You’re looking at the Amazon FBA opportunity, but there are some Amazon seller risks that we all face. After all, things don’t always go according to plan.
But some courses don’t talk about this. After all, it reduces student enrollment volumes.
So in the spirit of being totally transparent, allow me to outlay the 10 real risks that Amazon sellers like me face every day.
Amazon seller risks are real
Since this isn’t a blog where I simply talk up the advantages of selling on Amazon, I also want to outline real risks that you might face in the journey. This way, you can be better equipped when hazards might come your way.
Because I don’t need to rely on course enrollments. My main gig is selling on Amazon, where today I continue to enjoy a full-time income.
So let’s jump into the reasons why Amazon can be a risky business.
Your product quality is low
China messes up products. This doesn’t happen as often as you might think, but it does happen. Often it actually happens because the foreigner (us) didn’t spec everything on a Purchase Order before sending the final payment. You might later discover that your product quality is much more lower than anticipated.
Profit margins can become reduced
Trump is doing an excellent job of reducing our profit margins right now. But outside of that, some Amazon sellers are routinely hit with lower than expected profit margins, due to competition, higher purchase prices and more. This is why going for products with a good margin (30% minimum) is very important.
Products are damaged in transit
Many people avoid fragile goods due to the fear of damage. But other products, such as yoga mats, are almost as likely to be damaged in transit to Amazon. From truck crashes to leaking chemicals from other freight, or even forklift-induced damage, it’s quite easy for your products to be damaged in bulk.
Customers can return unsellable goods
One of the best things about Amazon is
Your competition can destroy you
Some competitors are ruthless. They’ll setup fake accounts to throw you negative reviews, in a bid to wash you away. Others will order all of your remaining inventory, then return it all in opened packaging. Whilst Amazon has become better, it is still at times, the wild wild west.
Account suspensions happen often
There is a good percentage of beginners who create an Amazon seller account, then get banned within the first hour. Literally. Then starts the process of getting yourself unbanned. This can take months, many emails, phone calls and even solicitor intervention. I’ve also been banned as a live seller with products.
Hackers can take your money
Amazon recently introduced 2-Factor Authentication to prevent hackers from accessing funds from seller accounts and reducing the likelihood of bank account changes. But it still happens sometimes, especially those sellers who have a 6 figure amount casually sitting in there, waiting for their fortnightly payments.
Amazon cares little about sellers
Ask any successful Amazon seller if they think that Amazon has their best interests in mind, and they’ll say no. The support you get is absolutely shocking. This is not a company who cares about sellers who are helping their own customers. You’re simply a number in the system and they don’t care if you’ve been hi-jacked.
PPC expenses are often rising
I sell in some competitive niches on Amazon. So much so, that I rely a lot on PPC ad-spend in order to let my customers discover my products, and convert into sales. Unfortunately, all my competition also wants to spend money on these ads, driving up the price of every click. Not every sale…every click. And it starts at $1.10. 😬
The Chinese scammers are around
If you wire money to China, then you need to be aware that some hackers are taking over factory email accounts. They’ll pretend to be the same person, but give you completely different bank account details. When you wire the money, then you’ll never see it again. I know several people who have lost thousands this way.
Protecting your moat
I talk often on the blog about protecting your moat. That is – building a solid barrier around your Amazon business. Doing so can massively eliminate a lot of these issues.
Perhaps the most important thing that one can do, apart from being educated properly with a real Amazon course, is to lodge a trademark ASAP. This is going to provide access to Amazon Brand Registry which gives a whole lot more protection. I’m surprised to see today, that still only a small percentage of Amazon sellers are in this program.
I like to use Zonguru to alert me whenever an account issue arises. From a negative review to an account suspension, or a listing hi-jacker, I’ll know instantly when something pops up.
You also need to be proactive. This is your business, not somebody
In summary
So many courses are promising the world. You can travel the world, make passive income 🙄, gain ‘financial freedom’ and live happily through selling on Amazon. It sounds like a dream.
I wish it were this easy. I wish it was a case of pressing a button and money rains in. This doesn’t happen, ever. With anything. Period. So you don’t have to build an Amazon business at all, especially if you don’t have the work ethic.
While I will say that these upsides certainly exist, and today I have real freedom, selling on Amazon is not without risks. I have to pay attention often. It is, after all, a real business. One that takes a financial and time commitment.
Nothing is guaranteed here. Some people shouldn’t start the journey on Amazon. But for those who do, I look forward to continuing to help you out along the way.
Hi Joshua!
Thank you so much for the candor and warmth with which you generously share your knowledge. Links to Sophie Howard’s course have preceded many YouTube videos. She is charismatic and easy to like but there’s no possibility, at this stage in Amazon’s existence, that one could earn a large income with little effort. It had to be a scam! I googled her and discovered you. You’ve actually inspired me to consider either Adam Hudson or Sophie Howard’s course. Keep up the great blog! Cheers, Kim
Thanks Kim! Really appreciate the feedback. 🙂 Yep Amazon is actually hard work which is why so few make it, and sometimes is shown as risk-free which it isn’t.