Amazon Sellers in Europe Crunched for Cash over New Reserves
Amazon sent a notice to sellers in Europe in May warning them of a “one-time cash flow disruption” due to a new reserve policy it planned to roll out this summer. On August 3, Amazon changed its reserve policy to a “Delivery Date Based Reserve.”
A moderator in an Amazon seller discussion board thread confirmed at the time it would apply to all orders, including FBA, for those sellers who received the notification. “We are changing sellers’ base reserve policy to DD+7 to standardize reserve policies and to deliver the best experience for customers,” the moderator stated. “This change will also ensure that sellers are eligible to run non-Prime Deals in the European stores, which is currently limited to sellers on DD+7.”
Amazon’s notification included the following information:
“A base reserve policy is one of the factors that determines your Account Level Reserve, which is the amount of money that Amazon reserves to ensure that you have enough funds to fulfil any refunds, claims or chargebacks from buyers. Delivery Date Based Reserve is our worldwide standard for selling partner accounts since 2016 and determines when your funds become available for disbursement.
“While your current base reserve policy uses the shipment confirmation date to determine how long funds are held in reserve, the Delivery Date Based Reserve policy uses the delivery date of an order. When you use an integrated shipping provider, we will use the actual delivery date of the order. In the absence of valid tracking data, we will use the latest estimated delivery date. This policy change may cause a one-time cash flow disruption until the new reserve is built up and funds become available for disbursement according to the estimated or confirmed delivery date.
“Changing to Delivery Date Based Reserve will allow you to run non-Prime deals in the European stores, which are currently limited to sellers on Delivery Date Based Reserve. Note that other eligibility criteria for non-Prime Deals still apply.
“The policy change will not affect your disbursement frequency, your ability to “Disburse Now” or the total amount of funds received. This policy change will only defer the availability of your funds according to the delivery date of the order plus seven days.
“No action is required from you; the policy change will automatically be initiated on August 3, 2023. To prepare, we recommend evaluating if this change could impact your processes for handling payments from Amazon. We also recommend you ensure that you have enough funds to cover the one-time cashflow disruption and evaluate possible financial support options if required.”
Interestingly when Amazon posted the notice on the boards, it said the policy would take effect in the UK on July 14, 2023.
The BBC wrote about the impact on sellers, pointing out Amazon also provides a lending service to sellers who need cash:
“Michelle, 32, from Cheltenham has been selling pet products for more than 10 years on Amazon. She told the BBC the company is holding £16,000 of her takings.
“She took out an £18,000 loan from Amazon Lending to help keep her business running, which she was expecting to receive straight away. But said she was told by Amazon she could not access the loan for two weeks, making things “very challenging indeed” for cash flow.””
