With a global market valued at $4.3 trillion US, e-commerce is rapidly becoming the dominant model of product consumption, and that has opened up an enormous opportunity for brands and private sellers alike. Of course, with the opportunity comes responsibilities, and compliance is chief among them.
In a realm of evolving rules and regulations, staying between the lines can be surprisingly difficult, regardless of whether you’re an individual who’s new to selling or a veteran operator running an already lucrative storefront. So, let’s discuss all things compliance and, more to the point, how you can tackle it to succeed as an Amazon seller.
The Complexities of the Digital Marketplace
As digital marketplaces have grown, they’ve become increasingly complex for sellers to navigate. With internal terms of service, domestic regulations, and international laws all in play, there is a lot to account for in terms of compliance and a lot at stake, as a misstep can severely hamper a seller’s ability to stay competitive. This is why working with an e-commerce attorney is so important, as they can help you avoid falling foul of rules and regulations.
The following are some of the key subjects which sellers should be aware of, and on which e-commerce attorneys commonly advise:
Marketplace seller policies
All major e-commerce platforms have policies that outline acceptable standards for seller activity. Amazon is no exception and, in fact, takes compliance very seriously. A small, initial infarction may result in temporary suspension, while repeated or severe violations could even result in your seller account being banned permanently.
To give an example, Amazon has strict set standards regarding product listings. For sellers aiming to be featured in a best reviews guide, adhering to these standards is even more crucial, as visibility in such guides often draws increased consumer and platform scrutiny. Sellers are, of course, prohibited from selling restricted items, but they also may be penalized for displaying product descriptions that Amazon feels are inaccurate or misleading. In fact, you can even incur penalties for repeating keywords in listing titles if Amazon deems it to be excessive.
Without due care and vigilance, you could easily find yourselves having issues with FBA compliance, triggering its automated flagging system, and perhaps even incurring a punishment despite your best efforts.
Intellectual property and brand protection
Sellers are also obligated to toe the line with regard to intellectual property. IP laws enforced both by governmental authorities and within digital marketplaces themselves – in Amazon’s case, through the Brand Registry and Project Zero. Both were created specifically to protect licensed trademark holders by enabling registered sellers to monitor their brand presence and report instances of IP infringement.
This is an area strewn with pitfalls for well-intentioned sellers who are inexperienced or uninformed. It is not uncommon for a seller to violate IP laws unintentionally, for instance. This can occur when the seller unwittingly sells unauthorized products, despite having sourced them through legitimate channels.
Taxation and reporting
Taxation is another core aspect of e-commerce legality that sellers need to contend with, and often one of the most complex. While major e-commerce platforms like Amazon now collect and remit sales tax for their sellers, the duty of ensuring correct tax reporting, as well as VAT compliance, rests on the shoulders of each seller themselves.
When it comes to the taxes, the consequences for non-compliance can be severe, ranging from seller account suspension and frozen funds to financial penalties and potentially even legal prosecution. As such, succeeding as an e-commerce seller is contingent on one’s ability to ensure that accurate records are made and proper documentation is kept.
Putting compliance first in e-commerce
As an Amazon seller, compliance is something that requires your ongoing attention. Of course, since e-commerce regulations are subject to frequent iteration, it can be tough to keep up with what’s expected of you at times. But with a proactive, compliance-first strategy, you can avoid running into issues of oversight or complacency.
Standard operating procedures are essential here. Outline exactly how you should create product listings, carry out marketing, and process customer service. Then, you can schedule regular policy audits, including vetting suppliers and checking trademarks, to ensure that everything reliably passes compliance checks. All employees should also be briefed on the latest policy updates and best practices for product compliance.
Seeking the counsel of an e-commerce attorney is also advised, as they can provide clarity on the intricacies of e-commerce laws. With specialist guidance, you will be able to engage in more insightful strategic decision-making and consistently avoid infractions.
Building for success through compliance
Digital marketplaces like Amazon offer incredible scope for commercial success. However, there are some legal complexities you must first navigate as a seller. While it might not be the most exciting aspect of e-commerce, it is undeniably a prerequisite for true success. By combining a thoughtful strategy with expert guidance, you can ensure you stay consistently compliant so that you can focus on driving your e-commerce business forward.