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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Amazon.com, Inc.    AMZN

AMAZON.COM, INC.

(AMZN)
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Amazon com : Seed Curbs Unlikely To Stop Mailings

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09/08/2020 | 03:48am EDT

By Jon Emont and Jesse Newman

E-commerce giants are enacting new restrictions on the sale of seeds, but the moves are unlikely to eliminate the tactics government officials and industry experts suspect are behind the mystery seeds caper that gripped the world this summer.

Amazon.com Inc. is barring foreign sales of seeds into the U.S., The Wall Street Journal reported over the holiday weekend, and e-commerce company Wish will ban the sale of seeds. Amazon said sales of plants from outside the U.S. would also be barred and some overseas sellers would have their offers removed from the site. A representative for San Francisco-based Wish cited an "ongoing threat to U.S. consumers."

The e-commerce companies' actions to restrict and eliminate seed sales came after thousands of people in the U.S. over the past few months received seeds by post they say they didn't order. Most were postmarked from China, and the shipments were often labeled as jewelry, toys or other goods. Canada and the U.K. are among other countries that have also experienced the phenomenon.

In discussing their investigations into the mystery seeds, U.S. officials have raised concerns about the ease of importing seeds online, citing threats to American agriculture posed by pests or diseases that such shipments could contain. E-commerce experts say that restricting online seed sales will help solve the problem by cutting off major retail avenues for foreign seeds to enter the U.S.

Yet some experts familiar with e-commerce scams are also skeptical that the latest actions by e-commerce companies will solve the core issue federal officials believe may underlie much of this summer's seed mystery: unsolicited seed orders used to generate fake sales for other products, a tactic known as "brushing."

"The only way they are going to reduce any successful brushing schemes is by attacking brushing at the source," said Chris McCabe, a former Amazon investigator and current Amazon seller consultant who noted the company would have to devote more resources to tracking down these scams if it wanted to prevent objects like unsolicited seeds from being used in them.

Brushing scams work like this: Vendors selling on online retailers like Amazon pay third-party brushers to place orders for their own products -- which could be anything from stuffed animals to televisions or furniture. The fake orders artificially boost sales, which surfaces the products higher on Amazon's website and gives the sellers the chance to write their own positive product reviews.

To make the fake sales seem real to e-commerce sites, brushers will send packages with tracking numbers to actual addresses. But instead of sending the actual product being boosted -- which might be bulky and expensive, such as furniture -- the brusher will ship cheap and lightweight items such as seeds. These are placed inside the packages with the hope that whoever receives it will assume it is an unexpected gift and not raise a fuss with authorities, according to e-commerce experts familiar with how brushing works. From the e-commerce company's perspective, the tracking number's arrival at the address makes it look like a genuine furniture sale.

Online-sales experts say brushing is more than just an annoyance for the people barraged by unsolicited products like seeds. It generates fake reviews that mislead customers. It manipulates sales volumes to promote products that may not deserve the extra attention.

Amazon on Monday reiterated its view that seed deliveries linked to orders on its site were genuine orders delayed due to Covid-19 and not incidents of brushing. A spokesperson for the company said third-party sellers are prohibited from sending unsolicited packages. "We take action on those who violate our policies, including withholding payments, suspending or removing selling privileges, or working with law enforcement." The spokesperson said brushing is an industrywide scam, similar to phishing, and not specific to Amazon.

Online marketplace eBay Inc. told the Journal it is reviewing the seeds matter and any further restrictions that may be warranted. The company's current policy holds that plants or seeds prohibited by government or shipping regulations are disallowed. It said most plants and seeds can be listed provided they are allowed in the location the seller is shipping to, though there are exceptions, including noxious weeds.

Jerry Kavesh, chief executive of 3P Marketplace Solutions, which sells apparel and footwear on Amazon and advises companies on selling on Amazon, said he found it unlikely that thousands of people would get apparently unsolicited orders of a similar product -- seeds -- if it wasn't brushing. "It walks like a duck and quacks like a duck," he said.

Mr. McCabe was also skeptical that mass unsolicited seed orders were something other than brushing. He was also doubtful that a possible brushing scheme of this scale wouldn't involve boosting Amazon products. "If you're going to do any brushing you would probably focus on Amazon because that's the biggest and most important marketplace," Mr. McCabe said.

Howard Thai, the Shenzhen, China based head of Signalytics, an e-commerce consulting firm, said he didn't think Amazon's new policy restricting seed imports would have an effect on sending seeds from China for brushing purposes, because seeds used in brushing schemes are purposely disguised and logged as sales for other, non-prohibited products.

Agriculture officials have been concerned the seeds could introduce harmful weeds, pests or diseases that might hurt U.S. agriculture. In an interview last week, Osama El-Lissy, a deputy administrator for the U.S. Department of Agriculture's Animal and Plant Health Inspection Service, said the agency had received nearly 20,000 reports from seed recipients and collected some 9,000 packages. The USDA has so far assessed more than 2,500 of those packages, he said.

The USDA has identified several seeds of noxious weeds, called dodder and water spinach, according to Mr. El-Lissy, as well as a few diseases and pests.

Mr. El-Lissy said the findings to date haven't sparked significant concern or necessitated the enactment of a federal emergency-response plan. Still, he said, the USDA is very concerned about the potential that one or more of the seed packages could contain a threat to U.S. agriculture.

Amid the mystery, the Journal reached out to 70 recipients of mystery seeds. The Journal's reporting found, based on people's best recollections and understanding, that the majority had accounts consistent with brushing schemes. Of 68 people who said they were recipients of unsolicited seed packages, about 20 people said they hadn't recently ordered seeds online but received at least one seed package in the mail. Approximately 20 others said they had recently ordered seeds, mostly on e-commerce platforms, and after receiving their order, they received additional unsolicited seeds. E-commerce experts including Messrs. McCabe and Thai said these cases all suggested brushing, as the people had received unsolicited seeds not connected to any specific e-commerce order they had made.

Not everyone who received unsolicited seed packages was considered a likely brushing victim. Some of the people the Journal corresponded with said they never received their original seed order, and then received a seed package that wasn't what they ordered. Cases like this could be possible delivery mix-ups or straight-up fraud where sellers offer one product but instead send another, less expensive one, according to some Amazon sellers. Some people may not have recognized seeds they ordered because they lacked labels, and online order statuses didn't confirm delivery.

Even if the bans on e-commerce seed sales and imports don't prevent the use of seeds in brushing, the extensive attention given to this summer's unsolicited seed packets may render seeds less effective as a brushing tool. Because government officials and media reports have warned citizens to be wary of unsolicited seeds, scammers will likely opt for other cheap and light items -- such as kitchen implements -- to send in brushing packages instead, said Mr. McCabe and others familiar with brushing schemes.

There are signs that Amazon's seed-import block has been effective at halting seed sales that aren't connected to brushing on the platform.

A seed exporter in East Asia said that before Amazon's crackdown there were simple workarounds that allowed him and others to sell Chinese seeds on Amazon without supplying documents to the company proving the seeds could be safely imported. The seller said he used abandoned seed product listings created before 2016, which is roughly when Amazon started regularly requesting such verification, he said, as a way to avoid scrutiny from Amazon. The seeds he shipped were declared as "gifts" to bypass checks by U.S. customs, the seller said. But he said his seed offer was removed by Amazon after its new ban on seed imports was put in place last week.

--Annie Gasparro and James R. Hagerty contributed to this article.

Write to Jon Emont at jonathan.emont@wsj.com and Jesse Newman at jesse.newman@wsj.com

 


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Financials (USD)
Sales 2020 369 B - -
Net income 2020 16 447 M - -
Net cash 2020 53 158 M - -
P/E ratio 2020 99,9x
Yield 2020 -
Capitalization 1 605 B 1 605 B -
EV / Sales 2020 4,20x
EV / Sales 2021 3,49x
Nbr of Employees 798 000
Free-Float 81,3%
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Mean consensus BUY
Number of Analysts 52
Average target price 3 746,12 $
Last Close Price 3 204,40 $
Spread / Highest target 40,4%
Spread / Average Target 16,9%
Spread / Lowest Target 4,86%
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NameTitle
Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Dave Clark Senior Vice President-Worldwide Operations
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
Patricia Q. Stonesifer Independent Director
Thomas O. Ryder Independent Director
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