Exclusive: Amazon India Suspends Over 2,000 Sellers; Payments, Inventory Worth Crores Stuck In Limbo

More than 2,000 Amazon India sellers were suspended from accessing their seller accounts on the ecommerce platform without warning or clarity, leading to crores in lost income in the last three months, Inc42 has learnt from multiple sources aware of the development.

At least half a dozen sellers told Inc42 that Amazon invoked contractual conditions to suspend seller accounts, alleging that these sellers violated certain business solutions agreements (BSA) meant to protect the interest of consumers and the marketplace.

Inc42 reviewed copies of the email communication sent to Amazon sellers prior to suspension of their accounts. The system generated emails claim the sellers violated portions of Amazon’s BSA. 

Section 3 states that “We (Amazon) may suspend or terminate your use of any Services immediately if we determine that (a) you have materially breached the Agreement and failed to cure within 7 days of a cure notice unless your breach exposes us to liability toward a third party, in which case we are entitled to reduce, or waive, the aforementioned cure period at our reasonable discretion; (b) your account has been, or our controls identify that it may be used for deceptive or fraudulent, or illegal activity; or your use of the Services has harmed, or our controls identify that it might harm, other sellers, customers, or Amazon’s legitimate interests”

However, sellers vehemently deny any wrongdoing, as some of them have been registered sellers on Amazon for more than five years. Sellers say Amazon suspending accounts without notice has put them in financial distress; a majority of them are SMEs with working capital constraints. The account suspension allegedly wiped out monthly revenue of these sellers, who typically see INR 1 Lakh – INR 2 lakh in daily sales. 

Amazon sellers that we spoke to pointed out that they usually receive payments from successful orders on a weekly basis. Ever since the suspension of accounts, however, even the orders currently under processing have been retracted, with the seller-side inventory stuck in limbo. 

Sellers allege the collective pending amount payable by Amazon may run up to crores of rupees. Sellers also claim to be unable to get a response or resolution from Amazon, which has raised their suspicion about the actual reason behind the account suspensions.

An online seller based in Delhi who uses Amazon to sell networking equipment and computer components told Inc42 that he has been on the marketplace since 2016. After automatically being logged out of his account, the seller lost INR 11 lakh in income in February. And since then, the seller alleged that they haven’t been able to generate any income. 

“I used to sell my goods offline across my brick and mortar stores, but had to completely shut the stores down and move to online ecommerce sites since footfall into computer components stores were wiped out by online sales. Since 2016, I have always addressed every negative review, and it’s shocking to see a major ecommerce company treating its sellers irresponsibly,” says the seller who asked not to be named fearing retaliation from Amazon.

 Sellers Claim Suspicious Account Activity Prior To Account Suspension

A section of sellers that Inc42 spoke with alleged that their registered accounts had been a target of hackers. To start with, the original email (attached above) informing about account suspension was sent from a “.uk” Amazon domain when in fact the sellers were from India origin. 

Some sellers also pointed out suspicious activity on their accounts days prior to the company’s decision to suspend those accounts from the marketplace.

“On 25th February midnight, I got a message saying that my seller account has engaged in deceptive, fraudulent, or illegal activity. But just two days before this, I got an OTP SMS from Amazon India stating that someone had tried to reset my password from a location outside India. I actually ignored this, but days later my account was suspended,” the Delhi-based seller added.

Another Amazon seller who sells cosmetics and baby products on the ecommerce portal said that he too received a request to change his password a day before his account was suspended. On checking with the Amazon Seller Services team, he was informed that his account was suspended due to an actual deactivation request placed from his side, although the seller denied this. His account has been in suspension since the past 1.5 months.

“After several days of communication and complaint forwarding with the Amazon Seller Services team, they informed me that in fact I had placed the request to deactivate my seller account. But I would never do this, since I have daily sales of Rs 1.5-2L on Amazon, which is the only income I have…And at that point I was clear that Amazon is simply playing games with me, as the support team has no clue what actually has led to these account suspensions,” added the seller mention above.

A third Amazon seller who sells audio accessories told Inc42 that “someone tried to de-register my account from India region, and relate it to the EU region.” A day after she received an SMS alerting this activity, her account was suspended from Amazon India. She added that her online seller account never sold products in the EU region or had any plans to do so, although a request was placed to register her seller account in the EU region without her knowledge.

“I have been constantly following up with the support team, and various managers at Amazon but there is no response at all. The category manager assigned to me is also clueless. I had a call scheduled with the Amazon Team to help me with my issue, but that call got cancelled without any explanation. Payments are stuck, and inventory is another issue, because there is inventory worth multiple lakhs that is stuck in the warehouses,” she added. 

Responding to Inc42’s queries on the development, an Amazon spokesperson acknowledged that there has been suspension of accounts, but did not comment on the instances of suspicious activity reported by sellers.

“As a customer-centric company, Amazon is committed to maintaining a high bar on customer trust and making consistent efforts to keep the marketplace safe for our customers to shop on. We have processes and technology solutions to monitor customer complaints and take action on accounts that may violate Amazon’s policies. We have taken similar action on potential suspect accounts. Some of the enforced sellers have reached out to us with more information and we are currently reviewing this to provide an early resolution,” the spokesperson added. 

Amazon India currently has more than 4 lakh sellers on its platform, out of which 1.5 lakh sellers were added in 2020 alone.  In its annual report in December last year, the ecommerce major revealed that around 4,152 sellers surpassed INR 1 Cr in sales during the festive season promotions, while the number of sellers who sold goods over INR 1 Cr grew 29% year-on-year.

However, Amazon has also been accused of finding loopholes in regulations, and using it as a benefit to shore up revenues. A recent report by Reuters suggested that just 35 sellers on Amazon India contributed for two-thirds of the sales in 2019.

The report also added that US-based ecommerce giant gave unfair preferential treatment to a select group of sellers with discounted commissions, and used them to bypass India’s FDI restrictions. Currently, India’s FDI rules bars ecommerce marketplaces with foreign investors from holding inventory; Amazon has seemingly skirted these rules with “significant control over the inventory of some of the biggest sellers on Amazon.in,” as per the report.