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Amazon has made radical changes to its terms of service for third-party sellers Wednesday to address a problem that is the biggest problem of its e-commerce business.
As part of an agreement reached with the German antitrust authorities about its market policy, Amazon announced that it would now give 30-day notice to sellers facing suspensions and give specific reasons to those who were blocked for "alleged violations of the law". Until now, Amazon could terminate the seller's accounts at any time "without justification", in accordance with the agreement announced by the Federal Cartel Office in Germany.
But marketers and market experts who have become too familiar with Amazon's increasingly cavalier approach to suspensions fear that the changes, which will come into effect on Aug. 16, are not going well enough. away to protect traders from the sudden disruption of their activities. , or even decimated, without recourse.
"It's a good step forward, but the update has not solved some fundamental issues related to suspension issues," said Peter Kearns, a former director of Amazon Marketplace who now works for 180Commerce, providing consulting and strategy services to third-party sellers. .
The market has been a blessing and a curse for Amazon since the company opened its doors to many other outside vendors, particularly from China. Third party merchants now account for 58% of items sold on Amazon, up from 31% a decade ago, and generate higher margins than Amazon's retail model, as sellers pay for all kinds of services , such as storage, shipping and advertising. Amazon to have to spend so much in inventory.
"Third-party sellers are kicking our first party," wrote Amazon CEO Jeff Bezos this year in his annual letter to shareholders.
But with millions of new sellers sourcing from tons of uncontrolled manufacturers, counterfeits have flooded the market, resulting in an avalanche of counterfeit lawsuits. While Amazon is attacking the problem of counterfeiting by aggressively suspending abusers, many honest sellers have also been fired, and Amazon has not been able to handle the deluge of complaints.
The German antitrust service wrote in the agreement that it had examined the problem of suspension mainly because "many sellers have complained of groundless and surprising cancellations and loss of digit." resulting business ". US regulators have taken no definite action, but presidential candidates, including Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT), have publicly criticized the company for having too much power over the market, and officials from the European Union recently launched an antitrust investigation into Amazon's business practices regarding third-party sellers.
Anecdotes from sellers about abusive terminations are not hard to find. For example, CNBC had previously reported that a seller had been suspended after a fake law firm had filed a false complaint, while another vendor had been wrongly attacked and suspended by a competitor calling itself the "Amazon virus". Last year, a small company called Cheapskates Liquidators was suspended because of false claims that it would have sold non-genuine items and, in attempting to be reinstated, she entered a foolish black hole.
In the updated agreement shared Wednesday with third-party vendors and viewed by CNBC, Amazon included a red online version comparing the old and the new language. Here is the most relevant part for suspensions:
Old version: "We may terminate or suspend this Agreement or any Service for any reason at any time upon notice."
New version: "We may terminate your use of the Services or this Agreement for convenience on 30 days notice We may suspend or terminate your use of the Services immediately if we determine that (a) you have substantially violated the And you have not resolved the problem within 7 days of a treatment notice, unless your breach exposes us to liability with respect to a third party, in which case we are entitled to reduce or cancel the aforementioned processing period at our reasonable discretion; (b) your account has been opened or ours; the controls identify that it may be used for an activity misleading, fraudulent or unlawful, or (c) your use of the Services has impaired, or our controls identify that it could harm other sellers, customers or legitimate interests of Amazon. inform you of this resiliation or suspension by e-mail or similar means, including Seller Central, stating the reason and the calling options, unless we have reason to believe that the communication of such information will prevent you from l investigation or prevention of a misleading, fraudulent or illegal activity, or allow you to circumvent our protection measures. "
Chris McCabe, a former employee of Amazon who now helps sellers to be reinstated and stay in compliance, said he was encouraged by the update but that it remained to be seen how she would be implemented. The 30-day notice will give sellers more opportunities to react to unfair suspensions and plead their case, but the rest of the wording is vague and leaves Amazon a lot of leeway, he said.
"They need better training and greater accuracy in terms of reason and causality around suspensions," McCabe said.
McCabe spends a lot of his time helping sellers claim their reinstatement and find the right person on Amazon to view the documentation because many processes are automated and the system is overloaded. Slow response times and lack of employee awareness of specific violations result in small businesses losing revenue at critical times of the year, such as the holiday season or Prime Day. In addition, suspension notices from Amazon often do not offer specific solutions, which prevents sellers from understanding the corrective actions they must take.
In a statement sent by email, an Amazon spokesperson said the updates were aimed at "clarifying the rights and responsibilities of sales partners".
"These changes allow Amazon to continue to protect our customers and business partners from abuse, while also clarifying our practice of providing advance notice and offering a way to appeal our decisions to vendors who think we are in pain. acted against their accounts, "said the company. I said.
On the online sales forums, merchants have voiced their complaints regarding issues such as the lack of clarity of Amazon's e-mail representatives and the low level of commitment. A salesman, suspended for violating an unfamiliar pricing policy, wrote about the frustrating nature of the appeal process. Email correspondence between Amazon and another suspended seller shows how difficult it is to dispute certain claims.
& # 39; False positives & # 39;
Then there is the dependence of Amazon on imperfect technology. Amazon's automated system, based on machine-learning algorithms, often signals non-violations, creating "false positives," especially when complicated tricks are involved, such as a competitor trying to demolish a top seller, according to Jerry Kavesh, an Amazon salesman. and consultant. The changes do not mention these problems or how to solve them, he said.
"Currently, attractive false positives go into a black hole, and even if they are resolved, they stay on your account as a black mark," Kavesh said. "Too many sellers can suspend their account even if they have done nothing wrong."
Kearns of 180Commerce said the updated version still left room for unexpected account cancellations. Even with the 30-day notice requirement, Amazon said in the new agreement that it could suspend the accounts "immediately" under certain conditions, as if a vendor were engaging in an illegal activity or behavior detrimental. Amazon certainly has logical reasons to maintain this right, but it can leave sellers attacked by competitors in a position of helplessness.
"The level of ambiguity is still such that Amazon can simply say:" We think you are doing something wrong and we will stop you, "said Kearns. "In that case, you are guilty until you can prove that you are innocent."
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