Practical Ecommerce

7 Common Mistakes of New Amazon Sellers

It’s easy for new Amazon sellers to get caught up in the excitement of 240 million shoppers. But, while Amazon recruits more than 100,000 new sellers each year to the marketplace, many will leave the site within six months, often for avoidable reasons.

In this article, I’ll review seven common blunders made by new sellers on Amazon’s marketplace.

1. Forgetting to Collect Sales Taxes

Regardless of whether you collect state and local tax on your sales at Amazon, you still incur the tax liability. For a small fee, Amazon offers the service of collecting state tax on your orders. I’ve seen large established sellers not collect state taxes, only to learn from their accountants that they have a large unfunded liability they must pay out of their own pocket.

This is unnecessary and can eat away at your margins, especially if you have tax nexus in a populous state where many orders originate or in which many orders are shipped.

I’ve seen large established sellers not collect state taxes, only to learn from their accountants that they have a large unfunded liability they must pay out of their own pocket.

When you sign up for your Amazon account, fill out “Tax Settings” in Seller Central immediately before you make any sales. That way, you can focus on more productive parts of your business without any year-end tax surprises. And remember, you are responsible for remitting your sales tax payments, not Amazon.

2. Entering Incorrect Prices and Inventory Quantities

When you create a listing on Amazon, the pricing and inventory quantities are live nearly immediately. Unfortunately, Amazon doesn’t provide a “sandbox” to practice your product listing skills. If you have no inventory, indicate zero inventory; if you have inventory, don’t overstate your quantity.

Far too many new sellers are surprised to find out how quickly inventory can sell on Amazon, and when you oversell, that can start a painful chain effect that often leads to account suspension — quickly.

And don’t play with low pricing if you don’t mean to offer products at those low prices. I’ve seen many sellers lose thousands of dollars when they accidentally apply a low price — like $0.01 or $1.00 — on a new listing. Thanks to deal sites and Internet-fast word of mouth, a deal like that can often get sold out overnight when the seller isn’t paying attention, resulting in a significant loss.

On every new listing, make sure you apply a true price and inventory level so you don’t get burned.

3. Items Do Not Match Product Listings

As new Amazon sellers match their offers to existing product listings, not all of those sellers pay attention to whether the match is perfect — it’s “almost” the same color, or “almost” the same style. On Amazon, “almost” is never good enough.

You are responsible for ensuring that your listing is exactly what you are selling. If a customer buys an item, only to find it doesn’t match the product listing, the customer is likely to complain, and you can get suspended for not properly matching your catalog to the right products.

Unless an item matches perfectly, don’t link your products to existing listings. And even if an item matches an existing UPC or part number, you still have to confirm that the original listing doesn’t contain bad data.

4. Slow Response On Customer Inquiries

Every Amazon seller has 24 hours to respond to each customer inquiry it receives, no matter the time of day, day of the week, or whether a particular day is a holiday. When you take more than 24 hours to answer, you can get dinged by Amazon; too many dings will result in your account getting suspended.

Fortunately, there are external software providers — ReplyManager is a good one — that offer reply assistance for staffing gaps. But it’s up to you to figure out how to staff for rapid customer response.

ReplyManager can respond to queries, if needed.

ReplyManager can respond to queries, if needed.

5. Failure to Gather Customer Feedback

Amazon’s seller policing department, Seller Performance and Product Quality, checks that every seller has customer feedback for each sale on Amazon. Typically, customer feedback is tracked not just for quality (e.g., 5 out of 5 stars), but also quantity (typically 2-5 percent of all sales should get feedback).

Even large, established sellers are expected to continue getting feedback from customers. While you develop your own system for requesting feedback, there are several cost-effective providers to help automate this process. These include Feedback Genius, Feedback Five, and BQool.

In fact, new sellers should sign up with one of these providers so they don’t have to worry about gathering feedback quantity. And don’t forget to monitor the quality of the feedback; consider changes to your business if your receive too much negative feedback.

Feedback Genius, Feedback Five, and BQool automate the process of soliciting feedback from customers.

Feedback Genius, Feedback Five, and BQool automate the process of soliciting feedback from customers.

6. Fulfillment Errors

If you’re new to fulfilling Amazon orders, it’s easy to make a mistake — such as you’re late shipping an order, or you don’t provide shipping tracking information to Amazon, or you cancel the order due to unavailable inventory.

It’s amazing how quickly trouble will find you if you don’t get your order fulfillment under control from the start.

Every new seller should make sure the first 10 orders are perfectly fulfilled – shipped on time, and tracking information entered into Amazon. If you are unsure about fulfillment, seriously consider moving all of your inventory to Amazon’s Fulfillment by Amazon program, so your orders get sent out on time, with proper tracking information, and to ensure inventory is always in stock.

7. Competing against Amazon

If your products compete directly with Amazon Retail, don’t expect to get many sales, or many sales at profitable levels. Amazon Retail controls its ability to win the competitive sale at even unprofitable levels.

Before you buy a single unit of inventory, check whether Amazon Retail sells the items today. Free tools like CamelCamelCamel.com or Keepa.com can determine if Amazon Retail has recently offered the product, but may be currently out of stock.

James Thomson

James Thomson

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Comments ( 31 )

  1. Carlos Rivera July 24, 2015 Reply

    This article is like the ‘How-To Guide to selling on Amazon’. Highly recommended. Great stuff!

    Thank you for the customer feedback suggestions. I did not know about that.

  2. John Burns August 18, 2015 Reply

    Don’t forget that one of Amazon’s system for visibility of your products is by the amount of sales they get. If you are on page 10 for example, you won’t get many sales.. if any. It will take some time before you rank on higher pages and get good traffic. It can be a vicious cycle, so don’t expect too much in the beginning.
    We using Amazon at https://lovelighturns.com but don’t count it as the main contributor of our business.

  3. Casey Lawrence November 18, 2015 Reply

    Jim,

    Thanks for your article on selling on Amazon. I am in the process of applying to sell a DVD. Its a documentary that I produced and create the copies. Amazon is requesting I have UPC codes on each product. I have none. Do you recommend purchasing stickers and applying them to each DVD I ship?

    • James Thomson November 18, 2015 Reply

      Casey – you will need a unique identifier on each SKU you sell….and a UPC is usually the easiest way to go. I would first purchase the UPCs (easy and inexpensive through a site like https://speedybarcodes.com). Then you will need to get stickers to print those UPCs and apply them directly onto the DVD packaging.
      good luck, James Thomson

  4. Anthroseller December 26, 2015 Reply

    What do I do if I am going out of town and unable to mail books for a week?

    • James Thomson December 26, 2015 Reply

      You have a few options available to you:

      1. you could choose to put your books into Amazon’s Fulfillment by Amazon (FBA) program, where Amazon would handle shipping out your orders – but your inventory would have to be held with Amazon.

      2. you could fulfill your orders yourself, where you set up in Seller Central that your shipping times are 7 days – while that’s allowed, it would hurt the likelihood that a customer would buy from you, as most customers on Amazon are getting used to very quick shipping

      3. you would put your whole account into “Vacation Mode”, so you don’t sell items that you can’t fulfill in 2-3 day period. Of course you would get no sales, but you also wouldn’t get into trouble from Amazon for not shipping on time. Go to Seller Central –> Settings –> Account Info –> Vacation Settings

      good luck!

  5. Sergei January 1, 2016 Reply

    I’m reading a lot of horror stories online about Amazon.

    While its logical that many successful Amazon sellers won’t post anything on these sites, are there a lot of sellers that have actually grown their brand and sales significantly by selling on Amazon?

    • James Thomson January 2, 2016 Reply

      Sergei, there are tons of successful private label sellers of Amazon… best bets are to reach out to privatelabelpodcast.com or theamazingseller.com – both have huge followings of successful private label sellers.
      Good luck.
      James Thomson

  6. Saravana January 8, 2016 Reply

    Hi
    I read from their seller agreement that sales proceeds will be transferred to seller bank account in 14 calendar days if there are know refund/replacement request initiated by end customer. Is this 14-day lead to for payment reasonable and will payment happen consistently and automatically?

    • James Thomson January 10, 2016 Reply

      As long as your seller account remains in good standing, 14 day payment cycle is what Amazon uses. Some larger sellers are able to negotiate for 7-day payment cycles, but that is rare. Also, if you see a sudden increase in merchant-fulfilled sales without a sudden increase in feedback, Amazon may choose to hold back your payment for 30 days in order to ensure that there isn’t seller fraud happening.

  7. John March 21, 2016 Reply

    Hey, check out this scouting app for Amazon. It is free, and registration is very simple:
    http://www.azgizmo.com

  8. Eli April 19, 2016 Reply

    I normally get my codes from http://officialupccodes.com, I’m currently selling on Amazon, Ebay, Rakuten and Sears, I would recommend them to anyone.

  9. Lisa June 5, 2016 Reply

    Thanks James for the helpful tips, as this newbie is kind of floundering. As efficient as the fba process is I’m still weary of starting my inventory. I have a ton of great books to sell, but am still a little confused about pricing. When there are no fba sellers, but there is a market place price and other sellers I’m not sure how to price the book. Amy help with that would be appreciated greatly. Thank you for sharing your valuable knowledge!

    • Parry June 6, 2016 Reply

      Hi Lisa,
      https://www.facebook.com/AGSSEA/
      Routing you to the Amazon’s Facebook page. You may ‘Like’ the page for updates from Amazon and contact them directly for your specific questions.

  10. Art June 28, 2016 Reply

    Thank you. I,m in starting and investigating phase of online business. Thanks for tips.

  11. joe July 6, 2016 Reply

    Great Article. We are just starting our new FBA business.
    Here’s my question,We are purchase goods from China, and we want to sell on FBA US, we are non-US citizen. We found a FBA shipping company(cnpacksend.com), they said they can help us deliver goods from China to FBA US, and they can help you pay duties in US, is it legal for us?

  12. RAHUL SHAH July 28, 2016 Reply

    THANKS FOR GIVING TIPS.
    I AM IN STARTING PHASE OF MY ONLINE BUSINESS THROUGH AMAZON INDIA.
    THIS TIPS ARE USEFULL TO ME FOR GROWING MY BUSINESS ON AMAZON.
    ONCE AGAIN THANKS A LOT

  13. ron stone August 10, 2016 Reply

    very informative.
    I am going to purchase products and start selling next week.

    Do you have anything to tell me how to get Amazon to store my products and where I would get them shipped to?

    Best Regards
    Ron Stone

  14. Lisa August 22, 2016 Reply

    We are Amazon Sellers Lawyer, we help seller who have been suspended, have IP complaints etc. Please check us out at amazonsellerslawyer.com, maybe we can collaborate

    Thanks
    Lisa

  15. Liz Denisty November 1, 2016 Reply

    Great information, James…thank you so much! I understand the other seller has to sell the exact same product as that listed on the first page but is it okay to sell the product in different packaging than what is shown on the first page? For example, I want to sell a beauty serum but I want to sell it in a better container than the lame, cheap one shown on the first page.

  16. Tyrone January 1, 2017 Reply

    As the year change, January 1,2017 a individual seller account does the account starts at zero (sales) for the new tax year?

    • James Thomson January 1, 2017 Reply

      Tyrone – there are a number of implicit assumptions in your question. First, you ask about tax – if you have set up the individual seller account so calendar year and tax year are the same, then yes, the sales go back to zero to start the new year. Otherwise, you may have set up your account with a different tax year – if that’s the case, then be sure to track sales accordingly, and pay taxes at the appropriate year end for your business.
      Second, another tax issue to consider is Amazon won’t collect sales tax for individual sellers, but you are still responsible for remitting that form of tax nonetheless, if applicable. Good luck!
      James Thomson

  17. JM January 5, 2017 Reply

    Yes, I agree with these pointers, very informative! Additional information to competing against Amazon, I’ve noticed that listings owned by Amazon are in the buy box by default, next in the priority line are FBA items. A seller needs to maintain a reputation of 96-100% approval rating and to price its products $1-5 lower that the others in order to compete against FBA items and win the buy box! Yes chrome extension tools are also helpful, in fact I’m paying almost $7 a month for Amzpecty just to gain a daily snapshot of my competitors’ prices and quantities, which really gives me a cue when to raise prices and how many to list live.

    • Jamie January 15, 2017 Reply

      Very useful tips! Thanks for sharing!

  18. Jamie January 15, 2017 Reply

    Thanks James for educating the new online sellers like me!
    Looking forward to learning more.

  19. Danielle February 13, 2017 Reply

    Great post! Very informative as a new Amazon seller. I’ve just sent loads of inventory to Amazon so I will be updating the tax info on my account today so that I can get ahead of that possible issue before I start making sales. Thanks again! That one tidbit alone was enough to save my business.

  20. Jimmy Nguyen Tran February 17, 2017 Reply

    This happens a lot, most of the items don’t match. Most probably a communication gap between a seller and buyer. I own a cargo & freight shipment company here in California. It’s great that you brought this all up! All in one article. This will serve an eye opener for me and to others too.

    website: http://www.wordcraftlogistics.com
    Instagram: jimmyscw

  21. ana March 8, 2017 Reply

    Hi James,

    Very interesting article. I have a question, I signed up for Individual seller rather than Professional seller account on Amazon. Do I need to have a business license? I currently do not have any license as I am just starting to buy the products and luckily re-sell them in amazon.

    Thank you for your help.
    Ana

    • James Thomson March 8, 2017 Reply

      Thanks for your note, Ana. Amazon allows you to sell without a license, but you are then required to provide your SSN rather than a company EIN. Last time I checked, Amazon is required to report to the IRS all sellers who sell at least $10,000/year in sales, so if you are success selling on Amazon, the IRS will still take an interest in your tax position if your sales are at this level, whether you have used a company EIN or SSN to register your third-party seller account.
      Good luck selling on Amazon, James Thomson

  22. Ashwin Campbell May 9, 2017 Reply

    Am I responsible for paying the seller if they made a mistake like this. They shipped my item and accidentally refunded my purchase price. Then they sent a kind of rude email accepting fault but demanding payment. On top of that, they wanted repayment through a system outside of Amazon. It all sounded strange to me but shouldn’t they eat the cost on this one? Ps…I did actually receive a full refund.

    • James Thomson May 9, 2017 Reply

      While you may be able to get Amazon to pay for such a mistake’s costs, quite often Amazon will simply tell you this is the cost of doing business. There is no certain outcome for situations like this….believe me, I’ve seen sellers pay for a lot of crazy stuff that was caused by confused, mistaken customers.