Sell on Amazon: too easy to be true? If you did some basic research, you might already know the steps to create an FBA Business. It only takes a few hours to find everything you need to know about e-commerce.
Find a product, source it from China, create a listing, and launch with advertising: nothing special. If you managed to do all of them correctly, you would create a successful business and make big profits.
In practice, you see one seller succeed when ten others fail. It’s not that they don’t know how to sell, but they haven’t updated their strategy in years. That opens the door to competitors who may not have the customers’ best interests in mind.
Have you ever launched a perfect product that got saturated right when you were about to start selling? Do you remember spending hundreds to rank on page one only to get no sales? What about burning dollars on PPC campaigns?
No matter how easy Amazon FBA looks at the eyes of Internet gurus. As a rule, sellers achieve less success than they thought — or it took them way longer than expected.
The biggest problem? Failing is expensive on Amazon. A beginner could waste all his money before even launching the product: FBA scams. Recovering from a loss can take months only to get back where you started.
Is Amazon a scam? Not if you start your business with the right preparation.
About Amazon FBA Scams
In the beginning, there were rumors that Amazon was a scam. Jeff Bezos’ long term plan made investors lose money in the short term, making it unreliable. But today? Nothing further from the truth.
Amazon, in a few words, stands for customer satisfaction. It only benefits sellers when they approach business with the same principle. These brands wouldn’t exist otherwise.
The problem with Amazon is, people have unrealistic expectations. If you expected to make six figures overnight, would you mind putting down a few thousands? Probably not.
From product research to the launch, you’ll find people who want a piece of those profits. And their means aren’t precisely legit: sneaky payment tactics, refund tricks, listing sabotage, click farms. Perhaps you never heard of the dark side of Amazon.
Getting Started: Don’t Fall For The Same Mistakes Everyone Did
You don’t need to be making millions to become a target. As soon as you join the platform, e-com scammers will encourage you to “invest” money with them. Before you know it, you lost thousands of dollars.
There’s, of course, specific reasons businesses fail, and each company has its own. But most of them derive from the person, not the tactics. Three mistakes, in particular:
Selling on FBA is a slow process. It takes days to verify your account, find ideas, ship inventory, and launch the product. You may think: “the sooner I get it done, the sooner I’ll enjoy financial freedom.” Well, Amazon is about accuracy: if you rush on product research, it doesn’t matter how perfect you do the rest.
Thinking you need to take action quickly leads to bad decisions. Scammers are always behind beginners, which makes mistakes unforgiving.
#2 Lack of Experience
Imagine selling on FBA without ever having started a business. You also do it by yourself, no help. How far would you get?
If you come with unrealistic expectations, you’ll feel inclined to listen to those who make you bold promises. Whenever something sounds too good to be true, it leads to deception.
Learn how FBA works to understand what it takes to succeed. Thus, whenever someone approaches, you’ll be able to tell opportunities from scams.
#3 Fraud Triangle
Amazon cares about customers, not your success (although it’s correlated). If instead of valuing customers, you want to succeed at any cost, you’ll prevent yourself from creating a lasting business.
Let’s say you create misleading listings to drive more sales. When talking to suppliers, you negotiate every penny and sacrifice quality for quantity. You also fake your reviews, because sales come from social proof!
You rationalize: “Once I’m making money, I’ll create a more decent product.”
But customers find out quickly. Avoid this behavior: you’ll only be fooling yourself. There’s no shortcut.
How To Recognize And Prevent Every Amazon Scam
If you commit to letting behind those three limitations, congratulations: you’re ready to sell on Amazon!
You may already have a plan for each stage of the FBA business. In this guide, we will follow the same order, explaining what problems you should beware of on each case: registration, research, sourcing, listing creation, and launch.
That’s right. You can get scammed before even getting into Amazon. No matter your history, Amazon runs periodical verification procedures to update security. There’re stories of closed accounts, despite selling for years.
Seller Central sends messages all the time, which makes it easy to miss a phishing email. When you open, it will look exactly like an Amazon email, designs included. You click and land on a seller central clone, no visual difference.
Since you’re so used to this page, you may not pay attention to the few details that don’t match:
- The domain has a misspelling.
- None of the links work except the login page.
- When you hover over the email link, it shows another address.
- You never got messages from this address before, although it varies one or two letters from the official Amazon address.
In short, a scammer is about to steal your accounts. When you log into the fake page, it redirects to the real page where you didn’t log in. “That was weird.” You try entering the data again, and everything looks right.
Common Red Flags:
- Instead of links, Amazon usually asks you to search from their page. If they do send one, they certainly won’t cover it with Bit.ly.
- A misspelling instantly shows an imposter is trying to scam you.
- If you use an online link tracker, it often points to a fraudulent website reporter for phishing.
- If you click on “Remember credentials,” you’ll always log in without having to re-enter data. If you click on the link and need to log in again, you may have landed on a different (cloned) website.
How To Prevent It:
- Whenever something looks strange— and you don’t know what you’re doing— contact Amazon instead of trying to fix it. Support will tell whether you should worry and what to do.
- Only respond to legit Amazon addresses. You can ask Support to double-check the email you received: contact from Seller Central.
Product research is the main difference between success and failure. It’s so critical that sellers might spend weeks browsing for products and still find nothing. It’s about trial and error.
Not everyone can reach proficiency in this skill. Naturally, the impatient will look for shortcuts to avoid the hassle. They don’t want to waste time, so they spend money. But was it necessary?
Advance Fee Service
Perhaps a person approached you on social media who guaranteed to help you with anything. Brand registry? Product restrictions? Product research? Leave it for the pros! You just need to pay one upfront fee, and they’ll do the rest.
With this payment trick, however, they no longer need to help you: they can walk away anytime. If you do get the service, it costs far more than expected. You paid for something you could have done for free if you spent money on learning instead.
Giving others control to make those changes suggests you’ll need to share your personal information, which can lead to fraud.
Outsourcing Product Research
You spent days looking and found nothing. You start browsing on websites for product ideas until you stumble with an ad: “We research for you to find the best products to sell, all for less than $49.”
Question: if it’s so good, why are they sharing instead of selling it? When you buy ideas, you never know what you’re buying. Once they share the product analysis, you can’t get a refund. Perhaps they show the same listings to everyone, so it saturates the moment you get in.
Common Red Flags:
- They ask for money before offering the service. If they also specify an unsafe payment method, that screams “scam.”
- You can’t find a product overnight. If someone sells product ideas, and they’re sharing instead of selling, they may not be that good. If they were, they wouldn’t share them. One profitable product selling on FBA is worth more than $49.
How To Prevent It:
- If you need to pay upfront, choose buyer protection. Prepayments make sense, except when there are no refund guarantees.
- Know how to do what you want to outsource. You need basic knowledge about the task to delegate so you can evaluate whether they did a good job.
- You could outsource advertising, keywords, or photography. But don’t delegate research, the task that determines 90% of your success chance. It’s better to do it oneself and learn when you did wrong.
We’ll be buying large orders from distant locations, usually China. We’ve all had the million-dollar question: why do those suppliers settle for less and don’t join Amazon FBA? Although some of them do, manufacturing products doesn’t mean knowing about product research.
For them, it’s beneficial that you succeed in your business, so you always source from them: a long-term business relationship. An unverified supplier, however, may use sneaky tactics to scam you.
Suppliers aren’t in business to scam you, but they may take the chance if you’re not careful. For example, some of them:
- Suggest paying 100% upfront unless you say otherwise.
- Offer a single payment method: wire transfers.
- Won’t reply if you refuse to follow their conditions.
Sourcing products is risky for both the seller and the manufacturer. Both parties should share the risk instead of moving all of it onto the other.
For large orders, escrow services can monitor payments without favoring any party: they ensure a fair deal. Sometimes, you may contact brokers and fake suppliers: they claim to have a business they don’t. Unless you used Escrow.com, you lost any money paid upfront.
They may secretly work with the escrow company to rip you off. If you use a trusted firm (Escrow.com), they may impersonate it, so you make a payment mistake.
Common Red Flags:
- They name themselves Manufacturers, but they work as traders.
- Traders refuse to prove they are manufacturers. If you ask them to turn on their camera and show the workshops in real-time, they’ll give excuses.
- The site shows no certifications.
- They make excuses on why you can’t ask to inspect the inventory.
- They reached out to you, or you found them on sponsored listings.
- They come up with payment excuses: “We’ve already reached our Paypal withdrawal limit for this year.”
How To Prevent It:
- Contact multiple suppliers (10+), so you don’t depend on a single choice. This perspective will save you from confidence tricks.
- Before ordering, pay for samples and inspections. If you buy defective products, your listing may receive a load of bad reviews, ruining your launch due to someone else’s fault.
- Pay with buyer protection. Offer to pay 50% of the fees upfront. They may change their minds and let you use that payment method.
- Pay 30-50% upfront after you got the sample. Once the inventory is ready for delivery, pay the remaining sum. Most suppliers will document with photos.
- Choose trusted sites to contact suppliers. Select the right filters: years in business, verified accounts, company revenue, no. of transactions this year.
Creating Your Listing
You may think, now that you’ve ordered inventory, you’ve already covered the highest FBA expenses. That’s only true if you’re careful. If you make the mistakes in the listing and launch, you could lose just as much as you paid for inventory and still fail on your business.
Bad news: some competitor wants to bring your listing down to get your sales. The good news? If people try to sabotage your listing, that’s a sign you did a great job researching the product.
If enough customers send Amazon complains about you, they may change your listing, having the same power as you:
- A con man creates dozens of accounts to submit listing complaints.
- All of them say the listing doesn’t match with the product you sell, and they explain what the product really looks like (they invent all of it).
- Despite having your product in their warehouse to check, Amazon will favor the buyer. One day, you find a sales decrease and bad reviews. Your listing now shows inaccurate terms.
If they insist enough, they may change your product weight, color, length, features, anything to confuse actual customers: a subtle way to cause bad reviews.
Since Amazon forces those changes, it takes weeks to revert them.
One day, you find your product making fewer sales than usual. Since the pattern repeats, you try to find out what’s going on. But after looking at every aspect of your business, you can’t find anything wrong.
Amazon Hijacking often happens after offering giveaways/deep discounts, especially when selling commodities. You see, not every buyer has the intention to use your product. Some con men acquire parts of your inventory to resell it later. If their offer is better or cheaper than yours, they get the Buy box.
You spent on ranking and advertising, but they get the sales. These hijackers are often lazy, jumping on high-profit listings, hoping you don’t notice the steal. On the website, it looks like “Sold By Seller B,” which isn’t related to the listing brand.
Common Red Flags:
- You get loads of misleading customer complaints.
- You sell a product that’s hard to differentiate. Anybody can replicate and sell it.
- You’re approaching holidays, or you plan to make a deep discount.
- You see other listings having the same problem on page one.
How To Prevent It:
- Check your listing often. If you spot the scam quickly, you’ll save yourself from more losses.
- It won’t hurt sending a Cease And Desist letter to discourage the hijacker from manipulating your sales.
- Long term wise, trademark your brand, so you can protect your products legally when things go wrong.
- Instead of simply adding your logo, improve the product accessories, parts, and materials. It won’t be as easy to copy, and customers may find it more valuable.
- The simplest way to avoid hijacking is to have ten decent products instead of one home run. Hijackers will ignore your brand if your listings make less than $15K-$20K in revenue. Anything beyond draws unwanted attention and risk.
After product research, we consider launches the most critical step in your business. You might have created a super-product, but if people can’t find it, nobody will buy it.
To launch well, you need sales and reviews (and ranking). This stage completes once you’re among the top 3-5 listings on page one selling profitably. Unfortunately, it can take a while before you get there, which is why many new sellers are looking for shortcuts.
Manipulated Review Tricks
For a price, people offer to leave five-star reviews to improve your conversions. Here are some things to consider:
- The sales-to-review ratio should be lower than 5%.
- You can only get ~5 reviews a week, but the limit increases with verified purchases.
- Review manipulation only serves to launch. Once you’re selling well, real shoppers will show what rating your product deserves.
- If you cross those limits, the algorithm flags your listing as suspicious. They may remove some of your reviews or delete your listing altogether.
Is the buyer really doing you a favor? Or putting you into trouble?
We’ve all dreamed of the privilege to appear on page one. Ranked listings get sales. Sales help to rank, and rank helps to sell. Or should we say organic ranking?
These days, anybody can throw dollar bills on advertising and appear in front of customers. That doesn’t mean they will rush to buy the product: if it’s not as good, they won’t.
People won’t buy it unless your product is notably better than the current market leader. Think about it: would you replace your fridge because you found a model that’s 10% more efficient or cheaper? Not likely.
Yet, beginners believe that by ranking, they have launched their product. You may pay hundreds to services like Pageoneify and still lose money. After getting on page one artificially, organic sales pull you back down.
Selling With Associates
If you did the review-for-review trick, you might stumble with these scammers on social media. As you negotiate your review, they mention they could help you rank your product.
“You need sales to get to the first page. For a commission, I can get you as many sales as you need. I’ll refer to my friends and coordinate them to buy from you at once.”
You need to sell more than the top listings for seven days straight or more. Selling as a beginner is rare, and giveaways are expensive, so you say Yes.
Like clockwork, the associate supplies you with those sales every day. You see all the money on your Seller balance, which is a confidence trick to pay him the commission. The catch? Anybody can cancel the order anytime. But why would they do so all at once?
Because the associate is referring to fake accounts. Each of them has a different address and card number. These orders stay on Pending status for weeks and cancel right after they ship.
Before ordering, he may have encouraged you to raise prices to make money on the launch. It only increases your Amazon fees, because the order won’t complete.
As a second catch, the associate will always choose the most time-consuming shipping plan, so you find out the refund scam too soon. Since the sale canceled, you get no rating boosts from it.
Common Red Flags:
- You hear promises or guarantees before you completed product launching.
- You start getting senseless bad reviews (competitors may pay for sabotage)
- You’re making sales, but orders don’t complete, don’t deliver, or your ranking doesn’t improve.
How To Prevent It:
- Choose the Early Reviewer Program to get honest reviews fast. It doesn’t guarantee five stars and costs around $50 for five of them.
- If you want to manipulate your first reviews, choose triangulation. Seller A reviews Seller B, who reviews Seller C, who reviews your product. It tricks the Amazon algorithm.
- If you use giveaways, pick many buyers: don’t get all of them from one “affiliate seller.” Have an organized schedule to coordinate your sales every day of the launching week.
- When you advertise for the first time, do not rush with data reports. PPC campaigns take minimally two weeks to gather reliable data. If you got one sale per keyword, you still have nothing precise. You may try Facebook/Instagram/Facebook Ads.
- Learn how to prevent click fraud and keep your ads profitable.
Putting It All Together
Is FBA worth it? Despite the risks, Amazon is the way to start a business from scratch. It saves a lot of time you’d otherwise spend looking for customers.
If you’re not careful, the mentioned seller scams could cost you all your money, perhaps your identity too. Yet, some sellers have stayed here for years without ever finding any issues.
Long term, however, it’s not FBA fraud that should concern you. Over the years, we know Amazon will update its Terms and Conditions so that they favor their customers. Is that necessarily good/bad for you? In any case, Amazon has control. They own part of your business.
As long as you sell on their platform, they have the power to shut down your store anytime for unexpected reasons. As a seller, you can let Amazon be part of your business plan, but not all of it.
Many successful brands started on Amazon, built reputation, and got out with a client email list. Other than that initial stage, it’s not worth setting a business 100% on Amazon.
What should you expect?
Beginners expect to find brilliant product ideas, buy inventory for cheap, and make millions overnight. Although it’s possible and happens all the time, it’s the exact scenario that attracts scammers.
You can still make big money for far less risk without having those super-star products: create a brand.
- When choosing your first product, do more preparation than you usually would. A thorough analysis leads to smart product research. Optimism doesn’t.
- If you plan to launch multiple products, aim between $7K and $15K in monthly revenue. Ten $10K products have less risk of hijacking than one $100K product. If anything wrong happened, you’d still have nine products backing you up.
- Instead of selling random accessories, have your products follow a topic or category. If you can unify as a brand, you have more chances to get recurrent clients. If a customer buys, say, a garlic press from you, they may be interested in other kitchen wares you sell.
- Amazon takes a big chunk for selling on their platform, about 30% per sale. To build a long term customer base, create your official online store and make them buy from there. Let’s say fulfilling orders costs you 10% instead of 30%: you can offer Amazon customers a 10-20% discount if they buy through your store.
We consider FBA a passive business model. Although the traditional method still works, building a brand brings far more benefits: more customers, better quality, upgraded products, and more profits.