FBA is an easy business to get started in – for some people, too easy. While we’re firmly of the mind that you should get started right now, you do need to do some thinking and planning before you take action.
We’ve been asking around to find out what FBA sellers think was their worst mistakes – the kind where they say “Don’t ask me how I know that.” We hope their lessons learned will stop you from making the same mistakes!
• Ordering way too many items nearly sank one FBA seller’s business – paying huge money out for the stock, and then paying extra Amazon storage fees. Don’t order five times what the top existing seller shifts in a year. Making a big order can be exciting, but manage your risks properly.
• “Christmas stuff,” one seller said. The problem with holiday seasonals is that once the holidays are past, you have eleven months coming with stock in the warehouse, and no sales. Now, she does holiday offers, but on regular merchandise that will also sell the rest of the year.
• Picking a product that’s hyper-competitive. “I picked a great, really trendy product,” said one seller. “The only problem was everybody and his dog was already selling it.” A competitive market won’t let you gain the top spot and won’t let you charge decent prices. Make sure you research your market properly.
• Leaving money on the table. “Now, I negotiate,” said one seller. “When I think of the prices I paid suppliers on my first few orders, it nearly makes me cry.” Always negotiate, whether you’re negotiating for a better price or for the same price with better features.
• “My shipping costs came in double what I’d expected.” That seller was lucky not to have her business plan wrecked. Not sweating the detail on shipping costs can leave you making great sales but no profit. Particularly if you buy from China or another offshore destination, shipping can be a major cost, and you need to wise up fast – or find a broker you can trust.
• “The supplier delivered such poor quality I had a stream of returns in the first few months.” Getting bad reviews can kill your product and your business stone dead. This seller was lucky to survive – and now quality checks product obsessively. You’ll also want to be sure you specify exactly what quality is required when you order – don’t leave anything to chance, put it in the contract.
• “I was really only providing a me-too product and my sales didn’t take off till I redesigned it to offer more value-add.” If all you’re doing is selling the same as the next guy, you might do okay but you won’t really breakthrough into the big time. Spend time looking at reviews, finding customers’ pain points, and thinking how you can offer something better.
• “I did okay on initial sales, but I wasn’t getting reviews. On my second product, I included a ‘please review me’ message with the product pack, and it worked. Sales were much, much better.” Remember that Amazon is a network, and social proof is one of the major motivations for sales.
• “I wish I’d known how to use ads. If I’d used PPC I reckon I’d have sold out my inventory in two months, not a year, and I’d be way ahead of where I am now.” Even if you don’t have a lot to spend, just earmarking 10 percent of your profits for reinvestment can make a huge difference.
• “Unfortunately, I have to say ‘I fought the law, and the law very nearly won,” admitted one seller. Fortunately, sometimes Amazon will give you a warning if you’re breaking the rules, and give you a little time to make the necessary changes – but not always. A close brush made this seller check up on the terms of business very carefully before launching his next product.
But all these are problems you can do something about. There is, however, one certain way to fail at being an FBA seller – and that’s not to get started in the first place!