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Amazon Debuts New Payment Policy, Receives Backlash from Small Business Formats

Amazon Debuts New Payment Policy, Receives Backlash from Small Business Formats

SEATTLE, WA - To some, Amazon is already all-encompassing, Amazon itself seems to be looking to welcome larger corporations into its marketplace. To draw new business buyers in and open up a new revenue channel, Amazon announced in an email to sellers that a new payment policy, “Pay by Invoice,” would be implemented this month to allow qualified third-party merchants 30 days to pay their bills.

“Pay by Invoice represents a new growth opportunity for sellers by encouraging Amazon Business customers to use the Amazon Marketplace as their primary channel for B2B purchases,” Amazon wrote in the email.

Amazon announced that a new payment policy would give qualified third-party merchants 30 days to pay their bills

According to a report by CNBC, Pay by Invoice was put into effect on August 8, and automatically allows general marketplace sellers—many of which utilize Amazon’s fulfillment centers and logistics system—to become eligible for invoice purchasing and to receive the benefit of a longer payment period. Sellers can opt out of the new policy in order to receive cash faster than 30 days by paying an additional 1.5 percent of the invoiced amount—an option that many sellers might be interested in taking.

While Amazon told sellers in the email that the change is meant to draw more corporate buyers to the marketplace, and could open up a new revenue channel from customers who wouldn't otherwise shop with them, concern seems to remain for smaller business, particularly consumer product sellers, that might depend on reinvesting payments bi-monthly to fund operatins and inventory purchases.

Jerry Kavesh, CEO, 3P Marketplace Solutions

Jerry Kavesh, CEO of consulting firm 3P Marketplace Solutions stated, “Cash is always tight and challenging for small companies. This policy could put sellers in a cash bind, where they may not be able to pay suppliers and employees, which is problematic at best, and at worst could put them out of business.”

Another seller told CNBC that, “Amazon should have given merchants the choice to participate because cash management is such a sensitive part of their business.”

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