Over at Amazon, they have a listing for a Hercules 21pc drill bit set, featuring a “BlueBraid titanium coating.” As you might know, Hercules is Harbor Freight’s new higher-tiered power tool and accessories brand. So what’s it doing on Amazon?
Back in October 2017, Amazon had direct listings for new Harbor Freight Bauer cordless power tools.
Advertisement
How are they selling this Hercules drill bit set directly?
Whenever I ask this question of brands that don’t usually distribute through Amazon, the first response usually goes like this: “oh, that’s a 3rd party listing.” But, in this case and some others, it’s not.
More Info: Hercules Drill Bit Set on Amazon, the same drill bit set at Harbor Freight.
Ships from and sold by Amazon.com.
The brand is said to be Central Purchasing, and following that trail leads me to 55 search results for Central Purchasing tools sold directly by Amazon. There, you’ll find things like a Central Forge clamp-on swivel vise, at 2X Harbor Freight’s direct price, or a Banks brad nailer at a ~75% markup.
Some of the items are said to be in low supply, but others are in low supply with “more on the way.”
Advertisement
Why does Amazon have these Harbor Freight tool listings? How?
I can only think of two potential explanations. Perhaps Harbor Freight is shipping some tools to Amazon to help increase the familiarity of their brand names, or maybe Amazon is buying the tools from Harbor Freight at retail and is listing as part of some search engine traffic strategy.
Or, maybe they were… somehow… coming from 3rd party sellers?
What else could it be?
I had similar questions about how Amazon and Walmart were directly selling select Milwaukee Tool products, and I still don’t have any better of an understanding.
Speaking of which, Amazon has a competitively-priced “ships from and sold by Amazon.com” listing for a Milwaukee cordless impact wrench and grease gun combo.
Does anyone have any concrete insights into how or why this happens?
Bob
I once worked for a B2B whole sale distributor. Our policy was not to sell to end users.(this kept our clients happy and thinking we were not selling directly against them). Long story short Amazon has LLC’s set up that we sold as. The googling and the paper trail for anyone trying to keep find the seller would never lead back to us. Allowed us to sell on amazon with out pissing off our client base. Also we had some brands where the contract did not allow us to sell to e-retailer… this was another work around to this.
Now i have no idea why HF would need to hide this. Maybe they have a large wholesaler they work with and they are trying to mask who they are?
Stuart
That’s the thing – I don’t believe Harbor Freight is selling to Amazon.
Regarding the Baeur tools, this was their reply:
Bob
Maybe some one buys up these..
https://www.truckloadliquidations.com/harbor-freight-tools or
https://www.toptenwholesale.com/wholesale-products-harbor-freight-tools-p1802885 Than sells them on marketplaces. would explain limited quantity. Seems like a whole lot of work though. you would need to create unique ASIN’s for each prodcut etc.
If HF was being a 100% truthful they could reach out to Amazon and have those listings suspended or removed if they control the brands and the seller is not an authorized retailer of the product. Seeing as the Bauer listing is still active it makes me wonder.
Either way something does not pass the sniff test.
Stuart
The Bauer listings are not still active.
One of the three listings is simply gone, with a “Sorry we couldn’t find that page” error message, and the other two are only available on Amazon thru third party sellers.
While there are other things on my plate to work on and post about today, I find myself frustrated with unknowns, and this is a big one.
Toolfreak
You don’t have to be an “authorized retailer” to sell a certain brand’s products on Amazon, or anywhere else, really.
The only thing being an “authorized retailer” does is it means the manufacturer will generally honor the warranty, if any, that it offers on it’s products, particularly if they state they only honor the warranty with a receipt from an “authorized dealer”.
The law does not allow corporations or brands to control their merchandise in such a way that anyone who sells it must be authorized to do so.
Of course, a giant corporation with endless funds can hire lawyers and bankrupt just about anyone with legal costs just to defend a meritless claim of copyright/trademark infringement, but in this day and age of social media and online news, it’s a larger PR risk than in decades past.
Bob
No but what they can do is stop selling to you or if you buy from a B2B wholesaler put pressure on the wholesaler to stop selling to you… We would get correspondence all the time for manufacturers asked if we sell to certain people.. along with links to their listings on third-party marketplaces..it is not uncommon to have the rights to sell a brand brick and mortar but e-retail especially automotive aftermarket.
Same goes for a licensed merchandise.. they’re very strict with who sells what where.
Stuart
No, but it can have big ramifications.
Let’s say you buy a grey market (international version) camera to save a little money compared to the product that goes from the USA distributor to authorized retailers. You’re generally not going to be able to send the camera to the USA warranty center.
Here’s my question – if Harbor Freight says they’re not selling their tools to or through Amazon directly, where is Amazon getting the products from, and why?
Bob
More interesting to me is that there are five sellers that sell it. 4 are FBM one stocks it at Amazon.
this leads me to believe harbour freight does wholesale to people and or someone’s buying a boat load of harbor freight load in the back of trucks and then selling it online.
once an Amazon listing is made for a product that is mostly the hard part anyone that has the product an Amazon account can hook onto it and sell the product.
I worked for a large company that had a lot of licensed apparel. We at one point where only B2B. Some of our customers started selling on Amazon (drop shipping from us) when we finally got our s*** together we just attached to their listings undersold them. About a year later we just caught off all e marketplace sellers. That organization is a very very large Amazon seller I’m talking top 200.. and I knew if anyone we sold too was selling Amazon, no legitimate way harbor freight isn’t aware unless someone is buying the product straight from the Chinese manufacturer
Larry K
Your last remark is the most likely. The Chinese are extremely duplicitous and have stolen patented US products & resold them for years. The FBI & FTC & Commerce Dept websites are filled with examples of these facts.
That most major leading brand tool manufacturers would allow their tools to be built at rock bottom slave labor wages says one thing: Made in America means nothing to almost all Americans today. And worst, it’s simply greed by maximizing Profits for tools built by Chinese saboteurs using substandard critical function parts so the tools are doomed to a shorter lifespan. That’s the really sad part of it. And have you heard anyone in Washington DC complaining on behalf of their constituents? Survey some tool repair shops and you’ll see the real story going on. And yes Milwaukee, that includes you too. The Chinese must love your red tools matching their Red flag
Bobby
Interesting for sure. While browsing on AliBaba I came across a manufacturer that displayed a sample of Pittsburgh Pro screwdrivers, which lead me to believe they are one of the manufacturers Harbor Freight uses. This doesn’t really explain how Amazon is selling HF tools, but I thought it was interesting and gives me a little more confidence in HF tools.
William Adams
Sold from Amazon.com means that it is Amazon, so possible reasons:
– Amazon buying stock as a marketing test
– Amazon bought a company which has these as stock and is dumping said stock
– Amazon testing the idea of their selling stock at an inflated price makes marketplace sales more palatable and profitable — following the money trail would make this seem the most likely candidate
Does anyone know what percentage of Amazon sales comes from Marketplace vendors? I’ve seen reports that the Marketplace vendor sales division is Amazon’s most profitable — not surprising — and I suspect that Amazon is now at a point where they’re investigating ways to maximize that.
A couple of overpriced listings which sit in a warehouse until marked down and sold is a small investment on Amazon’s part for increasing such sales.
The real question will be if any of the items which have regular freebie coupons ever come up, and how that dynamic will play out in the long term.
Rx9
It could be drop shippers. There are a LOT of listings of Costco/Wal-Mart/Sam’s club etc. store brand products shipped directly from the retailer’s warehouse and sold on Amazon by a 3rd party that takes a cut of the profits.
Bob
According to Stuart harbor freight claims they don’t wholesale or distribute through any third parties
Travis
That’s not related. HF isn’t marketing/selling items to a 3rd-party. A 3rd-party dropshipper would advertise HF products at a mark-up on, say, Amazon. Then, when an order is placed to the dropshipper via Amazon, the dropshipper just orders the item from Harbor Freight and enters the Amazon customer’s address, pocketing the difference in prices.
Michael F.
Maybe it’s a marketing scheme to get the HF brands displayed next to competitors listing on Amazon. HF uses an Amazon shell LLC just to get the listings seen, but prices them high as to not require full logistics support, then the savy internet shopper searches and finds the tool for sale at a much lower price at the HF down the street (instant gratification trumps prime 2-day shipping) and then HF profits. It’s kind of like a form of advertising – just have to have listings to be seen… [Don’t know if I explained my idea clearly]
Stuart
That is a very well-thought-out possibility. But, if it were true, I would think that things could be done better, and without compromising the subtlety.
Frank D
I concur on the marketing idea. Ship a few pallets to AMZ. Get in the system. See what happens, even if they don’t sell, they may help as part of a larger marketing / seo scheme for additional traffic and ranking.
Bob
It is not that simple. Amazon will charge you to store it. Storage varies based on numerous factors. Then after so long if the product isn’t moving your rates go up. Not to mention all the requirements on how things are to be shipped to them. If you don’t hit the criteria you get penalized well they don’t call it penalties. It is actually difficult to make money on amazon.
One quick article on just part of it. https://www.cnbc.com/2018/06/28/amazons-new-warehouse-policy-inventory-performance-index.html
Evadman
Those costs are probably significantly below advertising costs on amazon (a few cents/impression to roughly a dollar for click-through). The products in total, including quantities, are under $10k retail. The cube for those appears to be under $650 a month at the penalty rate (back of envelope math). That’s around $20k for a year. That’s pocket change to get your product in front of millions of eyeballs that AMZ can toss at them.
Someone will buy one every once and a while too, so that’s a bonus. Seems like a slam dunk.
Corey Moore
That makes a lot of sense, to me. Though the logistics of using Amazon and their storage situation, as mentioned below, gives me pause. You’re explanation sounds very logical to me, though.
Toolfreak
I tend to agree, though it seems odd that HF doesn’t send WAY more items to Amazon to make it seem like their misleading/fake “brand” names are actual products made by independent companies and just sold by HF.
Maybe they only send/list certain items that are selling the best or get the most hits on the site.
Bobby B
I have run across this on Wal-Mart’s online store I was looking for a cheap but good air grinder found being sold by one company it was a central pneumatic tool normally sold by harbor freight. I only discovered it when I got it the harbor freight name was marked out by a marker but was able to see the name.i found out later I was charged twice the price.
NewtonsApple
You likely bought from a 3rd party sellers and not Walmart directly. As described by Ben W there are a bunch of people who do this HF, Home Depot, and Lowes. The HF people are generally buying invetory at retail. The Home Depot And Lowes resellers are “drop shipping” taking advantage of free shipping.
With The occasional EBay 15% of coupons, buying from drop shippers via eBay can be a way to get a discount on generally excluded from promotion brands.
PETE
Why are they selling harbor freight tools? Because amazon wants to sell junk too!
ric Cumming
Did you buy any tools from HF. Most are pretty good and at a good price
PETE
I have, i used to buy from there frequently. In fact i would base my tool & consumable purchases by what i was able to buy from HF.
I ended up finding that the tools would break & the consumables were severely sub-par resulting in the job being stopped because of those reasons then i had to buy the same tool again. for one example- i bough a pack of sawzall blades for HF, all of them broke during mid project. I went to HD and bought 1 diablo blade & it finished the job with out breaking and i was still able to use it the next job.
Ben W
Hey all.
I work at a Harbor Freight in Washington State and I can say for sure that we definitely do not sell directly to Amazon. At our one location alone we have 3 different people who come in and buy a couple thousands of dollars worth of product from us every week and resell it on Amazon for a profit. They’re always loaded to the brim with printed out coupons and they have a business resellers permit allowing them to not have to pay taxes on anything either.
Christina Hulbert
Hey Washington,
I work for Harbor Freight in New Jersey and I’m glad that this happens in other stores as well. The only other thing I can imagine is during our Parking Lot Sales when our distribution centers have the refurbished merchandise marked down. One of my customers was telling me how he’d go down there and by 20 or 30 of the pancake and hotdog compressors to throw into his work trucks
NewtonApple
Are the guys who are obviously reselling paying with credit cards or cash? This sort of buying at retail, selling online is a moderately efficient money laundering method.
PABLO
It’s very simple. Somebody has a vender account with Amazon and puts up listing on their drop shop program. The listing shows sold by Amazon but it’s really shipping from a third party with Amazon vendor account. They either keep some stock on hand or smaller guys will run to Harbor Freight once a day to fulfill orders.
NewtonsApple
That is how 3rd part sellers work who are doing reselling. For the most part Amazon owns all the inventory they are selling. There are limited cases where items drop ship from specific brands/distributors.
PJ
I would imagine in some way Harbor Freight is working with Amazon. In my experiences with HF I have found that its not uncommon for the left hand to not know what the right hand is doing so the response you received may be accurate as far as that person knows.
Looking at some of the other marketing strategies of HF, nothing would surprise me.
NewtonsApple
I bet it is items repossessed by Amazon from 3rd party sellers who didn’t pay their bills and/or had accounts closed due to suspicious activity. There must must be times where Amazon ends up with 3rd party inventory and no where to return it to.
I havn’t read their terms to find out what they do with your inventory if they end up sitting on it. Being able to sell it themselves seems pretty reasonable. They have never been big on worrying about inventory origin seeing as they will (or at least did) mix inventory from 3rd party sellers.
Michaelhammer
Absolutely riveting. This is why I visit this site daily.
NewtonApple
So apparently Amazon spent some time buying inventory from 3rd party sellers to hold as Amazon Inventory. This may have been executed through some sort of automated system and gobbled up inventory from those reselling HF tools on Amazon:
https://www.retailwire.com/discussion/why-is-amazon-paying-full-price-for-third-party-inventory/
Sounds like they may very recently be reversing course: https://www.google.com/amp/s/qz.com/1567934/amazon-sellers-panic-after-the-company-reportedly-canceled-orders/amp/
NewtonApple
As an example of the sort of crazy inventory antics Amazon has pulled, there was a time where they were pushing hard to compete in the industrial supply space. They went and bought pretty much one of everything from a whole bunch of very specialized manufactures. Think, buying almost one of everything from Mitutoyo, Brown and Sharp (Tesa, Compac, Interapid), and Starrett. Some of those catalog items are super specialized and no one buying them is looking at Amazon. Much of the inventory was eventually sold at 80% off list. There are still some relics around from that era:
Anyone need a micrometer?
https://www.amazon.com/Mitutoyo-105-421-Micrometer-1600-1800mm-Graduation/dp/B003UATBWK/
Brandon Brewer
I worked as a manager for HFT for several years and know personally that HFT does not wholesale tools. Now they will sell pallets of As Is/Returns from Parking lot sales if you contact the Store Manager and you follow a strict process to buy those pallets. It doesnt happen often here in the Midwest where I am but on the West coast where HFT started there are more stores and happens more. The new brands like Bauer and Hercules have been sold by the case if someone comes in with the money. Just some info to throw out there.
Bob H
Thank you for highlighting this Stuart.
This is even more interesting when viewed from Canada…
Hercules Titanium Drill Bit Set 21 Pc:
Harbor Freight USA $19.99 USD = ($26.91 Canadian Dollars)
Amazon USA, $38.72 USD = ($52.13 Canadian Dollars)
Amazon Canada, sells in Canadian Dollars, for $142.06 in Canadian Dollars!
Jason S
They are dropshippers