
“Amazon is holding over 4.2M dollars, suffocating our business” - hippich
https://sellercentral.amazon.com/forums/t/amazon-is-holding-over-4-2-million-dollars-during-a-pandemic-suffocating-our-business/611187
======
devy
The OP said it was a velocity hold tripped up due to COVID19 situation that
caused the sales to spike drastically.

[https://sellercentral.amazon.com/forums/t/amazon-is-
holding-...](https://sellercentral.amazon.com/forums/t/amazon-is-holding-
over-4-2-million-dollars-during-a-pandemic-suffocating-our-business/611187/73)

And got the attention and escalated:

[https://sellercentral.amazon.com/forums/t/amazon-is-
holding-...](https://sellercentral.amazon.com/forums/t/amazon-is-holding-
over-4-2-million-dollars-during-a-pandemic-suffocating-our-
business/611187/148)

And then eventually resolved:
[https://sellercentral.amazon.com/forums/t/amazon-is-
holding-...](https://sellercentral.amazon.com/forums/t/amazon-is-holding-
over-4-2-million-dollars-during-a-pandemic-suffocating-our-
business/611187/405)

~~~
vermontdevil
And now what? Will Amazon improve their business process to avoid future
situations like this?

(of course not)

~~~
dbliss
My guess this will lead to a internal Correction of Error (COE) report and
there will be some change to either reduce false positives or increase the
velocity of addressing them by making some systematic change.

~~~
jjeaff
Ha! Amazon has had this velocity issue locking up legitimate funds for a
decade. It's a feature, not a bug. They know it locks up funds for legitimate
sellers but they don't really care that much about their 3rd party sellers and
they get to retain a lot of cash for longer than usual anyway. It won't get
fixed.

~~~
toasterlovin
I think you vastly underestimate the degree to which Amazon's actions are
shaped by ongoing, pervasive fraud by 3rd party sellers.

~~~
lnanek2
Your reply doesn't make sense. He said they won't fix it. You said he's wrong
because he's not thinking about fraud. But not fixing it is better for
preventing fraud anyway. So you both basically said they won't fix it.

~~~
mcdevilkiller
First poster implied Amazon does this to retain more cash. Second implied they
do it to prevent fraud instead.

~~~
jjeaff
I just mentioned that retaining more cash is a plus for them and yet another
reason they won't fix it.

------
55555
This basically happens for a good reason. Basically, the potential scam is to
sign up to a marketplace and list very popular products at lower prices than
everyone else. Then ship empty packages or boxes full of rocks. The
marketplace will pay you every few days, and if you are "shipping
internationally" they won't figure it out for a few weeks. So trust is gained
slowly.

The real takeaway here is that this guy pays $5,000 USD per month to get a
support rep on a platform he sells a million dollars a month worth of goods
on, of which it already takes a decent percent, and the support rep can't even
talk to anyone with any power. This is the dark side of monopolies.

~~~
ethanwillis
Surely the scam doesn't last since 2013. Stop making excuses for Amazon, this
isn't acceptable given the circumstances.

There's no scam going on here and bringing it up is just a way to take blame
away from Amazon and for what end?

~~~
55555
I have had XXX,XXX funds locked and a business wrecked in this exact same way
but I'm explaining why it happens. If they didn't do this, they would be
exploited. The real issue here is that, because they're a monopoly, the
customer service sucks, and they don't care at all to let you prove you aren't
running a scam. To the sibling commenter: No, what Amazon is doing is not a
legal requirement. Yes, they act like PayPal now.

~~~
_red
>because they're a monopoly

They're not a monopoly.

~~~
55555
Yeah, they're not a monopoly. And my business isn't a monopoly either. But,
notably, not in quite the same way that they're not a monopoly.

------
jeffrwells
I managed a $60M/yr amazon business and these kind of issues would happen on a
monthly basis.

We were on Vendor Central so we had a dedicated rep. He would avoid helping us
however, and use the opportunity to force us to renegotiate our rates (so
Amazon could have more margin). Then the issue would disappear.

This happened so often we suspected these automatic issues were actually
orchestrated to secure more margin.

The Amazon rep told us that he had quotas to hit of new margin targets for us
every quarter.

We also consistently had issues of Amazon reporting under-deliveries and
holding our funds. We shipped product in packages of (modulo) 8, and so they
ordered in packages of (modulo) 8. When it arrived at the warehouse, they'd
mark only 7 delivered, which is not feasible, sell the extra one and refuse to
pay us for that 8th unit. This amounted to millions of dollars.

I eventually tracked every single package we had ever shipped and presented
evidence of this fraud to them. They offered to pay us 30 cents on the dollar
if we signed a waiver forgiving the rest.

~~~
pcurve
"The Amazon rep told us that he had quotas to hit of new margin targets for us
every quarter."

That is truly wtf.

~~~
toasterlovin
It's management by KPI. Possibly the greatest wealth generating mechanism ever
created. The closest we have yet come to building the fabled paperclip
maximizer of AI doomsayer fame.

------
pgrote
12 hours ago the OP reported the issue was resolved. No further explanation
except thanking Pax from amazon.

~~~
whoisjuan
Lol! That's why social shaming works. Ignoring quiet people scales. Ignoring
loud people doesn't scale. So learn your lesson and complain everywhere you
can when you have an issue.

~~~
hinkley
I used public shaming on Usenet once, in the Computer Shopper era, when a
vendor kept telling me “next week” on the motherboard I ordered. All summer.
The system was going to cost me a huge fraction of my income for that year
(student, gift from family) but I wanted it for career advancement. And in
fact had cost me, because they charged my card immediately. So I was furious.

Three hours after posting a fair but damning report where all the home brew
people hang out and I get a manager on the phone and some sob story about how
they probably shouldn’t be selling that hardware anyway. I didn’t disagree.

And even then I had to go to the bank anyway and reverse charges because they
tried to charge me a restocking fee for hardware they clearly couldn’t even
get their hands on. What are you restocking?

I ended up using the money to move to Seattle instead, which was at least as
good an investment.

------
j-c-hewitt
They do stuff like this all the time. Large sellers are treated like subhumans
that do not deserve attention from an intelligent person at Amazon. You get
bots and contractors making very expensive decisions.

>Why would Amazon, in the middle of a pandemic squeeze a business such as ours
so hard that we cannot get ANY of our funds for goods sold or to pay our
people. I understand risk mitigation, but this is over the top. Please mods,
help us!

Amazon considers sellers to be a renewable resource that can be disposed of
haphazardly at the whim of an automated system or a low level employee. Note
that they also pay for an account rep, covering a significant portion of that
rep's fully loaded salary, yet they are still unable to get timely
information. You have to understand that even if you are on the larger side,
in the top 10% of sellers, that Amazon still considers you expendable.

Paid reps are very helpful but the cost is sort of absurd for what they wind
up doing in high pressure suspension situations for nebulous or
stupid/incomprehensible reasons.

Unfortunately, they are trying to write to "Amazon legal" which does not exist
to field seller problems. Writing to "Amazon legal" is indeed a black hole.
The way to force a response is to file for arbitration.

~~~
sandworm101
>> You have to understand that even if you are on the larger side, in the top
10% of sellers, that Amazon still considers you expendable.

No. Amazon considers them a threat. Amazon itself is the largest of large
sellers. Any profits made by an upstart large seller are profits that Amazon
would rather be making itself.

~~~
j-c-hewitt
Sellers are more profitable and less risky overall because Amazon does not
need to buy the inventory and they make a profit off of every interaction with
the seller from transaction fees to storage fees to PPC ads and more. Amazon's
vendor business sucks and is overall shrinking proportion of marketplace
revenue.

~~~
user5994461
I think you are more likely to be correct than the poster on principles. A
marketplace model makes more and easier margin than being a seller.

However as any gigantic organization, Amazon is not a single minded entity.
It's likely these activites are handled by totally separate entities with
different employees and targets. So it's entirely possible that Amazon is
pushing simultaneously for more marketplace and for more own selling actively
sabotaging both aspects.

------
sacks2k
I wrote about almost the same experience I had in a previous thread that
happened to me a decade ago.

In some seller categories, you are required to show Amazon where you purchased
your items. The excuse is that they need to make sure they are authentic.

While this may be the case, Amazon will most likely use this information to go
around you and put you out of business. In the re-sale business, sources are
your best guarded secret and competitive advantage.

You aren't really building a business anyway. Amazon doesn't allow you to
access any real customer information, you can't communicate outside of
Amazon's communication channels, and you will get banned if you include any
advertisements for your own business/website.

When selling on Amazon, you could sell there for a decade and have nothing to
show for it.

------
hippich
From their SAS - Core program FAQ:

"How many accounts does each account manager manage? Each account manager
manages between 12-15 accounts. We limit the number of sellers that each
account manager has in their book of business so they can focus on optimizing
your account and helping you reach your business goals."

So up to $900k/yr of the revenue made by each of such managers. Yet they are
either nonresponsive or not helpful. Not sure what to think about that kind of
business...

------
tester756
>This was resolved and funds were released. Sorry I got capped on how many
posts I could make and then didn’t circle back to this. Thanks for stepping in
and helping out Pax!

------
LatteLazy
I'm always suspicious of these pieces. Their own comments say they do 1m a
month is sales. But a 15 days hold has them at 4.2m? So their business went up
by a factor of 8 overnight? Sounds like good reason to have a hold in place to
be honest. Even top sellers under coronavirus have only gone up 6.5x haven't
they?

Plus who are they paying? Most businesses have 28day payment terms don't they?
So 15 days in is a little early to panic.

Plus everyone is dealing with coronavirus, so not getting a call back from
Amazon for 2 weeks doesn't sound like the world ending...

~~~
hippich
Our revenue is about $1m there. We are paying for everything upfront, wait for
the sea freight to arrive, clear the custom, etc. Amazon also pays once every
two weeks + keeps about two weeks of proceeds on hold on a rolling basis. That
together with a spike in sales can easily crush if there are no fat cash
reserves.

~~~
LatteLazy
Mind if I ask: how long between paying for goods and being able to send them
to people? Does shipping take long? I'm sort of fascinated by these supply
chains because by making things (say) a week quicker you get a week's worth of
capital back. But if things slow down by a week suddenly you have to out a lot
of capital back in. Its like a very high leverage position in finance would
be...

~~~
toasterlovin
Here's what our capital requirements look like (we manufacture in Asia and
sell on Amazon): 35 days in transit from Asia to U.S. West Coast + 60 days of
safety stock + average of 14 days from when we sell to customer to when Amazon
disburses funds. But the factory extends 60 day payment terms, so we need to
cover 35 days of cost of goods sold (@ 50% of revenue) + 14 days of revenue.
Or ~31 days of sales. I would say that we are probably in the typical range
for a company that sources from Asia. If you source domestically, then you
probably only need 30-45 days of safety stock, depending on lead times, but
you might not get 60 day terms from your supplier.

~~~
LatteLazy
Thanks!

------
Neil44
I'm amazed at how many of the respondents on the Amazon forum are taking
Amazon's side. That's nuts.

~~~
sacks2k
It is nuts. Many people on the Amazon forum not only take Amazon's side, but
try to shame you and blame you for your situation.

------
ilamont
The Amazon Seller forums are a great educational tool, and also a window into
the frustrations that many 3PS are experiencing on the platform and off (such
as issues that relate to UPS and USPS).

There are lots of automated freezes on accounts, some legitimate (selling
products from protected brands without permission) but lots of shutdowns for
no clear reason and it's impossible to get an explanation from a human.

------
egypturnash
Damn there sure are a lot of people blaming the victim in those replies.

~~~
grayed-down
Yeah, HN is a weird place. I got grayed out for saying Amazon desperately
needed competition.

~~~
abiogenesis
If I were Amazon, I would certainly hire people/trolls/bots to participate in
prominent online forums, such as HN.

Edit: Now I'm getting downvoted too.

------
ptero
This is just an opinion without personal experience, but as others indicated
you likely have been snagged by a bot; your case seems really clear cut and a
review with a human should fix this quickly.

The challenge is to get a human on your case. One option would be to give your
rep a heads-up that in 24 hours you will ask your state representative (choose
one which likes to bitch about Amazon or monopolies) for help. Or media. You
like Amazon, blah-blah, but they are killing your livelihood. This has some
risk that Amazon will retaliate and kick you out after releasing your money,
but unless you seriously misrepresent your case they have way more to lose
from publicity than you do. Good luck!

------
peter_d_sherman
Note to Future Self:

I have to wonder if it wouldn't be a great business idea to find / gather all
disgruntled Amazon shippers / sellers, then create some small-scale, yet large
enough to get the job done, Amazon alternative...

After all, "Where there's muck, there's brass", as the old expression goes, as
Joel Spolsky reiterates in one of his essays:

[https://www.joelonsoftware.com/2007/12/06/where-theres-
muck-...](https://www.joelonsoftware.com/2007/12/06/where-theres-muck-theres-
brass/)

------
hinkley
I remember hearing advice years ago about how vendors give you more grace
period to pay when you make regular payments but once they have to bug you
about it then they eventually cut you to 30 days and then cash.

It was impressed upon the other participant that you should make dead sure to
pay your bills on time if you actually have the cash. Once they stop trusting
you your cash situation just snowballs.

It seems like that relationship becomes very topical when your retailer starts
sandbagging on their end. Like the question shouldn’t be how many dollars, but
how many days.

------
didibus
I think engineers are partially to blame for these type of situations.

I can just imagine the internal scenario, the rep escalated, there's some
support ticket sitting on some engineering teams backlog somewhere. Rep can't
do anything since it's all automated, have to wait for the devs to do
something about it.

The systems probably lack manual overrides, or other such measure. Maybe they
were flagged for fraud, but somehow the payload got stuck in some error state
somewhere, and now there's an engineer that needs to figure out how to get
things moving again. To the engineering team, that's 1 error out of hundreds
of thousands of requests per day. This is low severity.

I guess my point is that, as an engineer myself, I often feel very
disconnected from the users themselves. We see errors and issues as percentage
of total traffic. Low number of errors, not important. We don't always stop to
think, wait is there an actual person or business that relies on this for
their livelihood? This one error, what's the impact to the user that depends
on my systems?

The same way that big corporations start to see users and employees as just a
number, I think so do we often fall into this trap. We're always focused on
the scale out, never the quality of service of individual requests. It always
seems more important to launch in one more region, than to fix the hand full
of errors and corrupted requests in the existing one.

~~~
londons_explore
A better way to look at this is to consider a webmail service.

There are 20 engineers on the core dev team. There are 1 Billion customers.
99.9% of customers love the service. 0.1% fall into some bug, and need
customer support to sort it out. 0.1% of those complaints are unusual and need
an engineer to sort it by writing some code.

Thats 1000 issues that require one of those 20 engineers. 50 each. It might
take a day per issue, since these are the in-depth, real corner cases. Some
will require re-architecting things to fix.

You are the project manager of this webmail system. Do you spend 2 months of
the entire teams productivity to help 0.0001% of the customer base, or do you
ignore them and build some features for the other 99.9999%?

~~~
hellotomyrars
How many of the users pay the company $5,000/mo for an account manager?

That's my sticking point. If I pay a company to have a human advocate for me
at the company, I should actually have a seat at the table instead of being
subject to the machinations of a black-box system that nobody can seem to
touch or do anything about unless someone high enough sees people on social
media shaming them.

------
tracker1
I wonder if there are provisions against the seller adding a flyer to their
sales packages pointing to their own website and including a link to a writeup
on this?

While I can understand the need for this type of action on Amazon's part... I
do not feel that taking nearly 2 weeks to resolve this kind of situation is
appropriate. They should have at least a 72hr max turn around for requests
from paid account reps.

I'm also not sure if Amazon is experiencing higher fraud rates than normal
right now either... the silence is deafening.

~~~
hippich
yes, they specifically prohibit that (adding flyers). The customers is
Amazon's, not seller's (but all the risk is on the seller).

------
hippich
Looks like mods noticed HN traffic and closed the topic. Wanted to ask how
they resolved it in the end.

------
robomartin
A good friend of mine sold product on Amazon back nearly ten years ago. I got
to have a pretty good look into the operation as he sought my advice on both
business and technology issues.

The best way I can describe what being a third party seller on Amazon is like
is something like this: If you are interested in ending-up in the hospital
with a massive heart attack, become a third party seller on Amazon.

This is my opinion, of course, your mileage may vary. That said, the things
I've seen defy description. Things like your entire product line suspended
overnight without cause, recourse or a clear and immediately actionable path
to recovery. Or how about your entire account being suspended and the Seller
Support people you talk to are useless?

And how about this one: How about people who never bought your product leaving
negative one star reviews. Even better: People leaving reviews _before_ they
receive the product they purchased, then they cancel the order and it never
goes out. I mean, think about it, as an example, say you buy a weight loss
product. How can Amazon's software allow _anyone_ , even an actual buyer, to
leave a product review _before_ they receive it? How can they allow it a week
after they get it?

Here's a nice one: You manufacture your own product (not a Chinese one-in-a-
thousand-copies private label product). In other words, you are the sole
source and the sole retailer of the product. Nobody else makes it and nobody
else is authorized to sell it. Amazon has no protections against some scammer
claiming they sell your product. What happens is someone buys from one of
these scammers and either get a box full of rocks, something totally different
or a bad quality copy of your legitimate product. Whats worse is _you_ are
left to answer for what happened and _your_ reputation, seller and product
scores suffer due to the bad reviews.

Then there's the issue of no protection against competitors attacking your ads
within Amazon. They have a pay-per-click system. You set a daily budget.
Competitors will pay offshore click farms to click on the competition's ads
while everyone in key markets are sleeping. By the time your potential
customers wake up your ad budget is gone and you produce zero sales for your
money.

I could go on. He left the platform and got really good at running his own
online operation. His stress level is a thousand percent lower and, more
importantly, he knows his business isn't going to be shutdown overnight by
some all powerful online retail god who could absolutely ruin him. I mean,
these people are supporting families. The way Amazon treats legitimate third
party sellers is just terrible. And they make so much money because of them.

~~~
fludlight
> he knows his business isn't going to be shutdown overnight by some all
> powerful online retail god who could absolutely ruin him

Like Google?

~~~
robomartin
Yup, that happened years ago (10+?) to other people I know. And this is the
main reason that, to this day, we do not use any Google product other than
search and AdWords (when we have to). After seeing what happened to people
who's accounts were shut down summarily and without recourse (not even a way
to communicate with a human being) I have less than zero interest in exposing
my businesses to that nonsense.

I mean, who does business like that in the real world? Even the IRS will pick
up the phone, talk to you and help resolve issues. You have to wonder what
kind of personal and corporate culture leads to having such contempt for
clients, customers and partners that a company would think it OK to treat them
this way.

Facebook is another one. Someone I know was advertising exercise clothing for
women. Tank tops, spandex shorts, that kind of stuff. His account got shutdown
without recourse for showing too much skin. As she tells the story, she was
treated to a daily dose of ads from Victoria's Secret while browsing FB, and
they show _far_ more skin and in very suggestive ways than she ever did with
her workout clothing. Three years later she is unable to reach a human being
to have, you know, a human-to-human conversation and attempt to get the
account back.

This is wrong. I guess it's the new normal.

------
citizenpaul
Yell, Wail, gnash your teeth. It won't matter. This is the issue with not
owning your own business when you think you do. Amazon sellers are in reality
just affiliates of Amazon and do not have control over their own business.
This is the reason people pay marketing companies instead of living in the
marketing companies platform.

------
amelius
It won't be long until Amazon represents the entire market of many goods. At
what point will we decide that the function of a market should be left to an
independent regulator? Or that "selling stuff online" should be a utility?

~~~
hippich
I think eventually it will break itself. Sellers facing such risks will add a
significant premium for selling there. Also, even tho you are called a seller
and bear all the risks, you do not even see the customer's address (for FBA
orders). Meaning it is not seller's customer, it is an Amazon customer. So you
are not building business, you are taking advantage of the temporal situation.
In the long term such seller would build their own sustainable business and
Amazon would become just one of channels, expensive one tho. As businesses
expand other less risky channels, and 3PL solutions offer similar shipping
service to prime, Amazon will no longer be a place to get a good price. And it
is already often not a good place for trusted reviews or genuine products. Too
bad some sellers like us who bought in, will be collateral damage in the
process.

------
throwaway042620
So even large accounts don't have an account rep they can call ? They still
have to plead for help on the user forums ? Having no account reps seems petty
and reckless. It's like Amazon is begging to be regulated.

------
pgt
Amazon is the new Paypal.

------
leoplct
Write to jeff@amazon.com

~~~
wjnc
They did, their lawyer did and their support rep did.

~~~
jawns
When I saw that their pricey support rep also emailed jeff@amazon.com on their
behalf, I laughed out loud.

Nothing says organizational dysfunction better than having a disempowered
employee email the same last-ditch "please may a human see this" support email
address that's given out to customers.

~~~
woutr_be
> Nothing says organizational dysfunction better than having a disempowered
> employee email the same last-ditch "please may a human see this" support
> email address that's given out to customers.

And yet it's all too common. I currently find myself "escalating" issues
constantly because other people aren't helpful. Usually it's easy to go up the
chain, to their manager, then that manager's manager, department head, ...etc

But every so often you find yourself in a situation where the next step is
upper management, then what do you do... (This is at a 90K+ employee company)

------
newguy1234
This is one of the reasons why I completely pulled out of amazon and now focus
exclusively on ebay only. Amazon constantly screws over their 3rd party
sellers.

------
jbverschoor
Almost looks like a bank. They do exactly the same shit

~~~
chrisco255
And credit card processors as well.

------
peter_retief
Please support small business and real people. I keep reading stories of
Amazon not paying fair wages and avoiding paying tax. This arrogance and
disregard for small business is even more reason to avoid Amazon.

~~~
hippich
Sellers sell where buyers go. Unfortunately, Amazon today represents a very-
very large portion of online sales. And if you don't sell there, you lose. And
convenience (I think? I don't think it is a place to find a best price
anymore) looks like it takes over concerns over small business.

~~~
peter_retief
Maybe so but the customer is king and if more customers move away then maybe
sellers will move as well.

~~~
hippich
You can bet sellers will move where customers go. Unfortunately, that is not
happening, and if anything, during that virus time, Amazon appears to increase
its positions (another interesting topic to discuss, btw).

------
xutopia
Can you even speak to Amazon on the phone?

~~~
hippich
In theory - yes, in practice, you speak with someone who has no authority and
appears to be there solely for the purposes to be not helpful enough for
seller to give up. Only once I was able to reach someone who was able to make
a decision (which was made quickly, but I doubt I can repeat that when I need
it again)

EDIT: also when escalating (because their first layer of reps defense can not
resolve the issue) and requesting a call, I got a very specific "we do not
have capacity to call you".

------
paypalcust83
Corporate inverted totalitarianism at work. Corporations using the pandemic to
ostensibly justify their poor service and ruinous treatment of others is what
they do. They're not your friends and basing your business on them is a
critical mistake like not owning the mineral rights to farmland.

------
grayed-down
All the FAANGT's desperately need MORE competition

~~~
HeyLaughingBoy
They'll get it as that acronym grows longer...

~~~
grayed-down
Ha! FAANGTY

------
Bubbadoo
Wait, this merchant sells $1MM/month and his business has no LOC (line of
credit)? No lawyers? Something's not right here.

~~~
rurp
The OP explains in the thread that their lawyer is already involved. I would
guess that very few businesses in retail can float 100% of their costs with no
income for weeks/months.

