James Thomson
Mercer Island, Washington
WHY I WROTE THIS
Every day thousands of Amazon Sellers have their small businesses disrupted because their accounts have been accidentally suspended or their listings erroneously removed. I hear about it every time I talk to an Amazon Seller, whether starting up on the platform or doing $30 million a year in sales. In the Amazon e-jungle, the hoops required to jump through to get a problem not-of-your-making resolved are tedious at best, with revenue losses escalating until a solution is reached—sometimes too late. Trust me. The fear is real.
I started selling on Amazon in the pioneering days of e-commerce, when it was a wide-open frontier and an Amazon representative was just a polite phone call away, eager to problem-solve and open to Seller feedback. My brothers and I originally sold other people’s products on the platform until Amazon started high-jacking our listings and offering the same products for less. We always expected some push-back from the company, and we were prepared to adapt, switching to products with unique UPC codes. But Amazon always counterpunched by purchasing these exclusives out from under us, after we’d gotten them favorably ranked for search results (of course). We recovered again, building our own private label business, where we dominated the coveted Buy Box, only to have Amazon use our data against us to replicate our best-selling items, then offering their knock-offs at prices as low as our cost.
At every turn, U.S. Third-Party (3P) Sellers are being run-through by Amazon, with the latest example of this found in their relentless pursuit of Chinese national factories. Under their “customer-obsessed” banner to drive down prices, Amazon is recruiting and abetting the same factories 3P Sellers have relied upon, while also stripping away the protective layer provided by these very same Sellers for things like quality-control and consumer product safety.
In Mr. Bezos’ preternatural drive to be everything to everyone, he is sacrificing more than just U.S. Third-Party Sellers and the local jobs they create. Amazon shortcuts to price-savings for consumers is removing the critical layers of protection between unsafe, counterfeit products and Amazon shoppers, without culpability. It’s the very same argument we hear from Facebook when they claim they are simply a platform with no responsibility to ensure that advertisements or news reports are fact-based. The broken line between Amazon and its Sellers seems to absolve Goliath, while making it nearly impossible for Sellers (and consumers) to seek recourse.
In a recent interview for national television, I was asked about the predicament of Third-Party Sellers. Specifically, the host wanted to know what I would say to Jeff Bezos if he were in the room. It was a tantalizing question for sure; something I hadn’t previously considered. In the context of the small recording studio, with bright lights amplifying the prickly question, it felt a lot more real—as if Mr. Bezos was in the room, ready for a debate.
As the second-largest employer in America, millions of people—on and off the Amazon.com platform—have benefited tremendously from what Jeff Bezos has built over the years. Mr. Bezos and his whip-smart teams have fostered the kind of creativity and innovation that offers consumers an extensive selection of choices at unbeatable prices delivered to your door in two days or less. Sellers, like me, have also thrived, despite the hardships, sharpening our entrepreneurial skills and applying our own version of ”customer-obsessed.”
Pleasantries aside, however, it is 3P Sellers who helped build the Amazon of today and upon whom Mr. Bezos and his company are bound in the future. Bezos alone did not build Amazon; rather, the massive selection and creativity of products and brands are the result of the millions of small entrepreneurs who launched their wares for sale on Amazon. com. I would tell Jeff Bezos that it is unfair and irresponsible to ignore the needs of 3P Sellers by repeatedly thrusting policy changes on them that can put them out of business overnight. I would argue that treating Third-Party Sellers like third-class citizens is not only unconscionable, it’s counterproductive to Amazon’s own customer-first ambitions because small business owners, and their customers, get screwed in the process. In fact, Amazon 3P Sellers are the largest group of customers of Amazon Services and should share in the benefits of that customer-first culture. Amazon Third-Party Sellers generate 58% of Amazon retail revenue,1 and according to some analysts such as Scot Wingo, co-founder of ChannelAdvisor, Third-Party Sellers contribute more profits to Amazon’s bottom line than the Amazon AWS cloud computing division.2 And with Mr. Bezos’s obsession for the end-customer, they are trampling the folks that helped build the business and for which he is still dependent upon for future growth.
Yet in the time it took me to say that, thousands of Third-Party Seller accounts will have been suspended, sometimes indefinitely, due to no fault of their own. Thousands will have had their listings suppressed because Amazon found listings for less on other sales channels. And thousands of U.S. Sellers’ high-quality, good-selling product listings will be overrun by a flood of illegitimate and otherwise unsafe products from Chinese factories. How is this okay? I would then beseech Mr. Bezos to meet with a small group of Top Sellers, as any CEO would be convinced to do when a majority faction of their business or a top group of customers is disgruntled. I would urge him to talk with Top Sellers about what is really going on because the total disregard of a company’s most productive group of Sellers is unimaginable in the first place. But the ill-treatment, including the deliberate shutdown of Seller accounts and profitable product listings, would not likely be tolerated anywhere else.
The intensity with which I delivered my outburst surprised the host and his crew, and it has since led to deeper conversations about the controversy on a national level. I got my first taste of playing the advocate role for Sellers when my good friend James Thomson, the Godfather of all Amazon Sellers, invited me to speak at the very first Prosper Show. James’ first-hand experience as the former business head of Amazon Services and first FBA account manager, primed him to create the Prosper Show, an annual conference bringing thousands of discerning and established Amazon Sellers together once a year to share best practices.
It was at this conference in 2016 that my career path took an unexpected turn. James invited me to join a group of panelists for a session on Amazon selling. But it was what happened after the presentation that was so pivotal. A large group of Sellers who’d attended the talk followed me and a few of the other panelists out of the room and into the hallway. It was like a spontaneous support group, swapping war stories, sharing solutions, trading business cards. This was exactly what James envisioned—where the conference and the networking that followed could be a useful resource for Sellers who face crippling obstacles in their tireless struggle to make a profit on Amazon. Mission accomplished, James.
Since then, I’ve shifted my focus from seller to advisor. The switch has been profoundly gratifying, using my years of experience on Amazon to help Sellers avoid the same traps that snared my brothers and me; then helping them build winning brands, in spite of Amazon’s aggressions. Third-Party Sellers dominate the Amazon retail market, with nearly $43 billion in 3P Seller service revenue, up from $32 billion in the previous year.3 Even Mr. Bezos noted the trend in his 2019 letter to shareholders, where he acknowledges that Amazon is a smaller player in global retail. “To put it bluntly,” he wrote, “Third-party sellers are kicking our first-party butt. Badly.”
As a Marine Officer, I learned how to shape my ambition for constant improvement, and I developed the mental toughness and life skills required to bend and adapt under the most difficult of circumstances. I don’t expect Amazon to offer 3P Sellers a free lunch, but selling on their platform, while also contributing generously to the company’s bottom line, shouldn’t be analogous to war.
I wrote