The 7 Most Common Amazon FBA Mistakes to Avoid


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The 7 Most Common Amazon FBA Mistakes to Avoid

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Seven most common Amazon FBA mistakes and how to avoid them

Hi guys, Neil Waterhouse. This week’s video’s about the seven most common Amazon FBA mistakes and how to avoid them. A couple of weeks ago, I did Amazon FBA presentations around Australia. I got to speak to many sellers, from people just starting out to full-time, multi-million dollar sellers. And as a side note, if you’d like a copy of that presentation, I’ll put a link on the screen, where you can download it for free.

Why some sellers are full-time multi-million dollar sellers and others aren’t?

Now, before and after the presentations, it was great to speak to people in the audience and, you quickly figure out the themes of why some sellers are full-time multi-million dollar sellers and others aren’t. Now everybody’s different but, learning from other people’s mistakes, can save you a lot of time, and a lot of money. So let’s launch right into it.

Mistake one

Mistake one. This is being unrealistic about how much money it costs, in inventory, to build a full-time Amazon FBA business. And is the FBA the best option, as it’s certainly not the only option as I’ll show you. Now, many FBA newbies don’t take into account how long cash can be tied up for. If you’re importing from Asia, whether it being China, Malaysia, Vietnam or anywhere else. There are normally lead times, when you place a new order with a supplier, as often they need to manufacture to produce their goods, and this can take anywhere from a few days to several months. Normally the supplier will ask for a deposit, often around 40%.

Cashflow is required

And this of course is where the cashflow is required. Then after the items are produced and inspected, then their goods are either sent via air freight, which of course is very expensive. Or shipped to a freight forwarder, and sent via sea freight, which normally costs much less, but it does obviously take more time. Then the goods are cleared by customs in Asia, and locally, which takes time. And then the goods are shipped to an Amazon FBA warehouse, and unpacked. And this of course, all takes time, and while this is all happening, you’ve outlayed cash, and you’re not getting any return until the items are listed and then sold.

Stock turn

This whole process of course is called a stock turn. And many newbie sellers don’t take into account, how much time and cash is required for each stock turn, and of course the stock turn is from the time you outlay the cash ’til you finally get the cash back in your bank account. Now if cash is an issue, then it’s normally better to start with another strategy, like dropshipping,

Start with another strategy, like dropshipping

you know, is an example, where you get paid first, before you purchase any inventory, in other words you don’t have to pre-purchase any inventory. Now I’m going to go into this about dropshipping today, as I’ve done that in the past, but again, I’ll put a link on the screen, for a free dropship training course.

Mistake two

Okay, mistake two, and that is not calculating all the fees, for running an Amazon FBA business. If you’re importing from, say, China, normally you’ll be paying in US dollars. Make sure you’re using a money exchange, which gives you the best possible exchange rate. Don’t use companies like PayPal who offer very poor exchange rates.

Not calculating all the fees

And also take into account, inspection fees, freight forwarding fees, from your supplier, all the shipping costs. Clearance fees, in your country, GST. Ask your accountant if you can claim back the GST, when goods are imported. And also take into account shipping fees from your local freight forwarder. To your Amazon warehouse. Also Amazon fees, Amazon final value fees or referral fees. They vary from six to 13%. And also Amazon long-term storage fees.

Mistake three. This is selling cheap items

Okay, mistake three. This is selling cheap items. Now I reckon, eight, nine out of ten newbies that come up to me, after a presentation, and tell me what they’re either selling, or they’re going to sell, it’s almost always low-cost small items, i.e. cell phone accessories, USB cables, SD cards. Or something similar. And the big problem with this is, after all the fees and the mass competition by all the other beginners focusing on small cheap items, there’s very little profit remaining. And you  have got to sell a ton of these types of products to make any real money.

The bigger and/or more expensive an item is, the higher the profit margins

As a general rule, the bigger and/or more expensive an item is, the higher the profit margins. Course this is the opposite of what beginners do.

Mistake four

Okay, mistake four. And this is purchasing a list of recommended products or recommended suppliers. The problem with purchasing a list is, every man and his dog gets the same list. Everybody gets the same list of suppliers. They find the same products. Then everybody lists the same products. All of a sudden there’re an extra 10, 50 or 100 sellers selling exactly the same products.

So buying lists is extremely dangerous

And that just takes a couple of new sellers to start the price war, and bang, and the next thing you know, is that products are selling under your cost. Now, this can be a delay, if someone puts out a new list. Now you might look on there right now and go, “Okay, yeah look, you can buy for X and sell for X “it’s a great profit.” But then, everyone goes and orders it from China, Malaysia, Vietnam or wherever. And then, in the next 30 days, two months, and all those products arrive in your country, bang, and that’s the problem. So buying lists is extremely dangerous.

Mistake five

Mistake five. This one is, beginners trying to find the one killer product, that has a 300% profit margin or whatever, and sells ten times a day. Yes, these products do exist. However, they can take a lifetime to find. And if and when you do find them, it won’t be long before others find exactly the same products. And then of course, the other thing about these products is, you want to build a business that works without you.

You want to build a business that works without you

You want to outsource. Now if you become some genius about doing product selection where you find these one-off products that make huge profits and turn over a gazillion times a day, it’s very hard to outsource this to low-cost labor. And the other thing with these products, if you lose one of those products that you’ve taken forever to research, it’s much easier to replace one of those ones that makes less profit like I was telling you about one in ten, so I have ten products that make the same money as one product, it’s much easier to replace that.

Mistake six. Trending products

Okay, mistake six. Trending products. Be very careful with trends. If you’re new, and you’re importing products, and you’re not experienced with picking trending products. If you’re a dropship seller, not a problem, because with dropshipping, you don’t have to pre-purchase any inventory. You get paid before you purchase any inventory. But, if you’re an importer. And/or you sell on Amazon FBA. It’s easy to get stung when a trend drops.

The bigger the party, the bigger the hangover

Always remember the saying: The bigger the party, the bigger the hangover. This is especially true with trends. Use programs like Google Trends, which is free. Which shows you the trend of any keyword. Now remember those fidget spinners? In the early days, you could sell a hundred a day for $15. Now you can’t give ’em away. And that’s a classic scenario of a trend.

Mistake seven, being passionate about a niche product

Okay, mistake seven, being passionate about a niche product. Or about a niche, or a product. This is another mistake that massively determines the failure or success of sellers. I’ve seen this over and over and over. Buyers on Amazon on eBay. Now this is buyers, not sellers, buyers, okay, so buyers on Amazon or eBay, they both want a high-quality product, but at a bargain price. The problem with this, is a general rule.

The problem with this, is a general rule

EBay and Amazon buyers will not purchase the Rolls Royce of quality. And this is the big thing. Like, here’s an example. My biggest hobby in life is building and flying radio-controlled jet planes. Now over the years I’ve learnt, model aircraft, like full-size aircraft. They’re only as good as the weakest part. In other words, it only takes a five cent part to fail, and that can be the end of a model jet, which can be worth thousands of dollars. So for that reason, I only use top-quality parts, and of course, all those quality parts I’m very passionate about, I’d love to sell them. But, I’ve learned over the last 20 years of selling online that the amount of buyers for these high-quality parts around the world, is extremely small. And if I wanted to sell, mass amounts of products. I had to sell products that the masses buy. P

Products have to be good enough in quality to get good reviews

Products have to be good enough in quality to get good reviews. And this is the balance that you need to do. You need to always sell products that are most definitely high enough quality to get good reviews. But cheap enough to sell to the masses. And the great thing is, you don’t have to bring these things out and check out the quality. You always read the Amazon reviews. From your competitor’s products. And you can also look on eBay to look at the reviews on eBay and the negative feedback and whatever. So we always check the feedback, to check the quality.

Always optimize every single listing every single time

And when you’re starting, get your products inspected when they’re still at their manufacturers, if their manufacturer’s in China or wherever, get them inspected over there before they leave. Okay, and lastly. Over 90% of listings are not optimized. Always optimize every single listing every single time. Learn how to optimize the listing, and then outsource the work to a one to $2 per hour, low-cost overseas virtual assistant. Again, I’m not going to go into outsourcing in this video, but, I’ll put a link on the bottom of the screen, where you can find virtual assistants from one to $2 per hour, and there’s another free course. Anyway, that’s all for this week. Please scroll down, leave me a comment below.

Please leave me a comment below and let me know what you think.

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2 Responses to The 7 Most Common Amazon FBA Mistakes to Avoid

  1. John says:

    Hi Neil !
    Words of wisdom indeed! I can’t seem to find that link that you were going to place at the bottom of the screen Neil 🙁
    Cheers
    John

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Neil Waterhouse

Before you go, get the behind-the-scenes strategies and secrets used by the world’s most successful eBay Amazon Dropship sellers.

These are powerful tactics that I’ve used to launch and grow my own online businesses… and they can work for you, too