Cheap or free inventory is tempting, but carries significant risk
It seemed like the ideal way to get started selling on Amazon – flipping deeply discounted or free products purchased right on Amazon itself! But this tempting method of sourcing can lead to disaster.
“I went to those deal sites online,” my client said during our intake call about his account suspension. “They have huge discounts for products listed on Amazon. So, I would buy the items and then flip them. The margins were amazing. Some stuff I bought had a discount of 90 percent or was even free.”
My client visited sites like Vipon, JumpSend and SnagShout, where Amazon private-label (PL) sellers post deals to drive sales and improve their Best Seller Rank. After buying the goods (or getting them for free), he listed them on Amazon.
As one might imagine, this had the immediate effect of angering the affected PL sellers. These PL sellers had brand registry, and they filed IP complaints. Lots of them. My seller ended up suspended.
In other cases, I’ve seen PL sellers perform test buys and claim the products are counterfeit, inauthentic, or used sold as new. They have left terrible, sticky feedback and complained to Amazon endlessly.
Try to understand the situation from the PL sellers’ perspectives. They sold at huge discounts to launch their products – not to create competition on their very own listings! (We are talk about how such massive discounts violated Amazon policy, but that’s a topic for another day.)
The old phrase “too good to be true” comes to mind. These “deals” are too good to be true, if you’re planning to resell them on Amazon.
What should a new Amazon seller do instead? Every sourcing method carries expense and risk, but there are many alternatives that are safer – if not as profitable. Buy from wholesalers, distributors or local manufacturers. Even retail arbitrage and online arbitrage – which carry quite a bit of risk and are not a great long-term strategy – are less risky than buying from deal sites and incurring the wrath of PL sellers.
By Lesley Hensell
Lesley is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.