Amazon changes payout period
Ecommerce giant Amazon has announced that it will make changes to its payout period. Sellers in the United Kingdom and Europe will have to wait until a week after the delivery of an item to receive their proceeds. The change will come into effect in phases in the upcoming month, until September 6th.
The online marketplace has informed sellers in Europe and the United Kingdom that it will no longer credit their Amazon Seller accounts after a sale is made. Amazon is now implementing a Delivery Date Based Reserve policy.
‘Funds will be transferred to sellers a week after the delivery of an order.’
With this new policy, funds will be transferred to sellers a week after the delivery of an order. This means that sellers will need to wait even longer in the case of a delay in delivery. Previously, many sellers that have been active on the platform since before 2016 were using a ‘shipment date’ reserve, where they got paid based on the day they shipped an order.
33,750 businesses affected by new policy
According to Amazon, 225,000 small- and medium-sized businesses sell through its marketplace in Europe and the United Kingdom. About 16 percent of them, or about 33,750, can be affected by the change.
‘Cashflow crunch could cripple operations.’
Many sellers say that the cashflow crunch can cripple their operations, as they will not be able to buy more stock or pay their employees. One seller from the United Kingdom said that he would be owed about 40.519 euros (35,000 pounds) after seven days. He would not be able to pay staff or loan repayments on time, because of the delay in receiving funds.
‘No impact for 85% of sellers in Europe’
An Amazon spokesperson said: “This policy was introduced in August 2016, and there will be no impact for over 85% of sellers in Europe. This process will standardize reserve policies for European sellers to ensure they have sufficient funds to cover any financial obligations, like product returns or customer claims.”
“We recognize it may lead to a one-time cashflow disruption which is why we notified affected selling partners three months in advance to them to help prepare for this change.” The marketplace has already implemented the new policy for some sellers, while others will notice the change by September 6th.
Detrimental during the holiday season
“These extra days added on to existing payment delays to getting paid from Amazon could be extremely detrimental during Q4, particularly December. If you have a high sales period during Black Friday and Cyber Monday, you will not receive payment for those sales until just before Christmas, meaning if you have not been able to restock, you will be missing out on the busiest sales period of the year”, said Joep Backx, Sales Director at Storfund, an advance payment service.
‘With an advance payment service, sellers can get paid on the day they sell.’
Amazon has advised sellers to look into possible financial support options, if required. “By using an advance payment service like Storfund, sellers could get paid on the day they sell, eliminating Amazon’s payment delays. This helps sellers restock immediately, meet demand and grow their business”, said Backx.