There’s a cruel internal term used at Amazon for certain types of FBA sellers: CRaP, which stands for Can’t Realize a Profit. Amazon FBA CRaP refers to low-cost products fulfilled by Amazon that can’t make a profit, and therefore can’t be sustained as a business.
Who are FBA CRaP sellers on Amazon? Many are newbies. These include people attempting retail arbitrage using seller apps or their own gut feeling. Then they discover they can’t unload the goods unless they cut prices to the bone, obliterating their margins or even going negative.
Other sellers attempt private label products in highly competitive niches like phone cases or hair accessories. Newbies are lured to these market segments, led on by bad advice from masterclass gurus and Amazon seller apps. They make a basic mistake, assuming that high search volume on Amazon for certain keywords will lead to high sales.
Amazon’s own search engine reveals the problem with this assumption: There are currently 100,000 results for iPhone cases. In addition to being priced below $15, many have thousands of reviews, making it nearly impossible for newbies to break in.
FBA CRaP sellers don’t realize far more experienced sellers already dominate these niches, and often control the supply chain as well. They have thousands of reviews and can always beat new sellers on COGS through better relations with manufacturers in China.
What happens to Amazon FBA CRaP sellers?
On the Seller Central forums, I often see newbie CRaP sellers lament their lack of sales and reviews.
The ones who have gone through the trouble of creating an Amazon brand are the saddest cases. Most of it is white-labeled consumer goods. They’ve invested tens of thousands in legal fees to secure trademarks and buy inventory, and spent heavily on masterclass and app subscriptions, as well as Amazon FBA and PPC costs.
They launch their brand and are horrified to discover that even with expensive PPC campaigns and a handful of Vine reviews, competing products appear right on their detail page priced 30% lower and having hundreds or even thousands of Amazon reviews. These are often literally the same product, made by the same factory with a different brand’s sticker. Eventually, the sellers realize it’s not sustainable and leave.
Here’s an example of one such private label seller. Pickleball paddle sets are probably “premium CRaP” as the price points are over $20, but there’s no way this seller can compete unless the product components, images, and above all the price are changed.