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10 Costly & Crippling Amazon FBA Mistakes to Avoid

by | May 6, 2022

Amazon offers incredible leverage and high potential to grow your business & sell your products at scale – but if you want to take your operation to the next level, there are some costly mistakes to avoid. In this post, we’ll highlight some of the most common Amazon FBA mistakes and give you tips on how to prevent them. 

By avoiding these obstacles, you can evade a huge amount of stress and energy dealing with countless issues – putting yourself in a much better position to sit back, reap in the profits and emerge as a top seller among your competitors. So take a look at the common mistakes below and make sure you’re doing everything possible to avoid them!

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Inefficient systems, processes & organization

Many Amazon FBA businesses are plagued by poor systems, processes, and organization. This often leads to inefficiencies and wasted time/money. For example, if you have an inefficient process for listing products, it will take you longer to get your products live on Amazon. This can lead to lost sales and a lower ranking in the search results. 

Furthermore, if your fulfillment process is disorganized, it can lead to errors and delays in getting products to Amazon fulfillment centers. This can result in hefty Amazon fees and significant opportunity costs in sales. Plus, if you don’t have a reliable system for tracking inventory levels, you may end up with stockouts or overages. Both of these can lead to lost revenue and a hit to your bottom line. 

Every step of the process – from manufacturing to shipping to customer service – needs to run smoothly in order to be successful. When there are disruptions in the workflow, it can have a ripple effect that impacts every area of your retail business. 

Poorly-managed employees are often the biggest cause of disruptions, since they can only perform as much as they’re empowered to do! If your employees aren’t properly trained or don’t have clear instructions, it can lead to crippling mistakes and delays. This can throw off the entire production schedule and make it difficult to meet customer demand.

In short: poor systems, processes, and organization can have a major impact on your Amazon FBA business. By taking the time to develop efficient procedures, you can avoid these problems and set yourself up for success.


Poor health, energy & focus

As an Amazon FBA business owner, there is nothing more important than maintaining good health, focus and energy levels. Deteriorating health can lead to less productivity, focus & energy – which can snowball into organizational & efficiency issues. It ranges from physical issues due to poor posture, to weak immune system causing sickness & not being able to work as much. 

Keep in mind, if you’re not feeling well and forced to step away for a few days, that removes the head decision maker in your business. You might have a manager or two underneath you… but at the end of the day, you’re the one who knows best for your company. 

Don’t forget about your mental health, because increased stress levels can further impact your focus and energy. This industry is hyper-competitive and requires razor-sharp focus to succeed – so it’s essential to take care of your health in order to grow a profitable business.

10 Costly & Crippling Amazon FBA Mistakes to Avoid

Here are a few tips to maintain excellent health, focus and energy throughout the day:

1. Don’t neglect sleep. We’ve all heard it a million times, but we continue to struggle with it! Aim for 7-8 hours of sleep each night – otherwise you’ll risk burnout and lack of motivation. You can get by with poor sleep sometimes, but it’s not feasible to go off 4 hours multiple times a week in the long-term. 

2. Eat healthy meals. Fuel your body with nutritious foods that keep you feeling energized and vibrant. Avoid processed foods, sugary snacks and caffeine overdoses – this type of junk food is consistently shown to interfere with your hormones and lead to productivity issues.

3. Exercise 3-7 times a week. This improves your overall physical health and boosts your mood & mental clarity. Going for a run (or even taking a brisk walk) are great ways to get some exercise and move your body around a bit – which helps refresh your mindset and boost your mood (especially if the mid-day crash hits and you need to rejuvenate yourself).

4. Take breaks throughout the day. Don’t be afraid to take some time off and relax a bit – even if it’s just for a few minutes. Step away from work and enjoy your free time for an hour or so – you’ll be able to return feeling ready to tackle whatever comes your way (especially when the stress and challenges of running an Amazon business come along).


Focusing on sales volume over profit margin

When you prioritize sales volume over profit margin, you can run into a number of problems. For one, you may struggle to maintain profitability as your costs increase. Additionally, you may find it difficult to grow your business if you are constantly reinvesting your profits back into inventory. One of the main difficulties from scaling an Amazon business occurs when you’re not generating enough profit to reinvest in growth. 

When you prioritize sales volume over profit margin, you may end up selling your products at a loss. This can quickly eat into your profits and put your business through financial stress – making it difficult to maintain high revenue over the long term. Eventually, you may have to resort to heavy discounting or other marketing strategies that erode your margins even further. Therefore, it’s vital to find a balance between sales volume and profit margin in order to maximize the success of your Amazon FBA business.

Remember, cutting corners to increase sales can have serious consequences – and you may find it difficult (if not impossible in some cases) to maintain profitability as costs rise and profits dip. Many Amazon sellers experience this issue when there isn’t enough left over after paying off inventory debts from previous months’ revenue streams. 

Additionally, scaling your Amazon businesses becomes a huge challenge when you’re not generating enough cash flow to accumulate earnings and profits – which are needed to reinvest back into growth. By prioritizing sales volume over profit margin, Amazon FBA businesses can inadvertently cause more harm than good.


Choosing the wrong products

When you are selling products on Amazon, always remember to choose products that are increasing in demand with upward trends and projections – not just regular products with high search volume. If you choose products that are heavily saturated, you may have a hard time making sales. Additionally, if you source products that are poorly made or that do not meet customer expectations, you may receive negative reviews. 

Negative reviews can damage your reputation and make it difficult for you to sell products in the future. As a result, it is essential to carefully research and test products yourself before listing them on Amazon. By taking the time to choose the right products, you can avoid many of the pitfalls that can damage your Amazon FBA business.

10 Costly & Crippling Amazon FBA Mistakes to Avoid


Undervaluing your products

One of the biggest mistakes made by Amazon FBA sellers is participating in a “race to the bottom” in pricing. Aim to strike an optimal balance between making a profit and meeting customer expectations. If you undervalue your products and set a low price… you’ll have trouble scaling your operation and dealing with unavoidable downswings in sales and profitability that will naturally happen on occasion (which often occurs after December, for example). 

In addition, customers may question the quality of your products if they seem too cheap – and as a result, you may find yourself having to lower your prices even further in order to compete, which can quickly eat into your profits. In the end, it’s important to find a pricing sweet spot that allows you to make a profit while also delivering value to your customers.

When you undervalue your products, you are essentially leaving money on the table. Not only does this mean that you are not maximizing your profits, but it can also send a signal to customers that your products may not be worth the time and investment to purchase and try out (even with free 30 day returns). 

Setting a low price can lead to increased competition from other sellers who may be willing to undercut you on price. This can ultimately erode your profits, slash your ROI and make it difficult to grow your business. Consider increasing the price of your products in order to give yourself a fighting chance of success on Amazon FBA.


Overvaluing your products

On the other hand, if you charge too much, you could deter customers from buying your products altogether – especially when your products don’t have stellar reviews to support the premium pricing. This is especially true for sellers in competitive markets that are known to have high-quality products at cheap prices (electronics, for example). 

If you overvalue your products and set a high price, you risk having your listings buried in search results and your products ignored by shoppers. Expensive prices can also lead to negative customer reviews if the product doesn’t live up to expectations – which can further damage your reputation and growth opportunities. Ultimately, it’s important to strike a balance with your pricing in order to maximize your chances of success on Amazon.

To strike the perfect balance between increasing and decreasing your prices, you should run a pricing analysis against your competitors – as this will help you get closer to maximizing revenue and profitability. There are a few different ways to approach this, but one method is to use Amazon’s automated repricing tool. This tool takes into account your cost of goods sold, shipping costs, and any other applicable fees, as well as the prices of your competitors. Based on this information, it will automatically adjust your prices up or down to remain competitive. 

Another approach is to manually check your competitor’s listings and adjust yours accordingly. This can be a bit more time-consuming, but it allows you greater control over your pricing. Whichever method you choose, regularly checking your prices against your competitors will help ensure you are optimizing for revenue, profitability and growth.


Neglecting customer service

In order to maintain a good reputation and keep your reviews above 4 stars, customer service is a huge priority. Unfortunately, neglecting customer service can have a number of negative consequences – including an increase in customer complaints, which can lead to negative reviews and lower sales. 

Keep in mind – when your listings gain traction, customers are heavily interested in the “Customer Questions & Answers” section (which can increase your conversion rate and revenue). Make sure to provide detailed answers that satisfy the concern, because it’s likely other buyers will have the same questions too.

In addition, ignoring customer service can also lead to an increase in costly returns – since you’ll often need to answer questions regarding how the product works. Neglecting customer service can have a serious impact on your Amazon FBA business, so be sure to give it the attention it deserves.

10 Costly & Crippling Amazon FBA Mistakes to Avoid


Skipping research, preparation & due diligence 

When selling on Amazon, it is important to do your research, prepare thoroughly, and devote serious effort into due diligence. You’d be surprised how skipping any of these steps can hold you back from growing and scaling.

If you don’t research your market, you risk not knowing what products are in demand or what price point to sell at. This can lead to products that don’t sell through very well – or that don’t make you a profit in the first place. Not preparing sufficiently can also lead to further obstacles – for example, not having enough product in stock when seasonal trends pick up. This can result in losing out on potential sales and revenue. 

Skipping due diligence may result in missing important details that can make or break your business. For example: failing to register a copyright or trademark for your product’s branding can lead to unethical sellers taking advantage of you and stealing your intellectual property.

Taking shortcuts in research, preparation, and due diligence is a recipe for disaster when selling on Amazon. Make sure to perform all the necessary work upfront in order to set yourself up for success.


Overlooking Amazon policies

When FBA sellers don’t take the time to familiarize themselves with Amazon’s policies, they risk violating those policies and facing penalties from Amazon. These penalties can include having your listing removed, your account suspended, or even being banned from selling on Amazon altogether. 

In addition to the direct financial cost of these penalties, there is also the opportunity cost of not being able to sell on Amazon, which can force you to depend on lower-traffic platforms like eBay and Walmart. Furthermore, when businesses violate Amazon’s policies, it harms the reputation of all FBA businesses, making it more difficult for everyone to succeed. 

Ignoring, overlooking or neglecting Amazon’s policies is therefore not only harmful to individual businesses, but also to the FBA community as a whole – and customers become far more skeptical when purchasing as well.


Unrealistic expectations on level of difficulty

It’s no secret that Amazon is a tough marketplace to crack. With millions of products already available, and hundreds of thousands of new products being added every day, it can be difficult to stand out from the crowd – so it’s a wise choice to reel-in expectations and prevent yourself from being sucked into the “get rich quick” false hopes being promised by a lot of “gurus.” 

If you’re selling a physical product, you’ll need to contend with strict listing requirements, fierce competition, and constant price wars. Even if you do manage to get your product in front of potential customers, there’s no guarantee that they’ll actually buy it – and even if they do purchase your product, you’ll need to deal with customer service issues, returns, and negative reviews. 

In other words, starting an Amazon FBA business takes rigorous dedication and commitment. It’s important to have realistic expectations about the level of difficulty involved, and to be prepared to put in the hours necessary to make your business a success… otherwise you’ll likely end up disappointed and frustrated.

10 Costly & Crippling Amazon FBA Mistakes to Avoid

Final thoughts on the worst Amazon FBA mistakes to avoid

That being said – if you dedicate serious effort into avoiding the mistakes in this article, you can definitely grow and scale an Amazon FBA business into 7, 8 and even 9 figures a year. Doing the right things and avoiding the wrong things will have you cruising off revenue on autopilot – that’s the beauty of Amazon FBA! If you have friends who also sell on Amazon, share this webpage with them. We never want to see fellow online sellers struggle either, even if we’re all competing with each other in a sense. Thanks for reading and good luck on your ecommerce journey!

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