Published March 13, 2019

Pitfalls of Selling on Amazon (And How to Overcome Them)

Amazon spans a vast audience that it’s hard to miss your marketing targets, unless you’re selling items that no one cares to buy. As long as you can find a product to sell with realistic, competitive margins then you can make it.

As an FBA Amazon seller myself, I’ve done a lot of research and compiled a lot of horrifying stories about telltale signs of Amazon gradually becoming saturated, the pitfalls as an FBA seller and the solutions and various workarounds to counteract these setbacks. Nowadays, we have a myriad of Amazon tutorials, tools and resources at our fingertips to help drive private label selling to unprecedented levels.

Even as we speak, Amazon is being flooded by copycat sellers. These are vendors that have no originality and hardly have any meaningful sense of selling ethics at all. We are not there yet, but these are telltale signs of an impending chaotic market situation in the future.

To better identify where we are in the transition, I talked to a number of high ranking Amazon sellers and other online business owners who gladly shared their thoughts with me. Their advice is to do either one of two things:

  • Ride the tide while it’s high. Get everything you can get out of Amazon while the going is good
  • Don’t put all your eggs in one basket. Diversify some of your capital out of Amazon and into your personal branded platform

I tend to take a safer approach to things so I chose the second option – it’s a personal preference, really, but one that is backed by a valid reason: the outlook may be great at the moment, but circumstances can take a sharp turn for the worse without a warning. So it’s important to have a Plan B or even a Plan C, just in case.

The consensus among experts is that you need to set aside a quarter of your capital and use it for your own branded website. Otherwise when that thing hits the fan, you would have lost everything you’ve worked so hard for.

You could get banned from Amazon for no apparent reason and without warning

Here’s what many sellers have to complain about Amazon. One moment you’re on a roll, making big sales and profits. The next moment you’re out of the game, dazed and not even knowing what happened.

Amazon’s number one reason for banning a seller negative feedback around non-compliance of product quality standards (like selling fake items) or getting a series of negative feedback. What’s interesting is that some unscrupulous sellers pay certain accounts to buy from a competitor and then leave negative feedback, to the detriment of the competitor’s reputation.

One vendor I spoke to confided that they have made a little over a million dollars in profits over the last couple of years. And then without a warning, they’re suddenly out of business after receiving a flood of feedback accusing them of selling inferior or counterfeit products.

On Amazon, this can happen so quickly. That’s why it pays to have a diversified source of revenue, and not just depend on Amazon. Even if you’ve followed everything by the book, there’s nothing that protects you from accusations of policy violations (valid or not) that can lead to the closing of your account, ridding you as a competitor.

Beware of copycat sellers

So you’re doing great during your first year as an FBA seller. But beware of unscrupulous vendors with a knack for hijacking your product descriptions and photos and using them to sell items that compete against yours.

When you bring this matter up with Amazon, all they can tell you is you need to present more proof and documentation to back up your allegations. What this means is you need to convince Amazon that you are in fact the owner of those pictures and description.

To present to the kind of documentation Amazon wants can take days or even a week. How do I know? Well, because this sort thing happened to me during my first year as a budding entrepreneur. Fortunately I was able to get in touch with the seller. After a lengthy but civilized talk with them they took down my photos and descriptions.

Beware of large purchases. It could be some unscrupulous seller trying to squat on your inventory

Amazon has become a cutthroat environment where everyone seems to be resorting to some kind of underhanded tactics to channel sales towards them, at the expense of honest, hardworking vendors.

An example of this is when a bad seller  soaks up your inventory and siphon off your revenue into their pocket. This is how it happens:

  • They will pose as buyers or have someone buy your goods in bulk.
  • They will then resell the goods they bought from you, and in the process snatch away your buy box
  • Any excess inventory the buyer failed to sell when the season has ended will simply be returned to you

With Amazon so slow at responding to seller complaints, you are left with a limited course of action. One thing you can do is to be on your guard when you receive large orders. Another thing is to dispute large return of items.

Final thoughts

Despite all these underhanded seller schemes being brought to Amazon’s attention all time, it seems Amazon is simply content at biding their time, as if the mere lapse of time will by itself correct the wrong done to honest sellers.

That said being said, it is not surprising that even FBA seller refunds for goods that have been lost or damaged in Amazon warehouses are slow in coming if at all given.

If you have been disillusioned by all this, and if your request for reimbursement from Amazon has fallen into deaf ears, there is someone who can give you the right advice and assistance you need.

Should you be unable to cope with the task of collecting or keeping track of your reimbursements from Amazon, Seller Investigators can collect this money for you in a fast, expedient and risk-free manner so you can give your growing business the full attention it deserves.

Recent Posts