Shenzhen's big seller had 100 million yuan frozen by Amazon, which has not been recovered yet!

Shenzhen's big seller had 100 million yuan frozen by Amazon, which has not been recovered yet!

The fresh Amazon account suspension wave has stung countless Chinese cross-border sellers, and until now many sellers’ funds are still frozen on the platform.

 

After three consecutive years of losses, Youkeshu still has 100 million yuan in funds frozen by Amazon

 

Recently, Shenzhen-based Youkeshu held an earnings briefing, during which an investor asked Youkeshu whether it would return the hundreds of millions of yuan in payments frozen by Amazon.

 

Youkeshu responded that after the Amazon account blocking incident, the company set up a special working group to actively appeal to Amazon, and is also seeking cross-border arbitration, litigation and other means to do its utmost to unfreeze the funds, but the large amount of frozen funds has not yet been recovered.

 

According to the announcement previously released by Youkeshu, about 400 Youkeshu sites were blocked on the Amazon platform , and about 128 million yuan of store funds were frozen.

 

According to the 2022 annual performance report released by Youkeshu , Amazon still has 104 million yuan in the company's accounts receivable column.

 

Of this amount, bad debt provision reached 103 million yuan, with a provision ratio as high as 99.20%. The reason for the provision was that the platform funds were frozen and there was no sign of unfreezing.

 

 

It is worth noting that in addition to Amazon, Youkeshu also has funds frozen on the Walmart platform.

 

The book balance of Youkeshu at Walmart was 22.51 million, but the bad debt provision reached 21.29 million, with a provision ratio as high as 94.57%.

 

The Amazon account blocking incident dealt a heavy blow to Youkeshu. In the past three years, Youkeshu has been experiencing ups and downs. Its performance has been squeezed by both internal and external market environments. It has suffered losses for consecutive years and has been unable to turn losses into profits.

 

In the past three years, Youkeshu’s net profit before and after deducting non-recurring gains and losses has been negative, and the audit report for the most recent year shows that there is uncertainty about the company’s ability to continue operating.

 

 

In 2022, Youkeshu’s revenue was 774 million yuan, a direct decrease of 56.11% compared to 2021.

 

From 2020 to 2022, Youkeshu's net profit attributable to shareholders of listed companies was -871 million yuan, -2.676 billion yuan and -366 million yuan respectively.

 

Youkeshu stated that due to unfavorable factors such as the slowdown in global macroeconomic growth, setbacks in overseas core consumer markets, and intensified competition in the cross-border e-commerce industry, the company's revenue from its main cross-border e-commerce business in 2022 fell by 60.11% year -on-year.

 

In addition, as of the end of 2022, Youkeshu still had 307 million yuan in bank loan principal to be repaid, and the accrued interest, penalty interest, etc. reached 24.8404 million yuan.

 

Under the influence of many factors, Youkeshu's online revenue has continued to decline.

 

 

In 2022, Youkeshu's online channel revenue was 625 million yuan, accounting for 98.79% of its cross-border e-commerce business revenue. Among them, its sales on Amazon were 201 million yuan, down 61.28% from 2021; sales on AliExpress were 182 million yuan, down 42.66% from 2021; sales on other third-party platforms were 241 million yuan, down 65.31% from 2021.

 

It is unknown how long the pain caused by Amazon’s account suspension will last for Youkeshu.

 

The battle between Amazon and sellers is still going on, and some sellers have won!

 

In addition to Youkeshu, another big-selling product that is continuing to compete with Amazon is Zebao.

 

Affected by the account blocking incident, as of the end of 2021, the number of sites where Zebao’s sales were suspended by the Amazon platform had totaled 367, and the balance of frozen funds was equivalent to approximately RMB 32.2492 million, and the losses were also heavy.

 

In 2021, Zebao's revenue was 2.577 billion yuan, a year-on-year decrease of 46.02%, and a loss of about 886 million yuan. Revenue on the Amazon platform was 1.972 billion yuan, a year-on-year decrease of 55.76%.

 

In 2022, Zebao achieved operating income of 1.225 billion yuan, a year-on-year decrease of 52.39%. Revenue on the Amazon platform was 601 million yuan, a year-on-year decrease of 69.53%.

 

In February of this year, Xinghui Precision issued an announcement regarding the cumulative litigation, arbitration matters and litigation progress that occurred in the company and its subsidiaries for twelve consecutive months.

 

The announcement shows that the total amount of litigation and arbitration cases involving Xinghui Precision and its subsidiaries as plaintiffs is approximately RMB 37.3773 million, accounting for 79.87% of the total litigation and arbitration amount of RMB 46.7968 million.

 

This case is the lawsuit filed by Sunvalleytek International, Inc., a US subsidiary of Zebao, against Amazon in October 2022. Zebao's reason for the lawsuit is that the store account was frozen. It believes that Amazon has violated various agreements such as supplier terms and closed its supplier account.

 

The amount involved in this case has reached 37.3773 million yuan. It is still under trial and it is still unknown whether the losses can be recovered in the future.

 

However, it is not impossible to unfreeze the frozen funds.

 

Since last year, many sellers have gradually seen hope of being unblocked.

 

In September 2022, a big seller in Dongguan successfully fought back! He won the arbitration lawsuit against Amazon and took back all the funds that were blocked from his store.

 

It is understood that the store of the big seller was banned by Amazon in 2021, and all the funds of the store were frozen, so the big seller hired a team of lawyers to apply for arbitration.

 

The arbitration result of the US court was that the clause in Article 2 of the Amazon agreement that froze the seller's funds was invalid. Amazon not only needed to unfreeze all the frozen funds of the seller, but also had to pay him 12% interest.

 

In March of this year, an overseas joint law firm announced three cases in which Amazon sellers won .

 

The first case is a technology company in Dongguan that initiated arbitration against Amazon. A Florida judge ruled that the second clause of the Amazon agreement that froze the seller's funds was invalid, and Amazon needed to unfreeze all the seller's frozen funds and compensate the seller with interest. In the end, the judge ordered Amazon to pay the seller $499,858.47 (about 3.43 million RMB) in damages.

 

The second case is a Shenzhen technology company suing Amazon. The judge ruled that the penalty clause for review manipulation in Article 2 of Amazon's BSA was unreasonable. Although the seller violated the BSA policy , the seller was entitled to the platform's revenue. In the end, the court ruled that Amazon should compensate the seller $342,773.02 (about RMB 2.35 million) , including interest from the date the account was deactivated .

 

The third case was a lawsuit filed by an e-commerce company in Shenzhen against Amazon. The final verdict was that the judge held that Amazon had violated its obligation to distribute seller profits in accordance with the terms of the BSA and ordered Amazon to compensate the seller for US$790,196.61 (approximately RMB 5.427 million) in profits .

 

More and more Chinese sellers choose to use legal means to safeguard their legitimate rights and interests and ultimately win the case, which undoubtedly gives blocked sellers great confidence.

 

Previously, a group of Shenzhen sellers filed a class action lawsuit against Amazon, and some of them have successfully reached a settlement with Amazon and were able to get back most of the frozen funds.

 

So many winning cases have also encouraged more sellers to fight back.

 

Amazon’s wave of account bans has never stopped. Amazon sellers must pay attention to compliance operations on a daily basis. At the same time, they should not overly rely on the experience of a single platform such as Amazon. All eggs should not be put in one basket at the same time. They must establish a multi-platform and multi-market operating awareness.


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