Navigating Amazon’s Challenges: Top 15 Challenges Faced by New Amazon Sellers
Embarking on the path of online selling? If so, you’re likely aware that Amazon is your ultimate destination. With a staggering 9.7 million global sellers and over 150,000 raking in annual sales exceeding $100,000, Amazon’s potential is undeniable in the eCommerce industry.
However, for newcomers, the Amazon terrain can be a source of anxiety. Achieving success here is both feasible and rewarding, yet it’s not without its trials. Navigating the intricate Amazon landscape demands not just courage, but also a profound understanding of its mechanisms.
Fortunately, every challenge has a solution, and that’s where we step in to guide you on this journey. We recognize that having a successful Amazon business requires a strategic approach. To simplify matters, we’ve segmented key areas that warrant your attention:
1. Revenue and Sales Performance
2. Listing and Product Management
3. Account Health and Compliance
4. Customer Service and Order Fulfilment.
As you delve into this resource, you’re taking the proactive step towards mastering Amazon’s complexities. Let’s dive in together!
1. Revenue and Sales Performance
Let’s not beat around the bush. Your goal as a business owner is to make profits, have a positive cash flow, and ensure that your efforts in the Amazon space result in positive revenue and sales. Here are the common challenges that you may face when it comes to your revenue and sales performance:
A. Buy Box Loss
The Amazon Buy Box is a section on the right side of an Amazon product detail page where customers can add a product to their cart with a prominent box that says, ‘Buy Now.’ This ‘Buy Now’ box on Amazon allows shoppers to make instant purchases from the product detail page.
But what would you want in a Buy Box? Only a few sellers can get the chance to obtain a Buy Box, and once you do, it can significantly boost your sales. Approximately 80% of Amazon sales are made through Buy Box purchases.
Losing the opportunity to be in a Buy Box can result from various factors, such as a poor seller rating, uncompetitive pricing, or inadequate inventory health. Maintaining a good seller rating is crucial for retaining your Buy Box. If you ever lose it, don’t panic. The first thing you can do is adjust your pricing. Be strategic about lowering your price to remain competitive, but avoid compromising your profitability.
Lastly, eligibility for a Buy Box requires a high inventory rating. Ensure that you have sufficient stock to fulfill your orders.
B. High Competition / Competition Overload
A frequent worry among new sellers is excessive competition in the market. With many online sellers expanding their operations on Amazon, the competition can be tricky.
Nonetheless, employing Amazon seller tools and having a full-fledged strategy can enhance your performance as a seller and boost the visibility of your products. By familiarizing yourself with these tools and learning the process, you can effectively enter and thrive in the market.
Such marketing tools can help you optimize how you run your business on Amazon and assist you in crucial decision-making situations.
C. Lack of Product Reviews and Amazon Feedback
Another thing to look out for is your Amazon feedback and product reviews. Reviews are a crucial part of success on Amazon. It helps you rank higher in Amazon’s organic search results and improve the conversion rate. So, your goal is to convert all your sales into positive reviews.
You may request a review manually or automate your requests through a third-party tool. However, you should care about more than just the number of reviews coming in but also the average rating of these reviews.
You would want your customers to give you a 4–5-star rating. For that to happen, many factors must be considered, such as accurate product listing, high product quality, good customer service, etc.
D. Amazon Price Wars
Given the prevalent excessive competition in the Amazon marketplace, it is natural for Amazon sellers to engage in price wars. This phenomenon is widespread among sellers vying for their products featured in the Amazon Buy Box.
Many inexperienced sellers attempt to win by undercutting their competitors and offering lower prices than the existing ones. However, resorting to such tactics would result in settling for reduced profits and lowering the profit margin.
E. Ineffective PPC and Advertising Campaigns
In the sprawling realm of Amazon commerce, the impact of ineffective Pay-Per-Click (PPC) and advertising campaigns can be felt like a missed opportunity echoing through the digital aisles. Picture this: your carefully curated products deserve the spotlight, and PPC campaigns act as the stage where they perform. Yet, if the curtains don’t rise right, your potential buyers remain shrouded in darkness.
Ineffective campaigns may burn through budgets without bringing the anticipated surge in clicks and conversions.
With Adbrew, the story of your PPC campaigns evolves from mundane to masterful. Our customizable and advanced automation software unburdens you from the nitty-gritty of your advertising efforts, allowing you to refocus your energies where they matter most – strategic decision-making and amplifying your brand’s resonance.
2. Listing and Product Management
Newbie sellers are likely to encounter several challenges concerning listing and product management. Amazon is strict with how it handles logistics from its sellers. Some challenges to look out for are listing suppression, FBA inventory management, and counterfeit and hijacked listings
By adhering to the policies set by Amazon, you can effectively tackle the difficulties associated with suppressed listings and develop your business on a path toward prosperity. From our recent blog, you may also learn more about suppressed listings and some tactics to maximize your visibility and sales.
A. Listing Suppression
Amazon listings become suppressed when they fail to meet Amazon’s standards and guidelines, causing them to be hidden from view. This common problem can severely affect your business by limiting product visibility, eroding customer trust, and ultimately impacting sales performance.
B. FBA Inventory Management
While Amazon may be accessible to many, navigating its strict adherence to policies and restriction guidelines regarding product listings can be challenging. The platform prohibits the sale of certain items, posing challenges for sellers with limited access to inventory supplies. To avoid inventory-related problems, it is advisable to conduct comprehensive product research. Utilizing a product research tool or service can be beneficial in identifying profitable products that yield substantial returns.
C. Competing with Counterfeit or Hijacked Listings
Whether you’re an experienced or new seller on Amazon, you may encounter the challenge of your listings getting hijacked. As your product gains traction, the likelihood of this happening increases.
If you are new to this and unaware of the possibility, it is better to be proactive and know what to do in these situations:
- Trademark your brand: Having legal backing instills confidence in your product’s presence in the market, protecting it from unauthorized use.
- Put your logo on your product and packaging: Even if trademarking is not an option, placing your logo enhances brand identity and recognition. This helps customers distinguish your authentic products from counterfeited ones.
3. Account Health and Compliances
So that Amazon can ensure its sellers meet the standards expected by customers, the company implements a strict metric called Account Health Rating (AHR), which measures a seller’s account health and categorizes it as either good or bad.
A. Account Health Concerns
If you are new to selling on Amazon, there are certain factors that you need to proactively manage, as they directly impact your Account Health Rate. These include negative feedback, order defect rate, late dispatch rate, and cancellation rate.
B. Sales Tax Compliance
Charging sales tax to buyers is a compulsory requirement for all merchants. Merchants are responsible for temporarily collecting these taxes and will later submit them to the appropriate local and state taxing authorities on a regular schedule, which can be monthly, quarterly, or yearly.
Being an Amazon FBA seller establishes a sales tax nexus in each state where your products are stored for resale. The sales tax nexus represents a significant connection for taxation purposes.
C. Intellectual Property (IP) Infringement
In hindsight, Amazon has no liability for any copyright infringement occurring on its site. However, it is responsible for implementing a mechanism for involved parties to be notified and for taking down product listings that are deemed to be infringing. There can be two sides to the story in this situation; either your copyrighted work is being used or sold by other sellers, or you violated someone else’s intellectual property.
What should you do if your product/brand is being used without your permission?
The first thing to do is to file an online report to Amazon.
The report contains:
- Your statement
- The description of your copyrighted work
- Evidence backing up your claim
What to do if you violate someone else’s IP?
If you are ever reported for a copyright violation, Amazon will notify you with a takedown notice, warning that your product listing is being removed from the platform. In such a situation, you may choose to contact the complainant and attempt to reach an agreement with them.
D. Dealing with Inauthentic Claims
If you are confident that the complaint against you was a mistake, you can respond directly to Amazon to demonstrate the authenticity of your product. The worst-case scenario is that your account may get suspended. If this happens, do not panic. You will need to submit a ‘Plan of Action’ to Amazon, explaining why you were selling copyrighted materials, your resolutions, and providing statements on how to avoid such incidents in the future.
To prevent intellectual property violations, be vigilant when creating your listings. Ensure that you are selling original products and use unique photos and descriptions. These precautions can help protect your account and ensure compliance with Amazon’s intellectual property rules.
4. Customer Service and Order Fulfilment
A. Shipping and Logistics Issues
Shipping is a massive part of the selling process for any Amazon seller. If you choose to utilize an FBA service, you should carefully consider the fulfillment costs of shipping your products, taking into account both shipping time and costs.
Effective inventory and tracking management is also crucial for the shipping process. As an Amazon seller, it is essential to monitor for overstocking and restock items accordingly. Additionally, providing customers with details about the whereabouts of their shipments is a key responsibility.
Another logistic challenge you should be aware of is stranded and unfulfillable inventories.
Stranded inventories are products occupying storage space in Amazon’s fulfillment centers but are not linked to any active listings in your seller account. Meanwhile, unfulfillable inventory refers to unsellable products due to damage, expiration, spoilage, or falling under restricted item categories.
B. Customer Service Challenges
Good customer service is a critical aspect of the success of an Amazon business. Effective communication and timely action are needed for any customer interactions.
Responding promptly to your customers’ inquiries goes a long way. It will help you address the issue before the customer escalates it through a complaint or a report. In case a buyer message remains unanswered for 48 hours, the Amazon customer has the option to initiate an A-to-Z Claim, leading to a high possibility of receiving a full refund, sometimes without the need to return the product. Make it a routine to visit your product listings on Amazon regularly, to monitor and review new customer feedback and reviews.
You can use Amazon seller tools such as Feedback Genius or FeedbackWhiz to monitor customer feedback and negative reviews in real-time. These tools not only notify you promptly but also enable you to respond swiftly, addressing customer concerns and showcasing your commitment to quality service.
C. Managing Returns and Refunds
In an online selling business, customer returns and refunds are likely to occur, no matter how much you try to prevent them.
For returns involving defective, damaged, or materially different items (when a seller misrepresents ‘the condition or details of an item in a way that affects its value or utility’), the seller must refund the original shipping costs and any shipping costs incurred to return the item.
However, if the buyer changes their mind within 30 days and wishes to return the item, you are only required to refund the item’s cost and the original shipping costs; you are not obligated to refund the cost of gift wrapping or cover the cost of return shipping.
Once a customer initiates a return for an item, you will receive an email notification informing you about the return request. The email will include the buyer’s stated reason for the return, and Amazon will also indicate if the reason falls outside their returns policy.
About the Author:
Ben Smith
Head of Partnerships, Seller Candy
Ben started working in the e-commerce space in 2016 and was hooked ever since. In the years since then, he learned the ins and outs of what it takes to build a successful Amazon brand. With his past experience as an Amazon Account Manager and 6-figure Seller, He has become passionate about helping Amazon Sellers and Agencies scale their business and achieve their goals. Today, he leads the Seller Candy partnership team and he spends his days chatting with businesses of all sizes to solve their Seller Central woes so that they can get back to growing their business.
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