The 6 biggest Amazon FBA mistakes and how sellers can successfully get compensated.
The advantages of the Fulfillment by Amazon (FBA) service have been mentioned many times, and experienced FBA sellers know how to benefit from the nearly endless customer base of the online giant. However, every year, thousands of new marketplace sellers start an Amazon business – of which the majority will not survive a year. The Amazon universe mercilessly punishes FBA sellers for mistakes, as the competitive pressure is enormous. The good news: Especially in the first year of their selling career, most newcomers make the same mistakes, and these can be easily avoided. Today, we will show you what to pay attention to in order to avoid as many FBA mistakes as possible.
The top 6 biggest Amazon FBA mistakes
FBA mistake No. 1: Little knowledge, little strategy, little plan
For a long time, it was considered a quick way to make money by entering the “online retail” business through Amazon FBA. It has now largely become known that selling on Amazon is anything but easy and requires the same business skills as any other company. Additionally, aspiring sellers should have basic knowledge of e-commerce. How does Amazon work? How do I find successful products? What is a market analysis? How do I run online advertisements?
Amazon FBA is not inherently suitable for beginners. Instead of starting recklessly, it is advisable to first expand your own knowledge. Of course, no one can have everything figured out at the beginning. But the basics should be in place so that you can assess which tasks you can handle on your own and where you need support, for example, from external service providers. Additionally, you should make a plan and act strategically. This guide may help you: The ultimate Amazon FBA guide: Step by step to your own business!
FBA mistake No. 2: Lack of market analysis and research
Here too, the rule applies: Keep a cool head. What good is it if you have acquired all that knowledge and developed a strategy, but then fail because you did not invest enough time and care into a detailed market analysis or, in the heat of the moment, order a cheap product in large quantities that no one wants to buy?
You need to know the market and your target audience inside and out. Only then will you be able to launch the right product in the optimal way. Which product has a good chance of selling (spoiler: usually not the one you personally like the most)? What should the product images look like? What is the competition doing in the niche? How is a sales-psychological product description structured? All of these are questions that will come your way.
FBA mistake No. 3: No investments, no goods, no advertising
Admittedly, the timing is not exactly optimal at the beginning: the business is not yet generating revenue, but expenses are increasing. Nevertheless, investments are necessary – in new goods, in advertising, in product images, in product listings. The list is long.
At the same time, you should not blindly throw money out the window. First, heed mistakes No. 1 and 2, and then focus on investing money in the important things. You can save in other areas.
FBA mistake No. 4: Help not wanted
Don’t fall into the trap that many marketplace sellers find themselves in at the beginning. You want to take off, are highly motivated, and everything interests you intensely. The truth is: Your day does not have enough hours to handle everything on your own. You need help, and you cannot familiarize yourself with all areas at the same time.
Therefore, actively consider where your labor brings the greatest benefit and which tasks you want to outsource, whether to an agency, a freelancer, or software. Sometimes, it is also helpful to exchange ideas with other Amazon FBA sellers. While you must gather experiences yourself, at trade shows and meet-ups, you will meet like-minded individuals who have similar problems as you.
FBA mistake No. 5: Inadequate pricing calculation
On Amazon, price plays a crucial role. Surprisingly, you can often set a higher product price on the marketplace than on other platforms, but within the system, the algorithm assesses, among other factors, how well your product listings rank based on price and whether you win the Buy Box with your offer.
Competitive prices therefore directly determine success and failure. For this, you must keep an eye on the market situation at all times and adjust your product prices accordingly. For this purpose, there are so-called repricers that take this tedious work off your hands. The SELLERLOGIC repricer for Amazon automatically optimizes your prices around the clock and ensures that you sell your goods not at the lowest, but at the highest possible price. In addition, the repricer takes care of the entire price calculation based on your product costs and your desired margin.
FBA error No. 6: Ignoring Amazon’s errors
Surprise, even the e-commerce giant makes mistakes. Merchants who use Fulfillment by Amazon have their goods delivered to an Amazon warehouse, where they are stored until an order is placed. Subsequently, the trading platform takes care of picking and packing, shipping, customer service, and returns management. This process is diverse and complicated. For this reason, it can happen that products are damaged, lost, or that the merchant suffers some other kind of damage.
As the owner of the product, you are entitled to compensation for this. Unfortunately, Amazon does not automatically reimburse its own FBA errors in most cases. Since analyzing the many different FBA reports is a daunting task, many marketplace sellers simply ignore that they are losing quite a bit of money as a result. Therefore, we would like to take a closer look at this problem and the rather simple solution that neither diminishes your profitability nor essentially gives away the money that is rightfully yours to Amazon.
What FBA errors occur to Amazon during the FBA process?
Roughly, the most important and relevant errors for the seller in the Amazon FBA process have three different origins:
Origin No. 1 and No. 2 result in goods and thus a material value being lost under Amazon’s supervision. Origin No. 3 results in the merchant being charged an incorrect amount.
Item becomes unsellable due to inventory movements
Whether through a movement in the warehouse or by the buyer – it often happens that an item gets damaged. When this is the case, the goods can no longer be sold, and Amazon disposes of the item. It is deducted from the inventory.
With all the complexity and hustle in the shipping centers, it can happen that goods are mistakenly disposed of. In this case as well, the item is deducted from the inventory.
In addition, items can simply get lost. This is, of course, frustrating for the merchant, as they will not be able to sell the goods. During the next inventory, it will then be determined that there is a stock discrepancy and booked accordingly.
So far, everything is correct. The existing errors will appear in the various FBA reports. However, as long as the affected seller does not analyze these reports, they will know nothing of their loss. Because Amazon only rarely reimburses proactively.
FBA errors in returns
Amazon’s leniency towards its customers is well known. After all, Jeff Bezos built his company strictly based on the motto “Start with the customer and work backwards.” By now, customers also know that the marketplace’s customer orientation knows (almost) no bounds, and they do not take the return of items very seriously. It therefore happens that buyers initiate a return and the money is refunded by Amazon even before the product has actually been sent back. Amazon generally waits 45 days for the return. And after that… nothing happens.
In these two origins, a refund of the replacement value of the goods should normally be automatically processed to the merchant. However, this only happens in the rarest of cases. The merchant is left with the loss of the goods after an FBA error instead of receiving a refund for the replacement value.
Calculation errors of the FBA fees
Both the storage fees and the shipping fees for the FBA service are calculated based on the dimensions and weight of the stored items. If Amazon now assumes incorrect dimensions as the basis for calculation, inflated FBA fees will be charged.
In addition, there are some other types of cases, such as errors in the delivery of goods to the warehouse. The likelihood that you will not notice the FBA error is quite high, as Amazon usually does not reimburse proactively.
Which items are eligible for reimbursement of FBA errors?
The following conditions must be met for an item to be eligible for reimbursement:
Which reports need to be checked for an FBA error reimbursement?
In total, you need data from around 12 different reports to check your entire inventory to see if all items, returns, and reimbursements have been recorded. Only in this way can you find errors related to orders, such as refunds that have not been credited back to you as a seller because the goods were not recorded by the customer after 45 days. We will only address a few scenarios as examples here.
Reimbursement for unsellable items due to Amazon’s fault
All returns received by Amazon can be viewed in the “Returns” report (Reports > Fulfilled by Amazon > Returns) in Seller Central. If the status in the “Item Condition” column is “Damaged” or “Damaged in Transit,” you are entitled to compensation.
Now you need to check whether the case reported by Amazon has already been refunded. To do this, search for the Amazon order number with the identified compensation case in the “Refunds” report (Reports > Fulfilled by Amazon > Refunds) and check if a refund has already been issued.
If no refund is recorded, you need to submit the data for the identified case to Amazon via Seller Central. However, make sure to submit the requests in a timely manner. Some of them have an “expiration date” of 90 days.
Reimbursement for items not returned
The “expired,” i.e., return requests older than 45 days for which the customer has already received a refund but has not returned the goods, can be found in the Amazon VAT Transactions report. To do this, go to Reports > Fulfilled by Amazon and access the “Amazon VAT Transactions report” and download it. Orders that were shipped via FBA can be found in the SALES_CHANNEL column under AFN.
In the list, you can now filter for the refunds for which there is no return (only REFUND, but no RETURN under TRANSACTION_TYPE).
Now check the filtered Transaction Event IDs (order numbers) for the refund. You can find this information under Reports > Fulfilled by Amazon > Refunds. If there is still no refund after 50 days, you can report the case via Seller Central and request a refund.
How does Amazon calculate the reimbursement for FBA errors?
To determine an estimated selling price for the item to be reimbursed, Amazon compares various indicators due to significant price fluctuations. These are:
If there is still not enough information available, Amazon assigns an estimated selling price of a comparable product.
What steps do you take if Amazon denies a refund request?
If Amazon denies a case, you have the option to appeal. Take a closer look at the basis for the denial and check whether you provided all the necessary information to Amazon. What additional information can you provide, and does the reason for the denial align with your original request?
For example, it may happen that Amazon denies a reassessment of an item, even though you did not request one, but rather that the FBA fees are charged to you correctly based on the provided dimensions. In such cases, there is not much more you can do than to remain persistent but polite.
All-round carefree package: SELLERLOGIC Lost & Found Full-Service
The time required for compiling reports and opening cases is usually not economically viable. Remember to invest your time where it benefits you the most. And that is certainly not in painstakingly comparing FBA reports.
So that you still receive your hard-earned money, SELLERLOGIC has developed an automated solution that takes care of the work for you completely: SELLERLOGIC Lost & Found Full-Service.
This software analyzes the data from your FBA reports in the background and automatically detects the aforementioned FBA errors. Each notable transaction is created as a separate case, allowing you to trace all information if needed. The individual cases are presented in an easily understandable manner, so that every seller can always understand which type of error generated which refund amount.
SELLERLOGIC also takes care of the application process with and communication with Amazon, as well as any follow-up questions should there be issues with a refund. You don’t have to do anything and can use your time better in the meantime.
Sandra Schriewer
SELLERLOGIC Lost & Found is indispensable for every FBA seller in two ways: On the one hand, it reveals refunds from Amazon that you didn’t even know about before. On the other hand, it saves an incredible amount of time for research and processing of cases, allowing me to dedicate myself to my work with a clear conscience.
This way, thanks to SELLERLOGIC Lost & Found Full-Service, none of your refund claims will be lost anymore. Sign up for free now and receive your first refunds today.
Frequently Asked Questions
There are a whole range of different errors that can occur during the FBA processes at Amazon. The most important errors come from the areas of delivery, inventory, and returns. An overview can be found here: Case types.
It has almost become a sport among professional marketplace sellers to complain about shipping with Amazon. And it’s no wonder, as it is frustrating and costly when Amazon refunds a customer for a return, for example, even though the returned goods have not yet arrived back in the warehouse – and may never do so. All in all, the FBA program is, in our experience, a great help for Amazon sellers because there is no need to set up one’s own complicated and expensive logistics.
Making a living with an online business is easier said than done. Despite many bold promises from self-proclaimed gurus on YouTube, it requires a solid knowledge of e-commerce and some business acumen to sell profitably on Amazon. Many sellers complain about the high competitive pressure – and they are right. Finding one’s own profitable niche is hard work and also a bit of luck.
Image credits in the order of the images: © 2rogan – stock.adobe.com / © Jan – stock.adobe.com
