30 sellers were banned, Amazon and Chinese sellers have a seven-year itch

In the past two years, the outside media's reports on the cross-border e-commerce industry have mainly focused on the bright growth figures and promising prospects. But this time, many mainstream media followed up and put in front of the public the tragic case of the cross-border e-commerce industry's account suspension.

Some sellers believe that the "account blocking wave" is the seven-year itch of Amazon and Chinese sellers. In this huge change, cross-border e-commerce listed companies and financing-level companies have been affected. Some companies have laid off employees in silence, or announced their demise with a single announcement. As news of account blocking continues to spread, some sellers have questioned Amazon's sentencing standards.

The account blocking wave has caused turmoil in the entire industry. Domestic cross-border e-commerce has reached a crossroads. Risk control and compliance have become compulsory courses. Yien.com interviewed many industry insiders and presented this in-depth article.

These 30 sellers have been banned for three consecutive months

At the end of April, Paton’s account was blocked, marking the beginning of Amazon’s account blocking trend, which lasted for three months. From top sellers to mid-level sellers, everyone was affected, and the “account blocking” incident dominated the industry.

The news that Amazon's top sellers' accounts collectively failed attracted great attention, and more than a dozen mainstream media outlets including Time Weekly, China Economic Weekly, Economic Observer, China Business Network , 21st Century Business Herald, and Southern Metropolis Daily reported on it.

(Media coverage of Amazon’s account suspension incident)

Southern Metropolis Daily compiled a list of some of the names involved in the ban, including dozens of billion-level top sellers such as Paton, Tongtuo, Zebao, Zehui, Wantuo, Hongbo Weizhi, Humboldt Technology, Youkeshu, Huanjin Technology, Lens Technology, and Baoshijia; as well as mid-level sellers such as China Electronics Hengye, Shenzhen Ruitai, Shenzhen Hess, Guangzhou Taiyang, Mengzhituo, Wofeng Outdoor, Hangya E-commerce, Lemailemai Trading, Ai Yaxun, Xibei Electronic Technology, Kolashi, Hede Tiancheng Technology, Rafar, Yikeshan E-commerce, Guangmian Technology, Anbo Technology, Aowon Technology, and Detuo Electronic Technology.

But this is just the tip of the iceberg. Many companies that have been confirmed to have been affected or even closed down by the seller circle are not included in the list. According to statistics from the Shenzhen Cross-border E-commerce Association, in the past two months, more than 90,000 active accounts have been blocked across the country .

Amazon's sentencing standards are questioned for killing a large number of sellers with one stroke

Most sellers said that Amazon's drastic measures are conducive to cleaning up the platform ecosystem and are fair to most sellers. "There is nothing wrong with Amazon's approach. It is the big sellers who have no sense of risk and no bottom line," said one seller.

However, some sellers believe that Amazon's penalties or sentencing of deregistering brands and confiscating money are too severe, and that the boundaries of the platform's penalties are unclear, causing other sellers to panic for no reason.

After foreign media exposed that a top seller had paid for positive reviews with gift cards and was banned, small cards became a high-risk label, and many sellers stopped logistics and even moved warehouses to remove small cards. But is Amazon only targeting gift cards at this time, or does it also include various small cards such as warranty cards?

One big seller was confused: "The sellers who were previously blocked had clearly written on the small card how much money they would get back for leaving a five-star review, which was a serious violation. But later there was news that as long as it was a small card, even if no 'money' was mentioned, the seller would be blocked. This is terrible. In other words, almost every seller could be blocked."

Even if Amazon is caught with gift cards, the punishment on sellers is not uniform. Perhaps because the target is too large, the exposed big sellers are all closed down, their brands are removed, and their communication channels are closed, while small sellers still have the opportunity to appeal through POA.

Amazon's sentencing standards are puzzling.

Jeff_fu expressed his opinion in his article: "I support the platform punishing illegal sellers and creating a good business environment. What I oppose is arbitrary punishment without standards and boundaries. It cannot be that a 15-day detention in the past has suddenly become a beheading and the punishment of the entire family. If this kind of arbitrariness is allowed to develop, it will be very dangerous to all sellers, and the platform itself will eventually become a victim."

Another seller , Ricardo, also believes that the phenomenon of fake orders on the platform "is suspected of Amazon's 'inappropriate punishment'. This incident was indeed caused by sellers violating platform rules by fake orders, but the platform itself is not innocent. Fake orders have been around for a long time. In the past, Amazon did not strictly review and stop them in time, but instead let them go, giving sellers inappropriate expectations. This year, it made a big move and killed a large number of sellers with one stroke, which is hard to believe."

What are the specific criteria for Amazon to close stores and cancel brands? This is what sellers are eager to know. Amazon did not disclose the specific reasons and sentencing criteria for the tens of billions of annual sales being fined, and the collapse of a towering building overnight is really terrifying, and sellers in the industry can't help but wonder.

The account blocking wave has caused turmoil in the industry, and cross-border e-commerce has reached a crossroads

Amazon's strict style has made new sellers who heard about it at the beginning of the year feel at a loss. Coupled with the continued inventory restrictions and fierce price wars, Amazon's business difficulties have increased sharply this year. "A friend who asked me for a manager in March asked me how to cancel his account last week," said a seller.

This is not bad news for the sellers who remain. The high-difficulty mode can dissuade a group of incompetent players and reduce internal friction among sellers such as spiral price wars.

The situation of big sellers relying too much on Amazon is not good for them, and their monopoly of multiple product categories is also not welcomed by the platform. One seller pointed out: "Now the big sellers are like seaweed, covering the surface of the Amazon sea. In the long run, the creatures in the sea will die of lack of oxygen, so it is inevitable that big sellers will be severely cracked down."

The wave of account bans has disrupted the inherent Amazon ecosystem and has also shaken capital's confidence in Amazon sellers.

Half of the top sellers are listed cross-border e-commerce companies. Currently, parent companies such as ZEBO and Youkeshu have issued announcements on the account blocking incidents and their impacts, and other listed companies have also been asked about the safety of their accounts. In addition, there have been constant reports that industry giants such as Global Easybuy, Zhiyu, and Youkeshu are being asked to pay back debts by suppliers, which may trigger negative sentiment in the capital market.

Since July, the share price of Anker Innovations, the "No. 1 in cross-border e-commerce", has continued to fall, from about 163 yuan per share at the beginning of July to about 112 yuan per share on July 28. Some sellers believe that Anker Innovations' share price has fallen below the issue price again, and it cannot be ruled out that it has been affected to some extent by the industry turmoil.

( Anker stock price )

Anker Innovations Anker people responded to the media, saying, "Since our establishment, we have only had one store on the Amazon site, and we will not do anything that touches the red line."

Right now, China’s cross-border e-commerce exports have reached a crossroads. Amazon’s sudden attack has made industry sellers realize two things: 1) They should develop a multi-channel layout to reduce the potential risks of focusing on a single channel; 2) They should abandon impetuous operations and return to the essence of sales and products.

"I have never been interested in multiple channels. I think small companies should focus their resources on the most efficient points. Under normal business scenarios, I think this is still the best choice. But when profit and survival are put together, survival should come before profit. Therefore, allocating part of the resources and deploying other channels has become a better choice at the moment." Jeff_fu said.

He believes that even if the new channels have low profits, they can still keep the spark in extreme cases and not go bankrupt overnight when the storm comes. When more and more sellers have multi-channel layouts, the current situation of one super-dominant market will be improved.

It is undeniable that some Chinese sellers are obsessed with bans on reviews and fake orders.

It is reported that a company in the industry with annual sales of several hundred million yuan, when it recently launched a new brand on Amazon, still picked up the brush and gave it a good review, but stopped leaving reviews . The sellers watching could not help but sigh "How brave!"

Recently, Tianze Information announced that Youkeshu had about 340 stores closed in the first half of the year due to suspected violations of Amazon rules, which attracted a letter of concern from the Shenzhen Stock Exchange and required it to provide additional information on the specific violations of Amazon rules . Afterwards, Youkeshu announced 12 types of violations, the number of which was staggering:

But Youkeshu’s explanation is very interesting. “Last year, the huge development potential of the cross-border e-commerce export industry was stimulated, and a large number of companies in the industry achieved rapid development. While pursuing the continuous expansion of market share, a group of cross-border e-commerce export companies, including Youkeshu, have also ignored the compliance of platform store operations to a certain extent. Some specific operating behaviors may be suspected of violating the operating rules of platforms such as Amazon.”

In the end, Youkeshu stated that it had ordered all business departments to further strengthen their study of the rules of platforms such as Amazon, comprehensively check whether there are other behaviors that may violate platform rules, and make timely rectifications.

It's not just a tree. After this incident, all cross-border sellers should put compliance on the agenda, including business compliance, tax compliance, intellectual property compliance, etc. How can we reduce risks? Yien.com interviewed industry big sellers and professionals in the field and gave the following suggestions.

How to achieve compliance operations?

Under the background of Amazon’s account suspension, sellers have a consensus that they must operate in compliance if they want to develop on the platform for a long time. How can they achieve compliance? Sellers need to work hard on platform policies, intellectual property rights, financial and tax compliance, and other aspects.

1. Platform Policy Compliance

For most sellers, the most important thing is compliance with platform policies. The main reason for Amazon’s ban this time is the violation of platform policies and manipulation of reviews. Next, compliance in this regard must be the first priority. Regarding compliance operations, the editor interviewed several sellers, and they all expressed their opinions.

From the outbreak of video verification and insurance issues at the beginning of the year to the current wave of account blocking, Amazon migrant workers, an industry seller, believe that in terms of compliance with platform policies, sellers must ensure two points:

1. Registration information is compliant: If sellers want to do long-term business, they must ensure that the registration information is authentic and can withstand the test of the platform, such as video authentication and postcard verification. It is best to spend money to find an agent to register an account with a company, and don't buy an account from the market. Taking shortcuts in the early stage will only lead to more detours in the later stage. If you can borrow the information of relatives and friends, make sure to maintain a good relationship to avoid being unable to cooperate normally when you need assistance in the future.

2. Comply with platform rules: What sellers should learn most frequently is the platform’s customer review policy, and only read the English version, so that they can better understand the original intention of the platform.

Speaking of compliance issues, Amazon seller Lao Lan said that compliance means operating normally, obtaining normal data information, adjusting one's own operation strategy, targeting one's own customer groups, optimizing product direction and supply chain, and avoiding evaluation, fake orders, and gift card operations.

Reviews and gift cards are the key issues that Amazon is strictly investigating, and are also the main reasons for the account suspension. Next, the channels for sellers to obtain reviews must also be compliant.

Lao Lan said frankly: Many operators think that it is normal to put gift cards, but this is not the case. Amazon does not allow this path, and other methods are really hard to find. For sellers, under the strict inspection of the platform, many people will be eliminated in the next year. At present, the price war on the platform is fierce. There is no profit to be made from previous products, and the factory does not give credit period. In the long run, many people will find it difficult to survive.

The evaluation route is blocked. Amazon migrant workers believe that if sellers want to increase reviews, they still have to consider more reviews. Uploading main pictures and videos, A+, etc. can allow sellers to obtain more traffic. At the same time, the difficulty of getting reviews is also forcing sellers to differentiate their products. Only by understanding the original intention of the platform can they do better. It is already difficult to make quick money on Amazon, and those who make quick money have paid the price.

In the long run, he believes that Amazon's ban will definitely bring more benefits than disadvantages to the platform's sellers. Only healthy and orderly competition on the platform can ensure long-term business.

Amazon is a platform that will "settle accounts later". So many big sellers have been blocked and cannot get their money and goods back, and some have even gone bankrupt. Bloody cases have clearly shown that no matter how big you are, you can't get away with it by paying "protection fees".

II. Intellectual Property Compliance

In addition to complying with platform policies, sellers should also pay attention to intellectual property compliance. There are many cases where sellers have been fined or had their accounts blocked for intellectual property violations. In addition to spontaneous complaints of infringement, major law firms are also filing lawsuits against infringements all year round. Jite Intellectual Property Data: According to incomplete statistics, more than 440 rights protection cases were initiated by major law firms in the first half of this year.

Cross-border e-commerce intellectual property risks mainly include trademark infringement, patent infringement, and copyright infringement.

Trademark infringement: using the other party’s trademark or logo without the official authorization of the product brand ;

Patent infringement: The seller produces and sells other people’s patented products without permission;

Copyright infringement: the unauthorized use of another person’s copyrighted work.

In addition, copying other people's listings, stealing pictures, etc. will also trigger the risk of intellectual property infringement. Intellectual property violations are hard to prevent, how can sellers avoid them? Jite gives 4 suggestions for sellers' reference↓

1. Pay attention to self-examination when selecting products

Sellers should do a basic product intellectual property search before selecting products. However, it should be noted that trademarks and patents have a blind search period, and the copyright official website will not display specific works, so the search cannot ensure that there is no risk of error. Sellers are better off selling their own brands and applying for patents or registering copyrights for their products in a timely manner.

2. Understand product supply information

Sellers are advised to ask the factory or supplier three things: (1) whether the product is independently developed or imitated from others; (2) whether the product is an improvement or upgrade based on others’ products; and (3) which sellers the product is supplied to.

Generally speaking, there will be no infringement issues with independently developed products. However, for imitated or improved products, although the infringement issue is avoided, the possibility of being found to be infringing cannot be ruled out.

3. Pay attention to the details of the source of goods

Suppliers can supply goods to different sellers at the same time, which makes it very common to sell the same product of different brands on the platform. Sellers of the same product often complain about infringement. To prevent this from happening, sellers should communicate clearly with suppliers about the source of goods at the beginning.

4. Pay attention to the pictures and texts of the listing

The text and images in the listing can also infringe copyright. Make sure that the content in the listing is original or has obtained permission from the intellectual property owner. Do not add brand names or logos other than your own brands to the title or product images at will. Non-original product images should also be used with caution.

3. Financial and Tax Compliance

The most important thing about compliance is financial and tax compliance. Previously, the VAT tax problem of Amazon Germany broke out, and many sellers were banned from selling due to non-compliance with relevant requirements, and could not remove FBA inventory. The most fatal thing was that the funds in multiple accounts were also frozen. Due to the huge sales on Amazon, Sunvalley (HK) Limited, a second-level subsidiary of Xinghui Co., Ltd., also received a tax payment notice issued by the French Public Finance Directorate General, with a total amount of nearly 5 million euros.

Compared with small and medium-sized sellers, large sellers have more prominent overseas tax issues. Domestic sellers lack effective resources and knowledge about European taxes, and have little initiative to implement tax compliance, so the penalties they receive during tax audits are relatively severe, and some are even fatal.

In order to avoid losses caused by tax issues to sellers, the editor interviewed the external tax consultant of the e-commerce platform, Germany One Europe. He said that cross-border sellers have tax-related store closure cases every year, and the problem is actually due to the lack of systematic tax maintenance. Looking at sellers of all sizes in the entire industry, there is a lack of professional personnel to coordinate logistics, finance, and operations related to taxation.

The EU tax reform came into effect in July. All sellers who set up accounts with Chinese entities will no longer have to report and pay taxes on their own to increase profits. This will definitely have a certain impact on sellers.

Germany's One Europe said that there are currently two strategies for dealing with tax reforms in the market: using a European corporate account or switching to an independent website. It is recommended that sellers conduct more research and find a model that suits them based on actual conditions.

Returning to the third-party platform sales model, after the VAT of B2C order sales is uniformly intercepted by the platform, whether we can find the starting point of tax cost advantage again requires analysis along the entire tax-related chain and moving the step nodes of tax optimization forward. Only customs clearance and deferred import VAT can reduce costs, reduce financial burden and improve customs clearance efficiency.

In practice, most sellers directly use the double-clearance package to bundle the initial logistics tax costs. However, for sellers with scale advantages or specific large categories of goods, they use their own tax numbers for customs clearance, and later deduct and refund the import VAT, or choose to defer transit through Belgium and the Netherlands to defer the payment of import taxes, and disassemble the first-leg cost structure to achieve 3%-5% tax burden optimization.

Financial and tax issues have always been an important part of compliance. How can sellers ensure that there are no mistakes in this regard? Germany One Europe's suggestions are as follows ↓

First of all, the core point of tax compliance is to conduct proactive and comprehensive audits, rather than waiting until the tax bureau writes to the platform to freeze the store when the problem worsens.

Secondly, taking Germany as an example, each department must do a good job in related work.

1. Finance department : There are two key steps: to check tax problems caused by non-subjective reasons; for large-scale enterprises, this should be implemented as a standard procedure. Sellers should start from the perspective of completely avoiding tax risks, and the tax processing agency should regularly ask the tax bureau whether there are any unresolved cases; apply for an account list from the tax bureau to find out whether they are in a tax arrears status.

2. Operations department : Price setting must take into account the tax attributes of To C and To B orders. For invoice requests in the background, it is necessary to verify the order attributes and verify the invoice issuance rules with the tax agent. The logic setting of the automatic invoicing function, whether it is built-in or external software, is usually not real-time and may deviate.

3. Logistics Department : If the first leg uses its own tax number for customs clearance, the freight forwarder must be required to enter the cargo owner's information such as tax number, entity address and other related information to ensure the effectiveness of subsequent deductions; for the Belgian deferred route, the collection of customs declaration documents must be time-controlled to ensure that the data for each accounting process is complete and consistent to avoid tax gaps and fines. Such problems often hide for 12-18 months and then erupt and worsen in a concentrated manner. For enterprises, in the context of high staff mobility, in order to ensure the continuity of information and data, a tracking mechanism should be established from top to bottom.

Finally, according to the current development progress of the tax bureau and customs, it is estimated to take 6 months to build the relevant IOSS system.

During this period, the customs clearance of direct-shipping parcels may face various situations. Due to the possibility of abuse of IOSS numbers, which may trigger chain reactions, there is a possibility that the platform will cancel the publication of IOSS. For sellers in the direct-shipping model, they should be prepared to return to traditional customs clearance.

As China's cross-border e-commerce has developed to date, compliance has become an inevitable trend. Are cross-border sellers ready?