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 : / / / /

Why You Need to Move Away From Walmart and Amazon FBA in 2021

The fact is that as of 2021, Amazon FBA and Walmart are officially dead for ecommerce dropshippers. If you’re currently a seller on Amazon or Walmart or you’re toying with the idea of using either as your sales platform, we recommend you move away from them and build your own sales infrastructure. The reason for this is revealed in a recent report from The Wall Street Journal, in which they detail how it’s actually often cheaper for Amazon and Walmart retailers to issue full refunds of products and let customers hold onto or donate them. This revelation can make both of these businesses detrimental to your dropshipping business in several ways. Read more about the state of business for dropshippers using Walmart and Amazon FBA in 2021.

What The Wall Street Journal Findings Mean for Your Business

The article in question discussed how retailers Amazon and Walmart, potentially followed by others in the future, are no longer requiring customers to return unwanted items. Those items technically belong to the retailers (as opposed to individual sellers). So those companies have the authority to give customers permission to keep unwanted items along with a full refund. Amazon and Walmart reason that it’s simply cheaper for them to let customers hold onto those items. But that can be harmful to business owners by tempting people to game the system. Customers who aren’t honest can hang onto items they’ve purchased while requesting a refund. This essentially allows them to get free products at the seller’s expense.

The article shows once again how ecommerce giants like Walmart and Amazon are really in control of sellers’ products and don’t truly have sellers’ best interests at heart. However, this isn’t really news at all. Many people may be familiar with the fact that, for several years now, Amazon has allowed customers to keep products rather than return them. This a long-held practice of theirs. The WSJ article simply helped raise even more awareness of this issue.

Losing Money From Unreturned Products on Amazon FBA in 2021

Screen grab of Peter Pru discussing the Wall Street Journal article about Amazon FBA in 2021

The problem with enabling customers to keep unwanted products — which in some cases may not actually be unwanted at all — is that this hurts sellers who could otherwise resell those products. And it’s worse than an inability to resell returned products. Sellers are also hit with fees that cause them to lose even more money when customers choose to get a refund without returning their items. These problems further emphasize how harmful those big retailers can be. They can be great for occasionally free traffic and sales, but you should avoid building your business through them.

Walmart and Amazon, along with other big names in the industry, may seem like a haven for sellers. They can use the platforms to push products and generate lots of sales. But it’s important to keep in mind that they’re only looking out for themselves. In short, the products sold through those channels don’t belong to the seller; they belong to those platforms. That means that Amazon and Walmart can do what they want with them. You forfeit control over your own inventory.

Do you want to make a profit and retain control over your products and business in general? Then make sure that your primary source of sales is your website. Setting up a sales funnel and developing a successful website that you actually own will ensure you don’t suffer from another retailer’s attempts to cut corners.

A Recent Surge in Returns for Sales on Walmart and Amazon FBA in 2021

Screen grab of Peter Pru discussing changes in consumer behavior during COVID-19

Another recent article on PYMNTS.com talked more about the rise in product returns experienced with retailers (including Walmart, Amazon, and Target) throughout 2020. The new decision to allow customers to keep unwanted items was officially made as a result of an increase in returns that took place in 2020, with ecommerce packages seeing a 70% increase in returns compared to 2019. 

Due to the pandemic and the subsequent inability to take items to physical stores, returning items became more challenging for consumers. The rise in ecommerce as more people turned to online shopping during lockdowns also led to more returns. Generally, online orders tend to lead to more returns than in-store purchases. Why? This is largely due to the hassle of having to return to the store after buying an item in person. Also, people may be disappointed or receive something different from what they expect when ordering a product online because they can’t see or try the product in person before purchasing.

Unfortunately, while Amazon and Walmart’s decision to let customers keep products they no longer want may be convenient for both consumers and those retailers, it’s a considerable loss for sellers.

Build Your Own Business Without Relying on Walmart or Amazon FBA in 2021

The best way to avoid the potential costs and headaches associated with product refunds and unreturned items is to stay away from companies like Amazon and Walmart. You don’t necessarily need to avoid them entirely. They can be beneficial in generating traffic for you and boosting sales. But they shouldn’t be your primary platforms.

Instead, build your own website and control the traffic to it. Develop a sales funnel that moves people along through the buyer’s journey toward a sale and upsell. Once you’ve built a solid foundation for your business and you’re able to sustain it, then you can consider branching out to outside retail platforms like Amazon FBA in 2021. The more control you have at the start, the more likely you are to succeed and grow. Then you don’t have to worry about what corporations are doing that may hurt smaller businesses. 

Start with your own website and your own platform that attracts short- and long-term customers. Then you can leverage the power of larger companies to supplement your core efforts. The less you rely on a company like Amazon, the less likely they will be to negatively impact your business in a way that matters. You’ll always have that main source of sales to keep you safely afloat.

Consult With the Ecommerce Empire Builder Experts

Dropshipper thinking about how to strengthen their ecommerce business

Do you want to learn how to build a winning online business and succeed without Amazon, Walmart, or other retailers? If so, reserve your seat at our free ecommerce masterclass. We’ll show you how you can sell best-selling products online and create a full-time income using reliable ecommerce funnels to grow your business. For frequent tips and insights, visit my YouTube channel, too. Tagged : / / / /