Amazon sold a used diaper. It tanked a mom-and-pop business

By Spencer Soper | Bloomberg

Paul and Rachelle Baron were an Amazon success story. The washable swim diaper they designed for their infant son quickly became a best-selling product as the online retailer’s algorithm worked its magic. Satisfied parents left five-star ratings and glowing feedback, elevating the diaper in search results and steering more shoppers their way. The momentum seemed unstoppable.

Then one scathing review changed everything.

“The diaper arrived used and was covered in poop stains,” a shopper wrote in a review with a one-star rating. “Nothing could have been more disgusting!! I am assuming someone returned it after using it and the company simply did not check the item and then shipped it to us as if it was brand new. These were not small stains either. I was extremely grossed out.” Worst of all, the review featured photos of the stains for all to see.

This wasn’t supposed to happen. Amazon.com Inc. has committed to inspecting each return for issues before reselling it. But warehouse employees, trained to work quickly, don’t always have enough time to carefully inspect each item before putting it back into circulation, according to someone who spent years in the returns operation. The Barons learned the hard way that the world’s largest online retailer isn’t perfect and sometimes makes mistakes.

Selling returned products as new on Amazon is a major and growing problem, according to consultants who advise merchants how to navigate the online marketplace. When the practice spawns negative feedback, they say, the damage increases exponentially.

The Barons told Amazon repeatedly that they weren’t at fault and that the review should be taken down. Yet it remains on the site, inflicting lasting harm. The couple says they’re $600,000 in debt, including a loan secured by their home that complicates the prospect of filing for bankruptcy. They make enough selling diapers to pay down debt and order more inventory, they say, but it’s not a living.

“The last four years have been an emotional train wreck,” Paul Baron said. “Shoppers might think returning a poopy diaper to Amazon is a victimless way to get their money back, but we’re a small, family business, and this is how we pay our mortgage.”

“We are sorry to hear that a seller feels their return was not evaluated correctly and resulted in a negative review,” Amazon spokesperson Maria Boschetti said in a statement. “We encourage selling partners to reach out with any concerns, and we listen to their feedback to help us continue improving the selling experience.”

Amazon recently introduced a policy that lets sellers instruct the company not to resell any returned products. Previously, “all items returned as new were automatically resold after being carefully evaluated by a member of our team to ensure the returned product meets strict guidelines for resale as new,” Boschetti said. She also said sellers can contact the company if they believe feedback on a resold product is “inaccurate or incorrectly attributed to them.”

The Barons’ entrepreneurial journey began a decade ago. They had enrolled their newborn son Beauregard in swim class. But the swim diapers they purchased were too tight on his legs and had to be removed like underpants, making cleanup messy. So the Barons turned their frustration into an idea: a reusable swim diaper with snaps to make it adjustable and easy to remove.

They used a credit card to place their first order with a factory in China and launched Beau & Belle Littles on Amazon. Before long, the business had reached $1 million in sales. The couple appeared on the Rachael Ray Show and were profiled in Forbes. Theirs was  the kind of small-business success that Amazon loves to tout, especially when regulators accuse it of hurting mom-and-pops.

“We started this as a dream to make enough money for Rachelle to be able to stay home,” Paul said. The alternative was Rachelle working as a teaching assistant, which barely covered the cost of childcare, they said.

The Barons were executing a plan to triple their annual sales to $3 million in 2020, when the review landed with a thud. Even though the diaper had a four-plus-star rating from hundreds of buyers, it was hard to miss the stain photos. More than 100 shoppers upvoted the damaging review as “helpful,” which increased its visibility. The algorithm was suddenly working against the Barons. Sales plummeted.

“It should be common sense,” Rachelle said. “Why would something like a diaper ever be put back into inventory to be resold?”

The amount of time Amazon workers spend inspecting returns varies, depending on what the item is, according to the former employee. But on balance, a worker shouldn’t spend more than a minute eyeballing each return, the person said. Employees often don’t even bother opening packages if they appear to be sealed and just assume they’re unused, the former worker said. But because seals are often just a sticker or zipper it’s not always clear if the product is as-new, the person said.

The breadth of Amazon’s catalog exacerbates the problem. The company sells hundreds of millions of items. An Amazon worker handling returns might see a particular product only once and never develop expertise about a given category. It might seem unlikely that a stained diaper would be resold, except that Amazon also sells fake dirty diapers as gag gifts.

Amazon says it doesn’t allow reviews that address packaging or shipping problems or product condition and damage. The guidelines appear to prohibit the stained diaper review since it suggests the item had already been used, and the Barons were hopeful that a quick note would fix things. But their emails went unanswered. Paul recalls spending hours on the phone, getting passed from one department to another. Seller support representatives acknowledged a used diaper had been mistakenly resold, but told him they couldn’t take the review down, he said. The couple tried the famous jeff@amazon email that supposedly goes to founder Jeff Bezos himself. Nothing happened.

Amazon knew reviews could be misused when it designed the system, according to a person who worked on the project. Executives realized it would be impossible to hire enough people to adjudicate every disputed review. The best remedy, they decided, was to encourage as many authentic reviews as possible so that false ones would get washed out, the person said. The company also doesn’t let businesses respond to critical feedback, unlike Google and Yelp.