Amazon FBA Business: Top 5 Failures and Lessons Learned

Top Reasons Why FBA Businesses Fail

Top Reasons Why FBA Businesses Fail
Even though the whirlwind of changes 2020 brought us, it was by far the best year for eCommerce sellers. Shout-out to Amazon account managers!   The top player… the deal-breaker and king of eCommerce – Amazon, saw sellers both succeed and fail during these tedious times.   Currently, there are more than two million sellers on Amazon worldwide, 17% of which sell for five or longer years on Amazon, whereas only 47% take pride in turning an Amazon FBA profit in less than TWO years.   The sufficient second half of these sellers are making next to no money. It takes hard work, expertise and fulltime dedication to make any business a success – and – FBA is no different.   Without further ado, here are the top reasons why FBA businesses fail and what to learn from them:  
  1. Wrong Product

  Many businesses hop in and start purchasing products left and right without a clear budget, plan and end goals.   Before ordering a single product from a supplier, perform thorough research on the product, calculate its shipping and delivery costs and only then decide whether the product is even worth the hustle.   Of course, solely doing the product research does not always guarantee that that’s what your buyer wants. Furthermore, estimate the buyer market volume and put a reasonable price (an estimated price your potential customer is willing to pay for your product) without breaching Amazon price policy, obviously.
  1. No Marketing Strategy

  From the numerous success stories, we can hardly pick a single Amazon seller who didn’t have a clear, action-based marketing strategy.   Come up with a strong yet flexible strategy that matches your goals. Tackle all the forms of marketing to determine which one will work the best for your target audience and product.   The second stop is Amazon listing optimization. You need to optimize your page with the right keywords.   How?   Perform SEO keyword research and do not overstuff your product description with keywords.   Bonus point: examine Buy Box Eligibility to include it in your marketing goals. 83% of Amazon sales ($320 billion in the last 10years) come from Buy Box. So, make sure you take hold of it! Last but not least, recruit eCommerce marketing experts.
  1. Poor Money Management

  A common mistake of novice sellers is failing to calculate the cash flow – all the costs, fees and taxes that go into selling a product. The costs include Amazon fees for fulfillment services, shipping taxes from suppliers if any, the cost of the product and running a business.   Another common miss-out is, upon sufficient profit, businesses do not do reinvestment. Meaning, you earn and invest to grow your business even further. Amazon evolves to the needs of the end-users and so should your business.   Bonus point: You can consider joining Amazon’s Professional Selling Plan. This on its turn will help you avoid the variable closing fee per sold product.  
  1. Poor FBA Inventory Management
  Even though Amazon takes care of fulfillment and shipping, there are dozens of stores that do nothing to set up the right expectations for the customers or assure that the supplier sent the products in a timely manner – or worse – the product is in stock.   Didn’t place the orders at the right time? Overstocked? Understocked?   To put odds in your favor in inventory management, you can entrust eCommerce wealth management to our experts.   With the help of proper planning and systematic tracking of metrics, you’ll get a whole picture of the products you invested in and their sales funnels. As a result, you will get a better understanding of your target audience’s needs and wants and therefore make more accurate choices in selecting a product your customers favor.  
  1. “Anyone can do it” Philosophy
  Anyone with guts, commitment and stubbornness – YES!   Trying out new FBA marketing strategies for better amazon management, constant learning, tracking platform updates should be a staple of your daily routine if you want to create a success story.   The end reward is worth it!     If this blog has succeeded in encouraging you NOT to fail as an FBA seller, then start your Amazon ecommerce business today with the help of our professional team here at Jerome Basilio! All you need to do is book a call with us and we’ll help you with the process!
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