6 ways to recession-proof your Amazon business

Amazon sellers are struggling. When they aren’t fearing potential Amazon account suspensions or ASIN deactivations, they are fighting challenges with decreased consumer spending, higher expenses and squeezed margins.

Don’t despair. Get proactive. Following are six low-risk, easy strategies to recession-proof your Amazon business in 2023.

6 ways to recession-proof your Amazon business

Strategy #1: Maximize reimbursements for Amazon FBA inventory

Amazon loses, damages and otherwise fails to properly care for FBA inventory that belongs to third-party sellers. This is a normal part of any fulfillment business.

Occasionally, Amazon sellers see automatic reimbursements in their accounts for lost and damaged inventory. But what they don’t see is Amazon’s dirty big secret. For most sellers, these automatic reimbursements make up less than 20 percent of the reimbursements they are actually owed by Amazon.

Getting paid back for mistreated and misplaced inventory isn’t easy. It requires serious accounting mojo, in addition to manual filing of Seller Support cases. Fortunately, there are service providers (including Riverbend Consulting) that can help. And in most cases, sellers do not pay unless the service provider recovers funds from Amazon. A small percentage, or finder’s fee, then applies.

If a seller has never performed an account audit, they may be in for a nice surprise. Cases can be filed going back as far as 18 months, depending on the reimbursement type.

Strategy #2: Control Amazon fees

For Amazon FBA sellers, fees can quickly get out of control – and destroy the bottom line. That’s why it’s important to conduct an ASIN-by-ASIN audit of Amazon’s fees, to ensure they are not overcharging margins away.

Examples include:

  • Product dimensions. We’ve seen many sellers whose products were placed in a larger size classification than they should have been. As a result, the fees for every single order were too high. Step one is to get the dimensions and weight corrected on Seller Central. Step two is to file a case asking for reimbursement of all past inappropriate charges.
  • Storage fees. These fees also can be wrongly inflated by Amazon if the product is assumed to be larger than it really is. But most high storage fees are the fault of the seller. It’s important to recall slow-moving inventory and not over-stock unproven items.

Strategy #3: Improve listing quality

Rather than flailing to source new products or reinvent the wheel, sellers would be well-served to maximize the ASINs they know should be selling more – but simply aren’t.

Dollar for dollar, money spent on listing optimization will create higher return on investment than almost any other activity on Amazon. Why? Because real improvements to the listing detail page can improve search results on the A9 algorithm, increase views, and drive more conversions. An optimized ASIN detail page can even work in concert with PPC campaigns to lower ACOS (average cost of sales).

In a recent case study, we determined that the best solution for listing optimization is to outsource. It costs less to use a high-quality vendor for this work than to hire in-house. Keeping headcount down during tough economic times is a must, so this strategy is particularly timely. Of course, we can help here as well.

Strategy #4: Outsource to low-cost options

Speaking of outsourcing, Amazon sellers are big believers in virtual assistants (VAs). With onshore and in-house labor costs continuing to rise, now is the time for sellers to evaluate their companies’ daily activities and find options for outsourcing.

Examples include:

  •  Answering customer service messages
  •  Fixing stranded inventory
  •  Managing account health and writing ASIN appeals
  •  Seeking out and sourcing inventory
  •  Performing any other task for which an SOP (standard operating procedure) can be developed

By outsourcing, sellers can avoid human resources expenses from hiring to onboarding to benefits and more. Plus, they can ensure continuity by relying on a full-featured firm with an entire team of employees to service their account.

Strategy #5: Keep inventory selling

Stranded inventory can be the bane of any seller’s existence. Unfortunately, getting inventory from “stranded” back to “active” can be difficult, time-consuming and frustrating.

But every day that inventory sits in stranded, a seller has their cash tied up – rather than making sales and using the proceeds to buy more inventory or rake in profits.

Whether they use an in-house employee, a VA, or an Amazon service agency, it’s critical that sellers have a strategy in place to get inventory active ASAP:

  •  In some instances, a few clicks in Seller Central will solve the problem for a well-trained employee
  •  In other cases, a case with Seller Support must be opened, monitored and followed up multiple times
  • Finally, sometimes, appeals are needed to address product quality issues or policy violations

No matter who is tackling these issues, they cannot be allowed to linger. It’s far too expensive – even if this expense seems hidden.

Strategy #6: Always be improving your worst ASIN

Some Amazons sellers have two or three products. Other sell thousands, tens of thousands, or even hundreds of thousands of SKUs.

But all of these sellers have something in common: they have one worst ASIN. Take away that worst ASIN, and they will have a new worst ASIN.

Bad ASINs can cause a multitude of problems, from poor reviews to high return rates to safety concerns and more. Add these problems together and suddenly, the ASIN loses money. It doesn’t have to be that way. We recommend that sellers continually work to improve their worst-performing ASIN:

  •  Uncover which ASIN is losing the most money, generating the most returns, or generally causing expensive headaches
  • Rehab that ASIN with a clear product detail page, a better description, improved packaging, or some other fix based on Voice of the Customer, reviews, returns, feedback and common sense
  •  If the ASIN cannot be affordably rehabbed, scrap it; don’t sell dogs
  • Repeat with the new worst-performing ASIN

SOPs can be written to cover most of this process, which then can be handled largely by a VA or outsource. Of course, final decisions, manufacturing issues, safety problems and the like still need management intervention.

But we promise, investing in this strategy drives up profitability while easing headaches. That’s the ultimate Amazon win-win.

When you need more insights and team support on improving your Amazon account improve health and performance,  we are here to help.

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