It truly is a jungle out there in the Amazon, and no, we’re not talking about the rainforest. We’re talking about the world’s largest e-commerce marketplace and their FBA program.
In the Amazon “food chain”, the sellers are the trees and plants, providing nutrients for the customer’s or “primary consumers” while Jeff Bezos sits back and rules the land as the almighty jaguar. We make this comparison, not only because of how well it works, but also because people rely on Amazon for easy-access to everyday life essentials just like earth relies on the rainforest to produce oxygen and clean the atmosphere.
But as the marketplace continues to change and evolve, Amazon can manipulate the sellers who are the ones providing the goods in the first place, chopping them down like trees. Now you see where we’re going with this, “Save the Sellers”- not the rainforest.
Amazon offers entrepreneurs the opportunity to start their own business through the Amazon FBA program- FBA meaning: fulfillment by Amazon.
Although, over the years, Amazon has built a reputation for providing exceptional customer service- its sellers’ experience a different side. From issues with payout to a highly competitive marketplace, there are many challenges that come with the FBA business.
To begin, let’s talk about how difficult it is to start selling. When the company first entered the e-commerce scene, they only sold books and CDs, then they evolved to selling almost anything and everything. Now, they’ve become stricter as more sellers continue to enter the marketplace. So what are your options when it comes to products for Amazon FBA businesses? Well, in order to start, sellers must receive approval for certain categories of products like clothing and collectible coins to name a few.
Once sellers are approved, they can begin selling with Amazon FBA and wait for the cash to roll in. However, the cash flow might not be as free flowing as expected. Amazon sellers only get paid every two-weeks and Amazon doesn’t accept PayPal from buyers, which makes it hard if sellers plan on using profits to purchase more inventory. But all of this sounds like chump change when we dive into the next topic: withheld funds.
When Amazon has reason to believe a seller’s goods are counterfeit or other various “issues” flag their account, Amazon can withhold the seller’s funds for up to 90 days as part of their reserve policy. Three months without a cash flow? Sounds like unemployment to us.
What’s worse is that your account funds can be withheld, or your account frozen, as a result of Amazon’s highly competitive marketplace, and some sellers definitely do not fight fair. They’re the fungus of the Amazon food chain, spreading diseases to sellers through fake Amazon reviews.
In an article by The Verge, John Dzieza tells the story of a multi million-dollar weapons accessory Amazon FBA business that fell victim to fake reviews. You’re probably thinking that a competitor planted bad ratings on the listing, causing the business to drop in search ranking and consequently lose sales, and although this tactic is used all the time, this wasn’t the case this time. You see, this time, the fungus got smarter and bought fake five-star reviews for the weapons accessory company. How nice of them. By doing this, the rival was able to frame the company for purchasing the fake reviews and in turn, caused Amazon to remove the seller’s listings and prevent them from selling on the platform again. And you better believe the sellers account funds were frozen too.
This type of unfair competition happens all the time and in many forms. From product impersonation to bribery, it’s a cruel cruel jungle out there. What’s worse though, is the process of getting off suspension and accessing frozen funds. This is because Amazon outsources their performance staff from other countries, like India and Costa Rica, and trains them to rely on pre-written scripts rather than allowing them to think for themselves.
The Verge interviewed a former Amazon fraud investigator, Rachel Greer, who explained that oftentimes, she and other workers might be able to see the actual issue with the sellers’ accounts, but they were unable to go into more detail than the forms would allow. Greer compared her job to working as a robot.
Although sometimes these suspensions are warranted, the process for reviewing suspensions is clearly flawed. Unless Amazon plans to reevaluate their methods, honest sellers will just have to take the risk of being unfairly shut down.
There is one other thing sellers can do, fight back. By working with the attorneys at RM Warner Law, you can help save the Amazon sellers.
“In my experience representing Amazon sellers, Amazon is the most cut-throat online marketplace out there. There are strict policies that are often difficult for even the most honest seller to comply with — all of which are designed to combat misconduct by seller. The flip side is, competitors can abuse the strictness or lack of enforcement, and wreak havoc on sale. I’ve literally had one client complain of going from $100,000 in sales per month, to $0, and have their account frozen. Amazon is truly the jungle of e-commerce.” says Raees Mohamed, Founding Partner at RM Warner Law.
If you are planning on becoming an FBA seller, and are searching for an experienced online business attorney, contact us at RM Warner Law. The attorneys at RM Warner Law are well-versed in e-commerce law and know how to help your FBA business thrive so give us a call us today.
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