E163: Why You Should Not Go All-in on Amazon – A Tale of our Most Grueling Week

An ecommerce seller’s journey is rarely a smooth one. If you’ve been a regular podcast listener, you would have heard me talk about Amazon suspending one of our best selling products. In this episode, I’m going to share more about that particular experience.

A couple of weeks ago, our ColorIt gel pens were randomly flagged as hazardous materials, even though we’ve sent the documentation well in advance to prevent this from happening. I won’t go into detail here about the events that followed (that would be giving too much away) but suffice it to say that they were maddeningly frustrating.

Through this experience, I’ve come to reflect that there’s a greater need to balance our business off of Amazon. Because at the end of the day, we can’t expect them to lift a finger on problems like this (even if you’re a million-dollar seller) if it doesn’t affect their bottom line.

Finally, I’d like to clarify that this is not me telling you that we’re hating on Amazon, but rather a cautionary tale to other ecommerce businesses disposing of their inventory on this platform.

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Thanks for listening to this episode! If you have any questions or comments, feel free to leave them below. Happy selling!

Full Audio Transcript

Mike: Hey guys, welcome to the 163rd episode of the EcomCrew Podcast. I'm your host, Mike Jackness. So glad to have you with us today. And today we're going to be talking about some trials and tribulations, the school of hard knocks, the hard week that we've had selling on Amazon. It's definitely not been the best week around here at Terran, but still also a great week because at the same time that we've been dealing with all this stuff, we also launched a new product. And that's been going very well as well.

But it's kind of funny. There'll be a little bit of an anecdote to that that I'll talk about as a part of this. So without further ado, let's jump right into the intro. And let's talk about some of the struggles we've had with Amazon.

Mike: This is Mike, and welcome to episode number 163rd of the EcomCrew Podcast. And as I mentioned in the introduction, it's been a little bit of a hard week, a hard a little bit of a stretch I guess with Amazon, at the same time that we're having success. There's been a little bit of light shed on a few things for me, more so on just our positioning within Amazon, and just making sure that we're very cognizant of that and our place in the pecking order if you will. And I'll get more into that as I go into the details of this.

But let me go over in just kind of in chronological order the struggles that have been kind of piling up that we've had with Amazon. And the one thing that I'll mention at the beginning here, this is not an Amazon bashing episode. This is not a, we're not selling on Amazon anymore, and we hate Amazon type of thing because even with all this, I still think that it's a great platform to sell your products on. It's a great place to have a business. But at the same time, I think that it's really important to be thinking about the bigger picture. And that's some of the stuff I'm going to talk about today.

So, if you've been listening to the podcast for any length of time, you definitely have heard me talk about a situation that came up with Amazon suspending one of our best selling items. And this is a product that we sell about a full container of every month. I mean, it's a very successful product of ours. It's our second best selling product by dollar volume. It's our number one product actually, in terms of profitability, and we move a ton of it under one of our brands. And we've been selling this product for quite a while.

Obviously, if you're selling it for a while, and you're selling container of it a month, there's a lot of planning that goes into that. You have to order multiple containers in advance because there's a 30 day window of it being on the water, a 60 day manufacturing period. So, at any time we have three POS out to our manufacturer for production of this item, and then there's some of it in a warehouse here, and then some of it in Amazon. And that has to constantly cycle through pretty efficiently in a low margin business to make things work.

And if anything goes wrong there, your cost, the money for holding the inventory, cost of storage, things of that nature start to get really ugly really quickly. And that's what happened to us a few months ago. Randomly, Amazon flagged this item for HazMat. Now there's nothing hazardous about it. And we're not a newbie seller on Amazon so we know this is something that comes up from time to time. And your best bet to prevent this from happening is to make sure that before you even ever start selling basically any product on Amazon, especially anything that could potentially have any type of liquid or semi liquid in it, even things like a gel pen have been flagged for us. So it has like a semi liquid, or markers.

We know better, and we submit the MSDS, which is the Material Safety Data Sheet well in advance of selling it. And we had done that with this product and figured everything would be fine. And everything was fine for quite some time. And then one day we get an email that says, you're actually — I don't even know if we got an email about this particular product. I think it just got delisted. Actually now I think about it, I'm positive that was the way that it went down. It just suddenly wasn't for sale.

Now, of course, obviously, if it's one of our top selling products, we're pretty aware of this and within 12 to 24 hours, we realized that something was wrong. We then called on Amazon, asked what the hell was going on, and they said that your product had been flagged for HazMat review. So of course, my first reply to them is okay, look like this thing has been up for sale forever. You flagged it for HazMat review, why not email us first, give us 24 hours, even 12 hours, something to like to correct it, make sure that we provide proper documentation which by the way we already had, rather than you're guilty before, proven innocent because something just got randomly flagged.

And that's what happened here. They randomly flagged it. I mean obviously who knows why, we'll never know exactly why. But when we made the phone call they told us it was because it needed to go through HazMat review. So obviously within a few minutes even, we had that documentation over to them as a part of that ticket and a couple days goes by and it still was not back up and running yet, called back in and asked to speak to someone. Of course, you can't speak the HazMat review on the phone and you end up in the situation where you can't get support for the issue on Amazon. It's really, really frustrating.

So, a couple more days goes by. We call back in and we were told it was approved by HazMat review and now it was just a matter of time before it's going to take a day or two for it to kind of go through their system and it will be back up for sale eventually. And again, another couple of days go by, another couple of days go by. And this was during the time that I was traveling, and I wasn't able to make a phone call myself, but I knew my COO was on top of it. And it was at a point where, like, I actually, let me be honest, it’s the first time I probably ever really thought that maybe she wasn't pushing it hard enough, because like, it just wasn't backup for sale yet.

I was like, you got to call them like, you take this attitude of like, I'm not going to hang up the phone and get really belligerent with them. And yeah I was frustrated because I mean, it's the point where you start pointing fingers at anybody that you can, because the situation still hadn't been rectified. So, as soon as I got back to the office from that epic seven weeks of traveling, the first thing I did was call Amazon. And lo and behold, I was in the same position that she was in. They just don't help you and I'm really persistent.

I actually even took this line of I am not hanging up this telephone until you help me, and of course, they're like, well, we've submitted this ticket to an internal team. We can't talk to the internal team. And you end up in this back and forth situation, and there's nothing that you can do and they won't help you, and there's no way to expedite it. And it's really, really frustrating. So, that situation in itself was really frustrating, obviously, for us having to deal with that. And it created just across the board problem for us, as I was mentioning, first of all cash flow, the numbers are definitely kind of out of whack.

And luckily, I mean, thank god we are in a situation that we don't push things to a half a percent of margin for error. We have at least a 10% margin for error for cash flow. So we've been able to absorb the fact that this product was down and not able to be sold for a couple of months. And of course, Amazon will do nothing for you to compensate you for your sales. They'll do nothing for you to compensate you for your storage fees, your time of dealing with it. We have an Amazon loan, I’m sure they’re not going to forgive any interest or loan payments.

And it's just a situation where you have to accept and realize that your positioning in this food chain of even as a — we're a $5 million seller on Amazon. We still can't get that level of support where we can even just get someone to help us out when even if it's not something that we're even doing wrong. Really obviously frustrating situation and something that I think at the end of the day, being realistic about the reason that this is, I mean, again not to be an Amazon basher here but the reality is, is that it doesn't affect their bottom line.

If you are selling, as our ColorIt products, let's just say it's gel pens, and someone types in gel pens into Amazon and your product isn't there, someone is just going to buy someone else's gel pen and Amazon still gets their 15% cut of that sale. And at the end of the day, they really don't care if you're there or not because there's still way more supply than demand. They must have been a time and demand I mean from a seller standpoint, not from a buyer standpoint, but now your buyers have way more supply and options to choose from then than they did in the early days of Amazon.

I’m sure, at one time, Amazon would have looked at this a lot differently and bend over backwards to make sure your products are there. But now that is definitely not the case. And that situation reared its ugly head again this week. It was about 11:50 at night which is this is embarrassing but it's past my bedtime. I'm usually in bed by 11:00 these days and try to wake up around seven. I don't set an alarm; I just naturally try to get up around seven o'clock. And I know that if I don't go to bed, at least get in bed by 11, it takes me a while to fall asleep that I don't wake up by 7:00 and emergency alarm is set for 7:30 and I don't like that to go off. I like to wake up naturally.

So, usually I'm in bed, but this particular night I was awake. I think it was yeah, it was earlier in the week during the launch week here. And so I've been on kind of pins and needles as we've been launching a brand new product, and I was still up waiting for the clock to actually strike midnight. I wanted to see something on one of our reports at the end of the day after the clock struck midnight and see what our sales were going to be for the day. And we did have a great day. Again, there's definitely some bright spots to this. But just as before we’re getting ready to go to bed, I got like 20 emails from Amazon, your product for XYZ skew is out of stock and your ads have stopped running.

And unless you're running product display ads or some type of Amazon marketing services ads, you won't get these types of emails if that happens. But we happen to have product display ads through AMS for all these products. And all of a sudden I got a string of emails that this product was out of stock. And oh man, I was just like you've got to be absolutely kidding me right now. I immediately notified our Philippines office. They called and worked the situation throughout the night. And I woke up to a situation of I got an email back from our team saying, it's going to be up to three days while Amazon reviews this for you. And there wasn't really any reason as to why this could potentially be happening.

So, first thing I did when I came in the next morning, I ended up spending two and a half hours on the phone with Amazon. And I typically personally try to never call Amazon. I want someone on my team to do it because I get like emotionally ramped up and spun up about this stuff. Plus, it's just a gigantic waste of my time. But I personally got on the phone, I called on Amazon. I actually wish that I recorded this first phone call. There were people in the office laughing because we share one room and it got to a pretty funny situation, I’ll get to here in a second.

But I called them up and I'm like, I want to speak to somebody on the captive team in the United States. I kind of know the tricks and I want to speak to someone who can help me out with us now. And finally, 20 minutes later I finally got to somebody that could help me. And their response to as to why our items had been shut down is because they were under review for being a massage device. And these are products that we sell exclusively for another manufacturer and they're not massage devices, they are hot and cold therapy products for your ankle, your elbow, your shoulder, whatever, for if you have aches and pains or arthritis or one under shoulder surgery or have a rotator cuff problem or tennis elbow, one of these types of things.

And they're the furthest thing from being a massage device. I mean, it'd be like, you know, saying that a ruler is a massage device or a can of Coke is a massage device. It’s literally that far out on that field that this would be considered a massage device. I was like, look, why, in whose mind is this a massage device? We need to get someone on the phone here that can obviously quickly take care of this for us. And same thing as the HazMat review this — I forget the word that he had used. But this other type of review, you can't talk to those people. They're not around.

I'm like, well, what if I was your mom calling in and could you help me out in that way? I know that there's someone that you can call, there's cell phones, there's inner office chat, there's email, there's something that you can do to help me. Don't tell me that you can't help me. This is ridiculous. I mean, I was really kind of getting like actually losing my temper and losing my mind. And it got to the point where I was like, well, let me talk to your supervisor. I want to speak to someone there that that can help me out here.

He put me on hold for a while. He's like, well, the supervisor is not available. And then I asked him, I was like, look, are you allowed to hang up on me? Like just flat out? Are you allowed to hang up this phone on me? And he's like, no. I'm like, look, I'm not hanging up the phone until you help me then. And we can talk about your family or what you're doing for lunch today or whatever else you want to do to pass the time if you don't want to talk about this, but I'm not hanging up. I'm not going to be the one that's going to hang up this phone until you help me out in some way.

He just, he was nice. I mean, it wasn't like he was being mean to me. He's like, look sir, I'm so sorry. But like, I can't help you with this right now. I've already escalated this every way that I can. I sent the emails that I can possibly do. And I was like, all right, well tell me what you had for lunch today. I mean, we literally, this is where we're kind of got funny, tell me what you had for lunch today. Well, I haven't had lunch today. I was like, I'm telling him what I had for — I'm having for lunch today. I was like, I'm going to be having some broccoli with some chicken.

And I was like, I'm in intermittent fasting lately, so I haven't had anything to eat today. I'm a little bit hungry right now, which is probably why I'm a little bit cranky, and I haven't really figured out what I'm going to do for dinner yet. But I'm curious like what are you going to do for dinner. And literally like this was the line that I took with him to try to like get some progress in this. And he's just — of course he's like look sir, I'm so sorry. Again telling the company why he never lost his temper, and then I asked to speak to the supervisor again.

And he came back; he's like I'm so sorry but like supervisor is not available right now. I was like what is he doing, why can't he talk to me? We sell $5 million of the stuff on Amazon a year; you're telling me that the supervisor doesn't have time to speak with me today? And I was like what is he doing? And he actually literally told me that he's doing paperwork right now, and he can't talk to you. That was literally his response. I was like I'm not hanging up the phone. If you want to hang up on me that's fine, and literally when I said that he hung up on me, and that was the end of the phone call.

And unfortunately that wasn't the end of it. I called back in and asked to speak to someone else. I got another lady on the phone and another hour later going through that same cycle. Now this call I did record, and I'm actually on the fence of making that a podcast episode, not sure if I want to do it. I mean, I listen to the call back. It is excruciatingly painful like listening to it. Obviously we got to be careful. I don't want to bite the hand that feeds us and obviously a lot of our business comes from Amazon and this type of thing gets out, a recorded phone call which by the way I did let the lady know when she picked up the phone that I was recording it.

But again the same thing an hour run around, she's like there's not much I can do for you right now. And it was a couple of days finally that the listings did get back up and running. Luckily for us, it wasn't the multi week, multi month problem that the other thing was. But again it’s just one of these things that's an eye opening situation for where you stand with Amazon. And I have two more things. If that wasn't enough, there's two other things that have kind of been eye opening for me this week.

The next one is we launched a brand new product on Amazon. And of course you guys know we do this the like literal most white hat possible way that there is. I mean it's been an incredibly successful launch. We've emailed our list, our ManyChat list, our email list. We run Facebook ads, we have our community, and people have been buying these things up, like left and right. I mean it's been incredible, like I'm really a proud papa right now if you will over the number of units that we've sold and the comments that we've gotten from it. We put a lot of work into this product. It's a number one bestseller on Amazon.

It was at one point for a while in the top 100 of all of arts and crafts on all of Amazon, just absolute amazing success. And we obviously ask our audience to please leave us a review when we email them out about the product, and they've done that like. I mean, our audience obviously is going to leave reviews at a higher rate naturally than anybody else because these are fans of our product and they really like them, and it's a product that they had never used before or seen for the most part. This is a pretty unique product, so of course it's going to get a higher than average return rate.

And just before recording this podcast actually, we started getting a bunch of emails with people sending screenshots and that Amazon has now restricted reviews from this product. And I imagine that they have now some type of algorithm where if you're getting more than X number of reviews per the number of sales that you're getting or whatever it might be, they’re flagging the product and not letting someone review the product which is just absolutely maddening. I mean this is not reviews that we've paid for in any way or compensated someone for. These are legitimate reviews. They haven't all been 5 stars unfortunately. We actually are at 4.7 stars as of recording this.

One person got their product and it was damaged. And again, really frustrating stuff with Amazon. This is something that we can't help that customer. If it was someone that bought it from ColorIt.com, we would be able to step right in and help with this. Now we did get fortunate that they contacted us and they email us directly at ColorIt for whatever reason. I'm not sure how or what made them think to do that.

Honestly, like this is where my conspiracy theory hat kicks in where someone knows how to work the system. And I want to give them the benefit of the doubt. Hopefully they did receive a damaged product and they aren't being disingenuous, but they left the one star review and then contacted us. And I think that, if how to work the system on Amazon, you can easily hustle companies like this. You leave a one star review, then you contact them and say, I just left you a one star review, and wait for them to like spill all over themselves to give you free stuff and correct the problem.

And you can easily get a second or third free item by hustling companies this way. And again, there's nothing you can do about that either. Those are the types of things that really frustrate me with Amazon. But again, giving this person the benefit of the doubt, hopefully when they receive the replacement that we're going to send them, there'll be happy, update the review, and we will have a five star product again.

But the fact that Amazon is restricting reviews for something like this is really infuriating. And I get why they would be doing that. Because the average person getting reviews at this pace is compensating people somehow, going to a review group or doing one of these types of things to get reviews. But I can tell you like wholeheartedly, that is not what we're doing. We told people to go buy it, we've had hundreds upon hundreds of sales getting close to 1,000 sales or something now of this product, because people really, really want it. And we staggered that over time like I've talked about in our launch strategy.

We asked people to send in a picture of themselves to ColorIt because we're going to make another marketing video with this, and told them if they did that and also left a review we would enter them into a contest, just all above board stuff. But Amazon is having to block this because there's other bad actors and we get caught up in the middle of that with no way to do anything about it. So that itself is also frustrating.

And the last thing that I'll mention here is someone from the Million Dollar Sellers group. I think you can go to EcomCrew.com/MDS. It's a great group of million dollars sellers on Amazon, just on Amazon.com. Someone from that group got a meeting with the head of seller performance. And I got to be careful about disclosing too much about this because it is a private group. So, I'm just going to keep it very high level and say that basically the feedback that came from that was wasn't positive. Like it wasn't Amazon looking at sellers like us in a light that they're going to bend over backwards for us or give us any benefit of the doubt.

They just don't care basically. And they their attitude basically is that yeah, this is the game that you're playing and if something happens this is the chance you take. Not the answer I really want to be hearing. So, between those things, it definitely has made me do a lot of thinking, a lot of reflecting on being an Amazon seller. And a lot of this comes from just past experiences of running other businesses and also being someone that helps people sell on Amazon and things of this nature. And so basically, at the end of the day I’ve been thinking about this for quite a while.

Again, as I mentioned in the beginning, this is not an Amazon bashing thing. This is not we're going to stop selling on Amazon tomorrow, and we hate Amazon. But it does make me want to continue to balance our business even more off Amazon. And I think that again, if you're a small seller, sub $1 million, that's one thing. But we are a seller on our way here, hopefully sometime soon to being an eight figure seller, and having all that running in one basket I think is definitely dangerous. So, we've worked hard to build an off Amazon business that is one third of our business.

And the basic bottom line is I think that over the next couple of months, we're going to be strategizing on how we can make that more 50/50. And that will come possibly at sacrificing growth and other things in our business just to be able to sleep better at night. And that's something we got to think through and talk about more internally here. We don't want to make decisions at a drop of the hat or irrationally. But certainly, I think that we want to continue to balance that out. And as someone said to me, look, you can continue to have a $7 million business that's exactly 50/50, 50% Amazon, 50% off Amazon or you can have a $10 million business that's 95% Amazon, what would you do? I'd rather have the 50/50 business.

Again, taking ego and other cool things out of it, it's neat to say that we have an eight figure business. At the end of the day if something goes wrong, I’d rather still have a business, and I got to be cognizant and thinking about all the other people's lives that go into this business as well, not just ours. If this thing got shut down, and we had to walk away tomorrow, I'd be fine. I mean, this is just I'm a resilient person. But I think about the 17 people that rely on us and I want to make sure that they're protected too.

So, that's kind of the bottom line and the final answer to all of this as far as what to do on Amazon. I wanted to share these stories with you of things that have happened to us over the past few weeks on Amazon from a perspective of you're not alone, from a perspective of be careful of your having the wrong outlook of where you stand in that food chain, and all those different types of things. And then you make your own decisions for what you want to do with your business moving forward.

So, I want to thank you guys again for spending the last 30 minutes or so with me on the EcomCrew Podcast. It means a lot to me that week in and week out, we continue to grow our listenership and you guys continue to listen to me ramble on about stuff like this. It definitely means a lot to me. If you have any comments that you want to leave for this episode, you can go to EcomCrew.com/163 to get to the show notes for this episode. Episode 163 is now officially in the books. And until the next one everybody, happy selling, and we'll talk to you then.