Amazon's DD+7 Policy: What It Means for Sellers and How to Adapt

Amazon's new DD+7 (Delivery Date + 7) policy is shaking up the seller landscape. Originally announced in 2016 and delayed several times, this long-anticipated update is now being rolled out—despite lingering concerns among sellers. This article dives into the key aspects of DD+7, its implications for sellers, and strategies to adapt effectively.

What is Amazon DD+7?

DD+7 stands for "Delivery Date + 7 days", a new payment policy where Amazon withholds funds for seven days after the delivery date before releasing them to sellers. This marks a shift from the previous system, where funds were typically available shortly after shipment.

For example:

• A customer orders a product on November 1st.

• The order is delivered on November 3rd.

• The funds will only be released on November 10th.

Until the release, these funds are labeled as "deferred transactions", impacting when sellers can access their earnings.

How to View Deferred Transactions on Amazon

To track your deferred transactions:

1. Go to Transaction View in Amazon Seller Central.

2. From the Transaction Status dropdown, select Deferred Transactions.

3. Click Update to see deferral reasons and expected release dates.

Once released, these funds will appear in your next payout.

Who Does DD+7 Impact the Most?

The DD+7 policy predominantly affects third-party sellers. While Amazon is gradually implementing this policy, early data indicates:

• Newer sellers are most commonly affected.

• However, some established sellers are also seeing the policy applied to their accounts.

The inconsistency in implementation has caused uncertainty among sellers, making it essential to understand how this change might affect you.

The Impact of DD+7 on Sellers

The shift to DD+7 introduces several challenges:

1. Cash Flow Delays
   Sellers face longer waits to access earnings, potentially disrupting cash flow.

2. Inventory Replenishment
   Delayed payments may hinder the ability to restock inventory, leading to stockouts.

3. Financial Forecasting
   Budgeting and financial planning require adjustments to align with the new payment schedule.

4. Deferred Data in Reports
   Date range reports may exclude transactions marked as deferred, complicating accounting and reconciliation processes.

Can You Apply for an Extension?

Yes, Amazon is offering extensions for sellers who qualify. To request an extension until September 2025, follow these steps:

1. Email eu-uk-reserve-policy-extension@amazon.co.uk from your registered Amazon account email.

2. Include your Merchant Token in the email.

3. Wait for Amazon to process your request and provide further instructions.

How to Adapt to DD+7

While the DD+7 policy may be challenging, there are strategies to mitigate its impact:

• Revise Cash Flow Projections
  Update your financial models to reflect the new payment delays.

• Diversify Sales Channels
  Explore alternative platforms like eBay, Shopify, or Walmart to reduce reliance on Amazon's payment schedule.

• Negotiate Supplier Terms
  Request extended payment terms from suppliers to better align with the delayed cash flow.

• Consider Financing Options
  Leverage tools like inventory or invoice financing to bridge temporary cash flow gaps.

Sellers' Concerns About DD+7

Many sellers have voiced concerns about the policy, particularly the cash flow challenges it creates. Smaller sellers, in particular, may struggle to manage their businesses with thousands of dollars or euros held in reserves. The lack of consistency in how the policy is applied has added to the frustration, leaving sellers with more questions than answers.

Looking Ahead: A Tougher Road for Sellers

For Amazon sellers, the DD+7 policy is undeniably a tough pill to swallow. This change significantly impacts cash flow, especially for smaller businesses already operating on thin margins. For EU and UK sellers, the timing of this policy is particularly harsh, as it follows Amazon’s decision to begin charging VAT on its fees as of August 1, 2024 - a move that has already strained seller finances.

With the DD+7 change, sellers could now wait up to three weeks from the order date to receive funds, compounding existing financial pressures. The delay disrupts not only cash flow but also inventory management and financial planning, leaving many sellers scrambling for solutions.

Amazon’s inconsistent rollout of the policy has added to the frustration. While larger sellers may have the resources to weather these changes, smaller sellers face an uphill battle, with some even questioning the viability of continuing their businesses on the platform.

As sellers, it's essential to voice these concerns through Amazon’s feedback channels and advocate for more equitable policies. Until then, careful financial planning, exploring alternative sales channels, and negotiating supplier terms are critical survival strategies.