Amazon offers a wealth of opportunities for sellers because it opens up your business to millions of buyers out there. The best part is that you can sell even without having a physical store or presence. Just showcase your products on the huge marketplace and you become visible to the massive user base. But however lucrative the opportunity may sound, there are certain challenges for Amazon sellers.
There are big success stories here, but not every seller succeeds. Businesses still fail or struggle before they establish themselves on this selling channel. The biggest challenge relates to handling finances because they can be more complicated than you think. If you are an Amazon seller, there are certain mistakes that you must avoid at all costs. Here are the ones that you should be careful about.
Mistake #1: Focus on sales rather than profits
Amazon connects you with a huge buyer base and you may make humongous sales right from the start. You may be surprised by the booming sales that flow in, particularly during the peak season. But getting excited about sales growth can be a major mistake. Your sales may surpass your expectations but profit is what really matters in the end. So your focus should be on profits, not sales. The sales figures may be impressive but there is a need to consider key factors like tax cuts, fees and charges to calculate the profit. In the end, you may actually be disappointed with what is left in your kitty. So profit, and not sales, is the go word for Amazon sellers!
Mistake #2: Missing out on diversification
Diversification of products matters when it comes to becoming successful as an e-commerce seller. Selling a few products on your Amazon store is risky because your business may suddenly go haywire if the demand falls. The best way is to sell diverse products because this strategy gives you a good risk cover. You may lose on some but leverage others to survive and grow in the long run. While diversifying your range is important, timing it right is vital. Early adoption surely brings its benefits, particularly if you have a unique offering. You can gain good profits from new ideas and products until other sellers start selling them too.
Mistake #3: Failing to maintain your books
Not maintaining your books properly is another major blunder that you should avoid. Just because you are selling online rather than through a brick-and-mortar does not give you a reason to ignore your accounts. Invest in professional Amazon seller bookkeeping services from an expert to keep your accounts in great shape. This is important because your books should be well-maintained if you need a bank loan or want to on board a business partner. Moreover, maintained accounts enable you to manage cash, taxes, growth, and profitability of your business. They give you a better understanding of the business model and help you identify the gaps as well.
Mistake #4: Not saving up for emergencies
Another mistake the Amazon sellers need to avoid is not saving up for emergencies. Saving for the rainy day is mandatory for all businesses and e-commerce businesses are no exception. There are several reasons why you could find yourself in trouble. It could be due to a failure of a seemingly cool idea or slower than expected growth. Some may fall prey to an overall slump in the economy while others may get stuck due to limited cash investment. Though these things happen, not having a Plan B can land you in deep trouble. Proper planning and saving for such situations is the key to survival even in tough times.
Mistake #5: Forgetting about taxes
Taxes can be tricky and it is easier to forget them if you are selling online. But this attitude can catch you off-guard and leave you surprised when you realize that you owe a huge amount. The authorities won’t spare you considering that you sell on Amazon. So you must absolutely know your taxes and set aside a fund for paying them at the end of the year. An accountant can guide you with proper tax planning so that you do not end up in a problem due to procrastination or lack of awareness.
Now that you know about the mistakes that you need to avoid as an Amazon seller, you can handle your finances better. Still, it is better to seek professional advice to stay on top of your finances. Collaborate with an expert who specializes in e-commerce accounting and knows its nitty-gritty.