Uh oh….. Small businesses, be warned. Amazon, arguably the most powerful company in the world, is coming for you.
Amazon has recently informed thousands of European sellers that it will hold onto sale proceeds for over a week. Normally, sellers received their funds within 3 days. Now, this process may take up to ten days. This is almost as bad as the WTAF Fee we wrote about in June!
Small business owners and merchants may have hundreds of thousands of pounds and euros locked in by Amazon. Seriously?
For scope, there are more than 225,000 businesses selling through Amazon in Europe. Amazon’s change will affect roughly 15% of these businesses, which is roughly 33,750. Most of these companies have been on Amazon for at least 7 years, too. It’s never cool being screwed over by a platform that they’ve truly built their businesses on.
We also need to consider the impact of this on sellers’ financial situation. For many, their store is their only source of income. If they’re living paycheck-to-paycheck and having their money withheld, it can lead to store closures and even worse. Some are lucky enough to have other forms of income on which they can rely on for cash flow purposes. Sellers were given a one-month notice to this change, meaning they had very little preparation time in regards to moving cash and adjusting their budgets.
Etsy did something similar recently, too– only worse. In late May, they changed their policy so that they held onto 75% of seller’s earnings for upwards of 45 days. As a result, UK vendors boycotted the service. Since then, Etsy has reduced the held amount to around 30%. Ask us, and that’s still absurd. Some Etsy users were lucky enough to be spared from the reserve system, while others have either been locked in or their shops suspended.
Now the question is why Amazon did this. Such a successful company must have their reasons. One explanation is that it will reduce Amazon’s administrative burden by protecting against fraud and promoting returns. This totally makes sense because Refund Fraud Is No Joke! Well, even though Amazon would accrue interest on the withheld funds, it probably won’t make too big of a difference to their overall income. It sure will hurt the honest, hard-working small business owners tho!
An Amazon spokesperson said the policy will “ensure [sellers] have sufficient funds to cover any financial obligations, like product returns or customer claims”. I don’t know about you, but it seems pretty counterproductive to me. And, execs have emphasized that this policy was introduced seven years ago, and that it’ll only impact 15% of sellers.
The other question is the credibility of this spokesperson. They stated that sellers were given three-month notice, but a merchant said they received less than a month. Who do you trust, a hardworking small business owner being screwed over, or a large corporation? Fog of war, I guess?
We all sit here and speak about how much more convenient Amazon has made our lives, and that’s true. Small business owners are the backbone of the country, and the engine room of the economy.
Hang in there!
You’ve already proven resilient just by establishing a company, and The Instant Refund Expert™ is there for you. Share your stories with us to highlight.
Yours Truly,
The Instant Refund Expert™
The Refunds Blog 