Minefields for Amazon Sellers

I could go on for a long time with stories about Amazon sellers that believe they have been screwed by Amazon. I have a big network of ecommerce professionals, and I am astounded by the things I hear. In fact, I often wonder if Amazon is worth the trouble at all.

If you are selling on Amazon or plan to sell there, be wary. Very wary…

The first thing you have to understand about Amazon is that if you are on their platform, it can feel a bit like entering a foreign country where you give up a lot of your rights. If they decide they don’t want you there, you can lose enormous revenue overnight. If they decide to freeze your account, even if you have done nothing wrong, there is a very significant chance you will not get your money back. If they decide you have violated a policy, you have very limited ability to regain standing.

Furthermore, they are the final arbitrator in any disputes between you and customers (and many sellers have horror stories of Amazon deciding for the customer even when the customer is obviously crooked). They will quite possibly not protect you from rogue competitors who can damage your reputation in many ways. They will quite possibly not reimburse you for the many mistakes they will make with your inventory. They may even use your ideas and become your competitor themselves.

You may live in the United States, but do not kid yourself; Amazon and you are not on a level playing field. Yes, you can go to court, but your legal defense is going to lose against their armies of lawyers and one-sided agreements you signed when going on their platform.

If you thinking I am overstating it, consider this story which made waves a few months ago. When Amazon decides to suspend an account, for them, it is just another day in the office. In fact, many suspensions are apparently made by software with no human decision making at all.

However, for the seller, that decision very often affects his/her ability to feed their family. To make matters worse, Amazon typically also freezes any money in the suspended seller’s account and makes it unavailable to withdraw. It is not unheard of for sellers to lose access to hundreds of thousands of dollars that way. Suddenly, a business has no revenue and no cash.

Sellers in that situation are desperate and that has created the gray world situation described in the story I just linked to. I am not condoning illegal behavior, but in many cases, sellers feel that they have no other option. Many of them are innocent but have been caught up in mistakes made by Amazon software.

The truth is that there IS a lot of fraud on the Amazon platform and there are a lot of scam artist sellers. To their credit, Amazon is trying to fix the problem. Unfortunately, the collateral damage is enormous and innocent sellers get targeted. In fact, getting suspended by Amazon could be simply the result of the rogue actions of a disgruntled customer or a crooked competitor.

I could write and write about specific issues that arise but rather than do that, I want to just give you a few tips to protect yourself a bit. Note that these tips apply even if you know you are innocent. Whether you are actually innocent or not is sadly not going to affect things on Amazon as much as you might think.

1. Keep as little money in your Amazon account as possible. The less of your money they are holding, the less they can confiscate. If you get tied up in a suspension and for some reason lose, you will very often never see that money again. Again, your guilt or innocence may not be relevant to this fact.
2. Make sure that the bank account you have linked to Amazon is kept as empty as possible. Do not have any kind of autodraft protection on that account and sweep the money out of it every day. This prevents Amazon from trying to draft money that they unilaterally decide you owe them.
3. Be careful of linking accounts. Let me explain what I mean by that. If you use a computer for your Amazon account that has also been used to log into another Amazon account that has been suspended, it is easy for Amazon to link those accounts, and you are at grave risk. As I am writing this, I know of a half dozen acquaintances who have recently been suspended by Amazon for this reason. They are innocent and do not even know the account that they are linked to. There are many ways besides using the same computer that Amazon can use to link accounts (such as network, address, or bank account). To give you an idea of how careful you have to be, if you log into a friend’s Amazon account as a favor and he ends up suspended down the road, your account may be at risk.
4. Do not ignore initial emails from Amazon asking for information. Very often, you will get pesky automatically-generated emails that are easy to ignore. If you do ignore them, do not be surprised when you find your money gone and your account suspended a few months down the road.
5. Play the game they want you to play. Amazon is famous for asking for a POA (plan of action) to get an account reinstated. Amazon employees look at these POAs and decide whether your account can be reactivated or not. If you tell them what they want to hear, they approve your POA. More typically, because you are shooting in the dark and do not know what they are looking for, they just deny the POA and leave you suspended. Writing these POAs is actually something that you might consider getting an expert to handle. It goes without saying that very often, POAs that get approved are full of fluff that never gets implemented. It is a silly game, but a game that you must play.
6. Get professional help. Dealing with suspensions is very often a matter of life or death for small businesses and you need to find an expert that knows how to play the game. If you want to find a professional, you can google it to find dozens of firms that at least claim to specialize in playing the game. You can also get on Amazon seller forums and read their advice. (Note: we are not your professional for this. We do not write POAs or do anything remotely close to brown-nosing Amazon at all. Life is too short…)
7. Remember your place. Yelling gets you nowhere. Legal threats will get you nowhere. If you want a sober reminder of your rights (or lack thereof), go back and read the terms you signed to start selling. The only way to win is to get humble and play the game.
8. Once you get your account reinstated, take your money and invest in diversification. Don’t keep all your eggs in the Amazon basket. I sincerely feel sorry for my friends that have to bend over and take the kind of crap that they take from Amazon. Figure out how to build a business on other channels and your own website. If you can get to the point where you can tell Amazon to get out of your life entirely, I can promise you that will be a good day.

What I have just written is fairly common knowledge but is not the kind of thing you see publicly written a lot. There are reasons for that, mostly involving sellers or other industry professionals trying to stay in the good graces of Amazon. In many cases, they are just scared. I’m not; we are not dependent on Amazon at all. In fact, I think the world would be a better place without them.

If you can use them to make money, do so but keep your eyes open and keep a hand on your wallet. If you don’t need them, consider yourself lucky.