Major problem encountered by amazon seller
The E-commerce industry is booming worldwide, and the world has understood that now the world is going to be a single open market. E-commerce has revolutionized trade. Amazon is the most popular channel of e-commerce. People are selling and earning huge profits on Amazon. Are you planning to sell through Amazon FBA business? That’s perfect but let us makes clear everything has its own challenges and so has the Amazon FBA selling. Here are some major challenges of Amazon FBA selling.
Late payments and problems of cash flow:
A cash flow problem arises as Amazon pays its sellers after 2 weeks. These delayed payments create inventory balance problems. You have to order manufacturer or supplier, and he demands an advance that can only be paid through extra investment. .
Manufacturers or suppliers ask for an advance of a minimum 20 to 25% to start the process of production and shipment. This needs an extra investment or some buffer fund to fill the gap between late payments from Amazon and the demand for advance from the manufacturer side.
You cannot rely on Amazon listing payments to balance the shortage of cash flow. You need some extra investment in the form of a buffer fund to tackle the issue. Buffer investment makes your business run smoothly. This maintains inventory and balances the costs of shipping. Thus, you need to be prepared for cash flow issues because of late payments and must have a buffer investment for the smooth running of your Amazon FBA business.
High competition as novice seller:
Amazon is an open market and world-famous e-commerce site. Do you have a guess of how many sellers are on Amazon?
The number is above 8 million. You have to face such huge competition and stand out among these sellers.
The competition makes entrance into the Amazon market a complicated task. A new seller trying to get into the market needs to remember that.
- Prices should be moderate and competitive
- Don’t lose profit margins by selling your products on lower profit margins
- Getting loss because of low profit margins and high hidden costs
- Must have a buffer investment to meet the initial challenges because of high competition
At the start of Amazon FBA business thus you need to be careful about setting the profit margins.” Amazon PPC tool and keyword research” can make your product rank and ultimately sell well.
More than 8 million sellers on Amazon not only create competition for new entries but also for the price adjustment of the selling product. Price shouldn’t be too low to cut short possible profit margins and not so high that the seller should seek another competitor having the same quality at a lower price.
Novice sellers at the beginning offer products with very low-profit margins, by doing this they not only lower their profit margins but are not prepared for the hidden cost which could be balanced with good profit margins. Sometimes the prices are too high the customer is not ready to get that product and looks for someone else providing the same product at lower rates. As a novice seller, we as a Business consulting agency recommend you to use.
- A1 algorithmic Reprices tool
- Seller Snap
By using these tools you can easily detect the selling behavior of a product in the competitive market. Once product selling behavior is detected you can easily set a good price for your product with a good profit margin.
Amazon’s algorithm rank product on several factors, “customer reviews” being one of them. Better say it is one of the most important factors when it comes to raking. Amazon changed its policy regarding customer reviews in 2016. By that rule now one can’t give or take reviews on the basis of just incentives or freely delivered items. Thus, at the start a novice seller must keep in mind to get good reviews to excel in this business.
Nonetheless, there are tools available for good reviews planning and by using these tools you can get good reviews from Amazon shoppers.
Strict terms and conditions:
Amazon provides a complete detail of the products that are allowed for sale. You can go through the guidelines of Amazon products terms and conditions and evaluate your product whether it completes the demands of Amazon or not.
As a novice seller you must have an idea of terms and conditions by Amazon. These conditions are not just for products but also for shoppers and sellers. If want to get rid of these problems you have to get familiarity with these terms and conditions or you can hire a consultant who will guide you about the complexities of selecting the product. Moreover the consultant can provide you any guidance if you are getting any kind of issue as a seller.
No stock no profit. Thus, if you are out of stock it means you are not getting your profit. In order to fill this lapse there should advance planning and some research about the selling product. If its demand is going to increase in near future you can order more from your manufacturer or suppliers to avoid the last-minute run. Last minutes runs are always costly and imperfect and may cost you in the form of loss.