The start of a new year is a hopeful time. In one sense, you can forget all about the mistakes from the past year and start anew. In another sense, you can take the time to reflect on those experiences to build stronger strategies—and resolutions—for your brand.
In light of 2022, we’ve created this list of common mistakes and roadblocks that Amazon sellers faced over the last year. Featured are tips from the experts at unybrands, a global Amazon acquirer that manages a robust portfolio of brands across eight core product categories. Here are their tips for overcoming challenges spanning supply chain, PPC and brand strategy in 2022.
7 Issues Stunting Your Growth on Amazon
1. Over-Reliance on a Single Supplier
It’s not uncommon for brands to become dependent on one supplier that they trust, whether for manufacturing or handling logistics. After all, expanding your supplier base can be an arduous and costly process.
At the same time, failure to diversify has left many brands defenseless against natural disasters, trade tensions, labor shortages, rising material costs—and, more recently, global pandemics.
Under a single-source or single-geography model, your business is at risk of losing the lifeline of its sales at any moment. You remain at the mercy of your one supplier with no immediate leverage to negotiate prices or tweak your engagements as needed.
Food for Thought
An overwhelming majority of U.S. Amazon sellers (73%) use FBA for fulfillment. While FBA is a strategic move for competing on Amazon, many brands are overly dependent on it and have fallen victim to sudden toss-ups within the program. During the COVID-19 crises, for instance, Amazon temporarily banned non-essential products from FBA, throwing thousands of sellers into a frenzy overnight.
2. High Operational Costs
Between shipping costs, fulfillment costs, product costs and inventory costs, seller fees can quickly stack up. Needless to say that these costs eat directly into your margin and if not managed effectively, you can find yourself with little-to-no margin.
However, finding the right solution isn’t always straightforward. For example, to reduce fulfillment costs, you may ask yourself, “Should I outsource fulfillment to a 3PL?”
On one hand, managing fulfillment in-house tends to sink costs (and time) as your brand grows, but offers the most control over your operations. On the other hand, a 3PL can free up your time and expand your reach immediately, but comes at a higher per-unit cost.
Finding the right solution requires a mix of number-crunching, good supplier relations and the willingness to spend money to make money—a step that some sellers skip over.
3. The “Copycat” Approach to Competition
Amazon is flooded with players that take a pure “copy” strategy. They mimic everything ranging from their competitors’ product assortment to their prices and brand messaging, hoping to mimic their success as well.
This may work to an extent, but it doesn’t allow you to build a long-term brand that stands on its own. Founders who take this strategy tend to hide in the shadows of their competition rather than building up their brands and continuously improving their products to become the competitor to beat.
“Having a superior product that is high-quality, loved by customers, difficult to replicate and differentiated from the competition is the key to long-term success. Without differentiating your brand, it’s guaranteed that another player will come in and ‘eat your lunch.’” - Vera Nieuwland, Director of Brand Strategy at unybrands
4. Cash Flow Issues
Many times during your brand’s growth, you’ll have to invest in production, freight forwarding and other business expenses. When a new product is involved, you’ll also have to factor in extra advertising and marketing costs to build up momentum (on marketplaces, this will help you to generate enough sales that will, in turn, help you to collect reviews and raise your organic rankings).
But with all the planning in the world, things can still go wrong. If ill-prepared, you could be pinching for capital and money injections to keep your business growing.
5. Distractions and Disorganization
Running an ecommerce business is anything but simple. As a business owner, you need to develop a project management mindset for handling various sprints and tasks at once. This alone frustrates some sellers. Instead of executing on clear, well-organized project plans, they stretch themselves too thin and spend a majority of their time putting out fires.
In the same vein, you may be bombarded with various courses, tech recommendations and growth hacks that threaten to take time and money away from your core business.
When this happens, it’s important to recognize that some tools and changes require a certain level of business maturity. You should do everything in your power to police yourself and stay hyper-focused, asking yourself questions like “Is this tool or process really necessary? Is it going to help me grow the business as per my strategy?”
6. Poor Inventory Management
Having adequate inventory is critical to sustaining (and scaling) sales. But inventory issues are one of the most common and pervasive issues among businesses. Some brands lack the tools to align inventory costs with business plans and, as a result, wind up with excess inventory or tied-up capital.
“With the supply chain issues that we’ve seen in the past one to two years, companies need to decide if they want to take just-in-time or just-in-case approaches. Just-in-time frees up cash to be deployed elsewhere in the business. However, any delays in production or transportation could disrupt your inventory position. Just-in-case means having capital tied up in inventory, but allows owners to be protected against uncertainty in demand and external factors.” - Joe McIntyre, Director of Supply Chain at unybrands
7. Lacking a Brand Voice
When you're first starting out on Amazon, creating a compelling and consistent brand experience for your customers across various touch points may not be high-priority.
But brand-building is a necessity when you begin expanding to new channels and cross-selling. For folks who take too long to make this mental switch will likely face quality control issues and struggle to establish their brand voice later on.
7 Tips for Scaling Your Amazon Business
From analyzing your supply chain to diversifying your sales channels, here are several ways to combat the above issues.
1. Improve Supply Chain Visibility
A resilient supply chain begins with having total visibility into your operations. Knowing where an item is in your supply chain at any point in time is paramount—as is knowing the status of all purchase orders (POs) and shipments.
This allows you to adjust for low inventories or overstocks when planning out your marketing, re-ordering and restocking strategies.
To achieve this, establish one source of truth for tracking inventory movement and/or managing your suppliers. A multichannel platform can ensure that all of your sales channels and tools constantly communicate with one another, plus can save you the headache of tracking down data from multiple sources.
Case in Point
One of unybrands’ companies faced product and invoicing delays, due to having data in many disparate information sources (some of which conflicted with each other). In response, the team conducted a root-cause analysis.
“Through this process, we were able to identify a disconnect between our instructions to suppliers and how our internal systems read invoices for certain payment scenarios,” says McIntyre. “By focusing on the problem the second it was identified, we were able to mitigate future risk for [our newly acquired] brand and enhance internal processes to be more robust and scalable.”
2. Pretend that You’re Driving a Cruise Ship, Not a Speed Boat
When it comes to your supply chain, you’ll want to build towards your future needs, not just for your immediate needs. In this sense, it’s wise to pretend that you’re driving a cruise ship, not a speed boat.
Focus on your 12- to 24-month growth plans when optimizing your infrastructure and making partnership decisions. Don’t cut corners or make emotional decisions, and instead, move carefully and methodically.
This will entail having clear operating plans, supply chain visibility and strong demand/production forecasting abilities. With the right data, you can drive meaningful conversations with your partners and check that they can realistically meet your future needs as your brand grows.
3. Optimize for Retail Readiness
Invest in peak retail readiness, even if it requires upfront time and costs. When a product has legitimate demand and traction among your audience, you’ll want to capitalize on this momentum by providing the best customer experience.
This all starts with your product listings. You need to have ultra high-quality product imagery, product video, A+ content and well-optimized content (title, bullets, backend search terms) at a minimum.
You may need to invest in potentially loss-making advertising as well to generate your first orders and reviews. This investment, however, will not be in vain. On marketplaces, reviews and sales velocity are vehicles for organic ranking.
Related Reading: The Listing Quality Flywheel: Explained
4. Outsource Amazon PPC Management
In the early days of your business, it’s typical to operate as a ‘solopreneur’ who wears many hats. But as your business scales, you’ll want to outsource things like advertising to an experienced partner.
Your time will be best spent on bigger growth-generating tasks. Meanwhile, an Amazon PPC specialist can keep close watch over your PPC campaigns at all time and expertly shave costs, while taking your strategies to the next level.
5. Invest in Multichannel Marketing
With the rapid growth of white-label sellers and corporate players on Amazon, the fight for attention will only become more vicious. Not to mention, Amazon PPC costs are steadily on the rise—so you’ll want to diversify your traffic sources to your Amazon listings.
“Every year, cost-per-click (CPC) prices on Amazon are going up. Competition on Amazon is going to squeeze FBA sellers and their ability to maintain their target profitability. Thus, the smartest sellers will build out their audiences and partnerships outside of Amazon’s marketplace and maintain steady growth, without surrendering to profit margin erosion.” - Bence Bathi, Manager of Amazon Growth at unybrands
6. Understand Consumer and Competitor Insight
Gather qualitative and quantitative data on your end-consumer and competitors to make better business decisions oriented around growth. This may mean A/B testing your content, scouring reviews, surveying customers and/or running focus groups. If you’re limited in time and budget, you can alternatively invest in a virtual assistant to analyze reviews around your products.
The goal is to build a process for regularly collecting insights on your pricing, listings, products and customer service so that you can find gaps (and opportunities) that impact growth.
7. Manage the Now, and Invest in the Future
It’s never too early to develop a growth mindset. While you might be busy trying to handle day-to-day operations, set aside time and resources for performing market research, generating opportunities and placing bets on long-term growth.
Avoid waiting until sales are stagnant to think of ways to pivot your brand. Keep a portfolio of ideas to act on—including, but not limited to, strategies for developing new products, engaging new categories, enhancing packaging or improving your brand position.
Amazon is chock-full of distractions and competition. Luckily, there’s a lot you can prepare for ahead of time, given the right mindset, tools and guidance.
As we kick off the new year, take a wider look at your previous experiences and make necessary reflections to sail through the next year with success. Identify things that are both inside and outside of your control, and steer clear of these common traps that sellers tend to fall into.
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