Starting a new online retail business has become increasingly popular thanks to various platforms offering easy access to a global marketplace. Amazon’s popularity and dominance have made it a top choice for sellers regarding potential sales and opportunities. However, despite the prospects, selling on Amazon has its challenges.
Luckily, new Amazon sellers can use this guide to discover the common issues they’ll likely face and the necessary solutions to overcome them.
What issues can a startup Amazon seller encounter?
Although Amazon offers enticing offers for its sellers, it’s certain that the road won’t always be smooth. New businesses, in particular, will likely go through various roadblocks and challenges on their path to Amazon success.
Here are some of these challenges that may stifle a startup Amazon seller’s efforts:
Issue 1: Slow incoming profit returns
New Amazon sellers may face a challenge with slow profits at the beginning. Why? Because Amazon pays sellers every fortnight, making it difficult for them to keep a steady inventory. Things get even worse when the new sellers use the revenue from orders to maintain their inventory, resulting in a further lack of profit or inventory disruptions.
Issue 2: Brutal competition
Millions of sellers crowd the Amazon marketplace, creating intense competition. This high number of sellers constantly striving for sales makes it challenging for new businesses to avoid hyper-competition. As a result, penetrating the market to make a profit can be problematic for these sellers.
Issue 3: Amazon seller price wars
In the highly competitive Amazon marketplace, sellers often use price wars to secure the buy box. However, inexperienced sellers often try to beat their competition by offering lower prices to win the war. But this approach leads to even more problems like lower profits and reduced profit margins.
Issue 4: Getting feedback from buyers
Amazon’s algorithm considers customer feedback and reviews a ranking factor, making it an essential aspect new sellers must conquer. However, Amazon made some significant changes to its review policy following some alleged review manipulation.
As a result, Amazon now prohibits sellers from directly soliciting reviews in exchange for free items or incentives. Even though Amazon allows incentivized reviews through the Amazon Vine program, it can still be a hassle for new sellers to get critical reviews from buyers.
Issue 5 : Breaking strict restrictions and policies
Amazon has established strict community guidelines that cover various aspects, like eligibility, promotions, commercial solicitations, and content infringement. However, one that often blocks new sellers is Amazon’s product restrictions, preventing them from selling certain items on the platform. Unfortunately, breaking such policies may lead to account suspension or total termination.
5 essential tips to help counter these issues
Solution 1: Use alternative sources of funding
No doubt, a newbie Amazon seller can make huge profits from their first sale(s). However, the fact still remains that Amazon pays every fortnight, which can be unfavorable for sellers that invested their entire savings as their capital. But, with alternative funding sources, sellers can overcome the slow profit returns.
By exploring options beyond their Amazon revenue, like loans, or credit lines, they can access additional funds to bridge the gap between their expenses and incoming profits.
Also, having access to alternative funding ensures a consistent cash flow. New sellers can proactively invest in inventory, securing a steady supply to meet customer demands. It will help mitigate the risk of inventory disruptions and allow sellers to leverage sales opportunities or expand their product offerings.
Moreover, sellers can also get financial flexibility from using separate funds. Instead of being tied to revenue generated from Amazon sales, they can experiment with new product lines or invest in marketing campaigns to drive sales.
Solution 2: Leverage Amazon organic search optimization
The competition is always brutal for new sellers who may be struggling to become visible in the large marketplace. However, new Amazon sellers can focus on organic search optimization to gain the necessary boost to beat the competition.
Thankfully, the techniques needed for this solution involve optimizing product listings for organic search results. New sellers only need to incorporate relevant keywords strategically, optimize product titles/descriptions, and enhance product images to improve their chances of attracting organic traffic.
When sellers optimize their listings effectively, they increase the likelihood of appearing higher in search results for related products. The boosted visibility can drive more traffic to their product pages, allowing them to outshine competitors potentially.
Moreover, Amazon’s algorithm rewards listings that receive high click-through rates and conversions with improved search rankings. In other words, delivering a compelling listing that appeals to customers and encourages them to purchase can help new sellers improve their organic search rankings.
Solution 3: Capitalize on effective repricing tools
The Amazon seller price wars are terrible for newbie sellers, but there’s an easy way around this. New sellers can use repricing tools to stand a chance at avoiding price wars without sacrificing profit levels.
Repricing tools like informed, Aura, Seller snap, etc., offer specific solutions to help sellers automatically adjust product prices based on market conditions and competitor pricing. As a result, new sellers can dynamically and intelligently optimize their prices in real-time to stay competitive and profitable,
Instead of racing to the bottom by continuously lowering prices, new sellers can use repricing tools to set strategic pricing rules. In addition to the previously mentioned competitor pricing and market conditions, these rules also consider sales velocity, inventory levels, and desired profit margins.
One of the best repricing tools new sellers can use to avoid unreasonable and less profitable repricing strategies among the rest is Seller Snap. Its advanced technology detects competitors’ behavior and makes customized price adjustments to outshine them.
Solution 4: Prioritize good customer service
Getting feedback from customers can be a big hurdle sometimes. And even when they do give feedback, it may be negative or not what sellers expect. However, instead of relying on direct solicitation, sellers can prioritize providing exceptional customer experiences, naturally leading to positive reviews and feedback.
Offering excellent customer service not only helps to exceed customer expectations but also builds a reputation for reliability and satisfaction.
Here are some tips new sellers can follow to ensure their customer service is top-notch:
- Provide prompt and clear communication: Responding quickly and effectively to customer inquiries or concerns, demonstrates attentiveness and professionalism.
- Ensure product quality: Delivering high-quality products that meet or exceed customer expectations helps foster positive experiences and encourages positive feedback.
- Offer hassle-free returns and refunds: A customer-friendly return policy instills confidence in buyers and reflects a commitment to customer satisfaction. Be ready to take the loss and save your integrity.
- Personalize the shopping experience: Going the extra mile to personalize interactions and demonstrate genuine care for each individual customer enhances their overall experience and increases the likelihood of positive feedback.
- Encourage feedback: Politely requesting feedback from customers after a purchase, without directly soliciting reviews, can generate organic and voluntary reviews.
Solution 5: Do proper product research
Amazon is incredibly customer-centric, placing strict policies and guidelines that may stifle a new seller’s envisioned business. However, all hope is not lost as sellers can avoid getting into trouble by thoroughly researching before selling any products on Amazon.
Moreover, conducting proper product research involves following several key steps.
- Understand Amazon’s policies: Sellers must familiarize themselves with Amazon’s guidelines, restrictions, and prohibited items list. That way, they can identify products that may pose compliance issues, avoiding them early enough.
- Conduct market analysis: Evaluate the demand and competition for potential products. It includes assessing sales rankings, customer reviews, and competitor listings to gauge the market viability and competition level.
- Verify product restrictions: Before listing a product, check for any specific associated restrictions or requirements. New sellers can do this through Amazon’s Seller Central or by contacting Seller Support for clarification.
- Check category-specific rules: Different product categories on Amazon may have specific rules and regulations. Ensure you thoroughly understand and adhere to these category-specific guidelines when choosing what to sell.
- Monitoring policy updates: Stay informed about policy changes and updates from Amazon. Regularly review Amazon’s communications, seller forums, and support resources to ensure compliance with new or revised policies.
The above steps allow sellers to navigate the platform responsibly, maintaining a good standing with Amazon, and avoiding penalties like account suspension or revenue loss.
Achieving financial freedom through selling on Amazon requires patience and perseverance. By leveraging the solutions mentioned above and by having realistic expectations, new sellers can pave the way for a thriving Amazon business.
Remember that it may take time to establish a brand, optimize listings, and build a loyal customer base. But with the right mindset and commitment to continuous growth, startup sellers can stay focused, continuously adapt to market trends, and embrace opportunities that arise.