Ecommerce businesses are booming. Amazon, the world’s largest online retailer, had 2019 net revenue of $280.52 billion, with over 50 percent of all sales on Amazon marketplaces coming from third-party sellers. The number of sellers with products listed on Amazon is approaching 3 million, and close to 100,000 new sellers signed on in the first six weeks of 2020. That’s over 2,300 new sellers each day!
If you're an Amazon seller, how do you make yourself stand out? We've put together some of our best tips for selling on Amazon, plus common mistakes to avoid.
6 Mistakes to Avoid When Selling on Amazon
1. Not Selling the Right Product
The competition on Amazon is fierce, which means you have to find and sell the right products in order to make a profit. What's "hot" now may not be "hot" next week, and there's also the reality that many other Amazon sellers are jumping in with similar products and saturating the market.
Market research, looking into product trends, analyzing the competition and understanding the target buyer will be time and effort well spent. Meeting a customer's needs, providing the "right" product and delivering on schedule will also help lead to positive buyer feedback and higher seller ratings. If it's a choice between Seller "A" and Seller "B" selling a similar product, customer feedback and satisfaction may be the deciding factor.
As a seller, you'll also need to keep a constant eye on the competition, checking out their product offerings and prices. And you will need to tweak your stock levels and selling prices so you rank properly.
2. Having a Poor Product Description
Whether you are a veteran salesperson using the Amazon marketplace as an additional sales and revenue stream to complement your already established business, or you’re just starting and working out of your garage, it is important to pay attention to the details — especially when you are pitching your product. Fact is, you will not be the only option in town, so you’ll need to find a way to stand out.
Put effort into your product title and description. This is when a potential buyer will decide whether or not to view — and hopefully purchase — your item. It may also pave the road to earning the valued Best Seller status.
Too little information may lose a potential sale. Not understanding who is buying your product may also lose a sale. Consider these tips as you customize your descriptions:
Know your customer and their needs.
Write a clear, concise and error-free product description.
Use bullet points to highlight key information, including product features, benefits, item details and specifications.
Your product title and description will be reinforced and magnified with the right image. By including a photo, you are providing the buyer with additional product information and detail, and also assuring them that the item exists and is ready to ship.
Make sure your image is clear.
Always go with the high-res image option.
Have a few images displaying your item in different angles/views.
Think like the customer: What would you want to see?
Consider hiring a professional product photographer.
4. Not Using Fulfilled by Amazon
All Amazon sellers need to understand the difference between “Sold by Amazon” sellers and "Fulfilled by Amazon (FBA)" sellers. In the FBA arrangement, Amazon takes care of storing, shipping, customer service and returns — and they charge for these services.
Going the “Sold by Amazon” route is less expensive, but you will have to take care of your own logistics, customer service and storage (which can be costly).
When you are an FBA seller, your products are automatically eligible for Amazon Prime shipping, which is very popular. It has been reported that using FBA gives sellers a 30-50% increase in sales. As a result, nearly 80 percent of Amazon sellers use the “Fulfilled by Amazon” service for some or all of their products.
5. Not Pricing Competitively
Avoid pricing too high or too low, which will scare off potential buyers or cause you to make less profit. Consider carefully as you buy merchandise for your online shop — you don’t want excess stock laying around, but you definitely don’t want to be unable to fulfill orders.
For help in optimizing your product prices, consider using a repricing tool, such as Splitly or SellerApp. These companies use algorithms to fine-tune product pricing and maximize profit. They can also offer support when it comes to product research and listing optimization.
6. Not Asking for Reviews
Reviews and ratings can make or break your online business — you need to garner enough positive reviews to gain the trust of potential buyers. The best way to earn positive feedback is simple: provide a good product and service.
While actively soliciting reviews and influencing customers is against Amazon policy, Amazon does offer an Early Reviewer program to sellers registered with the Amazon Brand Registry. Once a seller identifies a product that they would like reviewed, Amazon contacts buyers of a similar product, at random, to leave feedback. Amazon will gather reviews for up to one year.
If you still need to form your sales business entity, Incfile has a complete guide to everything you need to do. We can help get your LLC off the ground, or set up another entity specifically for your Amazon business. LLC formation does vary from state to state, but we’ve got you covered, wherever you are. Incfile has helped hundreds of thousands of businesses get on track and on the road to success.
Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.