Many individual sellers try to make a quick buck on Amazon or even earn a large amount of income by selling different products. They may be selling products in high volumes or selling high-margin products, or both. But not everyone can achieve success. Some sellers’ business even declines and they are unable to maintain basic operations.
In this article, I will introduce 5 lessons learned from some failed Amazon sellers to help sellers operate better on Amazon.
7 Potential Reasons Why You May Not Be Successful Selling on Amazon
Amazon provides a free, all-encompassing platform where people can sell products and make money easily and quickly. But at the same time, you need to understand that Amazon will also protect its own interests.
Some potential reasons for failed sales for Amazon sellers include:
1. Amazon becomes your primary source of online business income
Because you don't own Amazon, you are under Amazon's control. You have little control over your business, so you can get kicked off the platform.
2. Ignoring Amazon’s dynamic and evolving search engine algorithm
When consumers search for specific products online, they choose the products that rank high on the search results page, not the products of a specific seller, so it is important for you to pay attention to Amazon’s search algorithm. Once the algorithm changes, you may lose your competitive advantage.
3. Encroaching on niche products
If you do not own the rights to sell a product, or the product is not patented, you may be found guilty of infringement. You may have heard of the Amazon Basics program, which is an encroachment on niche products where Amazon picks profitable products, private labels them, and then sells them at a lower price or with a higher ranking based on the search engine algorithm.
4. Fight fake reviews
Amazon uses special technology to detect fake reviews. But if your products have no reviews, then the chances of people buying your items from Amazon decrease.
5. Difficulty in discovering untapped niche markets
In the past, private labels were more profitable, but now that has changed because you can’t find untapped niches as easily. Even if you find a profitable product now, fierce market competition may put you out of business.
6. Sales volume decreases with inventory availability
If you’re running low on inventory, it can hurt your sales rating on the platform, which can kill your online business growth. Your account may also be suspended by Amazon if you do not have inventory and are unable to ship within Amazon’s service level window.
7. Fluctuating profit margins
This is affected by manufacturing and shipping costs. If your profit margins drop significantly, your business will eventually end up with more losses and failure.
These are just a few potential reasons why selling on Amazon may not work. The purpose of listing these is not to discourage you or denigrate Amazon, but to make you aware of the lessons learned from failed sellers when considering or starting an Amazon selling business.
5 Important Tips from Failed Amazon Sellers
We looked at some stories of failed Amazon sellers and picked out some lessons that new Amazon sellers or online entrepreneurs can learn from. This includes Amazon’s Seller Central, which has clear policies for selling on the platform, as well as best practices and error demonstrations.
If you’re a beginner, you may be making the same mistakes as failed sellers without even realizing it. You can learn some lessons from the mistakes that failed Amazon sellers made, from setting up an account to selling and processing orders.
1. Account Settings
This is one of the key steps in creating your online Amazon selling business and most sellers spend their time here, although it varies depending on whether you manage automation or an agency.
An Amazon Seller account provides an overall view of current or ongoing orders, products purchased, and content listed on the platform. It also allows you to manage your inventory, product performance, define settings for your ads, and track feedback.
What to do right: It’s critical to take the right steps to build a solid foundation for your online store and products to avoid short-term or long-term failure. Also, do not access two seller accounts from the same IP at the same time. Amazon’s policy simply stipulates that each Amazon seller has one seller account, and anything beyond that will get you in trouble. Continuously review best practices, test, audit, and refine your seller account to avoid policy violations.
2. Check the goods before paying the supplier
Amazon sellers order their products from different suppliers, but most of them want to save on manufacturing costs while still getting a high-quality product.
Placing an order with a supplier you don’t know or have never met can be intimidating because you’ll be paying them a small fortune to produce the product you want.
Many failed Amazon sellers have to pay a heavy price for this, especially when suppliers do not meet quality and specification requirements, which leads to bad Amazon reviews or returns, as well as poor sales performance.
When this happens, it can take a long time for you to sell your existing inventory at a break-even price, and ultimately kill your successful product.
What to do: Check the goods before paying the supplier because they could have used cheaper materials or compromised in some way which would have also saved on production costs.
3. Choose the right product
This is probably the most important part. If you choose the wrong product, your business may fail miserably, no matter how great your marketing, PPC, and other sales aspects are.
The right approach: When doing product research, there are several factors to consider, such as product demand, profit margins, ease of manufacturing, level of competition, etc.
4. Correct product packaging and branding
There are many stories about customs seizing goods that Amazon sellers were shipping to various customers in different parts of the United States for a variety of reasons. This could be due to a small mistake like forgetting to check the product as per the target market’s requirements and not labelling the product properly.
But small mistakes like this can be devastating to your business, especially if all your cargo gets confiscated at the port and you have no way of getting it back or selling it, so you end up taking a huge loss and stopping sales altogether.
What to do: Make sure your shipment is packaged and labeled correctly before shipping.
5. Ensure high-quality customer service
Customer service is one of Amazon’s top priorities, so you shouldn’t skimp on this aspect. In fact, to some extent, customer service affects Amazon search page visibility, chances of winning Amazon’s Buy Box, and Amazon sales.
The biggest customer service mistakes that failed Amazon sellers make include shipping speed, return policy, reviews, and pricing.
However, the most common mistakes include: challenging Amazon policies by purchasing positive reviews, creating disputes with buyers, etc., because Amazon relies heavily on user trust.
The right thing to do: While there are several ways to address these issues, the best course of action is to invest resources in improving customer service metrics and improving your seller feedback management.
