Six pitfalls with selling on Amazon
Six pitfalls with selling on Amazon
Selling on Amazon brings about the opportunity of reaching a huge market, however it is redeemed by a system of its own rules in which you as a seller can get lost quickly. That’s why we decided to highlight the greatest risks and potential problems that we are addressing globally at EXPANDO every day. Mostly because know a lot of sellers who have initially failed to sell via global platforms and therefore decided it is not for them, which is just one way to look at it. For more of a complex overview, pay attention to the following facts.
1. Amazon seller's account requires your undivided attention
You can not simply open a Seller’s account on Amazon, list products you want to sell and put it on autopilot hoping for sales to happen. You need to give Amazon your 100 %. We of course do not mean a lot of time, but having clear guidelines as to whose job it is to look after the Amazon account. Or what procedures need to take place, depending on whether you get a customer request, an order, or any other request. If you, for instance, answer late to a customer or forget to send an order, it will immediately show up on your seller’s rank and this has a direct impact on the position of your products and the quantity of future orders.
Account verification is very peculiar, too. Amazon, with increasing turnovers, requires more and more confirmation steps and information about you, your company – especially due to financial and foreign exchange laws (the sales account has money, just like with a bank account). Amazon wants to know your identity and the identity of other people who access the account. For certain resellers it took several weeks to go through the verification process and they could not sell during that time.
2. Dealing with Amazon takes effort
Amazon often sends you various notifications and tips, however, on a one-sided basis. Whenever you need to solve something with Amazon, you have to contact their customer support (via phone, e-mail or chat), and you will be asked to create a so-called “case” that addresses the entire history of the communication in one thread. Case can also be set up by Amazon on your request.
With customer support, you can talk over the phone, but unfortunately you can not appeal to the same person you have dealt with. This first customer support line has very limited authority and information. You often get into a vicious circle of generic answers, so if you have a question, it’s often more effective to get rid of it, or ask for so-called sales forums, which are online discussion forums where vendors are discussing with each other. You are usually not the first one to solve a particular problem.
Additionally, it is good to realize that Amazon may be acting as a single company on the outside, but there are different independent departments that often have trouble communicating with each other such as Sales Support Team, Sales Team Performance Team, Verification Team, Payments Team, Fraud Team, Legal, etc.
Even us, after three years of closely cooperating with Amazon, have very limited direct contact with a specific Amazon staff, yet we can get some situations and specific problems to the right team and thus speed up the solution process significantly.
3. Amazon does not know Australian holiday
This experience cost us a lot of money in 2016 in Europe. A couple of July bank holidays fell on Tuesday and Wednesday, which meant that most of our customers took Monday off and therefore the whole process from placing an order by customer till the expedition could take up to 5-6 days. In the particular states, customers understood this, but abroad they are were not aware of other state’s holidays.
Upon returning to work ourselves that Thursday, we were struck by an unpleasant surprise, and some metrics worsened. It took a month before the turnovers reached the required values. Since then, we have set automatic replies to customers for holidays, or else we can suspend sales over holidays.
Also, we have developed a software at EXPANDO global, which monitors on daily basis metrics such sales accounts that we administer, unsold orders or shipment without tracking numbers. In cooperation with our logistics partner Japo – transport, we have been linked to transport so much that we know about the movement of consignments across Europe and can intervene in a timely manner whenever there is a problem with delivery.
4. Watch out for commissions and exchange rates
The fact that Amazon takes sales commission of between 12 and 15 % does not surprise anyone. Sometimes, however, it is possible to calculate the price for the actual sale and set prices correctly. Most of our clients will add Amazon’s commission to their sales price. When counting income and commissions, beware of 2 things:
- the commission is also included in the set postage, ie. Amazon also earns up to 15 % from postage, including VAT.
- Amazon sends money to your bank account according to the currency of the country in which the account is held. This is particularly important for Europe, where we advise companies not to set an EUR account in their national banks. Amazon would transfer money into their national currency first, and then, with the bank adding transfers to EUR, the loss might be up to 10 %.
5. No EAN code, no business
In modern ecommerce, no product can do without its unique number – the so-called EAN code. Amazon creates the largest catalog of goods in the world, and it is logical that it must be able to quickly match the same products of different vendors. In Europe, it uses EAN codes, UPC in the USA.
In one case, we began selling our complete range of products as unique products, although the products were already there on Amazon. Within a few days, 10,000 products were uploaded on Amazon and the first sales came immediately. But after a week, the Amazon Sales Performance team has retracted all the duplicate products and warned he will next forbid the sale of the account.
If you are a reseller, ask for your EAN code from your vendor. If you are making unique products, consider registering your brand into the Brand Registry. Be careful with inventing your own EAN codes, do not risk it. Amazon may over time remove products with unofficial codes, for example, in the US it is already linked directly to the GS1 database who controls its originality.
6. Larger turns will cost you
If you think about selling on Amazon, it will cost you money. Not the ones you would pay to someone, but rather money you pay indirectly. If you wish to reach attractive revenues, you must get the orders flowing as soon as possible. How? Here are some examples to increase sales:
- Initially, sacrifice margin on dozens of products and sell them cheaper (the products are listed on the basis of sales).
- Send a few free products to get reviews (without them, people do not trust new products / new sellers).
- Invest part of the budget in Sponsored Products, which is Amazon’s internal advertising PPC (although some sellers are only allowed to do this after 3 months on selling).
We have seen that sales across the global marketplace are working with great inertia. They go up slowly, but when they do, you sell more and more and collect more and more orders. Conversely, if you stop for a while, reaching the same revenue may take months.
That’s why it makes sense to start selling sooner rather than later – go through labor pains now and get interesting turns to get ahead of the competition. The history of the sales account and review creates a natural barrier to entry that is not easy for your competitors to overcome.