Top 6 Problems Faced by Newbie Amazon Sellers
Amazon is one of the biggest marketplaces and go-to destinations for both sellers and buyers. As an Amazon seller, you’ll get an opportunity to expand your consumer base, cut down on your infrastructure costs, and hence increase your profitability.
But despite these benefits in the marketplace, there are some key challenges that sellers face while establishing their businesses on Amazon. In this blog post, we’ll discuss some challenges that newbie Amazon sellers encounter and also discover possible ways to overcome them.
Most Common Issues Encountered by New Amazon Sellers:
New Amazon sellers are bound to encounter several challenges. Let’s delve into the details of these problems and learn how to overcome them while setting up your Amazon business.
Delayed Profitability:
One of the major challenges for new sellers on Amazon is managing their cash flow. When you make a sale on Amazon, you will receive your payment after 2 weeks and won’t get instant payment after selling your products. As a result, you need to arrange funds to avoid inconvenience to your customers and suppliers during the 14-day waiting period.
But once you start earning enough profit, you will have funds to manage your cash flows. Until then, we suggest newbie sellers use an alternate source of funding to provide payments to suppliers and ensure that the inventory is maintained regularly for customers.
You can do the following things to improve your cash flow:
- Review your budget for cost-cutting
- Increase your margins
- Offer discounts or promotions to encourage customers to buy
- Analyze Amazon payment schedules
- Negotiate with your suppliers
Tremendous Competition
According to Marketplace Pulse, “Amazon Marketplace boasts a whopping 9.7 million total sellers worldwide, incorporating 1.1 million sellers from the US.” Also, every day, more than 3,700 sellers join Amazon actively, which leads to intense competition for sellers globally, especially newbies. The excessive competition when there is little product differentiation makes it challenging for the new sellers to gain a share of the market.
However, to stay ahead of the game, optimizing your listing and boosting your search rankings on Amazon’s search engine is important. You can try the following techniques to increase your visibility:
- Optimize your listing with relevant keywords and SEO-based product descriptions
- Enhancing brand content and incorporating high-quality images
- Run advertising campaigns
- Earn positive customer reviews
- Competitive Pricing
- Join Amazon FBA (Fulfillment by Amazon)
Amazon Price Wars
We’ve just understood how excessive competition impacts newcomers. Now, let us talk about another aspect of intense competition, which is price war. A price war happens when competitors, two or more sellers of the same product, continuously lower the price of their products. They can do so to offer the least-expensive deal, to capture maximum market share, or to get a buy-box.
When new sellers try to lower their prices to fight their competition, they may end up eating their profit margin and suffering losses. Also, this will make customers suspicious of the quality and reliability of the products when the prices drop significantly. To overcome this, it is suggested to utilize algorithmic AI repricers that will help you optimize your listing prices and gain a competitive edge in the marketplace.
Customer Reviews and Feedback Management:
Customer reviews and feedback are one of the most crucial factors in Amazon’s ranking algorithm. If you want to stay in the market for a long time, you should go out of the box to get reviews from your customers. It is because if your product has no or fewer reviews, it will appear unappealing to customers, which can cause them to scroll away from your products.
As a new seller in the marketplace, it’ll be tough to attract the customer’s attention and get reviews.
However, you can build credibility and get organic reviews by paying attention to the following aspects:
- Provide a seamless experience for your customers
- Good-quality product
- Engage with your customers
- Handle negative reviews, if any, strategically
- Sending after-sales emails
- Use Amazon review services
Amazon’s Strict Guidelines and Policies
Being a customer-focused company, Amazon has established clear and strict laws and standards for its sellers that they must comply with. You should comply with the Amazon guidelines, as failure can lead to the suppression of your product pages, the suspension of your account, or even termination.
As an inexperienced user, it may seem intimidating at first, but by carefully studying and understanding Amazon’s laws and procedures before creating your account, you may steer clear of such problems.
Remember that Amazon has offered comprehensive guidelines on several topics, such as product limitations, brand registration, marketing, and content infringement. Therefore, you must conduct a detailed analysis to avoid any issues with your business.
Inventory Management:
For any seller on Amazon, inventory management is crucial. If you have too much inventory, it might result in high storage expenses and fines from Amazon, and with too little inventory, it can cause lost sales and bad customer feedback. To avoid such problems, sellers must maintain a balance between having too little and too much inventory.
Amazon is an online store that depends on satisfied consumers and fast order fulfillment; failing to meet their criteria will cost you money in lost sales, negative reviews, and possibly even account suspension. You can use the following tactics to manage your inventory:
- Keep a close relationship with your supplier
- Maintain around 60 days of supply
- Reduce over inventory
- Utilize inventory management software
Final Words
Apart from the issues mentioned above, a newbie seller might also face shipping and fulfillment issues, package restrictions, problems with Amazon fees, and expenses. Nevertheless, with strategic planning, the right tools, and a competent team, it is possible to overcome all these obstacles and build a highly profitable business on Amazon.