Amazon’s New Ad Payment Policy Sparks Seller Revolt

This Wednesday, April 15th, Amazon's new advertising payment policy will take effect, significantly altering sellers' cash flow management. This change has sparked considerable dissatisfaction among international sellers.

Major Sellers Protest Amazon's New Policy

According to Amazon's announcement, starting April 15th, major sites in North America, Europe, and Japan will no longer allow sellers to choose their advertising payment method. Instead, advertising fees will be automatically deducted from the store's account balance, with credit cards used only as a backup when the balance is insufficient.

Previously, sellers could use credit cards to pay for advertising, enjoying an interest-free period of about 30 days. Combined with the platform's 30-day payment cycle, this created a nearly 60-day interest-free cash flow window, easing operational financial pressure. Additionally, credit card cashback rates of 1.5%-5% were a significant profit supplement for many large sellers.

With the new regulation, advertising fees will be deducted directly from the store's sales balance. If the balance is insufficient, the seller's linked credit card will be used. This change eliminates the buffer space for cash flow, and sellers can no longer earn cashback points, effectively reducing their profits.

In response to this policy change, which was implemented without consulting sellers, many large international sellers are taking action. The Million Dollar Sellers community, composed of sellers with annual revenues exceeding one million dollars, is leading a protest. They are urging sellers to pause all on-site advertising on April 15th and share screenshots of zero spending to pressure the platform.

• Manage cash flow: Without the previous 60-day buffer, sellers need to keep more money in their accounts, at least 1.5 times the advertising budget, to prevent sudden ad interruptions due to insufficient balance.
• Check backup cards: Ensure your linked backup credit card is still valid and has enough limit. If the balance is insufficient, it should cover the shortfall to prevent unexpected ad pauses.
• Recalculate profits: Without cashback, advertising costs effectively increase. Reassess product profitability and adjust pricing if necessary.

Amazon Denies Layoff Rumors for May

In addition to the controversial policy change, rumors of Amazon planning significant layoffs in May have been circulating, attracting widespread attention. Reports suggested that 14,000 employees might be laid off, affecting core business departments like AWS, retail, and human resources, with some teams in China potentially being entirely cut.

However, on April 10th, Amazon officially denied these rumors, labeling them as false and baseless. Despite this denial, Amazon has been downsizing over the past two years, with 14,000 employees laid off in October last year and another 16,000 in January this year, totaling around 30,000 departures.

Amazon's Senior Vice President Beth Galetti stated that the company aims to streamline management layers and strengthen accountability. The company will continue hiring and investing in strategic areas and functions. Many believe this implies that adjustments will continue as necessary.

Globally, many tech companies are also undergoing layoffs. Oracle recently announced a global layoff of 30,000 employees, with 12,000 in India alone. The reasons are similar: organizational restructuring and operational integration. Traditional business growth has slowed, and investing in AI is essential but costly, necessitating cost-cutting in human resources.

Final Thoughts

Amazon's new advertising payment policy has undoubtedly stirred the seller community, highlighting the challenges of operating within a constantly evolving platform. While large sellers are actively protesting, smaller sellers need to adapt quickly to these changes by managing their cash flow and reevaluating their strategies.

As the tech industry continues to evolve, staying competitive requires adaptability and a focus on enhancing core competencies. The AI era is here, and those who fail to keep pace risk being left behind.