An Overview of Amazon’s Business Solutions Agreement
The Business Solutions Agreement Explained
The Business Solutions Agreement (the "BSA") governs merchants who sell or offer to sell Products on the Amazon Marketplace Services. The BSA also governs merchants who use other business solutions offered by Amazon identified on the Amazon Business Solutions Agreement/Business Policies page in Seller Central (collectively, the "Services"). The BSA, together with the Seller Policy and Related Agreements (defined below) and the applicable Selling on Amazon Fee Claim Form(s) (collectively, the "Agreements") forms a binding and enforceable legal agreement between you (the "Seller") and Amazon Services Europe Sarl, acting on behalf of itself and as agent for each of its affiliates (with regard to the provision of the Services) (collectively, "Amazon" or "we" , "us" or "our"). These Agreements govern all orders we receive for Services from the Seller and are part of your use of the Services.
The BSA governs your use of the Services regardless of the method by which you access the Services, whether via Seller Central (for example, Seller Admin Console), Application Programming Interface ("API"), Amazon Merchant Web Services ("MWS"), or any other means, automated or otherwise. The BSA does not cover the use of any other Amazon services or sites.
Amazon reserves the right to amend the BSA by posting the modified BSA in the Seller Central Help pages. Once posted, the amended BSA will be effective immediately, but will not apply retroactively to any prior activity. You will have an opportunity to review the amended BSA and either AGREE TO the AMENDED AGREEMENT to be eligible to continue using the SERVICES, or else terminate the SERVICES by following the instructions here.
Core Elements within the Business Solutions Agreement
The Amazon Business Solutions Agreement is one of the core agreements that Amazon uses to manage relationships with many of its business partners. In many ways, it is the standard "off the shelf" agreement used by Amazon to capture certain key legal provisions and issues involved in doing business with Amazon across a wide array of types of transactions. For an Amazon seller, this document sets the framework for many aspects of its relationship with Amazon. As this document is often subject to change without notice, it is incumbent upon all Amazon sellers to review it from time to time and be aware of any revisions or updates. Some key components of the Business Solutions Agreement include: Seller Responsibilities – These provisions set forth a range of obligations on the seller, including that all products must be authentic, licensed, not used, not counterfeit, not stolen, not illegal, not misrepresented, not subject to any defects, and in accordance with all applicable federal, state and local laws, rules and regulations. The seller must also obtain all necessary licenses, permits and authorizations, comply with all applicable laws and regulations related to the products, and monitor and adhere to all applicable pricing laws and regulations. Seller is required to maintain completed customer logs and records for applicable taxes. The seller must respond to all requests from Amazon to remove content or merchandise that allegedly violates any third party’s rights. Seller is required under the agreement to maintain product records, maintain and adequately staff an account with adequate funds to receive payments, and allow Amazon to access the product and account records upon request. Seller is required to notify Amazon of any changes to seller’s address, phone number or account name, and if seller is a corporation, must inform Amazon of any change in ownership of more than 50% of ownership interest. The seller is further prohibited from using the Amazon sites in a manner that causes legal liability to Amazon. The seller is obligated to destroy all product inventory that is returned to seller as defective or returned in error, to avoid further sales attempts of those products. If seller’s account is suspended or terminated for any reason, all obligations with respect to the seller’s products survives suspension termination. Liability – The seller is obligated to defend, hold harmless, and indemnify Amazon, its affiliates and subsidiaries from and against any claim arising from this agreement or the sale or alleged sale of the seller’s products. The seller limits Amazon’s liability to $20,000 during a calendar month for all claims related to the seller’s products, and in no event will either party be liable for loss of profits, revenue, data or business or for any consequential, special or indirect damages. The seller is required to cooperate with Amazon in providing assistance in any third party legal actions against seller or Amazon related to the seller’s products, or any action or proceeding related to an alleged breach of seller’s representations or warranties. Second Generation Products – The Business Solutions Agreement sets forth obligations on the seller’s part related to products produced in overseas manufacturing facilities that the seller designated as "second generation products." If the seller designates a product as a "second generation," the seller is required to maintain records and documents related to the manufacturing and transport of the second generation product. The seller must retain these records during the term of this agreement and for two years after the termination of this agreement. The seller is obligated to pay reasonably incurred expenses to Amazon upon Amazon’s request if Amazon assists seller with any government inquiries or investigations concerning a second generation product. Amazon has certain information rights during the agreement term that allows it to request records and documents related to the second generation product. Various Amazon Policies — This document also incorporates by reference and makes part of this agreement several policies designed by Amazon for sellers to ensure quality customer service and adherence to certain applicable policies, including the conditions of use for the Amazon.com site. The seller must adhere to these policies while selling products through any of the Amazon sites. The seller also agrees to abide by certain product policies, including those relating to retail-ready products and product detail pages, product authenticity and compliance, listing and pricing maturity, conditions and prohibited products, services and content, catalog policies, brand protection and counterfeit policy, restricted products policy, intellectual property policy, privacy policy, intellectual property infringement, and recalls and withdrawals. Seller is required to stay abreast of all applicable policies (without notice from Amazon), and if seller fails to comply with any policy, Amazon has the right to terminate the seller’s account. Payment Terms – This agreement describes the terms for payments of transactions that occur on the Amazon sites. It describes various fees that the seller must pay at different stages in the sale process for a product. It also lays out the terms for chargebacks.
Amazon reserves the right to change the fees from time to time, after giving seller thirty days’ notice. The agreement further describes the various charges Amazon may apply, including referral fees, referral fee discounts and refunds, shipping fees, fulfillment costs, reimbursements, funds held in reserve, price adjustments, returns and chargebacks, overdraft interest, late fees, and chargeback fees. Any claimed discrepancies in Amazon’s records must be reported to Amazon within sixty days or seller is deemed to have waived any refund claim.
Responsibilities and Duties of a Seller under the Business Solutions Agreement
A. Seller Obligations and Responsibilities
Delivery of Goods. In addition to the delivery requirements in the Marketplace Web Service Documentation, Sellers must deliver the Goods on or prior to the Requested Delivery Date, and provide us the tracking information as described in A1.6. Also, if the Seller is a Marketplace seller accessing and using FBA, then without waiving the obligations of such Seller (set out elsewhere in this Agreement), in the event the Seller does not ship all ordered quantities of SKUs associated with an Order, and in our reasonable belief, the Seller intended to ship the unordered quantities, the Seller shall, at our election, promptly either: (i) have the inventory for the unordered SKUs shipped to our warehouse, provided however that such shipment occurs within three (3) Business Days of the last Requested Delivery Date for the order; or (ii) ship the unordered quantity of SKUs to our Returns Center, for which Seller shall pay shipping to our Returns Center in accordance with our policies available on Seller Central. For avoidance of doubt, the foregoing sentences shall not apply if a Seller is unable to ship an ordered Skus in full due to stock shortages on such SKU(s).
Product Listings. The Seller must create Listings for the Goods they sell on Amazon. As part of this process, the Seller must designate the condition of the Goods they are selling. If the Seller is a Marketplace seller accessing and using FBA, the Seller further agrees to ship only Goods for which it can meet the condition it has designated. The Seller must also comply with the requirements concerning product Listings specified in the Marketplace Web Service Documentation.
Quality Control. The Seller must ensure that the Goods are of the highest quality. The Seller must also ensure that the Goods comply with the standards set out in the Quality Control Standards on Seller Central. If the Seller uses the Fulfillment by Amazon Service, the Seller must ensure that the Goods comply with the standards described in the Fulfillment by Amazon Policies.
Customer Service. The Seller must provide customer service concerning the Goods. The seller must ensure that the customer service staff have sufficient knowledge to appropriately address issues related to the Goods. If the Seller uses the Fulfillment by Amazon Service, the Seller must also comply with the customer service requirements specified in the Fulfillment by Amazon Policies. The Seller must respond to customer inquiries about the Seller’s Goods in an expedient manner. The Seller must also resolve customer complaints efficiently to minimize customer dissatisfaction.
Protection of your Intellectual Property under the Business Solutions Agreement
Amazon places heavy emphasis on compliance with its Business Solutions Agreement ("Amazon BSA"). With the rise of e-commerce and online vendors, traditional businesses have had to adapt their traditional intellectual property and license agreements and corporate environment to an increasingly digital age. In particular, online sellers need to revise their IP agreements for the purposes of complying with the Amazon BSA.
However, despite the fact that many online agreements require website vendors to agree to a wide range of representations and warranties, many may be just checking a box and ignoring the requisite disclosures that they are agreeing to take on. This may be a problem in the future if a dispute arises between the parties. Every seller also needs to be aware of the restrictions on their ability to assign and license intellectual property rights.
The intellectual property provisions section of the Amazon BSA states that a seller must grant Amazon the rights to use its trademarks and other data to help operate its business as part of the services provided under this agreement. However, Amazon does not own the seller’s intellectual property or license rights, except to the extent to which the seller has authorized its use or use made by someone authorized by the seller. As a seller you want the ability to be able to allow Amazon to use your data, however you do not want to give them any rights beyond the scope of use required for them to perform their obligations under the agreement. Companies that are permitted to use your intellectual property beyond the terms of the agreement could infringe on and damage the value of your intellectual property. Any dispute over the intellectual property usage would be costly and may damage your intellectual property during the time period that a dispute arises.
Sellers need to be aware of the ways in which noncompliance with the Amazon BSA can be very detrimental. You are not allowed to take any actions against other users of the website that is not consistent with established or applicable laws or regulations. A seller will be responsible for any violations of law, rules or regulations that result from a seller’s material breach of the agreement. No indemnities or provisions will protect a seller from their own actions, you are likely to be responsible for any damages resulting from the seller’s actions. A large violation of the agreement is a fundamental breach/dissolution of the agreement. This means that Amazon can immediately terminate contract for cause without notice or opportunity to cure.
Payment Terms and Fees to Pay under the Business Solutions Agreement
The Agreement establishes the payment terms for sellers charged by Amazon. These include:
- Referral Fees – Sellers pay Amazon a referral fee of 6% to 45% of the selling price on each sale made through the Amazon Marketplace. The referral fee may be higher than 15% for certain products (e.g., home appliances, automotive parts) but lower for other products such as Kindle eBooks.
- FBA Fees – If sellers use the Fulfilled by Amazon programme, sellers pay Amazon a fee on each unit sold. Fees vary based on the size and weight of the unit at the time it ships.
- Closing Fees – Amazon applies a closing fee for every item sold in a media category, including books, music, software and video games. The closing fee is $1.49 or $0.50 depending on the type of product sold.
- Referral Fee Reversal – Amazon reverses the referral fee when the return period ends.
- Chargeback Fees – If customers dispute a transaction, Amazon will reverse all fees paid by the seller and take back its referral fee. Amazon will also charge a chargeback fee of $15.00 per chargeback.
- Returns Processing Fees – If a seller offers return policy on US products sold through the Amazon Marketplace, Amazon charges a returns processing fee if the buyer decides to return a product. Returns processing fees range from $3 to $6 depending on the size of the product.
7 . Payments to sellers – Amazon pays sellers within 14 days of Amazon’s receipt of payments from customers for purchases of those units (requests to distribute payments to a bank account must be approved by Visa and Mastercard). Payments to sellers are calculated as follows:
Amount per order: Payment amount per order is 100% of the current selling price. A per-unit fee may apply for Amazon marketplaces in Canada, France, Germany, India, Italy, Japan, Spain and the United Kingdom.
Selling fees: Selling fees includes a referral fee, a closing fee, a high-volume listing fee, an inventory placement fee, a payments service fee, a label service fee, a preparation fee, a gift wrap charge, and a shipping fee.
Reversals: Reversal adjustment consists of a reversal of selling fees.
Cash adjustments: Cash adjustments include cash effects that were not already taken into account elsewhere in the balance calculation, including any refunds or removals of the payment to sellers for orders that were cancelled and any associated reimbursement refund requests or deduction requests (e.g., chargebacks, counterfeit removal deductions, etc.).
Payment recommendations: Payment recommendations is the recommendation we make to sellers to transfer amounts from their Disbursement Account to their bank account.
The fees and payment terms may seem to be favourable to Amazon but there may also be other costs to sellers using the Amazon Marketplace, including lost sales and customer base, and ultimately the ability to compete with other sellers.
Dispute Resolution under the Business Solutions Agreement
A clear dispute resolution procedure underlies Amazon’s Business Solutions Agreement. The Agreement sets forth the remedies and procedures available for addressing disputes among Sellers, consumers, and Amazon. The Agreement imposes an obligation on Sellers to handle disputes with Buyers directly and to not involve Amazon in resolving those disputes. The Agreement lays out Seller’s duties efforts to resolve the dispute, including procedures for managing a full refund against an order containing a defective and undamaged item due to Amazon’s error, a return of a single defective item when several are ordered, or a Seller’s request for resolution of excess customer returns.
If after direct dealings with Buyers, Sellers are or will be involved in litigation with others arising from their business activities as Savers on Amazon.com or a dispute arises between Seller and Amazon, that dispute is resolved by binding arbitration. Under this process, the parties jointly select a third-party arbitrator, who then conducts the arbitration in accordance with the rules published by the American Arbitration Association. If the two parties cannot agree to a single arbitrator, then each party selects an arbitrator who selects a third that is acceptable to both. The Center of Arbitration and Mediation of the American Arbitration Association, located in New York City, conducts the proceeding.
Further, the parties may not bring against each other in any forum any class, representative, or private attorney general action or proceeding based upon the Business Solutions Agreement, or its enforcement, performance, or breach. Additionally, class arbitrations, private attorney general actions and "mass arbitrations" are all expressly prohibited. For purposes of this provision, "mass arbitrations" include arbitrations involving at least 50 claims that are filed in the same location within 60 days of each other and that are purportedly filed with or consolidated with the same demand, cost sharing, or other similar provision of the applicable arbitration rules.
Terms, Amendments and Updates to the Business Solutions Agreement
Amendments to the Business Solutions Agreement
Amazon reserves the right to modify the agreement at its discretion. As a seller, you need to be aware of these changes. If you have Marketplace Web Services (MWS) connecting you to the Selling on Amazon site via an API, you should check for updates frequently. As the agreement changes, Amazon will notify sellers by email. You are expected to check your email for any updates; if you do not receive an email from Amazon, you should check with your account manager for updates. In addition to email notifications, you can check their community forum for issues and compliance questions.
Best Practices and Conclusion
Adhering to the Business Solutions Agreement ("BSA") is critical for Amazon sellers wanting to maintain a successful business on the Amazon Marketplace. To ensure continued success and avoid legal issues that may arise from non-compliance, we recommend the following best practices: Maintaining up-to-date information on your account, including information regarding identification and verification of the seller account holder, product information for all SKUs in your inventory, and credit card and bank account information is essential for remaining in compliance with the BSA. Oftentimes issues arise when the seller attempts to issue a refund to a buyer directly. The BSA prohibits a seller from issuing a refund to a buyer separately outside of the Amazon Marketplace. Instead , the seller should utilize the built-in "Issue a Refund" button in the Order Details page of the Amazon Seller Central website. Under Amazon’s Business Solutions Agreement, you are prohibited from engaging in fee avoidance. This prohibition extends to ecommerce sales on other platforms. In order to remain in compliance, be aware of what activities may be viewed as fee avoidance and do not engage in such activities. Any time you believe there is an error on your account, email address, or credit card, promptly contact Seller Support to correct the error as soon as possible. Failure to do so does not excuse any errors.