3 Costly Mistakes to Avoid When Buying an Amazon FBA Business

Buying an Amazon FBA business can be an exciting opportunity, but it also comes with risks. Without proper diligence, a deal can quickly turn into a costly mistake that wipes out profits. Below are three of the most common pitfalls and how to avoid them when considering an acquisition.

1. Overlooking the Competitive Moat

One of the most common mistakes in acquisitions is failing to understand the competitive landscape. Many buyers look at an FBA business as if they were purchasing a piece of real estate: the listing ranks well, has a strong keyword, and generates predictable revenue.

But unlike real estate, the market for Amazon products can shift overnight. A new competitor can enter with better costs, improved branding, or a differentiated product that makes the current listing far less valuable.

If the product has no unique selling proposition (USP) or competitive moat, it’s essentially a “me-too” product—easy to copy and vulnerable to price wars. Even products with thousands of reviews are not immune to being undercut by competitors who can deliver a similar item at a lower cost.

When evaluating an acquisition, ask: What makes this product different? If differentiation is weak or non-existent, the risk of depreciation is high.

2. Ignoring Review Score Risks

Another common pitfall is acquiring a business with products hovering on the edge of review thresholds. For example, a product with a 4.3-star rating displays as 4.5 stars in search results. But if that average dips to 4.2, the display drops to 4 stars.

That seemingly small shift has a major impact on conversion rates, search rankings, and revenue. In some cases, revenue has been cut in half almost overnight.

Sometimes sellers artificially inflate reviews, and once Amazon removes them, the score drops to the product’s natural level. If you buy based on inflated revenue multiples, you may find yourself overpaying and waiting twice as long to recover the investment.

The safest acquisitions are brands with strong review scores (ideally 4.5 stars and above) and thousands of organic reviews that provide a cushion against sudden drops.

3. Skipping Hands-On Product Testing

Due diligence should always include ordering and testing the product yourself. Not just one unit—buy multiple units from different channels and run stress tests to assess quality, packaging, and the customer experience.

There have been cases where buyers discovered significant defects only after placing test orders. In one instance, a kitchenware product had a faulty motor. Instead of recalling or correcting the issue, the seller included a replacement part in the box and expected customers to fix it themselves. Unsurprisingly, returns skyrocketed.

Testing the product beforehand would have flagged this issue and saved the buyer from a nightmare acquisition. Without this step, hidden problems can easily slip through and destroy margins.

Key Takeaways

When evaluating an Amazon FBA acquisition, keep these three checks in mind:

1. Assess the competitive moat — Avoid products that are easy to copy or only win on price.

2. Examine review scores carefully — Products hovering around 4.2–4.3 stars are risky.

3. Test the product yourself — Multiple orders can uncover quality issues before you buy.

If a business doesn’t pass these basic checks, it’s better to walk away. There are plenty of solid opportunities where the brand, reviews, and product quality create a sustainable foundation for long-term growth.