Are you ready for Amazon’s change to a Delivery Date Based Reserve?
2 min read
What we'll cover
How this change of policy affects sellers
Why cash flow is so important
What you can do to keep up with demand
Last summer Amazon announced they would be moving all its sellers to a Delivery Date Based Reserve policy, meaning a significant change in the way Amazon sellers get paid.
The change, which will apply to all funds from all countries through both FBA & FBM, was first due to come into effect last summer, however Amazon delayed the effective date to 31 January 2024, saying it was “extending the transition date for a small number of sellers who have contacted us and need support”. It looks like they may have postponed this for a second time as some sellers are reporting the change will take place for them in early April 2024.
The two groups of Amazon sellers who will be affected when this comes into force are:
- Sellers who currently have a ‘shipment date’ reserve i.e. sellers who get paid based on the day they ship
- Sellers who have never had a reserve applied before
These sellers will be moved to a Delivery Date Based Reserve policy, which essentially means their payments are going to be unavailable for longer.
The reason for the policy change Amazon says is “to unify base reserve policies for all selling partners”, adding that a delivery date based reserve has been the “standard for selling partners since 2016”.
In short, some sellers – mainly older sellers – have benefited from a more generous approach to payments, now everyone will see similar delays to their payments.
How will it work?
Amazon has said this policy change “will only defer the availability of your funds according to the delivery date of the order plus seven days”. This means that most sellers will wait 10 days to get paid (1-3 days for delivery, 7 days for payment) but it could be even longer.
First, the reserve policy isn’t improving. Amazon’s base reserve policy determines a sellers ‘reserve’; the amount of money held back to ensure there are enough funds to cover refunds, claims and chargebacks from customers. This means that sellers who currently see a delay of 14 days between their sale and getting paid for that sale because of the reserve, could be looking at around 20 days from next month.
Second, given payment is now tied to the delivery date your cash flow will be affected when delivery is delayed. For example, not all packages are scanned in, some providers do not deliver on weekends/ public holidays and occasionally there are postal strikes and other factors causing delays.
This move will no doubt hit sellers’ cash flow and Amazon sellers are rightly concerned that the extra waiting period will leave them unable to reorder stock and meet customer demand.
Amazon's DDBR policy - learn more
Storfund's Lukas Wurzinger talks to Orange Klik about the implications and how Amazon sellers can minimise the impact on their cash flow.
Cash flow is everything
For ecommerce sellers, a vital part of running a successful, growing business is its cash cycle. This is essentially the length of time it takes a business to convert inventory to cash, and clearly, a shorter cash cycle is better than a longer one; the less time that sellers have cash tied up in inventory, the more sales and profit they will be able to make.
On an Amazon seller forum discussing this policy change, one business owner said “The disruption to our cash flow is really worrying me”, another stated “Without the cash from the sales coming in quickly, we will be missing out on sales opportunities”.
Beat DD+7 with same day payments for your Amazon sales with Storfund
These extra days added on to existing payment delays to getting paid from Amazon could be extremely detrimental to a business.
By using an advance payment service like Storfund, you could get paid on the day you sell, eliminating Amazon’s payment delays – Storfund is also available on Back Market, ManoMano and all the Mirakl marketplaces. By getting paid faster for your marketplace sales you can restock immediately, meet demand and grow your business.
If you are an Amazon seller affected by this change we’d love to talk to you. We’ll pay you for your time or make a donation to a charity of your choice. Can be anonymous, email us if interested.