Top 5 Mistakes when starting Amazon FBA
A lot of beginners and intermediate FBA sellers can get stuck when trying to launch new products or increasing sales of their existing products. Are you a beginner too? Or do you already have a product or two listed on Amazon and want to improve your ranking? In this article, we will look at the top 5 mistakes that can cripple your Amazon business and how you can avoid them.
Mistake #1 : Picking a loosing product or niche
To make profit from your products, you need to invest initially into buying the product and getting it shipped (among other things). And when you’re making an investment, you wanna make sure that it’s as smart as possible.
You wanna reduce as many “factors of change” as possible. This means that you should not leave much or any scope for failure. Most beginner entrepreneurs create a product/service in a niche where there is no market demand or where they can’t differentiate themselves.
If you pick a wrong product/niche, your profits (if any) will be capped no matter how much money you spend on ad campaigns. You have to eliminate that ‘get rich quick’ attitude.
So spend a good amount of time going through the other “FBA niche research” video on the LivinThatLife channel and filter through your selection before ending up at a good product to launch. If you're interested in a complete tutorial on setting up your Amazon FBA business from scratch, check out The Amazon Method.
Mistake #2 : Not registering your brand
Not having your brand registered makes it easy for someone else to sell their products under your listing. So you may have some competitors selling the same product at a very low price under your listing. This will create a “race to the bottom” situation where the sellers will get stuck in a price-race that leads to no profit being made.
You can avoid all this hassle by registering your brand with Amazon so that they know you’re a genuine seller and are serious about your products.
This becomes much more important when you’re growing your business. Many sellers from abroad can see your hot product and choose the “Sell yours here” option on Amazon which will cut your sales down significantly. So it’s always preferred to go for the brand registry option if you want to sustain profits for the long term.
Mistake #3 : Resistance to feedback (analysing the data, what’s working, what’s not etc)
In his book “The Lean Startup”, Eric Ries talks about minimizing the time between getting your product out into the market and receiving feedback for learning and improving. This is crucial for not only tech startups but also for FBA sellers.
Once your product is listed on Amazon and you’re getting a few sales, you need to be all eyes and all ears. You have to observe how your customers are reacting to your product and maybe make a few changes that will improve their experience and also your own ranking on Amazon.
The “set it and forget it” approach only works after you have solid evidence (sales and reviews) from the marketplace that your product is in fact successful. And until you get to that point, you have to keep listening to your customers and keep improving your product/strategy.
Mistake #4 : Capital Management
Although it can take, on average, $1000 to launch your first product, it takes a considerably more amount of money to scale up and keep the show running. You will have to continuously replenish your inventory to make sure there’s enough stock of your product in Amazon’s warehouses.
You don’t want to end up in a situation where your product is a hit and you’re getting a ton of sales but you don’t have enough money to get the stock from the supplier. Not only are you missing out on the sales but you’re also running a risk of piling up customer frustration and possibly tainting your brand image.
Most sellers usually re-invest their profits into their business to get inventory, make changes etc. But as you scale your business by launching new products, running ad campaigns, creating your own website etc, you will find yourself needing more capital than you’d imagined. The solution for this depends entirely on you. You can get a business loan or get a few credit cards or use your savings or use your income from your day job etc.
Mistake #5 : Pricing Strategy (loosing the buy box)
Many people try to get initial sales by pricing their products very low and then increasing it as they get ranked higher on Amazon. This is a bit risky and has caused a lot of sellers to loose the “buy box” which is the default option of “Add to Cart” that customers get when buying your product.
So when you suddenly up your price, Amazon will move your product into the “other sellers” category which will not only give you lesser sales but also makes you incapable of sponsoring your products.
So it’s better not to shift up the price too much too quickly. You’re better off starting with an initial price that’s somewhere around your competitors’ price. Or, if you feel that you can distinguish yourself well from your competition, go for a higher price point. Customers will usually pay higher to get a higher quality product.
Other common mistakes
- Not running PPC ads or running bad ones
- Not following up with customers over e-mail and building a connection
- Not checking for patents or copyright possibilities
- Not managing your inventory properly
- Bad listing (description not detailed enough, shitty images, keywords in title etc)
For a complete step-by-step guide on how to get started with selling on Amazon, check out The Amazon Method course. You will find a lot of testimonials from people who got started with their first product on Amazon and are now making a pretty nice side income of $1000+ every month.