As always, it’s been another month of notable stories from Amazon that directly affect Amazon sellers. Let’s discuss several of these and what they mean for you, the Amazon seller, especially with the all-important 4th quarter in full swing.
In August, it was widely reported by eGrowthPartners and elsewhere that Amazon, under pressure from lawmakers in the US and in other countries such as Germany, was going to make sweeping changes to the US Seller Agreement (officially called the Business Solutions Agreement ) effective August 16, 2019.
The new Seller Agreement has many revisions and changes – you can actually read the red-lined version of the changes here – and those changes are now live on Amazon as well.
Here is a small list of the changes we thought would be important to sellers:
Under the new rules, Amazon must:
You already know what we do here at eGrowthPartners: We help sellers navigate the obtuse and ever-changing maze of Amazon seller policies. Amazon speaks its own language, and we help sellers who have run afoul of Amazon policy defend themselves. The sad truth is that a seller is ALWAYS presumed guilty when Amazon accuses the seller of wrongdoing, and 100% of the burden of proof is on sellers to exonerate themselves. To complicate matters further, Amazon does not always fully explain what the seller has done wrong, nor does it give them a clear and concise path to correct the issue. After helping thousands of sellers comply with Amazon policies, we at eGrowthPartners were very excited to see these changes to the Seller Agreement.
The changes amounted to a gentler, kinder Amazon that actually clarified seller polices and gave sellers time to correct the problem that Amazon determined they had
So August 16th came….and went…..
Six weeks later, we have still not detected any significant changes in Amazon policies, language, processes, or procedures as it pertains to Amazon’s relationship with the seller community.
The press has also picked up on this baffling non-action by Amazon. This article run by businessinsider.com in late September sums up what many industry insiders are seeing here and details the frustrations that Amazon sellers continue to have when dealing with Amazon.
Here are several quotes from that article:
“This is a much-ballyhooed improvement to account suspension and transparency and we’re looking under rocks for it,” said Chris McCabe, who is the founder of a consultancy called eCommerceChris that helps Amazon sellers whose accounts have been suspended.
“Nobody likes that your business just shuts down overnight,” Amazon seller and consultant Cynthia Stine told Business Insider. “They keep your money, they keep your inventory, and you’re looking at a very vaguely worded notification document that doesn’t really tell you what they’re looking for.”
“If they would just tell sellers, ‘you have two weeks to clean up your act,’ most sellers would,” Stine said. “They would do whatever Amazon wanted. Amazon sellers are like abused kids. They would do anything to please Papa Amazon. But we don’t get warnings — we just get taken down.”
“I have not seen the 30-day warning yet,” said Stine, who runs a 25-person business out of Dallas focused on reinstating suspended Amazon sellers. “So far as I can tell, there’s been no one who has gotten that 30-day message.”
We can only hope that Amazon will begin to make the changes promised in the Seller Agreement. We’re very confident that the changes would be most welcome in the seller community
“A team of Federal Trade Commission investigators has begun interviewing small businesses that sell products on Amazon.com Inc. to determine whether the e-commerce giant is using its market power to hurt competition,” begins an article published by Bloomberg in September. Many other major news outlets also widely reported the story.
The Bloomberg article continues: “Several attorneys and at least one economist have been conducting interviews that typically last about 90 minutes and cover a range of topics, according to three merchants. All were asked what percentage of revenue their businesses derive from Amazon versus other online marketplaces like Walmart Inc. and EBay Inc., suggesting regulators are skeptical about Amazon’s claims that shoppers and suppliers have real alternatives to the Seattle-based company. One merchant, Jaivin Karnani, said he was surprised the FTC returned his call the very next day.
The interviews indicate the agency is in the early stages of a sweeping probe to learn how Amazon works, spot practices that break the law and identify markets dominated by the company. The length of the interviews and the manpower devoted to examining Amazon point to a serious inquiry rather than investigators merely responding to complaints and going through the motions, antitrust experts say”
We will keep a close eye on this one as it progresses. Right now, the main takeaway is that the FTC is ready, willing, able, and actively taking statements from Amazon sellers as they attempt to ascertain whether or not Amazon is acting in a monopolistic fashion.
The question we always have with these issues is this one: How does it affect the seller community? It would stand to reason that if Amazon began to feel pressure from government agencies then they may begin to make changes to seller policies, performance, or many other criteria that will affect and disrupt Amazon sellers. Our eyes are wide open here and we will update everyone as we spot issues.
On October 1, Amazon published an announcement in the Seller Central area of US Amazon selling accounts that stated the following:
October 1, 2019
Amazon Intellectual Property Accelerator
Helping brands accelerate obtaining intellectual property rights and protecting brands in our stores.
Today, we’re excited to launch Amazon Intellectual Property Accelerator, a new program that helps brands more quickly obtain intellectual property (IP) rights and brand protection in Amazon’s stores. We created IP Accelerator specifically with small and medium businesses in mind, and IP Accelerator helps these entrepreneurs by making it easier and more cost effective to protect their ideas.
Expert legal guidance is critical for businesses to protect their brands and avoid costly mistakes in the trademark filing process. IP Accelerator solves this challenge by connecting businesses with a curated network of trusted IP law firms that provide high quality trademark registration services at competitive rates to help brands secure a trademark. When businesses use these law firms to file trademark applications, Amazon provides their brands with accelerated access to brand protection in Amazon’s stores.
Trusted intellectual property law firms at competitive rates
Amazon has vetted the participating IP law firms for experience, expertise, and customer service, and all have agreed to competitive, pre-negotiated rates for the standard services involved in obtaining a trademark registration. These law firms help ease the trademark filing process, including researching a brand to see if anyone else is already using it and filing trademark applications to protect it. In addition to trademark applications, these firms can also help with additional IP needs such as copyright registrations, design patents, and broader IP protection strategies, making it easy for businesses to get tailored solutions for their brands.
“We’re very excited Amazon has a list of legal firms that can advise us in our trademark needs. We have struggled finding counsel for trademark specific questions as we are a small company and work with limited budgets. Having the peace of mind that Amazon has vetted these firms and negotiated pricing for us lets us focus on what matters—building our brand.” – Sonali Nayak, owner of Indigo Paisley.
Using IP Accelerator takes the guesswork out of the trademark filing process. These law firms know the ins-and-outs of IP and can save businesses both money, and time—a proper, well drafted trademark application can significantly reduce the time required to secure a trademark registration. Amazon does not charge businesses to use IP Accelerator—they only pay their law firm for the work performed at the pre-negotiated rates.
Earlier access to brand protection features in Amazon’s stores
Because the participating law firms have been thoroughly vetted, when a business works with one of the law firms in IP Accelerator and a trademark has been filed on their behalf, they will be strong candidates for registration. As a result, Amazon will provide these brands with accelerated access to brand protections in Amazon’s stores, to better protect their brand months, or even years, before their trademark registration officially issues. Brands will benefit from automated brand protections, which proactively block bad listings from Amazon’s stores, increased authority over product data in our store, and access to our Report a Violation tool, a powerful tool to search for and report bad listings that have made it past our automated protections.
With today’s launch, Amazon IP Accelerator is starting by helping businesses from around the world obtain trademarks and other IP rights in the US. Businesses interested in IP Accelerator can get started at: http://brandservices.amazon.com/ipaccelerator.
IP protection is a vital area for any Brand. Trademarking your product is a necessary step to inclusion in Brand Registry, which gives Branded Amazon sellers some additional protection and abilities, including the ability to remove listings on their own. Legal firms can be quite expensive, and so on the face of this it would seem that it’s a good step forward for brands on Amazon.
But, as with all new Amazon programs, we have questions here:
Of course, we will keep you informed as this evolves.
As Hurricane Dorian approached Florida in early September, the State of Florida activated their anti-price gouging policies:
Surrounding states such as North and South Carolina quickly followed suit. As we are all aware, it’s illegal to significantly raise the prices of essential items that may be needed in the event of a hurricane, such as batteries, water, and gas.
Over that early September weekend, Amazon also fired up their A.I. Bots to detect price gouging on the site in states affected by the price gouging policies. They cast a wide net, and hundreds and possibly thousands of Amazon sellers woke up to their account being suspended.
In Amazon-speak, price gouging falls under two main groups of policies: Code of Conduct and Amazon Marketplace Fair Pricing.
Seller Code Of Conduct violations, in particular, are VERY difficult to defend and overcome. Here’s a recent snapshot of these polices in the USA:
Naturally, there was a group of Amazon sellers who were actively attempting to profit off of this natural disaster by significantly raising their prices of essential items. Those sellers are probably gone for good.
There was another significant group of sellers who also received Account Suspensions who had no intention of price gouging and, in many cases, weren’t even aware that they were doing anything wrong until they were suspended.
Once we at eGrowthPartners were contacted by sellers and looked at our own data about this issue, we found the pattern and determined the main culprit – their repricing software.
Many Amazon sellers, especially the larger ones with a lot of ASINs, rely on software to periodically reprice their inventory. On Amazon, price is just about everything. 70%+ of all sales of an item go to the lowest price. Repricing software can check the prices of a seller’s competitors and the price of Amazon itself and lower their offer price a penny below the lowest offer down to an acceptable lower limit or floor. All repricing software is focused on this particular task and can reprice as often as several times an hour. The repricer will also raise the price if competitors raise theirs or if competitors begin to sell out of their items .
Here’s the lesson that cost one seller over $50,000 in sales while he was suspended: a seller can get in trouble if the price of their item is too HIGH.
It’s counter-intuitive for sellers to think this way, but it’s important to place an UPPER limit, or ceiling, on the prices of their items in their repricing software as well as a lower limit. Most repricing software now has the Upper Limit feature, and sellers need to use it.
What was happening to sellers here is that they did not place an upper limit on their items, and as the sensitive items such as batteries, flashlights, cases of water, etc began to sell out, the repricing software began to naturally raise the prices of the items. Because several sellers did not have an upper limit set, some of the prices went up significantly and triggered the Amazon AI Bots to detect and suspend their accounts .
Fortunately, we were able to get our clients affected by this issue (Watergate 2019?) reinstated and selling again, and now is a great time to remind everyone that eGrowthPartners not only helps sellers get out of trouble with Amazon, we also offer Account Management services that keep sellers out of trouble to begin with. You can take a look at what we offer here:
Honestly, in the current Amazon selling environment full of ever-changing Amazon policies and dirty seller tricks, we couldn’t imagine ever starting or growing an Amazon business without someone like eGrowthPartners watching your account for signs of trouble at all times.
Vox Media recently published this graph of Amazon search results, and it is stunning considering how new the Amazon Advertising program is:
For Amazon sellers who think that paying Amazon 15% in listing fees is highway robbery, you may want to avert your eyes in disgust here.
Amazon Advertising is here to stay, and it is growing significantly and quickly, according to the recent story by Vox Media:
Even major brands are feeling the effects of Ad spending on Amazon. From the Vox article:
“Case in point: the luggage brand Samsonite, which has to pay for sponsored ads in order to be the top result when you search “Samsonite” on Amazon. As Samsonite’s Chief E-commerce Officer Charlie Cole told (Jason) Del Rey, “Amazon is making money off your products, making money off your data by creating brands, and Amazon is making money off the privilege of being on their platform by selling you advertising to protect your brand.”
“It’s been a tough relationship,” he added”
Should Amazon sellers be advertising on Amazon? We don’t think you have much of a choice at this point. A seller can certainly choose to not spend money on Amazon Ads, but what we’re seeing is that their sales are dropping significantly because their competitors ARE.
The other problem is that advertising on Amazon is HARD. No, its not hard to set up a campaign – most sellers can muddle their way through it. The issue is the ACOS, or Average Cost of Sale. In other words, how much ad money did you just spend to sell that t-shirt? If it cost you $6.00 in PPC Advertising to make your $15 t-shirt sale, is there any profit left over for you?
Complicating matters even more, there are several different ways a seller can advertise on Amazon, and what you are allowed to do depends on whether or not you’re a brand in Brand Registry and qualify for the different options.
Running efficient ad campaigns is the key. Keeping your ACOS low enough to make a profit is imperative. It is difficult to do and takes a lot of time – some sellers have thousands of products – yet is EXTREMELY important now.
Of course, eGrowthPartners can help you with this. We have an entire Amazon Advertising division that does everything from researching keywords to creating product listings to Enhanced Brand Content (sorry, it’s called A+ content as of a few days ago) to completely managing your PPC campaigns. Just email us at email@example.com or call in and we’d be glad to help you get started.
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About the Author
Kevin Harmon has been selling on Amazon and eBay for 15 years, at one point rising to the Top 1% of all sellers worldwide.
Kevin has brought his substantial e-commerce knowledge to eGrowthPartners and serves as Vice President of Sales & Marketing
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