Do you guys trust the current Account Level Reserve System?
Hello everyone, I started selling on Amazon in July and it has been great so far. The only problems i've came across so far are Amazon Fulfillment centers miscounting inventory, Amazon Seller Support (I wouldn't call them support, all they do is send the same generated templates with minor changes) and ACCOUNT LEVEL RESERVE. I get the whole "we hold the money incase chargeback or claims." But realistically you don't need to hold that much in a reserve incase of returns. I'm on month 3 and I noticed the more I sell, the little my disbursements are. Amazon just spreads out what they owe me and give me crumbs little by little every other week.
As a new seller I don't think I can believe the reasoning behind why they hold almost 75% of my funds. Do you guys think Amazon holds our money and uses it as advances for their own business needs? That's just the thought that comes to mind. Account Level Reserve really causes cash flow issues.
At most amazon should hold 15% in a reserve. If our returns just magically happen to need more money than whats in that small reserve, they could just take it out of our balance they owe us, or charge our credit card on file if we just happen to not have any money in our account. That would be a realistic "Account Level Reserve" incase of returns or charge back.
The system they have right now makes no sense and seems shady. I totally understand if this system was put in place only for new sellers, but i'm on month 3 with over 150 units sold. No need for them to hold the amount the do. My balance alone could cover returns or claims. My questions are, do they ever stop holding your money as you grow. Is there a certain criteria I need to hit in order for them to stop holding so much? These are all questions Amazon doesn't disclose and thats why the current Account Level Reserve system seems like shady business practices.
Do you guys trust the current Account Level Reserve System?
Hello everyone, I started selling on Amazon in July and it has been great so far. The only problems i've came across so far are Amazon Fulfillment centers miscounting inventory, Amazon Seller Support (I wouldn't call them support, all they do is send the same generated templates with minor changes) and ACCOUNT LEVEL RESERVE. I get the whole "we hold the money incase chargeback or claims." But realistically you don't need to hold that much in a reserve incase of returns. I'm on month 3 and I noticed the more I sell, the little my disbursements are. Amazon just spreads out what they owe me and give me crumbs little by little every other week.
As a new seller I don't think I can believe the reasoning behind why they hold almost 75% of my funds. Do you guys think Amazon holds our money and uses it as advances for their own business needs? That's just the thought that comes to mind. Account Level Reserve really causes cash flow issues.
At most amazon should hold 15% in a reserve. If our returns just magically happen to need more money than whats in that small reserve, they could just take it out of our balance they owe us, or charge our credit card on file if we just happen to not have any money in our account. That would be a realistic "Account Level Reserve" incase of returns or charge back.
The system they have right now makes no sense and seems shady. I totally understand if this system was put in place only for new sellers, but i'm on month 3 with over 150 units sold. No need for them to hold the amount the do. My balance alone could cover returns or claims. My questions are, do they ever stop holding your money as you grow. Is there a certain criteria I need to hit in order for them to stop holding so much? These are all questions Amazon doesn't disclose and thats why the current Account Level Reserve system seems like shady business practices.
40 replies
Seller_CW0P5hgbsiqWX
Well, I have to say yes. The reserved amount Amazon holds is distributed on the off week from the regular disbursement.
Remember, you are a new seller with a short track record of selling. The hold back will increase during November and December.
Seller_CVaskj9MGJRwo
I don't trust the system they have. I feel like i am getting scammed. The more I sell the more they keep so by the time I get my deposit it is small and I cannot replenish my stock.
Seller_BE3xPpZWhTS9Z
Unfortunately, what Amazon "should" do is irrelevant.
I'm in year 2 and not only were my reserves crazy high all through year 1, but the payment process was extremely opaque and it took forever to get paid.
I have come to learn that this is normal for new sellers. Once I got into year 2 with about 1500 orders behind me, payments started to behave the way they are described in the documentation. Year 1, though, is hard. And mysterious.
My biggest gripe with the platform -- aside from the return policy -- is the lack of transparency around payments. Assuming there is actually business logic driving payments, why not make it all transparent so I can see *when* money will free up and be available through the Request Payment button.
One thing *every* business needs is predictable cash flow, and the lack of transparency makes Amazon payments more unpredictable than I would like.
Seller_TvaTXH61RRGLO
3 months ? It would help if you waited more, and were in good standing.
Of course, they use the money in their bank accounts (including yours) for their needs, all the companies do this.
Seller_zZsW8dK4Cx378
I don't trust Amazon to run a good warehouse, which is one of the many reasons I don't do it. I also have multiple Sales Channels, so minimizing my inventory's exposure to only 1 sales channel would be foolish.
As to the Account Reserve, it makes total sense that they are holding more as you sell more. After you start to level off, you will see a significant jump in your payouts as they start to hold less. Or in my case as I ween off Amazon Sales on a downward trajectory, my payouts are close to 100%, sometimes more that what I sold in the period prior.
As FBA, Amazon has to hold even more money to cover warehousing fees etc. if your product slows down and you have cubage fees, etc. I'm FBM, so beyond my Pro account fees, Amazon's cut is by sale.
Seller_mB5yAdwc71hY4
Its crazy ....
thanks to the reserve i never make any profit ... i even have to pay ... over 1k in sales a pay period 700 in amazon fees 300 in fba fees and over 300 in reserve
now for second month in a row
Seller_boY6enyZLuHsq
I can't speak for everyone, but AMZ seems to keep to their number, plus a little bit more on their promised my 14 day payouts.
I tracked it over months. I elect to try and do a cashout every day, and I kept an excel sheet to track the actual payouts of a rolling 14 day period and only a couple of times did they miss the mark and it was almost always 15% or so higher when all added together.. The amounts of the 14 payouts varied greatly but they almost always added up to the amount promised or more.
It is true though, the more you sell the more they hold onto but it all makes it back to you in the end.
Seller_MeNjiBPtSZPht
Lets say you approach a giant business to sell your goods. This large company would have more reputation than you and they would have alot more to lose if you didn't come thorugh.
ALL of these businesses would ask you for at least 30 day terms, that is just how the corporate world works: send PO, get product, approve it is correct, send to accounts payable, accounts payable sends you a check.
In this case the giant company of Amazon is simply doing 14 day terms, maybe 21 in your case. This not only isn't unreasonable, it is normal.
Those with cashflow issues, this is also part of business and should be on your business plan, either you need to keep small and scale slowly or you need to get capital to run your business. This is also normal business.
Seller_R2dP7Hunjcdj0
I understand Amazon withholding funds equal to shipped orders that are still available for Return/Refund, and it does make business sense. Nothing about it is "Shady", but I WOULD agree that Amazon does use the system to their own benefit.
One example I can note is this; Immediately after your disbursement the sales you ship will increase the "Net Proceeds" in your payout, but a few days before the next payout Amazon will actually DECREASE the "Net Proceeds" amount and INCREASE the "Account Level Reserve" amount.
With only my own experience to inform me, it seems that given my fairly steady stream of Amazon orders, the "Account Level Reserve" amount SEEMS to be manipulated to MAXIMIZE the amount of interest that Amazon can accrue for themselves before having to pay us our "Cut". In my case, Amazon ALWAYS has a significant amount of "My" money to earn interest on before they have to pay me.
While it is manipulative and self-serving, it is not even close to "Shady", it is just a reminder that in ALL things, Amazon takes care of Amazon First and Best.
Given these facts, the system IS the system, and it works well enough for me that I continue to sell here.
Seller_4K7eqIN4GuF2E
I do not trust Amazon on anything. You bring up a good point regarding Amazon's "cash flow". I do not believe that in acting as a fiduciary to its sellers, that Amazon actually separates "reserve" funds into a separate account but instead uses them in their general fund. By not separating the fund out Amazon does not have to borrow money and pay interest, and obviously does NOT pay us interest for use of OUR money.
