Top 5 Challenges for New Amazon Sellers

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With over 300 million active users globally (Contimod, 2025) and being the fourth most visited website of the year (Semrush, 2024), Amazon offers unparalleled reach for sellers. This vast audience makes Amazon the go-to platform for entrepreneurs looking to tap into a global customer base. However, for new sellers, achieving the right balance between moving inventory quickly and maximizing profits can be challenging. While navigating unique amazon difficulties, sellers encounter common challenges listed below.

In this blog, we’ll dive into the top five challenges that Amazon sellers face, including:

Managing Your Money
Outpacing the Competition
Mastering Inventory Management
Managing Seller Ranking
Winning Price Wars on Amazon

Curious about the challenges you’ll face as a new Amazon seller and how to overcome them?

Keep reading to discover key solutions to help you navigate your selling journey and to help you succeed on Amazon Marketplace.

First Amazon Challenge: Managing Your Money

Many new Amazon sellers often struggle to maintain steady cash flow, especially with Amazon’s biweekly payout cycle, which can leave them using personal funds to keep things running and restock inventory. Adding to the challenge are the various fees involved—such as FBA storage fees and referral fees that can range from 8% to 45% depending on the product category. Sellers who use FBA also need to stay on top of aged inventory fees if their products linger too long in Amazon’s warehouses. On top of that, advertising costs can quickly build up, especially as sellers invest in paid ads to increase visibility on search and category pages.

Solution: Understand Amazon’s Fees and Build a Winning Sales Strategy

To overcome financial challenges on Amazon, planning is essential. Start by calculating all costs upfront and develop a strategy to lower expenses over time, while setting aside a buffer fund for costs during sales delays.

Consider the below common fees:

Referral Fees: For example, Amazon charges 8% for Consumer Electronics (or a minimum of $0.30 per item) and 17% for Clothing and Accessories (or $0.30 per item).

Fulfillment Fees: Individual sellers pay $0.99 per month, while Professional sellers pay $39.99.

Storage Fees: Amazon checks your average storage space against sales over the past 13 weeks at the end of each month to determine any extra charges.

Hidden Costs: Keep in mind refund fees (typically $5.00 or 20% of the refunded amount, whichever is lower), as well as variable shipping and handling costs.

Below are some tips and tricks new sellers can add to their sales strategy:

Enhance Your Ads Strategy: focus on maximizing your return on investment (ROI) by optimizing ad spending rather than just running paid ads. Utilize tools like Amazon Sponsored Products and BQool’s AI-Powered Advertising Management Services to manage your budget effectively.

Watch Now to discover how Craig tripled his sales using BQool’s AI-Powered PPC management

Diversify Your Sales Channels: don’t rely solely on Amazon. Explore other platforms like eBay, Shopify, or Etsy to create additional income streams while awaiting Amazon payouts.
Explore Alternative Fulfillment Options: If you are an FBA user, consider using Third-Party Fulfillment Centers for more flexible and cost-effective storage solutions instead of relying entirely on FBA.
Plan for Sustainable Cash Flow: avoid depending only on sales for cash flow. Develop a realistic sales forecast that includes inventory levels, ongoing expenses, and a cushion for unexpected costs. Careful planning and strategic investments will help you navigate the early stages of your business and establish a strong foundation for growth.

Second Amazon Challenge: Outpacing the Competition

While Amazon’s vast marketplace offers immense opportunity, it also presents a significant challenge—intense competition. With 1.9 million active sellers as of September 2024 (Contimod, 2025), standing out in such a crowded space can be tough. New sellers often face the daunting task of competing with established brands and similar products, making it difficult to gain visibility and differentiate themselves. Finding ways to offer more value and stand apart from the competition is both time-consuming and crucial for success.

Solution: Niche Selection, Competitor Analysis, and Listing Optimization

Select a Low-Competition Niche: begin by choosing a low-competition niche using product research software, focusing on high-demand, low-seasonality items that cater to specific audiences. Categories like Patio, Lawn & Garden (+80%), Automotive (+21%), and Electronics (+14%) have experienced significant growth quarter-on-quarter (JungleScout, 2024).

Check out this video to discover the 20 Best Amazon OA Categories with Lower Competition.

Expand Low-Risk Product Lines: consider expanding product lines in low-risk categories to enhance cash flow and profitability.

Conduct Competitor Analysis: analyze competitor pricing, listings (including images, descriptions, and keywords), and customer reviews to identify gaps and improve your own product pages.

Optimize Your Listings Regularly: continuously optimizing your listings based on market trends and consumer behavior, along with developing a strong brand identity, can provide you with a competitive edge.

Enhance Your SEO Strategy: improve your SEO efforts to drive traffic to your listings.

Watch this video on conducting SEO research using BQool’s Keyword Research Tool, or explore effective SEO tactics for your Amazon listings in our blog here.

Third Amazon Challenge: Mastering Inventory Management

New Amazon sellers often struggle with inventory management, where finding the right balance between overstocking and understocking is crucial. Overstocking can lead to excess storage costs and tie up cash flow, especially for Fulfilled by Amazon (FBA) sellers. On the other hand, understocking results in lost sales opportunities and decreased visibility.

Understocking and Missed Sales Opportunities

One of the biggest challenges sellers face is understocking—when there isn’t enough inventory to meet customer demand. This can lead to stockouts, which not only mean lost sales but can also hurt your seller ranking. Stockouts can occur for various reasons, such as not tracking sales velocity, poor forecasting, or overlooking sales across multiple channels. For example, failing to consider peak seasons or events like Prime Day can result in running out of stock during high-demand periods, significantly limiting your earning potential.

Solution: Monitor Sales Velocity & Sales Forecasting

To prevent understocking, track your sales velocity and aim to maintain at least 60 days’ worth of supply. Accurate sales forecasting that accounts for seasonal demand will help you plan effectively and avoid unexpected stockouts. Additionally, if you own multiple sales channels, monitor inventory across all channels to ensure you don’t run out of stock.

Overstocking and Excess Inventory Costs

On the other hand, overstocking can tie up your cash and result in expensive storage fees, especially for FBA sellers. Leaving excess inventory in Amazon warehouses for too long leads to long-term storage charges and lowers your Inventory Performance Index (IPI) score. A low IPI can restrict your future storage space and hurt your business in the long run. Additionally, overstocking diverts funds that could be better spent on more profitable opportunities.

Solution: Strategies to Combat Overstocking

To mitigate overstocking, focus on improving your sell-through rate through creating promotions, investing in ad spending, and optimize product listings to help move inventory quickly. Maintaining a good sell-through rate will support a healthy IPI score, allowing you to store inventory at Amazon for longer periods. Utilizing inventory management software for demand forecasting and real-time sales tracking can further help prevent overstocking and free up cash for other business areas.

Fourth Amazon Challenge: Managing Seller Ranking

Customer reviews are crucial for building a strong Amazon reputation. They increase visibility since Amazon’s algorithm favors products with positive feedback, and they enhance credibility by demonstrating that real users trust your product. Reviews also act as social proof, as satisfied customers can influence potential buyers and drive sales. Developing a strategic customer service approach to manage reviews can further strengthen your position as an Amazon seller.

For new sellers, gathering positive reviews in a competitive marketplace can be challenging. Although sellers are restricted when it comes to directly or publicly responding to customer reviews on Amazon, reviews not only influence potential buyers but also impact your product’s ranking on Amazon, affecting both your visibility and sales. Without good reviews, or if negative ones aren’t managed properly, your rankings may drop, leading to missed sales and a harmed reputation. Sellers could also sometimes receive fake or malicious reviews that can mislead customers and hurt your business.

Solution: Prioritize Customer Satisfaction and Provide Full Transparency

To address this, sellers should encourage reviews through:

Offering great products: Make sure you’re selling items that meet customer needs and are of sound quality to avoid complaints.

Set clear expectations: Describe your products accurately so customers get exactly what they expect—no surprises!

Highlight reviews: Regularly share positive reviews on your listings to attract more buyers and build confidence.

Listen and learn from negative feedback: Although bad reviews may be discouraging for new sellers, they offer valuable perspective and feedback which you can immediately address for future sale- it shows you’re willing to make things right.

Watch for fake reviews: If you spot fake reviews, you can report them to Amazon to protect your reputation.

The Final Amazon Challenge: Winning Price Wars on Amazon

Price wars happen when sellers repeatedly drop their prices to outdo competitors, but this race to the bottom can harm profit margins and threaten business sustainability. During peak shopping seasons like Black Friday and Cyber Monday, these battles become even more intense, with frequent price changes and fierce competition. Price wars are especially common in highly competitive categories such as electronics, books, and apparel.

For sellers, price wars create three major issues that can undermine success:

Time Wasted on Price Competition: When sellers spend too much time tracking competitors’ prices, it pulls focus away from more important tasks like building their brand or improving operations. Instead of growing the business, sellers get stuck in a cycle of price monitoring and keeping an eye out for the competition.

Shrinking Profit Margins: As sellers compete to offer the lowest price, profits shrink, leaving little to no room for growth. Sometimes sellers even make losses because of price wars.

Hurting Brand Value: As profits decrease, sellers might feel forced to source cheaper, lower-quality products to stay afloat. This compromises product quality, which can lead to negative customer experiences and poor reviews, ultimately damaging the brand’s reputation.

Solution: Automate Pricing with Tools that Align with Your Goals

Amazon’s marketplace is fast-paced, with constant price fluctuations as sellers compete to optimize their strategies. Keeping up with these shifts manually can be overwhelming and time-consuming. The sheer amount of data required to monitor the market landscape makes it difficult for sellers to stay ahead of the competition on their own.

To solve this, many sellers rely on automated repricing tools. These tools streamline pricing strategies and are increasingly AI-powered, enabling data-driven, hands-free adjustments that automatically respond to market changes. This gives sellers peace of mind, knowing their prices remain competitive without requiring constant manual intervention.

When choosing the right repricer as a new Amazon seller, consider these key features:

Affordable Plans: As a new seller, you might not see profits right away. While some repricers offer a wide range of services at a higher cost, it’s better to start with one that aligns with your primary goals and is affordable for long-term use.

Tailored Strategies: Competing for the Buy Box requires dynamic and adaptable strategies. With the fluctuating nature of Amazon’s marketplace and massive competition, it’s crucial to choose a repricer that offers flexibility and customization to develop repricing strategies that will place you in winning battles. New sellers in particular would benefit from tools that allow strategy adjustments for different inventory types when trying to establish their place in Amazon, helping to drive sales or move stock efficiently rather than focusing solely on profits.

AI-Powered Features: Modern repricers leverage AI technology to help sellers remain competitive during price wars. Look for transparency and continuous management of AI models in the repricer you choose, ensuring it can adapt and grow with your business needs.

Introducing Repricing Central: BQool’s Repricing Software Tool for New Sellers

BQool’s AI-powered repricer offers everything new Amazon sellers need to stay competitive and profitable. With flexible, affordable plans starting at just $25 per month, it’s perfect for sellers who are just getting started. The repricer includes tailored strategies that adjust to your inventory needs, like the AI Win Buy Box and the AI Win Profit Maximizer strategies, which ensure a steady climb to the Buy Box and even increase prices once the Buy Box is secured. These tools, alongside smart automation and data-driven repricing decisions, give sellers the ability to focus on growing their business while staying ahead of the competition without compromising their profits.

But don’t it from us, get the best repricing tips from real Amazon sellers in this video.

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