Another big seller was blocked, Amazon has banned nearly 300 accounts

Amazon's cleanup has not stopped. Yesterday, Youkeshu revealed that 340 new sites were frozen this year for suspected violations of Amazon platform rules, and about 130 million yuan of funds were frozen, which caused an uproar in the industry.

The number of sellers whose accounts have been blocked has risen rapidly. According to foreign media reports, the best-selling brand Fairywill has also been suspended. Amazon is cracking down on Chinese sellers, and the number of sellers whose accounts have been blocked is approaching 300.

"We were told that no appeals would be accepted for the ban," said an Amazon employee. One of the roots of this major ban was pressure from the FTC (Federal Trade Commission). As early as May, the FTC's investigation seemed to have led to the banning of at least six Chinese sellers.

Fairywill was blocked , and nearly 300 sellers were blocked

Recently, there have been big sellers being blocked almost every day. According to Marketplace Pulse, Amazon has suspended hundreds of top Chinese sellers in the past two months. Mpow and others were the first major sellers to be suspended at the end of April. Now the list has expanded to nearly 300 individual seller accounts (all located in China), including dozens of previously best-selling products. The annual sales of the suspended sellers exceeded $1 billion.

The big brand that was banned this time was Fairywill.

Entering "Fairywill" on Amazon.com will still bring up nearly 10 popular search terms, including "fairywill electric toothbrush" and "fairywill teeth whitening strips", but no Fairywill-related products can be found. Entering Amazon from the external link of its products also displays the dog-changing page; searching for its Japanese store, clicking on it will display "not a valid page on the website".

(Product page changes to dog)

Many sellers are familiar with Fairywill. In the past three years, Fairywill's electric toothbrush has been one of the top five best-selling products on Amazon, with more than 75,000 reviews and an overall score of 4.5. According to Fairywill's overseas sales data, its cumulative sales have exceeded 5 million, ranking TOP 3 in sales on cross-border e-commerce platforms, and its products have been exported to more than 35 countries and regions.

But now, Fairywill has also been suspended from sales. Just half a year ago, this big seller just won the "2020 Amazon Most Valuable Brand of the Year". A member of the award jury commented: "The 2020 Most Valuable Brand of the Year is well deserved for Fairywill."

In fact, many of the big sellers who have been affected were once Amazon’s model students.

Although "Made in China" is an important part of the Amazon platform, research institutions believe that the suspended sellers only account for a small part of the total number of Amazon Chinese sellers, and these actions will not have a significant impact on Amazon.

The sellers involved are already in dire straits. An industry insider once revealed to En.com : "The possibility of recovering the blocked accounts and brands is almost zero, and it is also difficult to get the funds in the accounts back."

Youkeshu's parent company Tianze Information announced that it is appealing the freezing of funds and store closures, but the overall progress of the appeal is slower than expected. The risk that some of the suspected frozen funds cannot be recovered is increasing, the time for the site to be unblocked cannot be accurately estimated, and the possibility of subsequent related sites continuing to suspend sales is increasing.

The signal sent by foreign media Recode is even more deadly. An Amazon employee said:

“We were told that no appeals against the ban would be accepted”

Amazon and sellers are well aware that soliciting positive reviews and other illegal practices on the platform have been going on for a long time. Why is Amazon choosing to expose the illegal sellers on a large scale now?

In addition to follow-up reports by foreign media reporters, who used their own purchasing experiences to prove that Amazon's top sellers exchanged gift cards for reviews, another reason was the continued pressure from the FTC (Federal Trade Commission).

Amazon employees said that Mpow's store had a brief recovery, "The seller was suspended at the end of March and restored in early April." But the pressure from the FTC became the last straw, "We were told that no appeals regarding the suspension would be accepted."

The FTC also asked Amazon to specify what actions it would take against relevant brands and sellers. According to reports, the previous FTC investigation seemed to have led to the ban of at least six Chinese sellers.

Because these sellers have high gross merchandise sales, they need to provide approval documents higher than the L8 level, which is the corporate level of Amazon's "director" , indicating the approval of an Amazon vice president . Only about 400 of Amazon's more than 1 million employees have this authority.

“Chinese sellers are in great danger this year”

Amazon’s purge lasted for more than two months, and more than half of the top sellers were affected and left badly hurt; their accounts were wiped out, and the revenue that was highly dependent on Amazon shrank instantly.

Since the beginning of this year, Youkeshu has frozen about 340 new accounts, accounting for 30% of the average monthly number of sites with sales revenue on the Amazon platform from January to May. In addition, with the shrinking independent site business, the total revenue in the first half of the year is expected to drop by about 40%-60%.

Some stores of the three brands RAVPower, Taotronics and VAVA under Zebao have had their sales suspended. From January this year until they were blocked, these stores contributed 31% of the company's revenue on Amazon.

A seller lamented: "It's like a dream. These big sellers were worshipped by thousands of people last year, but this year half of them may be facing a difficult situation. Amazon has frozen 100 or 200 million yuan, and if the bank withdraws several hundred million yuan in loans, suppliers will also tighten their payment terms." Sales have been halved or even interrupted. Without working capital, the company's capital chain has been stretched to the limit. If another small wave hits at this time, it may collapse.

Amazon's overhaul is still sinking.

An operator was terrified: "It feels like Chinese sellers are in great danger this year. We have issued after-sales cards, and many of our company's accounts have been shut down recently. In the past few months, large accounts were shut down, and last night more than 20 medium and small accounts were shut down.

A supplier said that its two largest customers were out of business, and their annual sales should be more than 300 million. In the seller group, the number of sellers whose accounts have been recently blocked is also decreasing.

The snowstorm also affected industry service providers. A freight forwarder told sellers not to leave small cards. "A big customer's small card was checked and the freight could not be repaid. The company stipulates that every customer must be informed clearly that small cards are not accepted."

Amazon's price spiral may intensify as it sells off inventory to pay off debts

After the big selling account is blocked, a group of people will inevitably suffer.

When a company is not able to sustain profitability, how will the employees be paid? How will the suppliers’ debts and service provider fees be settled? Industry insiders said that when big sellers have large orders, suppliers will generally give them credit terms. If they cannot get paid when the credit term comes, the suppliers are the ones who suffer the most.

The incident of Global Easy Shopping's suppliers coming to collect debts continues to ferment, and people in the industry all lament that after the big seller's account was blocked, perhaps some companies will follow in Global Easy Shopping's footsteps, and then they will face a more complicated situation.

After the account problems, some big sellers have urgently changed their sales channels in an attempt to clear out the goods to pay off their debts. According to news from industry insiders, some big sellers in Shenzhen have already started clearing out their inventory in various channels.

One of the big sellers cleared out its stock through a domestic e-commerce platform, and the discount price was really deep! Some sellers in the industry shouted that they wanted to go and buy and find bargains, so that the big seller could feel the warmth of his compatriots.

Perhaps seeing the situation of big sellers after their accounts were blocked, some Amazon peers have also started to clear out their stocks at low prices. The reasons for clearing out their stocks are mainly due to the following considerations: 1. They are afraid that their accounts will be blocked; 2. They had too much inventory before the New Year, so they cleared out the inventory to recover funds and increase inventory capacity; 3. They are using low-price spirals to seize the market share left by big sellers.

When many sellers start clearing their inventory, the price war on the Amazon platform will become more intense. The low-price spiral will turn into a floor spiral. Finally, sellers who have nowhere else to turn will have no choice but to destroy their inventory. Some sellers are already destroying their inventory.

As Chinese sellers clear out their inventory, American domestic brands are also having a hard time. Some brands have also begun to go for the low-price route. One seller roughly estimates that a certain clothing brand is currently being sold at 30% off.

The company whose account was blocked was dissolved and a large number of employees lost their jobs

In addition to clearing out goods at low prices to pay off debts, some big sellers whose accounts were blocked began to lay off employees and fire some people. The accounts were blocked and part of the company's business was not running, so why keep people?

A former employee of a large retail company said that the company's account was blocked, the brand was destroyed, and the company was about to go bankrupt. The company was already holding a meeting to discuss dissolution, and hundreds of people might lose their jobs.

It is understood that this cross-border seller mainly sells lighting, smart wearables, audio, outdoor and other categories, and its business covers the United States, Canada, Germany, France, Italy, Spain, the United Kingdom, Japan and other regions. The staff size is about 200 people, and the performance in 2020 is as high as 500 million.

In addition, Youkeshu, a well-known seller in the industry, is also facing a serious problem of employee turnover. Public information released by Youkeshu's parent company shows that nearly 340 accounts of Youkeshu have been "blocked" by Amazon in batches. As of July 6, among the restricted funds on Youkeshu's Amazon platform, the funds suspected of being frozen are about 130 million yuan. In the first half of this year, the number of employees in Youkeshu has dropped from nearly 2,800 at the beginning of the year to about 1,400 at present.

Big seller accounts have been shut down, a large number of employees have lost their jobs, and the turnover of Amazon's operating staff has increased. At the beginning of the year, cross-border e-commerce operations in the industry were scarce and wages had increased significantly. Now it seems that companies with recruitment needs can take the opportunity to recruit people.

One operator said that there are companies waiting downstairs of companies with account problems to distribute recruitment cards and conduct targeted recruitment. As operators, after the company brand is removed, they are worried about possible unemployment on the one hand, and on the other hand, they are worried about increased competition and salary downgrades when looking for the next job.

However, as far as the current situation is concerned, operations personnel from large companies are still in high demand, and some peers are willing to pay them high prices, offering higher salaries than their original companies. However, high salaries also have certain prerequisites, and other companies have clearly stated that they "dare not hire" operations personnel who can only fake orders and conduct evaluations but not conduct formal operations.

As these chain reactions occurred, Amazon’s purge continued. One seller explained Amazon’s behavior this way: “One company’s products flooding the platform is like an algae outbreak polluting the entire ocean. The platform must have this decontamination function to keep the ecosystem healthy and balanced.”

Some suspended sellers have announced layoffs or even bankruptcy. Many other sellers will also re-evaluate their business strategies on Amazon, such as strengthening compliance; and investors who are willing to spend huge sums of money to acquire Chinese Amazon sellers' stores have also begun to modify their due diligence procedures.