How Online Food Safety Loopholes Are Impacting Consumer Trust
The principle of caveat emptor is alive and kicking in the Amazon Marketplace ...
Amazon may be the go-to online shopping experience for the connected society, but there is growing evidence that a culture of quality is being overlooked in its food and beverage marketplace.
Investigative journalism conducted by CNBC has shone a light on a plethora of food product quality problems that include but are not limited to expired foods and beverages, mislabeling, counterfeit items and a host of unresolved customer complaints. Many of these identified quality pain points are related to third-party sellers as opposed to the producing brand itself, but there is a consensus that the ecommerce behemoth's apparent failure to clamp down on the number of poor quality consumable products being sold through its marketplace is impacting both consumer trust and the brand reputation of the manufacturer.
According to the CNBC report, the grocery element of the Amazon Marketplace is filled with items that either should not been sold in the first place or are being delivered close to their expiration date. And, although these products are likely to be in the minority in terms of the hundreds of millions of goods that ship with no reported issues, the fact that food safety is seemingly slipping through the cracks is a cause for concern.
Amazon customers have reported numerous issues with the brands they purchase via the marketplace, the news source said, citing customer complaints – known internally as a “critical review” - that covered a diverse range of spoiled or expired products such as hot sauces, beef jerky, baby formula, crackers, coffee creamer and tea. In addition, there were a number of products listed for sale that had been discontinued by the original manufacturer or were delivered with the words “not for resale” stamped on the packaging.
Third party sellers – who reportedly account for 58 percent of all physical products sold on the website - are in the cross-hairs for poor quality products and a decline in consumer trust. However, CNBC said that there are “loopholes in Amazon’s technology and logistics system that allow for expired products to proliferate with little to no accountability.”
As a result, consumer safety groups believe that the quality problem will only get worse as the food and grocery marketplace grows, and it is likely to be the brands who suffer from a bad customer experience.
“Many food manufacturers feel they’re at a loss when it comes to controlling third-party sales of their products on Amazon,” said Michael Neuwirth, a spokesman for French food group Danone, in an interview with CNBC. “You have two damaged parties in this, one of which is the purchaser, who thinks they’re getting the best quality product. Injured party two is the maker of that product whose brand and reputation are now called into question out of no act or fault of their own and, in fact, in a way they can’t prevent it.”
Catering to the on-demand society
Over the last decade, Amazon’s influence on not only the retail industry but also the distribution and logistics sector has appeared to be unstoppable.
Online marketplaces are arguably one of the ongoing success stories of the on-demand society, with the ability to buy whatever you want whenever you want it and changing the way people shop for a wide range of products. In addition, ecommerce overcomes geographical barriers and, in theory, allows a business to optimize its inventory and supply chain without the need for a physical store.
Amazon’s purchase of Whole Foods in 2017 meant that the company was able to significantly expand its food and beverage offers, with the expectation that the grocery chain's commitment to quality – cited as one reason why people shop at Whole Foods, according to a recent in-house study – would be reflected in the policing and detection of questionable products.
There is a consensus that food sellers suffer from the same sort of problems as other non-food companies on the website in that consumers often don’t know whether they are buying directly from a major brand, a smaller seller or even an Amazon distribution center itself. As a result, all three options could be competing for the same eyeballs on what is known internally as the “buy box.”
An additional concern is that Amazon’s internal quality processes rely on a combination of human moderators and AI systems – both of which are used to keep an eye on the reported 22 million-plus bits of product quality and safety-related feedback that the company gets every week. As a result, sellers that violate Amazon’s long-standing policies can have products removed from the platform or their accounts suspended.
This proactive attitude works when the food sellers play by the rules.
As part of its fulfillment process, Amazon requires third-party sellers to provide the company with an expiration date if they are selling something meant for consumption (either human or animal) and these sellers have to guarantee that the item has a remaining shelf life of 90 days. The flip side of this agreement, CNBC noted, is that there is no indication that the enforcement process actually exists, with some food safety experts telling the news source that some sellers bank on being under the tech-focused radar for expired products.
“Expiration dates are a red flag for what else is harder to see,” said Sarah Sorscher, deputy director of regulatory affairs at the Center for Science in the Public Interest. “If you can’t do something as basic as check an expiration date, then what else are you missing?”
Supply chain quality traceability
From a traceability standpoint, Amazon’s reliance on a combination of humans and tech for overall quality control is forcing companies to monitor both their existing supply chains and, increasingly, what is being sold on the ecommerce site. Regulators are also keeping tabs on what Amazon sells - a recent Wall Street Journal report highlighted the fact that thousands of unsafe or recalled products are still for sale on the marketplace.
Supply chain traceability has been a hot topic in the food and beverage sector for some time, and the FDA has been very vocal in its calls for quality and safety information in terms of labels and packaging. With the exception of infant formula – which is required by law to have a “use by” date – there is no requirement for federal intervention when a third-party seller uses an online marketplace to hawk their wares.
This grey area could be one reason why more companies are integrating business optimization tools that can monitor the entire distribution and selling ecosystem. A quality management system can pick up the flaws during the production process, but once an item hits the physical shelves then the responsibility is often on the distribution network and, increasingly, regulatory authorities to identify poor quality products.
That responsibility is not always replicated online.
The notable increase in third-party sellers on Amazon is the tip of the iceberg, with brands conscious that virtual distribution companies may not always adhere to a culture of quality. To put it simply, a traditional grocery store will have a lot of products for sale, but they won’t make them available if those items are unsafe or have reached the end of their shelf life.
For example, a gourmet food manufacturer told CNBC that there were more than 30 resellers for every one of the 200-plus products that the company sold, a situation that was pure chaos in terms of traceability and customer experience. And, many of the quality problems stem from the fact that food safety is basically a given in the eyes of the end user – either in a physical store or online.
Food Safety News reported that around eight out of ten adults in the United Kingdom take retail-focused food safety for granted, for instance, and assume that the food has been produced to a high enough standard that it is fit for human consumption. By contrast, 50 percent of people have the same degree of trust in a restaurant, FSN said.
Amazon has defended its detection practices, with human moderators instructed to instigate an investigation if they receive customer feedback that a product does not meet quality expectations. In the food category, for example, the company uses an ever-expanding database known as “Heartbeat” to record responses generated via reviews, phone calls, emails and seller communications.
“We work hard to make sure customers receive high-quality products when they order from our store,” an Amazon spokesperson said. “We have robust processes in place to ensure customers receive products with sufficient shelf life. If customers have concerns about items they’ve purchased, we encourage them to contact our Customer Service directly and work with us so we can investigate and take appropriate action.”
Poor quality erodes brand reputation
The ongoing issue for brands, however, is that they are invariably the ones in the firing line when expired or unsafe products end up in the hands of consumers through an ecommerce portal overseen by company such as Amazon.
Customers expect that third-parties have been vetted by the online marketplace, which essentially means that they shop with the confidence that a poor quality product is not waiting to be shipped from some desolate distribution center.
The key point to remember is that Amazon’s business model – a template that has been copied by various other online marketplaces – is set up to provide both companies and, increasingly, non-affiliated sellers with a portal to sell goods and services.
The caveat to this is that there is still a (well-founded) consumer concern that overall product quality is likely to be higher in a bricks-and-mortar location as opposed to an online grocery delivery service or third-party seller.
We know that product recalls are part and parcel of the retail lifecycle, but companies must take into account the business motivations of the third-party seller – turning a profit is often the driving factor, not public health or even quality itself. That is not to say that a seller sets out to deliberately deceive the end buyer, more that they know the customer will be more aggrieved at the brand for allowing expired or discontinued products to remain available.
When products do not have a sell-by date – electronics, clothing, sporting goods, furniture, for example – then those third-party sellers are more likely to slip through the quality cracks. That is not the case with food, beverages or anything marked for consumption, where the potential for spoiled or expired products being sold to customers is much higher. This is where QMS technology can alleviate quality pain points.
Automated solutions can not only flag potential end-of-shelf-life issues with distributed food or beverages, but provide a degree of traceability that maintains the culture of quality in both the physical and digital worlds. A soon-to-expire product can be returned to source, say, and disposed of in the proper manner.
Ultimately, an online marketplace is filled with pitfalls for the unwary, but companies can limit the chances for rogue elements to enter the distribution network by maintaining a close watch over where poor quality or expired products actually end up.
And while the oft-cited concept of caveat emptor – “let the buyer beware” – is always in play in our on-demand and connected society, closing the loopholes that allow expired products to get in the hands of consumers should be a priority. Brand reputation is often hard-earned, and letting a third-party reduce the level of consumer trust through the distribution of poor quality products is a business optimization strategy that is unlikely to offer any real rewards.
ETQ's long held mantra that quality creates strong companies is one of the many reasons why over 550 global organizations trust us to secure brand reputation and customer loyalty. Our Reliance 2019 SaaS software delivers built-in best practices and powerful flexibility to drive excellence through quality.
To find out more about how ETQ can help you on your quality journey, contact us today for a demo.