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Fri Mar 20 2020 17:34:11

Amazon Sellers Face Unique Challenges amid Outbreak

By: Ina Steiner

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Amazon sellers face some unique challenges as a result of the coronavirus outbreak, such as those who participate in its lending program. 

"Omg so what will happen with our Amazon loans if we can't pay it because we sell allot through fba?!?!" one seller wrote recently on the Amazon discussion boards. 

They're referring to the lockdown on Amazon's fulfillment service: Amazon FBA is refusing inbound shipments for all products except those deemed essential due to the COVID-19 outbreak (household staples and medical supplies) through April 5th. Sellers are concerned they'll still be on the hook for loan repayment even though their sales will almost certainly decline as a result of Amazon's restrictions.

Amazon Lending provides sellers with working capital loans. One common use of working capital is for buying inventory; Amazon automatically deducts loan payments from disbursements from sellers. 

Sellers who see a dramatic sales decline because they can't send product to Amazon fulfillment centers fear they will go into default on their loans. A reader forwarded us a link to a Reuters article that outlined the problem, which we forwarded to Amazon.

A spokesperson responded to us with the following statement: "Amazon is working quickly to develop the best ways we can assist our small business lending clients during this crisis, including repayment relief for existing and prospective borrowers."

Exactly how Amazon may help is critical. As one seller wrote on this thread on the Amazon discussion boards, "Deferred interest by suspending payments without removing all interest charges would cost sellers twice as much in the long run."

Sellers who participate in the FBA fulfillment program are also concerned about their IPI metric (Inventory Performance Index). And one seller asked, "Will our $40 professional merchant account fees be refunded since we can't sell in the categories we normally sell in? Some how I doubt it,..."

Some sellers rely solely on FBA, others use a merchant-fulfilled (FBM) strategy or a combination of the two. Stamps.com offered sellers advice for FBA sellers wanting to fulfill orders themselves, found on this Stamps.com blog post.

Stay tuned as marketplaces take different approaches in how they help their online sellers, and let us know what concerns you have.



Comments (4) | Permalink

Readers Comments

Perminate Link for Amazon Sellers Face Unique Challenges amid Outbreak   Amazon Sellers Face Unique Challenges amid Outbreak

by: purpleiris This user has validated their user name.

Sat Mar 21 18:36:34 2020

While I understand the need to get critical supplies to people, there is also a critical need for that income FBA sellers are losing. I don't see how shutting down any portion of a critical sector of industry helps anyone.

Particularly during a time when many are shut-in at home, whether high-risk or not, and prefer shopping online for their needs AND wants more. I think it's unconstitutional that shutting out any of their sellers is being allowed.

It's bad enough for the economy that B&M's are shutting down all over the place. Why shut down any portion of the one sector consumers can turn to? And at probably THE most popular shopping site of all, no less?  

Perminate Link for Amazon Sellers Face Unique Challenges amid Outbreak   Amazon Sellers Face Unique Challenges amid Outbreak

by: Chicago48 This user has validated their user name.

Mon Mar 23 03:26:31 2020

While FBA is shut down, is AMZ charging them storage fees?  If the sellers are storing  non-essentials, then AMZ shouldn't charge fees....simple.

"Stamps.com offered sellers advice for FBA sellers wanting to fulfill orders themselves"
^^ This.  Bring your product in-house and ship from home.

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by: topdog This user has validated their user name.

Mon Mar 23 07:41:06 2020

FBA is NOT shut down. All merchandise at the fulfillment centers is still being sold. They simply are not accepting new shipments of goods that sellers are trying to restock. Even then there are work-arounds (I expect to send several shipments this week despite the ban).
So all is not lost. Yes, sales (on non-essential products) are lower right now - that's likely due to the upheaval in the economy vs any policy changes though - but my goods are still for sale, and I'll still bring in (needed) revenue.  

Perminate Link for Amazon Sellers Face Unique Challenges amid Outbreak   Amazon Sellers Face Unique Challenges amid Outbreak

by: purpleiris This user has validated their user name.

Mon Mar 23 10:22:04 2020

@topdog, when an FBA seller's in-warehouse stock runs out, they won't be able to replenish it. So, it will basically be shut down for them until Amazon starts accepting new shipments again.

Hopefully they are able to take care of the shipping themselves, somehow. I'm sure a lot of sellers use the FBA program due to high volume sales and/or them needing to focus on making products. So, I expect them to have a difficult time with this.



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