Unboxing Amazon

1. It’s not easy money. “It used to be,” says Motty Hoffmann, Amazon seller and director of the Red Moose shoe care brand. “There was a time when you could buy a few units of any product, drop-ship it directly to Amazon, then mark it up by a couple of percent and you’d make a nice profit.” But Amazon eventually instituted more restrictions and today many large brands are gated — making formerly hot categories like electronics harder to crack.

“When you tell most people that you do Amazon, you can see them wondering just how well you must be doing,” shares Motty. “It’s not that simple. Yes, I know guys who are making millions a month, but I also know some small businesses that are really struggling.”

If everything goes smoothly, Amazon is easy to deal with. But the second you run into even a bit of trouble, they’ll come down hard. Amazon can shut down your account literally overnight. You can be an established seller with years of million-dollar revenue — until a customer lodges a complaint or another seller reports you. And then, at the touch of a button, your account is shut down and your livelihood is suspended.

“Amazon reserves the right to cancel accounts on a whim and they can be monsters about it,” explains Avi Weber, the director of growth and partnership at New Rain USA, a company that manages Amazon accounts for sellers. And if they close you down, you’ll have hundreds of thousands of dollars of inventory just sitting there. You can’t make money off it, and you may even be losing money from fees like storage. “To you it’s a million dollars, but to Amazon it’s a drop in the bucket,” he says.

The only way out is what one seller described as “pleading guilty and begging for mercy.” In fact, reopening accounts is so difficult that there are businesses dedicated to this purpose. For Amazon sellers relying on their business for parnassah, the suspensions can be cataclysmic.