Current Events in December 2024

In a significant legal move, District of Columbia Attorney General Brian Schwalb has filed a lawsuit against Amazon, accusing the retail giant of misleading thousands of District residents into paying for Prime delivery benefits they are not receiving. 

Members of Amazon Prime receive free shipping, in most cases in two days or less. But the lawsuit, filed under the District's consumer protection law, alleges that since 2022, Amazon has secretly excluded two ZIP codes, 20019 and 20020, from its fastest delivery services, while continuing to charge the full Prime subscription price to approximately 48,000 affected members.

According to the complaint, Amazon, in June 2022, internally decided to halt the use of its branded delivery trucks in the specified ZIP codes, opting instead to rely on third-party services like UPS and the US Postal Service, known for slower delivery speeds. 

‘Delivery exclusion’

This decision, termed a delivery “exclusion,” was not communicated to the affected Prime members, leaving them unaware of the service change, the complaint alledges.

"Amazon is charging tens of thousands of hard-working Ward 7 and 8 residents for an expedited delivery service it promises but does not provide," said Schwalb. "While Amazon has every right to make operational changes, it cannot covertly decide that a dollar in one ZIP code is worth less than a dollar in another."

Schwalb did not initially reveal how his office determined that Amazon is purposefully slowing deliver to these areas, but the attorney general points to Amazon’s delivery performance before and after June 2022. 

In 2021, Schwalb said over 72% of Prime packages in the affected areas were delivered within two days. By 2023, this figure dropped to 25% in ZIP code 20019 and 24% in 20020. Meanwhile, Schwalb said delivery speeds across other District areas have improved, with over 74% of packages delivered within two days.

Schwalb said Amazon has yet to publicly respond to the attorney general’s office about the lawsuit. However, CBS News reports Schwab was informed by Amazon of the change, made out of concern for driver safety.

Schwalb said Amazon was legally obligated to tell affected customers aboutt the change.

Amazon recently launched Amazon Haul, a low-price shopping section, which saw its biggest success on Black Friday thanks to a massive 50% discount on all items.

The promotion, highlighted on the Amazon app, drew shoppers in large numbers. However, many items sold out quickly, and the momentum slowed over the weekend due to limited stock.

Key Highlights:

• Black Friday Boom: Amazon Haul gained traction on Black Friday, with 2,700 products becoming best-sellers in smaller categories like jewelry boxes and pepper mills.
• Stock Issues: Products, mostly sold by China-based third-party sellers, were shipped from warehouses in China. Many sold out because sellers underestimated demand, impacting Cyber Monday sales.
• Limited Success: Despite its strong start, Amazon Haul's sales remain small compared to competitors like Temu, a popular direct-from-China shopping platform.

Challenges for Amazon Haul:

• Competition with Temu: Amazon Haul has far fewer sellers and products compared to Temu, which boasts 500,000 sellers and heavily markets itself.
• Short-Lived Promotion: The 50% discount and app promotion have ended, causing demand to drop significantly.

Amazon Haul has begun running ads on Facebook and Instagram, but it’s unclear if this new section will sustain long-term growth or compete effectively with established platforms like Temu.

A scaled-down lookalike

On the surface, Amazon Haul looks like Temu, but in reality, it is a scaled-down version of Temu in terms of its number of sellers, catalog size, and category coverage. Marketplace Pulse research shows it has hundreds to Temu’s 500,000 sellers.

“Haul feels more like an algorithmically disorganized wholesale catalogue than the hyperpromotional “shop like a billionaire!” manipulation machines on which it’s based,” wrote John Herrman, a tech columnist at Intelligencer, in a report published on MarketplacePulse, a newsletter that follows Amazon.