29 Jul-2015

3 Challenges Facing FBA Sellers (& How to Overcome Them) – Joanna Lupo, eComEngine

3 Challenges Facing FBA Sellers (& How to Overcome Them) 

If you are an Amazon Merchant who uses Fulfillment By Amazon (FBA), you know that the benefits of the program can far outweigh the costs. Most sellers actually see a significant jump in sales once they join the program. Plus, FBA handles storage of your products, picking and shipping them to clients, which allows you to concentrate on more strategic aspects of your business. But with any system, there are challenges. 

Here are 3 challenges facing FBA sellers today and how to overcome them. 

Managing Inventory
Knowing what and when to restock can mean the difference between seeing ROI in an FBA program and losing your shirt. Inventory management is a problem to be solved for any online merchant, but there are unique challenges within the FBA system. First of all, your goods are shipped into an Amazon warehouse, and you’re charged a storage fee. If you order too much, your storage fees are too high. If you order too little, you don’t have the stock to support your business and you lose the sale. If you offer product kitting, you have to order the right amount of product to support your kits and try to keep track of all your SKUs. Managing your supply chain can be hard to do once you reach a certain size. So, what do you really need to know? 

At a minimum, you must keep track of the following to know what and how much to reorder: 

  • How much you’re making
  • How your margins fluctuate
  • How fast your items are selling
  • What price other FBA and non-FBA sellers are charging for the same items
  • What shipping and order fees you’re paying and whether Amazon has fully received your shipments
  • What inventory is on order – both at Amazon and in your warehouse
  • What seasonal selling trends could impact your business 

If you can capture this data and use it to plan your inventory chain, you’re in the clear. You can use a series of spreadsheets to help you, or there are tools on the market that can do it for you. 

Managing Feedback
Every Amazon seller knows that feedback is important, not only to the customer-facing side of business, but to how Amazon rates that seller. If you’re an FBA seller, you may have noticed that not only do you get more feedback, but you receive less negative feedback. As an FBA seller, you have a great opportunity to improve and maintain your feedback score, which will result in more sales, a better online reputation, and may even help win you the Buy Box. But how do you make sure you’re doing everything you can to appropriately solicit feedback and manage negative feedback? The best ways are to: 

When bad feedback occurs, there are steps you can take to remove it. Amazon will strike through negative feedback on an FBA item if the feedback pertains to shipping or fulfillment. They’ll then add a note that explains that the problem with the order occurred in the FBA warehouse. Amazon will remove any feedback that contains personal information, profanity, or if the feedback is merely a product review. 

If the negative feedback fails to fall into an Amazon removal category, it’s up to you to try to get it removed. Customers have a 60-day window in which to remove negative feedback, so if you can satisfactorily resolve the issue you can ask them to remove it. Staying on top of all this is a challenge in itself, but it’s worth it to maintain a good feedback score. Luckily, there are tools to help you manage this too. 

Knowing What To Sell
Market research can be one of the biggest challenges to face an online merchant, and the stakes are higher for an FBA seller. Again, you’re storing your inventory in an Amazon warehouse, so if you’re storing the wrong thing you’re paying fees for product that isn’t moving. So how do you choose what to sell

It’s best to choose products based on: 

  • How the product ranks in sales and category on Amazon
  • How many other FBA sellers and other sellers are selling the item
  • What price FBA sellers and other sellers are using for an item
  • How much the item weighs
  • How big it is – dimension-wise
  • What your potential profit margin might be if you stocked that item 

When you know these things, you can make better decisions about what to purchase for your FBA store. It takes a lot of research and a lot of time, but done right, it pays off. Of course, there are also tools to help with these tasks. 

The life of an FBA merchant can be exciting and fulfilling. Knowing what specific challenges face you and how to overcome them can take a lot of the guesswork out of your online business, and knowing what tools are out there to help you can make all the difference. 

Joanna Lupo