Amazon, the word is a boon to most of the sellers while it turns into a nightmare for many sellers. Specially, fulfillment by Amazon. Today, we will discuss what’s go wrong with FBA sellers that leads to failure.
6 common FBA mistakes that leads to failure
Wrong product launch
I went to a mall and purchase any item. It is OK. Being a customer, it will not impact me.
But, I am starting an online business and sell any product, it is not a good practice. A wrong product launching will incur heavy loss. This is the most common problem with sellers who failed in the Amazon fulfilled business.
Amazon is a wide marketplace and a home to millions of sellers. It has a huge competition for best selling items. You need to audit the Amazon industry in reference to the Amazon product and its niche. This way you can decide what to sell on Amazon as a FBA seller.
See the above picture, it features earphones product analysis on Amazon. All top page sellers are selling 1,542 units every month. But, check the red highlighted arrow. The top page sellers have average 10k+ reviews. This is not at all a good product idea to start Amazon FBA business.
You should do effective Amazon product research for FBA. Check product competition, monthly sales volume, price history, reviews and ratings etc. Find a product having good sales and average seller ratings is below 100. This way you should final a product to launch.
Misconceptions about Amazon fulfilled business
Amazon is a marketplace to sell products. You use Amazon warehouse to keep your products. It charges you monthly storage fees ($3.90/ cubic feet). Amazon charge you fulfillment fees to ship your orders to customer. Amazon charge you referral fees on every order (15% of the selling price).
Also, you need to be a professional seller in order to enjoy Amazon advertising services and unlimited warehouse storage. The professional seller fees is $39.99.
Sellers think Amazon FBA incurs order shipment fees only. But, there are other charges that I mentioned above. This misconceptions impact the profit. They experience loss because they do not count these expenses while calculating profit.
Bulk Inventory
Business is a risk and take a risk. Sellers purchase bulk inventory above thousand units and send it to Amazon warehouse. But, you should think of one thing. Amazon provides you platform and not help you make sales. You need to do promotions and run PPC to sell.
You starting the business from zero reviews and ratings on a fresh listing. So, it is advisable to take low risk. Launch a product with limited stock under 500 units. You can give big order to supplier if the first inventory makes good sales.
Investment
The investment you put to sourcing products, you will need almost same investment for promotion. PPC, coupon codes, social media ads, and storage fees etc. Sellers do not keep a same budget as a backup fund for advertising. They will because of lack of fund for promotion.
You need to keep paying monthly storage fees to Amazon. In the end, if you decide to end up the business. You have two option left either call the inventory at your home or dispose it through Amazon. For both services, again you need to pay Amazon to stop getting charged for storage fees and professional plan subscription.
So, better idea is to spend half investment in product sourcing and keep half budget for promotion and selling.
Multiple product launch
A new business introduces new opportunities as well as setbacks. To earn as many money, sellers often stuck into traps. They launch multiple products at a time. This leads to failure.
A launch of more than two products will demand money and time. You need to spend on all products individually for promotion and advertising. Many sellers revealed the launch of multiple products was the reason behind quitting business.
Instead you should keep foot step by step. Let one product succeed and launch another afterwards. This way you will have good experience of how Amazon business works. You will not do the same mistake that you did with the first product launch.
No Product Inspection
You are finding a supplier from Alibaba and giving him product order. But, is he sending you legitimate goods of high standards?
We order the suppliers and get inventory shipped to Amazon. We cannot inspect it. Many times seller face high return rates that leads to low ranking, poor review and ratings, and even seller account gets suspended sometimes.
So, before the inventory shipped from supplier’s location, hire a inspection company and get product audit to ensure product quality. Get damaged units replaced within the supplier’s city and process it to freight forwarder to forward the inventory to Amazon warehouse for selling.