The managing director of IT distributor Smithie UK is rallying the industry in an attempt to resolve ongoing payment issues with Amazon.
Earlier this year it was reported that Amazon owes millions of pounds in total to various UK tech suppliers over deliveries it claims it didn’t receive. It’s believed that problems with Amazon’s internal systems may be to blame.
Last month, some distributors said that Amazon had begun paying them back, though others said the etailer ‘had not agreed to pay the total bill’.
Several suppliers told PCR anonymously that Amazon had not paid them for some deliveries, and despite them apparently sending proof of delivery to the etailer, were left out of pocket.
Now, following an internal crisis meeting, Smithie UK’s managing director Steve Riordan is taking a stand on the matter as the first to go public with his views. He wants to unite other distributors to go back to Amazon as a force – and get the situation resolved.
“Everybody is scared [of speaking up] but I don’t care what anybody thinks anymore,” Riordan told PCR. “Why are these people getting away with it? In the industry there are millions of pounds sitting on people’s balance sheets that Amazon won’t pay.
“They owe us an awful lot of money. They’re crippling this industry. Let’s not be frightened of this anymore – we’ve got to put a stop to it somehow.
“Even if they did actually pay us the money now, we’ve still lost amount of supply on this kit. It’s just horrendous.
“We need to sit down and talk [with other disties] and get around the table. I’m happy for my name to go out there because we’ve got to put a stop to this.”
A small handful of suppliers told PCR they would be happy to enter discussions with Smithie over the matter, while others are distancing themselves from the situation and aren’t concerned by it.
PCR contacted Amazon for a comment on the matter last Friday (May 13th), and since then, we understand that Amazon has agreed to pay around 30 per cent of what is owed to Smithie.
Both Exertis and VIP Computers say they have a healthy working relationship with Amazon.
VIP MD Rich Marsden commented: “We’re happy with Amazon – we have an infrastruxture set up to deal with major retailers.
“There are always issues and challenges in this industry in general, but if you have the right infrastructure then you’ll have fewer problems.”
PCR understands some distributors are still owed six figures; other rumours claim that at least one distributor was seven figures short in the past.
One UK supplier allegedly agreed to meet halfway with Amazon to resolve its unpaid invoices – on more than one occasion in the past. Other distributors have told PCR that Amazon has offered to pay half of what’s missing, with the distie expected to foot the remaining half of the bill.
PCR also understands this situation ‘has been going on for years’ with some companies.
Riordan says going 50/50 with Amazon sets a ‘dangerous precedent’.
He added: “It sets an extremely dangerous precedent, because if other distributors have the money to write off what they’re owed, what does that say to the rest of the industry? It lets Amazon think they’ve got away with it.
"In six months’ time we might be owed £2 million, and Amazon are just going to think they can pay off just half of what they owe again. So they’re just going to keep doing it.
“Distributors caving in to Amazon is suicide for them – and they’ve made it suicide for the rest of the industry by doing that.”
A couple of distributors told PCR they foresaw a situation like this emerging – and cut ties with Amazon a few years back.
One such supplier told PCR anonymously: “I won’t trade with them for several reasons. I saw the writing on the wall much earlier than some of my competitors, who have clearly been burnt. The only way to get something like this fixed is through legal action.”
Another distributor, apparently owed between £300,000 and £400,000, told PCR: “Everyone is affected by this – it’s a global phenomenon, not just affecting the UK industry. Amazon is an absolute monster.”
Some companies – including vendors – have mentioned problems with returns as well as deliveries.
Riordan claims Smithie has received TVs, irons and other products from Amazon that it doesn’t supply, with the items seemingly intended for a different distributor.
Another distie said: “We reported debt to our insurance company but there’s nothing they can do about it. Amazon’s reasoning is they’re disputing the invoices and have never received the goods, even though we’ve provided copies of the proof of deliveries. They can’t see that disties have supplied the kit to them. Their system isn’t ready for business.”
Despite the now-public dispute between Smithie and Amazon, Smithie’s founder Shane Hilden says that Amazon is still an important customer.
"We hope this can be fully resolved," he said. "They have cleared about 30 per cent [of what Smithie is owed], so we have had a little bit of progress."
Further negotiations between Amazon and Smithie are ongoing.
An Amazon spokesperson told PCR: "We don’t comment on specific supplier relationships."
Image source: Joe Pepler/REX