Why not hitch yourself to Amazon and become an Amazon Seller? It is like the Holy Grail of eCommerce. Enter their eco-system and be a part of their logistics, streaming Prime, and grocery business. 3 out of 4 sales from eCommerce comes from Amazon.
Done correctly your Amazon store can bring you an income in the five or six figures every year. Furthermore, if you just dabble you may find yourself hitting one of the 8 Pitfalls of being an Amazon Seller.
Here are the 8.5 Pitfalls
Pitfall #1 Failure to Set Up an Actual Business:
Amazon sells billions through its independent sellers. But they don’t post their Independent Seller’s failure rate of 96.8%. One of the reasons is that people fail to set up their businesses. They don’t set up a business entity, or get a business license, business banking account, or business tax ID. If you truly want to succeed act like a million-dollar start-up.
Pitfall #2 Proper Tax Set-up:
Someone has to pay taxes. The buyer or seller. Somebody has to pay. At some put when you are making sales the tax man comes to get his money. Depending on where your business is located. State taxes have to be collected. You can avoid this pitfall by having a reseller’s certificate and investing in a tax consultant.
Pitfall #3 Drop Shipping
Drop shipping used to be Taboo with Amazon. Now they have it in their Seller’s University. As long as you follow Amazon’s guidelines you will not be suspended and lose your store.
Pitfall #4 FBA Fulfillment By Amazon
This is where most people fail and lose their store. Customer satisfaction is the cornerstone of Amazon. Your health rating will determine if you get suspended. Don screw this up by:
1. Comingling SKUs (just lazy)
2. Selling Counterfeit items (Just not smart)
3. Amazon Repackage returned Items (Do this yourself)
Amazon Seller Operations
Pitfall #5 Operation Pitfalls
Do you have the time to list your products, update SKUs, change your catalog, keep up with price changes, and make sure your product descriptions have the proper SEO language? Who will manage your FBA inventory, customer service, refunds, and sendbacks? Who will repackage your returns (hint Do Not let Amazon handle that)?
Pitfall #6 Duplicate listings from your Competition
When you have a hot-selling item. Other stores will copy your listing and steal your traffic. If you are not checking on duplicate listings you are losing sales.
Pitfall #7 Pricing and Procurement:
Prices go up and down. Failure to keep up with your item’s market is a sure way to lose money. And yes every item is a business. None of those coaching programs talk about the constant price adjustments. Products need to be dropped and added. This is not set it and forget it?
Pitfall #8 Marketing and Listing Optimization
Are you skilled enough to list your items to get them to show at the top of the page? Where do you focus your ad spend? Who will monitor your listing and update them to stay competitive? Are those items in your store still selling or do they need to be positioned to a different market segment?
Pitfall #9 Profitability
You are on Amazon to make a lot of money. If you are not you should have not read this far. Too many sellers focus too much on top-of-the-line sales and forget about the losers dragging their stores down.
The Case for Amazon Management
If you are a high-income earning with no time to start an Amazon store. You should invest in Amazon Management. You invest in your start-up and let your management team handle the rest. Avoid the 98.9 failure rate of the Amazon Seller’s out and invest in Management.
A reputable management team can help you earn a passive income for your store and create a business that you can later sell if you choose. This works best for high-income earners who are liquid and want to invest their cash into a passive income investment.
