Starting an FBA business is easy. But a lot of businesses drop out in the first year. Others struggle for a few years and then give up. Others go from strength to strength and make their owners a fortune.
What’s the difference? Luck? Having a better product? No. The difference is that the successful FBA businesses know how to avoid the pitfalls. So to give you some useful help, here’s our list of ‘how not to sell on Amazon’.
• Don’t pick the right product niche. If you pick a saturated niche you can’t win. Even if you really, really love pink, take a look at how saturated the pink girly merchandise niche is. Want to sell athleisure? You’re going to need something that differentiates you from Nike and Adidas. (Lululemon did exactly that; they catered to the yoga mom not the jogger dude.) Your product research needs to work out whether you have a chance of competing.
• Don’t have a plan or a schedule. At first, any business works about 50 percent by firefighting. But to get FBA to work, you need a schedule, or rather, several schedules. You need targets for new product launches; you need targets for advertising and reaching out to new influencers; you need targets for checking your inventory.
• Don’t use Seller Central to the max. It’s surprising how many FBA sellers just use Seller Central to carry out very basic business processes, when it’s got huge amounts of data that can transform the way you think about your business. Spend some time every week extending your knowledge and use of its resources and you’ll be way ahead of the competition.
• Don’t read your reviews. OMG this is such a bad mistake to make; you really, really need to be on top of your reviews, because 92 percent of buyers read them. If you have negative reviews, get on top of the issues, take action, and try to delight your customers in future. Give them a hotline to you so they don’t write the bad review first and think later!
• Not outsourcing. First, because you’re always going to be firefighting if you don’t learn to outsource (see rule one). And secondly, because unless you are a professional at all the jobs involved (photographer, SEO, graphic designer, copywriter), at some point people are going to notice. Like when you see a flier for a local event in five neon colors, fifteen different typefaces, and where the designer missed out the date.
• Don’t be choosy about suppliers. You picked the lowest price supplier when you started, and it shows. Cost is important, but so is quality, ability to deliver on time, and updating and improving your product. If you have a supplier that’s letting you down, it’s time to look for another one.
• Don’t put all your eggs in one basket. Starting with just one product might seem attractive, but you’re best off if you sell a dozen products in your niche, even if some of those differences are just in size or color. That way you’ll catch the person who initially clicked on your dog crate, only to find it’s for a chihuahua when they’ve got a massive wolfhound.
• Stay in your comfort zone. That might mean always using exactly the same pricing strategy, always developing your product portfolio incrementally, always choosing a ‘safe’ product. Sometimes, challenging the way you do things can increase your success. Get someone fresh to look at your business, or be prepared to go out on a limb for a new product area that stretches you.
• Don’t prioritize. The eighty/twenty rule applies – eighty percent of your profit will come from just 20 percent of your ads, products, or customers. The crucial thing is to know which ones!
• And finally, don’t worry about Amazon’s rules; after all, who cares if your account is canceled? It’s surprising how many sellers who only sell on Amazon think they can get away with finessing rules like not paying for reviews, selling counterfeit product, or using fake paperwork. That’s their entire livelihood they’re dicing with. Thinking of doing it yourself? Just don’t. Don’t. Don’t.