Starting your own online selling business has been made easy with the help of numerous online selling platforms. When it comes to consumer items and essential goods, Amazon has been a trusted partner by entrepreneurs since the early 2000s after it eclipsed eBay’s influence in the eCommerce industry.
Since the increase of Amazon’s popularity and dominance in the eCommerce industry, it has become a top destination for online sellers. Apart from its influence, sellers are inclined to sell their products on Amazon, either via FBA or FBM programs, because of the potential sales.
In 2019 a survey revealed that the majority of Amazon sellers make monthly sales of at least $1,000. For super-sellers, it estimated that their annual sales could even reach up to $3 million.
However, similar to other business ventures, it is not all rainbows and butterflies when it comes to selling on Amazon. Before successful Amazon sellers reach their target profit, they often experience a series of challenges.
If you are new to Amazon or planning to become a seller, here are some of the commonly experienced challenges or issues when selling on Amazon.
1. Delayed Profitability
Before your Amazon business becomes profitable, you should be wary of potential challenges to your cash flow. However, the good thing is such a concern is only temporary.
One of the major challenges in terms of cash flow that is commonly encountered by new Amazon sellers is generating money to maintain inventory. Since Amazon pays third-party merchants every two weeks, you will have to invest in maintaining your inventory.
One of the mistakes of inexperienced sellers is relying only on the revenue of their Amazon listings to replenish their inventory. For that matter, before you delve deeper into Amazon FBA or Amazon FBM, you should secure a buffer fund to keep your Amazon business afloat.
Some manufacturers or suppliers will ask at least 25% of the inventory cost in order to start shipment or begin production of your items, this is especially true if you are aiming to sell private label brands on Amazon.
If you need help in terms of finding items to sell on your Amazon store, you may check Alibaba for a wide array of choices.
2. Competition Overload
According to Marketplace Pulse, “Amazon marketplace has 8.6 million total sellers worldwide.” With such popularity, it cannot be helped for excessive competition to arise.
Due to excessive competition, new sellers are having difficulty penetrating the market. However, there are tips and tricks to help your listing rank on Amazon’s organic search.
There are available Amazon seller tools online, such as Amazon PPC tool, Keyword Research, and Product Research Tools of SellerApp. The said tools were designed and created to help Amazon sellers advance their business and maximize profitability.
3. Amazon Price Wars
With the reality of excessive competition in the Amazon marketplace, it is inevitable for Amazon sellers to enter into price wars. This is commonly observed among sellers who are aiming for their listing to appear in the Amazon Buy Box.
Most inexperienced sellers will try to outbid their competition by offering a lower price than its precedence. However, practicing such methods would simply mean settling for less and eating up the profit margin.
To avoid unreasonable and less profitable repricing strategies, the use of an AI algorithmic Amazon repricer is highly recommended. One of the best Amazon repricing tools on the market is Seller Snap.
Seller Snap’s technology is capable of detecting the behavior of a specific competitor and making tailored price adjustments to outsmart that competitor. Its algorithm aims to get you the Buy Box at the highest possible price while avoiding price wars. Seller Snap offers a 15 Day Free Trial – No Credit Card Required.
4. Receiving Amazon Feedback
One of the ranking factors considered by Amazon’s algorithm is feedback or customer reviews.
In 2016, when Amazon noticed alleged review manipulation, the tech giant made major changes to its review policy. Sellers are no longer allowed to directly ask for reviews in exchange for free items or incentives.
In their official blog post, Amazon stated that “we updated the community guidelines to prohibit incentivized reviews unless they are facilitated through the Amazon Vine program.”
However, if you provide a seamless experience to your customers, you will receive reviews from Amazon shoppers. Needless to say, there are also Amazon reviews and feedback tools available to help improve your Amazon feedback.
5. Strict Restrictions and Policies
Unlike other methods, such as dropshipping, Amazon provides guidelines on items that are allowed and not allowed to be sold on their platform. If you are a new Amazon FBA seller, you may check here to know more about product restrictions by Amazon.
In terms of overall community guidelines, Amazon has laid down strict guidelines for community participation. This includes but is not limited to eligibility, promotions and commercial solicitations, and content infringement.
Restrictions and policies are placed for the common good of all Amazon sellers and shoppers alike. In order to avoid issues, the best thing to do is to familiarize yourself with them to avoid committing irregularities with your Amazon transactions.
Slowly But Surely
Reaching your goal of financial freedom through selling on Amazon is possible, but not immediate. With the help of the tools mentioned above and a clear understanding of what to expect, it is possible to build a successful Amazon business.