The biggest shock in the industry in a decade: Amazon's big sellers have been killed one after another, and the amount involved may exceed 100 billion

In the past two months, Amazon has carried out drastic rectification on third-party sellers who violated regulations on the platform. Many of the industry's leading sellers' brand sales accounts have abnormalities and their products cannot be sold, including some listed companies. Mr. Yang, a senior salesman who has been in the industry for ten years, believes that this is a major industry shock that only happens once in a decade.

Most of the sellers involved are located in Shenzhen and are large in size. The news that the top domestic Amazon sellers were blocked quickly spread, and domestic mainstream media such as "Economic Observer", "Jiemian News", and "Securities Times e-Company" reported it one after another.

Since the end of April, there have been sporadic reports of Amazon sellers’ accounts being blocked. However, this week, the number of blocked sellers and brands involved has increased sharply. The sellers involved have quickly dropped from the top sellers in the first tier to the middle sellers in the second tier, and the categories involved have also spread from consumer electronics to home furnishings, health, beauty, etc.

The situation is still developing. A senior industry insider said that this blocking may last until the end of the year. The possibility of restoring the blocked accounts and brands is almost zero, and it is difficult to get the funds in the accounts back. The amount of funds seized in the past month is about 20-30 billion yuan, and it is estimated that the funds involved for all sellers may exceed 100 billion yuan. Some sellers may not be able to move their remaining goods.

Misfortunes never come alone. Most cross-border e-commerce operations are based on sales accounts. After the accounts were blocked, some sellers lost 150 million yuan in investment and declared bankruptcy; some companies whose main brands were blocked faced layoffs. For a time, those who "do Amazon" were awakened from the dream of Shenzhen Bay No. 1, and became an industry that capital stopped watching or even urgently evacuated.

As the industry's top sellers were caught in the eye of the storm, the other sellers standing on the edge of the storm could not help but feel insecure. Mr. He, a big seller, said: "Amazon sellers are taking out small cards, taking out all that can be taken out, some logistics have been stagnant, and overseas warehouses are very busy."

The "massacre" of blocking accounts has been going on for two months

Amazon has always prohibited the manipulation of reviews, but in order to promote new products and increase conversion rates, some sellers still accumulate good reviews through evaluations and rewarded good reviews, stepping on the red line of rules and playing hide-and-seek with the platform. The safety risks of sellers who cross the line always exist. When the weather is clear, everything is fine, but once the fuse is lit, it will be an unprecedented disaster.

This time, the fuse that ignited the raging fire was a small card.

At the end of April, the first Amazon top-selling brand Mpow, a brand under Paton, was blocked; in early May, the accounts of three top-selling brands including Zebao were blocked, causing an uproar among sellers.

Subsequently, Marketplace Pulse, an American e-commerce data company , wrote an article saying that Amazon has suspended more than a dozen Chinese sellers who participated in the fake review program, and the total sales of the suspended sellers exceeded US$1 billion.

The third round of account blocking occurred on June 16, and Zebao and other brands were stopped from selling because their products contained small gift cards. Then on June 18, 22, 23, and 24, new news of brands being blocked came out one after another, and the number of blocked sellers rose sharply. On June 24 alone, more than a dozen brands including Saferell, AirExpect, FITFORT, Dralegend, and MOSPRO collapsed. Most of these brands can no longer be searched on Amazon, and entering from external searches such as Google also results in a dog-shaped page of "Page cannot be found", or the product page directly shows that it is not for sale.

The sellers then discovered that Amazon’s account ban targets had dropped from the top sellers in the first tier to the middle sellers in the second tier, and they were immediately furious.

According to statistics, at least 12 big-selling brand accounts have been blocked since the beginning of this storm , including 6 industry benchmark sellers such as Zebao, and the number of mid-level sellers that have not been discovered may be even greater.

From the perspective of categories, 3C products are the hardest hit area in this account blocking. The brands with abnormal accounts are mainly in the categories of electronic products, home, health, beauty, groceries, etc. Specific products include headphones, chargers, data cables, keyboards and mice, drones, fascia guns, massagers, car chargers, sports cameras, driving recorders, furniture, etc.

The storm is coming, 150 million capital is withdrawn and the seller goes bankrupt

Amazon sellers were banned, which directly brought down Tarot cards.

Among the sellers whose accounts were blocked, some major brands were almost wiped out, and the heavy losses caused some cross-border e-commerce companies to lay off employees or even go bankrupt. An operator said that 80% of the company's stores were closed on the second day of Prime Day, and the company has already started laying off employees, letting them choose for themselves.

What is the current situation of the sellers whose accounts have been blocked? Mr. D, a 3C seller in Shenzhen , said: “In the past, everyone wanted to negotiate with Amazon collectively, but now it seems that negotiation is useless and this path is no longer feasible.”

"The sellers' mentality now is how to stabilize the company, how to deal with Amazon's goods, how to deal with Amazon's deposits, and how to deal with employees. Decisions must be made quickly to move the goods out of the warehouse. The goods can no longer be sold through Amazon channels, so how can these goods be sold through channels other than Amazon? This is the internal priority that sellers must deal with after their accounts are shut down." said Mr. D.

Most of the sellers whose accounts have been blocked have financing experience, so financing is the first external problem that sellers have to face after their accounts have been blocked. Mr. D said, "Capital has four attitudes: one is to ask sellers for money, and then the sellers will charge 6% or 8% of the bank; the second is to wait and see, and let the bullets fly for a while; the third is to withdraw loans; the fourth is to continue to invest, but the company's valuation is lowered."

Mr. D revealed that after a company in Shenzhen Tianan Cloud Valley had its Amazon account blocked, the capital withdrew 150 million yuan of financing and the company directly declared bankruptcy.

Once their accounts are blocked, smaller sellers may not even be given a "probationary" treatment and will be directly abandoned by capital. Whether the top sellers whose accounts are severely blocked can survive the disaster depends on the support of capital. If capital recognizes them, they may be able to make a comeback.

At present, this large-scale ban has impacted the confidence of investors in Amazon sellers. Mr. Yang, a senior seller, said: "Now the investment circle dare not look at Amazon, everyone is waiting and watching, and will not make any moves for the time being."

Amazon sellers’ top priority: Get the small card

According to foreign media reports and confirmation by the blocked companies, the small cards were the main reason for the large account blocking. For a time, Amazon sellers collectively began to remove the small cards.

Mr. He, a big seller in the industry, said that the sellers who were previously blocked were because the small card clearly stated how much money they would get in cashback for leaving a five-star review, which is a serious violation. However, there have been reports in the past two days that as long as it is a small card, the seller will be blocked even if no "money" is mentioned .

"This is terrible. In other words, almost every seller may be shut down. So after this news came out, all sellers are now picking up their cards. Logistics have come to a standstill. The logistics companies said that all sellers must take the goods back and get the cards. Overseas warehouses are also very busy now. The only job of all overseas warehouses now is to pick up the cards." said Mr. He.

At present, Mr. He's company is also trying to remove the small cards, but those that have already arrived at the Amazon warehouse cannot be removed. The cost of returning the goods is too high, so Mr. He decided not to take the cards from these goods. "In my personal opinion, I think it's just a card. If there is nothing illegal, the store will not be closed."

Recently, a seller posted a notice: How to avoid account deactivation?

Sellers must provide a list of all ASINs that contain inserts, flyers, coupons, brochures or similar materials in or on the product packaging that request buyers to leave positive reviews/ratings or offer incentives for buyers to leave reviews/ratings within 3 business days. If the seller does not submit a complete list of ASINs within 3 business days, his or her sales account will be suspended.

New rules: If you are banned from selling, you will lose both your money and your account

Now, can the dozen or so banned big seller accounts come back? Many industry insiders agree: it is difficult, almost impossible.

There have been cases of big sellers in the industry having their accounts blocked, but they returned to normal in a short time. When Paton and other big sellers had problems in April, many sellers said: "Don't worry, big sellers' accounts are blocked quickly and unblocked even faster." However, this prediction failed. Now, about two months later, the first batch of blocked big seller accounts have not been restored.

3C seller D reported that Amazon has updated a rule. The new policy makes one point clear: the platform has zero tolerance for all violations of the review policy. If a seller is found to be trying to manipulate reviews, Amazon will immediately and permanently revoke the seller's sales privileges on Amazon and withhold funds.

Analyzing from the new rules, seller D believes that the big seller account that was blocked this time may be permanently blocked, and the account funds will also be withheld. Ultimately, it will be difficult to recover the account, brand and payment, and the seller will lose both money and account!

It is estimated that the funds in the sellers’ accounts involved in the recent account suspension have reached more than 10 billion. Seller D further stated that from the first wave of large-scale account suspension at the end of April to the recent period, the financial losses of the blocked accounts in China are estimated to reach 20-30 billion. The account suspension is not the sole action of Amazon, but is driven by forces behind it.

When it comes to account suspension and funding issues, seller D still has four questions:

1. American sellers also have small cards. Are they checked at the same time? Are Chinese sellers treated differently?

2. The platform should look at how many suppliers are behind these blocked sellers, and how many people will become indebted or even go bankrupt as a result?

3. Amazon has proposed that brands go overseas. Will this account ban be an attempt to kill the brand and uproot it?

4. Where will the funds seized from Chinese sellers go?

Amazon crackdown continues

Regarding the successive blocking of big-selling accounts, Amazon’s official attitude is also very clear. The platform requires sellers to operate with integrity and not manipulate reviews in violation of regulations. Otherwise, the account will be blocked without any tolerance and the crackdown will continue.

Amazon’s official Weibo account issued notices on May 20 and June 16, warning sellers to crack down on fake reviews.

On May 20, Amazon issued a letter to all sellers, the first sentence of which directly mentioned: Amazon's policy has always clearly required sellers not to abuse reviews. This is a side response to the reason for the death of many sellers' accounts - review violations.

Amazon then said, "We have recently suspended the sales privileges of some sellers. In the future, we will continue to perform this duty, monitor the operating environment, and take prudent actions. Amazon will not make the decision to suspend a seller's account lightly, and we are well aware of the difficulty of every seller in establishing and operating a business."

After several top sellers such as Tongtuo had their accounts blocked, many sellers actually panicked. However, the matter was not over even after Amazon made it clear that it would not block accounts at will, and the blocking trend continued to spread.

On June 16, Amazon released a statement on creating a trustworthy customer review experience, which directly stated its attitude: No matter the size of the illegal seller’s business or where they are located, we will take action to prevent false reviews.

Regardless of the size of the seller, this may also be a foreshadowing for the top seller registration. In the following days, the number of sellers whose accounts were blocked increased sharply and reached a peak on the afternoon of the 24th, including a well-known top seller in Shenzhen.

According to official data, Amazon blocked more than 200 million suspected fake reviews in 2020. In addition to removing these reviews, Amazon also informed sellers that it would block accounts that posted false reviews from continuing to submit reviews, and take action against seller accounts that obtained commercial benefits through false reviews.

The platform has a firm attitude. As long as sellers abuse reviews, Amazon will continue to crack down on them. Previously, the platform's usual practice was to settle accounts later. If it settles accounts this time, it will make a large number of sellers tremble.

The account suspension may last until the end of the year

Why do sellers panic? Because there are too many domestic sellers who abuse reviews!

Shenzhen 3C seller D said: "Many Chinese sellers are engaged in 3C products, and many Shenzhen sellers started their business with this category. If you don't review 3C products, you may not get a good review in a month. The weight of reviews on the Amazon platform is too high, so many sellers would rather take the risk of doing reviews."

The reason behind Amazon's massive account ban this time is that sellers are manipulating reviews in violation of regulations. Whether it is an official statement or a request for reviews after the sale, manipulating reviews in violation of regulations is definitely the most common way for sellers to "seek death".

In addition to the widespread manipulation of reviews by 3C sellers, sellers in other categories are also following suit. An industry insider said that when promoting a product on Amazon, more than 80% of the sellers he knows start by relying on reviews and slowly promote the product.

As one seller said, no snowflake is innocent in an avalanche! When a large number of sellers violated the rules by posting comments or placing small cards, and the platform cracked down on such violations, widespread panic continued to spread among sellers. Especially when seeing big seller accounts fall one by one, many people worried about their own situation.

The story of how fake reviews attracted widespread attention started with reports from foreign media.

In May, foreign media reported that Safety Detecties discovered an organized Amazon fake review scam involving 200,000 people. Safety Detecties also discovered a database vulnerability that contained more than 13 million fake review transactions between suppliers and customers. From the leaked data, about 75,000 Chinese Amazon accounts were leaked, and about 200,000 to 250,000 people were affected.

Foreign media also said that these 75,000 Amazon accounts may be permanently blocked. In addition, these false reviews will also be deleted from the product pages.

As the matter developed, foreign media continued to pay attention to it. On June 16, as some stores under the three Zebao brands were suspended from selling, the reasons reported by foreign media were laid out in front of everyone. The reason for the ban seemed to be that the product packages contained small gift cards, which violated Amazon rules.

Perhaps due to the pressure from foreign media, this round of Amazon's "cleansing" is absolutely large-scale . When big sellers are caught one by one , will small and medium-sized sellers be affected? Mr. He, a big seller in the industry, said: This account ban is still in progress, and it seems that there is no rhythm of stopping. Amazon may take it step by step, banning a few accounts every week, using the method of killing chickens to scare monkeys, forcing sellers not to touch the red line of the platform.

Shenzhen 3C seller D believes: “This time Amazon’s rectification will start with the top sellers, and once the top sellers are cleaned up, the sellers will move down, and the ban may last until the end of the year.”

How do Chinese sellers face this storm?

The Amazon account suspension incident is undoubtedly a big shock to Chinese sellers. Each bloody example warns sellers that they must operate in compliance with regulations and try to change their business thinking.

Mr. Xiao, a big seller on Amazon, said that sellers are facing "three big mountains" this year : 1. The platform cracks down on illegal comments and bans accounts on a large scale; 2. Logistics costs are extremely high, and slow logistics has led to a longer payment cycle for sellers. The capital turnover that was originally 2-3 months in previous years has been dragged to more than 4 months this year; 3. Internal competition is serious, and sellers are engaged in a price war. In the end, no one makes any profit. The more they sell, the more they lose, which is tantamount to suicide.

Mr. Xiao further said: "In the face of major industry shocks, I would rather do less this year and think about surviving first. Because Amazon's rectification is mostly done by robots, it is inevitable that there will be mistaken killings. I did not violate any rules in my comments. Some time ago, more than 1,000 comments on a hot-selling product were innocently deleted. Now I am still worried that legitimate sellers will be affected."

3C seller D is pessimistic: "I feel that Amazon may have closed the door to 3C sellers. We cannot change the overall environment, and the only thing we can do is to deal with the current situation. We will not expand this year. We will wait and see, hoping to survive smoothly. I suggest that new sellers do not enter the market blindly, and do not believe the rumor that all the houses in Shenzhen Bay have been bought by Amazon sellers. Now we are all picking up bottles. This year, those who are not experienced should not enter the market, and existing sellers should expand cautiously. "

Compliance, making money, and risk diversification are the key words that Amazon sellers must keep in mind this year.

As a seller, since you have chosen the platform, you should abide by the rules. An operator shared his thoughts: "When I saw that the evaluation violated the policy red line, I was stunned. What should I do next? I don't know. I can only try to change it. If I don't change it, will I "wait to die"?

Next, sellers who want to continue on the platform must stop all illegal behaviors, operate in compliance, and survive by relying on products. After compliance, the seller's performance may be slower, but at least they don't have to worry about losing sleep or losing everything overnight.

Diversifying risks means putting your eggs in different baskets to prevent the baskets from being knocked over when the platform fluctuates.

A seller lamented: "Amazon can close stores at will. Even if you are very big, it can go back to the old days overnight!" Currently, some sellers are trying to develop independent sites and other third-party platforms, and some sellers are even investing outside the industry.

Amazon sellers have repeatedly mentioned that the essence of business is to make money. However, under the price war this year, a large number of sellers were "crying", and they lamented: "The more I sell, the more I lose"!

Due to Amazon's storage capacity policy, this year, old sellers are selling at low prices to clear out their inventory and collect payments to increase storage capacity ; new entrants are trying to grab the market with low prices, and the top categories are taking the lead in lowering prices to grab rankings. The price war between Amazon sellers has suddenly broken out and is getting more and more intense. Sellers have turned into cross-border philanthropists, bringing warmth to the people of Europe and the United States, but they themselves are left cold. This price reduction behavior is called a spiral strategy, where everyone wants to grab the market but is swallowed up by profits.

As Mr. Xiao said, commercial competition must return to fairness, and making money must comply with market rules. We cannot just fight among ourselves after getting capital. If we kill each other, we will eventually kill ourselves.

Amazon's large-scale ban on accounts and brands is a fatal blow to many sellers. This once-in-a-decade "industry shock" hurts more than just the platform sellers.

Amazon, banned, big sales