If you think selling on Amazon is all about smooth sailing and easy profits, it’s time to rethink that. A lot can go wrong, which is why solid risk management on Amazon is crucial for your business’s survival.
The potential rewards of selling on Amazon are significant, but they come with their own set of headaches and challenges. From unpredictable policy changes to competitive pressures, risk management helps you navigate the rough waters.
Take, for example, the story of a hand sanitizer seller who learned this lesson the hard way. In a podcast episode from our Amazon agency, the story was shared of how this seller got caught in Amazon’s crackdown during the pandemic, proving why risk management is never optional.
The Hand Sanitizer Collapse: When Profits Backfire
During the early days of the pandemic, a hand sanitizer seller saw an opportunity as demand for disinfectants exploded. He jumped in early, stocked up, and started raking in serious cash almost overnight.
To him, it felt like he’d found the golden goose; every bottle sold faster than the last, and the profits looked endless. But that golden goose quickly turned to stone when Amazon caught wind of the inflated pricing and moved fast.
Amazon swiftly suspended the seller’s listings for price gouging. What began as a successful venture turned into a crisis almost overnight.
Selling on Amazon Is Riskier Than You Think
Amazon has a history of reacting quickly and harshly when its reputation is on the line. Sellers caught in the middle of a PR crisis often face instant suspensions with no time to prepare.
If you’re selling on Amazon, you don’t really own your store, you’re basically just renting space on their platform. And when Amazon decides to shut that space down, there’s not much you can do other than appeal.
Why Risk Management on Amazon Is Not Optional
When Amazon shuts you down, they don’t ask questions first, instead, they act and let you figure it out later. That’s why waiting until something breaks to build a backup plan is a terrible idea.
In the podcast, it was made clear: if your entire business is tied to one SKU or one channel, you’re vulnerable. Risk management on Amazon means building flexibility before disaster strikes, not after.
Amazon Risk Management Lessons That Still Hold Up Today
Even now, risk management on Amazon still matters just as much as it did during the pandemic. At any point, a new crisis can hit, whether that’s from regulations, supply chain disruptions, or geopolitical issues.
A recent example is the tariff increase that caught a lot of sellers off guard. Sellers who rely heavily on China as their only sourcing option are now forced to either cut profits or raise prices and lose customers.
This could’ve been avoided if risk planning had started earlier. Sellers who had already begun diversifying their suppliers or building in more margin were better positioned to ride it out.
Don't Wait for the Crash
The hand sanitizer case is a clear example of how quickly success can turn into chaos on Amazon. It shows how sellers who ignore risk management are setting themselves up for failure.
This wasn’t just a one-off situation, it was a wake-up call for every brand. The lesson still stands: if you’re not planning for risk now, you’re just waiting to get blindsided later.
Need help creating backup plans and strategies for your Amazon business? Reach out to our full-service Amazon agency. We’ll audit your risk exposure and help you prepare before things go sideways.
