Amazon keeps growing and 2017 was another great year for the company (and Jeff Bezos apparently).
Most analysts believe that 2018 will be even better for Amazon. News about how well Amazon is doing together with stories of people getting rich on the platform are everywhere, so you may think that starting your own business is easy as pie. It’s not.
Amazon is not rocket science, but as a new seller, you must be ready to deal with some challenges. Here are 5 of them:
1. Selling On Amazon is Getting Harder
Selling on Amazon is getting harder for 2 reasons: competition and Amazon itself.
Competition
Thanks mainly to FBA and seller tools it’s now easier than ever to start selling on Amazon. Why did I say it’s getting harder, then? Because the bar is set so low, basically anyone, anytime, and anywhere can enter Amazon and compete with you. In the past, it took ages to do the proper market research and finding a supplier in China wasn’t easy. Nowadays you can use product research tools like BigTracker and see what is selling in seconds. If you can do it, so can your competition. Then, it gets even harder because many Chinese wholesalers and manufacturers are entering Amazon with prices they usually offered to people like you and me, Amazon sellers.
Amazon
Amazon itself is getting more complicated. It’s like a living organism, constantly evolving. Each year there are new rules and changes that can directly affect your business. The number of things you have to learn can be overwhelming. For example, suspensions can force even more experienced sellers to use a lawyer’s help to get their listings back.
Niels Bohr once said, “Prediction is very difficult, especially if it’s about the future.” That’s true, but over the years Amazon has made it a bit harder to get started selling on their site. And it might get harder in the future. If you want to sell on Amazon, start now.
How to overcome the challenge?
There is nothing you can do about the competition, it’s part of selling on Amazon. You can, however, make sure you do your research before launching on Amazon. It’s always a good idea to use product research software to find a profitable niche. If you plan to start arbitrage, there is inventory management software that can help you look for new products and manage your existing portfolio. And if you really want to start selling, start now. The sooner you open an Amazon store, the better. The best way to learn how Amazon is working is to sell stuff.
2. Listing quality is now more important than ever
This is true for both new and established sellers. The two most crucial factors of Amazon ranking are sales velocity (more on that later) and conversions.
How to get more conversions?
Easy answer-offer a competitive price. But as you know, it’s not always possible to compete on price. That’s why listings optimization is important. Putting price aside, product photos are the most important conversion factor on Amazon. So, make those photos as good as possible. When it comes to descriptions, take a look at Amazon’s Style Guide. Follow those basic guidelines to avoid violating TOS.
How to overcome the challenge?
Make sure your photos and descriptions are top-notch. For photos, get a test product sent to you and have professional photos taken of your product. You can find tons of articles on how to take great photos with a smartphone yourself, but they will never be as good as professional work. And don’t forget to include lifestyle photos. They can make your conversions soar.
If you really plan to take photos yourself, make sure they are per Amazon’s Product Image Requirements:
- Have a pure white background
- Have at least 1,000 dpi, so that it won’t turn fuzzy when customers zoom in on your image
- Show the entire product, and have the product occupy at least 80 percent of the image area ∙
- Include only what the customer will receive
You don’t have to be a professional copywriter to sell on Amazon. Just make sure your bullets and product description are free of typos and spelling errors. Explain what the product is and, this is the most important thing, how it will benefit the customer.
3. Sales Velocity
Sales velocity is the key factor in Amazon’s ranking system. The more you sell, the higher you are. And the higher you are, the more you sell. This circle makes it very difficult for new brands to enter the Amazon marketplace. Without sales, your product is condemned to failure.
How to overcome the challenge?
This might sound ridiculous but to start selling you need to get some sales first. There are many ways to boost your initial sales, but the two most important are:
- Giveaways/Discounts
- PPC
Each time when you plan to launch new products be ready to invest in giveaways and discounts. There are services which can help you distribute coupons and get more sales. You can launch Facebook ads and direct traffic to your Amazon store. You can start blogging and link to your Amazon products. Do whatever you can to get as many sales as possible at the beginning.
PPC campaigns are harder to master, but they are necessary. You can learn how to start here.
4. Reviews
In 2016 Amazon ended up adding ‘incentivized reviews’ and changed the marketplace forever. Since then it’s been harder to get reviews. And you need those reviews almost as much as you need sales velocity. Reviews don’t directly affect your ranking, but they do affect it indirectly.
Reviews increase your conversions (buyers are always more likely to buy 5-star items with tons of positive reviews), which then increase sales, and in turn, makes your product show up higher on Amazon.
How to overcome the challenge?
In the last point, we talked about sales velocity. Sales velocity not only helps you sell more, but it also helps you get more reviews. The more you sell, the more reviews you get. The thing is, people don’t like to post reviews, and if you stick to organic reviews, you might get as less as 1 review per 100 sales. That’s why e-mail automation is necessary. Again, “there is an app for that.” Tools like BigCentral can help you get more reviews and feedback. If you are new to Amazon, you might also try Amazon’s Early Reviewer Program. For $60 Amazon will help you get 5 first reviews. It’s not much, but it’s better than nothing.
5. Returns
Returns have always been a part of doing business on Amazon, but from Oct. 2017 Amazon implemented a new return policy. Changes aren’t as bad as some sellers make them on Seller Forums. What Amazon did can be simply called a unification of customer experience. From October, Sellers who ship products themselves are subject to the same rules as items shipped by Amazon. That’s great news for buyers, but not so great for smaller sellers shipping from their home or garage. Dropshippers were also affected negatively. The new policy means that buyers can print off a return address and get a refund at once. This move has increased the number of refunds 3rd party sellers are getting. Sometimes, drastically. And it looks like in the future Amazon will make returns even easier.
How to overcome the challenge?
There is nothing you can do to avoid returns, but you can try to reduce the number of them.
One of the best ways is to describe your products as well as possible. And don’t forget, again, about photos. As weird as it sounds, different photos from different angles can help your customers understand what they are buying. Adding photos of your item that show the scale or use of the product can help, too.
The last piece of advice. If you are doing your product research now, make sure your margins are high enough to cover up return fees. Not all returns qualify for a restocking fee, and if your margins are too low, you might be losing money.
Key Takeaways
This list is not comprehensive, and as a new seller, you will meet many more challenges. Some of them will be even more challenging than those I mentioned. My key advice is to start selling as soon as possible. The sooner you begin your Amazon journey, the easier it will be.
And don’t forget, Amazon high-rollers didn’t make it to the top overnight. If you start now, you will have more time to reach your goals.
