Amazon to penalize sellers who ship unsafe packages to its warehouses

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Amazon will charge the fee under what it calls “unplanned services,” which will make sure the packages meet safety standards in six areas: shipping box overweight, shipping box oversized, electrical products hazard, sharp products hazard, spilled products hazard and unacceptable pallet condition.

Amazon has been charging unplanned service fees from at least 2013 on other things like missing barcode labels or bubble wrap requirements. But this is the first time Amazon is charging for safety-related issues. Amazon said it would run a trial period starting Nov. 29 and that it would notify sellers at least one month before it starts charging the fees.

Amazon has reason to double down on ensuring safety compliance in the packages it ships out of its warehouse.

According to the Office of Hazardous Materials Safety, Amazon has seen a sharp increase in reports of shipments allegedly violating the U.S. Department of Transportation regulations. In 2009, Amazon only had two incident reports, but that number jumped to 32 in 2016 before reaching 42 this year.

Details of the reports, obtained by CNBC through FOIA requests, give some insight into the type of safety problems with some Amazon shipments.

In one case from April, a gas pressure washer was shipped with gasoline inside the machine. The report said the fuel eventually leaked, and the package was found to have none of the required hazardous markings visible.

“If materials are going to be shipped with fuels inside, they should have clear warning labels and hazardous warnings,” the report said. “If possible, machinery should be shipped without fuel at all.”

Another case from March caused some warehouse employees “hand, arm, and skin irritation,” the report said. An investigation later discovered there was a hazardous spill from a package containing Red Crown High Test Lye, which could potentially cause severe burns.

Multiple reports involved “undeclared aerosols” that were flammable and had no hazardous markings on the packages. There were also a number of undeclared lithium-ion batteries. In October 2017, smoke came out of a package containing a cellphone battery.

On Wednesday, several workers in an Amazon warehouse in New Jersey were exposed to bear repellent after its container was punctured, according to local news reports. It was unclear if the bear repellent came from a third-party Amazon seller.

Fred Killingsworth, a former Amazon employee who now runs the marketplace consulting firm Hinge Global, said the hazardous issues arise mainly because third-party sellers are simply not aware of federal regulations when they ship their products to Amazon’s warehouse. That makes it that much more difficult for Amazon to stay compliant.

“It’s pretty challenging,” Killingsworth said. “It’s a range of things that can cause an item to be a hazardous material.”

While some sellers have expressed concern around Amazon’s lack of clarity around the fee structure and the company’s propensity to mistakenly charge certain fees to sellers, most merchants and consultants welcomed the move as improving the overall Amazon marketplace experience, according to message boards and conversations with several sellers. The new fees, alongside the newly instituted policies around long-term storage, will help products move faster in Amazon’s warehouse.

“It’s always been about driving efficiency at Amazon,” Killingsworth said.

2018-12-07 13:32:00

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