There are thousands of third-party sellers on Amazon, selling everything from private label items to name-brands and spanning nearly every product category imaginable. But regardless of what you’re selling on Amazon, you can expect to encounter some challenges — and rewards — along the way.
We asked a handful of Amazon sellers for their highs and lows when it comes to running a third-party storefront. Here, we’ve compiled 10 of the most common:
The Cons: Amazon Seller Challenges
Bad news first, right?
1. Customer Interactions
Having a sound customer service strategy is key to any business’ success, but sometimes it can be difficult to manage when you run an online business with a middle man like Amazon. Nicole Rush, Payability customer and co-owner/Customer Service Manager of C7 Device Recycle on Amazon, notes how difficult it can be to build relationships with your Amazon customers:
“Some customers provide their phone numbers, others do not. As a seller, we must keep accurate records of all our transactions, so all communication must be done through Amazon. Sometimes, you just need to talk to a customer on the phone to truly reflect your intentions… Customer service is about so much more than the sale.”
2. Predicting Product and Market Trends to Maximize Margins
Amazon sells anything and everything, which gives third party sellers tremendous opportunity — so long as you sell the right products at the right price. But choosing which products to sell and how much to charge for them isn’t always easy. Just take it from these two Amazon sellers:
“It’s a challenge to manage product SKU’s to keep track of current trends with regards to pricing and Buy Box status,” says Marcey Barichello, Payability customer and owner of Coffeevines on Amazon.
Nathan Carlson, Payability customer and owner of DreemDeals LLC adds, “Understanding margin — and knowing when and just how far you can push the envelope before you are just wasting your time turning dollars without a pure profit — can be challenging.”
3. Fraudulent Activity & Hackers
Fraudulent activity on Amazon is on the rise, which can greatly impact your Amazon business.
Nicole Rush noted a recent incident when a customer tried to scam her: “There are so many scammers out there. Just this week we had a customer demanding a refund saying he never received his order. We had confirmation of delivery from USPS. The customer filed an A-z claim on us, which is extremely time consuming, and can severely damage your Amazon ratings. This customer was not interested in finding his order, he only wanted a refund for a phone we eventually proved he had received. He even admitted to it. This case had a happy ending, but unfortunately this is not always the case. We are a small business, and scammers trying to steal product can be really defeating at times.”
And as Jean Kloer, Payability customer and owner of Lucky Combination Co. on Amazon, notes, scammers don’t just happen on the customer end: “The biggest challenges currently facing a serious Amazon seller right now is Chinese hackers. They’ve decided to try to hit Amazon with a vengeance. In addition to just plain trying to hack individual accounts, they also flood the market with counterfeit items and fake listings; that creates bad news for everyone, buyers and sellers alike.”
4. Always Open
Owning a business is not your typical 9-5 job — especially when that business is online. With Amazon “open” 24/7, so is your business.
Nicole Rush notes that it’s “the business that never sleeps.” She continues, “As an Amazon seller, you are always open. The good news is you receive new orders while you are sleeping, the bad news is that customers message you with issues while you are sleeping. You must get into a good routine when managing your Amazon inbox, or it will consume all your time. Amazon expects you to answer every message within 24 hours, so you must stay connected.”
5. Cash Flow Gaps
Because Amazon doesn’t pay you immediately for your sales, cash flow gaps are inevitable and, as a result, your business’ growth can stall. Not to mention, running your day-to-day operations can be very difficult. Luckily, there is a solution in Payability — just take it from these two Amazon sellers:
“Cash flow was a challenge for us until we got in with Payability,” says Nathan Carlson. “It has been nice pushing the envelope with sales not worrying to cash flow.”
“Payability has enabled our business to get access to funds much faster than we imagined was possible. We even get same day access to our income stream!” says Susan Brearley, Payability customer and owner of Elf Works Lane on Amazon. “We’re a small business and don’t have the same luxuries that large corporations have. So Payability makes it possible for us to remain nimble and enables us to make the kind of turn-on-a-dime decisions that are critical when you are a startup up or entrepreneur.”
The Pros: Amazon Seller Rewards
Challenges aside, there are several rewards that come from selling on Amazon. Here are five:
1. Customer Exposure
Amazon’s reach is undeniable, and as an Amazon seller you have a built-in customer base in the many millions.
Nicole Rush notes that Amazon brings “lots of visibility, lots of customers, and hopefully, lots of sales. The customers will come if you have a quality product at a quality price.”
Susan Brearley adds that there is “constant access to new customers and the ability to build out our unique brand. We can grow on a vibrant platform — as Amazon grows, we grow.”
2. Brand Trust
With Amazon’s customer base comes its brand name. Buyers know and trust Amazon, which explains why so many do their online shopping there (and hopefully, from your third party storefront).
“Customers trust that they are getting the best pricing and customer service so your company name is a trusted seller and source for the product you are selling,” Marcey Barichello explains of Amazon shoppers.
To really cash in on this trust, you should make sure you have positive ratings. As Nicole Rush points out, “If you are selling on Amazon and have a good feedback rating, customers trust that you will deliver the product they order. Amazon helps you get them in the door, your customer service keeps them coming back.”
3. Organized Inventory Tracking
To run an e-commerce business — on Amazon or otherwise — you need an inventory management strategy. Amazon offers a built-in solution in Seller Central, and for larger sellers, there are great inventory tracking tools like Teikametrics.
Nicole Rush likes using Amazon’s inventory management tool in Seller Central: “Adding and modifying your inventory is very simple with Amazon’s tools and reporting in Seller Central.”
There is an inventory report in Amazon Seller Central that outlines your inventory levels for each of your listings, including sales, days until out of stock, and recommendations for how much inventory to order so you don’t experience a stockout.
According to Nathan Carlson, “Nothing is better than an automated Amazon business that turns a profit while you are sleeping.”
So what does it mean to automate your Amazon business? For starters, Amazon’s FBA program allows you to essentially sit back and watch them fulfill your orders, process shipping and returns, and manage customer service. All you have to do is get your inventory to their warehouses (a process you could also automate with your suppliers).
*Pro Tip: Nathan does mention that automation is a blessing and a curse all in one, and suggests that you review sales and monitor your automated systems regularly to avoid pricing errors, ASIN mismatches, etc.: “This could lead to a monetary issue, quantity issue, or just a complete shipping of the wrong product. We all know that after a few mistakes you will be paying for the losses and your account could be at risk with Amazon.”
5. Flexibility & Work/Life Balance
Many of our customers who sell on Amazon tell us that they opened their storefronts in order to work from home, set their own hours, and have more time for family and friends. Running an Amazon business lets you do just that, so long as you plan well (and automate – see #4 above).
Just take it from our customer Rebekah Cornell whose Amazon business allows her to work from home with her husband and spend time with her children.
What challenges and rewards have you experienced as an Amazon seller? Share with us on Twitter at @GetPayability.