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PopSockets CEO Calls Out Amazon's 'Bullying With a Smile' Tactics (mashable.com) 68

Posted by BeauHD from the play-ball-or-get-bent dept.
At a House Judiciary antitrust subcommittee on competition in the digital economy, PopSockets CEO and inventor David Barnett described how Amazon used shady tactics to pressure their smartphone accessory company. Mashable reports: "Multiple times we discovered that Amazon itself had sourced counterfeit product and was selling it alongside our own product," he noted. Barnett, under oath, told the gathered members of the House that Amazon initially played nice only to drop the hammer when it believed no one was watching. After agreeing to a written contract stipulating a price at which PopSockets would be sold on Amazon, the e-commerce giant would then allegedly unilaterally lower the price and demand that PopSockets make up the difference. Colorado Congressman Ed Perlmutter asked Barnett how Amazon could "ignore the contract that [PopSockets] entered into and just say, 'Sorry, that was our contract, but you got to lower your price.'" Barnett didn't mince words. "With coercive tactics, basically," he replied. "And these are tactics that are mainly executed by phone. It's one of the strangest relationships I've ever had with a retailer."

Barnett emphasized that, on paper, the contract "appears to be negotiated in good faith." However, he claimed, this is followed by "... frequent phone calls. And on the phone calls we get what I might call bullying with a smile. Very friendly people that we deal with who say, 'By the way, we dropped the price of X product last week. We need you to pay for it.'" Barnett said he would push back and that's when "the threats come." He asserted that Amazon representatives would tell him over the phone: "If we don't get it, then we're going to source product from the gray market."
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PopSockets CEO Calls Out Amazon's 'Bullying With a Smile' Tactics More

PopSockets CEO Calls Out Amazon's 'Bullying With a Smile' Tactics

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  • Isn't that basically 'doing business'?

  • "The gray market" = the factory itself. (Score:5, Informative)

    by Mal-2 ( 675116 ) on Friday January 17, 2020 @09:41PM (#59631772) Homepage Journal

    Alibaba pulls this stunt all the time too -- go direct to the supplier and get the item, possibly (but not always) with a new name on it. These may be rejects, they may be overproduction, or they may be cranked out specifically to order and just as good as the original. If they're not counterfeit branded, there's very little the seller can do about it in any case.

    • Except that people have pointed out in the post they were not getting the product from the manufacturer. They were passing off other companies’ products as from the manufacturer.

      • Re: (Score:2)

        by Mal-2 ( 675116 )

        No, it doesn't say that. It says that they were getting product from another supplier, which does not rule out the original factory. Also if the item is sufficiently simple (like non-powered toys, for example), it's not at all hard to have another factory clone the item -- either well or extremely cheaply, it would be Amazon's call (and they'll probably go the extremely cheap route).

  • Itâ(TM)s exactly the Walmart model. They engage in the worst, most likely illegal tactics, and then pray for forgiveness.

  • Google Parent Alphabet Market Cap $1 Trillion (Score:3, Insightful)

    by Required Snark ( 1702878 ) on Friday January 17, 2020 @10:02PM (#59631804)
    Ironically, the previous Slashdot post [slashdot.org] to this one.

    You don't get in the Trillion Dollar Club unless you are completely corrupt. That's just how capitalism works.

    • Re:Google Parent Alphabet Market Cap $1 Trillion (Score:4, Insightful)

      by markdavis ( 642305 ) on Saturday January 18, 2020 @12:55AM (#59632004)

      >"You don't get in the Trillion Dollar Club unless you are completely corrupt. That's just how capitalism works."

      No, but that might be how crony capitalism and/or capitalism without suitable anti-trust safeties work, however. There is a big difference. But it can also be a company that gives consumers what they want and isn't doing anything "wrong" at all. Oh, and amount of revenue earned or stock valuation really has little to do with it; corruption can come in any size, flavor, color, shape, or type and within any system that includes humans in it.

  • Walmart on steroids (Score:5, Insightful)

    by Pollux ( 102520 ) <speter@[ ]ata.net.eg ['ted' in gap]> on Friday January 17, 2020 @10:03PM (#59631808) Journal

    That sounds a lot like Walmart's tactics from back in the day [pbs.org]. A startup business CEO would fly to Bentonville, have a sit down with the execs, and walk away with a purchase order. After the initial sale went well, Walmart would tell the startup that they need to drop the price. The startup often would eat the costs, because the volumes Walmart would promise was worth the cut to the margins. But Walmart would keep pushing the costs lower, and when the startup would say they couldn't go any lower, Walmart execs would suggest them to move production to China. They often insisted, even sharing contact info for manufacturers who worked very closely with Walmart and already had logistics worked out.

    But at least Walmart gave companies the honor of saying yes or no, even if coerced. Leave it to Amazon to just skip all the foreplay and go right to China for the moneyshot.

    • Sounds like you read "The WalMart Effect" too.

    • Re: (Score:3)

      by King_TJ ( 85913 )

      I thought about the Walmart comparison too -- although the version of the story I heard never mentioned pushing vendors to move production to China for a lower cost. The stories I heard typically said the small businesses awarded the deals to sell in Walmart were cornered, up against a wall, at some point. Because what Walmart knew would usually happen is a new vendor wouldn't have the capabilities to produce the quantities Walmart asked for. So they'd take out a huge business loan to build those capabiliti

  • Just say no? (Score:3)

    by DigitalisAkujin ( 846133 ) on Friday January 17, 2020 @10:07PM (#59631818) Homepage

    I've had plenty of times where I could not find something on Amazon and then guess what? I went somewhere else to get the real thing. Don't assume that everyone will always buy the knock off.

    • Re: (Score:3, Insightful)

      by insurgioFather ( 6387656 )
      That's a very good point and I concur. However, don't assume that everyone is as community, and quality minded as yourself. Just because you take the time to weigh your options, doesn't mean everyone else does so.

      In fact, businesses like Walmart and Amazon, prey on the majority that do not. I believe that being loyal to my community when making a purchase adds value to my community and life. Does that mean even a projectable segment of the population does so?

      Amazon and Walmart having such a high marke

    • Re:Just say no? (Score:4, Informative)

      by ArchieBunker ( 132337 ) on Saturday January 18, 2020 @01:11AM (#59632030)

      Other than fast delivery there isn't a compelling reason to buy from them anymore. Half the shit they sell isn't actually sold by them. Their prices aren't cheap like they used to be and now tax is collected. Plenty of times places like Target and Walmart have things cheaper.

      • Unless I'm mistaken. There never was a reason to buy from them, besides fast delivery.
        Which essentially, lands us in the same pile of crap.
        What other reasons, have there ever been?
        It's not like before, getting a good market share and cracking down on shady once they got a board,
        That they have ever have had anything to offer besides speedy delivery to your home.


        Am I missing something? Fast delivery is and has always been their platform no matter what you get stuck with.
        Such logistics is why people
        • Comment removed based on user account deletion

        • Amazon is good for buying mixed items that are pretty cheap individually.
          On my side of the Atlantic (Germany), Amazon has a combination of low-ish prices and great variety. Buying from Amazon directly, the prices are not the very lowest, but with the wide variety of products it is usually possible to find 30 Euro worth of stuff you really want to have. At that total price, the free delivery kicks in and the total deal becomes usually cheaper than ordering piecemeal from different merchants. Also, delivery i

      • Comment removed based on user account deletion

        • I wanted to get some Arctis gaming headphones for my wife for xmas. Amazon had them for $99 (with tax) and Target had them for $79 (with tax). We do have a prime account and its nice for specialty food items.

  • Just my opinion - slow grind (Score:5, Interesting)

    by insurgioFather ( 6387656 ) on Friday January 17, 2020 @10:34PM (#59631848)
    In looking for areas of growth Amazon is leaning enough to squash it's retailers, sector by sector. There are areas that are too specialized or too fringe for them to care about. Amazon essentials is a prime example, they source those products all sorts of shady, Pump up their commisions, to make it so one cannot compete. If you stop selling on Amazon, you must have done so willingly. If you push back, you must be silenced. Internally, Walmart is a competitor whereas google (for the most part) is not. They basically, want to outclass Walmart, by sourcing products themselves, and pushing them online. They really don't care if they are counterfiet or unsafe products, just as long as the sale is made. Little by little, sector by sector. The will aim is to produce and deliver products end-to-end. If they did so in faster or in larger chunks, it'd create an unmanageable pushback. Rather than changing their model all at once, it's better to do so gradually, as people tend to forget. Walmart for example started selling only products made in the US, and pledeged to do so. They slowly started letting imports in, and now dictacte, to many companies, where to build and where to price at, or else. Amazon is simply better poised, as the diversity of their customers is greater as is the potential. In this situation, I believe the guy with the complaint has a good case. However, does he have the ability to fight, for years maybe even decades? Amazon is very much aware that it's unlikely. They bully their workers, "partners" & customers. Frankly, that is capitalism, it's "promise" was that with increased production comes increased success for citizens at large. But what we see is that, it's a race to the bottom. Cheaper equals more profit. Whether it's fixing BS spreadsheets to track worker productivity, with poorly (or skillfully) applied bogus equations (and calling it AI). Or counterfeiting products, selling things that explode, kicking puppies and evicting disabled grandmothers. Bezos could care less, he believes he'll be in space ruling everything, with his AI (MS Excel 97), And as lazy and apathetic as the public is he might be right, even whilst wrong about everything.
    • Sorry about the spelling. But I hope you get the drift. After a long day of auto-correct, I turn that stuff off. Still, before posting next time, I'll apply a filter.

      • I don't care about the spellings as much as the solid wall of non-formatted text.
        After a long day of work I am not willing to read it.

  • Amazon already has a grey market problem (Score:5, Insightful)

    by WolfWalker545 ( 960367 ) on Saturday January 18, 2020 @12:53AM (#59632002)
    Their supply chain management lumps all products with the same SKU together, so that if supplier A provides 100 of an item to warehouse X, and supplier B supplies 100 to warehouse Y, a customer who is closer to warehouse Y who orders from supplier A will actually receive the products shipped from supplier B. A LOT of counterfeit products enter Amazon's supply chain this way, there are some products that can NOT be safely ordered through Amazon as a result (tourniquets are one example where this is known to happen, the preferred tourniquet is the CAT, counterfeits with cheaper materials that can fail in use are common on Amazon, literally risking lives). Not to mention the problem of returning counterfeit items in a box for the real item, so the customer who gets shipped the allegedly unopened item receives a counterfeit item. On top of the issue of Chinese manufacturers producing excess name brand materials and selling them on their own to grab the profits, instead of the company who developed the products and contracted for their manufacture. SHOT show is coming up, there will be a LOT of Chinese there trying to take detailed pictures of products to produce counterfeits, some will be sold as "airsoft" parts, but others will be sold as the name brand item by sellers who don't look closely at their suppliers.

    • Great post. Even if a buyer is diligent, they can get screwed. I try to avoid marketplace sellers because of counterfeits and review fraud, but what you point out is that "Ships from and sold by Amazon.com" only goes so far as a protection. Ironically, Amazon's success is driving me more to brick and mortar stores.

  • Getting it on the record (Score:4, Informative)

    by Todd Knarr ( 15451 ) on Saturday January 18, 2020 @03:10AM (#59632164) Homepage

    Amazon's tactics are one reason why in business (and for individuals too, for that matter) all phone calls should be recorded as a matter of course. Legality be damned, it's the only way to be sure you have documentary evidence when you need it.

    • What use is evidence if it not only cannot and will not be used in court because obtained illegally, but will land you in legal trouble for having obtained it in the first place?

    • Yes, record calls. But no need to be shady, just inform them that all calls are recorded.

      I want to know why it is so hard to record a call on your smartphone. Basically impossible without rooting.

      • Yes, record calls. But no need to be shady, just inform them that all calls are recorded.

        I want to know why it is so hard to record a call on your smartphone. Basically impossible without rooting.

        So they aren't facilitating lawbreaking. Route through google voice and you can.

        • > So they aren't facilitating lawbreaking. Route through google voice and you can.

          Haha, their phone is programmed so that you have to give up the contents of your call to their servers if you want to exercise your legal rights in many states.

          Good move for Surveillance, Inc.

      • Yes, record calls. But no need to be shady, just inform them that all calls are recorded.

        Try it. They will immediately hang up on you if you tell them you are recording the call. That's been my experience, anyway.

    • ...as long as you're in a one party consent state.

      • > ...as long as you're in a one party consent state.

        Terminate your PSTN calls at a VoIP POP in one of those States and do the recording there. Access those calls remotely via VoIP.

        Don't do the recordings in a State where that recording would be made inadmissible.

    • Comment removed based on user account deletion

  • Textbook psychopathic behavior. (Score:3)

    by BAReFO0t ( 6240524 ) on Saturday January 18, 2020 @04:48AM (#59632264)

    If corporations are people, Amazon needs to be locked up until the meds are properly adjusted.

    That means Bezos specifially. And everyone from the corporate culture he hired at least needs to be removed from that environment and checked for it.

    Why are people not doing that, despite clear evidence? Somehow it almost seems to be expected. Like murder is somehow alright when "it's a war". Makes no sense to me. Either it's harmful or it isn't. And when it's harmful, and intentional, it's a crime.

  • This is Strategy, Not Accident (Score:5, Insightful)

    by ytene ( 4376651 ) on Saturday January 18, 2020 @06:12AM (#59632394)
    I'm a keen amateur photographer. A few years ago I decided to invest in a tripod. I found an absolutely amazing product from a small, independent company that was set up and operated by three professional photographers. Made the purchase and have been thrilled with the results I've got since.

    Several months later, I happened to be searching Amazon's web site, when I spotted what appeared to be a replica of the very unit I now possess, down to critical design features, but offered by some random Chinese company.

    I picked up the phone and called the manufacturer of the legitimate product. I ended up speaking with the CEO and the experience he relayed to me was chilling.

    Out of the blue the company received a call from someone in Amazon purchasing, who said something along the lines of, "We have incredible data analytics that helps us understand what our customers want. I'm delighted to tell you that we see a real demand for your product and I'm going to offer you an amazing deal. We're going to buy {this many} of your product for {this much} each and sell them on Amazon..."

    The discussion did not go well. In the end, the CEO told me, he had to go to court to stop Amazon from attempting to undermine his business by using his company name. It cost him tens of thousands, but he got the result his business needed. Amazon's response was to turn around, go to a manufacturer in China and have them knock-off his product, down to key design features.

    The big challenge that a western company faces when dealing with Chinese-made clones is of course that China doesn't really respect international patent, copyright, trade dress or trade secret laws. Quite the opposite.

    Worse... Amazon knows that a significant portion of their "resellers" retail counterfeit product through the Amazon reseller market. They don't act because they would rather take their percentage than dispose of the reseller. This is especially true of software counterfeiters - I've ordered brand-name software from a supposed tech retail company with an Amazon storefront. I've reported the issue to Amazon - the company is still trading...

    And most outrageous of all... About 3 years ago my home printer - an HP Deskjet - died. I found one offered by a local reseller on Amazon and ordered it. I received a shipping notification and my credit card was charged... 2 days after the quoted delivery date the printer had not arrived, so I got in touch with the reseller, who apologized and told me that they didn't have any in stock. "But I have an Amazon email that says you shipped it..." I responded...

    "Oh yes, they do that. But Amazon do not have visibility in to our dispatching system and we haven't notified Amazon that we ship. They make that up just so they can charge your credit card..."

    You would think that a company with the size and profitability of Amazon could afford to play by the rules. Apparently, breaking the rules is inseparable from the company.

    • > You would think that a company with the size and profitability of Amazon could afford to play by the rules. Apparently, breaking the rules is inseparable from the company.

      If that were true The Washington Post would have done a big expose on this!

  • They were doing this back in early 2000 (Score:5, Interesting)

    by gabrieltss ( 64078 ) on Saturday January 18, 2020 @10:10AM (#59632724)

    When I helped build Cabelas.com back in the early 2000's. After we were live for a couple years, Amazon approached us to be their outdoor product vendor. We looked over all the "terms and conditions" and told Amazon to take hike! They stated clearly back then that they could dictate pricing and that Cabelas was not allowed to market to the customers we sold to. As they wer Amazons customer NOT Cabelas. Also all we would get was an order, we were ONLY a fulfillment company at that point We didn't even process the payment - Amazon did and they would send you a "check" (make payment) for all sales monthly. Don't get me started about their bullshit data feed process. You had to send them updated product and inventory data every 2 hours and if they failed to get your data feed it was YOUR fault regardless if something was wrong on Amazons end. Amazon is just the new Walmart when it comes to shady practices!

  • I have been a victim of similar corruption. It is caused by lazy courts that do not want to dog through complicated stories. The bad guys do one thing when it is easy to record and another thing when they have hacked your phone. This needs to be a federal felony.

    • Or maybe it's because you come across as a literal crazy person.

      "The bad guys do one thing when it is easy to record and another thing when they have hacked your phone. This needs to be a federal felony."

      What? WTF are you even talking about?

  • Colorado Congressman Ed Perlmutter asked Barnett how Amazon could "ignore the contract that [PopSockets] entered into and just say, 'Sorry, that was our contract, but you got to lower your price.'" Barnett didn't mince words. "With coercive tactics, basically," he replied.

    "I am altering the contract. Pray I don't alter it any further." [youtube.com]

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