Amazon is dominating the e-commerce landscape as over 100,000 new sellers join the marketplace every year, while an estimate of 240 million customers shops from this giant platform. With that in mind, it’s no surprise to see an increase in business-savvy sellers to earn profit from this target-rich environment.
However, first-time sellers tend to make fatal mistakes in the early days and suffer from costly consequences as a result. It’s understandable as navigating through Amazon can be a tricky ordeal between the ever-changing requirements, policies, tools, and advertising.
To that end, we’re here to breakdown the common pitfalls to avoid so you can sell your products on Amazon without a hitch!
Mistake #1: Failing to Monitor Your Listing or Data
When it comes to selling products on Amazon, your product listing is vital and should be regarded as some form of a living organism. It undergoes constant changes throughout the day, which means that you will have to stay on top of these fluctuations to monitor its performance.
Throwing up your listing and calling it a day will only lead to disappointments, so be sure to keep track of your competitor’s listing and see how you can improve yours. This includes improving your keyword list optimization and ad campaign, as well as observing the campaign data to develop long-term strategies.
Mistake #2: Keeping Prices Static
The prices in Amazon’s marketplace are in constant flux, and failing to keep up with these changes can lower the ranking of your product listing. Experts and top sellers are always on the price tail and adjust their prices accordingly, so be sure to keep watch of your product prices and make necessary changes when the opportunity presents itself. You can quickly check the prices through Keepa or CamelCamelCamel, both of which can offer price history charts and price drop alerts to keep you on the loop.
Mistake #3: Tax Blunders
When selling products on Amazon, taxes are typically at the back-burner of a seller’s list of priorities. However, you are liable for collecting sales taxes in all regions where you have a physical business presence.
Be sure to check with your Amazon Fulfillment Center in your state as collecting sales tax can vary. To that end, it’s in your best interest to set aside a dedicated budget for tax payments each month to prevent your payroll check from bouncing when you cut your tax check.
Mistake #4: Underestimating Expenses
Amazon requires sellers to pay for various fees for their fulfillment services. This can easily overwhelm new sellers as most fail to consider the cost of doing business in Amazon the FBA style. This can cost fees on the following services:
- Order handling fee per customer order
- Pick and pack charge per unit ordered by a customer
- Weight handling fee per pound unit ordered by a customer
- Storage fee per cubic foot per month
Mistake #5: Failing to Keep Decent Books
New sellers often find it challenging to keep up with their financial status, which means that you risk losing track of the ins and outs of your cashflow. When you can’t manage what you can’t see, it leads to high financial risk and compromises your business.
To that end, maintaining proper bookkeeping for your e-commerce business should help you manage profitability, cash, and taxes. It also enables you to identify errant fees and keep you from losing money, as well as prevent employee fraud down the road.
The Bottom Line
Taking on multiple hats in a large-scale business such as Amazon may lead to costly mistakes in the long run, which is why new sellers should consider investing in a professional bookkeeper, accountant, or CPA to help straighten up their financial status on day one.
Of course, you don’t necessarily need a professional when you’re just starting on the fly. However, you will eventually need financial guidance once you start to settle payments, and managing finances becomes demanding.
To keep your cash flowing correctly and prevent running into financial blunders, investing in an accountant will help you navigate the waters in no time.
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