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How Does Inflation Impact Amazon Sellers?

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How Does Inflation Impact Amazon Sellers?

inflation amazon sellers

As inflation rises, it puts more pressure on consumer spending and changes online customers’ shopping habits, posing new challenges to eCommerce store owners. This is also true for businesses on Amazon. For more information on how inflation can impact Amazon sellers, please continue reading, then reach out to AVASK Group today.

Is inflation affecting Amazon sellers?

Inflation is the rate at which the cost of goods and services rises over time, affecting consumer purchasing power. Whereas the moderate price increase reflects positive economic growth, higher inflation rates indicate the contrary and entail specific risks for shoppers and business owners. Inflation in the United States has hit a forty-year high of 8.6 percent, which brings the following pressures:

  • Rising fuel costs
  • Decrease in consumer purchasing power
  • Increased commodity prices
  • Raw materials shortage
  • Higher inventory costs
  • Labor market challenges

Unfortunately, sellers will face several additional challenges.

What additional challenges does inflation pose for sellers?

While these additional challenges can be devastating, sellers do have possible solutions. The challenges and solutions are as follows:

  • Increase FBA inventory fees and fuel surcharges: Redo your math to see how far you can discount your products and still make a profit: Confirm all your product sizes are accurate, so you don’t overpay for shipping or storage.
  • Amazon sales slow down: Optimize your product line by conducting thorough product research and determining your brand concept and maintaining profit margins.
  • Soaring freight costs: Streamline order fulfillment by leveraging your connections with fulfillment centers, diversifying the source of your product and switching to domestic suppliers.
  • Challenging inventory management: Automate your inventory management by buying the right inventory management software to provide accurate reporting and reduce human error.
  • Amazon shoppers seek out discounts and better customer experiences: Improve customer engagement by developing a strong social media presence, building your brand reputation and earning Amazon badges.
  • Fierce competition: Win the Buy Box or go multichannel.
  • Amazon’s push for lower prices: Monitor sales data and track prices to adjust them: Choose best-selling products to increase your product margins and use lower-margin products as bonuses, benefits or entry offers.

Please reach out to Timothy E. Nelson, CPA today if you have any further questions about this or other Amazon-related topics

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If you are an Amazon seller and require the assistance of an experienced Certified Public Accountant, please contact Ebiz Accounting for an initial consultation.

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