Apple earbuds aren’t cheap. At Target, they can cost up to $17. But on Amazon you can find a version that looks identical and pay under five bucks.

The cheaper earbuds may look the same, but consumers are usually aware a less-expensive knockoff is cheaper for a reason—in this case, the earbuds most likely don’t have the same sound quality or product lifespan. When you’re buying cheap, that’s generally what you want: fast and disposable.

But suppose you purchase the name brand Apple earbuds, more expensive and purportedly better quality, and then receive a pair that is clearly a knockoff? If you’re an Amazon shopper, returns are easy, especially with Amazon’s A-Z guarantee. And if you’re really annoyed, you can vent your frustration about the Amazon seller via Customer Reviews.

For Shoppers, Amazon is a win-win, even if they don’t get what they were expecting.  On the seller side of this scenario however, the horizon is significantly more grim.

The earbud seller in this situation faces severe consequences from negative account reviews, including suspension, or—in the worst case scenario—removal from Amazon. But here’s the kicker: Those earbuds may not even have come from the seller who’s responsible for the return and gets the harmful review.

How does this happen? An Amazon fulfillment option called Commingling.

The Dangers of Commingling for Amazon Sellers

Counterfeit or mislabeled products are a common pitfall of Amazon’s commingling service—a fulfillment option available to Amazon sellers that compiles products from different sellers for processing and shipment by Amazon.

The Amazon commingling fulfillment option mixes products with the same manufacturer ID from various third-party merchants selling on Amazon, along with those that Amazon sells, and from brands directly supplying Amazon.

Commingling as a fulfillment option is designed to increase fulfillment efficiency for Amazon by increasing purchase volume and sales while decreasing shipping time, for sellers using Fulfillment by Amazon. Amazon was operating 56 distribution centers in North America in June, and 107  across thirteen countries, according to supply chain consulting firmMWPVL. With so many warehouses—and the number keeps growing all the time—Amazon pitches commingling as a fulfillment option that saves time and money for merchants that choose to use Fulfillment by Amazon (FBA).

So it sounds like a great idea. But cautionary tales of commingling have started percolating to the surface from experienced Amazon sellers. In our earbud knockoff scenario, and with similar commingling issues, Amazon sellers face the prospect of poor reviews, unnecessary returns and the reality of any Amazon seller’s worst nightmare: removal from Amazon.

Which Amazon sellers does commingling impact, and what can suppliers do about it?

In order to understand how commingling impacts Amazon sellers, and what sellers should look out for, we’ll need to first take a couple steps back and look at which sellers use Amazon fulfillment for orders; supply and demand in an age of near-instantaneous gratification; and why Amazon sellers choose this fulfillment option to begin with.

Fulfillment by Amazon (FBA) Labeling

Online retailers who wish to sell on the Amazon Marketplace have a variety of selling options to choose from based on their goals, fulfillment capabilities and other seller attributes.  One Amazon selling option for third-party sellers, Fulfillment by Amazon (FBA), utilizes Amazon’s fulfillment centers for product packaging and shipping.

In order to be received, stored at, and shipped from an Amazon fulfillment center, Amazon requires FBA sellers label their products for shipping. Commingling is a feature of FBA which saves sellers time and energy in labeling products for fulfillment.

To sell through FBA, retailers are required to label every product based on its unique product identifiers, including:

• Product ID- The Manufacturer’s product identifier or bar code. These can include UPC , JAN , ISBN, GTIN or EAN bar code (UPC is most commonly used in North America)
• FBA label – Label highlighting the product information for Amazon to identify (this can be printed from a merchant’s Seller Central Account)

Amazon’s default FBA label setting is “Labeled Inventory.” Labeled Inventory requires an FBA label for each product you send to Amazon (printed at Seller Central) and identifies products you send as attributed to your seller account.

For FBA sellers, this means every product sent to Amazon for fulfillment needs to have an FBA label. That’s generally a daunting manual task for smaller merchants, and also an issue for sellers with a large numbers of products.

Amazon outlines more about labeling and label requirements on its Labeled Inventory page, which highlights this helpful video:

For sellers who can’t print labels or handle label volume, Amazon offers an FBA Label Service through which Amazon labels products for a price (per-unit fee).

What Is Commingled Inventory?

FBA Labeled Inventory requires that each product you send as a seller has its own FBA label. Commingling is the other label option for FBA and it saves sellers time and energy.

The commingled inventory option provides the option for retailers to skip labeling using the stickerless, commingled inventory option.

Commingled inventory does not require individual labels, but instead uses a bar code, such as UPC, to group products. Unlike individual labels however, commingling groups the same products from different sellers together.

Commingling inventory is essentially pooling your inventory with the inventory of other sellers at Amazon’s fulfillment center, all of which are grouped by Amazon based on their product ID. Amazon packs, ships, and provides customer service for those products just as it does with all FBA orders.

Here is an macro idea of how commingling works for an FBA widget sold by a third-party Amazon seller:

Fraud, labeling and other commingling issues all arise because products are combined together (regardless of seller) based on a bar code (UPC, EAN or JAN) for purchase fulfillment. As Amazon itself says: ”When you choose to commingle inventory, your products become interchangeable with the same products from other sellers for both order fulfillment and removals.”

Let’s say you sell Widget A. You can send that widget to Amazon where it will be included with other Widget A’s that share the same UPC. If someone purchases the widget from Amazon through you as a seller—the product sent could come from you, Amazon, or another seller whose products are included in Widget A commingled inventory.

Here is a visual example of how your widget might not be the widget sent to someone who purchases from your store on Amazon if you are commingling inventory with FBA:

Here is how Amazon explains commingled inventory:

Which Amazon Sellers Use FBA Stickerless Inventory?

Not all Amazon sellers face the hazards that come along with commingling on FBA. Commingling is an option for FBA sellers, and also depends on the seller’s fulfillment capabilities, product inventory, and Amazon revenue goals.

Sellers who choose to Commingle with FBA

Commingling inventory on FBA products is also an option only for qualifying products which:

• Are in new condition
• Have a scannable bar code and match only one ASIN ( Amazon Standard  Indemnification number) in the Amazon catalog
• Aren’t products which require approval (e.g. Media) This would include products that require approval to be sold on Amazon (not just for commingling); for example, alcohol (not including wine)
• Are not media products (e.g. books, CDs, VHS, DVDs, video games, or software without labels)

Why Use Commingling on Amazon?

Commingling is designed to make fulfillment easier for retailers using FBA. It is an option for sellers who don’t have the time or resources to manage fulfillment themselves, or are shipping from a distant location which affects shipping times.

Commingling Benefits

Commingling is a FBA option because it provides utility for Amazon sellers. Here are some of the major benefits to stickerless inventory:

1)   Commingled Orders Reach Customers Faster

Commingled inventory allows a seller’s products to be placed more evenly around Amazon’s fulfillment network, so they can reach customers faster. Since commingled products are part of FBA, they are fulfilled by Amazon. Sellers can take advantage of Amazon fulfillment centers—which are strategically placed around population centers to ensure quick delivery to customers all over the nation.

If a seller’s goods were only in the Phoenix fulfillment center, for example, it’s less likely an East Coast customer would receive their product on the same or next day.

2)   Commingling Reduces Cost and Labor for Labeling and Fulfillment Operations

Sellers save significant amounts of time and labor investment by using commingling because they avoid having to apply FBA labels to each product they send to Amazon. Imagine you sell 50 products using FBA; even if it only takes you one minute to add an FBA label, that’s still almost an hour of manual labor prior to shipping those items to Amazon.

For resellers using drop-shippers/manufacturers to send goods directly to fulfillment centers, not all drop-shippers will FBA label for the reseller. This means if you’re using a drop-shipper you’ll need to get your products from them, label them, and then send them to Amazon yourself.

3)   Commingling Removes Some Errors with Labeling

Choosing commingling allows a seller to skip applying FBA labels to the products they are sending to Amazon, as the original UPC bar code will suffice. As a result, a seller can find the process of sending commingled products easier and less prone to receiving errors at an Amazon warehouse.

Consider a seller that might send roughly 20% of its catalog into FBA and the store sells a large number of products, say 10,000—that’s 2,000 labels which need to be created and applied for FBA. More labels means more margin for error. How many drinks do the baristas at Starbucks label a day, and how many times have you received the wrong drink?

4)   Leverage Amazon’s Branding for Credibility

Amazon strikes fear into the hearts of sellers who maintain less than 80% positive customer reviews. Amazon shoppers trust Amazon—trust which you assume by default with Amazon’s shipping service. Amazon’s Marketplace is a shopping destination that is known for reliability, ease of online shopping and selection. Listing on the Marketplace with FBA allows sellers to capitalize on that branding.

Commingling Issues

Commingled inventory often gets a bad rap on seller forums, and social outlets. Consider this question submitted to an Amazon group on Facebook, which got 9 comments in under three hours—the first of which was, “You’d be insane to allow co-mingling”:

Commingling removes much of the inventory control from sellers, and introduces the element of fraud with commingling:

“It’s bad enough to have your inventory out of your control yet alone allowing who-knows-what-from-where to get mixed in with your stuff.”

Amazon sellers have noted that counterfeit products can get mixed in with the bunch, which leads to negative reviews and product returns—negatively impacting a seller’s brand and Amazon rating. Sellers also run the risk of getting flagged and taken off Amazon for counterfeit violations.

In addition to products which may not be the real deal, businesses using Commingling on Amazon face the issues of products sold under their name but supplied by other sellers which may be:

• Damaged
• Different from the advertised UPC
• Come in damaged or sub-par packaging

Here is an example of a scenario where an online shopper might receive the incorrect item when purchasing an FBA commingled product:

Amazon employs quality assurance employees to screen for counterfeit products and screens all third-party merchants, but at Amazon’s size, it’s no surprise some items slip through the cracks.

Amazon does address commingling issues, but as you can see through from the discussion boards shown earlier, they are more inclined to penalize merchants than shoppers.

To compound commingling issues for Amazon sellers, if you decide to stop using commingling on Amazon the returned units you receive come from the commingling pool and could include items from other sellers as they are sourced from the commingled inventory.

Avoid Fraud with Commingling

Amazon FBA is not an option for all Amazon Sellers, and may not be worth the saved time and labeling effort if you have products that are highly susceptible to fraud. If you are a seller with pristine packaging, fragile items, or other variables that might lead to commingling issues, you are likely better off labeling your products or letting Amazon label them for you.

Consider the following variables when choosing if and what you will commingle with FBA:

1)     What do you sell?

Do you sell products that are predisposed to fraud? How many other sellers sell items that are similar to yours?

2)      What are your ROI goals?

Consider what it will cost to fulfill with Amazon and label, with or without commingling. Which products sell well on Amazon and elsewhere?  Is it a good ROI to commingle all or some products?

3) What are your fulfillment capabilities?

Sticker FBA Products

Sellers always have the option to sticker their FBA products with FBA labels. What this does is separate a seller’s inventory of a given product from the same product being sold by other sellers (and Amazon themselves). Labeling your FBA products takes more time than leaving them stickerless, but prevents any issues that would arise with commingling.

Commingling adds the benefit of faster fulfillment, but that doesn’t mean that traditional FBA is slower. It’s faster and easier to send products to Amazon since you don’t need to label each product.

Sticker Select FBA Products

Remember you don’t need to choose the commingling option for all of your products, if any. Determine which products are worth your time and effort to label (or not) based on the product ROI, popularity, your fulfillment capabilities and goals. Weigh your variables for products against the pros and cons of commingling and proceed.

For example, you may choose to commingle some top-selling products, but label other FBA products that sell less frequently.

Strategically, a seller could consider offering products which are most at risk for fraudulent products (take the knock-off widget, for example) as non-commingled inventory, while sending the remainder of their FBA products as commingled.

Add Special FBA Labels

Alternately, some Amazon sellers recommend anyone using commingling label their products with distinctive markings—such as a colored dot, so they can be identified later.

Ultimately, there is no “right” or “wrong” answer when it comes to deciding whether to commingle your inventory. But understanding the risks and benefits of each strategy will allow a seller to make the most educated choice for their product set.

Generally sellers aren’t just using commingling for FBA, and may not be listing solely on the Amazon Marketplace.

With Amazon commingling, there is no right or wrong way to label. Merchants who sell items that are more likely to be subject to fraud should consider avoiding commingling altogether. However, labeling choices are highly dependent on the seller’s time and manpower resources to label inventory.

Think of commingling like drinking coffee. There are benefits to drinking coffee, such as increased focus, and productivity. But you may also want to avoid drinking coffee for other reasons, like hyperactivity or stained teeth. Coffee is neither good nor bad, although there is evidence to support both assertions. It’s up to you to decide and then judge the experience for yourself.

CPC Strategy is a digital marketing firm that specializes in search marketing and optimizing retailers’ product feeds to comparison shopping sites and marketplaces.

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