How the pandemic helped Walmart battle Amazon Marketplace for sellers

CHICAGO (Reuters) – Between 2009 and 2014, Walmart’s Marketplace business, where outside merchants hawk everything from baby blankets to power tools, counted no more than six sellers, and was described by one expert as “in limbo.”

But what was treated as an afterthought for years has emerged as an important leg in the world’s biggest retailer’s long-term strategy to take on Amazon Inc, which it is battling for advertising and ecommerce dollars.

Walmart Marketplace grew to an estimated 70,000 sellers in 2020, fueled by a surge in online shopping due to the Covid-19 pandemic and a series of investments in technology and vendor relationships reported here for the first time.

That is expected to rise 146% by the end of 2022, according to projections by data firm Marketplace Pulse that have not yet been published.

The rapid growth is starting to stress the system, some merchants said, a growing number of whom worry that if the pace picks up, Walmart risks damaging its reputation as a haven for quality sellers. Reuters spoke with vendors from Walmart.com and Amazon, analytics companies that help merchants sell on both marketplaces, industry experts, consultants and executives.

“A year or two ago, every brand on Walmart.com would be trustworthy but now it’s getting very similar to Amazon and that’s a huge risk,” said Cal Chan, who sells supplements and skincare products on both Walmart and Amazon. “Amazon let everyone under the sun in – that helped them grow, but now they’re trying to clean up the riff-raff and it’s very hard to close Pandora’s Box.”

Amazon disputed the characterization by merchants and said it has a thorough vetting process designed to help honest sellers set up accounts quickly. The company employs more than 8,000 people to remove counterfeit products, false listings and identify intellectual property theft. In 2019, Amazon stopped over 2.5 million suspected bad actors from opening Amazon selling accounts, and blocked more than 6 billion suspected bad listings, an Amazon spokesman said in an email.

Walmart has distinguished itself as a safer, less crowded marketplace than rivals like Amazon, making it easier for merchants to stand out and sell products. But it is now expected to see a surge of new vendors after it said last month it will open its online store to international merchants, which are less accountable to U.S. consumer protection laws. Walmart has already added over 130 new Chinese sellers, Marketplace Pulse said.

(Graphic: More Chinese merchants join Walmart Marketplace – )

Reuters Graphic

The retailer said it is actively courting foreign vendors including from ecommerce giant Flipkart, which is bigger than Amazon in India and in which Walmart holds a 77% stake. It vowed to maintain quality control.

“We do not plan to lower our bar or change our vetting standards, our monitoring or management of sellers,” Jeff Clementz, Vice President of Walmart Marketplace, said. “We are aiming to attract the best from around the world.”

Walmart said its sourcing teams in other countries have begun vetting potential sellers by their reviews, licensing permissions, reputations and items.

The business of providing a storefront for outside sellers is, as one analyst called it, a “secret weapon” for Amazon and a major growth engine that has caught the attention of Target and big tech rivals Google and Facebook, which are eager to expand similar businesses.

Sales generated by Amazon’s third-party vendors totaled $189 billion last year in the United States, or nearly 60% of the company’s total U.S. retail ecommerce sales, according to eMarketer data from Insider Intelligence.

Amazon, which declined to verify these numbers, dwarfs Walmart’s marketplace and is estimated to have more than 3 million sellers on its U.S. third-party store at the end of 2022, and 7.5 million globally, according to Marketplace Pulse.

But the lure of Walmart’s over 5,000 stores and clubs – more important than ever as pick-up and delivery hubs take off due to the pandemic – is a big attraction for many vendors.

“Walmart has something Amazon can’t match: brick-and-mortar stores. If you do well on Walmart.com, there’s potential you can get into a regular Walmart,” said Bradley Sutton, who works at third-party seller consulting firm Helium 10.

“It’s like the Holy Grail for vendors. That’s way bigger than Amazon.”

(Graphic: U.S. third-party merchants’ sales surge – )

Reuters Graphic

‘STRATEGIC PRIORITY’

Marketplace’s elevation to what Clementz in June called a “strategic priority” tracks Walmart’s reinvention from digital also-ran to the No. 2 spot behind Amazon.

The transformation began with the 2016 addition of serial entrepreneur Marc Lore to lead Walmart’s U.S. ecommerce business. That year, it agreed to spend $3.3 billion on Lore’s less than three-year-old Jet.com.

“This company, over time, is going to look like more of an ecommerce company,” Walmart Chief Executive Doug McMillon said at the time.

By early October 2016, 17 days after joining Walmart, Lore laid out a strategy that included a plan to not only lure hipper, urban, millennial shoppers to Jet.com and Walmart.com, but also to make both sites attractive to smaller merchants.

Lore eyed an opportunity to lure sellers of “more premium-type brands that don’t typically want to sell on marketplaces” of rivals.

(Graphic: Walmart Marketplace vendors seen rising sharply – )

Reuters Graphic

Some vendors described a rigorous process to get on Walmart Marketplace that can take weeks and includes submitting bank account information, sales records and social security details.

When Clementz, previously COO of Walmart.com, was put in charge of Marketplace, the first order of business for the veteran of PayPal and Intel was to improve “glitchy,” complicated software for listing products and simplify the process of connecting analytics and delivery firms for vendors, said sellers.

Walmart spruced up its advertising platform, rolled out software to protect sellers’ intellectual property, launched a delivery and logistics service, and introduced its version of Amazon Prime, called Walmart+, a membership program that “100% boosts sales,” according to fitness equipment merchant Michael Lebhar.

Hoping to address complaints from sellers, Walmart hired “strategic account managers” who cater to top vendors. On Tuesday, Walmart emailed vendors to apply for “a chance to win the opportunity to sell” U.S.-made products in stores.

To sweeten the pot, Walmart has also undercut Amazon on the commission it takes on sales of some items. Walmart takes a 3%-20% cut of items sold versus Amazon’s rate of 6%-45%, depending on the type of product.

The month Walmart opened its market to international sellers, new vendors were told they would not have to pay a commission at all for a limited time.

But concessions like this generate concern among some sellers.

“This is alarming and will end up with Walmart having similar counterfeit or quality issues like Amazon is having,” said Ryan Ebel, 30, a third-party seller from Las Vegas.

Lore, who left the company at the end of January and remains an advisor, said he is “not worried” about Walmart’s expansion to foreign sellers.

“The magic is finding that white line, the right balance between adding more assortment but not going down a path of letting anybody on the platform,” he said.

Reporting by Richa Naidu in Chicago; Editing by Kenneth Li and Nick Zieminski

FBI arrest man over alleged Amazon centre bomb plot

US authorities have arrested a man who allegedly plotted to bomb an Amazon data centre, which he believed would “kill off about 70% of the internet”. 

Seth Aaron Pendley, 28, was arrested after receiving a dud explosive device from an undercover FBI agent, and was charged with a malicious attempt to destroy a building with an explosive,

He came to the FBI’s attention after somebody reported his online posts. 

If convicted, Mr Pendley could face up to 20 years in prison.

According to investigators, Mr Pendley’s main goal was to damage Amazon’s web server network. 

He believed that there were 24 buildings that “run 70% of the internet”, including services used by the CIA and FBI, according to a conversation detailed in the criminal complaint against him.

Damaging them would frustrate the “oligarchy” – or small group of elites – in power in the United States, he believed.

Amazon Web Services (AWS) does play a hugely important role in the modern internet, hosting and processing the information behind many popular online services and websites. 

Outages caused by a problem at one centre tend to knock services offline for several hours at most, and often for a limited number of people or for specific sites.

For example, in 2017, a major fault at one US AWS centre knocked sites such as Quora and Trello offline for several hours. And even the total loss by fire of a European data centre earlier this year – which disrupted an estimated 3.6 million websites including government portals across Europe – went unnoticed by many internet users.

From Capitol Riot to C-4

Mr Pendley attended the Capitol Riots of 6 January, investigators found, having driven from Texas to Washington DC. Investigators said he told friends he had brought an assault rifle with him, but left it in his car – and also that although he reached the windows of the Capitol building, he did not enter it.

Two days after that event, a “concerned citizen” reported Mr Pendley’s posts on a militia website – where he went by the name of Dionysus, the Greek god of wine – to the FBI.

“We are indebted to the concerned citizen who came forward to report the defendant’s alarming online rhetoric. In flagging his posts to the FBI, this individual may have saved the lives of a number of tech workers,” acting US attorney Prerak Shah said in a statement.h

The BBC is not responsible for the content of external sites.View original tweet on Twitter

The posts from “Dionysus” that sparked concern spoke of his desire to “conduct a little experiment,” which he said would be dangerous and “draw a lot of heat” and could be “dangerous”. Asked by another user what the result would be, he responded, “death”, according to the court documents.

The FBI managed to uncover Dionysus’s email address, and link that to his Facebook account and real-world identity.

In late January, Mr Pendley began using the encrypted messaging app Signal to detail his plans to bomb an AWS facility – but the recipient of those messages was a confidential FBI informant, investigators said. 

Over the course of February, Mr Pendley shared his plans, including the type of explosive he sought, potential targets, and maps. 

On 31 March, the confidant introduced Pendley to a supposed explosives supplier – who was actually an undercover member of the FBI. His plan at this point, according to a recorded conversation, was to attack three Amazon buildings clustered close together.

On 8 April, at the handover of the supposed explosives, the undercover FBI employee showed Mr Pendley boxes he claimed were C-4 weapons-grade explosives, and showed him how to arm and detonate them. After Mr Pendley took the devices and placed them in his car, he was arrested by the FBI.

Mr Pendley made an initial court appearance on Friday, and remains in custody.

Source: BBC

Amazon defeats historic Alabama union effort

man with RWDSU sign outside warehouse in Alabama

Amazon has defeated activists hoping to establish the company’s first unionised warehouse in the US.

Workers at the Bessemer, Alabama warehouse voted 1,798 to 738 against the effort, labour officials said. 

That represents a majority of votes cast, though some ballots have been challenged and have yet to be counted.

The contest was seen as a key test for the e-commerce giant, which has faced global criticism for its treatment of workers during the pandemic.

The union said it would challenge the results.

It accused Amazon of interfering with the right of employees to vote in a “free and fair election”, including by lying to staff about the implications of the vote in mandatory staff meetings and pushing the postal service to install a mailbox for the vote in an effort to intimidate workers.

“Amazon has left no stone unturned in its efforts to gaslight its own employees,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union (RWDSU), which organised the effort.

“We won’t let Amazon’s lies, deception and illegal activities go unchallenged, which is why we are formally filing charges against all of the egregious and blatantly illegal actions taken by Amazon during the union vote.”

Labor board finds Amazon illegally fired activist workers: NYT

(Reuters) – The National Labor Relations Board (NLRB) has determined Amazon.com Inc illegally retaliated against two of its most prominent internal critics when it fired them last year, the New York Times reported on Monday.

Last year, Amazon fired two user experience designers, Maren Costa and Emily Cunningham, for what it called repeated violations of internal policies. (nyti.ms/39J25Lw)

Amazon and NLRB did not immediately respond to Reuters requests for comment.

Amazon drivers urinating in bottles: Apology to Rep – Pocan

(Reuters) – Amazon.com Inc has apologized to U.S. Representative Mark Pocan, admitting to scoring an “own goal” in its initial denial of his suggestion that its drivers were sometimes forced to urinate in bottles during their delivery rounds.

“We know that drivers can and do have trouble finding restrooms because of traffic or sometimes rural routes, and this has been especially the case during Covid when many public restrooms have been closed,” the company said in a blog post bit.ly/2PnoLKr.

Its admission came a week after the Democrat criticised Amazon’s working conditions, saying in a tweet: “Paying workers $15/hr doesn’t make you a ‘progressive workplace’ when you union-bust & make workers urinate in water bottles.”

Amazon initially issued a denial, saying in a tweet: “You don’t really believe the peeing in bottles thing, do you? If that were true, nobody would work for us.” But it subsequently walked back those comments.

“This was an own goal, we’re unhappy about it, and we owe an apology to Representative Pocan,” Amazon said in its blog post, adding that its previous response only referred to staff at its warehouses or fulfillment centers.

The company said the issue was industry-wide and it would look for solutions, without specifying what these might be.

Amazon’s apology comes at a time when workers at an Alabama warehouse are waiting for a vote count that could result in the online retailer’s first unionized facility in the United States and mark a watershed moment for organized labor.

Amazon has long discouraged attempts among its more than 800,000 U.S. employees to organize. Allegations by many workers of a grueling or unsafe workplace have turned unionizing the company into a key goal for the U.S. labor movement.

German union calls four-day strike at Amazon sites ahead of Easter

BERLIN (Reuters) – The trade union Verdi has called for workers at six Amazon sites in Germany to go on strike from Sunday evening for four days in the latest attempt to try to force the U.S. e-commerce group to recognise collective bargaining agreements.

Verdi said the strikes at Amazon’s sites in Rheinberg, Werne, Koblenz, Leipzig and at two locations in Bad Hersfeld signalled an “unofficial start” to wage talks for the retail and mail order industry, which are due to begin in the next few weeks.

“Amazon is making a mint in the coronavirus crisis. For this reason alone, wage evasion must be stopped there,” said Verdi representative Orhan Akman.

Verdi is demanding a pay increase of 4.5% for workers in the retail and mail order industry.

“This must also be possible at Amazon this year,” Akman said.

Amazon has faced a long-running battle with unions in Germany over better pay and conditions for logistics workers, who have frequently staged strikes since 2013.

Germany is Amazon’s biggest market after the United States.

Amazon says it offers excellent pay and benefits. It has said during past calls for strikes over 90% of employees in the logistic centres worked as normal.

AI: Ghost workers demand to be seen and heard

Artificial intelligence and machine learning exist on the back of a lot of hard work from humans.

Alongside the scientists, there are thousands of low-paid workers whose job it is to classify and label data – the lifeblood of such systems.

But increasingly there are questions about whether these so-called ghost workers are being exploited.

As we train the machines to become more human, are we actually making the humans work more like machines?

And what role do these workers play in shaping the AI systems that are increasingly controlling every aspect of our lives?

The most well-established of these crowdsourcing platforms is Amazon Mechanical Turk, owned by the online retail giant and run by its Amazon Web Services division.

But there are others, such as Samasource, CrowdFlower and Microworkers. They all allow businesses to remotely hire workers from anywhere in the world to do tasks that computers currently can’t do. 

These tasks could be anything from labelling images to help computer vision algorithms improve, providing help for natural language processing, or even acting as content moderators for YouTube or Twitter.

Mechanical Turk
image captionThe 18th Century Mechanical Turk fooled chess players into thinking they were competing against a machine

MTurk, as it is known, is named after an 18th Century chess-playing automaton which toured Europe – but was later revealed to have a human behind it.

The platform is billed on its website as a crowdsourcing marketplace and “a great way to minimise the costs and time for each stage of machine-learning development”.

It is a marketplace where requesters ask workers to perform a specific task. 

“Most workers see MTurk as part-time work or a paid hobby, and they enjoy the flexibility to choose the tasks they want to work on and work as much or as little as they like,” said a AWS spokesman.

But for Sherry Stanley, who has been working for the platform for six years, it is more like a full-time job, one that helped her financially bring up her three children, but one that has also made her feel like a very small cog in a very big machine.

“Turking is one of the few job opportunities I have in West Virginia, and like many other Turk workers, we pride ourselves on our work,” she told the BBC.

“However, we are at the whim of Amazon. As one of the largest companies in the world, Amazon relies on workers like me staying silent about the conditions of our work.”

She said she lived “in constant fear of retaliation for speaking out about the ways we’re being treated”.

It is hard to describe a typical day for Sherry because, as she puts it, “the hours vary day by day and the pay also varies”.

Woman on computer
image captionThe benefit of such work is that people can do as much or as little as they want, and work from home

But the tasks she is asked to complete are various, including image tagging and helping smart assistant Alexa understand regional dialects.

And there are also a series of issues she wants answers to, such as:

  • why some work is rejected and why workers, who may have spent a long time on it, are not told the reason that it was not up to standard
  • why some accounts are suddenly suspended without notice or official avenues for challenging the suspension
  • why requesters are setting the price of some projects at extremely low rates

“Turk workers deserve greater transparency around the who, what, why and where of our work: why our work is rejected, what our work is building, why accounts are suspended, where our data goes when it’s not paid for, and who we are working for.

Turkopticon is the closest thing MTurk workers have to a union, and the advocacy group is working to make them feel less invisible.

“Turkopticon is the one tool that Turkers have evolved into an organisation to engage with each other about the conditions of our work and to make it better,” said Ms Stanley

She is fundraising to help the organisation create a worker-operated server where contractors can talk to each other about working conditions.

In response, Amazon told the BBC that it had introduced a feature in 2019 that allowed workers to see “requester activity level, their approval rate and average payment review time”.

In a statement, it said: “While the overall rate at which workers’ tasks are rejected by requesters is very low (less than 1%), workers also have access to a number of metrics that can help them determine if they want to work on a task, including the requester’s historical record of accepting tasks. 

“MTurk continues to help a wide range of workers earn money and contribute to the growth of their communities.”

YouTube bans

YouTube logo with people in silhouette
image captionYouTube has had incidents where LGBTQ content is banned for no obvious reason – but is it the algorithm or the people behind it to blame?

Saiph Savage is the director of the Human Computer Interaction Lab at West Virginia University, and her research found that for a lot of workers, the rate of pay can be as low as $2 (£1.45) per hour – and often it is unclear how many hours someone will be required to work on a particular task.

“They are told the job is worth $5 but it might take two hours,” she told the BBC.

“Employers have much more power than the workers and can suddenly decide to reject work, and workers have no mechanism to do anything about it.”

And she says often little is known about who the workers on the platforms are, and what their biases might be.

She cited a recent study relating to YouTube that found that the algorithm had banned some LGBTQ content. 

“Dig beneath the surface and it was not the algorithm that was biased but the workers behind the scenes, who were working in a country where there was censoring of LGBTQ content.”

This idea of bias is born out by Alexandrine Royer, from the Montreal AI Ethics Institute, who wrote about what she described as the urgent need for more regulation for these workers.

“The decisions made by data workers in Africa and elsewhere, who are responsible for data labelling and content moderation decisions on global platforms, feed back into and shape the algorithms internet users around the world interact with every day,” she said.

“Working in the shadows of the digital economy, these so-called ghost workers have immense responsibility as the arbiters of online content.”

Google searches to tweets to product review rely on this “unseen labour”, she added.

“It is high time we regulate and properly compensate these workers.”

By Jane Wakefield
Technology reporter

Amazon former executive Adam Selipsky to lead AWS

(Reuters) – Amazon.com Inc on Tuesday named Adam Selipsky, chief of Salesforce.com Inc’s Tableau Software unit, to lead its Amazon Web Services unit.

(Reuters) – Amazon.com Inc on Tuesday appointed Salesforce.com Inc executive Adam Selipsky to lead its high-margin cloud computing unit, Amazon Web Services.

The move comes as AWS’ current lead Andy Jassy is vacating the role to become the chief executive officer of Amazon, after Jeff Bezos announced his exit in February.

AWS, a key part of Amazon’s growth strategy, has raked in record profits for the world’s largest online retailer, and counts scores of startups, big corporations and many government agencies among its clients.

Seattle-based Amazon said Selipsky, one of the first VPs hired in AWS in 2005 who ran the cloud computing division’s sales, marketing, and support for 11 years, will return to AWS on May 17. (bit.ly/3d4k27U)

Selipsky became the CEO of Salesforce.com Inc’s Tableau Software unit in 2016, and under his leadership the value of the division quadrupled in just a few years, Amazon said.

Exclusive: Amazon Canada to shut Brampton facility, workers self isolate for 14 days

(Reuters) – Amazon.com Inc’s Canada division has been ordered to close its Brampton facility in South Ontario, with workers being asked to self-isolate for 14 days, according to a statement from Peel Public Health.

Over the past few weeks, the rate of COVID-19 infection across Peel has been decreasing while the rate inside this facility has been increasing significantly, the statement added. (bit.ly/38uDnOn)

Amazon did not immediately respond to a Reuters request for comment.

Indian agency seeks information, documents from Amazon amid probe: Source

India’s Enforcement Directorate has recently asked Amazon.com Inc for information related to its operations in the country, as the agency continues to investigate the U.S. e-commerce giant, a senior agency source told Reuters on Friday.

Last month, the source at the country’s federal financial-crime fighting agency said the Directorate will examine the findings in a recent Reuters special report which revealed the company has for years given preferential treatment to a small group of sellers on its India platform and used them to circumvent the country’s foreign investment rules.

Amazon has for several years been under investigation by the agency for possible violation of foreign investment rules. Such probes typically take years in India, and in most cases details are not made public.

The Reuters special report was based on internal Amazon documents dated between 2012 and 2019. It provided an inside look at the cat-and-mouse game Amazon has played with India’s government, adjusting its corporate structures each time the government imposed new restrictions aimed at protecting small traders. To read the special report click reut.rs/2OCOT2W

On Friday, the senior Enforcement Directorate source told Reuters “obviously we have sought information” from Amazon.

Asked if the agency had sought documents from the company, the source said: “information means information and documents.”

The source declined to comment further on what type of documents had been sought, or if any company executive had been summoned for questioning.

An Amazon spokeswoman in India declined to comment.

In the Reuters report published last month, Amazon said it was confident of its compliance with Indian law. It added that it “does not give preferential treatment to any seller on its marketplace,” and that it “treats all sellers in a fair, transparent, and non-discriminatory manner.”

Indian retailers, which are a crucial part of Prime Minister Narendra Modi’s support base, have long alleged that e-commerce giants like Amazon and Walmart’s Flipkart flout federal regulations and that their business practices hurt small traders. The companies deny the allegations.

The documents reviewed by Reuters showed that Amazon helped a small number of sellers prosper on its India platform, giving them discounted fees and helping one cut special deals with big tech manufacturers such as Apple Inc.

The company has also exercised significant control over the inventory of some of the biggest sellers on Amazon.in, the documents showed, even though it says publicly that all sellers operate independently on its platform.