Becoming an Amazon seller has an unmistakable allure.
The rags-to-riches stories of Amazon sellers who turned a small investment into a recurring seven-figure salary are familiar. These stories play to our aspirational goals – to break away and build a flexible lifestyle that leads to more work-life balance.
Selling on Amazon world’s most popular side gig for a reason. Finding success on Amazon is more complicated than it seems. There are pitfalls around every corner, waiting to derail your promising store.
Let’s take a look at the eight most common mistakes new Amazon sellers must avoid.
Amazon Seller Mistakes
There are eight well-documented, and common mistakes Amazon sellers make:
- Creating products to solve problems that don’t exist
- Trying to compete directly against Amazon
- Not adhering to Amazon’s Seller Code of Conduct
- Mispricing products
- Automating marketing too soon
- Forgetting to collect state income tax
- Not understanding how shipping costs affect profit margins
- Failing to gather post-sale customer feedback
Amazon New Seller Mistake #1: Creating Products to Solve Problems That Don’t Exist
One of the cardinal sins of getting started selling on Amazon is to launch a product that solves a non-existent problem. One of the most infamous examples of this is the Juicero fruit juicer.
Juicero assumed people would buy special-made packets for their machine monthly on top of shelling out $400-700 for the device itself. To have some access to fresh juice that was available faster.
Well, it didn’t work. There wasn’t a problem there. People are happy to squeeze their juice, especially if they are health-conscious.
Don’t create a product that solves a problem that doesn’t exist. No matter how clever the idea may seem on paper.
Amazon New Seller Mistake #2: Trying to Compete Directly Against Amazon
As Amazon continues to experience astronomical growth, they’re selling more of their brand products. By selling products through Amazon Retail, they defeat the potential of competition. It’s a reality even for experienced sellers, much less for new sellers.
It’s always smart to see if Amazon Retail sells your product before putting money into a losing proposition.
Moral of the story: Do not try to be David to Amazon’s Goliath.
Amazon New Seller Mistake #3: Not Adhering to Amazon’s Seller Code of Conduct
Amazon’s Seller Code of Conduct is detail-packed. Amazon expects you to understand the Seller Code of Conduct inside out. If you do something counter to it, it’s not Amazon’s problem, and they will make it yours.
The Seller Code of Conduct outlines:
- How you can promote your business
- The number of accounts you can work within, and
- How you can offer product discounts
Ensure you give it a thorough read, so you’re intimately familiar with what Amazon expects of you as a seller.
Amazon New Seller Mistake #4: Mispricing Products
Determining the right price point for your products isn’t easy.
Your product will disappear from listings if you price it too high versus what your competition is offering. Also, Amazon will continuously reprice Amazon Retail offerings to be the category price leader. If your product is priced too high, Amazon will undercut you on price. If you price a product too low, you won’t be able to protect profit margins.
For price control, it’s easy to work with a service like Repricer Express or a similar repricer to monitor individual listings. These tools help you win the “Buy Box” more often and sell more products. These tools help you find a “sweet spot” price for your product.
Amazon New Seller Mistake #5: Automating Marketing Too Soon
Marketing can be a pain in the backside.
Creating content, crafting social media posts, developing an email list, organizing paid click campaigns, and soliciting buyer feedback can be exhausting to manage manually. These are time-consuming processes. Regardless, marketing needs to be hands-on for a while before the risk of automating becomes reasonable.
Marketing automation can be a powerful way to free up time to focus on other areas of your business. Just be careful not to do this until things are humming along, and you can afford to take some of the risks associated with automation.
Amazon New Seller Mistake #6: Forgetting to Collect State Income Tax
Tax liability is the responsibility of Amazon sellers regardless of whether you remember to pass on the cost burden to your customers.
It’s a common mistake Amazon sellers make to not charge their customers for sales taxes attached to the sale of products they have listed. The significant risk of not charging your customers for sales tax is the immense personal liability you’ll assume at tax time for the money owed to the states in which you operate.
No one wants a surprise balloon payment on tax day, and adding sales tax to the products you sell is the easiest way to avoid that.
Amazon New Seller Mistake #7: Not Understanding the Effect of Shipping Costs on Profit Margins
Shipping costs are an important X-factor to consider when setting a price for a product. It’s a good business practice to offer free shipping to your customers, if possible.
However, if you do so, you still need to recoup those shipping costs somewhere else.
This need will require you to either:
- Add a premium to the cost of your product to offset the offer of free shipping, or
- Offer a paid shipping option that’s less than most options to offset your costs upfront
Either way, 66% of Amazon shoppers expect free shipping – regardless of cart size – so for new Amazon sellers, it’s almost always worth offering, and figuring out how to protect your margins.
Amazon New Seller Mistake #8: Failing to Gather Post-Sale Customer Feedback
Customer feedback is central to ranking well for your products on Amazon. Without reviews, your products will languish behind competitors. Even if the feature set you provide is more innovative, and your product deserves more attention.
Amazon Seller Performance and Product Quality will check your products periodically to ensure you’re earning feedback, and the feedback is quality – i.e., you’re not faking reviews. It can be time-consuming to solicit feedback manually. Therefore, it’s probably worth it to find a platform to help you do it.
Selling on Amazon can seem intimidating when you’re first getting started. Pitfalls are waiting to make your experience a frustrating one, but these are easily avoided with some care, education, and continuous learning.
Don’t be intimidated! There are too many people making a great living selling on Amazon. Learn from their mistakes, and take careful steps to make your own experience smooth and seamless.
Kris Hughes is the Senior Content Creator for Austin-based product innovation platform, Gembah. Gembah helps SMBs and entrepreneurs confidently navigate the product creation life cycle and take innovative new products to market.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.