Follow the money is reasonable advice in any arrangement where you are handing some over. In this category it is also the fastest way to tell two very different business models apart.
Who Holds Your Money in a Managed Amazon Store?
There are three separate pots: the fees you pay the management company, the working capital that buys inventory, and the payouts Amazon disburses from sales. Only the first should ever leave your control. In our arrangement you retain control of capital and platform payouts, and the storefront is 100 percent yours. If a company's answer to this question is complicated, the complication is the answer.
Pot One: Fees
This money genuinely leaves you. It is payment for a service.
It splits into the startup fee, which buys the build, and the performance fee, which is a share of profits and so only exists once there are profits. There are also pass-through costs for software, tools, and team expenses named in the Services Agreement, which you pay directly.
Fees are the only pot where the correct answer is that the company has the money. Everything below should be somewhere else.
Pot Two: Inventory Capital
This is your money buying your goods, and it is where the category's sharpest divide sits.
The question to ask any company is simple: does inventory capital pass through your bank account, or does it go from me to the supplier? Both arrangements exist in this industry and they carry very different risk.
What you want to establish, in writing:
- Whose account funds the purchase orders.
- Whose name is on the supplier invoices. This matters for suspension appeals as much as for ownership.
- Whether your capital is ever commingled with the company's operating funds or with other clients' funds.
- What documentation you receive for each purchase, and how quickly.
- What happens to undeployed capital if the relationship ends mid-cycle.
Commingling is the specific thing to rule out. Capital sitting in a company's general operating account is exposed to that company's business risk in a way that capital in your own account is not, regardless of how trustworthy anyone is.
Pot Three: Platform Payouts
Amazon disburses sales proceeds on a cycle, typically every 14 days, though this can vary by account. The question is where they land.
In our model, they land with you. You retain control of capital and platform payouts, and act, in effect, as the CFO of the store: you pay for product, you collect the payouts, you hold the profits. The money does not route through us and then on to you.
That structure is worth insisting on wherever you go. A company that receives your platform payouts and then remits your share is a company whose solvency is now your problem.
The Questions That Separate Models
Ask these of any company in this category, including us, and ask for written answers.
- Whose legal name is on the Amazon account?
- Which bank account receives Amazon disbursements, and whose name is on it?
- Who initiates purchase orders, and from which account are they paid?
- Is client capital ever held in your company's accounts?
- If your company ceased operating tomorrow, which of my money would be exposed?
That last one is the stress test. In an arrangement structured correctly, the honest answer is that fees already paid are gone and everything else is in your name and unaffected.
What You Should Be Able to See
Control is partly a matter of visibility. You should have direct access to the Amazon account, see disbursements arrive in your own bank, and receive documentation for inventory purchases rather than summaries of them.
If the only window you have into your own store is a report somebody else produces, you do not have control, you have a description of control. We covered how to check the numbers independently in how you verify what your store is doing.
Where We Sit
To put our own answers in the grid, as published: clients retain 100 percent ownership of the storefront, you retain control of capital and platform payouts, and if services end, the store stays with you. Our operating entity is 24/7 Distribution Group LLC, identified in our disclosures, and an account-standing letter for the entity is included in the Client Diligence Package.
Ask us the five questions anyway. Published answers are a starting point, not a substitute for asking directly and getting it in the agreement.
Related Next Steps
- → What's Actually in the Agreement
- → eCommerce Management Scams: Red Flags to Watch For
- → How to Compare Amazon Automation Companies
FAQ
Do you ever hold my inventory capital?
Ask this directly on the call and get the answer in the agreement. Our published position is that you retain control of capital and platform payouts, and the agreement is where that becomes enforceable rather than descriptive.
Where do Amazon payouts go?
To the bank account attached to your Amazon seller account, on Amazon's disbursement cycle of typically 14 days.
What happens to money in the Amazon account if the store is suspended?
Funds already disbursed to your bank are unaffected. Funds still held by Amazon are typically retained during the review. We covered this in what happens if Amazon suspends your store.
Can I see the supplier invoices?
You should be able to, and you should ask what the process and turnaround for requesting them is before you sign.
What if the management company goes out of business?
In a correctly structured arrangement the account, the inventory, and the payouts are in your name and continue to exist. Fees already paid are spent. Confirm this in writing rather than assuming it.
Ask Where the Money Sits
It is a short question with a long tail, and it is the one we would lead with if we were evaluating this category from the outside.
→ Schedule a Free Consultation, fifteen minutes. Or read the Client Diligence Package first.
