Amazon FBA : A Realistic View

 

 Amazon FBA: A Realistic Look at the Challenges and Struggles of Online Selling

So you want in on the Amazon Gold Rush. This blog will not give you rainbows and unicorns!

It is NOT a get rich fast business, but a slow and painful learning curve. 

I'm not writing this to scare you either, more so you wont get fooled as I did in the beginning of my Amazon FBA selling Career. DO NOT BUY INTO CLAIMS OF "Auto Pilot, You can Make 6 figures in a year etc etc etc. BUY MY SYSTEM and I GUARAUNTEE YOU SUCCESS".

Six figures in a year is more than doable,but usually that's gross revenue for new sellers who attain that, (though some actually do more and quite well)., NOT PROFIT, do not buy into the noise you want to hear, rather use your GOOD judgement to decide.          

Amazon FBA (Fulfillment by Amazon) has been touted as a golden ticket to financial success and freedom for aspiring entrepreneurs. While many have found success using the platform, the reality is that it's not all sunshine and rainbows. In this candid article, we'll delve into the less glamorous aspects of Amazon FBA, exposing the challenges and struggles that sellers often face.

The Hidden Challenges of Amazon FBA:

Fierce Competition

With millions of sellers on Amazon, standing out from the crowd can be difficult. As a result, sellers are constantly battling for visibility and market share, often resorting to aggressive pricing strategies that can cut into profits.

More often than not especially for new sellers there is the mentality of "I must sell my stuff first", or "Oh no I have to cut my price to match the buy box or I won't sell anything" This usually incites the "race to the bottom"  scenario.

In some cases it is sadly true, but there are many cases where to hold is worth it, but also to drop is inevitable, so drop right away before it tanks to bigger losses.

You will learn these differences as you gain experience.

High Fees

 While Amazon FBA eliminates the need to handle logistics, it comes at a cost. Amazon charges a variety of fees, including storage, fulfillment, and referral fees, which can significantly impact your profit margins.

In most cases Amazon actually makes more than you will.  

Fulfilment fees go up constantly and are seasonal, so you have to plan for that.

These fees change constantly, and can mount up quickly for "long term storage" situations where you have sent things that sell at a very slow pace, but to recall is not an option or a bad option.

Inventory Management

Managing inventory can be a headache, particularly for new sellers. It's crucial to strike the right balance between having enough stock to meet demand and not overstocking, which can lead to costly storage fees and unsold products.           

Image by upklyak on Freepik

Inventory management also reflects on your ipi index and seller metrics, which in turn can hurt your storage levels(you can send less) or your buy box eligibility.

Also and most notably this will really affect your cashflow, especially as a beginner.

Customer Returns and Complaints

 Amazon FBA might handle customer service, but sellers still have to deal with returns, refunds, and negative feedback. These issues can be time-consuming and frustrating, especially when dealing with dishonest customers who exploit Amazon's lenient return policies.

There is also the problem of black-hat sellers. Low snake like creatures that can't handle competition and probably have very small b***s. So they resort to things like false buy and returns, false reviews, anything to disqualify you as a seller.

Suspension Risk

 Amazon has strict policies, and violating them can result in account suspension or even permanent closure. Even unintentional mistakes can have severe consequences, leaving sellers scrambling to recover their businesses.

This is usually brought on by sellers themselves, not following Amazon's seller TOS, selling knockoffs and dropshipping.             

Image by Freepik

But can also be for many other reasons such as selling bad products, too many mislabelled items causing returns, IP complaints, and selling restricted products.

Algorithm Changes

Amazon frequently updates its algorithms, which can significantly impact product visibility and rankings. Keeping up with these changes and adjusting your strategies accordingly can be both challenging and exhausting.

These are the most complicated and annoying things Amazon does to its seller base, usually they end up affecting your buy box eligibility or inventory amounts as well as sku restocks.

Emotional and Mental Strain

 Running an Amazon FBA business can be incredibly stressful, with the pressure to succeed, the constant challenges, and the feeling of isolation that comes with working solo.

Facebook groups can help with the loneliness aspect, because anyone not selling on Amazon, including family you're spouse will never understand what it is to be an Amazon third party seller!

The fear of being suspended and losing your business, is usually prevalent among all sellers new, old uber-successful and mediocre sellers.               

Listings that "tank" (price drops below seller buy price) for one reason or another.

Just to name a few!

Overcoming the Challenges:

Despite the challenges, many sellers have found success with Amazon FBA. To thrive in this competitive environment, you'll need to:

Develop a strong business plan and focus on niche markets to minimize competition.

Continuously optimize your product listings, pricing strategies, and advertising to stay ahead of the game.

Invest time in learning about Amazon's policies and best practices to avoid suspension risks.

Maintain a healthy work-life balance and seek out support networks to manage stress and maintain mental well-being.

This is just a quick intro into the world of Amazon FBA business. I will hopefully have enough time to cover many more subjects that you need to know in depth.

Amazon FBA offers a potentially lucrative opportunity for online entrepreneurs, but it's essential to be aware of the challenges and hardships that come with it. By understanding these realities and preparing for them, you'll be better equipped to navigate the rough waters and find success in your online business.

Just remember:  Shiny objects are just that ,designed to grab you're attention and money! GURUS and self proclaimed Amazon experts are usually NOT. Some have actually never sold anything on Amazon, while others are selling you old outdated ideas. The sellers on Amazon who are successful, will never divulge their secrets and why would they, the GURUS would have a field day!