Q&A: Why is Amazon selling copies of my book at insane prices?

QUESTION: I sell my book, the Slick Move Guide, on Amazon and my Web site for $12.99 retail. But I don’t understand why there are additional listings priced at $69 and $70. Is this a mistake, or are people really willing to pay those amounts for the book? Who benefits from this, and why does Amazon allow it?

ANSWER: This has been happening for nearly a decade, ever since Amazon began allowing third-party sellers to list used and new books directly on Amazon’s detail page for any book. Generally, sellers are allowed to charge whatever they want. Some charge outrageous prices, and it’s no mistake.

Some of these booksellers don’t actually carry any inventory; they’re known  as “drop-shippers.” If they get an order, they try to purchase from another seller — perhaps one of the competing Amazon sellers. The book is shipped directly to the original buyer, and the drop-shipper collects a tidy profit.

Instead of maintaining a real inventory, these drop-shippers merely maintain a huge database of ISBNs, and automatically multiply the regular price for a book by a factor of three or more. You might wonder why anyone would buy a book at a hugely inflated price. Well, every one in a while, it happens. Sometimes Amazon’s site malfunctions, and only part of the listings are visible. The customer overpays by a large margin, and isn’t aware of the market price. In other cases, one buyer in a million assumes that the highest-priced item is best, even if the items are identical, like a book. The point is, that the drop-shipper can have millions of listings with virtually no effort, no investment in inventory. Only a tiny percentage of listings must sell in order for the business to operate.

So now, the question becomes, is it unethical or unlawful for someone to charge three times the market price for a commodity item like a book? Technically, no. The seller is offering an item at a stated price, and when there’s a sale, the item is often delivered as promised.

However, the rules of Amazon’s marketplace require sellers to have items “on hand” when they’re advertised for sale. Drop-shippers don’t actually have the goods. Also, sellers are required to ship within two business days, and drop-shippers often fail to do this, for a variety of reasons. When sellers have an excessive number of late deliveries, complaints, or refunds, they’re banned from Amazon.

So the practice of drop-shipping certainly violates Amazon’s rules. As a practical matter, though, there’s no way to prove or disprove whether sellers have items on hand.

In the old days, before the Internet, if a buyer couldn’t find a book, they went to a local secondhand bookstore and ordered it. The bookseller would locate a copy from another seller, then mark up the price to ensure a nice profit for himself. The local bookseller acted as a middleman, and nobody complained about it because he was providing a valuable service. The average book buyer didn’t have an efficient way of finding books and what their market price was.

Today, some online sellers are trying to act as middlemen, just as yesterday’s secondhand dealers did. Unfortunately, there isn’t much room for a middleman on today’s transparent online marketplaces.

Related posts:

1. Q&A: Why is my book being sold at low prices on Amazon?
2. Q&A: How can a bookseller undercut my price on Amazon?