×

Amazon says new $1,500 selling fees won't apply to existing merchants

Boxes move along a conveyor belt at the Amazon.com Inc. fulfillment center
Michael Nagle | Bloomberg | Getty Images
Boxes move along a conveyor belt at the Amazon.com Inc. fulfillment center

It's been a nerve-racking week for Amazon.com sellers after the e-retailer implemented new rules requiring merchants to supply dozens of invoices and pay a fee to sell certain big brands on the site.

Amazon is now trying to provide some clarity on what's known as "brand gating."

The Seattle-based company is telling existing sellers that they're being grandfathered into the system and that the charges, which typically range from $1,000 to $1,500 per brand, only apply to new merchants. In other words, if you've been selling Nike shoes or Hasbro toys for several years, it's business as usual.

Here's what Amazon spokesman Erik Fairleigh said in an e-mailed statement to CNBC.com:

"If a seller is already selling brands on Amazon that are now subject to a fee, they are not required to pay the fee to continue selling those brands. The fee only applies to new sellers of particular brands. Sellers can see whether a product requires a fee to sell when they search for that product using the "Add a Product" tool on Seller Central."

With the holiday season just around the corner, sellers that count on Amazon for the bulk of their revenue are on edge. Amazon has been hit with a swarm of counterfeiting, largely from Chinese manufacturers, in the past couple years, and is now responding with a heavy hand to get the problem under control.

By forcing brand resellers to show that their products are coming from legitimate sources, the thinking goes, Amazon can get rid of the bad actors and clean up the site. The third-party marketplace now accounts for close to half of e-commerce sales.

But the way Amazon has communicated this message to sellers has left plenty to be desired. Many merchants discovered the change late last week when they tried to upload a product listing only to find they were blocked unless they could provide invoices showing the purchase of at least 30 products over the previous 90 days. After clearing that hurdle, they'd have to remit a payment to get authorized.

Complaints started flooding onto seller forums, Reddit threads and Facebook groups, and unofficial lists of all the restricted brands were compiled on various websites. Some sellers received e-mails explaining the change, but others didn't. Amazon didn't announce the terms publicly.

For existing sellers, this is the time of year to load up on inventory in preparation for the holiday rush. Getting blocked from Amazon could mean tens — if not hundreds — of thousands of dollars in unsellable goods.

Many merchants operate in the so-called grey market, where they buy items in bulk from clearance and liquidation sales and mark up the price on Amazon. The products are typically authentic, but the businesses can't produce invoices from manufacturers or distributors.

"It's hard not to be nervous about rules you don't understand 100 percent," said Rania Sedhom, managing partner of New York-based Sedhom Law Group, which represents brands that sell online. "This is a reactionary step that Amazon is taking to all the grey market areas that have been percolating."

Amazon CEO Jeff Bezos is in a tough spot. The troublemakers have found so many ways to sell knock-offs and manipulate rankings that his company can't keep up. As Amazon chases down the counterfeits, long-time sellers are getting hit with suspensions and being forced to take down listings.

Sellers should be relieved to know that the new fees don't apply to them, but plenty remain fearful about what changes may be in store down the road.