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Why FBA Vendors Often Fail on Amazon and How to Avoid the Common Mistakes


Amazon is the world’s largest online retailer, so if you have decided to partner up with the giant among giants, that is a step in the right direction. It saves smaller businesses the hassle and expense of establishing, maintaining, and growing their own eCommerce website, while at the same time, exposes them to the world’s largest pool of target customers. Unfortunately, a large number of FBA (Fulfilled by Amazon) businesses still fail on Amazon.

Why Do Businesses Fail on Amazon?

There are so many reasons that a company might not survive as an FBA partner of Amazon, and we will get to the most important ones soon. However, it is important to underline the three primary mistakes, to which all of the usual reasons are related.

1. Misunderstandings or misconceptions
2. Inaction
3. Wrong action

To further elaborate on them, let us take a more detailed look at the common reasons why Amazon vendors often fail to make an impact, even with the world’s largest online retailer by their sides.

Photo by Christian Wiediger on Unsplash

Misconception: Becoming Successful on Amazon is easy

It’s true that in most cases, one’s chances to succeed as a business on Amazon are higher than they would be if they were to try and build a new eCommerce website from the ground up.

That higher chance of success has nothing to do with the job being easy, though. The misconception regarding the whole thing is a result of misleading blogs and marketing tactics. What usually happens is that a lot of the FBA Amazon partners do not expect the amount of work or investment they have to put in first. Once they begin to lose money, they realise their mistake and close down to cut losses.

Wrongful Action: Breaching Amazon’s Policy

Amazon has a very strict set of policies, and they make frequent changes to them as well.
Furthermore, not all of Amazon’s policies are universal, meaning that Amazon UK will not have the exact same policy as Amazon US.

Whether it’s intentional or not, a good number of Amazon sellers get suspended a few too many times for wrongful actions, which in this case would be called a breach of policy. if your Amazon appeal is not deemed to be good enough by the retail giant, they will reject it, prolonging your suspension period. Keep in mind that making similar mistakes too many times will lead to the seller being permanently suspended from Amazon.

In case you have a thriving FBA partnership with them, don’t let a breach of policy ruin your reputation and business so suddenly. You should contact a company such as Thompson and Holt who are highly experienced in writing Amazon appeal letters, as they could help in getting the suspended account reinstated within the span of a single workday.

Even if you wish to write your own appeal letter, pay their website a visit to receive guidance on how one can write a successful Amazon appeal letter.

Inaction: Not Adhering to Warnings and Prior Suspensions

Amazon will usually not suspend a seller permanently right away, as they are willing to give new businesses and old partners enough chances to rectify their mistakes. On the other hand, if they consider a seller to be inactive about rectifying their mistakes or submitting a properly addressed, formal Amazon appeal letter after a suspension, that could lead to dire consequences. Being the giant MNC that they are, it doesn’t take them too much time to permanently suspend a seller, if inaction is indeed noted by them.

Such mistakes lead to plenty of new FBA businesses getting snuffed out on a monthly basis, even before they have had a chance to build themselves up. Established vendors who believe that they are far too important for the company to ban them permanently will also get suspended from Amazon permanently if they fail to act in time and rectify the mistakes that led to the breach of policy.

Wrongful Action: The Universal Mistake of Choosing the Wrong Product

If you choose the wrong product, your business will not thrive; this is a time-tested, well-established fact of business, which has remained true ever since the concept of business itself came into being. Therefore, it shouldn’t be surprising that making the same mistake on Amazon will lead to a new vendor’s early demise as well. Amazon is the world’s largest online business, but it is still a marketplace where all basic principles of business do apply. Therefore, the advice to avoid picking the wrong product is more or less the same as it is for any other eCommerce platform.

Some of the most common mistakes to avoid can be highlighted as below.

  • Poor match between the market research data and the product chosen
  • Lack of harmony between the product and the marketing
  • Poorly matched product development in respect to the target audience
  • Poorly chosen manufacturing partner in respect to the target audience’s demands
  • Inability to provide aftersales service for the chosen product
  • Selling products in categories that are too niche or overcrowded
  • Manufacturing products far above the expected quality will incur losses, as the target audience will not spend more money than what the market research may have suggested
  • Manufacturing/selling products below the expected quality will lead to a shutdown of sales on Amazon due to bad reviews

Amazon is the world’s largest online company, and it is still growing at an astonishing pace, even when most MNCs took a huge hit across the planet in 2020. Just counting the figures from last year, they generated $280.522 billion in revenues and, as of 2019, had an estimated asset worth of $225.248 billion, leaving space for about $62.06 billion in equity.

If you understand and accept the fact that Amazon is far too big to accommodate repeated policy breaches by anyone, your chances of succeeding as an FBA partner will already be higher than a lot of other new sellers.

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