18 Most Expensive Mistakes Amazon Sellers Should Avoid

June 13, 2024 what are common amazon fba seller mistakes to avoid?

Amidst handling operations, listings, and marketplace management, it’s easy to make mistakes that can affect your bottom line. 

You’re not alone!

Besides, if you’re new to Amazon selling, expect a steep learning curve. 

Here at AMZ Prep, we ensure that all our clients are equipped with the right tools and strategies to grow their brand. So, we’ve compiled this list of the top 18 Amazon Fba seller mistakes that sellers should avoid to maintain profitability.

Here’s a peek into the topic:

  1. Account-related mistakes
  2. Product-related mistakes
  3. Inventory-related mistakes
  4. Fulfillment-related mistakes
  5. Pricing-related mistakes
  6. Listing and PPC-related mistakes

Let’s get started…

Account-related mistakes

  1. Violating Amazon TOS

One of the most common Amazon fba seller mistakes is violating Amazon’s Terms of Service. It could be related to any of their policies. Amazon will not think twice before suspending your account. You can still reinstate your account, but it’s not an easy task. 

How to solve it 

The first order of business for any Amazon seller is to ensure their seller central or vendor central account complies with Amazon’s policies and guidelines. 

  2. Wrong business structure

Most sellers start their Amazon FBA business under a sole proprietorship. As your business scales, you may want to look for other reliable business structures. 

Let’s say you upgraded from a sole proprietorship to a Limited Liabilities Company (LLC). The change impacts your business’s financial and legal frameworks, requiring meticulous attention to compliance. You should carefully navigate this transition and update your Amazon seller account. In case you fail, you will jeopardize your ability to sell on the platform. 

How to solve it

It’s crucial to thoroughly understand and comply with Amazon’s guidelines and adapt your business for seamless operations. Ensure you have all the necessary documents in place beforehand.

  3. Opening multiple Amazon accounts without permission

This is one of the simple Amazon FBA mistakes that can potentially lead to your account suspension. 

Amazon is very clear about its one-account policy. Opening multiple seller accounts is prohibited, and doing so can result in severe consequences. 

How to solve it

As I said before, sellers should operate within the guidelines and terms to avoid potential disruptions to their selling privileges and the overall success of the business.

If you’re planning to sell multiple brands under different accounts, you should check Amazon’s policies. Otherwise, you would walk away empty-handed.

Product-related mistakes

  4. Lack of Market Research

Many Amazon FBA businesses fail in the initial stage due to the lack of market research. It’s tempting to start selling a product out of passion. But it’s a recipe for disaster without research. 

Companies like Coke and Procter & Gamble use streamlined processes to research their target audience. For instance, Coke knows that people like to put 3.2 cubes of ice in a glass through its research. 

While you probably can’t track all the information, you should conduct market research to understand the niche, competition, customer needs, etc. 

That brings us to the next point…

  5. No customer persona

Many Amazon sellers fail to understand what their customers want. So, they end up with the wrong products, ineffective marketing communication, and irrelevant ads. Your product, ultimately, fails to connect with the target customers, hindering your sales growth. 

So it comes down to – How well do you know your customers?

To answer this, build your ideal consumer profile, determine their psychographics, and understand their pain points, needs, and preferred social media platforms. This process helps you analyze their behavior, find patterns, and gain insights. You can use this information to expand your product portfolio and tailor your marketing strategies

  6. Ignoring competition

With over 9 million sellers, the competition is cutthroat on Amazon. Once you decide to sell a product, you should be aware of the competition. You will get a limited market share if multiple sellers sell the same product. You’ll even find it harder to expand your business. 

How to go about it

Before you dive head-first into the world of Amazon FBA, understand the basics – A unique product, price, competition, and customer. 

  7.  Sourcing low-quality products

You cannot scale your Amazon business with low-quality products. You can seek cost-effective options to sell, but you cannot compromise on your product quality as it can lead to negative consequences. 

Customers are likely to leave poor reviews, resulting in a damaged reputation and decreased sales. Amazon’s algorithms wouldn’t like products with low ratings and bad reviews, hampering your product visibility on the platform. 

How to solve it

To mitigate this, prioritize quality checks during the sourcing process. Ensure your products meet or exceed industry standards so you can safeguard your brand’s integrity. Remember that a good product leaves a positive customer experience, fostering trust and repeat purchases.

Inventory mistakes

  8. Overstocking and Understocking

Like it or not, managing inventory is one of your biggest Amazon FBA mistakes while selling on Amazon. You should maintain the right amount of stock to meet customer demand and avoid overstock and understock situations. 

With excess inventory in the warehouse, your long-term storage fees will rack up, which will eat into your profits. Besides, overstocked inventory would be obsolete and be “unsellable.”  On the other hand, understocking leads to lost sales opportunities. 

How to solve it

Forecast your customer demand using historical sales data. Additionally, regularly monitor inventory levels and adjust the stock based on trends. Use inventory tools and software that offer real-time insights to maintain an optimal balance. Be proactive in meeting customer demand and efficiently manage your Amazon FBA inventory.

  9. Your products run out of inventory

You’d face severe consequences if you ran out of stock on Amazon.

You will: 

  • Miss out on sales
  • Lose customers’ trust
  • Lose product rankings

If you’re an Amazon seller, arguably, the most significant consequence of running out of inventory is losing product rankings. When your rankings drop, the sales velocity of the particular product is negatively impacted. So, even if you restock, it takes a while before the sales momentum picks up. Meanwhile, your customers might turn to your competitors’ products. 

How to solve it

Set up automatic alerts for low stock levels to avoid stockouts and track your inventory closely. You can also use a buffer stock to help you cover for unexpected sales spikes to ensure a more seamless selling experience.

  10. Seasonality

Seasonal sales can be a great opportunity for Amazon FBA sellers. It can be a challenge, too. If you don’t plan your inventory for seasonal trends, especially Q4, you won’t be able to grow your business multifold. This would also hamper your IPI (Inventory Performance Index) score on Amazon. 

Ensure you plan your stock by factoring in seasonal demand and refrain from committing such common Amazon Fba mistakes. Adjust your sales forecast to prepare ahead.

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Fulfillment-related mistakes

  11. Expensive shipping charges

High shipping costs can quickly drive away your customers. Besides, your Buy Box share and customer reviews hinge on your shipping charges. While it can be tempting to levy expensive shipping costs for short-term gains, it can significantly harm your long-term success on Amazon. 

How do you go about it?

Plan your shipping costs and effectively price your products. More on that later.

 12. Choosing the wrong shipping partner

Successful Amazon FBA shipments demand meticulous planning and an understanding of Amazon policies. Handling logistics and shipment yourself to Amazon FBA can be tedious. So, you need an expert who can help you with what not to do with Amazon FBA, to stay in stock all the time and optimize your shipping costs. 

If you need an ideal Amazon fulfillment partner, AmzPrep has got you covered! We helped many top brands like Heinz with their Amazon prep and fulfillment services. You can check out our plans here.

  13. Other fulfillment issues

Miscalculating delivery times, canceling an order, missing logistics details, and packaging and labeling errors are potential Amazon Fba seller mistakes that you should know about. These are easy-to-avoid issues but can potentially escalate when unattended. 

How to solve them

Sellers should maintain high standards in terms of fulfillment. Ensure you have a streamlined fulfillment process in place to fulfill your products to the customer easily. 

Pricing-related mistakes

  14. Poor pricing strategy

Pricing is an integral part of your Amazon business. Pricing mistakes can result in revenue losses for your business.

When your product pricing is incorrect, two potential problems arise –

  • You lose money when your product price is too low
  • You get fewer or no sales when your product price is too high.

It’s good to have a price range you can play with and reap profits. For that, you should understand your business goals, research competition, calculate your costs, and set your prices accordingly. 

Another potential mistake is using a fixed pricing strategy.

Your consumers track product prices across multiple platforms. They want to get the best prices for the products they seek. To stay competitive and increase sales, you should constantly monitor your competition and set rules to automatically update your product prices. 

  15. Underestimating costs

There is no place for instinct in business. You can’t stay profitable if you underestimate your costs. You should always know your numbers because profit margins determine your business growth. 

Calculate your COGS (Cost of Goods Sold), operating expenses, taxes, additional expenses, and ad spend and effectively price your products. Use these inputs to estimate your overall profit margins. 

Alternatively, you can use Amazon FBA calculators out there to estimate your profit margins. 

Listing and PPC-related mistakes

  16. Listing mistakes 

One of the most common Amazon FBA mistakes are in Product Listing that can cost a fortune. In general, sellers make the following listing mistakes:

  • Not properly grouping the ASINs
  • Unclear or inaccurate product information
  • Including promotional information in the listing and images
  • Having colored backgrounds and watermarks in listing images
  • Ignoring Amazon SEO 
  • Poor keyword research

All the mistakes mentioned above can hamper your product visibility on Amazon. When the guidelines are not followed, Amazon may remove your listings. You can, however, avoid them with some knowledge and streamlined execution.

Also, Amazon SEO is an important step to get your products in front of your target audience. It helps you rank your products on the search results pages. 

If you’re new to Amazon, you should know that Amazon SEO and Google SEO are not the same.

  17. Customer feedback and rating mistakes

Navigating through competition, operations, and sales can be overwhelming. It’s easy to get lost as the Amazon marketplace moves fast. Amidst that, getting customer reviews is a constant battle for sellers. 

While Amazon’s communication guidelines allow you to request customer reviews, there are certain things that you can’t do. 

You can’t: 

  • Incentivize your customers to write reviews
  • Review your products or have your friends and family do it for you
  • Specifically, ask your buyers for positive reviews or request them to remove negative ones
  • Manipulate your reviews

Besides, do not disregard negative reviews from your customers. Negative reviews offer valuable insights about your product. Address your customer concerns and demonstrate responsiveness and commitment to their satisfaction. Use constructive criticism to refine your products, turning them into growth opportunities.

Reviews serve as social proof that can turn on-the-fence shoppers into buyers. Encourage reviews by ensuring your product delivers a positive experience to your customers. These experiences motivate customers to share feedback. Also, establish a system to consistently generate reviews for your products. 

  18. Amazon PPC mistakes

If you’re looking for incremental business growth, you should invest in Amazon PPC campaigns. However, advertising without defined strategies can impede your success in the marketplace and result in wasted ad spend.

Here are a few advertising Amazon Fba seller mistakes that sellers make:

  • Not investing in PPC
  • Inefficient spending on advertising
  • Wrong campaign structure
  • Running only auto campaigns
  • Targeting the wrong audience
  • Underoptimized and overoptimized campaigns
  • Failing to track and adjust bids, budgets, and campaigns
  • Overlooking the importance of compelling ad copy and engaging visuals
  • Lack of data analysis and A/B testing for optimization insights
  • Overspending without a clear strategy

To maximize advertising ROI on Amazon, you should strategize your campaigns based on your business goals and campaign objectives.

Bottom line

Running an e-commerce business is demanding and stressful. You need to focus on many areas like what problems do Amazon sellers face to ensure your business stays afloat. No matter how much you want to avoid, sometimes, Amazon Fba seller mistakes are inevitable. Don’t forget to learn from them and pivot your business success. 

Do you want to share any other Amazon Fba seller mistakes? Let us know in the comments.

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