“Amazon ruined my life.” Those are the words of retailer Barak Govani, who moved his entire inventory into Amazon’s warehouses after packing up his brick and mortar store on Melrose Avenue, Los Angeles. Much of Govani’s inventory was destroyed when Amazon accused him of selling counterfeits, a claim he strenuously denies. Bloomberg’s Spencer Soper reports:
Barak Govani made a big bet on Amazon.com Inc. earlier this year that he now regrets. He shuttered his New York Speed clothing store on Los Angeles’s storied Melrose Avenue, packed up $1.5 million in inventory and shipped it to Amazon warehouses around the country, putting his fate in the hands of a company that has routinely presented itself to the world as a friend of small business.
Today, the 41-year-old retail veteran is broke and couch surfs between his mother’s home and his sister’s place. Govani hopes to start anew by getting Amazon to pay him for inventory the company destroyed after suggesting his products could be fake—an accusation Govani strenuously denies. His lawyer in September sent a demand for $800,000—along with invoices to verify his merchandise came directly from fashion brands—and they’re waiting for Amazon’s response.
“All my life, I’d wake up at 5:30 a.m. and work 40, 50, 60 hours each week,” Govani said. “That inventory was everything I had. Amazon ruined my life, and I did nothing wrong.”
Amazon has become the world’s largest e-commerce company in large part thanks to the millions of third-party merchants who have chosen to set up shop on its sprawling marketplace. Small- and medium-size businesses are responsible for more than half of the goods the company sells to customers around the world—moving 3.4 billion products alone in the year ending May 31. The average small business has annual sales of $160,000 on Amazon, up about 60% from the previous year.
In blogs and press releases, Amazon highlights the success of these merchants as a win-win—for them and itself. Lost in the public-relations glare are merchants like Govani.
Stories like his have swirled for years in online merchant forums and conferences. Amazon can suspend sellers at any time for any reason, cutting off their livelihoods and freezing their money for weeks or months. The merchants must navigate a largely automated, guilty-until-proven-innocent process where Amazon serves as judge and jury. Their emails and calls can go unanswered, or Amazon’s replies are incomprehensible, making sellers suspect they’re at the mercy of algorithms with little human oversight.
Recourse is limited because when merchants set up shop on Amazon, they waive their right to a day in court by agreeing to binding arbitration to resolve any disputes. Amazon doesn’t negotiate terms with merchants. The boiler plate agreement is take-it-or-leave-it, a telling reminder of who has the upper hand in the relationship.
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