You’re here to learn how to sell on Amazon in 2020. But before we round off this series with the most important strategies and tactics, let’s go over some of the risks of selling on Amazon. Give this a quick read to learn about the top 7 Amazon seller risks and how to tackle them.
We’re near the end of our series designed to show people how to sell on Amazon in 2020.
But before we move on to the final and most important piece of the puzzle – selling strategies –, let’s go through some of the risks of selling on Amazon. After all, every grand endeavor comes with its challenges.
The 7 Most Serious Amazon Seller Risks
Slow Payouts
Only the lucky few have a grandfathered account on Amazon. These Amazon sellers can ask for disbursements 24 hours after payment clears.
But if you’re not one of them, you’ll have to wait 14 days for Amazon to transfer the money you made to your checking account by direct deposit.
And you won’t get all of it either.
Amazon Reserves take 7 days from the maximum EDD to clear.
So, part of your earnings will always show up as Unavailable Balance.
Then there’s also the Permanent Hold.
If your account is suspended, Amazon can withhold your funds for 90 days or longer. More on this here.
Obviously, not having access to your earnings right away affects your liquidity. This then affects your stock levels, your selling price, your sales, your growth, and your overall performance.
Unfortunately, there are only 3 ways to deal with the payout delay, and they don’t all apply to every Amazon seller:
- Upload tracking numbers as soon as you have them.
- Set daily disbursements, if the option is available.
- Switch to FBA to avoid having too much money tied up with Amazon.
Hidden Costs
You could say that hidden costs are one of the biggest Amazon seller risks.
Most MFN merchants think that Amazon fees make up the bulk of their costs.
But while referral fees, closing fees, and uncovered shipping expenses amount to about a quarter of earnings, there are many other costs to consider.
Staying competitive on Amazon isn’t cheap.
Running ads takes a big chunk out of profits – $381 per day on average.
Then there’s winning the Buy Box. It’s the sine qua non of selling on Amazon in 2020. And it’s near impossible without tools like Sellery that keep tabs on the competition and keep prices in check.
As for those who sign up to FBA, things like fulfillment and storage fees might not jack up their monthly bill. But overage fees, long-term storage fees, prep services, label, and refurbishing services can all add up over the years. So too can return, disposal, and removal order fees for items Amazon deems unsellable.
Inventory Eligibility
Speaking of which, your inventory can become worthless overnight. It’s not just damaged, dangerous, or fake items that get snubbed, either.
Amazon can impose selling restrictions on new, safe, and genuine branded items bought from the manufacturer. And ungating a brand isn’t easy.
At the brand owner’s request, Amazon can suspend listings or boot off sellers with no prior warning.
This tends to happen when brand owners partner up with Amazon.
But thanks to the Brand Registry, brand owners can take matters into their own hands. And it’s up to the sellers to cover any FBA removal costs.
Account Suspensions
Account suspension isn’t a matter of if but when.
One of the most common risks of selling on Amazon is having it happen to you just before the holiday season, Prime DayPrime Day was initially a one-day sales … More, or other major sales event.
And when it happens, all sales are suspended. Worse still, Amazon places a permanent hold on your funds.
An Amazon seller risks having their account suspended even if they did nothing wrong. Hacked accounts, hijacked listings, fraudulent seller claims, and unfounded buyer complaints can get you suspended.
And even words like “fake” in a buyer’s message can be picked up by a bot, triggering a suspension.
You have 17 days to file an appeal, but it can take longer than that to reinstate your selling privileges.
And as for the 90-day hold on your funds, it can take longer than that to clear, whether your account is reinstated or not.
Meanwhile, expenses like FBA storage and overage fees might start to accrue.
So, it’s anyone’s guess when your account will be suspended. But when it is, you’ll need to make some tough choices – and fast.
If you want to get your account back, it always pays to get your appeal right the first time around. That’s why we recommend the Account Rescue service.
Price Wars
On Amazon, profit matters more than turnover. That’s why top sellers use sophisticated repricing software to stay competitive.
And when you outprice one competitor, you set off a chain reaction. Every competitor’s repricer wants to undercut you. Before you know it, your price spirals out of control.
Some merchants will enter this highly competitive selling environment unprepared. And they’ll learn how to sell on Amazon in 2020 the hard way.
But if you use Sellery, you don’t need to get into price wars. Rather than watch your profits plummet trying to outsmart a competitor, you can focus on profits.
Sellery uses price limits as a fail-safe. So, you never risk selling for less. And certainly not at a loss. In this Orange Klik tutorial, Michael takes you through the basics of setting up a minimum price, margin, and markup. Thanks to these features, you’ll not only reprice faster, but also smarter than the competition.
Unfair Competition
One of the most serious risks of selling on Amazon is dealing with a dishonest competitor.
Retailers source their inventory from the same suppliers. And be it generic, PL, or own brand, the product isn’t really unique. So, from the moment they list, every Amazon seller risks stepping on one too many toes.
Dishonest sellers often use black hat SEO tactics. Aggressive pricing strategies and unscrupulous upselling tactics are also unfair to the competition. And some go so far as to hijack listings or hack accounts. Here are some of best ways to fight a competitor who doesn’t play fair with Sellery:
- Blacklist them with the ‘filter specific sellers’ feature using their seller ID.
- Give Sellery a list of honest sellers to compete against.
- Use the ‘based on their price + shipping’ option to weed out unreasonably high or low offers.
- Analyze your competitor’s price strategy by checking your Smart Lists and downloading data.
- Set ceiling prices for all the items you sell against a dishonest competitor.
- Check MSRPs and report sellers if they inflate them.
- Set up rules so that your price reflects your stock levels and competitors don’t buy your last units.
- Use the ‘Do Not List’ rule if you’re happy to wait until the competitor runs out of stock.
- Time your listings and reschedule repricing with the ‘Ignore’ feature.
Competing with Amazon
Sellers sometimes forget that Amazon is not a single entity; it’s a trinity.
Amazon is the market, the seller, and the buyer. And it can pull the rug out from under you anytime. Not just by suspending you, but also by doing what you do better and cheaper.
Our Brands @ Amazon.com have steadily taken over a huge share of the market. The AmazonBasics brand alone is known for everything from XBox controllers to pet beds. But there are 26 Own Brands in all, and hundreds of Exclusive Brands.
So, if you’re wondering how to sell on Amazon in 2020 and avoid losing your entire business to the single-most powerful competitor of all, we have only 3 pieces of advice to offer:
1. Maintain Your Own Website
At the risk of repeating ourselves, please don’t put all your eggs in one basket.
Especially since the price parity rule no longer applies and you can make your webshop offers much more appealing than your Amazon listings. Buyers are slowly waking up to the fact that Amazon isn’t always cheaper or faster.
2. Have a Unique Branded Item
Shopping habits are changing. But people still crave an exciting shopping experience, even if they check out on a mobile phone. An alluring logo, clever custom branding, space-saving packaging, and eco-friendly credentials will bring buyers to you and lower the costs and risks of selling on Amazon.
3. Keep Up
Every Amazon seller risks wasting an opportunity to be successful on Amazon if they don’t stay up to date with the trends. To minimize the risks of selling on Amazon, read up on policies, join seller groups, sign up to newsletters, follow blogs like ours, and sign up for some software tools before you start selling.
Now that we’ve shared some of the most important risks of selling on Amazon, we’re happy to move on to strategies and tactics in the next and final edition of our series, “How to Sell on Amazon in 2020”.
Please stay tuned to find out how applying the best selling strategies can lower these Amazon seller risks further and bridge the gap between current and potential growth for your business.
Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.
