Season 1, Episode 131
When Amazon Sellers Should be Scared
It’s time to debunk the prevalent myth of effortless success on Amazon. The misleading allure of quick gains can often overshadow the importance of building a sustainable and compliant business. The truth is, focusing solely on sales and neglecting the operational and compliance aspects of selling can lead to detrimental consequences.
In this episode, Chris and Leah delve into the critical aspects of compliance, policy awareness, and the potential risks that lie beneath the surface of the facade of quick and passive income.
[00:00:00] Chris: Hey everybody. Welcome back to Seller Performance Solutions. This is Chris McCabe. I’m with Leah McHugh, both of us from ecommerceChris. And today we are talking about how we, let’s think about the best way to phrase this. Sometimes we scare people that are new. Not just new to selling on Amazon, but sometimes our content. On things that can happen that are not so great when you’re selling on Amazon. Those things can frighten you, right? Frighten you away from either expanding your presence if you’re already selling, or scare you from selling at all do you think?
[00:00:38] Leah: Yeah, I think a lot of new sellers, when they’re getting started, they’re sort of in a little bubble of here are all the great things about selling on Amazon; and you can make so much money, and all you have to do is, you know, optimize your keywords, and spend some money on ads. And then we come along and are like, here are all of the bad things that could happen to you, and yeah, they tend to get scared.
[00:01:00] Chris: So is that because their tunnel vision, focused on the happy side, and the sunny side, because they’ve just been watching YouTube video after YouTube video about how much money you can make. Are they focused just on the financial upside of it? Or is it that they’re in groups talking to people, maybe attending events or whatever, where none of this comes up because it’s not convenient for those on the marketing and ads and services side. I mean, is that what this is about?
[00:01:34] Leah: Yeah. I mean, there’s an entire industry built around convincing people how awesome it is to sell on Amazon.
[00:01:42] Chris: Right. But if you’re starting a business. Any kind of business. Typically, you sit down, you write out your business plan, but at some point you think of like, what are the legal ramifications? What are the compliance ramifications? What are the potential pitfalls? What mistakes could I make as a business owner, nevermind being a brand owner or an Amazon seller? What as a business owner could I do wrong simply because I don’t know this particular business from A to Z?
[00:02:11] Leah: So, I will say that it is definitely getting better. And I am meeting a lot more new people to the platform that are aware that they need to consider these things. But there are still a lot, and historically there have been a lot of people coming into the industry essentially with blinders on when it comes to that.
[00:02:33] Chris: Thank you for the visual.
[00:02:34] Leah: Well, if you’re listening to the podcast, I’m sorry.
[00:02:38] Chris: Good radio good radio right there
[00:02:39] Leah: If, you know, they have their blinders on and are just focusing on how to make as much money as possible. You know. Passive income is a wonderful promise, but it’s, it has gotten better. I will say that it has gotten better. There is a lot more awareness around this than there used to be. But I still do have regular conversations of, well, I don’t know anybody that’s had this problem. And it’s like, cool, do you know all of the Amazon sellers?
[00:03:07] Chris: That’s a good point, but I do believe that things have swung in the other direction when it comes to even using the phrase passive income, or the other one we love to hear, set it and forget it, or, four hour work week. Any of these concepts I think are coming under more scrutiny and being challenged, number one, because they’re kind of ridiculous to start with, number two, Amazon marketplace sales, that is not the place to set something and forget about it. Otherwise, you are going to wake up to a suspension, right? We see this all the time where people are kind of like, well, we weren’t paying that much attention to our performance notifications, and all of a sudden our account health score has plummeted. And we want you to help us figure out why. And we ask some questions and do some digging, but we find out early on that they weren’t really looking at it, right?
[00:03:55] Leah: Yeah, I mean, I have that conversation a lot where they just were like, Well, I had no idea. I didn’t read the policies. So, first of all, please read the policies.
[00:04:03] Chris: Yes, please read the policies. But also, and I brought this up before, start any Amazon business with some rainy day funds or set aside some resources to troubleshoot problems, even if you’re new. Amazon will never take an appeal that says, I’m sorry, I was new, I didn’t know, I’m learning as I go. The phrase I remember when I was working at Amazon and I was reading appeals was, we were having teething problems. As in, we were in our infancy on Amazon. And that’s like the worst thing to say. Don’t say you’re new. Don’t say you’re having teething problems. Whatever you do, do not say we’re learning as we go, because that’ll scare the daylights. We’re talking about sellers being scared, that’ll scare seller performance into thinking you don’t know what you’re doing, and that they shouldn’t be trusting their buyers with you.
[00:04:52] Leah: Yes.
[00:04:53] Chris: Doesn’t bode well for an appeal, because they’re not going to accept your appeal, reinstate your listing, or your account if they think you’re just saying, well, this was a learning experience so I think we kind of figured it out, but we’re new, and we’re new, and we’re new, and we’re naive, and we’re new. They don’t want to hear that. They want to hear you read all the policies. You studied all the code of conduct.
[00:05:14] Leah: We have a compliance manager. Maybe you are the compliance manager because you’re the only person in your company, but Amazon doesn’t understand that. So there’s a compliance manager, there’s an account manager, there’s operations. Even if it’s all the same person, treat it like it’s a big company, and these are all positions and roles. Because eventually, hopefully you grow big enough that they will be real positions and roles. And then you’ll have your procedures laid out for that. But when you’re explaining this to Amazon, telling them that you’re like a one person show, and you’re doing your best is not what they want to hear.
[00:05:47] Chris: Right. I mean, just think of it in terms of quality control. I mean, this is not a foreign concept. You don’t wait until a bunch of buyers complain about product quality before you do some due diligence, have a quality control manager, pull samples out of your factory, your manufacturers. Inventory, making sure they go to you, so you can open them up and make sure they’re meeting your specifications. They’re in good condition and so forth. Instead of just blindly sending it all in the FBA and hoping for the best, right? What does Amazon want to see in an appeal? They don’t want to see, well, we don’t really have quality control, we just kind of had our manufacturers send everything to FBA and then we got a bunch of complaints. Amazon is going to say, okay, why did you approach it that way?
[00:06:30] Leah: Right. Well, and assuming that, you know, they’re catching this before it’s resulted in an account suspension. My favorite executive game, or executive strategy that I learned from Carlos Alvarez, actually a wizard of ecomm is have team meetings.
If it’s just you, you are the team meeting. But have sessions where you brainstorm what could put you out of business. And then make plans for what can put you out of business, so you have contingency plans if something goes wrong. What happens if your shipments can’t arrive on time? What happens if you can’t ship your orders to Amazon on time? What happens if there’s quality control issues? You need to have plans for everything that can go wrong, because one, Amazon expects that of you. And two, they don’t give you a lot of leeway to fix issues when they happen. So try to brainstorm ways of avoiding those issues in the first place, but also make sure that you have plan B’s in place for if something bad could happen. And I think that’s where a lot of new sellers get hung up. They’re so very focused, both budget wise, and mental space wise on optimization, and ads, sales rank, and they don’t really spend time to think of what could go wrong. And as I’ve had to tell many sellers, it doesn’t matter how optimized your listing is if it’s suspended.
[00:07:51] Chris: Of course. And it’s not like we’re saying that sales rank, and listing optimization, and making your products as searchable as possible in a highly competitive environment doesn’t matter. And of course, from our perspective, we see people who completely ignored the compliance piece in the equation and did great work on those promotional, and marketing, and ads spaces. But what is the point if you’re not even going to know how to reinstate. If you can reinstate your top selling ASIN, because you’ve done it before, and it didn’t go down for days and weeks. You were able to get it right back up. I can kind of understand why you’d expect to handle that yourself. But, that probably means you designed a contingency plan before it happened. Didn’t do it on the fly.
[00:08:41] Leah: It’s like estate planning. If you buy a house, and there’s a bunch of fire hazards in the house, are you just gonna keep it because you’re too busy making it look pretty? Or are you gonna like, solve those problems so your entire house doesn’t burn to the ground?
[00:08:53] Chris: Right. Right.
[00:08:54] Leah: Granted, like on a day to day basis, these fire hazards may not be an issue, but in the grand scheme of things, that’s a fairly major issue that you will need to address if you plan on keeping that house or selling it later. Whatever the case may be, your Amazon account and your business is an investment, and you want to protect those investments by making sure that you’re not doing things that could burn it all to the ground.
[00:09:16] Chris: And a suspension might only happen once, but it can be very damaging when it happens.
[00:09:21] Leah: I’m not even talking about just Amazon suspensions. I’m also talking about legal compliance. I mean, I don’t want a six figure fine from the FTC, and I’m sure most sellers don’t. So there’s legal issues, as well as Amazon issues. And at that point, you’re not just talking about your Amazon account, you’re talking about your entire business. And depending on how you set up your business, potentially personal liability as well.
[00:09:42] Chris: Yeah, I like how you mentioned the six figure fine because we hear from sellers all the time that say, well, I know it’s not compliant, but everyone else is getting away with it. Just because Amazon isn’t enforcing something doesn’t mean governments and laws don’t don’t enforce compliance issues, because there might be a government agency out there that sees all kinds of terrible things happening in your category. Or on these listings. And they may not care that amazon doesn’t care about these items.
[00:10:12] Leah: Well, and I know for a fact that the CPSC definitely cares about your product being safe.
[00:10:16] Chris: Cpsc is a perfect example
[00:10:19] Leah: And the FTC definitely cares about review manipulation.
[00:10:21] Chris: Yes.
[00:10:21] Leah: And the FDA definitely cares about whether you’re selling a drug that hasn’t been approved by the FDA.
[00:10:26] Chris: Right. So I know this topic and this type of talk is scary but I think a healthy amount of Concern is a good thing. If it sort of scares you straight in terms of, we’re catching something and we’re fixing it before it impacts buyers negatively; before it impacts our relationship with Amazon negatively. And of course, it limits your interactions with members of my former team, Seller Performance and Policy Enforcement. And you don’t want them looking at your account or your listings any more than absolutely necessary.
[00:10:59] Leah: Right, and the flip side of this, which I think is maybe the more positive way of looking at it, is that if you’re selling a highly regulated product, and you’re one actually complying with those regulations, you’re in a space that has barriers to entry.
You’re not in a space that anyone can just go and list another version of that same product. Those barriers to entry mean that there’s less competition. And if you’re actually fully compliant and a lot of your competitors aren’t, that also means that at some point you’re probably going to have kind of a blue ocean of your product as the product that is available, and isn’t taken down or fined by whomever. So there are benefits to being in highly regulated spaces and one of those benefits is way less competition.
[00:11:40] Chris: Yeah. Excellent way to end this episode. Could not say it better myself. So anyone has any questions about our scary content or the scary things we say, I don’t know. Maybe we’ll answer those on the Halloween episode much, much later this year.
No, we’ll answer those as quickly as they come in. Thanks again for listening to Seller Performance Solutions, and we will catch you next time. Bye.
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