Article shared from Forbes.
Written by Ken Kam for Forbes.
Amazon’s stock is up over 60% so far this year, and earnings have grown even faster. However, at 174 times earnings, it is priced to perfection. If there is any part of the business that is not rock solid, it bears close scrutiny. In February I took a close look at Amazon’s third-party sellers. Since then, I have received so many emails from Forbes readers who have had bad experiences with this part of Amazon’s business that it is worth another look.
Amazon’s most valuable asset is that people trust them to make it safe to shop online. Amazon’s A to Z guarantee and its generous return policy have largely dispelled the fear of making a bad purchase.
By allowing other sellers onto its website, Amazon exposes its customers to sellers that most of us have no reason to trust otherwise. Customers buy from them anyway because they trust Amazon to make things right if something goes wrong.
This business is core to Amazon. It accounts for about 50% of Amazon’s unit sales and is very profitable. However, if Amazon allows sketchy sellers onto the website, it puts at risk their most valuable asset, their customers’ trust.
So how careful is Amazon to protect their customer’s trust?
In the past, Amazon has allowed some pretty sketchy sellers. A little more than a year ago, I wrote about some to-good-to-be-true deals I found in Amazon Offers LG’s 32-Inch IPS Monitor For $4.89, But I’m Not Buying It. I am happy to say that I no longer see such fake deals on Amazon.
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