Why Amazon’s ‘much ballyhooed’ suspension policy isn’t protecting third-party sellers in the way they expected (AMZN)

Amazon's third-party merchants power some 58% of the e-commerce giant's sales.

But those sellers aren't without their gripes — and one of the biggest complaints centers around just how easy it is to be wiped off the platform without any warning or explanation. Many accounts suspensions are also the result of an algorithmic decision made by Amazon's internal machine-learning software, which results in some sellers getting booted even if they have done nothing wrong.

"Nobody likes that your business just shuts down overnight," Amazon seller and consultant Cynthia Stine told Business Insider. "They keep your money, they keep your inventory, and you're looking at a very vaguely worded notification document that doesn't really tell you what they're looking for."

So, as part of a German antitrust settlement, Amazon amended its Business Services Agreement, which all third-party merchants agree to.

That new version gives sellers in and out of Germany a 30-day notice before permanently removing them from the platform. Sellers whose profiles were used for illegal or fraudulent activities, whose products harmed customers, or otherwise "materially breached" the sellers' agreement could still be removed without that 30-day notice.

Before the new policy went into effect, Amazon said in its seller agreement that it could "for any reason at any time by notice" remove merchants from the marketplace.

That new policy went into effect on August 16 for merchants worldwide.

The policy isn't what sellers or consultants thought it would be

When the August 16 policy was enacted, sellers and consultants believed Amazon would give them that 30-day notice when they were suspended. That's what much of the messaging around the new policy communicated.

"This is a much-ballyhooed improvement to account suspension and transparency and we're looking under rocks for it," said Chris McCabe, who is the founder of a consultancy called eCommerceChris that helps Amazon sellers whose accounts have been suspended.

The fact that this new policy doesn't protect suspended sellers — and only ones headed for permanent removal— was "a surprise to us," McCabe said.

Hollis Johnson/Business Insider

The limits of the policy were also news to Jason Boyce, who was a multimillion-dollar seller on Amazon and is now a consultant to Amazon businesses.

"When I read the policy change that came shortly after the EU rulings, I thought, 'Thirty days — this is a good start,'" Boyce told Business Insider. "'I would prefer 60 or 90 days, but this is a step in the right direction to protect third-party sellers.'

"To hear now that it had nothing to do with account suspensions, only to do with account cancellations, to me it seems that they only paid the account policy lip service," said Boyce, the founder of Avenue7Media.

An Amazon spokesperson said sellers are "incredibly important" to Amazon and its customers.

"We have tools and services to help them grow their business, as well as policies to ensure they help us delight our customers," the spokesperson said in a statement emailed to Business Insider. "If sellers violate our policies and damage our customer experience, we take swift action in order to protect both customers and other sellers."

Ever-changing language

Part of the confusion stems from the fact that Amazon frequently changes how it refers to account suspensions or terminations.

Germany's federal competition regulator told news media that the settlement would address "the termination and blocking of sellers' accounts." But those two terms could feasibly refer to permanent or temporary account actions. Amazon alternatively calls temporary actions "suspensions" or "deactivations." A permanent account ending may be called "blocking."

Read more: Amazon denies a report that it altered its search algorithms to favor its own products

The constantly-shifting terms are baffling to sellers. But this hazy language is not an accident, said McCabe, who worked in Amazon's seller compliance department for five years.

"They generally like to keep it vague on purpose because they don't want to be, I guess, pigeonholed. They don't want to be quoted back to themselves," McCabe said. "'Well, you told me this, and that's what I've given you.' They don't want to be quoted to themselves. They keep it vague because they want to reserve the right to interpret things as they see fit."

Sellers are still getting removed without 30-day notice

The fact that Amazon is not required to give 30-day notice before suspending an account is still widely not known among sellers.

Peter Kearns was a business development manager at Amazon for nearly four years, and now consults suspended Amazon sellers. He told Business Insider that several suspended sellers have contacted him in recent weeks, confused that they didn't receive the 30-day notice before getting booted.

Read more: A key metric in FedEx's financial statements underscores why the shipping giant dropped Amazon as a customer

"I think that one of the challenges with the new BSA (Business Solutions Agreement), there was a lot of talk when it came out that sellers were going to get a 30-day notice," Kearns said. "That doesn't say that that's what this was going to do."

Amazon warehouse in Brieselang, Germany.

Getty

In the UK, Yasmin Calma runs a baby accessory and clothing store called Tiny Alpaca with her partner Kieran Broyd. On September 15, the merchants discovered their account was suspended without any notification. (As of September 18, they're back on the platform.)

"We haven't been given any reasoning — no email, no explanation," Calma told Business Insider. They said they had $15,000 of inventory stuck in the Amazon warehouse and couldn't ship it back without losing thousands of dollars.

Calma has been monitoring the Amazon Seller Forums, where scores of sellers have posted about their accounts getting suspended without notification, to learn more. "A lot of them believed they would get a 30-day notice, but they were shut down with no notification," Calma said.

"If they would just tell sellers, 'you have two weeks to clean up your act,' most sellers would," Stine said. "They would do whatever Amazon wanted. Amazon sellers are like abused kids. They would do anything to please Papa Amazon. But we don't get warnings — we just get taken down."

Read more:'Amazon is not their friend': Amazon sellers are organizing against the retail giant as the FTC and DOJ continues their anti-trust probe

One US-based seller, who requested anonymity to avoid retaliation from Amazon, was removed from the marketplace after Amazon claimed they were selling items with prescription-level substances in it.

Amazon told the seller to remove that product on August 30. They removed the inventory from that product, but failed to delete the listing altogether.

Less than two weeks later, on September 11, the seller saw one night that their account was suspended. "My stomach totally dropped," the seller told Business Insider.

They thought they would receive a 30-day notification, but did not.

John Zeedick/AP Photos

That seller ultimately got their account reinstated in less than two days, but there was a hit to the seller's bottom line — they generate some $2,000 a day in sales.

"We're running a business," the seller said. "We have lines of credit that we're paying on top of the product — just not a very good situation to find yourself in."

And in India, Amazon seller Chirag Jindal told Business Insider that his account was suspended on September 6. He received two emails the prior month, which Business Insider viewed, about inaccurately constructed listings, which he corrected.

"I didn't get any notification before (I was suspended)," Jindal said. "And I think that's the worst thing about suspensions that Amazon does."

Read more: US senators wrote a letter to Jeff Bezos expressing 'grave concerns' over 'illegal' and 'deceptive' products sold on Amazon

Five Amazon consultants and lawyers who help sellers with suspended accounts confirmed to Business Insider that recent clients also have not received the 30-day notice Amazon promised.

"I have not seen the 30-day warning yet," said Stine, who runs a 25-person business out of Dallas focused on reinstating suspended Amazon sellers. "So far as I can tell, there's been no one who has gotten that 30-day message."

'Good apples' are getting caught up in the crackdown — and the economic consequences can be serious

While they may be thought of as small businesses, some of these marketplace sellers are massive. Around 50,000 third-party Amazon sellers each generated more than $500,000 in sales last year.

So, when they're removed from the marketplace platform, they risk losing their entire livelihood. Scott Needham, CTO of Amazon marketplace seller Logan, Utah-based BuyBoxer, previously told Business Insider that, when his store was suspended for seven days, 100 employees were sent home for a full week. (This shutdown happened prior to the August 16 policy change.)

"I just know that like every seller out there has feared the policy enforcement out there," Needham said.

"Amazon says that they're going after the bad actors. I completely support and I want them to do that, but I can name dozens of sellers that have tried to do things in good faith and they still come across this."

AP Photo/Patrick Semansky, File

Plenty of "good apples" can get caught in Amazon's machine learning-based process of suspending sellers, Kearns said. Lots of suspensions result from seller accounts triggering Amazon's algorithm to catch bad actors in the marketplace, and that means sellers who haven't made a mistake can sometimes end up suspended.

See also: Apply here to attend IGNITION: Transportation, an event focused on the future of transportation, in San Francisco on October 22.

An Amazon spokesperson told Business Insider that the company has employees who "monitor seller activity and take action when appropriate."

"We provide sellers with clear guidance about what policy they violated, and have an appeals process where sellers can explain how they will prevent the violation from happening in the future or let us know if they believe they were compliant," the spokesperson added. "Our global team is available 24/7 to support sellers via email, phone, and chat in more than 15 languages. If a seller has a question about their account, we encourage them to contact us directly and we will investigate and take appropriate action."

REUTERS/Clodagh Kilcoyne

Stine said many of her clients who were suspended in the past week made a mistake in creating a variation on their product page. An Amazon merchant who is selling, say, several different colors of water bottles may place a different size or type of bottle in the same listing. This is beneficial for the seller if that original water bottle has a high ranking and review, but it's not allowed under Amazon's seller agreement.

And some sellers take it too far, knowingly or not, and pack hundreds of variations in one listing. Ultimately, they risk suspension from Amazon.

"They are banning people for very minor offenses made out of ignorance," Stine said. "That's why this has been so heartbreaking."

Still, the speedy banning is in line with Amazon's ethos of "customer obsession." If a third-party seller is potentially causing a bad experience for customers, the e-commerce giant won't hesitate to eliminate them.

"Amazon at its core is obsessed with creating a great customer experience," Kearns said. "If they think a seller is creating a negative customer experience, they'd rather suspend and protect that customer experience rather than allow a potential bad apple."

Are you an Amazon seller? Email the reporter at [email protected]om.

Leave a Reply

Your email address will not be published. Required fields are marked *