When I first thought of starting my toy company I naturally wanted to put some products on Amazon. Whether you like it or not, Amazon is a prime retailer in the US and abroad and even though many say they hate it they still buy things from it.
Before you register to sell anything on Amazon you need to consider a few pros and cons and whether Amazon is right for your business.
I also decided to include a few hacks that I’ve learned in the process that can help when you’re trying to buy things on Amazon.
Pros and Cons of Selling on Amazon
PROS:
Accessibility
You can easily reach your target market quickly. Customers trust Amazon so they will purchase a new product more likely when it’s backed up by a giant retailer.
Although it’s an illusion because you don’t need any safety certificates for most items, and if you do – they can be easily skipped (more on this later, also why I never recommend buying certain things off Amazon due to counterfeits).
You Can Sell By Doing Nothing
If you run your business on Etsy or a self-hosted platform you need to ship the items, deal with returns and exchanges and customer complaints.
If you sell on Amazon you could just send all your stock to Amazon Warehouse for a fee and then Amazon ships everything for you and deals with returns. It’s undeniably convenient.
CONS:
High Fees
Naturally, the most obvious con of selling on Amazon is high fees. If you sell fewer than 40 items a month you pay $0.99 fee for each item sold, on top of other fees.
For example, if you are selling something for $130 using FBA, you would incur $35.80 in Amazon fees. These include a $19.50 referral fee for the sale along with approximately $16.30 in Fulfillment by Amazon fees. These fees don’t include the shipping fees paid to mail the tent to an Amazon fulfillment center for Prime.
Amazon Seller Central is Super Confusing
The interface of the seller’s central is not very straightforward. It takes quite a while to learn your way around it.
Even if you decided to use their FBA program, a lot can go wrong
Limitations
Amazon limits what you can sell. Certain products cannot be sold at all unless you have specific certificates and a certain quantity. For a small seller it’s often impossible.
If you’re adding a product that’s new to Amazon, you may need to purchase a UPC code or request an exemption.
Also, just as I was writing this post I received an email from Amazon stating:
Sellers must meet the performance criteria below to sell in Toys & Games through seller fulfillment from November 2, 2020, through January 3, 2021. All seller-fulfilled orders are considered when determining your performance.
Performance criteria based on seller-fulfilled orders (not fulfilled by Amazon):
– Your first sale on Amazon must be prior to September 1, 2020 but does not need to be specific to Toys & Games.
– You must have processed and shipped at least 25 seller-fulfilled orders from August 15, 2020 through October 14, 2020.
– Your pre-fulfillment cancel rate must be no greater than 1.75% from September 15, 2020 through October 14, 2020.
Basically, I won’t be able to sell anything during this period as I’m a very small retailer.
Being Prime is Expensive
Customers are more likely to purchase products available in Prime. Why? It ships for free and it has free returns. (Little do they know it’s actually often cheaper to turn off your prime and order from a non-Prime retailer – check it yourself next time!)
Prime has advantages for sellers. You don’t need to deal with shipping and returns, Amazon does it all for you.
If you want your products to show as Prime you need to have a seller’s account first which costs $39.99 per month, regardless of whether you sell one item or a hundred. Or even zero, as you pay it up-front. You also need to pay the shipping fee to the Amazon warehouse and then a fee for storing all your crap there.
Many people got screwed on it at the beginning of the year when certain products simply stopped selling due to coronavirus pandemic.
You’ll Never Win with the Chinese as a Small Retailer
I don’t mean it as a joke or being racist. I mean it in terms of business. Chinese retailers are able to offer products at lower costs than you (naturally, they’re straight out of their factory), then ship it by sea to an Amazon warehouse and boom – they have cheap products available in Prime.
Shipping from China directly to the US is cheaper than shipping within the US thanks to a shipping method called ePacket, so many sellers dropship through AliExpress on Amazon. As a result, the Chinese have inherent cost advantages that US sellers don’t have.
If you write reviews on Amazon you probably got approached by Chinese retailers asking you to place an order for their product and write a review. They obviously return the money immediately via PayPal so you simply get a free product (this isn’t a scam), but as a result, they can get 1000+ reviews in just a few days.
Unfortunately the same thing goes for fakes. If you create a product, put all your money and effort into testing it and production, then Chinese take copy this and put a fake product as a real one and Amazon will do nothing.
(!) This is also why I never recommend buying anything involving safety for children off Amazon. I can tell you for sure 90% of the child’s lifevests sold on Amazon are actually counterfeits.
Amazon Still Tolerates Bullying
Something that blew my mind when I first registered for Amazon was how little Amazon actually cares for their sellers. There’s basically no functioning customer service for sellers!
I listed my products (imported toys) and waited for some orders. As a new seller I naturally priced my stuff lower than I saw on Amazon…
Within the first few hours I received two messages from two other sellers who sold the same product bullying me in Chinese saying that I have to stop selling this product for this price, because they own the market and that they’ll place order to give me bad reviews which will close my account.
I immediately reported this to Amazon, canceled all the fake orders which gave me 1* reviews naturally (they never paid for the orders anyway, but were able to post a review either way). Just to hear that Amazon refuses to delete these reviews and they don’t care what sellers are doing to other sellers!
I started googling around and checking sellers groups on Facebook and found out it’s an ongoing issue that Amazon simply ignores. That said, as a small seller you cannot win. After three 1* reviews your account gets suspended, so you simply cannot win (more horror stories here for example)…
You’ll Never Win with People Returning Things
People love returning things for no reason. If you check the actual stats, many people will order something then just return it because they can.
Even if it says it’s “free returns” someone pays for it – the seller. If you don’t approve the return as a non-Prime seller there is always a way for the customer to win, unfortunately.
Quite often the customer will get a full refund straight away, even if they used the item or destroyed it, so you won’t be able to resell it.
Is Selling on Amazon Worth It in 2020?
Quite frankly, no, it’s not worth it in my opinion. More and more US sellers are leaving Amazon as it gets saturated by foreign Chinese sellers.
Especially if you’re just planning on selling one product you developed it’s business suicide.
Thank you for sharing this article. I completely agree with you as I started a cosmetic brand and I’m getting entirely destroyed on Amazon. My product recently has dropped a star in rating and it’s struggling to sell. I’ve had customers also return for no reason, at no cost so my balance on my seller account is in the negatives including PPC ad costs. I’ve been breaking even or in the negative for months.
Are you provide alternatives that you recommend to sell on? I have my own website so I’m wondering if I should drive traffic there and try another platform like Etsy?
I think Etsy is good to start with for a bit, but you can do much better with your own website and targeted facebook ads.
I’m getting destroyed on Amazon as well right now. I owe over $400 in ad cost and no one is buying my product. No one. I get like 1 sale a month.
Hi, Anna –
I came here to read your article about Mercari, and stayed because you are completely transparent in your writing and reviews!
So happy you wrote this truth about Amazon. I’ve been selling there for many years – not my own products (except for my 2 books), but used books & media. They SO do not care about 3rd party sellers! Or even authors! I got targeted by a hate site and they wrote several scathing reviews on my books – all on the same day – and Amazon wouldn’t remove them.
Ebay is almost as bad protecting sellers…but that’s another article.
I hope you write about selling on Facebook Marketplace, which I’ve never tried!
I’m hoping for tips on Facebook Marketplace, too! Here’s a second vote for an article on it, @annainthehouse! 🙂
I started selling December of 2022, so roughly a month on Amazon. The YouTube gurus make it look so easy. They don’t tell you how absolutely difficult it is finding profitable products and that when you do find profitable products you’re on a listing that’s 15 sellers deep, who sometimes have thousands of the products on hand.
The fees are absolutely atrocious. Since I’m new I thought I’d start off easy and do books. I’ve gotten a few sales but I’m basically breaking even after the fees. If I do FBA the handling fees are terrible and if I do FBM the USPS shipping are usually $3.49 at a minimum, plus I have to buy the packaging. Also, there’s a $1.80 “Variable Closing” fee for media.
I’m only a month in but am quickly realizing this dream of selling on Amazon is turning into a nightmare.
I have been selling on Amazon for 8 yrs now. Initially, i was distributing other products that I was able to purchase at wholesale and resale with small profit. Then I launched my own branded products. Outside of no brand recognition, i did have positive customer reviews on our storefront so my branded products sold reasonably well when advertising. then last two years for unknown reason, Amazon would all the sudden delist my products (not all but certain ones at a time) saying our products needed to be EPA registered. Through appeals i have been able to get our products relisted but happens in peak season and cost significantly with lost sales. Dont know if its a competitor making anonymous accusation and Amazon just capitulating or if its Amazon or EPA but appeals process is set against the seller and not innocent until proven guilty but is guilty until you prove your innocence. Even with proof, they can still arbitrarily keep it delisted. I wonder if others have faced similar and would like to file a class action suit
All my concerns about possibly selling on AZ have been given voice by this short article. My margins, once Amazon is done taking their cut, would be horrible.
I’ll create my own site, focus on niche advertising.