Amazon Sellers currently account for nearly 60% off Amazon’s business—no small share when you take into account the more than $230 billion in revenue Amazon posted last year. Selling partners all over the globe will be thrilled to learn of Amazon’s new policies that clarify their rights in an updated terms of service. The changes go into effect everywhere on August 16.
Third-party merchants in Germany complained that Amazon has treated merchants unfairly. One of the main grievances being Amazon’s often-arbitrary and opaque decisions to suspend sellers with no or little notice. Regulators agreed. Germany’s Federal Cartel Office ended a 7-month investigation into Amazon this July, saying that negotiations have resulted in a new agreement for more regulated terms of service. Germany is Amazon’s second largest market, after the United States. The new changes will immediately affect 300,000 sellers in Germany before being rolled out to all Amazon marketplaces in August.
What will change under the new Terms of Service?
Under the old agreement, Amazon terms were markedly ambiguous: “We may terminate or suspend this Agreement or any Service for any reason at any time by notice to you,” they said. Sellers had to agree to this or not sell on Amazon. This policy was likely vague because Amazon has had to deal with an increasingly problematic third-party counterfeit issue. Rather than fully investigating each claim related to this issue, Amazon was instead quick to wield the suspension ax in the interest of protecting the customer experience.
New terms of service were presented to Sellers on July 17, with red-line updates that, most notably, include a 30-day notice prior to suspension:
“We may terminate your use of any Services or terminate this Agreement for convenience with 30 days’ advance notice. We may suspend or terminate your use of any Services immediately if we determine that (a) you have materially breached the Agreement and failed to cure within 7 days of a cure notice unless your breach exposes us to liability toward a third party, in which case we are entitled to reduce, or waive, the aforementioned cure period at our reasonable discretion; (b) your account has been, or our controls identify that it may be used for deceptive or fraudulent, or illegal activity; or (c) your use of the Services has harmed, or our controls identify that it might harm, other sellers, customers, or Amazon’s legitimate interests. We will promptly notify you of any such termination or suspension via email or similar means including Seller Central, indicating the reason and any options to appeal, except where we have reason to believe that providing this information will hinder the investigation or prevention of deceptive, fraudulent, or illegal activity, or will enable you to circumvent our safeguards.”
So far, 2019 has been a year of Amazon addressing and overhauling some third-party issues, especially related to tackling counterfeiting. In February, Amazon specifically called out counterfeiting in its Annual Report to Shareholders. Amazon also introduced Project Zero to streamline and automate counterfeit reporting. Prior to this latest terms of service update, suspended sellers would need to file an appeal and provide various documentation and proof of compliance. Being reinstated could take a lot of time as sellers sorted out the murky reason for the suspension and worked to rectify it with Amazon’s often-vague policies. This could unfairly impact sellers during key events, like Black Friday, the holiday shopping period, or Prime Day. Sellers have often complained of lost revenue and unfair suspension policies.
The new terms of service intends to clarify the reason for suspension and a corrective action while still giving Amazon leeway to suspend sellers “immediately” if they engage in illegal or harmful activity.