Why Most Amazon Sellers Fail Before Becoming Profitable

People think that selling on Amazon is their ticket to the big time, that they’ll open their store on Amazon and immediately be inundated with people wanting to buy their merchandise. After all, Amazon is one of the largest selling platforms on the planet. So naturally, if they have a good product, it will sell quickly, right? But the truth is that most Amazon sellers fail before they’ve even begun. The truth is that Amazon FBA can be a waste of time and a major financial risk. This guide will show you exactly why Amazon sellers fail and why FBA is not the amazing business choice that so many people think it is.

Amazon Will Believe Larger Businesses When It Comes to Copyrights and Patents

You can have a business making $50,000 to $80,000 per month and can still lose your business because a larger business makes copyright or patent claims on your idea. It doesn’t matter if the claim is totally false. It doesn’t matter if there is no evidence. Amazon will shoot first and ask questions later. Then, a year later, when it’s proved you were right all along, the larger business has already taken your market share, and you’re left with nothing.

Amazon Sellers Fail Because the Startup Costs Are Staggering

When you’re starting with a $0 budget, Amazon is a tough place to start. Everybody tries to pretend to sell on Amazon is cheap, but it’s not. You have to buy bulk merchandise and a lot of it to make sure you keep up with demand, and that means laying out five to twenty thousand dollars in inventory upfront with no idea if it will even sell. 

Added to that are advertising costs. There are literally millions of people trying to do what you are doing. If you want to stand out, you’re going to have to advertise, but ads aren’t cheap. Even if you are buying cheap ads, the odds are that no one will see them, and that’s why they’re so inexpensive.

Amazon Has No Trouble Competing With You on Their Own Site

Screen grab of Peter Pru discussing Amazon's packing cube product

Chances are, if you’re just starting, you are selling some basic commodity. If that is the case, Amazon makes it, too. Check it out for yourself; stop reading for a second and go on Amazon and put a basic commodity like packing cubes in the search engine. Amazon makes packing cubes, and it comes up first. Of course it comes up first; why wouldn’t it? They will always prioritize themselves over your small business on their site, and if you stop and think about it for a minute, that makes perfect sense.

Amazon is smart; they won’t just have one type of commodity on the market. They have so many products themselves that there’s barely room for any other competitors on the front page, and most people will buy from that initial page. 

The truth is people trust the Amazon brand; after all, they’re buying from their site. So people will buy the Amazon Basic version of what you sell before they buy yours. It will be cheaper, be better advertised, and have name-brand recognition. How can you compete?

Even When Amazon Isn’t Competing With You, Someone Is

If you owned a store that made luggage, you wouldn’t have your competitor’s luggage next to it so that the customer can compare. But Amazon doesn’t care about that. You’ll never get a page to yourself, which is why many Amazon sellers fail. 

If you’re not competing with an Amazon brand, your brand will be right next to some larger brand. There’s no way for you to stand out that way. If people wanted a specialty item, they’d go to the artist’s website or go to a craft website like Etsy. 

Amazon is where you go for convenience. People don’t care if your product has an extra pocket when it’s right next to a cheaper product and will ship sooner.

They’re Using Your Store’s Statistics to Compete With You

Screen grab of Peter Pru discussing Amazon Basics products

If your store is successful, it will catch Amazon’s attention. If they see you’re selling some niche product incredibly well, they might start making it, too. Go back to the Amazon page and Type ‘Amazon Basic’ into the search bar. These are all the commodities that Amazon makes. They started smaller, but they can copy a store’s products every time they see a successful store.

Maybe they didn’t always make gym equipment, but they saw some stores on their site doing good business and started making the same equipment. They don’t have to pay for market testing; you’re doing it for them. They can sit back and see what’s selling before duplicating the popular products and ignoring the products that aren’t selling, and they’re doing that using your hard work. How can you possibly compete with them when they control the site, and they can make everything cheaper than you?

They won’t give you your own customer list or your own statistics to help you make your store successful. So why provide the statistics to your competitor who is using it against you? It makes no sense!

Can You Even Afford to Rank?

Amazon seller seeing competitors outrank his store

The only way to rank on Amazon is either to sell a lot of inventory and have a lot of reviews or to be Amazon itself. When you’re just starting, you will have to give away hundreds if not thousands of products for free just to get enough reviews to rank. Can you afford to compete like that? Can you afford to give away thousands of free products just to get your business started?

Look at the stores on Amazon, and you will see that they all have incentivized giveaways so that they can keep up with the number of reviews they need to keep their rank up. Of course, you could decide you don’t care about your rank. But no one will buy from your store on page five of Amazon. Amazon is all about quick, cheap sales, so many Amazon sellers fail and fade away.

How Ecommerce Empire Builders Can Help

Don’t set yourself up to fail! Use Amazon for research and to funnel sales to your website, but don’t rely on them for success. I have started businesses before, and I can help you start yours. When you have your own business on your own site, people won’t see your competitor’s brands right next to yours. If you want to market your own business and sell products you believe in, then create your own online store. Click here to reserve your seat in our webinar or subscribe to my YouTube channel for more insights. Tagged : / / / /