Online Merchants Guild
As a tax war wages between states and Amazon, leaving sellers in the crossfire, those same sellers are banding together to force change from within, and the results could be very beneficial to Amazon sellers.
Recapping the Tax Issue
We reported early in February that several states had asked Amazon to release information about sellers who weren’t properly filing their sales taxes so that the government could come after them. In Massachusetts, Amazon did exactly that by releasing information about the sellers to the state without permission from those sellers. Amazon’s actions left sellers hanging out to dry and put their businesses in jeopardy.
“It’s concerning that Amazon handed over the information about the Amazon Sellers without consulting the Amazon Sellers or any notice to the Amazon Sellers,” said CJ Rosenbaum, Founder and Partner at Rosenbaum Famularo, P.C., the law firm behind AmazonSellersLawyer.com.
“As far as we are aware, there were no subpoenas or court orders requiring Amazon to release the information about Amazon Sellers. It seems that Amazon just handed over Amazon Sellers private information on a silver platter to the State of Massachusetts.”
Massachusetts’s decision was in contrast to what occurred in the state of Washington, where Amazon decided to collect sales taxes from the sellers itself without getting the government involved in the middle. As these problems rise up in other states, nobody is sure how Amazon will handle it on a state-by-state basis. The biggest fear sellers have is that Amazon will do to them what it did in Massachusetts.
The Purpose of the Online Merchant Guild
Enter the Online Merchants Guild, which Forbes reports recently formed to tackle this very issue. The guild is made up of online sellers from around the country who are banding together to fight the states that seek to shut down their businesses.
The Online Merchants Guild gained a lot of steam recently at the Prosper Show in Las Vegas, where a lot of merchants signed on to join the cause.
Here are some more details from the Forbes report:
The association, which currently includes 100 member companies, seeks to promote unity and a common voice for the diverse group of merchants who sell on Amazon and elsewhere online, says Paul Rafelson, Chairman of the Online Merchants Guild.
“The states are taking advantage of the little guy, but also shooting themselves in the foot. If businesses have to lay off people, the states will be the ones providing benefits and support when those jobs are lost,” Rafelson says of the imperative to assemble a formal association to defend these businesses.
Rafelson is a professor in law at Pace University, which makes him a great person to have at the head of such an organization. Rafelson and his team are hoping to change the way that laws impact Amazon sellers, and the organization could have a lasting impact even after this issue is resolved.
The organization seeks to aid in the law-making process going forward that can satisfy both the states and the sellers, and perhaps to provide some uniformity and clarity to the laws so that sellers don’t have to do dance the tightrope when selling across state lines.
The Online Merchants Guild seems to think that the main problem lies in the government’s lack of knowledge in how the online selling process works, and that with the help of the Online Merchants Guild, some common ground may be found that would disallow Amazon from throwing its sellers under the bus like it did earlier this year.
They’re pretty serious about getting to work with this legislation too, as they’ve already founded their own website under the name OnlineMerchantsGuild.org. As the website’s front page reads: “Shaping the Future of eCommerce Together.”
It’s More Than Just Taxes
While the tax issues with the government is the primary reason the Online Merchants Guild came into existence, it isn’t the only thing that the organization stands for. There are a lot of issues that concern sellers and the Online Merchants Guild can be a platform for people with all kinds of seller-related problems.
“What’s really concerning to most online merchants is the cost of compliance,” Rafelson said.
Rafelson remembered hearing from people in August that forming this union would be a wise idea to help educate the legislators. Rafelson got to work making it all come together.
“I was surprised there wasn’t already [a union],” Rafelson said. “That was shocking to me.”
Given how many sellers there are around the world, Rafelson figured that someone would have already thought to create such a group. But now the organization seeks to battle a number of things that Amazon sellers are currently faced with, including the Chinese trade tariffs supported by United States President Donald Trump.
“We’re not just a tax organization. Tax has a limited shelf life as an issue. But looking forward we’ve got account suspension, intellectual property problems. We want to work with Amazon on the legislative side.”
Even though some may see the Online Merchants Guild as running counter to Amazon’s goals and needs, Rafelson believes that the two can work together rather than against each other.
“Our concern about the taxes is simply between the states and the online merchants. The income tax issue isn’t going to be something that has anything to do with Amazon. I don’t think any of our objectives are meant to be anti-Amazon. If we were, nobody would join because all of our members love Amazon. I’d be concerned if we came off as highly aggressive and trying to fight back against Amazon. It’s supposed to be sort of a two way conversation between the merchants and Amazon.”
It makes sense that the two would rather work in harmony rather than in opposition. The sellers who make up the Online Merchants Guild wouldn’t have an income if not for Amazon and the other online retail businesses. Amazon’s success is success for the sellers, and the sellers’ voices could be a benefit for Amazon and lawmakers in making everyone happy.
How Much Power Does the Online Merchants Guild Really Have?
This will be the biggest question going forward. As Rosenbaum noted in his book Your Guide to Amazon Suspensions, “Amazon focuses on customers, not sellers. Sellers are replaceable. Large or small, Amazon is incredibly diversified with sellers. It seems that no individual account, large or small, is, by itself, important to Amazon.”
But this isn’t one individual seller or account by itself, is it? Already, thousands have joined this union of angry sellers who want to create change within the system. They know as well as anyone how badly they need numbers to move the needle with Amazon.
Even the founders of the union don’t know for sure how well their plan will work out. Amazon has resisted the power of unions in the past. The one thing the Online Merchants Guild can do is educate lawmakers to make sure that laws aren’t passed without knowledge of how those laws are affecting sellers. As noted in the Bloomberg story, that’s the main goal:
“When we speak to lawmakers about how Amazon works, their eyes glaze over,” says Jamin Arvig, a guild member and organizer who has been selling water filters on Amazon for more than a decade. “Our fear is policy makers will come up with solutions that are terrible because they don’t understand this business.”
Whether the Online Merchants Guild can successfully tackle this tax issue, it seems like the organization has the momentum to stick around for a while. The big question is whether the union truly has the power to change a behemoth like Amazon. Sellers and vendors should watch the progress of this organization closely. If the Online Merchants Guild succeeds, sellers will have a lot more luxuries and power with how their businesses are run online.
How Can I Get Involved?
The organization is rallying for more members to take up its cause with some motivational words.
Today, we find that our biggest challenges in 2018 are sales tax, intellectual property and trade policy. Tomorrow, the challenges we face might be completely different. The tax issue caught many of us by surprise in 2017, we won’t ever let that happen again. We will be your eyes and ears, looking for tomorrows challenges, and making sure we are never caught off guard again. We will also be your voice when it’s time to be heard, and your sword when it’s time to fight.
Sellers can join at a subscription fee, with the cheapest fare being $100 per year and the most expensive one at $25,000 a year. Benefits increase for the member depending on how much they’re paying for the service. The Online Merchants Guild also promises confidentiality to all of its members so that Amazon can’t come after sellers for participating in the union.
The Online Merchants Guild is in its infancy right now, and there’s no way of knowing what it can accomplish. Right now, the organization is focused on this tax issue that’s plaguing sellers everywhere. In the future, the union could come in handy for legal issues on the horizon.
Anders Jorstad is a content creator for Rosenbaum Famularo, P.C., the law firm behind AmazonSellersLawyer.com. Anders will be earning his degree in journalism from Hofstra and has five years of professional journalism experience. He has written for numerous online and print publications including SB Nation and The Hofstra Chronicle.
Related articles:
Amazon Sellers Sales Taxes Washington State versus Massachusetts
Amazon Collecting Sales Tax from Washington Buyers