Why FBA Sellers Are Not Like Spotify Users
Many Americans have watched in disbelief as the president of the United States was silenced by Twitter, Facebook, and almost all other big-name platforms as the power of “Big Tech” is now being debated in America and the world. “Big Tech” is the new buzzword and is being used in the same way as “Big Pharma” or “Big Oil” was used in the past. Can a platform like Twitter or YouTube shut down an account that has millions of followers in an instant because it disagrees with its political stance or on its own decides that a post encourages violence? Can’t they do what they want since they are a private company? Should they be regulated? Obviously, lines have to be drawn and the current rage now is who decides when to draw it and at what point. (My personal feeling is a line somewhere between Twitter and Parler seems about right). I do not think it should be a free for all where talks of white supremacy and Nazi ideology are glorified in the name of free speech.https://www.linkedin.com/embeds/publishingEmbed.html?articleId=7058065712004193745
Regardless, many people have commented recently that the power Amazon Seller Performance has over its merchants is the same argument. “Big Tech” VS the little guy. I reject this comparison outright and I think all sellers should.
As I have devoted my last few years trying to bridge the huge disconnect between Amazon Seller Performance and 3P sellers, I can tell you this strange relationship (Between sellers and Amazon) is very different than for example a Spotify user and Spotify or an Instagram blogger and Instagram.
While I do not think a platform should be able to terminate an account without some due process, any company ultimately has a right to end the contract based on the agreement signed. Nobody forced you to invest your time on Instagram and if they think a line was crossed, they technically can do that.
Amazon has used this same argument in terminating sellers, seizing funds, and destroying inventory. This is what you agreed to, own it. It is my position that this is a whole new level of unfairness and the issue with Spotify or Twitter is totally not the same as it is for FBA sellers. Firstly, the fact that a seller agreed to these terms is generally only known AFTER the fact and besides, nobody thinks it will happen to them until they call my number asking to “speak to ED urgently”. It is also practically the only game in town so you have no choice but to agree to the terms and it is signed essentially under duress. If you’re tossed from Twitter, there is Facebook, Instagram, Whatsapp, Telegram, etc. There is no Amazon alternative for 3P sellers and it’s not even close. (Sorry Walmart & eBay)
(Please join the ASGTG Sellers group that helps you avoid compliance pitfalls to the extent possible.)
What’s involved in selling on Amazon?
Firstly, months of research and a lot of funds go into an Amazon seller launching a product and making their first sale which very often never happens. The seller must research the product with enough demand and supply, find a supplier, figure out how to import it if it’s overseas, label it properly for FBA, and make sure every single of Amazons hard to follow rules are obliged. Then, they need to open a company, file for a TM and apply for brand registry, create the listing, retain a lawyer for IP issues, hire an accountant, create photographs, and create branding materials. You must contend with copycatters, counterfeiters, and shady suppliers that may sell your product to other sellers even though you paid for the mold and signed and exclusivity with the factory.https://www.linkedin.com/embeds/publishingEmbed.html?articleId=7051734572707686833
Assuming things take off and you turn this into a real business, you can easily spend hundreds of thousands of dollars on all forms of advertising from within and outside of Amazon to “rank” your item and obtain reviews. At this point you sign a 3 years lease on a warehouse, hire a few in-house people and you’re on the way to growing major e-commerce business. You get an SBA or business bank loan or take out equity from your home to fund this enterprise. Your FBA inventory can quickly reach 1 million dollars and your 2-week monthly disbursement can hit 100K pretty fast. You put in 60 hour work weeks, get insurance, pay all your taxes, hire employees and you feel like you have a real asset.
At this point, Amazon decides you related to an account that cannot sell; your invoice is not “verifiable”, or a general non-compliance email. Amazon will often hold your remaining funds, terminate your account, keep all your inventory and say “sorry Charlie, it’s in the BSA. if you not happy, next time do not sign the agreement”. Of course, you’re not related to another account and you’re not selling counterfeit but if the horrible process does not work for you, it will destroy years of work, force you to cancel the lease, terminate your employees, and turn your life upside down often without recourse and even if Amazon admits later in arbitration that you did nothing wrong and it was indeed a mistake. This is not the same “Big tech” issue as losing your Spotify account. This is an inhumane and barbaric way of acting and something that I think most in Amazon now recognize as not proper.https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8902666660877446816
Unfortunately, this is still common and that is why the current discussion currently taking place regarding “Big tech” is not the same as the relationship between Amazon and its Sellers which is a much more substantial issue facing many small businesses today.
This is from a seller who was terminated in 2016 and reached out to me last week to see how I am doing. He told me this ” I suffer from mental exhaustion- what happened to me has left me feeling suicidal and worthless. Desperately trying to earn so that I can pay the bills and not have to move home and move my kids from school. I don’t know if my story is helpful to anyone and it won’t achieve anything. So I think we should leave it. I watch your videos periodically and think you are very gracious and helpful. I wish you all the best “
If the solution to this comes from Government regulation or without (which is my preference), I think placing the 3P seller’s issue under the same umbrella as “Big Tech” is not intellectually honest and should be treated as separate. Do you agree? Put comments below and would love to hear feedback
Please join the ASGTG Sellers group that helps you avoid these pitfalls to the extent possible. Of course everything free as always.