There is no doubt that Amazon has changed the online global marketplace for both buyers and sellers. And it is quite easy to get caught in all the hype of selling on Amazon. However, it is much like starting any new business, of which more than 90% fail within their first year. While Amazon private label selling can be a lucrative business it is most certainly not a set and forget money making program, but a private label business like any other that needs your time and attention. It is advisable that any potential sellers thoroughly read the Amazon FAQ’s beforehand. And one mistake can mean the end of the business if you are not careful. It is prudent to take note of seven of the most common mistakes made by new Amazon sellers so you do not get consigned to the category of Amazon sellers who could not make it.


More than 90% of Amazon sellers fail within their first year


Amazon Sellers’ Mistake One – Account Setup


Setting up an incorrect account initially could lead to longer term consequences. You are only allowed to have one seller account on Amazon, and you cannot direct Amazon shoppers to your own personal website via a URL when setting up your account. These both amount to violations of Amazons terms and conditions for sellers. It is also important to do research into the correct seller account which is appropriate for your business.


Amazon Sellers’ Mistake Two – Selling Low to Avoid Risk


When starting off a new venture, it does make sense to start low. It’s because we are inexperienced and might end up losing money. This is true, but there are two features of Amazon which makes selling low cost products (roughly less than $10) commercially unviable in many instances. One is the fees charged by Amazon. When an item is priced too low, a flat minimum fee could eat up most, if not all, of your profit margins. There is another feature called the Add on Item with Amazon shipping. The item is not available for free shipping unless the total amount of the order is FBA and over $25. This could put off many potential buyers.


Amazon Sellers’ Mistake Three – The Product Listing


Your product listing is where you sell your product. It will make or break your business, as a good product listing will sell and a bad product listing will turn customers away. So, it needs to be spot on. There are a number of common pitfalls with the product listing. The image has to be correct as per Amazon’s terms and conditions, and Amazon’s policy is quite strict. Do not use one image which features multiple products and do not include animated images. Avoid any promotional text in the title, including coupons, delivery speeds and discounts. The product title has to be descriptive. Needless to say, include factual and accurate information about your product in the description itself, as errors here will be pointed out in the reviews. To sum up the product listing, simply follow the rules and guidelines and do not attempt to get strategic, as this more likely will be a violation of Amazon’s terms of service. And make sure that the product listing exactly matches the product, which is a statutory requirement. Otherwise you will get complaints and your account will be suspended.


Amazon Sellers’ Mistake Four – Customer Service Fails


There are a number of things to be aware of with regard to Amazon when it comes to customer service. The delivery has to be on time and inexpensive. Customers will run when they see expensive shipping costs. Do not promote your own material in the packaging of the product as it goes against Amazon’s policy. It is highly recommended to use fulfillment by Amazon which makes use of Amazon’s reliable shipping service. The first ten or so orders need to be fulfilled perfectly without any criticisms. And note that paying for positive feedback is a violation of Amazon’s terms of service. Other considerations are simply good business practices. You are invariably going to meet an irate customer with unrealistic demands, but you must take extra care to go the extra mile. Otherwise the customer will leave a negative review. You have only 24 hours to respond to customer inquiries. If you take more than 24 hours you get a “notification” from Amazon. Too many notifications result in account suspension. There are external software tools such as Reply Manager which may help with this issue.


Amazon Sellers’ Mistake Five – Failing to Pay Taxes


Upon signing up for you Amazon account, immediately fill out the “Tax Settings” section in the “Seller Central” tab. You are the one responsible for your sales tax payments, not Amazon. As such, all Amazon sellers are self-employed and are responsible for their own taxes. You do not want any tax surprises at the end of the year. For a minimal price, Amazon does offer the service of collecting state tax on your orders. Failure to collect state taxes could result in a large unfunded liability. Remember that you are also perceived as a business. You are fully entitled to deduce a reasonable amount of business related expenses, but there is no need to unduly draw the great eye of the IRS upon your enterprise by overdoing it.


Amazon Sellers’ Mistake Six– Failure to Gather Feedback


In any business, you have to get feedback about your product. Only a tiny fraction of Amazon purchasers bother to leave feedback, which can be frustrating to many sellers. There are a number of tools that can help you get feedback from your customers, including BQool and Feedback Genius. Amazon encourages (the word “enforces” may be more appropriate) its sellers to get feedback from customers via its Seller Performance and Product Quality department. Obviously, the whole point of feedback is to pay attention and change accordingly. Without feedback, you would never know how your business is doing.


Amazon Sellers’ Mistake Seven – (Mis)Managing the Inventory


Be very careful how you manage your inventory. Simply state how much product is in stock without getting clever. If you drop the price by 50%, be sure to check on your inventory regularly. This information could spread quickly and you could soon be out of inventory. And you could also take a significant financial loss if you had no intention of selling so much at the discounted price. Like many things on the Amazon platform, overselling your inventory can lead to account suspension. Also, be aware that after you enter in your product you would have more competitors, so adjust the price accordingly. It is not just set and forget with Amazon selling.


If you pay attention to avoid these mistakes and do intelligent research using a private label manufacturer can be an effective way to make money. Of course, it is necessary to find high quality private label manufacturers for this to work. It would be unfortunate to do everything right except for selecting an appropriate manufacturer, arguably the most important part of the business. Reliable third parties can be of invaluable assistance with this task.