Seller Performance Solutions
Is All Your Inventory Defective?
February 16, 2023
There's been a recent increase in Amazon sellers experiencing their inventory being declared defective and unsellable, resulting in sellers suddenly having thousands of units detained. In this episode, Chris and Leah explore the reasons behind this sudden surge in defective inventory, the potential implications for sellers and how to resolve this issue.
[00:00:07] Chris: Hello everybody, this is Chris McCabe. Welcome back to Seller Performance Solutions. I'm here once again with Leah McHugh, and today we are talking about something distressing we've seen happen very recently. There seems to be multiple pieces to it that Leah's going to unpack in a second.

But we're hearing about people having inventory suddenly declared as defective and unsellable. They're trying to reach FBA teams, they're trying to reach account health teams. A lot of confusion, a lot of chaos. We're getting these contacts from Amazon brands almost every other day, or what is it every day now.

So, some of it seems tied to product recalls that may be real or imaginary. I wanted to start with that piece first because I know we had talked in the past about abuse cases where there was no product recall. Somebody just made this complaint to Amazon. Amazon warned the seller, took their listing down. That was for invalid complaints about fake product recalls. So I wanna make sure that we clarify the real recalls from the fake ones. So can you start there in terms of the legitimate ones that you've seen so far?

[00:01:14] Leah: Yeah. Well, so first I think we should probably start with what defective actually means in Amazon speak because I think that is where people get confused in terms of the recall thing.

Defective within Amazon doesn't mean damaged. It means that there's something wrong with the product, making it unsellable such as a recall or if the product doesn't match the description that was given to customers. So I think the reason why sometimes people are getting messaging with the term recall in it is because the defective is the status that inventory goes into if there's a recall. And then recall doesn't necessarily mean government recall. It can also just mean a safety issue with Amazon and they've just put it in defective status to make sure nobody else gets those products. And so I think that's where people are getting confused because defective doesn't mean damaged, it's different. It's a different term, it's a different status. Both are unfillable, but one is like defective, doesn't mean damaged. And I think another reason that people are upset and it makes sense for them to be upset. Is that what we're seeing in a lot of the cases in the last week or so, is that all of their inventory for an ASIN gets moved to defective. So it's pretty standard that you'll get like one or two pieces moved to defective sometimes, but they're seeing whatever the amount of inventory there is for that ASIN being moved into defective status and so sometimes, you know, that might just be like 10 pieces if that's all you have left but we we're also seeing where it's like tens of thousands of units that have suddenly been moved into defective inventory. 

[00:02:44] Chris: And it's good that we're defining our terms. So we will never confuse defective with damaged because damaged inventory is, you know, people file reimbursement requests for that.

[00:02:54] Leah: Or it gets damaged in the warehouse.

[00:02:56] Chris: And this has nothing to do with that. A lot of people I've talked to, go in the voice of the customer, they go into return reasons. They look deep on ASIN level data, and they don't see any history of defective item complaints, and that really alarms them because it looks like they're being attacked by a competitor or it's a straight up, crazy mistake by Amazon. But a lot of people are trying to divine the origin of these. What are the cause? Of, like you said, having thousands of units quarantined in this unsellable status. I think the one I started working on last night was 9,000 units. I mean, this is not, like you said, this isn't 10 or 12 or 14 pieces.

[00:03:38] Leah: Right. You're looking at potentially hundreds of thousands of dollars worth of inventory that's suddenly been moved to defective. And another thing to also note, which is another reason why I think they maybe get confused with the recall, is that if the inventory is in defective status, FBA won't check that inventory for you. Where if it's damaged, you can request a bin check If it's defective and you call FBA and you're like, Hey, how come all of my inventory is moved into defective? They'll be like, we don't know. But the only way to get it out of defective is to remove it all from FBA, check it and then send it back in.

 So first of all, don't do that unless like you actually know that your inventory is defective. 

[00:04:18] Chris: We're assuming nobody would do that as their first option.

[00:04:22] Leah: Right, but FBA won't check it for you. So you can't be like, Hey, this seems incorrect. Can you go physically look at that inventory?

They won't do it. And they will also tell you that their tools cannot move it from defective back into sellable. Which I'm sure is true. I'm sure their tools won't let them do that. But their solution for you is to have all of the inventory returned to you, check it, and then send it back in.

And like, obviously if you have hundreds of thousands of units or whatever, you're not going to want to do that. 

[00:04:52] Chris: Well, and you kept talking, this is a little bit different, but you kept talking to people and you did a lot of digging in research in terms of Amazon reps were calling different FBA warehouses because Amazon wouldn't remove the items, right? For legitimate recalls even.

[00:05:10] Leah: Well, yeah. I mean that is where there is an actual recall present and the inventory should be in defective status. So that's a little bit different than what we're talking about here. We are kind of talking about and what we've seen in the last few weeks is really inventory that isn't defective being marked as defective.

And I've seen that come in one of two ways. One way is when an ASIN has been suspended, the inventory goes into stranded and then we've seen it quite a few times in the last week where once the ASIN gets reinstated, the inventory gets stuck in defective, even though the ASIN has been fully reinstated.

And you talk to account health and account health are like, there's nothing on your account that says that those units should have been moved to defective. But we can't talk to FBA. But, so we saw that quite a few times where the ASIN was reinstated, but then the inventory was stuck in defective and nobody could tell you why and nobody could get it fixed.

We did get it fixed. If you have a SAM that's probably like the quickest kind of route to get it resolved. But, and then with the other way that we've been seeing it is just totally normal active ASINs, just suddenly having all inventory removed into defective unfillable status.

And I think with the reinstatement ones, I was like, oh, well this just seems like a glitch with the tools. But when it's just kind of happening outta nowhere based on nothing, then it's like, okay, well now this is probably an abuse tactic, unfortunately. 

[00:06:31] Chris: Well, so what are people doing wrong, so opening cases with support, We've seen examples of what kind of messaging they get back calling into account health reps. I mean, what are people going to try initially before trying to fix it the proper way? 

[00:06:45] Leah: Yeah. So it's Account health and FBA, Account health can't access FBA and will refuse to help you because according to them, this has nothing to do with your account health and they just can't talk to the FBA team.

And then the FBA team, like I said, are just going to tell you that they can't check the inventory and they can't change the status and you have to remove the inventory and send it back in. So really the only way that we've found to get this resolved is to escalate it. 

[00:07:07] Chris: So there's escalating with internal cases, obviously there's, from my way of thinking, you're treating this like you would almost an account suspension. Or I mean maybe not doing reinstatement appeals per se, but you are sending email escalations, right? 

[00:07:22] Leah: Yeah, because it's one of those things which Amazon doesn't really excel at, where multiple teams are required to fix it.

So just contacting FBA, they can't do anything. Account health can't do anything. You need to get it to somebody within an escalation queue because they have the ability to communicate with multiple teams. 

[00:07:43] Chris: And keep in mind we say this a lot on the podcast take with a grain of salt, what you hear from account health reps when you call them, which inevitably people will, or seller support.

 If you're directed to seller support about this. I've heard that somebody called, somebody that I talked to called Account Health and they said, well, I think this product is the subject of a recall, but there's nothing annotated on the account that says who initiated the recall, or you better contact the manufacturer to find out if there's a product recall.

[00:08:12] Leah: And of course, this particular person said, we are the manufacturer, so we know there's no recall. Right. And I can kind of understand where account health could be thinking that, because again, if defective means potentially subject to a recall and all of their inventory has been marked as defective. 

It would make sense to think that, oh, this must be subject to a recall. I mean, the fact that they are actually saying that there aren't any notes is helpful because if it isn't actually subject to a recall, because recall can also mean a recall by Amazon. And we have seen that in the past where a government recall isn't required, but part of the reinstatement process is that Amazon requires you to remove all of the current inventory from their warehouses before reinstatement. A good way to test whether your product is subject to a recall or not with an Amazon system, is open up a merchant fulfilled offer on that ASIN and if you're allowed to do merchant fulfilled, probably not subject to a recall.

[00:09:04] Chris: Any, any last thoughts on this particular topic in terms of info you can scrape together people or questions you can be asking. 

[00:09:15] Leah: Yeah. The main thing is just you need to push, you need to push for an escalation if you have the strategic account manager, that's a very easy way to raise an internal escalation. If you're working with someone like me or Chris, we can obviously help with the escalations. If you have absolutely no idea how to escalate to anybody..

[00:09:31] Chris: Ask, before you start escalating.

[00:09:33] Leah: Well, but I mean, even just within the FBA requesting that that team escalates it for you, can actually work. It'll probably be a little bit slower than if you had a different sort of escalation, but I actually usually will do that simultaneous to another escalation. So you kind of have it being escalated from multiple angles to potentially get it looked at a little bit faster.

And also you know, one team just sometimes is less busy than the other team and so you get a quicker response. So I like to do both. I like to push the FBA team for an internal escalation. If there's a SAM, push a SAM for an internal escalation and then escalate it to whoever escalating to in that particular week that we're dealing with the issue.

[00:10:14] Chris: Well said, the reason I asked was because inevitably people will write to the Jeff Amazon email and start barking at executive seller relations.

[00:10:22] Leah: I mean, it does still sometimes work. 

[00:10:23] Chris: Saying but not as much as it used to. Not nearly as often. 

 Is that just enough to get the ball rolling and then you handle it differently elsewhere?

Because I think the expectation when people write to Jeff nowadays is it goes to executive seller relations and it gets fixed by that team without many more escalations, many more follow ups. They expect that to be the result that they're looking for. Is that hopeless?

[00:10:48] Leah: It depends on the issue. I mean, I think in my experience recently, executive seller relations certainly doesn't have the access and the ability that it had, say, 12 months ago. But I mean, for issues like this, executive seller relations should be equipped enough to assist. The only thing is like everybody's emailing Jeff, right?

So you're probably gonna be waiting longer for action via that channel than any of the other channels. So, I mean, yeah, it does still work sometimes, but it is what it is. It's there and it's well known and a lot of garbage gets sent to it.

[00:11:19] Chris: That's the thing. You're at the back of a long line. It doesn't necessarily get prioritized and many of the people we're hearing from have thousands and thousands of units pushed into unsellable. 

[00:11:28] Leah: And a lot of times it's their best selling ASIN. So you don't really wanna be rating around weeks for resolution on that.

[00:11:34] Chris: Oh, for sure. The one I'm working on right now is their top selling ASIN. 

[00:11:38] Leah: Isn't it interesting how when it's potentially abuse, it's always the best selling ASIN? 

[00:11:42] Chris: Not a coincidence. So I should probably wrap this up and get back to working on that particular case.

But in the meantime, any questions about randomly assigned defective units or unsellable inventory? Ask Leah because as she's demonstrated this podcast episode, she knows all about this and I'm still catching up. Thanks again for listening, everybody.