Selling on Amazon has become a great way to earn extra income. The platform offers a lot of advantages to online retailers. Despite these perks, Amazon sellers often complain about various issues.
In fact, according to a recent survey conducted by the National Retail Federation, nearly half of them said their biggest issue was dealing with bad customer service.
The eCommerce giant has over 300 million customers worldwide, and its marketplace is growing at a rate of 20% each year. As a result, Amazon sellers are facing new challenges every day.
There are several things you should consider before starting your Amazon business. These include choosing the right category, pricing your products correctly, and finding ways to improve your sales.
The company offers a wide range of products from electronics to clothing to books. If you want to sell something on Amazon, you’ll need to register as an independent seller. In order to get started, you’ll need to create a listing and upload photos of your products.
Problems Faced by Amazon Sellers:
What works for one retailer may not work for another since there are numerous variables that contribute to a store’s success.
Amazon sellers face a variety of challenges every day. From dealing with managing inventory to shipping orders, they deal with a wide range of problems.
Some of these issues are common to everyone selling on Amazon, while others are unique to certain categories or regions. If you want to succeed as a seller, you’ll need to master these issues:
1- High Competition:
Millions of vendors have joined the Amazon marketplace because of the great potential it provides. There are a lot of rivalries since many Amazon sellers are aiming for the same position in the search engine rankings.
When there is already a lot of competition in a market, it’s tough for new vendors to build a name for themselves. In general, consumers prefer well-known brands with several positive reviews over unknown ones with few or no ratings.
When you have a lot of competition, there’s really only one way to deal with it: stay ahead of them. Maintain up-to-date listings and keep updated on market developments and Amazon’s rules. Increase your SEO efforts if your product page isn’t already showing up at the top of Amazon search results.
2- Inventory Management:
Inventory management is a huge issue for many sellers. There are a number of different ways to keep track of inventory, and each method comes with its own pros and cons. You can use software like Xero to help you manage your inventory, but you can also manually enter information into spreadsheets.
Many people think that having a lot of inventory is good, but it isn’t. Having a lot of inventory means that you need to keep track of what’s sold, what’s left, and how much you’re spending on storage space. If you aren’t tracking these things, you could end up losing money.
Pricing is another big issue for many Amazon sellers, especially if they don’t know how to price their products correctly. A recent survey revealed that almost 40 percent of Amazon sellers underpriced their products. Another 20 percent priced their products at exactly the right amount, while only 30 percent priced them at the correct price.
Subsequently, low costs are a direct result of the overwhelming competition. When faced with a high level of competition, most merchants will respond by reducing their prices.
Since profit margins are so small in this industry because of price competition, survival is a constant struggle. Some Amazon advertising services cut their prices in the short term so they can get more positive customer feedback and a better Google page rank; this will allow them to charge more in the long run.
Although this strategy seldom succeeds, it does indicate that vendors may have to compete with rivals who are prepared to offer far lower pricing.
4- Limitations Based on Category:
Amazon has, throughout the course of its existence, gradually developed a policy that requires third-party vendors to meet an ever-increasing level of criteria before they are allowed to offer items in certain product categories. For the sake of customer security and in an effort to cut down on the number of fake goods being offered on the site, this measure has been taken.
Approval to sell in certain categories might be extremely challenging for smaller merchants. You may need to make a purchase of stock before you can submit the necessary paperwork to Amazon and get selling approval. If you’re not authorized, you’ll have to pay for stuff you can’t sell.
5- Return and Exchange:
It might be challenging to deal with clients who are dissatisfied or who have changed their minds. Dealing with returns and refunds on the Amazon platform may be particularly time-consuming and difficult due to the sheer size of the company’s user base.
In most cases, the returned items have already been opened and may no longer be in saleable condition. For Amazon sellers, the prospect of having to pay penalties for returned goods, missing out on the cash from the sale, and then being unable to sell that thing again can be an extremely irritating experience.
How you process refunds and returns from customers may have a significant practical and monetary impact on your business, depending on the type of service you provide.
6- Selling Fees:
At the time of account creation for your company, you will have two options.
Amazon offers two different ways to sell. All plans require sellers to pay a referral fee. This charge is different depending on the kind of goods. Amazon’s Seller Central provides details on all of these charges. It might be anything from 8% to 96%, depending on the exact category.
If you’re a store and you sell via Amazon, be ready to pay a big fee. To avoid any unpleasant surprises, it’s important to have a solid grasp of the monthly costs involved before getting started.
7- Reviews and Feedback:
Amazon has also implemented stricter guidelines concerning vendors’ requests for product reviews and subsequent letters made to buyers.
Because of these changes, it’s harder for Amazon sellers to get reviews for new products, and it’s almost impossible to make sales without reviews when you’re up against products with a lot of good reviews.
Another difficulty is that the vast majority of consumers will not take the time to write a review unless they have had a negative experience. Previously, retailers could encourage consumers to post reviews, but now they must sit and wait and wait for buyers to initiate the process.
8- Customer Retention:
You are seriously wrong if you do not feel that customer service is a vital component of success. Also, customers that buy from you more than once are the lifeblood of any company.
Be careful to satisfy the requirements of your customers while maintaining a reasonable level of service. It is also essential to present the greatest version of yourself possible. Customers are more likely to return if they had a customer service experience, according to research.
Businesses fail when they are unable to keep their existing clientele. If you can’t persuade your current clientele to return, you’ll eventually lose your ability to attract new ones.
9- Managing Cash Flow:
Without a doubt, one of the most difficult things for most Amazon sellers to deal with is cash flow. New items don’t immediately contribute to the company’s bottom line, making it more challenging to invest in brand expansion and product development.
Even if you’re making a profit on paper, you should still set aside money for when you need to restock. If you want to meet the increased demand during the seasonal peaks, you’ll need to put up even more cash in advance.
10- Amazon’s Communication Is Not Consistent:
There is room for improvement in Amazon’s communication with its vendors. So, the majority of Amazon’s policies are straightforward, with most challenges arising from attempts to ensure compliance. There is no guarantee that sellers will be able to contact anybody at Amazon to communicate about their issues.
For merchants, all of these factors add up to a difficult business environment.
The Bottom Line:
The good news is that you don’t have to deal with all those tasks at once. Therefore, as an Amazon seller, you’ll be responsible for fulfilling customer orders, managing inventory, and shipping items. Instead, you can focus on mastering each issue individually.
Amazon facilitates the development of e-commerce firms, but it is not without its fair share of difficulties.