Over the last several years, the Great Resignation has prompted innovative business minds to strike out on their own, leading many into the world of e-commerce. In 2022, it was estimated that there were upwards of 12 to 24 million e-commerce businesses worldwide.
Having one’s own e-commerce business can be very lucrative, though it can also be pricier than some aspiring entrepreneurs might expect. Given the numerous fees associated with selling online, the cost of doing business can quickly add up and seriously affect the bottom lines of hard-working business owners.
Most e-commerce entrepreneurs agree that there needs to be more oversight and control over the erroneous fees charged by online selling platforms. But taking on a behemoth like Amazon and standing up for the overcharged “little guy” can likely feel like an insurmountable task. However, with a light shining on fees and chargebacks that can adversely affect a small e-commerce business, changes can happen to better prepare those businesses for working within the parameters set by large e-commerce platforms like Amazon.
When retailers approach platforms for refunds on incorrectly charged fees, they may be stuck waiting awhile. The automated accounting system on which Amazon relies to bill (and refund) sellers contains no way for sellers to audit their collective fees. Based on statistics, the relatively nominal fees charged by Amazon could result in taking up to a third of some sellers’ profits.
Automation and increased fees
Guidelines for vendors on platforms like Amazon can be complex and are further complicated by the reliance on automation that charges e-commerce vendors fees for not following platform guidelines to the letter. “Amazon has always been an outlier in their fees compared to other retailers,” explains chargeguard CEO John Collins. “However, more and more retailers and vendors are relying on automation, so I anticipate these to increase across the board.”
As Collins explains, the primary issue with automated billing systems is that they are not always entirely accurate. Mistakes can easily be made within automated systems and create frustrating financial problems for sellers. As such, it can be confusing for sellers to know exactly how much they may be losing to automatic fee charges, and initiating refunds can be a complex process.
Collins’s company is taking on the ever-increasing problem of erroneous fees. By conducting in-depth account audits for e-commerce vendors, chargeguard reveals fees that were charged and then works to recover them. They also work with vendors to ensure they remain compliant with the wide array of rules and regulations that platforms like Amazon impose in order to avoid additional hefty fees in the future.
“The fee problem directly impacts an e-commerce vendor’s bottom line,” says Collins. “Some things are pre-negotiated with Amazon, and you’re left with a decent chance to profit from your sales. But these fees are not preset or pre-negotiated, so they cut directly into profitability. As a result, many e-commerce businesses are finding they are having to claw their way back to profit.”
Reclaiming power
Amazon is one of the most powerful forces to be reckoned with in the e-commerce space. “Vendors know that, in today’s world, you must sell on Amazon to be successful. And it’s a pay-to-play marketplace, so vendors absorb these fees as a cost of doing business,” says Collins. However, many retailers see this as an abuse of power by large entities such as Amazon, leaving them no choice but to play the game if they want to see any profit at all.
Cost-recovery experts such as chargeguard see this as unfair treatment and are working to level the retail playing field. Their team has learned the rules of the game and how to work within the parameters set by Amazon to avoid fees that can cut into a retailer’s bottom line.
The company’s recovery experts have the ability to recover unfairly imposed fees and shortages from as far back as five years. They offer one-on-one help for retailers with a Certified Recovery Specialist and work with them to study the root cause of extra fees and help minimize any potential new charges in the future.
Although Collins acknowledges that friction can always exist when the power is unbalanced between two parties working together, he also knows the value of an unbiased third party. “We are representing the vendor and helping them reclaim their dollars, but we do so in a way that is completed by the book that Amazon made. We have a great working relationship with Amazon and are sure to follow their processes,” he says.
Collins’ company helps e-commerce vendors and retailers thrive and empowers them with the knowledge and insight to work within the fee-heavy parameters of online retail. By gaining a better understanding of the e-commerce process and associated fees, retailers can gain some ground in the e-commerce space and create lucrative businesses.
