In a perplexing and somewhat startling move, Amazon has conveyed a message to numerous marketplace sellers in both the UK and continental Europe. It entails a significant extension of the waiting time for the release of sale proceeds, potentially plunging small businesses into a precarious situation. This decision has caused an uproar among these sellers, who now fear the possibility of going out of business due to this financial disruption.
Amazon, a giant in the e-commerce realm, traditionally credited seller accounts immediately upon the sale of an item online. However, they have now altered this practice, opting to release funds only a week after the item has been delivered. This shift is outlined in a letter from Amazon, where they acknowledge the likelihood of a one-time cash flow disruption for sellers.
Previously, sellers had to endure a wait of up to three days before gaining access to their hard-earned funds. With this new policy, they must now brace themselves for a prolonged period of up to 10 days post-delivery before they can access their revenue.
The impact of this decision on small businesses cannot be overstated. Many fear that it will severely impede their operations, possibly pushing them to the brink of bankruptcy. Some sellers have reported having substantial sums, sometimes even exceeding £100,000, tied up in Amazon’s new arrangement.
This move by Amazon follows in the footsteps of another online marketplace, Etsy, which introduced a policy of withholding up to 75% of certain sellers’ earnings for a minimum of 45 days. This decision led to a backlash from UK vendors, resulting in Etsy revising its policy to hold back a more reasonable 30%.
Approximately 15% of Amazon’s sellers, roughly 33,750 businesses, primarily those that joined the platform before 2016, stand to be affected by this change across Europe, including the UK. The UK’s Small Business Commissioner, Liz Barclay, expressed concerns about the widespread implications for domestic sellers.
Sellers heavily rely on these funds to procure materials and maintain their inventory, which is crucial for their business operations. The abrupt alteration in cash flow has disrupted their ability to conduct business smoothly.
Despite this financial predicament, Amazon insists that this policy, introduced in August 2016, will have no significant impact on over 85% of sellers in Europe. They rationalize the change as a means to standardize reserve policies, ensuring that sellers have sufficient funds to cover obligations such as product returns and customer claims. Amazon further justified this decision by notifying affected sellers three months in advance to help them prepare.
Nevertheless, the consequences for small businesses cannot be ignored. Sellers are now left grappling with uncertainty, with some contemplating the survival of their enterprises. The extended waiting period for funds has placed immense pressure on them, making it difficult to meet commitments like staff salaries and loan repayments.