Forget things that go bump in the night. If you're a seller on Amazon, phantom buy boxes and performance-point dings are what's really causing you to lose sleep.
As Amazon continues to envelop the internet--the Seattle-based e-commerce retailer is expected to report $57 billion in third-quarter sales after markets close on Thursday--it's worth shining a light on the anxieties of working with the juggernaut.
Here are five of the scariest things about selling on Amazon.
1. 'Buy Box Suppression'
If you've bought products on Amazon, you know most listings have a one-click "add to cart" button. Known to sellers as the "buy box," it is typically assigned to the businesses selling items at the best prices. Because it's so convenient to the consumer, sellers will often engage in pricing wars to win the buy box. Lately, however, some product listings on Amazon have lost the buy-box button entirely.
Kelly Rundle calls it "buy-box suppression." "Instead of saying 'add to cart,' it will say 'see all buying options,'" says Rundle, the founder and CEO of Simply Sales, an agency based in Atlanta that helps businesses and brands sell their products on the e-commerce platform. The one-click buy option disappears when any retailer outside of Amazon--say Walmart or Target--offers the product at a lower price.
An Amazon spokesperson had this to say about the phantom buy boxes: "Sellers set their own product prices in our store. If a product is not priced competitively by a seller, we reserve the right to not feature that offer. Customers can still find all offers on the offer listings page."
That clicking around isn't ideal--and its no fun for the business owner, says David Simnick, the co-founder and CEO of Soapbox, a Washington, D.C.-based soap and shampoo maker. "We see a very precipitous drop in our sales" if we lose the buy box, says Simnick, whose company has been selling its products on the platform since March. Sales could to plunge as much as 40 or 50 percent in a day as a result, he adds. "All of the sudden you're slowing the growth that you could have [had]."
2. Selling Out
While counterintuitive, selling your entire inventory on Amazon can quickly turn into a nightmare. "Once you run out of stock, it kills your listing," Lawrence Bibi, founder of New York City-based Light Accents and an Amazon seller, told Inc. in July. If an item is no longer available because it sells out, your listing's ranking on the search page may take a hit. Amazon might then move on to another vendor, for instance.
However, before you start stockpiling inventory in Amazon's warehouses, remember that Amazon charges a long-term storage fee for items held longer than six months. In August, it also introduced an additional 50-cent fee per item per month for products kept longer than a year. Depending on how many items you have, the costs start to add up.
3. Processing delays
Losing performance points can sting--especially when you're not to blame. Some sellers, in the past month, are reporting week-long delays in processing inventory shipments in Amazon's fulfillment facilities, according to Simply Sales's Rundle. If before it took a week and half for you to ship your items to Amazon and have them processed and logged, now that wait time has increased to two and a half weeks, she says. The delay has caused some of her clients to run out of inventory because the items shipped to the warehouses are held up longer than anticipated. This causes them to lose out on potential sales and have their listings' ranking affected.
To be sure, Rundle says that processing times are still within the 14-day window Amazon provides, but it's taking longer now than, say, a year ago at this time. Amazon says it is investigating this claim, but offered no further comment.
Other business owners who ship products directly will receive warnings from Amazon if shipments are delayed in getting to the customer. Go above a 4 percent delay threshold and your account might be suspended, even when you're shipping items at the appropriate times, says Michael Dweck, founder and CEO of New York City-based apparel startup Basic Outfitters.
"We had a situation about three weeks ago," he says. Basic Outfitters had shipped orders from its warehouse to the buyers on the same day the products were bought. However, because the delivery service Dweck used did not scan the package's tracking number until it arrived to the sorting facility, it appeared as though it hadn't shipped on the date that it did. "Our performance rating got hit," he adds.
4. Cloned listings
Amazon strictly prohibits counterfeit items on its platform, but cloning a product--that is copying a listing's text and using it verbatim to advertise a similar product with a similar name--is something of a gray area. And according to Rundle, sellers are increasingly crossing that line. "2018 was the crazy year of the private labeler," says Rundle, who notes that at least two of her clients have experienced it firsthand. "Brands are trademarked, images are trademarked, but the copy is not," she says.
To counter the effort, Rundle now removes certain keywords from products' public pages and slots them in the back-end instead, so that at least competitors won't be able to copy their most valuable SEO words.
To be sure, Amazon requires third-party merchants to follow its stated policies before using the platform, though it's unclear whether the rules ban "cloning." The company also polices its platform. "Policy violations can result in cancellation of listings, removal of selling privileges, withholding of funds, and legal action, depending on its severity," said a spokesperson.
Probably one of the biggest things keeping sellers up at night is worrying about Amazon itself. As the company extends into new types of businesses, many founders wonder if--or even when--they will need to compete directly with the retail giant.
If you sell paper towels, for instance, Amazon's private label products get special placement not open to other brands. In a search for "paper towels," seven sponsored products appear before you see the first search result. Two of those items, featured prominently in a box labeled "Top rated from our brands," belong to Amazon's private label business, Presto.
Then, general algorithm and policy changes keep you guessing, Dweck says. Amazon's algorithm might flag items that maybe never had an issue before or perhaps his seller account could lose certain privileges without a specific reason.
Still, Amazon has proved vital for businesses like Basic Outfitters, which says Amazon is its biggest sales driver outside of its own website. Of course, you have to be able to stomach the uncertainty, says Dweck. "It's this constant fear and nervousness that Amazon provides."