6 Major Problems With Selling on Amazon
eBay was the only online selling platform for many years. Since its inception in 1996, millions of sellers around the world have bought and sold items with ease and confidence. Amazon entered the selling scene in the early 2000s, and people could use the platform to sell books, CDs, and DVDs. Over the years, Amazon has grown exponentially since 2012, opening numerous fulfillment centers around the world.
As efficient and attractive as Amazon seems, it still has its problems.
Problems With Selling on Amazon
- Barriers to entry. It isn't so simple just to jump on Amazon and start selling. As the platform has become inundated with sellers who don't follow the rules, Amazon has had to become more strict in allowing who can sell, and what can be sold. For example, sellers must be approved to sell clothing, shoes, handbags, automotive items, and many more types of inventory. The list of categories requiring approval keeps growing. And it isn't that easy to be approved. This doesn't happen on eBay. There are no barriers to entry and anyone can sell any item that isn't on eBay's restricted list.
- Amazon sellers only get their money every 2 weeks. When you sell an item on Amazon, payment is made by direct deposit to your checking account every 14 days. Amazon does not accept Paypal from buyers. That can be a real drag if you are using the revenue from your sales to purchase more inventory to sell. There are ways to work around the 2-week payment system, but you must apply and be approved to Amazon. With eBay, you can get paid every day, even multiple times a day.
- The competition is brutal. Many Amazon sellers don't sell one of a kind items. They sell items purchased from wholesalers or suppliers in bulk. This begs the question, if you can buy it in bulk, then any number of other people can too, so why put yourself up against so much competition for the same items? Also, Amazon sellers use automated repricing software so their prices are continually adjusted to be the lowest price. With many sellers using repricers, the minute one sellers out-prices another, it sets off everyone's repricers and a downward pricing spiral begins. The only winner is the Amazon buyer who gets items really cheap. One of a kind items (like vintage, used, and thrift store items) have high profit margins. You may be the only person with a handmade Bucilla stocking or the only seller with a size 4 Anthropolgie dress in the right colors.
- It is difficult and time-consuming to build a positive feedback profile. You think eBay customers are bad about leaving feedback? Amazon customers are worse. Only about 1 in 30 buyers leaves feedback on Amazon, so you have to sell a lot of products to build up your feedback. About 1 in 3 eBay customers leave feedback.
- Your products can become restricted and unsellable at any time. Amazon works closely with manufacturers and brands. If a brand decides they don't want third party sellers listing items on Amazon, they can deem them restricted at any time. This happened to me numerous times on Amazon. For example, I was selling Dunkin Donuts coffee that I was purchasing at grocery stores and Target. I had about 40 bags in an FBA warehouse. One day I woke up and found an email that Amazon had partnered with Dunkin Donuts and third party sellers could no longer sell this brand. I had to pay to get the coffee out of the warehouse and sent back to me. Everyone got Dunkin Donuts coffee for Christmas that year — what else am I going to do with 40 bags of coffee?
- Amazon is complicated and expensive. Especially if you sell on the FBA program. Fulfillment by Amazon, is when you send your items to a warehouse and they sit there until a customer buys them, then Amazon ships the item. Learning the prep system isn't easy, and a lot can go wrong with damaged items, lost items, and other warehouse issues. Amazon fees are about 1/3 of the sale price of the item, which doesn't include the monthly fee of $39.99, and the ever increasing warehouse storage fees. eBay comes out to be about 15 percent of the sale price, so about half as much.
As someone who has sold on eBay since 2003, and on Amazon from 2009 — 2013, I can attest that eBay is a better fit for me. I don't care for the rat race of competing against other sellers selling wholesale goods for razor thin margins. I also like to have my inventory with me where I can manage it — where I know things aren't going to be damaged and orders will be shipped on time. I also enjoy the thrill of the hunt for unusual or one of a kind items. eBay isn't for everyone, neither is Amazon. It is just a matter of determining which is a better fit for your particular business.
Revised by Suzanne Wells on February 27, 2017.