March 2022 | April 2024 | 5 minute read | Product Information Management

Common Challenges Faced by Amazon Sellers—Tips for Newbie Sellers

The Amazon marketplace has become one of the go-to destinations for sellers who want to participate in the increasing success of the ecommerce industry. As the majority of consumers transitioned to online retail due to the pandemic, online sellers likewise expanded their brick-and-mortar stores to platforms like Amazon.

According to Marketplace Pulse research, Amazon adds over two thousand new Amazon sellers daily. As of last year, it is estimated that Amazon has over six million third-party sellers on its marketplace.

Why you should start selling on Amazon

Venturing into a business will require significant start-up capital.

This means that starting a new business venture requires an initial investment in order to begin operations until the initial investment has been recouped.

One of the reasons online entrepreneurs choose Amazon as their business platform is its low start-up costs. You can start with low cash upfront and source your inventory from nearby thrift stores or liquidation stores.

You are not required to purchase inventory items in bulk compared to traditional businesses normally transacting with major distributors or suppliers. Aside from the low initial investment, you can also take advantage of Amazon's popularity and millions of followers. Marketing your product on Amazon will not be that difficult compared to running your own website or physical store to develop your brand.

Typical problems sellers encounter on Amazon

There are countless reasons why you should start selling on Amazon. However, worth noting that on the other side of the coin, sellers often encounter some challenges during the early stage of their Amazon business. Here are some of the imminent difficulties you should anticipate if you plan to sell on Amazon.

1. Profitability is not instant

The Amazon marketplace is one of the most active marketplaces in terms of site visits and purchase transactions. However, this does not mean that success on Amazon is instant. You need to understand that before you become profitable on Amazon, you might have to deal with cash flow issues. Maintaining your inventory is one of the factors contributing to cash flow difficulties. Hence, it would be best to capitalize on product data solutions to help drive growth in your business.

However, such a concern of delayed profitability is not permanent. Significant profit will follow as you grow your business and improve your cash flow.

2. Amazon price wars

Since the marketplace is highly competitive, a price war is almost inevitable.

Price wars refer to Amazon sellers' unreasonable price slashing to steal customers from competitors or increase their market share. An Amazon price war can be detrimental to any seller's profit margin. Although offering the lowest price can increase sales, there is no guarantee that you can maintain a healthy profit margin with this pricing strategy. To avoid this, top Amazon sellers utilize Amazon repricers to automate price adjustments while safeguarding their profit margin.

In particular, experienced and high-volume Amazon sellers rely on algorithmic AI repricers to enhance their listing prices while obtaining a competitive edge.

3. Strict product restriction and inventory guidelines

Amazon's strict product guidelines can sometimes stifle your envisioned business. You might find a promising item you would like to sell online, but Amazon might restrict you from doing so.

Amazon is known for its product restriction guidelines and firm adherence to product listing policies. Amazon prohibits specific items from being sold on their website, which can be a problem for sellers with limited access to inventory supplies. It is best to do thorough product research to avoid issues with your inventory. You can use a product research tool or service to help you find products that can generate significant returns.

4. Consumer-friendly return policy

Amazon is a customer-centered company that offers one of the most customer-friendly returns processes in the eCommerce industry. Thus, making their platform more appealing to online shoppers. However, since shoppers can now quickly return the product for almost any reason, it can be challenging for sellers to deal with multiple product returns. Not to mention the refund process and the removal order fees for returned items that are unwanted or damaged.

A lenient product return policy can be challenging for sellers on both the physical and financial aspects of a business. It is especially true when some online shoppers take advantage of the return policy to the point of committing fraudulent product returns.

5. Amazon fees and expenses

If you are not careful enough in choosing products to sell on Amazon, your profit might end up merely paying for the Amazon fees. It would be best to recognize that having an Amazon business entails dealing with Amazon fees and so-called hidden fees. Moreover, fees may vary depending on your marketplace of choice and the listed product. Hence, it is crucial to always check fees and other potential expenses before venturing into Amazon.

To help you check the profitability of items in relation to Amazon fees, you can use the Amazon FBA calculator for guidance.

6. Massive competition

One of the common concerns for sellers is a large amount of competition in the marketplace. Since numerous online sellers are expanding their businesses on Amazon, competition can be challenging. However, Amazon seller tools and strategies can help you improve your seller performance and increase your product visibility. Simply learn the process and get acquainted with these Amazon tools to penetrate the market.

7. Getting customer feedback

New sellers are having a hard time getting customer feedback or product reviews. It is especially true for newbie sellers whose brands are still relatively unknown in the marketplace. Feedback is a crucial metric evaluated by Amazon to improve your ranking and your chance of winning the Amazon Buy Box. Hence, you should learn helpful strategies to increase customer feedback.

You can always seek help

Success can be uncertain on Amazon; it might be unreachable for some sellers. However, like any other success story, your Amazon business also has the potential to grow with the help of third-party integrations and the use of reliable Amazon seller tools and services. When faced with complex issues or challenges, newbie sellers or even experienced ones should remember that available tools and expert advisors can assist you in building your successful Amazon business.

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Plytix PIM is a great place to start. When selling on Amazon, the quality of your product content plays a huge role in your overall success. This content is not a once-off either; it's forever changing to keep up with Amazon requirements and performance. By centralizing your information in PIM, you can easily manage and optimize content in real-time, to stay competitive and in Amazon's good books!

Frequently Asked Questions

Starting on Amazon can be cost-effective, but it's important to keep track of all possible expenses. Begin by using accounting software to monitor your daily operations costs, sales, and profits. When it comes to inventory, consider options that require less upfront investment, like dropshipping or sourcing from thrift and liquidation stores. Always use tools like the Amazon FBA calculator to understand the fees you'll pay when using Amazon's fulfillment services. This way, you can price your products wisely, ensuring that you cover all costs and maintain a profit margin. Also, keep an eye out for hidden fees and regularly review your Amazon fee statements to avoid any surprises.

Competing on price alone can be challenging. Instead of constantly lowering prices, focus on differentiating your products by offering superior quality, better customer service, or unique features that justify a higher price point. Use automated repricing tools to adjust your prices, but set a lower limit to ensure you don't sell at a loss. Also, by building a strong brand and cultivating customer loyalty, you can compete on factors other than price. Consider implementing pricing strategies that provide value to your customers, like bundled offers or exclusive deals, which can also help you stand out in the marketplace.

Amazon’s return policy is designed to instill trust and confidence in buyers, but it can be tough for sellers. To mitigate the impact of returns on your business, start by selling only high-quality products and ensuring that your listings are detailed and accurate to avoid mismatches between customer expectations and the actual product. Package items securely to prevent damage during shipping. If returns do happen, analyze the reasons to see if there are recurring issues that you can address. Also, maintain good communication with customers who have issues with their purchases to try to resolve concerns before they result in a return. Remember, building a positive relationship with customers can lead to better reviews and fewer returns in the long run.

Product Information Management, Amazon

Common Challenges Faced by Amazon Sellers—Tips for Newbie Sellers

Why you should start selling on Amazon