Amazon’s suspensions don’t sit well with smaller marketplace sellers

August 29, 2016 08:46 AM

(Bloomberg)—Andy Ayers was walking to his car in a Big Lots parking lot—shopping cart brimming with cereal, dog treats and Always brand feminine hygiene products he planned to resell for a markup on Inc.—when he got a phone alert that his account had been suspended.

“I thought, ‘Oh Crap. Perfect timing,”’ says Ayers, 32, of Athens, Ga.

An Amazon shopper had complained that one of Ayers’s products wasn’t authentic. Ayers disputed the claim and provided receipts to back it up. But about two weeks had passed by the time his account was reinstated, and the downtime cost him sales.

“I wasn’t doing anything shady,” says Ayers, who estimates he’ll sell $500,000 worth of goods on Amazon this year. “It seems there are a lot of Amazon sellers who aren’t doing anything wrong and are getting punished. There’s an arbitrary nature to it.” He has plenty of company. Attendees at an annual gathering of online merchants in Seattle last week said merchants are “living in fear” that they’ll be kicked off the site.

Most Amazon customers probably don’t realize that almost half of all items sold on the site come from third-party merchants. That means a set of kitchen knives could have been plucked from a Wal-Mart bargain rack in Nebraska by a mom-and-pop business looking to profit from a little retail arbitrage. Amazon, No. 1 in the Internet Retailer Top 500 Guide, relies on more than 2 million merchants like Ayers to keep its website and warehouses stocked with an assortment of goods no bricks-and-mortar store could ever match. But the company’s relentless focus on customer service means that when Amazon receives a complaint it’s the shopper, not the merchant, who typically gets the benefit of the doubt.

“We treat sellers like customers,” said Erik Fairleigh, a company spokesman. “The perfect seller experience is seamless self-service that allows the seller to independently run their business. If a seller needs to contact us, we have Seller Support associates available 24 hours a day worldwide, including support for urgent issues with a response in an hour or less. Sellers have available to them at any time many comprehensive tools and services to reach and interact with our Seller Support team.”

But Ayers and other sellers maintain Amazon is too quick to suspend its business partners and too slow to review their appeals, cutting off their primary revenue source, leaving them saddled with inventory. That ties up thousands of dollars in Amazon accounts until the issues get resolved, they say. As a result, many are reducing their reliance on Amazon by placing some of their merchandise on other sites, including eBay Inc., one of Amazon’s chief rivals.

“Any complaint from any buyer or manufacturer can result in a seller suspension, and their livelihood stops,” says CJ Rosenbaum, a New York attorney who says he’s helped hundreds of sellers navigate the suspension appeal process in the past several months. “Mom-and-pop businesses can’t make the mortgage and big businesses can’t make payroll.”

Sellers say the suspension process is guilty-until-proven-innocent, forcing them to prove complaints are unwarranted or pledging to make improvements to get selling privileges reinstated. They also say that the email appeal process wastes time and energy, and they often field the same request, often vague, seeking additional information without specifying what’s wanted.

The tension between Amazon and its sellers was on full display at the Seattle conference, which attracted 100-plus merchants and vendors. The suspension process has given rise to a cottage industry of lawyers, former Amazon seller account investigators and veteran online merchants who charge up to $3,000 to help sellers navigate the mysterious suspension appeal process.

Consultant Lesley Hensell was scheduled to lead an afternoon session on “hot button suspensions.” She and her partner noticed the business of helping sellers deal with Amazon suspensions pick up a year ago, and they now have a 30-person team working on it. “Amazon is getting harder and harder to persuade,” she says. “There’s no consistency. It’s all by email with different people handling the case. This isn’t how business partners are supposed to act. If I’m your business partner and you’re unhappy with me, I’d hope I could speak with you about it.”

Amazon is clear in its seller policies that its rules can change at any time, taking effect immediately. Sellers are informed about changes via email and other notifications sent on the platforms they use to manage their accounts.

Amazon’s view of the perfect customer experience is one that is completely automated with no person-to-person interaction. Someone orders something online, and it arrives on their doorstep. Any additional interaction—a complaint or a return—is considered friction that indicates a problem. Sellers maintain this policy is unrealistic and fails to recognize that some shoppers lodge unwarranted complaints to get refunds when they are simply having buyers’ remorse.

EBay has grappled with similar complaints from its marketplace sellers and last year relaxed its rules in an effort to make amends. Consultants for online merchants encourage sellers to get inventory on eBay and other platforms so their business isn’t crippled by an Amazon suspension.

That’s what happened to Emad Abukheit, who spent several years building a $2 million business selling mostly health and beauty products on Amazon before his account was suspended in March. Customers complained that products they purchased were expired, damaged or not as advertised. He submitted a plan of action to improve operations in his North Carolina warehouse, but Amazon kept requesting additional information and saying his account remained under review without making a decision.

He hired Chris McCabe, who once investigated sellers for Amazon and now runs a business helping sellers get reinstated. Frustrated with the lack of response from Amazon beyond generic emails telling him his account was under review, Abukheit filed a complaint with the Better Business Bureau in April. About two weeks later, he received an email from Amazon that his account would not be reinstated.

Abukheit says he had to cut 10 warehouse employees and estimates the suspension cost him $600,000. He is shifting inventory to eBay and other online platforms but says sales are slower. He was frustrated since a handful of complaints put him out of business when he has sold thousands of products on the site. “It’s been a nightmare,” he says. “They were our partner. You can’t just put your partner out of business.”

Ayers used to work at an Amazon warehouse in Lexington, Ky., where he noticed the volume of inventory sold by third-party merchants. He decided to go into business himself four years ago and purchased $40 worth of scented candles from Wal-Mart. Now he gets products from retail liquidations and the shelves of various stores, including Big Lots and Marshalls. Of the $500,000 he expects to generate this year, Ayers keeps about 35% for himself and pays Amazon about $100,000 in fees and commissions.

“My wife and I joke that we’ll sell anything that makes a profit,” he says.

When his account got suspended, he paid $2,000 to a consultant and followed the advice to get reinstated. He says he’ll sell on Amazon as long as he is able to make a living, and if it gets too onerous he’ll return to the workforce. His primary suggestion is for Amazon to insert a human touch to the process so merchants get a warning before being suspended and there’s a conversation in case complaints are unwarranted.

In the meantime, he’s shifting inventory to other sites so an Amazon suspension isn’t so crippling. “I learned a long time ago not to stress about what I can’t control,” he says.




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