Sellers on the edge of the cliff: 2,000 Amazon accounts were blocked, and only 1‰ survived

Yien.com learned that more than 20 Shenzhen sellers are still looking for opportunities to get their funds back. Their annual sales total about 20 billion, and the amount frozen in the account blocking wave reached 300 million. These sellers counted about 2,000 blocked accounts in the surrounding area. So far, only 2 sellers have been able to get their funds back through appeals, and the survival rate is only one in a thousand.

It is difficult for sellers to communicate with Amazon about blocked accounts, so they start to resort to law. However, according to Amazon's terms, sellers will face compulsory arbitration, and they will file for arbitration in the corresponding country for each site of each account. The number of blocked sites = the number of arbitrations. A US site with a large balance will cost 150,000 to 250,000 US dollars, which is a sky-high arbitration price.

The balances of most blocked accounts are not enough to cover the arbitration fees, so arbitration is not worth the effort; even if the balances are high, they still have to pay about 1 million RMB in arbitration fees, and the arbitration results are unpredictable. Currently, these Shenzhen sellers are collectively seeking lawyers to conduct arbitration to reduce costs, and are trying to organize group lawsuits outside the United States. They still hope to protect their rights through legal means.

20 Shenzhen sellers confront Amazon after being banned for more than half a year

Recently in Shenzhen, more than 20 sellers whose accounts were banned gathered together to try to recover their funds. Most of them are mid-level sellers with considerable annual sales. "We can make about 900 million yuan, and the others should make 500-1.5 billion yuan. Assuming that each seller makes 1 billion yuan on average, the total sales is 20 billion yuan, " said organizer Li Cheng.

The total amount of money frozen for these sellers is about 300 million yuan, and after deducting a series of fees, there is currently 200 million yuan left. Li Cheng introduced that in the first wave of account blocking, more than 90% of the sellers' accounts were blocked, and some accounts that were rebuilt later were also blocked one after another. After several rounds of blocking, only a small number of stores are left to clear their inventory.

Wang Ming is one of them. He started working on Amazon in 2015. More than 90% of the company's revenue comes from this platform. In the first half of 2021, the number of orders reached 1 million. "We did some reviews, but we didn't put the small cards. We were caught (brushing orders), and more than ten of my stores were closed, and sales and profits decreased by 80%. After three months of waiting, I was convicted of fraud and my funds were confiscated."

According to the statistics of blocked sites and balances provided by sellers, the number of blocked sites for a single seller ranges from single digits to nearly 100, covering major sites in North America, Europe, Japan, etc. The balances of frozen accounts range from millions to tens of millions. One seller had more than 30 sites blocked and had 20 million yuan of funds deducted.

(Provided by the seller /details of some blocked sites and balances)

When the account was blocked for 90 days, Amazon informed sellers that they could appeal through video authentication, but most of the accounts that had undergone authentication were rejected or received no response.

Li Cheng is a boutique seller with the largest market share in a certain small appliance market. Last month, sales on Amazon reached 80 to 90 million yuan. Due to its heavy reliance on Amazon, Li Cheng's company plans to gradually reduce the proportion of revenue from Amazon channels, but the action is still a bit slow. Before the 2021 Member Day, Li Cheng's company made sufficient preparations, including a large number of promotions and sufficient stocking. The balance of members' accounts was high in the future, but the account was soon blocked. This node made Li Cheng sigh with regret, and the revenue on Amazon was only 20%.

It is reasonable to have your account shut down for fake orders, but Li Cheng and other sellers believe that Amazon should not withhold their account funds and goods. "The contract between Amazon and us cannot override the law. You can ask me not to do Amazon, but you have no right to seize our funds and goods. They are not Amazon's property, and Amazon is not a court."

In addition, unable to communicate with Amazon, a group of sellers decided to take the matter to court, but the conventional litigation route was not feasible. Wang Ming said that there was a default clause in the seller agreement that when a dispute arose between a seller and Amazon, the seller could not file a lawsuit and could only resolve it through arbitration.

(Screenshot of Amazon’s terms)

“Amazon and you each agree that any dispute with Amazon or its affiliates or any claim relating in any way to this Agreement or your use of the Services will be resolved by binding arbitration as set forth in this paragraph, rather than in court…” Except in some special circumstances.

The terms also mention that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in Amazon arbitration, Amazon and the seller each waive any right to a jury trial.

Wang Ming said that if there were no such clauses, the current account suspension incident would have a different outcome, and Chinese sellers would have banded together to file a class action lawsuit. He gave an example: "If one seller were to file this lawsuit, it would cost 1 million US dollars; 100 sellers might need 2 million US dollars, but if the cost were shared among each seller, the sellers would be able to afford the lawsuit."

However, this assumption does not exist and the seller is faced with costly arbitration.

Unbearable arbitration costs

In the U.S. District Court for the Northern District of California, several sellers filed a class action lawsuit against Amazon over the account suspension incident. Not long ago, the court ruled to approve Amazon's request for compulsory arbitration, but did not support Amazon's request to withdraw the lawsuit, and the lawsuit will be resolved through arbitration.

Arbitration costs are extremely high, and for sellers, it is almost like the end of the game. A seller whose account was banned for 180 days described the dilemma of this group under litigation and arbitration in a video.

Wang Ming gave a detailed explanation of the arbitration.

"Arbitration requires sellers to submit arbitration to the corresponding country for each site of each account. For example, our Amazon global account has a total balance of 100,000 US dollars, 50,000 US dollars in the US site, 10,000 US dollars in Canada, 20,000 US dollars in Europe, and 5,000 US dollars in Japan. Then each site will file for arbitration with the local national court, involving 6 countries and 6 arbitrations. For example, the arbitration fee in the United States may be 150,000 to 250,000 US dollars, which is about 1.2 million RMB. I haven't asked about the European and Japanese ones yet.

Assuming we have 10 global store accounts, we may have 50 sites under our name, and each site needs an arbitration. So Amazon has a clear reason not to give us sellers money, and this is the reason, arbitration is too expensive, and you have no choice.

For example, I have frozen funds in more than 10 accounts for 14 days, and there is still 11 million RMB left, which sounds like a lot. But the reality is that none of my sites has a balance of more than 2 million RMB, and only three have a balance of more than 1.2 million RMB. I cannot afford to go to arbitration for my three largest accounts, and the lawyer and arbitration fees I have to pay after the arbitration are just enough to cover the amount I want to fight for. It is equivalent to spending one dollar to fight for one dollar. If I don’t spend this dollar, Amazon will take the dollar for itself.”

(Photo provided by the seller)

The result of such expensive arbitration is still unknown, and the seller needs to pay the arbitration fee first. For the sellers whose accounts have been blocked, this will be the last straw that breaks their back. "Most sellers have less than $100,000 left in their accounts. Once the arbitration is held, they have to pay a fee first. How many sellers are willing to do so? They are already half dead and almost bankrupt, and they are asked to use their last money to sue. No one can afford it." Li Cheng said.

There is also a lower-cost arbitration - emergency arbitration. The emergency arbitration fee for a US site is about 30,000 to 40,000 US dollars, but it requires sellers to file within a short period of time after the account is blocked. Currently, four or five cases that have attempted emergency arbitration have all failed and can only return to ordinary arbitration.

Li Cheng introduced that in ordinary arbitration, the actual arbitration fee is related to the account balance. The arbitration fee for sites with lower balances may be tens of thousands of dollars. Even so, the account balances of many sellers are not as high as the arbitration fees. Only a small number of sites with larger balances can conduct arbitration, and the vast majority of sellers cannot afford it.

Li Cheng is angry about the current situation: "Amazon is bullying us now, not because we are not right, but because we cannot afford to sue. We cannot afford the time and financially. We just cannot beat them." "Forced arbitration is a pitfall. For 99% of sellers, arbitration is a road of no return. It is a path that hurts yourself by a thousand and the enemy by eight hundred," said Wang Ming.

Despite this, dozens of sellers in Shenzhen have prepared arbitration to protect their rights. Li Cheng said this is a helpless move with extremely high costs, but if they do not do it, sellers will face unilateral punishment from Amazon. "Now some people are organizing collective negotiations on a price to go to arbitration together, and the package price may be cheaper. In addition, we are calling on everyone to form a group to find a lawyer for arbitration to reduce costs, and to form a group lawsuit outside the United States." Li Cheng said that they still hope to protect their rights through legal means.

With their funds withheld and arbitration difficult to conduct, the sellers whose accounts were blocked have many questions about Amazon and its terms.

Sellers accuse Amazon of unfair terms and rules

Li Cheng and Wang Ming admitted that they had indeed violated regulations, but they both believed that if a seller violated the regulations, the platform could block his or her account, and it was unreasonable to withhold account funds and goods.

Amazon's terms mention one point: If we determine that your actions or performance may lead to returns, refunds, claims, disputes, violations of our terms or policies, or other risks to Amazon or third parties, then, as long as we determine that any relevant risks to Amazon or third parties continue, we may decide not to pay you any money at our sole discretion. This may be the basis for Amazon's decision.

The seller disagreed. Wang Ming said, "According to my understanding, the money in the account is ours, and Amazon just swallowed it. The legal community agrees that if there is no violation of the law, it is the seller's private property, so why doesn't the platform give it to us? We have no legal recourse now, because it would cost a lot to sue the platform."

(Photo provided by the seller)

Li Cheng said that Amazon's actions do not respect the rights of sellers. Now that the account has been blocked, the platform deducts the seller's goods and money for various reasons. For example, if the buyer wants to return the goods, he can do so at will, and the platform deducts various storage fees, and the seller is not allowed to move the warehouse when he needs to.

On the issue of returns, Li Cheng described his own situation: returns are delayed for a long time, a lot of goods are lost, and the platform does not mention compensation. At present, almost all the sellers he knows have encountered the problem of lost goods, and about every seller has lost 10% to 20% of their goods, with an average loss rate of about 15%.

"If you don't allow us to do it, we should reconcile with everyone at once. There is no logic in doing something that will be dragged on indefinitely and I don't know what their (Amazon platform's) original intention is," he felt anxious.

Li Cheng said that Amazon does not respect the rights of sellers, which is reflected in many aspects:

First , there are bugs in Amazon's rules . As sellers , we have been constantly asking Amazon to solve the problem when communicating with the investment manager . For example, if the weight of Review is appropriately reduced , there will be fewer people to place fake orders .

Second, there is no proper control. If Amazon properly controls follow-up sales, there won’t be so many people manipulating links ; if the weight of VC accounts is properly reduced, there won’t always be people using VC accounts to attack their peers.

Third, sellers are not given a chance to appeal. Sellers whose accounts have been blocked are waiting for Amazon’s appeal channel, but this channel never appears . We have counted about 2,000 accounts so far, and only 2 of them have passed the appeal and the sellers have received their funds back. According to this, the proportion of accounts that have their appeals returned is only one in a thousand.

Fourth, Amazon did not conduct strict checks at the source. In the process of attracting investors, Amazon did not strictly review accounts and control the qualifications of sellers. If it could have done a strict review in the early stage, it would not have had to impose such complicated and frequent penalties later. Now new accounts are approved at random, and then closed at random after they come in, causing great waste.

Wang Ming's view is similar to Li Cheng's. He said that the millions of sellers on the Amazon platform are like a swarm of fish, and they are all at the bottom of the Amazon food chain. "Amazon's closed ecosystem is similar to a prisoner's dilemma. Between 2015 and 2020, during the Amazon ecosystem cycle that I experienced, the platform also cracked down on fake orders, but it was not strict. Those who faked orders rose to the top, and those who did not fake orders developed slowly. This caused panic among sellers and the phenomenon of bad money driving out good money appeared. In such an ecological environment, in the cognition of many sellers, fake orders and evaluation are conventional means of competition. Now the wind direction has suddenly changed, and the platform is holding up the banner of public opinion and policy to ban these sellers."

Wang Ming further explained with his own example, "I did some evaluations. In fact, in terms of order volume, these evaluations accounted for a very small proportion, less than one thousandth. Then the platform determined that I was suspected of commercial fraud, and no evidence was provided during the whole process. In the process of blocking the account on the platform, it will not tell you what it has monitored or what the evidence is. It will just send a notification to tell you that your account is suspected of violating Article 3 of the commercial terms, and we will start to suspend your account, and then ask you to submit an appeal.

In the complaint template provided by the platform, the seller must report which policies he violated, whether he had faked orders, which orders he had faked, who helped to fake them, etc. This template information is the seller's criminal facts. After the seller fills it out, the platform will review and decide whether to approve it. Usually, no matter what the result of the complaint is, as a seller, you must first take the initiative to provide criminal information. If a good person is killed by mistake, you will be helpless in the face of such an appeal process.

For example, one of my relatives, I authorized the brand to do it for him. He didn’t do fake orders, but because my brand was implicated, his account was also blocked. He wrote to Amazon to say that he didn’t do fake orders. Amazon still threw a template at him and asked him to provide criminal facts. How can a good person prove that he is a good person? He couldn’t provide it, so he asked a lawyer to write to Amazon. Amazon said that we don’t accept lawyer’s letters and let the seller communicate on their own. So he went back to providing criminal facts. To some extent, during the account suspension rectification, some sellers did not do fake orders. These sellers who did not do fake orders were killed, and they also had a dead end in the account suspension appeal process. ”

After experiencing account suspension with no solution, some sellers adjusted their business direction in an attempt to reduce their dependence on Amazon.

“Control your desires and reduce the proportion of income from Amazon”

After his account was blocked, Li Cheng's fighting spirit on Amazon was almost exhausted. He said that until the issue of Amazon's account blocking was resolved, he basically would not consider focusing on this channel anymore. In the future, the company will reduce the proportion of revenue from Amazon to less than 30% of the total revenue. " Be cautious and control your desires. Even if you have business, you can't do it casually because there is a lot of uncertainty on the platform. In the future, everyone should just sell high-value goods, and don't engage in involution and rush to the front. This is unfriendly to everyone."

Wang Ming has the same idea. He said frankly that he will continue to work on the Amazon platform, but he will put less energy into it. Amazon is a channel that can carry Chinese brands overseas. This platform has a large market share, but in the face of platform policies, the seller group must also try to get rid of its dependence on it.

Wang Ming has deep feelings about the internal circulation of the Amazon platform mentioned by Li Cheng. He analyzed: The platform will never lose money, and will never lose. The internal circulation among sellers is also deliberately done by Amazon to a certain extent. This is called the herd effect. I think Amazon's flywheel theory may be malicious. Its entire business model design is such a setting for Chinese sellers and supply chain groups. The flywheel theory is more sellers and buyers. The platform attaches great importance to buyers. This is its resource. Amazon wants buyers to have more repeat purchases and higher loyalty, so it must provide them with better services, lower prices, and better products.

Wang Ming believes that his experience is enough to make people see the answer clearly. The Amazon platform has high risks. This business model is asset-heavy and has a low safety factor. "According to the platform terms, Amazon has the right to terminate cooperation with sellers unconditionally. This is in the seller's store agreement, which means that Amazon does not need a reason, but only needs to inform the seller 30 days in advance to terminate the cooperation. Now the relationship between Amazon and sellers is a bit like the relationship between Party A and Party B. It is not a platform and does not bear the responsibility of the platform. For any seller, it is like Party A, which can terminate cooperation with sellers at any time and close the seller's account at any time without any reason."

From these perspectives, some of Amazon's rules are not friendly to sellers. They advise their peers to moderately reduce the proportion of Amazon's revenue in order to protect their own rights and interests.

At present, Li Cheng and Wang Ming are actively expanding other third-party platforms and independent station channels to share their own business risks. "Our new business direction is to build independent stations and boutique stations, narrow the business scope, use more resources to create a boutique, and then break away from the dependence on Amazon traffic, build brands and hits, and absorb traffic through full network marketing." Wang Ming said.

Based on his own experience, he made three suggestions for cross-border e-commerce sellers:

First, compliance. Don’t violate the rules and place fake orders anymore, because you will pay the price one day.

Second, you must build a brand;

Third, diversify traffic. Centered on the brand, we will create diversified channels and traffic, improve the competitiveness of the product itself, gain a deep understanding of users, and conduct in-depth insights into users and in-depth mining of traffic.

Like Li Cheng and Wang Ming, these sellers whose accounts have been banned by Amazon are not having an easy time. There are many such sellers in China. It is still a big question whether and when their funds and goods can be returned.

(Li Cheng and Wang Ming are pseudonyms in this article, and the views expressed in this article are those of the seller)

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