Why You Are Losing Money With Your Amazon FBA Business

Why You Are Losing Money With Your Amazon FBA Business

In this challenging world of e-commerce, various situations can lead to profit loss, such as improper inventory management, poor sales strategy, or customer service issues. This guide aims to help you avoid unnecessary financial losses in your Amazon FBA business. Here, we'll share top strategies to avoid common pitfalls and even teach you how to obtain compensation. Let's delve into these crucial tips to ensure the thriving development of your Amazon FBA business.

Why you Lose Money with Amazon FBA Business?

You lose the Amazon Buy Box

The importance of retaining the Buy Box on Amazon cannot be overstated, given that it accounts for a staggering 90 percent of all sales on the platform. To lose the Buy Box is to lose a significant portion of potential sales and revenue. It's essential to understand that the term "Buy Box" refers to what is more commonly known as the "Add to Cart" field on Amazon. If you're not entirely familiar with the concept of the Buy Box or how to secure it, there is a comprehensive guide about what Buy Box is and how to win it.

In essence, the key to winning and maintaining your position in the Buy Box is professionalism. This means conducting your business and interacting with your customers in a highly professional manner. The more professional you are, the more likely you are to be favored by Amazon's algorithms and win the Buy Box. At the very least, maintaining a high level of professionalism will ensure that you are in a strong position, even as competition intensifies.

However, the rules for winning the Buy Box change all the time. So, what’s the solution?

First and foremost, keep an eye on your competition so you may set a competitive price. It's quite difficult to update prices manually, so we recommend getting an automated repricing tool that will do all the dirty work for you and save you time.

Secondly, increase your seller metrics, because your reputation as a seller defines your level of trustworthiness. The higher your ranking, the greater your chances of winning the Buy Box are.

You don’t have Enough Good Reviews

Amazon has always placed a great value on customer satisfaction, and it protects the integrity and trustworthiness of its reviews using an innovative algorithm. Amazon uses reviews as one of the variables in determining a product's rating. Customers, on the other hand, read reviews before making a purchase. This indicates that positive reviews help pave the way for increased sales.

What can you do to get more positive reviews? You know, in many cases, customers are actually ready to provide a review if they are motivated in some way. Check out this article to see the ways of getting more sellers reviews!

We have to warn you not to buy reviews! Never do this please, because buying reviews goes against Amazon’s guidelines. Not only will your bought Amazon reviews be erased, but the online retailer will also have grounds to suspend your account. Do you really need to put your business at risk?

The final point about reviews that should be made is that recently there was a wave of fake reviews on Amazon. This is usually done by competitors. Actually, it doesn’t even matter who does this if it harms your business. Having said that, customers will not buy your products if it or you as a seller has a low rating. Don’t start panicking, we have got you covered! Here is what you can do to spot and report fake reviews on Amazon.

You have Low Inventory

Running out of stock or having low inventory not only results in lost sales opportunities, but also gives your competitors a chance to gain new sales and secure future customers. Essentially, you could be losing money on your FBA business! What's the solution?

Exercise complete control over your inventory. By doing so, you can identify which products are selling and which aren't. You can monitor your assets' locations and their financial worth. It also helps avoid overstocking that could lead to potential financial losses. Remember, Amazon levies charges on each item that stays in their warehouse for an extended period!

Your Product was Damaged

Well, you might know that from time to time items get damaged either in the warehouse or with the buyer. It doesn’t matter where, but what really matters is that Amazon disposes of the item and it is considered to be written off. Obviously, your business is losing money if that’s the case!

There are FBA Errors With Returns

Amazon is famous for its excellent customer service. But sometimes, there are some errors arised with the returns.

Here's what happens: A customer says they want to return a product. Amazon quickly gives them their money back, even before they send the product back. Amazon waits for 45 days for the product to be returned, but many times, it never comes back.

In most cases, sellers should receive a refund from Amazon's FBA service. But getting this refund isn't straightforward or easy.

FBA Fee Calculation Error Occurred

The size and weight of the stored products are used to calculate both the storage and delivery fees for the FBA service. Excessive FBA costs will be imposed if Amazon now uses incorrect dimensions as a basis for calculation. Sellers can lose a lot of money if such FBA mistakes are taken together.

Now let’s see what you can get reimbursed for and get your money back.

What Can You Do As a Seller to Get Money Back?

Well, the legal situation is clear in the FBA customer returns policy: any subsequent loss of value caused by Amazon must be paid by Amazon (apart from the situations when sellers lose Buy Box). The reimbursements, on the other hand, are not made automatically. In other words, it is the seller's responsibility to show proof of these losses in value and to file a claim with Amazon for reimbursement. Amazon stores the bookings in numerous reports at Seller Central, thus proving this isn't a problem.

However, that can be time-consuming. When you factor in different time zones, the length of time it will take to identify the FBA issue, and the specifics of each marketplace, the whole procedure becomes a nightmare. Moreover, all of this should, of course, be done on a regular basis. No one wants to do that every day because it is extremely time-consuming. As a result, many sellers lose money by allowing their reimbursement claims to lapse. Sounds sad, doesn’t it?

SellerLogic Lost & Found Will Come in Handy in Such Situations!

An automated solution that does the tiresome work for you: the “Lost & Found” tool analyses the data up to twelve reports and identifies the FBA errors mentioned above. Each conspicuous transaction is created as a separate process. This can be done up to 18 months retroactively. The individual cases are prepared in a way that is easy to understand and stored as a copyable template. All you have to do is open the case in Seller Central, insert the text prepared by SellerLogic, and press “send”.

Thanks to this tool, not a single one of your reimbursement claims will be lost – and all you have to invest is a minimal amount of effort. Should there however be any issues with one of your cases, SellerLogic's experienced staff will help you communicate with Amazon!

Final Thoughts

While we think that money is an indispensable resource of every entrepreneur, we also agree with Jim Rohn who said “Time is more valuable than money. You can get more money, but you cannot get more time”. So, we would advise you to automate everything you can to get more profits and time! When it comes to FBA business, losing time and money is not an option, so SellerLogic Lost&Found can get your money back, while SellerLogic Repricer will update your prices dynamically leaving your competitors behind!

Robin Bals from SellerLogic

SellerLogic’s Portfolio encompasses two dynamic tools that can be connected to your Amazon account with just a few clicks – the SellerLogic Repricer and Lost & Found. While the latter monitors your FBA processes and informs you about reimbursement claims you have against Amazon, the SellerLogic Repricer is specialized in optimizing your pricing strategy, making it infinitely scalable while remaining flexible. Both solutions enable an efficient and tidy profit maximization in the field of E-commerce – while saving the merchant time and money.
Interested in getting to know us? Get in touch!

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Robin Bals
April 10, 2024
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