As the world’s largest e-commerce platform, Amazon has made it easy for new sellers to start their own online business. It allows them to reach millions of consumers on its platform, giving them access to a large customer base. About 50% of the sales on Amazon are third-party sellers, which means that a lot of money can be made. However, selling on this platform comes with unique challenges for new Amazon sellers.
There are many ways to sell on Amazon: you can buy and sell products (marketplace / online arbitrage), hire a financial developer to create a private label product for you, buy products in bulk and sell them on Amazon, etc. .
Regardless of your business type, you need to familiarize yourself with the issues and problems you will face as a new business owner. Therefore, we have prepared this article to discuss common issues that new Amazon sellers face. Here are the most common challenges you will face as a beginner on Amazon:
1) Category restrictions
You can find almost any product on Amazon. It offers a wide variety for sellers to choose from, but not all of them can be sold at once.
Of the 33 types, 23 are open, which means that new sellers without registration can start selling whenever they want. However, others (and some subcategories and types) are limited. This is done to avoid fake or fake products. An example of these restricted – or closed – sections is the collection, which can easily be counterfeited. Those who want to sell gated products must first get Amazon’s approval, which requires them to go through a complicated process called “unging.”
The easiest way to avoid blocking on Amazon is to get help from a professional company that provides Amazon Unblocking Service. OABeans is one of the reliable companies that provide these services. Instead of going through the complicated unlock process yourself, you can choose your unlock package, give us some important information, and relax while you unlock.
2) Amazon fees and costs
One of the challenges for new Amazon sellers is the high fees and costs of starting a business on Amazon. There are two plans on Amazon: personal and professional plans. Since each plan has some limitations, you should choose a professional plan if you care about your business. By choosing the professional plan, you will pay $39.99 per month, regardless of the number of products or sales volume.
In addition, sellers must pay a referral fee – commonly called a commission – which ranges from 6-45% depending on the retail price and product type. Depending on the model, there is a minimum referral commission of 0-2%.
But Amazon’s biggest pricing challenge comes from Amazon’s FBA fees. In exchange for handling the shipping, handling, and shipping of your products, Amazon will charge you based on the size, weight, and type of the product, as well as storage fees per cubic foot of storage space used.
3) Inventory Management
Retailers and entrepreneurs who want to ship their products from Amazon’s warehouses will be subject to high fees and taxes. This situation is especially worse due to the COVID-19 lockdown and supply chain disruptions around the world.
One of the challenges businesses – both large and small – face is moving from an arrangement like Amazon FBA to an in-house arrangement. They need to find a shipping service that fits their product and target market. They also need a robust warehouse management system that provides actionable data-driven insights to improve inventory management, order management, shipping and packing, and overall fulfillment.
4) Packaging restriction
Like everything else, Amazon has strict guidelines for how to send products to the fulfillment center. For example, Amazon requires sellers to send their products in different types of boxes, and to deviate from these instructions can be very expensive as the seller will have to pay for the return of the product.
But the challenge for new Amazon sellers isn’t just FBA sellers; FBA and FBM merchants are required to consider certain regulations regarding their packaging process. The packaging process has two main pillars: branding and individual packaging. Sellers must adhere to international trademark standards for their brand name, Amazon logo, and brand owner logo.
In addition to the labeling guidelines, sellers must adhere to all packaging requirements determined by Amazon. There are strict guidelines for bulk products, sets, box units, container units, and bundled products: each box containing one product must have the same number of units and SKU.
5) Amazon reviews and reviews
Feedback and reviews are one of the most influential factors in the buyer’s journey. Many marketers think they are the same, but there are differences.
Reviews are directly related to the product and its issues without concern about who the seller is. On the other hand, feedback refers to things like legal compliance and customer service and should not talk about products.
One of the common problems for new Amazon sellers is getting positive feedback on reviews. Amazon does not allow sellers to offer incentives to customers or ask them directly for reviews, and most customers make no effort to leave reviews unless they have had a bad experience. So it’s up to you to deliver high quality service and keep customers happy with positive reviews and feedback.
Amazon pays sellers every two weeks, but one of the challenges for new Amazon sellers is that they have to pay for the goods for a long time before they get any money and him.
Many retailers – especially private label brands – hire manufacturers in China to make products for them, and these manufacturers usually charge 25% of the product in advance before starting production. Depending on various factors, such as the number of your products, the production process may take 1-2 months. After that, you will pay the remaining shipping and customs balance. It can take anywhere from a week to a few months for your product to arrive at Amazon’s warehouse.
When you add it all up, you will see that it will take months before you start paying for the goods you bought. It becomes more difficult when you offer many different products. Therefore, you will want to keep the money on hand so that you are ready to enter the inventory process.
7) Great competition
According to statistics, there are 8.6 million Amazon sellers worldwide. It is not difficult to imagine how the competition is high and many sellers can offer the same product as you. Excessive competition makes it difficult for new sellers to enter the market. However, you can find many tips and tricks to help you rank in Amazon’s organic search rankings.
Try to spend enough time to learn this process. Use Amazon marketing tools like Amazon PPC, Keyword Research, and Product Analysis tools to improve your listing.
Also, as a new marketer, you can’t jump on board and expect to sell the products you want. Some brands are very competitive, with many experienced and established dealers selling exactly the product you want to buy. Therefore, it is recommended to use the online arbitration list to find useful products without worrying about the competition.
8) Amazon price war
Price wars refer to unreasonable price reductions by some Amazon sellers in order to quickly buy customers from competitors or increase their market share. Since Amazon is a very competitive platform, the price war is one of the inevitable challenges for new Amazon sellers.
This is a risky pricing strategy because it can increase sales, but there is no guarantee that sellers who use it will maintain a good profit margin. A good way to avoid this is to use Amazon repricers to adjust the price while maintaining your profit margin.
9) Returning customers
One of the main reasons for Amazon’s success is its customer-oriented business model. It’s all about the customer, so you might want to know how Amazon deals with customer returns.
Return policies vary by product category. For example, some scripts offer free returns when you pay for them. Additionally, returned products may be missing parts or may not be in resalable condition. This can be a frustrating experience for new sellers, especially if they can’t resell the item to make up at least some of the money they spent.
10) Restrictions on strong policies
As a customer-centric brand, Amazon has strict policies and regulations that can sometimes prevent your intended business. Amazon restricts the sale of certain products on its platform, which can be difficult for sellers who do not have access to the goods.
The best way to avoid problems is to do proper research before selling the product, read Amazon’s instructions, and use a product or service research tool to help you find the right product.
Starting a business on Amazon seems easy at first glance, but you can see many challenges for new Amazon sellers if you look closely. However, every line of business comes with unique challenges that we need to prepare for. With a little hard work and the right tools, you can start your Amazon business successfully and be profitable in no time.