Do you have Amazon suspension insurance to protect your Amazon business?
If you are an e-commerce merchant on Amazon, you know the importance of being proactive about product liability and the risk of suspension. Alongside Product liability insurance and General liability insurance, you need Amazon suspension insurance to safeguard your business on Amazon.
This new line of coverage for Amazon sellers offers insurance company coverage for monetary expenses in case of suspension.
In this article, we will discuss Amazon suspension insurance and how it works. Also, we will discuss what sellers need to know about Amazon suspension and how to prevent it.
What is Amazon Suspension Insurance?
Amazon suspension insurance is a new addition in the line of coverage for sellers on the Amazon marketplace. The gist is that insurance agencies will cover your monetary expenses if your Amazon account is subjected to suspension.
Matt Lovell and Lori Jurans from WELL Insurance, while sharing some tips on e-commerce insurance in a recent webinar, came up with a solution for Amazon account suspension. WELL is offering Amazon Suspension Insurance for e-commerce merchants selling on Amazon to help pay for general operating expenses if the merchants’ store is suspended.
How does it work?
According to Lovell, this is the first time that an insurance policy is available to help sellers protect their Amazon businesses by covering normal operating expenses. He says, “We have worked really hard to bring you affordable, scalable suspension insurance… We think that this policy is a very valuable asset to any online retailer, specifically an Amazon online retailer.”
The Amazon Suspension Insurance policy that they offer is a 30-day policy that automatically renews every month. (Note: The 5-day waiting period or 5-day deductible is not a monetary deductible but a time-deductible.)
Five plans are available for Amazon suspension insurance:
- Coverage starts from $1000 per day to $10000 per day max.
- R-S-R or Reinstatement Specialist Reimbursement: You have to inform the insurance agent about your suspension within 24 hours. Also, you are required to hire a reinstatement specialist within this 24-hour window so that they can send a letter to Amazon to try and get you reinstated as soon as possible.
- (Note: As the daily coverage amounts increase, the reimbursement for the specialists also increases. The amount will be paid whether you reach the five-day window or not.)
- Once the 5-day window expires, the policy will pay for your losses for expenses.
- There are 12 items the policy will pay for, to be declared on the profit and loss statement for the business: the cost of goods, advertising, insurance, payroll, shipping and delivery expenses, property taxes, licenses for subscriptions, rent, utilities, amortization, service agreements, and interest expenses.
What Sellers Should Know about Amazon Suspension
It’s advisable to have Amazon Suspension Insurance, but best to understand the rules and regulations of Amazon to prevent suspension in the first place. Remember, you are basically at Amazon’s mercy and you have to abide by their rules. As a seller, it’s important to acknowledge how your selling privileges can be suspended, what can you do to resolve the issue (if suspended), and the general practices to prevent suspension.
When selling privileges can be removed
Your selling privileges can be revoked by Amazon for:
- Poor performance
Amazon can suspend sellers if they fail to fulfill Amazon’s performance target. Seller performance is measured in three ways:
- Order defect rate (ODR). The percentage of a seller’s orders that receive negative feedback, A-to-Z guarantee claims, or a service credit card chargeback. To prevent suspension, Amazon recommends the sellers to maintain a 1% or smaller ODR.
- Pre-fulfillment cancellation rate. This rate is equal to the number of order cancellations initiated by the seller before the shipment is confirmed, divided by the total number of orders in that time period. Poor inventory is often the reason behind high pre-order cancellation. To avoid suspension, sellers must maintain a pre-fulfillment cancellation rate of less than 2.5%.
- Late shipment rate. This rate is equal to the number of orders confirmed, divided by the total number of orders in that time period. A high late shipment rate causes constant customer dissatisfaction. Sellers should maintain a late shipment rate of less than 4% to avoid suspension.
Violations of Amazon selling policies
Amazon suspends the sellers who violate any of the five community rules:
- Honor your commitment to buy or sell.
- Maintain current account information.
- Do not open a new selling account if your selling privileges are removed
- Leave thoughtful feedback about your transaction partners.
- Do not misrepresent yourself.
- Violations of the restricted product rule
Amazon has specific product restrictions for every category. Selling a restricted product without permission makes a seller subject to account suspension. Hence, sellers must check the Restricted Product Pages to make sure their supply is appropriate, and that their supply categories do not require any additional action like pre-approval from Amazon.
What sellers can do to resolve the issue
If your account gets suspended, you have to submit an appeal to Amazon seller performance. Amazon gives a seller 17 days to submit an appeal with a Plan of Action (details of how you will resolve the issue that led to your account suspension) that can be sent through the link provided in the suspension notice email. Submitting an appeal doesn’t guarantee you will get your account back, but Amazon promises to carefully consider each appeal.
It’s advisable to craft a Plan of action by putting in a lot of time and effort because there is no guarantee that Amazon will reconsider your second revised plan if the first one is rejected. Submit a well-crafted appeal to Amazon on your first attempt.
How to write a successful appeal
You have to regain Amazon’s trust by submitting a nicely composed plan of action where you state the issues in your selling and/or your inventory management practices and what steps you will take to resolve them.
First, identify the issues that gave Amazon reason to suspend your selling privileges. These are stated by Amazon on the suspension email sent to you, and include:
- Performance issue. Check your Account Health Dashboard under the Performance tab to determine which metrics are not meeting Amazon’s expectations.
- Seller policy violations. If Amazon states that your suspension is a result of a seller policy violation, you need to consider whether your selling practices are consistent with Amazon’s Community rules.
- Product rule violations. If Amazon indicates that your account is suspended because of a product rule violation, check your inventory and inventory intake process to determine which part of your supply is prohibited and needs to be removed.
There are a few tips you should keep in mind while crafting a plan of action:
- Be specific. Since Amazon states that they value precision in a Plan of Action, write specific action points with exact, detailed steps when explaining your solution points.
- Keep it brief and to the point. Use bullet points and numbers instead of paragraphs to lay out your solution points.
- Keep emotions aside. Yes, you made a mistake as a seller, but that doesn’t mean your appeal should be a heartfelt apology. Don’t use an emotional tone while writing a Plan of Action. You should only focus on the solution points and be objective and reasonable while doing so.
- Don’t be defensive. Remember, Amazon has already determined that you are guilty of breaking the rules. Hence, you should accept the truth in your appeal instead of trying to prove yourself falsely accused. Moreover, you shouldn’t blame your buyers if you get a policy warning.
- Make sure your Plan of action has all the information clearly stated. You can use the Plan of Action template to guide you.
8 Tips to Avoid Amazon Suspension
Here are 8 tips that will help you monitor whether you are meeting Amazon’s standards for sellers, or need to improve.
- Check your Amazon reports regularly
Check the data in your return, imperfect orders, and Feedback reports regularly. These are essential bits of information to highlight whether or not you’re meeting Amazon’s performance targets.
- Keep an eye on order shipping
If you are not using Fulfillment by Amazon (FBA), make sure that customers get on-time shipments and properly packaged goods. Keep a close eye on your order shipping to avoid negative feedback or a high late-shipment rate.
- Check your listing descriptions
Make sure you are accurately describing your items because misrepresenting your supply is a seller policy violation.
- Review Amazon product rules and regulations
Check Amazon’s product rules and regulations before adding new items to your inventory. Make sure you’re not violating Amazon’s restricted product rules.
Download the Amazon Seller App to respond to seller account notifications and buyer messages instantly.
- Close or archive old listings
If you are an FBA seller, you should close or archive old listings. If you are fulfilling your own orders, you should delete them. Also, consider switching to FBA for any problematic ASINs to prevent e-commerce fraud.
- Get an inventory management system
If you are continually running out of inventory and canceling orders, you should get an inventory management system to help you keep your pre-fulfillment cancellation rate low and minimize negative feedback.
- Get Amazon Suspension Insurance
Amazon Suspension Insurance is the best way to cover the losses you will face if your selling privileges are suspended.
E-commerce is flourishing day by day and giving consumers the flexibility to sue anyone. In addition, Amazon is a strict marketplace. Make sure you understand their policies very well to avoid suspension. If you make a mistake, own up to it and take the steps to make it right with Amazon. And make sure that you have Amazon Suspension Insurance to cover you while you do that.