets brittle and
cracks when it's cold.
Sellers can also stock up on
seasonal items that become wildly popular
when normal grocery sellers take
it off the shelves.
You would be amazed at what people will
pay for that package of Oreos that
they can't get anymore.
So something that
was originally $3.50,
these sellers had people buying for
$25 and $30 a package.
So they would ignore the best-buy
dates and ship the product.
And then there's dumpster diving.
People going to Trader Joe's and
going through the dumpster and finding
products that they've thrown out
and reselling them on Amazon.
Brand owners have a real problem here
in the sense that once somebody gets
an expired food product and has a problem
with it, maybe they get sick or
it's just a horrible taste, they've probably
lost a customer for life at
that point. An online Amazon policy says
all sellers must place a label
showing both the manufacturing date and
expiration date in at least 36
point font so warehouse workers can easily
spot the dates on each box or
bundle as well as on each individual
item inside the box or bundle.
So then how does food past its best-buy
date actually make it out the door
of Amazon's warehouses?
Unfortunately, a very large percentage
of third-party sellers aren't even
aware of this particular rule.
And even if they are, they
tend to not follow it.
And Amazon also does not
always enforce its own rules.
Simple mistakes are bound to
happen at this scale.
Pickers and packers in the warehouses are
working at high speeds to keep
up with Amazon's 2019 promise to make
one-day shipping the default for all
100 million-plus Prime members.
In January 2020, Jeff Bezos told
shareholders that more people joined
Prime last quarter than ever before.
So if it's hard for the guy doing
pick and pack who's picking your order
and sending it out to you, he might
not notice that the item is expired
because it's printed in really small type
or whatever the case might be.
Amazon has more than 175 warehouses
across the world, covering 150 million
square feet of space.
Product is shipped to
all these warehouses.
It's trucked everywhere that one
seller owns the product.
So sometimes the older units have been
sold by Amazon without the seller
meaning to take part
in that behavior.
And sometimes problems with food items are
caused by how Amazon stores and
handles them. One of the things that
we found was like oatmeal next to
really smelly Tide.
And I know like Tide has a
very strong chemical smell, especially like,
you know, the big jugs of it.
And oatmeal is one of
those grains that absorbs flavor.
And so sometimes , there's nothing
wrong with it inherently, it doesn't
damage the oatmeal, but you might
have Tide flavored oatmeal, for example.
When Congress passed the Food Safety
Modernization Act in 2011, Rachel
Johnson Greer's job at Amazon was to
bring its food storage and handling
procedures into compliance.
Some of the temperatures were reaching
over 120 degrees inside the
facility and we just did spot
checks throughout the facility to see
different things. That particular one, the top
shelf, was a giant tub of
gummies that had all melted together
because it was 120 degrees.
And so it was literally
a melted tub of gummies.
Another issue: returned food items can
get mistakenly entered into the
wrong category and end
up being resold.
If someone screwed that up, either the
seller screwed it up or Amazon
screwed it up and assigned it to
the wrong category, t hen it wouldn't
follow the food process.
So Amazon has a really solid food process
where if a return comes in it
should never be put back
on the shelf, right?
Someone could have opened it.
Someone could have eaten part of it.
Someone could have gotten it gross.
Amazon workers can also make
mistakes when manually entering expiration
dates. That's the problem with the
system, is that if there's anything
that gets manually keyed in wrong,
if anything gets received incorrectly,
then things can still sell that
aren't really supposed to be selling.
And occasionally bad actors fake
a later expiration date.
I don't think that anyone at Amazon
would look at that in any detail
because the policy does require
stickering over manufacturer dates.
And then there's the whole slew of
products that are not fulfilled by
Amazon. So that's when you buy from
a third-party seller and they ship it
to you directly instead of Amazon having
any part of the shipment process.
In that case, Amazon doesn't have
any visibility to that product.
In a statement to CNBC, Amazon said,
"We also use a combination of
artificial intelligence and manual processes
to monitor over 20 million
pieces of customer feedback we
receive weekly for any concerns.
If one arises, we work quickly
to investigate, take the appropriate
actions and use this information
to improve our systems.
Appropriate actions include warning, suspending
or terminating a bad
actor's account. If customers have a
concern with a potentially expired
product, we encourage them to contact
our customer service directly for a
full refund of their purchase."
In the case of the spoiled
creamer, Amazon did offer to compensate
Atkinson after she spoke
to CNBC in October.
Wilson also received a refund
for her year old brownies.
It makes me think twice and so
we haven't ordered anything since then.
In another statement, Amazon said,
"With the A-to-z Guarantee, customers
are always protected whether they make
a purchase from Amazon or a
third-party seller." Former Amazon employee
Rachel Johnson Greer explained
how the process works.
A seller will get a warning from
Amazon saying a customer complained and
said that they received an
expired item from you.
Explain yourself. And you get a chance
to do what's called an appeal.
And then whoever at Amazon receives
that says, "All right, legit, you're
back on. Thank you."
Or, "Absolutely not.
That was a terrible appeal. Go away."
Amazon says in 2018 it spent more
than $400 million and employed 5,000
people to fight fraud and abuse.
A year ago, Amazon also
launched Project Zero, allowing certain
trademarked brands to directly remove
third-party sellers who are
tarnishing their reputations.
When an item expires, a rguably
it's been altered in some way.
It could have spoiled.
So at that stage, that's when trademark
owners and brand owners can jump
in and do something
about those listings.
But at this point, the
damage could already be done.
Who knows how many hundreds, if not
thousands of people have received the
expired item and had a negative
experience with your branded product.
One way customers can avoid b uying
expired items is to read the reviews.
But Amazon's platform can make it
confusing for customers to pinpoint the
right reviews and for reviewers to
leave their feedback in the right
place. I didn't understand, even when I
wrote the review, that it was a
specific seller that was
different than Land O'Lakes.
I had no idea. Because when you
looked at the listing, it said the
manufacturer was Land O'Lakes and
there was a hyperlink.
Really, the negative review for an expired
product should be left on the
seller's feedback page, not
the product listing.
So even other sellers' actions can
actually damage your brand or someone
selling a knockoff item or they're
selling full outright expired items.
Any reviews that come
in stay forever.
Some brands have decided the
risk is too great.
Nike and others have stopped selling
on Amazon in recent months.
Although this doesn't prevent third parties
from selling these brands on
Amazon. For seller reviews, however, Amazon
will cross out some negative
reviews for products
fulfilled by Amazon.
And that strikethrough basically means
they support that seller and
they're addressing the issue at hand.
And more often than not, the ratings
that you see on Amazon are actually
very inflated in the positive sense.
In a positive move, 3PM Solutions
has noticed fewer instances of crossed
out reviews since CNBC first
highlighted this issue in October.
Still, Amazon's platform can make it
complicated for shoppers to figure
out which sellers to avoid.
Unlike product reviews, which you can
sort by number of stars, seller
reviews can't be parsed
out into one-star reviews.
So some startups like Fakespot have
created apps to help consumers and
manufacturers sniff out
unreliable sellers.
As we're getting more data about the
seller, t his warning count will go
up and this warning count will tell
you if there's a problem with
expiration or if there's liquidated products
being sold or stale products
being sold. Fakespot says its free
app and Chrome extension have 20
million users so far and that
it's analyzed six billion reviews across
seven e-commerce sites since 2015.
And there are complaints, the same
complaints that you guys saw many
months ago, still happening
on the platform.
Fakespot allows you to sort a seller's
reviews by number of stars so you
can check for problems.
For example, selling stale Doritos.
There's 34 % of the reviews are
mentioning stale for these chips, 19% are
mentioning expired. Infant formula
with a broken seal.
Seal was broken. The outside
tamper seal was broken.
Broken seals. So it's a
recurring theme in this listing.
Or fake Fiji water bottles that may
have been filled with tap water.
Do not buy, it's a
fraud. Tastes like tap water.
The bottles are sealed differently from
the one in the bottom.
I'm attaching pictures of the fake one
and a real one from the local
supermarket. Amazon says product listings
like these with scathing reviews
haven't been removed because there isn't
a problem with the actual
product. Rather, problems come with specific
sellers who send out an
expired or unfit version
of the product.
You're getting a product that somebody
has already opened and just filled
up with something else and they're
able to sell it to you.
That's scary.
Another tool for consumers is
a Chrome plug-in called ReconBob.
It was created by 3 PM Solutions as
a simple way to check the reliability
of the seller Amazon's algorithms
have automatically selected for you.
It scans the seller's reviews for
one-star ratings and certain keywords
like "expired" or "stale" and gives
a stamp of approval or not.
Last resort, consumers can simply try
to stay away from third-party
sellers altogether. One big reason
this problem persists is that
expiration dates are not mandated.
The Food and Drug Administration told
CNBC that best-buy or sell-by dates
are not required under federal law,
with the exception of infant formula.
The FDA calls expiration dates "manufacturer
quality dates" that are "not
indicative of the safety
of the product."
On a more recent box of creamer
Atkinson purchased on Amazon in January,
it included a bright green
sticker explaining something called septic
packaging. Amazon says this sticker
is not its doing.
Food products are sterilized, ensuring
no microorganisms which cause
either food decay or
food poisoning are present.
As a result, this product is offered
on Amazon with no concern of
expiration past date on this box.
With "expired" I think people immediately
jump to it's somehow going to
harm them if they consume it and
most of the time it won't.
It's just stale or icky.
In January, the Department of Homeland
Security issued a report cracking
down on the online sale of
counterfeit and pirated goods, including things
like unsafe food and medicine.
Amazon and other e-commerce platforms will
now be required to turn over
information about third-party sellers
to the government.
And Amazon could face civil
fines, penalties and injunctive actions.
But so far, Amazon has been
regulated differently than its brick and
mortar competitors. If a traditional
grocery store sells a defective
product, the store can be sued
alongside the company that made the
product. And that liability means
conventional retailers are careful about
the products they stock. But Amazon
has successfully avoided liability in
court by arguing it's a platform for
the sale of goods rather than a
seller. The legal theory is that Amazon
was just providing the space like
a flea market and the individual
sellers were actually liable for the
goods they sold and not Amazon.
That has recently changed, though.
Last summer, the Third Circuit Court of
Appeals ruled that Amazon could be
held liable for products sold by a
third party seller on its platform.
The court found that Amazon was doing
much more than just providing the
platform. They were accepting
shipping information, coordinating returns.
The case was brought by a customer who
lost vision in one eye when a dog
leash she ordered on Amazon
broke during a walk.
It's still making its
way through the courts.
When you walk in to Target
or you go to Target.com,
you're buying from Target.
You're not buying from somebody that's shipping
out of a warehouse that is
not Target related.
So that's just the biggest difference that
you have with Amazon is that
they don't even control
all their inventory.
With its abundant variety of food
products for sale, Amazon is certainly
here to stay as a major player in
the grocery business where it hopes to
keep consumer trust.
I mean, I feel like I should be able
to trust what I buy from Amazon, you
know, and I don't know.
Now I doubt it. It not only damages
their faith in the brand, but it also
damages the consumer's
trust in Amazon.
So hopefully Amazon will fix this and
will make it easier to find these
expired products and to manage food, not
only for the consumer which they
should be doing it for anyway, but
also for themselves and the brand.
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