Account Suspensions on Online Marketplaces – the Right & the Wrong

Editor | Sep 10, 2020

Suspension was and is one of the most extreme and effective punishments to discipline unruly school kids. The ecommerce industry follows the same rulebook when it comes to disciplining online sellers.

To bring order to chaos, online marketplaces Flipkart, Amazon, Snapdeal and others have rules in place; breach of which can result in permanent deactivation or temporary suspension of seller account.

The biggest ecommerce disciplinarian

Indian Online Seller (IOS) ran a quick poll in association with All India Online Vendor Association (AIOVA) to find out which marketplace is the biggest disciplinarian when it comes to account suspension and what are the top reasons.

Flipkart ranks first and is followed by Snapdeal, Amazon, Shopclues and Paytm, in that order. The top (official) reasons are:

  • Selling counterfeit products (suspicion too)
  • High returns and quality issue
  • Low ratings (seller metrics)
  • Committing fraud against other sellers
  • Excess orders

Account suspension is necessary – when and why

That’s what online seller Sugam Jain said while talking to IOS back in March. So we decided to explore further and ask him why he feels that.

“I feel it’s like a rite of passage. It’s a part of growing up as an online retail business. Online selling is not a traditional business. Everybody is learning, not just in India but globally as well. The marketplace models & policies are continuously evolving,” says Jain.

He neatly laid out the reasons why account suspension can teach valuable lessons:

  • Sellers often chase the cheapest courier service and end up affecting their metrics due to delayed/damaged deliveries. In such cases, when the account gets suspended, the seller learns that the loss is bigger than the money saved by opting for a low-cost courier service
  • Some sellers invest in high-quality packaging only after getting suspended for excessive damaged deliveries
  • Suspension also teaches sellers not to be dependent on one marketplace. And that they should have presence on at least 2-3 marketplaces. But not on 5-10 portals as one can lose focus and fail to scale properly on any of them
  • It maybe necessary to improve catalogue quality and fix pricing. This all can only be inferred when sellers look into WHY the account was suspended

How the post-suspension period works out?

For reasons such as high returns or high number of unfulfilled orders, Flipkart attaches ‘account pending’ status and deactivates it temporarily. Once the ‘on hold’ time elapses or the issue is resolved, account is reactivated. But for grave violations such as committing fraud against other sellers, Flipkart blacklists the seller permanently.

A typical reply from Flipkart to blacklisted sellers is:

Flipkart blacklisted seller

As for Amazon, the etailer insists on a detailed ‘Plan of Action’ from a suspended seller. The action plan should include:

Amazon’s plan of action

“So basically, by suspensions only, a seller learns what to improve and how to improve. There are costs involved in doing online business and you cannot avoid them – that is what suspension teaches you. And I feel this is why marketplaces should be strict about suspending sellers who do not follow guidelines, rather than trying to take control of seller’s business and forcing them to use fulfilment services,” explains Jain.

That was all about the fair side of account deactivation by etailers. Now let’s put the spotlight on the unfair side.

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When sellers’ online store shuts through no fault of their own

It’s not rare to hear merchants complain about wrongful suspension by the ecommerce biggies. And according to them, the top (unofficial) reason for this is – fake orders, returns and complaints by buyers. Check the image below where a seller posted how his account is pending because of buyers’ fraud:

Account pending on Flipkart

Unfair returns policy crawls in everywhere and it not only affects a seller’s present earnings but also his/her future business. And marketplaces are either non-responsive or too slow in resolving account suspension cases due to fake orders or claims.

However, Sugam Jain is hopeful that with time, etailers will get better. He says,

“Marketplaces are also sometimes unreasonable about suspensions. Mostly in cases of severe buyer complaints like duplicate items. But these things will take time to settle as the categories move from unorganised to a more organised structure.”

So being rude and threatening seller support team may not help much. Being polite but firm, persistent, and patient might.

The twisted side of the story

A few cases have emerged where top sellers’ account is deactivated right in the middle of big sale events or before any festive season is about to start. And it is not restricted to Indian etailers.

Flipkart top seller suspension

Case 1 – Top seller on Flipkart in lifestyle category, Kush Agarwal’s account was put on pending based on buyers’ claims in spite of providing ample proof. (See the above image)

Case 2 – A seller was shocked to find the ‘Account Deactivation or Pending’ status next to his Flipkart account during the Big Billion Day sale. Reason? High number of orders. The etailer justified this by saying, “Account deactivation or Pending’ status in case of excess orders is NOT a penalty. It is to avoid the possibility of high seller cancellations, SLA breaches, pick-up reattempts and hence the resulting poor defect scores.” We wonder why Flipkart assumed that the seller won’t be able to fulfill the orders.

Case 3 – Kasey Fox, a bookstore owner and an Amazon.com seller’s account was permanently closed without warning for ‘inappropriate contact with other Amazon.com participants’. Since she had no idea what it means, she begged Amazon to explain further but the American ecommerce giant provided no explanation.

“We thought it was a joke at first. It was just so shocking and bizarre and completely out of the blue… It happened right before textbook season and Christmas, and that was devastating to us,” said Fox.

We are not the kinds to form theories but isn’t it strange that accounts of top sellers are closed without any warning? Why the exact reason for suspension is so closely guarded? Why Amazon or any other marketplaces block all means of direct communication? And why a seller-marketplace relationship is not as important or treated with the same respect & care as a buyer-marketplace relationship? The least an online marketplace can do is warn sellers and spell-out the reason for account suspension clearly, don’t you think?


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