10 Common Mistakes New Amazon Sellers Make (and How to Avoid Them)

Many new Amazon sellers jump in with ambition but stumble over costly, avoidable missteps that can erode profits, harm accounts, or derail success. This comprehensive guide spotlights the ten most common mistakes made by beginners on Amazon—and offers clear, actionable ways to sidestep disaster and build a sustainable business.

Whether you’re just beginning your Amazon seller journey or looking to refine your approach, learning the ropes from Amazon’s Seller University and understanding these pitfalls can save you significant time, money, and frustration. By the end of this article, you’ll understand the critical errors to avoid and have practical strategies to implement for a more profitable Amazon business.

Underestimating Amazon fees and costs

New sellers often make budgeting errors, missing FBA fee nuances, storage charges, referral fees, returns costs, and other expenses. These can wipe out margins fast and turn seemingly profitable products into money-losing ventures.

Amazon’s fee structure is complex and multi-layered. Beyond the basic referral fee (typically 15% of the sale price), FBA sellers face fulfillment fees, storage fees, removal fees, returns processing fees, and potential long-term storage penalties.

These expenses can easily account for 30-40% of your product’s selling price.

Real-world scenario: A seller launches a product priced at $25, calculating only the $5 cost of goods and Amazon’s 15% referral fee ($3.75), expecting a healthy $16.25 profit. However, after accounting for FBA fulfillment ($5.20), monthly storage ($0.75), advertising costs ($2.50), returns ($0.50), and packaging ($1.00), the actual profit shrinks to just $7.05—less than half the expected margin.

How to avoid this mistake:

Use Amazon’s FBA Revenue Calculator before listing any product
Create comprehensive spreadsheets including all potential costs
Account for seasonal storage fee increases (October-December)
Factor in return rates specific to your product category
Regularly audit your fee reports in Seller Central
Build a minimum 30% profit margin to absorb unexpected costs

Poor product research & selection

Many new sellers pick saturated or low-margin products, or skip validating demand and competition—resulting in slow sales and wasted capital. Proper product selection is arguably the most critical foundation of Amazon success.

The marketplace is flooded with sellers offering identical items, particularly in popular categories like phone accessories, kitchen gadgets, and fitness equipment. Without thorough research, newcomers often end up competing solely on price in red-ocean markets.

Common product research errors include:

Selecting products based solely on high search volume
Ignoring competing listings’ review count and quality
Failing to identify unique selling propositions
Neglecting to analyze seasonal trends
Overlooking intellectual property considerations
Choosing products with high shipping costs relative to price point

Qualitative vs. quantitative product research

Successful sellers balance numerical data with qualitative insights. While tools like Helium 10 or Jungle Scout provide valuable metrics on sales volume and keyword demand, they don’t tell the complete story.

Effective qualitative research includes:

Reading competitor product reviews to identify common complaints
Examining Q&A sections for unmet customer needs
Studying category trends across multiple marketplaces
Testing products personally before full inventory investment
Surveying potential customers about desired improvements

How to avoid this mistake:

Implement a scoring system for potential products (weighing factors like competition level, margin potential, trend stability)
Look for products with fewer than 200 reviews among top competitors
Target items where you can genuinely improve upon existing offerings
Consider starting in less competitive categories
Test market demand with small inventory orders before scaling

Inventory mismanagement (stockouts and overstock)

Running out of stock or over-ordering can damage rankings, kill sales velocity, or trigger excessive fees. This delicate balancing act represents one of the most challenging aspects of Amazon selling.

When you stockout, Amazon’s algorithm penalizes your listing’s visibility, competitors gain ground, and reestablishing rank becomes increasingly difficult. Conversely, excessive inventory ties up capital and incurs progressively higher storage fees, particularly after 365 days when long-term storage fees apply.

Amazon’s Inventory Performance Index (IPI) score measures your inventory management efficiency. Low scores can restrict your storage limits, while high scores unlock benefits like increased storage capacity during peak seasons.

How to avoid this mistake:

Implement inventory forecasting systems that account for lead time, seasonality, and sales velocity
Set up automated reorder points and safety stock levels
Monitor your IPI score regularly in Seller Central
Consider using inventory management tools like InventoryLab or Forecastly
Develop relationships with suppliers who can expedite production during high-demand periods
Create contingency plans for supply chain disruptions
Run strategic promotions to clear aging inventory before long-term storage fees apply

Using Amazon’s Inventory Planning Dashboard can help identify at-risk inventory and provide insights for more balanced stocking decisions.

Not optimizing product listings

Listings with poor titles, incomplete bullets, low-quality images, or non-optimized keywords struggle to convert and rank. In the competitive Amazon marketplace, listing optimization isn’t optional—it’s essential for visibility and sales.

Each component of your listing serves a specific purpose in the customer journey. Titles need to balance keyword relevance with readability. Bullet points must address benefits and overcome objections. Images should showcase features while creating emotional connection. Backend keywords capture additional search traffic without cluttering customer-facing content.

Key optimization elements include:

Strategic keyword placement in titles, bullets, and description
High-quality, information-rich images (at least 6-7 per listing)
Benefit-focused bullet points that address customer pain points
A+ Content for enhanced brand storytelling (for brand registered sellers)
Properly completed backend search terms
Strategic use of subject matter keywords

Avoiding common Amazon SEO mistakes

Many sellers sabotage their own listings with these common errors:

Keyword stuffing: Creates unreadable titles that diminish click-through rates
Repetitive keywords: Wastes valuable character space without improving ranking
Missing backend keywords: Fails to capture additional traffic from alternative search terms
Poor image quality: Reduces customer confidence and increases return rates
Generic product descriptions: Fails to differentiate from competing products
Ignoring mobile optimization: Over 60% of Amazon shoppers use mobile devices

How to avoid this mistake:

Follow Amazon’s style guides for your specific category
Research high-performing competitor listings (but don’t copy)
Use tools like Helium 10’s Scribbles to ensure keyword coverage
Invest in professional product photography and infographics
A/B test different titles and bullets using split testing tools
Update listings quarterly based on search trend changes

Ignoring Amazon’s policies and updates

Noncompliance or failure to update processes with policy changes can trigger listing suppressions, account suspensions, and lost sales. Amazon’s rules are numerous, complex, and frequently updated—yet ignorance isn’t considered a valid defense.

Amazon’s primary concern is customer experience, and its policies reflect this priority. Violations that may seem minor to sellers (like encouraging reviews through inserts or using certain restricted keywords) can result in severe consequences, including permanent account closure.

Common policy violations include:

Review manipulation (incentivizing reviews or using review services)
Intellectual property infringement
Listing prohibited or restricted products
Misuse of product variations
Creating duplicate listings
Inaccurate product condition descriptions
Circumventing Amazon’s communication guidelines

How to avoid this mistake:

Read and understand the Amazon Seller Code of Conduct
Subscribe to Amazon’s Seller Central News feed and policy update emails
Set a monthly calendar reminder to review policy changes
Join reputable Amazon seller communities to learn about policy interpretations
Conduct regular audits of your listings and processes for compliance
When in doubt, contact Seller Support for clarification before proceeding
Document all communication with Amazon in case of future disputes

Failing to manage customer feedback and returns

Poor review management or ignoring returns can harm seller metrics and erode trust. In the customer-centric Amazon ecosystem, your performance metrics directly impact visibility, Buy Box eligibility, and account health.

Customer satisfaction metrics fall into several categories: Order Defect Rate (ODR), Late Shipment Rate, Cancel Rate, Valid Tracking Rate, and Return Dissatisfaction Rate. Exceeding Amazon’s thresholds in any of these areas can result in selling privileges being limited or removed entirely.

Returns represent both a challenge and an opportunity. While they impact profitability, they also provide valuable feedback for product improvements and can be managed to increase customer loyalty.

How to avoid this mistake:

Implement proactive customer service via automated emails (within Amazon’s guidelines)
Monitor feedback, product reviews, and return reasons daily
Address negative feedback promptly with customer-focused solutions
Analyze return patterns to identify and resolve product issues
Use Amazon’s Account Health dashboard to track performance metrics
Create standard operating procedures for handling various customer scenarios
Consider using feedback management software to streamline processes
Maintain detailed records of all customer interactions

Not preparing and labeling inventory correctly

Mishandling FBA packaging, prep, or labels leads to delayed listings and penalty fees. Amazon’s fulfillment centers operate on standardized processes, and any deviation can result in inventory being refused, returned, or prepped by Amazon at considerable expense.

Each product category has specific preparation requirements. For example, glass products require bubble wrap, liquids need bagging with suffocation warnings, and textiles must be polybagged. Labels must be scannable, properly positioned, and include accurate product information.

Beyond basic requirements, proper preparation protects your products during shipping and warehouse handling, reducing damage and returns.

Common preparation errors include:

Incorrect barcode placement (covering manufacturer barcodes)
Using low-quality labels that smudge or fade
Inadequate bubble wrap or protective packaging
Missing suffocation warnings on poly bags
Improper bundling of multi-pack items
Sending products with exposed sharp edges
Using boxes that exceed Amazon’s dimensional limits

How to avoid this mistake:

Reference Amazon’s Packaging and Prep Requirements for your specific products
Create detailed preparation checklists for each product type
Use high-quality labels and printers (avoiding inkjet when possible)
Consider Amazon’s prep services for complex items
Implement quality control checks before shipping to FBA
Document your prep process with photos for training purposes
Regularly update your procedures as Amazon changes requirements

Overlooking PPC advertising and listing promotion

Assuming products will “sell themselves” on FBA is a myth—competitive markets require smart advertising. Even exceptional products with optimized listings often need promotional support to gain initial traction and visibility.

Amazon’s advertising platform offers multiple formats: Sponsored Products, Sponsored Brands, Sponsored Display, and video ads. Each serves different purposes within the customer journey, from discovery to consideration to purchase.

Effective advertising isn’t merely about spending money—it’s about strategic investment with measurable returns. Many new sellers either avoid advertising entirely (limiting visibility) or implement campaigns without proper structure, targeting, or performance monitoring.

Common advertising mistakes include:

Setting daily budgets too low to generate meaningful data
Using automatic campaigns without progressing to manual refinement
Failing to separate campaigns by match type (broad, phrase, exact)
Neglecting negative keywords to prevent wasted spend
Setting bids without considering conversion value
Not adjusting campaigns based on performance data
Ignoring seasonal trends in advertising strategy

How to avoid this mistake:

Start with research-based automatic campaigns to gather data
Implement a structured campaign hierarchy (research, scaling, defensive)
Use Amazon’s Advertising Learning Console for education
Target ACoS (Advertising Cost of Sale) appropriate to your profit margins
Analyze search term reports weekly to optimize keywords
Implement dayparting to focus spend during high-conversion hours
Consider using specialized PPC management tools to improve efficiency

Neglecting pricing strategies and the Buy Box

Inflexible or uncompetitive pricing strategy cripples Buy Box eligibility—which drives sales volume. The Buy Box represents over 80% of all Amazon sales, making winning this position critical for sustainable success.

Many new sellers set static prices based solely on desired margins, without considering market dynamics, competitor behavior, or Amazon’s Buy Box algorithm. This approach frequently results in either uncompetitive pricing (limiting sales) or unprofitable pricing (eroding margins).

Amazon’s Buy Box algorithm weighs numerous factors beyond price, including seller metrics, fulfillment method, and shipping time. However, pricing remains a significant consideration, especially in competitive categories.

Pricing strategy considerations include:

Competitor pricing and repricing frequency
Product life cycle stage (new launch vs. established)
Seasonal demand fluctuations
Inventory levels and turnover goals
Cross-elasticity with complementary products
Minimum profitability thresholds
Amazon’s referral fee tiers (which vary by category)

How to avoid this mistake:

Implement dynamic pricing that responds to market conditions
Consider using repricing tools with rule-based logic
Set floor and ceiling prices to maintain profitability
Monitor Buy Box win rate in Seller Central analytics
Analyze performance across different price points
Create pricing strategies for different inventory phases
Build competitive intelligence through tools like Keepa or CamelCamelCamel

Not monitoring competition and market changes

Sellers who don’t track competitors, market shifts, or their own category’s evolution risk falling behind. The Amazon marketplace is exceptionally dynamic, with new sellers, products, and trends emerging continuously.

Competitive intelligence provides insights beyond simple price monitoring. Understanding competitor marketing strategies, listing changes, review sentiment, and inventory patterns can inform your own business decisions and help identify emerging opportunities or threats.

Beyond direct competitors, broader market trends influence customer expectations, purchasing behavior, and product preferences. These shifts may originate from social media, consumer technology, regulatory changes, or economic factors.

Areas requiring competitive monitoring include:

New entrants in your product category
Listing optimizations by established competitors
Pricing strategy changes and promotional patterns
Customer reviews highlighting new features or pain points
Changes in advertising strategy and keyword targeting
Inventory levels and stockout patterns
Bundle offerings and cross-selling approaches

How to avoid this mistake:

Schedule regular competitive analysis (weekly for fast-moving categories)
Set up Google Alerts for your product category and competitors
Use product tracking tools to monitor competitor listings
Join industry forums and communities to identify trends
Analyze Best Sellers Rank (BSR) changes across your category
Subscribe to market research publications in your industry
Develop a formalized process for incorporating competitive insights

Conclusion

By understanding and proactively avoiding these ten common mistakes, new Amazon sellers can protect their profits, ensure account health, and set themselves up for sustainable success on the world’s largest marketplace. Continuous learning, data-driven decision-making, and strict compliance are your greatest allies.

The Amazon marketplace rewards sellers who approach it as professionals—researching thoroughly, planning strategically, and executing methodically. While challenges inevitably arise, avoiding these foundational errors will position you ahead of the vast majority of new sellers.

Take advantage of Amazon’s free educational resources, invest in reliable tools appropriate to your business stage, and consider connecting with experienced mentors or communities. Remember that success on Amazon isn’t about finding shortcuts—it’s about building efficient systems and making informed decisions based on marketplace realities.

Frequently Asked Questions

What is the biggest mistake new Amazon sellers make?

Most new sellers underestimate the true costs and fees associated with selling on Amazon, leading to profit loss or account risk.

How can I avoid getting my Amazon account suspended?

Always comply with Amazon’s policies, stay informed of updates, keep accurate documentation, and respond quickly to any Amazon notifications or warnings.

Why is listing optimization so important on Amazon?

Optimized listings increase visibility, attract buyers, and improve conversion rates, which is essential in Amazon’s highly competitive marketplace.

How do I choose the right product to sell on Amazon?

Perform thorough market research, validate demand, assess the competition, and ensure your product offers a clear point of differentiation.

What tools can help prevent Amazon seller mistakes?

Amazon’s Seller Central Analytics, Inventory Performance Index, FBA Revenue Calculator, and top-rated third-party tools (like Helium 10 or InventoryLab) all help minimize costly errors.