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Since Amazon bought WholeFoods for $13.

7 billion in 2017, it’s become an evermore popular place to buy food items.

With Amazon Fresh, Prime members getgroceries delivered for free in two hours from local Whole Foodsstores in select cities.

But outside Amazon Fresh, there’s anentire section of food sold through Amazon’s regular e-commerce platform.

It’s called Grocery and Gourmet, and itlaunched in 2006 with 14, 000 dry grocery products available.

Today, it has hundreds of thousandsof items sold by millions of third-party sellers.

Chances are you canfind your favorite variety or obscure flavor on Amazon.

And if you’re a Prime member, manyof them will have free one-day shipping.

But there’s a downside tothe convenience created by Amazon’s huge marketplace.

Some of thesefood items sold through third-party sellers are arriving expired, stale or tampered with.

That focus on selection, relentlesslyoffering more stuff, allows those expired or unsafe foods tofall through the cracks.

I do buy my creamer there because I can’tget it in the store where I live now.

It was chunky and curdled andthat’s when I noticed the expiration date was I want to saytwo or three months before.

It was shocking.

They m ailed usactually like over a year old brownies.

I’ve never experiencedanything like that.

Like, it tasted disgusting.

It tasted like, Idon’t know, cardboard.

A CNBC analysis found expired hotsauce, beef jerky, granola bars, Doritos, coffee creamerand baby food.

We wanted to find out why expired foodends up on Amazon and what’s being done to cut back on the problem.

Amazon currently just has the potentialfor a massive liability, and they’re certainly trying to take steps toclean things up and make the products that are being soldthrough the platform more reliable.

To understand how expired food getson the Amazon marketplace, it’s crucial to understand whois selling it.

Consumers have this false sense ofsecurity that because it’s coming from Amazon, it must be OK.

But what consumers really have to knowis they’re not buying from Amazon.

They’re buying from somebody else.

Amazon’s algorithms work behind thescenes to automatically suggest a seller when you shop.

These listingsare actually official brand names appearing there.

So it looks reallyofficial that it’s coming from like, let’s say, Kraft.

People don’t knowthat there’s a big third-party marketplace right behind the listing.

While Amazon sells its own groceriesthrough its Fresh program, the Grocery and Gourmet section is mostly madeup of products sold by third parties.

3PM Solutions, a dataanalytics firm that specializes in e-commerce, analyzed Amazon’s 100 best-sellingfood products for CNBC in October.

Of the sellers that had over1, 000 customer reviews in the last year, 40% had more than fivecustomer complaints about expired goods.

Almost four months later, 3 PM foundthat all these sellers are still active and at least 50% of themhave had more customer complaints of selling expired products since theinitial story ran in October.

I would hope that Amazon is readingthese stories in the news and understanding that third-party sellers areabusing their platform and selling these types of products anddoing everything possible to clean it up and start toprotect consumers better.

In a statement, Amazon told CNBC, “Werequire selling partners to abide by strict product quality guidelines andour teams have robust practice systems in place to prevent expiredgoods from being shipped to customers.

” Amazon told CNBC it willterminate bad actors for violating its policies around expired foods.

But the question that we should beasking is: how often are you checking to see if these sellersare following your guidelines? Amazon told CNBC that ithappens in very isolated incidents.

3 PM says it’s noticed a patternamong 150 million customer reviews of more than 2million third-party sellers.

Sometimes you’re buying from veryunprofessional sellers that are literally just trying to unload product andmake a quick buck and they don’t care about your safety.

Among the recent food products thatcustomers say arrived expired or tampered with are various coffee creamers, Doritos, Fiji water bottles and Similac baby formula.

In order to be eligible for itsfulfilled by Amazon program, food and beverage products must have a minimumremaining shelf life greater than 90 days.

Amazon says items within 50 daysof the expiration date at the time of arrival at a warehouse willbe marked for disposal by Amazon.

Bulk items must also includeextra time for consumption.

Amazon cites an example.

A 240-count bottle of daily supplementsmust have a remaining shelf life of 240 days plus an additional 90 daysat the time of check-in at the fulfillment center.

And Amazon takesproduct safety really seriously.

The problem is just how big Amazon isand it just is really difficult to police a system that big effectively.

Amazon says it has millions ofsellers worldwide, including at least 800, 000 in the U.

S.

Third-party sellers make up 58 percentof merchandise sold on Amazon.

Amazon as a company, they havea $1 trillion market cap now.

A big part of their growthhas been opening up the third-party marketplace.

That’s the only way you canget that volume and that huge growth as a company.

The thing is, that growth needs tobe tempered for the reasons of safety for the consumer.

And this issue ismore and more important as a growing number of shoppers headonline for their groceries.

A recent report by Nielsen andthe Food Marketing Institute found online food and beverage sales willtop $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 soldchips, crackers that are expired, ramen packets that are expiredand also flavored waters.

Although many of these grocery itemsare sold by third parties, Amazon gets a cut of each sale andprovides the selling platform, which makes culpability a hot topic.

It’s not just a flea market, a localflea market where a few goods are going to be sold.

Folks can go onthere and sell at scale expired items, items that can harm consumers.

And ultimately, Amazon needs to be liablefor that harm that’s caused in order to induce Amazon to takethe appropriate action to protect consumers from those types of sellers.

So where are third-partysellers getting expired merchandise? The short answer is: it’s usually changedhands a few times before it ends up on Amazon.

So-called banana boxstores sell pallets of goods deemed unfit for sale atnormal grocery stores.

Think overstock, discontinued items, returnsor inventory that’s been damaged, like when apallet 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 warehousesare other common sources.

For example, a U.

S.

company cancels an order, so theoverseas manufacturer sells it at a discount to a liquidation company whothen sells it on Amazon.

Another example: even though Starbucks closedall its 379 Teavana stores in 2018, you can still buy Teavana sugarand fruit tea on Amazon in 2020.

From sellers who purchasedit from closeout sales.

Now the problem with passingvisual inspection for anything that’s liquidation or that has some sort ofbroken supply chain is that no one knows how it wasstored in the meantime.

You don’t know if it got overheated.

You don’t know if it got dinged andnow there’s a hole in the seal.

You don’t know if it was too cold.

Plastic gets brittle andcracks when it’s cold.

Sellers can also stock up onseasonal items that become wildly popular when normal grocery sellers takeit off the shelves.

You would be amazed at what people willpay for that package of Oreos that they can’t get anymore.

So something thatwas originally $3.

50, these sellers had people buying for$25 and $30 a package.

So they would ignore the best-buydates and ship the product.

And then there’s dumpster diving.

People going to Trader Joe’s andgoing through the dumpster and finding products that they’ve thrown outand reselling them on Amazon.

Brand owners have a real problem herein the sense that once somebody gets an expired food product and has a problemwith it, maybe they get sick or it’s just a horrible taste, they’ve probablylost a customer for life at that point.

An online Amazon policy saysall sellers must place a label showing both the manufacturing date andexpiration date in at least 36 point font so warehouse workers can easilyspot the dates on each box or bundle as well as on each individualitem inside the box or bundle.

So then how does food past its best-buydate actually make it out the door of Amazon’s warehouses? Unfortunately, a very large percentageof third-party sellers aren’t even aware of this particular rule.

And even if they are, theytend to not follow it.

And Amazon also does notalways enforce its own rules.

Simple mistakes are bound tohappen at this scale.

Pickers and packers in the warehouses areworking at high speeds to keep up with Amazon’s 2019 promise to makeone-day shipping the default for all 100 million-plus Prime members.

In January 2020, Jeff Bezos toldshareholders that more people joined Prime last quarter than ever before.

So if it’s hard for the guy doingpick and pack who’s picking your order and sending it out to you, he mightnot notice that the item is expired because it’s printed in really small typeor whatever the case might be.

Amazon has more than 175 warehousesacross the world, covering 150 million square feet of space.

Product is shipped toall these warehouses.

It’s trucked everywhere that oneseller owns the product.

So sometimes the older units have beensold by Amazon without the seller meaning to take partin that behavior.

And sometimes problems with food items arecaused by how Amazon stores and handles them.

One of the things thatwe found was like oatmeal next to really smelly Tide.

And I know like Tide has avery strong chemical smell, especially like, you know, the big jugs of it.

And oatmeal is one ofthose grains that absorbs flavor.

And so sometimes , there’s nothingwrong with it inherently, it doesn’t damage the oatmeal, but you mighthave Tide flavored oatmeal, for example.

When Congress passed the Food SafetyModernization Act in 2011, Rachel Johnson Greer’s job at Amazon was tobring its food storage and handling procedures into compliance.

Some of the temperatures were reachingover 120 degrees inside the facility and we just did spotchecks throughout the facility to see different things.

That particular one, the topshelf, was a giant tub of gummies that had all melted togetherbecause it was 120 degrees.

And so it was literallya melted tub of gummies.

Another issue: returned food items canget mistakenly entered into the wrong category and endup being resold.

If someone screwed that up, either theseller screwed it up or Amazon screwed it up and assigned it tothe wrong category, t hen it wouldn’t follow the food process.

So Amazon has a really solid food processwhere if a return comes in it should never be put backon 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 makemistakes when manually entering expiration dates.

That’s the problem with thesystem, is that if there’s anything that gets manually keyed in wrong, if anything gets received incorrectly, then things can still sell thataren’t really supposed to be selling.

And occasionally bad actors fakea later expiration date.

I don’t think that anyone at Amazonwould look at that in any detail because the policy does requirestickering over manufacturer dates.

And then there’s the whole slew ofproducts that are not fulfilled by Amazon.

So that’s when you buy froma third-party seller and they ship it to you directly instead of Amazon havingany part of the shipment process.

In that case, Amazon doesn’t haveany visibility to that product.

In a statement to CNBC, Amazon said, “We also use a combination of artificial intelligence and manual processesto monitor over 20 million pieces of customer feedback wereceive weekly for any concerns.

If one arises, we work quicklyto investigate, take the appropriate actions and use this informationto improve our systems.

Appropriate actions include warning, suspendingor terminating a bad actor’s account.

If customers have aconcern with a potentially expired product, we encourage them to contactour customer service directly for a full refund of their purchase.

” In the case of the spoiledcreamer, Amazon did offer to compensate Atkinson after she spoketo CNBC in October.

Wilson also received a refundfor her year old brownies.

It makes me think twice and sowe haven’t ordered anything since then.

In another statement, Amazon said, “With the A-to-z Guarantee, customers are always protected whether they makea purchase from Amazon or a third-party seller.

” Former Amazon employeeRachel Johnson Greer explained how the process works.

A seller will get a warning fromAmazon saying a customer complained and said that they received anexpired item from you.

Explain yourself.

And you get a chanceto do what’s called an appeal.

And then whoever at Amazon receivesthat 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 morethan $400 million and employed 5, 000 people to fight fraud and abuse.

A year ago, Amazon alsolaunched Project Zero, allowing certain trademarked brands to directly removethird-party sellers who are tarnishing their reputations.

When an item expires, a rguablyit’s been altered in some way.

It could have spoiled.

So at that stage, that’s when trademarkowners and brand owners can jump in and do somethingabout those listings.

But at this point, thedamage could already be done.

Who knows how many hundreds, if notthousands of people have received the expired item and had a negativeexperience with your branded product.

One way customers can avoid b uyingexpired items is to read the reviews.

But Amazon’s platform can make itconfusing for customers to pinpoint the right reviews and for reviewers toleave their feedback in the right place.

I didn’t understand, even when Iwrote the review, that it was a specific seller that wasdifferent than Land O’Lakes.

I had no idea.

Because when youlooked at the listing, it said the manufacturer was Land O’Lakes andthere was a hyperlink.

Really, the negative review for an expiredproduct should be left on the seller’s feedback page, notthe product listing.

So even other sellers’ actions canactually damage your brand or someone selling a knockoff item or they’reselling full outright expired items.

Any reviews that comein stay forever.

Some brands have decided therisk is too great.

Nike and others have stopped sellingon Amazon in recent months.

Although this doesn’t prevent third partiesfrom selling these brands on Amazon.

For seller reviews, however, Amazonwill cross out some negative reviews for productsfulfilled by Amazon.

And that strikethrough basically meansthey support that seller and they’re addressing the issue at hand.

And more often than not, the ratingsthat you see on Amazon are actually very inflated in the positive sense.

In a positive move, 3PM Solutionshas noticed fewer instances of crossed out reviews since CNBC firsthighlighted this issue in October.

Still, Amazon’s platform can make itcomplicated for shoppers to figure out which sellers to avoid.

Unlike product reviews, which you cansort by number of stars, seller reviews can’t be parsedout into one-star reviews.

So some startups like Fakespot havecreated apps to help consumers and manufacturers sniff outunreliable sellers.

As we’re getting more data about theseller, t his warning count will go up and this warning count will tellyou if there’s a problem with expiration or if there’s liquidated productsbeing sold or stale products being sold.

Fakespot says its freeapp and Chrome extension have 20 million users so far and thatit’s analyzed six billion reviews across seven e-commerce sites since 2015.

And there are complaints, the samecomplaints that you guys saw many months ago, still happeningon the platform.

Fakespot allows you to sort a seller’sreviews by number of stars so you can check for problems.

For example, selling stale Doritos.

There’s 34 % of the reviews arementioning stale for these chips, 19% are mentioning expired.

Infant formulawith a broken seal.

Seal was broken.

The outsidetamper seal was broken.

Broken seals.

So it’s arecurring theme in this listing.

Or fake Fiji water bottles that mayhave been filled with tap water.

Do not buy, it’s afraud.

Tastes like tap water.

The bottles are sealed differently fromthe one in the bottom.

I’m attaching pictures of the fake oneand a real one from the local supermarket.

Amazon says product listingslike these with scathing reviews haven’t been removed because there isn’ta problem with the actual product.

Rather, problems come with specificsellers who send out an expired or unfit versionof the product.

You’re getting a product that somebodyhas already opened and just filled up with something else and they’reable to sell it to you.

That’s scary.

Another tool for consumers isa Chrome plug-in called ReconBob.

It was created by 3 PM Solutions asa simple way to check the reliability of the seller Amazon’s algorithmshave automatically selected for you.

It scans the seller’s reviews forone-star ratings and certain keywords like “expired” or “stale” and givesa stamp of approval or not.

Last resort, consumers can simply tryto stay away from third-party sellers altogether.

One big reasonthis problem persists is that expiration dates are not mandated.

The Food and Drug Administration toldCNBC that best-buy or sell-by dates are not required under federal law, with the exception of infant formula.

The FDA calls expiration dates “manufacturerquality dates” that are “not indicative of the safetyof the product.

” On a more recent box of creamerAtkinson purchased on Amazon in January, it included a bright greensticker explaining something called septic packaging.

Amazon says this stickeris not its doing.

Food products are sterilized, ensuringno microorganisms which cause either food decay orfood poisoning are present.

As a result, this product is offeredon Amazon with no concern of expiration past date on this box.

With “expired” I think people immediatelyjump to it’s somehow going to harm them if they consume it andmost of the time it won’t.

It’s just stale or icky.

In January, the Department of HomelandSecurity issued a report cracking down on the online sale ofcounterfeit and pirated goods, including things like unsafe food and medicine.

Amazon and other e-commerce platforms willnow be required to turn over information about third-party sellersto the government.

And Amazon could face civilfines, penalties and injunctive actions.

But so far, Amazon has beenregulated differently than its brick and mortar competitors.

If a traditionalgrocery store sells a defective product, the store can be suedalongside the company that made the product.

And that liability meansconventional retailers are careful about the products they stock.

But Amazonhas successfully avoided liability in court by arguing it’s a platform forthe sale of goods rather than a seller.

The legal theory is that Amazonwas just providing the space like a flea market and the individualsellers were actually liable for the goods they sold and not Amazon.

That has recently changed, though.

Last summer, the Third Circuit Court ofAppeals ruled that Amazon could be held liable for products sold by athird party seller on its platform.

The court found that Amazon was doingmuch more than just providing the platform.

They were acceptingshipping information, coordinating returns.

The case was brought by a customer wholost vision in one eye when a dog leash she ordered on Amazonbroke during a walk.

It’s still making itsway through the courts.

When you walk in to Targetor you go to Target.

com, you’re buying from Target.

You’re not buying from somebody that’s shippingout of a warehouse that is not Target related.

So that’s just the biggest difference thatyou have with Amazon is that they don’t even controlall their inventory.

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bramen

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