Starting any business can be daunting especially when you don’t know the starting point. This also happens with Amazon FBA, newbies often fall into different pit holes out of sheer excitement and end up in resentment. Based on our experience selling on Amazon and client feedback globally over the years, we are going to share 6 traps usually new sellers encounter and discuss their solutions. We will touch a couple of topics briefly before addressing these mistakes.
Amazon Seller DNA. We need to identify the DNA of a new Amazon seller as everyone come with their own mindset, targets and reasons to enter Amazon FBA. Some come for quick money, some want to leave their 9 to 5 jobs, some want an alternate income channel, some come for an exposure into Ecommerce while some come just to see what the fuss and the excitement is all about! Based on their objectives, sellers choose a business model according to their objectives i.e. Retail Arbitrage, Wholesale, Private Label, Drop shipping, FBA vs FBM.
Timing in the Year. It is pertinent to mention here that the timing of starting Amazon FBA business is extremely important and usually new sellers are unaware of the calendar of Amazon sales. If new sellers are entering and venturing in January – March then they will experience slowest pace of sales for sure which can become demotivating and can kill the excitement altogether. While the sales skyrocket from October to December. Generally the goal of any new seller is to start the journey on a positive note, profitably.
It is very easy to fall prey to this trap. Selling on Amazon is usually induced or is at times executed after attending a course of a guru. What new sellers see is the final result or the fruit after the tree has fully grown facing enormous hardships and challenges unique to the product. Their thought process usually goes like this. Getting excited after searching a product on JungleScout chrome extension and getting an encouraging opportunity score like 6, 7, 8, 9, 10. Step 2 would be to have a quick search of keywords to see the frequency of searches on Amazon for the product. Then they quickly open Alibaba to find a supplier, shortlist and finalize their orders.
What they miss is to do patent searches to see if there is already someone who has the copyrights to sell the same product or has a similar design. Their inventory will arrive in the warehouse, once their sales start they will come on the competitor’s radar. A complaint will be lodged in the post-natal phase. It’s very easy to check the copyrights and patents via google patents you just have to spend some time to go through. Alternatively you can hire an expert to do this for you and you will easily find a competent/ experienced professional on fiverr or upwork.
2. Seasonal Products
Newbies are naïve and consider all products behave in a similar manner all year round. Sellers are generally targeting products that will yield reliable and consistent profits to them all round the year. If you are selling winter caps or bean caps, chances are that they will be in demand in the winters only and people will not be buying them in summers most likely. So, your sales might skyrocket in the winters while they will plummet in the summers. We are not saying that seasonal products are a no go niche but in case you are planning to enter into it then you should be mentally and financially prepared to enjoy the ride while its moving at a fast pace at its peak and when it’s not at trough.
If you work on seasonal products in the right manner, you can easily reap off tons of money for that particular time of the year and they are a definitely a great add on in your portfolio of products. You just need to be wary of your expectations.
3. Prohibited Listings
Many times sellers procure products from suppliers without knowing whether they are allowed products or not. Below are some of the examples of prohibited items that you cannot sell on Amazon:
- Products that are subject to recall or safety alert
- Dietary supplements, such as weight loss
products that contain undeclared or prohibited ingredients or are marked as
unapproved new drugs such as:
- Growth hormones or products that claim to support or promote hormone productivity
- Homeopathic drugs that are prescription, mislabeled or unapproved new drugs
- Patches marketed as dietary supplements
- Sexual enhancement products
- Supplements claiming that they can be used to cure, mitigate, treat or prevent diseases
- Supplement listings that include disease names in their keywords
Sellers still take chances what they don’t understand is that all it takes is for one person to come along and complain or report. You might get away by selling the above items using different names but you will eventually be caught. So this can never be a long term thing as Amazon can remove your listing or ban your account.
4. Identification of a Fad
There are products that will come and go, they will have some fashion life maybe for days or months but their days are numbered for sure. Like iPad or iPhone accessories will change with improvements in versions and eventually they will not be in demand as and when technology improves. Similarly fidget spinners were a craze of their time, a fad that died out after sometime and many sellers fell victim to it. You need to work on products that have a history of sales, estimating total market size in terms of revenue. It needs to be high for a considerable time so that when your product reaches Amazon warehouse in USA in about 1 – 2 month’s time, their demand doesn’t diminish. You need to check your product results on Keepa and Google trends regularly to get a clearer picture and see through the product fate.
5. Liability Insurance
This is a common falling point for new sellers as well. They enter into categories with chemicals, oils or substances that are applied to the body without appropriate documentation and paperwork. Many times the sellers are clueless on this subject as they do not have any business or retail background. Substances that can cause an obvious accident risk or an allergic reaction by using them needs to get the required approvals. It takes a lot of time and will require some serious money to get the approvals from the right authority in each category. If someone starts selling such products without approval then Amazon will eventually ban them and ask them to take away their inventories from the warehouse.
6. Calculating Amazon FBA Costs
People are often snared while inaccurately calculating the product cost after it reaches the warehouse and when it reaches the customer ultimately. The best way is to use Amazon’s calculator which will give you each and every cost in detail. You can easily estimate your projected cash outflows based on the results and be wise while investing.
7. Data Analysis
This is the biggest issue within the new seller communities. They get excited after looking at scores using different market intelligence tools like JungleScout, AMZ Wordspy, Keepa etc. One needs to sit and take an overview of these stats and then dive into different details to get the most accurate and holistic picture of the product performance. People hastily select products just to throw them in the market and see how do they respond? Most often or so, poor homework results in disappointment. One of the most common mistake rookies commit is to type incorrect keywords, extracting and interpreting the results in their own favor. They do not understand that the same product can be searched with other names as well.
Earning profits and running a successful business on Amazon is tediously complex now and you might want to consider a mentor or an expert by your side to avoid the pitfalls mentioned above. If you have fallen prey to some of these points, you don’t need to feel bad about it as even experts and seasoned sellers also have battled on the same grounds. You just need to avoid these pitfalls and stay away from trouble right from day 1 by doing the right things.