Amazon will start paying customers who suffer injuries or other damages from defective products others sell on the platform.
Starting September 1, 2021, Amazon will pay out valid claims of up to Ksh.109,047.43 (US$.1,000) at no cost to sellers but can intervene if sellers are unresponsive.
The move “better protects Amazon customers and sellers,” according to the company, but it also better protects Amazon itself.
The new policy follows years of consumers suing the e-commerce giant over defective or dangerous products purchased from online sellers. The policy is designed to reduce that litigation, although courts have tended to side with Amazon and agree that sellers are responsible for the goods they provide.
One state appellate court in California said last year that Amazon could be liable for goods it stores and ships using its Fulfilment by Amazon program.
Tuesday’s announcement also included Amazon Insurance Accelerator, a group of insurance providers that sellers can use if they want to.
There is an update to a policy requiring them to get product liability insurance.
According to the Washington Post, nearly 60 percent of all physical goods sold on Amazon’s e-commerce marketplace come from third-party merchants, a fact that’s lost on many shoppers.
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Amazon has argued in court that this relationship absolves it of any liability related to defective products sold by those vendors. And for many years, courts have largely sided with Amazon.
The e-commerce giant has emerged as one of the world’s largest online retailer, in part by turning its store into an online bazaar where more than 2.5 million third-party vendors sell their goods.
It has prioritized that vast selection, allowing merchants to sell on the site with scant vetting. The company has said that, among its screening processes, it uses machine learning technology to identify risky sellers, as well as using investigators to review applications.
The business of selling other merchants’ goods is enormously lucrative for Amazon. In the second quarter of 2020, Amazon generated Ksh.1.9 trillion (US$.18.2 billion) of revenue from seller services such as fees and commissions, a figure that jumped 52 percent from the same period a year ago.
In its second-quarter revenue for June this year, Amazon’s revenue grew by 27 percent year over year to Ksh.12.3 trillion (US$.113.08 billion).
That’s a significant slowdown from the second quarter of 2020 when sales skyrocketed 41 percent year over year.
