Any way you look at the numbers, Amazon is looking pretty good these days.
The online e-commerce site attracts 300 million shoppers and has a market cap that is larger than the combined total of the top eight traditional brick-and-mortar retailers.
Numbers like these are part of the reason retailers are flocking to the online marketplace in droves. Each year, over 100,000 new sellers try their hand at selling on Amazon.
But Amazon’s incredible success does not guarantee the success of its third-party sellers. In fact, more than 90% of Amazon sellers fail within their first year, most of them leaving the site within their first six months.
Those who remain eventually find their sea legs and master the basics, but there is a lot to learn in the beginning and a lot of potential mistakes to be made that can jeopardize your entrance into the Amazon marketplace
As extreme as it sounds, because of intense competition and Amazon’s firm enforcement of their strict policies, one mistake can mean the end of your business if you are not careful.
Some mistakes may only cut into your profits, but others can completely dry up your funds or get your account suspended or even banned from Amazon altogether.
For those of you who are just getting started, the good news is that most of these mistakes are entirely avoidable.
The key is knowing what those mistakes are and learning how to avoid them before they ever become an issue.
The following are eleven of the most common mistakes Amazon Sellers make with a bit of advice thrown in from us on how to sidestep these issues from the beginning:
1. Misunderstanding How Amazon Works
The process of selling on Amazon is really quite simple.
It’s one of the reasons so many people are attracted to Amazon as a business opportunity. However, many often take that simplicity for granted and jump in without even reviewing Amazon’s policies or attaining a basic knowledge of how the marketplace works.
Many account suspensions could be avoided if new sellers simply read Amazon’s policies before you do anything else. Read Amazon’s Terms of Service and then follow them.
Amazon does not take their rules lightly and neither should you.
This also means staying in the know once your business starts to take off.
Amazon updates their policies all the time and this can change the name of the game in an instant. Stay up-to-date with what is going on in the market and be ready to adjust to any changes to the Terms of Service.
Not all the changes Amazon makes are bad, either.
Amazon regularly creates new features that can enhance your business – like the new giveaway option they introduced a few months ago – but if you are out of the loop and your competitors jump on board first, you could fall behind very quickly.
Other eager newbies can get ahead of themselves and forget to master the fundamentals of how Amazon works.
Even the most basic element of the Amazon marketplace – the fact that it is not actually a shopping site, but a product search engine – can be overlooked.
Failure to understand something like this will change your approach entirely. Roughly 50% of people searching for a product online go to Amazon first.
But Amazon is different from search engines like Google and eBay, with its own algorithms and policies, and new sellers will suffer if they assume they can get by without understanding these nuances.
For instance, success on Amazon is dependent on ranking well in the search results, but it is also about getting the Buy Box – i.e., securing your product as the one that will be added to the cart when a customer clicks the “Add to Cart” button.
If you don’t understand how the Buy Box algorithm works, you will likely ignore many of the important factors of running a successful Amazon business – solid product listings, competitive prices, rapid and reliable fulfillment, exceptional customer service, available inventory, etc. – which will increase your susceptibility to making the rest of the mistakes on this list and lead to your Amazon seller pitfall.
2. Botching Product Research
The first product you try selling on Amazon is never guaranteed to be a hit. That’s expected.
What you really don’t want is to invest in a product that becomes a devastating failure that takes you out of the game before you even get the chance to start.
We have an entire article dedicated to teaching new Amazon sellers how to do product research the right way to find the perfect first product. You can read that article here.
We also have an article on how to use the Amazon Best Seller Rank when conducting product research that you can access here.
Both articles will walk you through the important steps you should follow to avoid the most common pitfalls of product research.
However, there is one product research mistake we have to address here because it can completely jeopardize your chances of success: failing to check if you’re competing directly with Amazon.
Do not compete with Amazon. They are the biggest competitor of them all.
If you do try to take on the giant, don’t expect many profitable sales because Amazon can control its ability to win the competitive sale. You can’t compete with their margins or inventory levels.
So, before you go too far down the product research path, and most certainly before you invest in product production, check to see if Amazon sells the product itself.
3. Messing Up Your Account Setup
This is an uncommonly basic mistake, but it’s still one we have to point out because it’s an easy one to make that will have longer-term consequences.
Whether intentional or not, never set up more than one seller account. It is against Amazon policies to have more than one account per seller and violating this rule is enough to get you thrown out.
Another account policy that can result in termination if violated is directing Amazon shoppers to your personal website via URL.
This is something new sellers commonly do when setting up their account. Don’t do it! It will get you banned before you even begin.
We’ve created a full checklist of tasks to complete before you set up your account and during the setup process so you’ll be sure to avoid all the big mistakes of account setup.
We also address the two different account types that you can choose from in our Ultimate Beginner’s Guide to Selling on Amazon and discuss how to know which account type is the right fit for you and your business.
Once you do set up your account, take the time to get familiar with your Amazon Seller Account.
Seller Central gives you detailed information about ongoing orders, items purchased, and what’s getting listed on Amazon. You can also manage inventory, orders, and payments, define campaign settings, and track feedback and product performance.
Even if you set up your account correctly, you can still mess up by thinking that is all there is to it.
You’ll miss out on vital information and powerful tools by failing to become familiar with Seller Central from the get-go.
4. Neglecting the Product Listing
There are 101 ways you could go wrong with your product listing.
Some are more serious than others as they violate Amazon’s guidelines and can result in having your listing taken down, or even get your entire account suspended or banned from Amazon.
Other mistakes will simply keep you from getting the best conversion rates possible.
But those conversion rates can make or break your business, so these mistakes are almost just as serious as the ones that lead to account suspension.
Mistakes that will get you suspended or banned:
- Failing to match your catalog to the right products. If you use an existing product listing, your product must be an exact match with the item listed in the original listing.
Do not just check the UPC, you should also make sure that the color, shape, size… everything is exactly the same. There can be NO differences. “
Almost the same” is NEVER good enough.
This mistake can not only lead to a suspended listing but to bad reviews, returns, and refunds.
- Including a URL in your product listing. Most sellers who commit this grave sin usually try placing a link to their personal ecommerce website in their product inventory or in their business name.
Amazon is a closed ecosystem; they don’t want you to use their site to build your own brand and website. You can use Amazon to gain access to a larger shopper base, but do not take advantage of that relationship by sending Amazon’s customers to your own seller website.
- Including promotional text in your product title or images. Amazon has a strict policy concerning promotional text. Anything that sounds too promotional will be taken down.
Do not offer coupon codes, guarantee delivery speeds, talk up discounts, promote free shipping, or declare an item to be on sale for X% off anywhere in your product title or images.
Mistakes that can cripple conversion
- Ignoring the importance of keywords in your product title, details, and description. You need to incorporate your keywords throughout your listing and use accurate information in your product description or customers can feel misled and come back to leave a negative review.
- Disregarding product title rules. Your product title can only be 100 characters long (max).
Amazon also prohibits the use of all caps, html code, and symbols in the product title.
- Violating product image policies. Your main image must be a solo shot of your product on a white background. You cannot use an image that features multiple products or product colors (if different colors are sold separately). Amazon also bans the use of animated images, artistic representations, watermarks, and more. You can review all product image requirements here.
- Neglecting reviews. You can learn how reviews impact your sales, how to increase your good reviews, and how to handle negative reviews here.
One solution: Activate suppressed listings
If Amazon suppresses your listing, it will no longer show up on Amazon search results. Amazon will usually suppress a listing due to “defects” that can be fixed with relative ease (often one of the points listed above).
You can find and fix suppressed listings by going to:
Seller Central → Inventory → Manage Inventory → Suppressed (this only shows up if you have suppressed listings) → Select a viewing option (All Suppressed Listings, Image Missing, etc.) → Select a listing → Edit → Amazon Product Summary → Alert indicator (a red exclamation point) → Then resolve the alert and save.
Once you do this, your listing should be active again and you can go back to business as usual.
5. Miscalculating Product Pricing
Pricing your product can be one of the most significant and challenging aspects of the selling process and is one of the most common causes for Amazon FBA failure.
You need to set a price that will allow for good profit margins while still making customers happy. Lower prices are also instrumental in securing the Buy Box.
Set the wrong price and you could compromise your profit margins, sales, and your chances of getting the Buy Box, not to mention the havoc the wrong price can wreak on your product inventory.
If you price your product too low, Amazon’s fees will eat up most of your profit margin.
If you enter the incorrect price, deal sites and word of mouth can lead you to sell out overnight, draining your inventory and slaughtering your sales.
You can also suffer by miscalculating the true cost of an item.
Beyond production costs, you should also take into account inbound shipping, import duties, returns, the time value of your labor and a dozen other factors. Know the true cost of your product or you’ll quickly run your Amazon business into the ground.
Finally, while repricing tools can be a good way to get data, it is generally a bad idea to let these tools automatically reprice your listings for you.
Automatic repricing can lead to price wars that will eat into your profits. And, if you don’t pay attention, a bug can cause the software to list incorrect prices (like $0.01 instead of $10).
Feel free to use these tools to gather pricing data, but reprice manually to maintain control and visibility.
6. Forgetting to Collect Sales Tax
When you set up your Amazon account, you can immediately fill out the Tax Settings section in Seller Central.
It is much better to do this BEFORE you make any sales.
You can pay a small fee to have Amazon collect state tax on your orders, BUT you are still responsible for remitting that money to the IRS. All Amazon sellers are self-employed and responsible for their own taxes.
If you don’t collect the tax as you go, you will be left with a large, unfunded tax liability at the end of the year.
If you are not sure how to start, check out our webinar on sales tax where we cover all the basics.
If you are really serious about your Amazon business, seek professional help to understand the nexus tax implications of Amazon’s FBA program and have them create a solid tax plan for your business to remove any possibility of error.
7. (Mis)-managing Inventory
Buyers need to know if an item is in stock and available to purchase. If a buyer can see that an item’s stock is low, that can also motivate them to buy now.
Inventory quantities are live the moment your product listing is live, so if you don’t have inventory yet, state it as zero or you could create numerous problems.
If you do have inventory, don’t overstate the quantity or you’ll end up in the same situation.
New sellers are often surprised by how quickly inventory can sell and, when you oversell, you can start a chain effect that can lead to account suspension.
There is nothing worse than having to tell a customer that you can’t ship them an item they bought because you don’t actually have it in stock. Amazon especially dislikes when you do this and will penalize you for it, even ban you from selling on Amazon.
If you sell on multiple different channels, integration software can help sync inventory levels in real-time so that your product stock levels are always correct.
If you do not adequately plan your inventory and remain out of stock for considerable amounts of time, you will lose sales while your competitors are active, pushing you down the search ranks and damaging your future Buy Box rank as well.
If Amazon sees you as an unreliable seller, they’re not going to give you the coveted “Add to Cart” button.
Stay on top of your sales data, including both historical and seasonal trends so you can anticipate peaks in demand and order the correct number of products for your expected level of sales.
If you are running a promotion, be prepared for the increased sales and order inventory accordingly.
You also don’t want a garage full of inventory that you can’t sell.
As a new seller, before you start placing large orders, buy small batches to figure things out and see how a given product performs and then scale up to bigger orders from there.
The best strategy is to use data and realistic expectations to determine how many products to keep in your inventory. Calculate manufacturing time, shipping time, expected sales per day, and your competition into ordering decisions.
You should have at least 30-days-worth of inventory at any given time to ensure better rankings, and 90 days if you want to be on the safe side.
8. Mishandling Customer Service and Feedback
How you handle customer service and feedback goes a long way in determining the long-term success of your Amazon business. There are four main areas where you can go terribly wrong with this important seller responsibility.
1. Failure to Get Customer Feedback
Amazon’s Seller Performance and Product Quality department checks that every seller has customer feedback in terms of both quality (positive reviews) and quantity (2-5% of all sales should get feedback).
You should develop a system for requesting feedback, but you can also use tools like Feedback Genius, Feedback Five, BQool and others.
Then, once you get the feedback, pay attention to what your customers have to say and change accordingly.
2. Overlooking Customer Reviews
As much as 92% of consumers now read online reviews. They impact everything from the likelihood a customer will buy to your chances of getting the Buy Box. Once again, you can check out our article on the impact of reviews to get all the details.
The main thing to know is that you cannot pay for positive reviews (that will get you kicked off of Amazon these days) and the easiest and most effective way to get reviews is to simply ask for them.
3. Slow Response to Customer Inquiries
You have 24 hours to respond to customer inquiries no matter the time of day or day of the week that you receive them.
If you don’t respond within those 24 hours, Amazon will ding you and too many dings will lead to account suspension.
Regardless of Amazon’s policies, efficient customer support is also just good business.
The sooner you can reply, the more likely it is that you can catch the buyer while they’re still in front of their computer and you can resolve their issue before it gets out of control.
Prompt replies also make you look more professional and show that you care about your customers.
You can purchase external software like ReplyManager to handle certain parts of customer support, but you will need to handle many inquiries yourself (or hire staff to handle it for you) if you really hope to provide a positive customer service experience.
It’s also important to note that, when selling abroad, you have to provide customer service in the native language.
Judo Launch offers account automation services that provide you with a team of customer support agents who can provide your customers the support they need in their native language.
4. Negative Interactions With Customers
Avoid arguing with unreasonably demanding or argumentative customers. Instead, go the extra mile to help unhappy customers. This can prevent bad reviews and even get some negative reviewers to delete their bad reviews.
If you can remove negative feedback quickly, Amazon’s algorithms won’t have time to factor in the negative information and send you down the rankings.
Negative feedback is a buyer’s attempt to talk with you so don’t get defensive, simply converse and resolve the issues at hand. You’ll both be better off for it.
9. Fulfillment Errors
Amazon’s main concern is their customer’s experience and satisfaction with their purchase and the purchasing process as a whole. They want them to come back for more.
Order fulfillment is an integral part of the customer experience and, if you’re not careful, you can end up making a lot of rookie mistakes.
For instance, you can slip up and be late shipping an order.
People want their products delivered quickly and if you have set the expectation for a certain delivery timeline and you don’t fulfill, you can end up with bad reviews and direct complaints being sent to Amazon.
Another rookie mistake is to fail to provide Amazon with the shipment tracking information. Or, even worse, you could mismanage your inventory and be forced to cancel an order and never ship the product at all.
Any of these mistakes can get you in real trouble, from poor reviews to account suspension. You can also lose sales if your shipping costs are too high.
If you are unsure about fulfillment or simply want to take a few things off your plate, consider moving your inventory to Amazon’s FBA warehouses and using the FBA program to handle fulfillment responsibilities.
An overwhelming amount of Amazon customers use Prime and they tend to favor products that have the Prime/FBA free, 2-day shipping.
Switching to FBA can not only reduce your workload and the possibility of fulfillment errors but it can also increase your sales.
It’s a win-win.
10. Mismanagement of Cash Flow
You can mismanage your cash flow with both your initial investment and your ongoing investments funded by your profits.
In regards to your initial investment, having the money to buy the inventory and ship it is not enough. You need to account for all the little costs as well.
For instance, you need to set aside some money from the beginning to order your second batch of inventory in case it takes more time than planned to receive the money from Amazon from your initial sales.
You will also need to create a cushion for unexpected costs like long-term storage fees, shipping costs, and extra FBA fees.
Plan to invest two to three times more than you think you need to begin.
If you haven’t invested enough, you’ll run into too many little costs that can create big financial problems very quickly.
Once you’ve started the ball rolling, you will need to factor in costs for new orders, paid advertising, and more.
A lot of sellers get tripped up with the financial aspects of their business. The key is to keep all costs present so you’re not hit with too many surprises.
11. Selling a Product vs. Running a Business
Many new sellers decide to jump on the Amazon bandwagon because they have a great product idea. It’s great to be passionate about a product, but you won’t be able to take that product anywhere if you fail to view your Amazon venture as a business.
That means doing the research to verify that your product is even in demand and being willing to let a product idea go if it doesn’t show true potential.
It also means diversifying beyond just one product.
Even a product that has a 100 sales a day does not guarantee that you will be making a lot of profit. And relying on one product alone will not allow you to spread your risk. Diversify by investing in two to three products upfront.
As your business grows, build your brand by regularly introducing new, innovative products to your line-up. Don’t be content to sit on your laurels and depend on old products to carry your business.
Having more products also means that you can afford to get rid of the ones that aren’t performing.
You may have a couple of core products that provide steady income, but you should keep on top of product performance data to ensure that those “reliable products” are actually turning a profit.
Know which parts of your catalog are actually making money and know where the opportunities lie to improve and grow the business.
Tools like Feedvisor can track products and show you which ones are no longer winning the Buy Box.
By viewing your efforts as a business and not just an outlet to sell one product, you will be able to shift from a focus on short-term profits and develop long-term goals with an eye toward growth.
Amazon is more competitive than ever and only those who utilize it to build a real business (vs. folks who see it as a get-rich-quick scheme) will have greater longevity because they’ll invest the right mindset and effort into making their business work.
If you are already running an Amazon business, you may have gotten away with making some of these mistakes in the beginning.
Not all of them are fatal.
But even veteran sellers can use this list of common mistakes to review what they’re doing right and where they can make improvements to optimize their business.
If you are just getting started, you can use this list to avoid the bigger mistakes and build a solid foundation for your business.
Create habits and procedures that systematically prevent these mistakes from ever happening and you will be well on your way to success.