Several entrepreneurs are making a killing selling goods on Amazon. According to Zip Recruiter, new Amazon sellers earn an average of $45,080 annually.
However, making money through an Amazon FBA business isn't as easy as it seems. You can expect to encounter some challenges after launching your first store. And if you're planning to create a sustainable business, you must be familiar with different setbacks.
In this guide, we'll discuss the challenges new Amazon sellers face and how to overcome them.
You can't run away from the competition if you decide to join the Amazon FBA game. The reason? Amazon has more than 2 million sellers, and the numbers are increasing daily. You'll experience strong competition, especially if you choose to sell a high-ranking product.
Remember, you'll be competing with several established brands. So, most potential buyers won’t buy from you because your product has no reviews, and if you have no reviews you get no sales. It’s a catch 22. Instead, you need to stand out to beat your competition, and I'll show you how to do it below.
Though the competition on Amazon is fierce, you can create a profitable store if your product is amazing.
Here are some ways to cut through the noise:
Lastly, work on customer feedback. By doing so, you will improve your products and make the best impression on everyone who decides to try them out.
Amazon puts their customers first—they can return your items within 30 days. The bitter truth is that product returns will waste your time and money. Also, your ratings will drop if several customers return goods or file complaints against you.
Here are the reasons why many people return products:
Product returns can attract new problems. Say Amazon resells the returned goods; the new buyer might mention that you're dealing in used items, scaring your potential buyers.
Here's what happens:
Most sellers spend less time researching and testing products to confirm if they’re a good fit for their target audience. They pick any item that looks nice and start marketing it. Eventually, such sellers get low ratings from buyers, and Amazon bans their account.
The best way to avoid product returns is to do thorough product research and then partner with suppliers who value their customers. You'll make your buyers happy, resulting in repeat sales and referrals.
Here are other ways to evade the embarrassment:
Warning: Don't allow Amazon to re-brand and sell returned products. Instead, ship them to your address or to a third-party fulfillment center, and determine why your customers returned them. Perhaps they're getting damaged during shipping and require extra protection.
Want to know something interesting? Nine out of ten consumers read customer reviews before buying anything online.
That's proof (and scary at the same time) to know you'll make little to no sales if your products lack customer reviews. How will potential buyers determine if your product is the perfect fit if they don't know its good and bad sides? It’s impossible.
The worst part is Amazon has strict policies on product reviews. Unlike before, they don't allow you to ask for customer reviews post a purchase.
Also, they are against offering free products in exchange for reviews. See how it's so hard to get reviews?
A way to tackle this is to look for a unique selling proposition (USP), something that will differentiate you from the competition. I recommend you research your target audience then pick a quality product.
Next, create an irresistible offer to funnel them into buying from you. It can be:
If you don't know your USP, go through your customer reviews and find out why buyers choose you over your competition, then double down on it.
Pro tip: Your customers will reciprocate if you give them the best experience. Later, your product will start generating more sales on autopilot and you might be featured for the "Amazon Best Seller" or "Amazon's Choice” badge which will then snowball the reviews.
Price wars occur when brands are willing to sell for less than the market prices. It's common in businesses with several sellers dealing in similar consumer goods.
Everyone wants to make a sale, so some reduce their prices to win more customers. Some businesses experience a reduction in sales volume, which gets them out of business.
That's what happens on Amazon. Most sellers choose to lower their prices to lure potential buyers into shopping from them. It's a no-brainer that buyers love saving on costs. It makes it hard to generate consistent income.
Nowadays, selling on Amazon is becoming a race to the bottom. That's why I recommend you do your research well and find niches where price wars won't happen and you factor in a higher margin when doing your number-crunching on a new product.
But if it occurs, never lower your prices assuming your product is awesome. Instead, ignore your competitors and do your thing.
You can consider outsmarting them by adding more value to your products. Most consumers won't mind paying extra for a better experience. Instead, they'll keep coming back to you because of your value.
Also, by adding more value you can adjust your prices slightly higher than your competition to stay in business. Use ZonGuru to track your competition and get alerts whenever they lower their prices.
Pro tip: You can still generate more sales by revamping your marketing strategy. Start allocating more funds to advertising your products. Later, you can reduce it when your store starts getting more eyeballs organically.
Starting an Amazon FBA business is one battle and generating sales is another beast altogether. Having an Amazon FBA business is like an offline business, you have to invest your time and money to make it successful.
Here are possible reasons why new sellers don't get conversions:
Apart from not getting conversions, I see some sellers make this common blunder: going for products with low-profit margins. It makes very little room for any unforeseen circumstances like taxes and fees that might need to be paid.
Generating sales on Amazon is challenging but doable. If your competitors are doing it, why not you? I recommend you start by studying your competition and find out the strategies working for them—you can replicate their processes or improve on them.
Here are other ways to boost your sales:
Finally, know your numbers. I've discovered that many people aren't familiar with their landed COGS (cost of goods sold). If Amazon's FBA fees are too high, I would consider going with a 3PL and drip feed in stock to Amazon to save on costs.
If you feel you're doing everything right but not making any sales, consult an expert. You'll know what to improve on for your business to take off.
It's normal to go through several setbacks when launching a new business.
I see lots of gurus bragging about how they make huge bucks selling on Amazon, but they rarely disclose the challenges to expect along the way.
The good thing is, I've walked you through the major setbacks and how to solve them today. You now know how to cut through the noise, get more conversions and customer reviews.
I believe your business will take off much faster and smoother than the others by learning from the mistakes I have made to eventually turn it into a cash machine.
Discover opportunities. Maximize your sales. Grow your Amazon business!