14 mistakes you should avoid when selling on Amazon

Before we throw ourselves into the list of mistakes you ought to avoid, it is important to say something about the Amazon platform as a sales channel.

What is Amazon Marketplace?

Amazon Marketplace is an e-commerce platform where third-party sellers can sell their goods and services directly to consumers. Amazon Marketplace gives sellers the opportunity to list their products and take advantage of Amazon’s customer base, traffic and infrastructure in order to increase their sales and reach.

More options as a seller on the platform

Sellers on Amazon Marketplace can choose to fulfill orders themselves (Fulfilment by Merchant, FBM) or use Amazon’s fulfilment service (Fulfilment by Amazon, FBA), where Amazon handles storage, packing and shipping of the products as well as customer service and returns.

Amazon Marketplace operates in several countries and regions, which gives sellers the opportunity to reach a global audience and expand their business internationally. The platform also offers various tools and services, such as Amazon Advertising, to help sellers increase the visibility and sales of their products.

Why sell on Amazon?

There are several reasons why companies choose to use Amazon as a sales channel. Here are some of the most important advantages:

Large customer base:

Amazon is one of the world’s largest online marketplaces, which means you gain access to an enormous customer base. This can help you increase sales and reach customers you might otherwise not have had access to.

Increased visibility:

When you sell on Amazon, your products are exposed to a broader audience than if you only sold through your own webshop. This can increase your visibility and help attract new customers.

Trust and credibility:

Amazon has built a solid reputation for reliability and customer service, which means customers often feel safer buying from Amazon sellers. This can help increase conversion rates and sales.

Fulfilment by Amazon (FBA):

Amazon offers the FBA service, which takes care of inventory management, shipping and customer service for you. This can save you time and resources and allow you to focus on other aspects of your business.

International expansion:

Amazon has marketplaces in many countries, which makes it easier for you to expand your business internationally and reach customers in different geographical areas.

Customer experience:

Amazon offers a streamlined and user-friendly purchasing experience, which can help increase customer satisfaction and encourage repeat purchases.

Advertising and marketing:

Amazon offers various advertising and marketing options that can help you increase the visibility of your products and increase sales.

Sales data and analytics:

Amazon gives you access to valuable sales data and analytics that can help you make informed decisions and improve your company’s performance. Although there are many advantages to using Amazon as a sales channel, it is important to remember that there are also disadvantages and costs associated with it, such as competition from other sellers, fees and potential limitations on control over your brand. It is therefore important to weigh the advantages and disadvantages before you decide to use Amazon as a sales channel for your business.

Let Amazon handle the most with FBA

FBA (Fulfilment by Amazon) is a service Amazon offers to sellers who want to delegate inventory management, packing, shipping and customer service to Amazon. With FBA, sellers can focus on other aspects of their business while Amazon handles the logistics. Here is a description of how FBA works:

Sending goods to Amazon:

As a seller, you send your goods to one of Amazon’s fulfilment centres. You are responsible for preparing and packing the goods correctly as well as paying for shipping to the centre.

Inventory management:

When your goods arrive at a fulfilment centre, Amazon stores them in their warehouse. Amazon updates your inventory and gives you access to information about stock status and movements.

Order handling:

When a customer buys one of your products on Amazon, Amazon processes the order and packs and sends the item directly to the customer. Amazon also handles any special shipping methods, such as gift wrapping or express shipping, if the customer chooses that.

Customer service and returns handling:

Amazon takes care of customer service related to shipping and returns of products sold via FBA. If a customer has a problem or wants to return a product, Amazon handles the communication and the process.

Fees:

Amazon charges various fees for the FBA service, including inventory and storage fees as well as fees based on the weight and size of the products sold. It is important to be aware of these fees when you assess the profitability of using FBA.

The advantages of using FBA include:

• Time saving
• Access to a larger customer base,
• Reduced workload
• The possibility of benefiting from Amazon’s customer service and logistics expertise.

The disadvantages can include:

• Fees associated with the service
• Loss of control over inventory management and the customer experience.

You control the most with FBM

FBM (Fulfilment by Merchant) is a selling method on Amazon where the seller is responsible for handling inventory management, packing, shipping and customer service for the products sold on Amazon’s marketplace. FBM differs from FBA (Fulfilment by Amazon), where Amazon takes care of all these tasks. Here is a description of how FBM works:

Inventory management:

As a seller, you are responsible for maintaining and managing your own stock. You have to make sure you have enough goods in stock to meet demand and update your inventory on Amazon when necessary.

Order handling:

When a customer buys one of your products on Amazon, you receive an order confirmation, and it is your responsibility to pack and send the item to the customer. You also have to update the shipping information on Amazon so the customer can track the parcel.

Customer service:

With FBM you are responsible for handling customer service related to shipping and returns of products. This includes answering customer enquiries, solving problems and handling returns in accordance with Amazon’s policies.

Fees:

Although FBM sellers do not pay the same inventory and storage fees as FBA sellers, they still have to pay Amazon’s seller fees, such as referral fees and subscription fees. It is important to be aware of these fees when you assess the profitability of using FBM.

The advantages of using FBM include:

• Greater control over inventory management,
• Customer experience and
• The possibility of reducing fees compared with FBA.

The disadvantages can include

• A greater workload, since you have to handle logistics and customer service yourself, as well as
• Potentially less visibility on Amazon, since FBA products are often prioritised in search results
• Customers tend to prefer products that are fulfilled by Amazon.

How many markets can you sell in?

Amazon has marketplaces in different countries, which gives sellers the opportunity to reach a global audience. As of September 2021 Amazon had 17 marketplaces, but be aware that this number can change over time, as Amazon continues to expand globally. These marketplaces include:

1. USA
2. Canada
3. Mexico
4. Brazil
5. United Kingdom
6. Germany
7. France
8. Italy
9. Spain
10. The Netherlands
11. Sweden
12. Poland
13. Turkey
14. The United Arab Emirates
15. India
16. Japan
17. Australia

By selling on these marketplaces you gain access to a considerable number of customers from different regions and cultures. It is important to consider, however, that each marketplace has its own rules, taxes, laws and consumer preferences. It may be necessary to adapt your business strategy, product descriptions and marketing efforts to accommodate these differences.

In addition, there are fees and costs associated with selling on several marketplaces, such as currency conversion and taxes. It is important to research and understand these costs before you decide to expand your business globally on Amazon.

What types of businesses do we see on the platform?

There is a wide range of business types that can find success selling on Amazon. But some categories and business models tend to be more successful on the platform than others. Here are some examples of business types that typically succeed on Amazon:

Niche products:

Companies that sell unique products within a specific niche can experience great success on Amazon. This is because they are able to meet a particular demand and have fewer competitors in their segment.

Private labels:

Companies that create and sell their own brands can succeed on Amazon, since they can differentiate their products from the competitors and build a loyal customer base.

Products with high demand and low competition:

Companies that sell products in categories with high demand and low competition can have greater chances of success on Amazon, since they can benefit from the large customer base and gain greater visibility.

Companies with a strong brand and unique products:

Companies that have built a strong brand and offer unique, high-quality products can stand out from the competitors and achieve success on Amazon.

Companies specialising in products with repeat purchases:

Products that require regular replenishment or replacement, such as consumables, cosmetics and household items, can succeed on Amazon, since customers tend to come back for repeat purchases.

Seasonal products:

Companies that sell seasonal products, such as holiday decorations, summer equipment or winter clothing, can experience great success on Amazon, since demand for these products can be very high during certain periods.

It is important to note that success on Amazon is not guaranteed and depends on many factors, such as competition, product quality, marketing, customer service and pricing. Different companies and business models can experience varying degrees of success on the platform.

Which factors are important for a successful presence on the platform as a seller?

Success for sellers on Amazon depends on a number of factors, which can vary depending on product type, category and competition. Here are some of the most important factors that can affect a seller’s success on Amazon:

Product quality:

Offering high-quality products is crucial for building a good reputation and attracting positive reviews from customers. This can lead to greater visibility and increased sales.

Pricing:

Competitive pricing is important for attracting customers and standing out from the competitors. Consider researching prices from competitors and finding a balance between profitability and competitiveness.

Product images and descriptions:

Clear, professional images and detailed, accurate product descriptions are crucial for giving customers the confidence to buy your products. This can also help reduce returns and negative reviews.

Keyword and search engine optimisation (SEO):

Optimising your product pages with relevant keywords and SEO practices can improve your ranking in Amazon’s search results and increase the visibility of your products.

Customer service:

Excellent customer service is crucial for building a loyal customer base and getting positive reviews. Make sure to answer customer enquiries quickly, handle problems professionally and follow Amazon’s policies for returns and refunds.

Reviews and ratings:

Positive customer reviews and high ratings are important for building credibility and trust with potential customers. Consider encouraging satisfied customers to write reviews and addressing any problems that lead to negative reviews.

Advertising and marketing:

Investing in advertising and marketing campaigns, such as Amazon Sponsored Products and Amazon Advertising, can increase the visibility of your products and drive traffic to your product pages.

Inventory management and shipping efficiency:

Having sufficient stock levels and efficient shipping processes is important for ensuring fast delivery and avoiding stockouts. This can affect customer satisfaction and reputation.

Differentiation and unique value:

Offering products that differ from the competitors and deliver unique value can help you stand out and build a loyal customer base.

Compliance with Amazon’s policies and rules:

Complying with Amazon’s policies and rules is crucial for avoiding sanctions, suspension or closure of your seller

Checklist to prepare you for Amazon

Here is a checklist you can use to prepare for selling on Amazon:

Research and product selection:

Identify the demand and competition for potential products, and choose products that have the potential for success.

Sourcing suppliers:

Find reliable suppliers or manufacturers for your products, and negotiate prices and terms.

Building a brand:

Create a strong brand by developing a brand name, logo and a coherent visual identity.

Company registration:

Register your business, and make sure to meet all legal and tax requirements in your country and the countries you plan to sell in.

Creating an Amazon seller account:

Register for an Amazon seller account, and choose the right subscription plan for your needs. Read more on their page: Start selling on Amazon

Deciding on a fulfilment method:

Choose whether you want to use FBA (Fulfilment by Amazon), FBM (Fulfilment by Merchant) or a combination of both to fulfill your orders.

Preparing product information:

Write detailed product descriptions, take high-resolution images and find relevant keywords to optimise your product pages.

Pricing:

Carry out a competitive analysis in order to set a competitive price for your products that also ensures profitability.

Inventory management:

Plan your inventory management, and make sure you have sufficient stock levels to meet demand.

Shipping strategy:

Establish an efficient shipping strategy that includes shipping costs, delivery times and any international shipping restrictions.

Customer service plan:

Develop a plan for handling customer service, including answering customer enquiries, handling returns and solving problems.

Advertising and marketing:

Plan advertising and marketing campaigns to increase the visibility and sales of your products on Amazon.

Compliance with Amazon’s policies:

Review and follow Amazon’s seller policies and guidelines in order to avoid sanctions or suspension of your account.

Monitoring and optimisation:

Monitor your sales performance and use data to continuously optimise your product pages, prices and marketing efforts in order to increase sales and profitability.By following this checklist you can prepare thoroughly for selling on Amazon and increase your chances of success on the platform.

14 mistakes you should avoid

Many sellers on Amazon share their successful experiences, but it is important to acknowledge that there are also stories of challenges and failures. To help you navigate your own journey as an Amazon seller, we have collected a list of 14 mistakes other sellers have experienced:

Poor product selection:

Avoid choosing products with low demand, high competition or poor quality, as this can lead to low sales and a negative customer experience.

Ignoring Amazon’s policies and guidelines:

Violating Amazon’s policies and guidelines can result in sanctions, suspension or closure of your seller account. Make sure to read and comply with all rules and requirements.

Inadequate product presentation:

Poor product images and unclear, inaccurate or incomplete descriptions can put customers off and affect your sales performance. Make sure to present your products professionally and in detail.

Lack of keyword optimisation:

Without correct keyword optimisation, your products can have low visibility in Amazon’s search results. Make sure to use relevant keywords and SEO practices to increase the visibility of and traffic to your product pages.

Poor customer service:

Neglecting customer service can lead to dissatisfied customers, bad reviews and damage to your reputation as a seller. Prioritise fast and professional customer service in order to build a good reputation and attract positive reviews.

Lack of competitive pricing:

Prices that are too high or too low can put customers off and affect your profitability. Analyse the competitors’ prices and set a competitive price that maintains an appropriate profit margin.

Inattention to inventory management and shipping:

Failing to manage stock and shipping processes can lead to delayed deliveries, stockouts and dissatisfied customers. Make sure to have sufficient stock levels and efficient shipping processes in order to ensure a good customer experience.

Insufficient marketing efforts:

Failing to invest time and resources in marketing and advertising can limit your product’s visibility and sales. Consider using Amazon Sponsored Products, Amazon Advertising and other marketing channels to increase exposure.

Not responding to negative feedback:

Ignoring negative feedback can lead to a poor reputation and put potential customers off. Take the time to respond to and resolve customer experiences in order to improve your brand and customer satisfaction.

Poor competitive analysis:

Failing to analyse the competitors can mean that you are not aware of the market dynamics and possible opportunities or threats. Ongoing competitive analysis can help you adjust your strategy and gain an advantage in your niche.

Not monitoring and adjusting your strategy:

Failing to monitor your sales performance and adjust your strategy can lead to stagnation or falling sales. Use data and analytics to continuously optimise your product pages, prices and marketing efforts in order to increase sales and profitability.

Lack of product diversification:

Focusing on a single product or a single product category can make your business vulnerable to market changes and competition. Consider diversifying your products in order to spread the risk and increase earning opportunities.

Expecting immediate success:

Expecting immediate success on Amazon can lead to disappointment and poor decisions. It takes time and commitment to build a successful business on Amazon, and it is important to be patient and work consistently on improvements.

Ignoring local laws and regulations:

When you sell in international markets, it is important to comply with local laws and regulations, including tax requirements and product standards. Failing to do so can lead to fines, lawsuits and damage to your reputationBy being aware of these additional mistakes and avoiding them, you can increase your chances of success and build a sustainable business on Amazon.

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