Marketplace vendors in the UK and the rest of Europe claim that having to wait more than a week will make it difficult for them to pay workers and loans.
Small businesses claim that Amazon’s decision to tell hundreds of thousands of marketplace vendors in the UK and the rest of Europe that it is going to hold on to sale profits for over a week will put them out of business.
Sellers have been notified in writing by the company that credits will no longer be applied to their account as soon as a transaction is made online, but rather one week after the item has been received.
According to a letter obtained by the Guardian from Amazon, “You could encounter a one-time cashflow disruption.”
Usually, the money wasn’t released into sellers’ accounts for up to three days. Many individuals will be waiting ten days after delivery before they can get the money.
Businesses warned the Guardian that the decision might “cripple” their operations and that the tight cash flow could drive them out of business.
Some claimed to have thousands of pounds withheld. One claimed to have little over £100,000 “locked in Amazon”.
competing internet market Etsy was compelled to rescind a rule that required some merchants to keep back up to 75% of their earnings for no less than 45 days after it was implemented in late May.
Due to a boycott by UK vendors over the payment hold-up, Etsy was forced to announce that it will lower the amount withheld. The typical reserve level was now anticipated to be 30%.
Following a media backlash, many of Etsy merchants claimed they had been completely removed from the reserve system. However, other sellers said they were still impacted or that their online stores had been suspended.
In Europe, including the UK, Amazon claims to have 225,000 small and medium-sized enterprises selling through its marketplace. The change may have an impact on 33,750, or 15%, of its vendors, the majority of those signed up before 2016.
Liz Barclay, the UK’s small business commissioner, claimed she had spoken with a number of Amazon merchants and believed the issue affected many domestic sellers.
According to one seller, Barclay is currently owed $10,000. Before we experience any cashflow once more, I anticipate that more than £25,000 will be owing. We are a company that solely sells on Amazon; we make no other money.
Another vendor told the Guardian that he would be owed roughly £35,000 after a week and that the delay in collecting monies would prevent him from being able to pay workers or make loan payments on time, endangering the future of his company. He declared, “This action will make our business impossible.”
When monies were cleared, approximately fourteen days later than anticipated, a different vendor who sells aquatic goods claimed he had previously owed £6,000 and anticipated that amount to climb to £10,000 by that time.
We’re fortunate to also have a store, which helps to support the internet business, he continued. We wouldn’t be capable to pay our suppliers and employees if we didn’t have this additional income.
The policy, which is “pushing thousands of owners of small enterprises into catastrophic financial situations at a previously limiting time for small enterprises, leaving them unable to pay salaries, our bills, suppliers, and even HMRC,” according to Libby Pearson, who operates as Soul Nutrients, has prompted Amazon sellers to write to their MPs in protest.
The Entrepreneur, who has been selling nutritional supplements on Amazon’s marketplace since 2009, claimed that she only had a month’s notice of the change in policy and that she knew of others who had gotten almost any.
According to an Amazon spokeswoman, over 85% of merchants in Europe would not be impacted by this regulation, which was established in August 2016.
“Through this procedure, reserve plans for European sellers will be standardized, ensuring that they have enough cash on hand to meet any financial commitments, such as returned goods or customer claims.
“We informed impacted selling partners more than three months in advance to help them brace for this change because we recognize it could give rise to an once-only cash flow disruption.”
Amazon said this week that its quarterly sales rose 11% to $134.4 billion (£105.2 billion), producing profits of $6.7 billion, almost twice as much as analysts had predicted.