Entrepreneurship & Small Business

Amazon.ca competitor falsified returns to shut me down. Reorganizing business.

  • Last Updated:
  • Dec 11th, 2017 12:21 pm
[OP]
Newbie
Jul 8, 2017
67 posts
55 upvotes

Amazon.ca competitor falsified returns to shut me down. Reorganizing business.

Roughly 6 months ago I was making a living selling on Amazon.ca. I had a niche product I was selling which was a very small portion of my overall business revenue making a very small income. If I knew what was going to happen I would have dropped the item.

I had a very aggressive competitor who sent me threatening messages to remove my listing. He retaliated by buying all my stock of this item using multiple accounts and then making A-Z claims on all of them stating they were fake. This resulted in an immediate Amazon.ca suspension. After several months of back-and-fourth with Amazon they refused to budge. Their decision was final. If you search Amazon suspensions online you will see many situations like this where very successful business who employ people get shut down for trivial matters or unethical competitors. Communication with Amazon becomes very slow and cryptic and they can take weeks or months to reply. Their response are not normal dialogue like a human you can talk with, but instead giant blocks of cookie cutter response which give vague response. Your chance of getting reinstated depends more on the mood of the representative on your case than anything it appears. I have also approached legal council but this venue did not prove viable.

For the past 7 months I've been on government assistance, scraping by and trying to find a solution. I was able to create two new Amazon accounts and they've been running for several months now and I am starting to become self-reliant again.

**Now heres this issue**

I am a registered business as a sole-proprietor and am liable for GST/HST remittance to the Canada Revenue Agency. In order to collect GST/HST on Amazon.ca you must give your "Federal Tax ID" which is your Business Number with the CRA. This number is used by the CRA to uniquely identity you and collect GST/HST.

If I do not collect this GST/HST on my new accounts I will be liable for all uncollected tax (13% of gross revenue). After a certain threshold Amazon will ask for tax information regardless. If I enter my Business Number this will immediately link me to my old account and Amazon will suspend me again.

Heres where it gets tricky. The Business Number "GST/HST" number unique to you. You can only have one number. The only way to change the number is you change your legal structure between 1) Sole Proprietor, 2) Partnership, 3) Corporation, 4) Declare bankruptcy. But this still only provides you with a single number. I have multiple accounts to not leave all my eggs in one basket and each would need their unique numbers.

My options:

1) Enter a random "Federal Tax ID" which would force Amazon.ca to start collecting for me. I believe Amazon.ca will report the tax collected on the account to the Canada Revenue Agency and give the random "Federal Tax ID" I had given them. The CRA will then start ask why this person is not remitting this tax or why it does not exist. This is very concerning stuff and I dont know how it will turn out.

2) Find a legal business structure and get two unique business numbers to do this correctly.

Option 2 is obviously what I want. What legal structures (if any) would I be able to pursue to generate two unique business numbers to use with my new Amazon accounts? What advice do you have for me?

Disclaimer: Reinstating my old account is not an option. I've been with communication with Amazon for almost a year, they've said their decision was final in a dozen emails and ceased communicating with me. I've tried every avenue.
5 replies
Deal Guru
Aug 2, 2010
14024 posts
4014 upvotes
Here 'n There
That is absolutely horrible. It's hard to believe it is so easy to use nefarious and fraudulent methods to shut down a competitor. You must have not had a lot of stock for the competitor to buy all of it. Fake reviews are hard to counter and Amazon is full of them. I don't sell my product on Amazon because there is zero-value add for me to pay them 15% (the fee in my category) just to list on their website. I can fulfill orders as fast as them, my logistics warehouse that holds my inventory and does my shipping costs me peanuts and Amazon won't even provide pre and/or post sales support or warranty service. Also, I have a product with very unique features and they are unmatched by any other manufacturer. A so-called competitor of mine does sell on Amazon. They have a vastly inferior product at a much lower price and instantly upon listing on Amazon there were 30 reviews within 1 month that were all glowing about the product, not to mention written in the same style, which is amazing as it is totally absolutely a crap product that is easily known before you even by if you read the description. However, I digress!

I believe that the only way to solve your tax ID predicament is to incorporate. That will provide you with a unique tax ID as they are doled out per corporation. You are not a partnership so that does not work and of course bankruptcy is not an option.

Selling through amazon is a real double-edged sword and a deal with the devil. 52% of all US searches for products start with Amazon now. If you do not sell through amazon your sales are lower, but if you do there are many risks and costs. I would have to have a huge increase in sales just to break even selling on amazon and then all my customers would have to pay state sales tax as amazon now remits tax in all 50 states and that sales tax is not insignificant given my product has a 4 digit selling price. That makes it even worse. I only am required to charge state sales tax for shipments to NY state given my warehouse is located in Buffalo, NY.

What makes it all worse is amazon forces you to do business their way, fines you for every miniscule transgression or omission and for customer service you are mainly dealing with heartless customer service software bots.

On top of this, amazon has a huge department full of data scientists. All they do all day is analyze product sales to determine what products that are selling well would provide them with the greatest return on investment if they designed and manufactured them themselves under the 'amazon basics' brand label. Countless very successful vendors on amazon have seen their sales plummet and some have even gone out of business due to amazon copying their products.
Sr. Member
Oct 24, 2004
693 posts
119 upvotes
I was thinking about selling on amazon FBA and now reading on what you said I’m thinking twice about it now?
eonibm wrote:
Dec 10th, 2017 11:59 am
That is absolutely horrible. It's hard to believe it is so easy to use nefarious and fraudulent methods to shut down a competitor. You must have not had a lot of stock for the competitor to buy all of it. Fake reviews are hard to counter and Amazon is full of them. I don't sell my product on Amazon because there is zero-value add for me to pay them 15% (the fee in my category) just to list on their website. I can fulfill orders as fast as them, my logistics warehouse that holds my inventory and does my shipping costs me peanuts and Amazon won't even provide pre and/or post sales support or warranty service. Also, I have a product with very unique features and they are unmatched by any other manufacturer. A so-called competitor of mine does sell on Amazon. They have a vastly inferior product at a much lower price and instantly upon listing on Amazon there were 30 reviews within 1 month that were all glowing about the product, not to mention written in the same style, which is amazing as it is totally absolutely a crap product that is easily known before you even by if you read the description. However, I digress!

I believe that the only way to solve your tax ID predicament is to incorporate. That will provide you with a unique tax ID as they are doled out per corporation. You are not a partnership so that does not work and of course bankruptcy is not an option.

Selling through amazon is a real double-edged sword and a deal with the devil. 52% of all US searches for products start with Amazon now. If you do not sell through amazon your sales are lower, but if you do there are many risks and costs. I would have to have a huge increase in sales just to break even selling on amazon and then all my customers would have to pay state sales tax as amazon now remits tax in all 50 states and that sales tax is not insignificant given my product has a 4 digit selling price. That makes it even worse. I only am required to charge state sales tax for shipments to NY state given my warehouse is located in Buffalo, NY.

What makes it all worse is amazon forces you to do business their way, fines you for every miniscule transgression or omission and for customer service you are mainly dealing with heartless customer service software bots.

On top of this, amazon has a huge department full of data scientists. All they do all day is analyze product sales to determine what products that are selling well would provide them with the greatest return on investment if they designed and manufactured them themselves under the 'amazon basics' brand label. Countless very successful vendors on amazon have seen their sales plummet and some have even gone out of business due to amazon copying their products.
Deal Guru
Aug 2, 2010
14024 posts
4014 upvotes
Here 'n There
Cameraguy23 wrote:
Dec 10th, 2017 6:39 pm
I was thinking about selling on amazon FBA and now reading on what you said I’m thinking twice about it now?
Why were you thinking of listing on amazon in the first place? Not that I am saying you should not as it does work (for now!) for some vendors if amazon doesn't eat your lunch with their own product after you pave the way, but it is definitely not right for everyone. We calculated that because of the 15% fee (it varies by product category), the fact we still have to field all the pre and post sales support and do all warranty service our sales would have to be 250% of what they are now to make it worth it. And, that's just to break even, but not to increase our profit from what it is now. Not to mention that, but then we would not control the reviews. Right now we can limit reviews on our website to verified purchasers. Once amazon has control of them then it's a dog's breakfast and anyone can do to us what was done to the OP by posting fake bad reviews. Now, we know we are losing many sales to our competitors who do sell on amazon, not because they have a better product than ours but because 1/2 the people start their search on amazon and some of them don't go any farther, but we'd rather do that than sell through amazon and have lower profit. In other words, fewer sales but greater profit makes way more sense than greater sales and lower profit, not to mention the risk of malicious reviews making things even worse.

I've studied amazon at length for years and they are the devil in disguise. People are really going to be sorry when amazon control close to 100% of all online sales and the entire fulfilment channel from warehouse to home, including the delivery vehicles, whether they be boat, plane, truck, bicycle or train. Do you know that in addition to already having purchased planes to deliver their shipments that amazon has already acquired a cargo shipper's licence so they can ship their own cargo by sea. whether it is something they manufacture or their vendors do? Once they control everything they are going to make up for their 20+ years of mostly losses by jacking up prices sky high and there is nothing anyone is going to be able to do about it.
Penalty Box
Dec 27, 2013
8003 posts
3930 upvotes
Toronto
eonibm wrote:
Dec 10th, 2017 7:39 pm
Why were you thinking of listing on amazon in the first place? Not that I am saying you should not as it does work (for now!) for some vendors if amazon doesn't eat your lunch with their own product after you pave the way, but it is definitely not right for everyone. We calculated that because of the 15% fee (it varies by product category), the fact we still have to field all the pre and post sales support and do all warranty service our sales would have to be 250% of what they are now to make it worth it. And, that's just to break even, but not to increase our profit from what it is now. Not to mention that, but then we would not control the reviews. Right now we can limit reviews on our website to verified purchasers. Once amazon has control of them then it's a dog's breakfast and anyone can do to us what was done to the OP by posting fake bad reviews. Now, we know we are losing many sales to our competitors who do sell on amazon, not because they have a better product than ours but because 1/2 the people start their search on amazon and some of them don't go any farther, but we'd rather do that than sell through amazon and have lower profit. In other words, fewer sales but greater profit makes way more sense than greater sales and lower profit, not to mention the risk of malicious reviews making things even worse.

I've studied amazon at length for years and they are the devil in disguise. People are really going to be sorry when amazon control close to 100% of all online sales and the entire fulfilment channel from warehouse to home, including the delivery vehicles, whether they be boat, plane, truck, bicycle or train. Do you know that in addition to already having purchased planes to deliver their shipments that amazon has already acquired a cargo shipper's licence so they can ship their own cargo by sea. whether it is something they manufacture or their vendors do? Once they control everything they are going to make up for their 20+ years of mostly losses by jacking up prices sky high and there is nothing anyone is going to be able to do about it.

yeah it's crazy what's happening.
Deal Fanatic
User avatar
Nov 18, 2002
6984 posts
594 upvotes
Toronto
eonibm wrote:
Dec 10th, 2017 7:39 pm
Why were you thinking of listing on amazon in the first place? Not that I am saying you should not as it does work (for now!) for some vendors if amazon doesn't eat your lunch with their own product after you pave the way, but it is definitely not right for everyone. We calculated that because of the 15% fee (it varies by product category), the fact we still have to field all the pre and post sales support and do all warranty service our sales would have to be 250% of what they are now to make it worth it. And, that's just to break even, but not to increase our profit from what it is now. Not to mention that, but then we would not control the reviews. Right now we can limit reviews on our website to verified purchasers. Once amazon has control of them then it's a dog's breakfast and anyone can do to us what was done to the OP by posting fake bad reviews. Now, we know we are losing many sales to our competitors who do sell on amazon, not because they have a better product than ours but because 1/2 the people start their search on amazon and some of them don't go any farther, but we'd rather do that than sell through amazon and have lower profit. In other words, fewer sales but greater profit makes way more sense than greater sales and lower profit, not to mention the risk of malicious reviews making things even worse.

I've studied amazon at length for years and they are the devil in disguise. People are really going to be sorry when amazon control close to 100% of all online sales and the entire fulfilment channel from warehouse to home, including the delivery vehicles, whether they be boat, plane, truck, bicycle or train. Do you know that in addition to already having purchased planes to deliver their shipments that amazon has already acquired a cargo shipper's licence so they can ship their own cargo by sea. whether it is something they manufacture or their vendors do? Once they control everything they are going to make up for their 20+ years of mostly losses by jacking up prices sky high and there is nothing anyone is going to be able to do about it.
Totally agree. Though I don't personally sell FBA I have helped a few small businesses get on Amazon with extreme hesitation and much dissuading on my part. It's definitely something I will likely refuse to do even for my best clients in future.

There's almost zero support, huge nickel and diming, rules and regulations that would work well in a communist country circa 1980s. Crazy to think people want to deal with them but yeah the exposure is pretty massive.

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