Amazon…..It’s a Jungle Out There
Especially With This New Policy!
Last week, Amazon quietly implemented a new policy and procedure specifically for the process known as “Brand Gating.” The motivation for these new rules is indeed noble and no doubt have the consumer’s best interests at heart. However, the way Amazon communicated this message to their Sellers left plenty to be desired. In fact, many Sellers were never formally informed of these changes and only found out about these new rules when they tried to upload a product listing only to find they were blocked from doing so.
While most established Amazon Sellers have now been informed about these new policy changes, some of you may still be finding out about this major change only now in this article. So what is this new policy emerging from the dark and foreboding jungles of the Amazon? It is a procedure that requires Sellers to supply invoices and pay a fee to sell certain big brands on the Amazon website. Before we get into the specifics of these new rules, lets’ explain why Amazon felt the need to implement such cumbersome rules and hefty fees.
Amazon Products- NO COUNTERFIET ITEMS ALLOWED!
As complaints from consumers have started to inundate seller forums, Facebook Groups, consumer blogs and the internet in general about counterfeit products being openly bought and sold on Amazon, the Seattle based company had no choice but to try and crack down on these “knock-offs.” Over the last few years more and more of these counterfeit products (mostly from Chinese manufacturers) have created complaints from both the customers who unwarily purchase them as well as the legitimate product manufacturers they impact.
How to address these concerns? Well Amazon will now require big brand resellers to prove that their products are coming from legitimate sources. The conventional wisdom is that Amazon will clean up their site by dumping the Sellers’ who are knowingly marketing counterfeit products. They will now require the Seller to provide invoices showing the purchase of at least thirty (30) products over the previous ninety (90) days from the legitimate manufacturers of those products. Once they have completed that process, they will then need to remit a payment to Amazon for authorization to sell that specific brand. Those “Brand Gating,” registration fees will range from $1,000 to $1,500 per brand.
For many sellers, this is the time of year when they begin to load up on inventory as they prepare for the Holiday shopping season. These new rules from Amazon could severely impact many of those Sellers. Of most concern with these new policies is how it will affect Sellers who base their business model on what is called the “grey market.” This is where Sellers will buy items in bulk from clearance and liquidation sources and then add their margins to these products before listing them on Amazon. This means that typically, the Seller will not be able to produce invoices from the designated manufacturers and/or distributors…..even though the products in question are typically authentic. It is yet to be seen how this new policy will impact what has generally been a thriving business on Amazon, namely the product clearance/liquidation model.
Current Amazon Sellers Will be Grandfathered in………
The good news for current or established Amazon Sellers is that for them it is business as usual, at least for the time being. The registration fees will only be applied to new merchants bringing the big brand products on to their website. Amazon Spokesman Erik Fairleigh provided CNBC.com the following written communication clarifying this part of the new policy:
“If a seller is already selling brands on Amazon that are now subject to a fee,
they are not required to pay the fee to continue selling those brands. The fee only
applies to new sellers of particular brands. Sellers can see whether a product
requires a fee to sell when they search for that product using the
“Add a Product,” tool on Seller Central.”
Questions still exist regarding the new “Brand Gating,” policy for existing Sellers. As mentioned earlier, will they have to provide the invoices for all of their affected products to continue selling them? It appears that such a clarification regarding those items will be notated when the Seller attempts to add a product through the Seller Central portal. No doubt Sellers will feel a bit of anxiety each time they go through the process of “on-boarding” a new product for the foreseeable future.
This new policy also creates other dynamics that will play out going forward. The argument could be made that these new rules will help established Sellers from a business sense. Obviously, this new policy will impact the number of new Sellers who are attempting to enter the Amazon marketplace with authentic brands for the first time. Less competition means stronger margins for established Sellers who were already selling these brands on Amazon.
As Ari Levy, a Senior Tech Reporter for Twitter explained it, “Amazon CEO Jeff Bezos is in a tough spot. The troublemakers have found so many ways to sell knock-offs and manipulate rankings that his company can’t keep up. As Amazon chases down the counterfeits, long-time sellers are getting hit with suspensions and being forced to take down listings.”
Established Amazon Sellers while relieved to know the new fees will not apply to them will still be somewhat nervous about other new policy and procedure changes that may be in the offing they will have to deal with. Of course, no one ever said navigating the Amazon was not fraught with peril!