Amazon uses a service called Fulfillment-by-Amazon, where third-party sellers can store and ship their products through Amazon.
In a TikTok video, one of these sellers can be seen buying a two-pack of power strips from a Dollar Tree for $1.25. He explains that he sells each for $9.99 on Amazon — a mark-up of 16 times the original price.
At the end, he shows his email inbox full of sold-item receipts.
The TikTok’s comments are split. Some commended his ability to make money doing this and wanted to follow in his footsteps, while others found it outrageous.
The top comment says, “So, don’t buy off Amazon, got it!”
What is an Amazon third-party seller?
Amazon has two types of sellers on its platform: first- and third-party.
The average purchaser on Amazon may not be aware of the differences between these types of sellers and why they should be considered alongside other important information regarding the product such as price, user reviews and shipping cost and time.
According to Forbes, first-party sellers are vendors who have been specifically invited to partner with Amazon. They sell their product to Amazon, who then sells it to the consumer. In this way Amazon functions as a retailer, like Walmart.
Third-party sellers, on the other hand, sell directly to consumers, and Amazon functions as a marketplace to connect them. They aren’t directly involved in the acquisition or selling of the product themselves.
According to Amazon, more than 60% of their sales come from independent, third-party sellers.
Should you stop ordering from third-party sellers on Amazon?
Third-party sellers have the ability to control the prices of their products freely on Amazon, according to Forbes.
This means people — like in the TikTok video — can purchase items they find cheaper, like in a dollar store, clearance section or in bulk, and post them on Amazon for more money than what they were purchased for.
According to Amazon, products sold in this way must still adhere to their company policies and conditions. Sellers who do not meet their standards will lose the ability to sell on their website.
Amazon does not directly test third-party products for quality control. Third-parties are responsible for doing that themselves.
If there is any issue with the product and a refund is needed and not provided by the third-party, Amazon guarantees they will reimburse the amount.