Overview

A once‑thriving Amazon brand that was pulling in eight‑figure revenues vanished within a few months after a chain of avoidable mistakes. The rapid decline turned a multi‑million‑dollar operation into zero sales, offering a stark warning for sellers who rely on unchecked growth.

Key Points

• Revenue plunge — Quarterly turnover dropped from more than $10 million to nothing after a series of operational blunders.
• Cash‑flow squeeze — Dependence on Amazon’s payout rhythm left the company unable to finance inventory during a crucial restocking period.
• One‑product focus — Over 80 % of income stemmed from a single flagship item, exposing the business to listing suspensions.
• Policy breach — Minor compliance errors escalated into a full account hold after an audit flagged missing safety labels on product photos.
• Supply‑chain shock — An unexpected freight delay doubled lead times, causing stockouts that stripped the seller of the Buy Box.
• Channel narrowness — Absence of alternative marketplaces or a proprietary website eliminated any fallback sales route.

How the Collapse Unfolded

1. Aggressive ad scaling — The entrepreneur reinvested roughly 70 % of profits into Amazon ads, lifting monthly ad‑driven units from 5,000 to 20,000. When cash pressure forced a budget cut, the sales surge evaporated almost overnight.
2. Over‑ordering inventory — A forecasting mistake resulted in a 150 % larger purchase order from a Chinese factory. A port strike delayed the shipment, leaving the Amazon fulfillment center empty for three weeks while the seller waited for the cargo.
3. Listing image violation — To boost conversion, the seller swapped the original product photos for lifestyle images that omitted required safety markings. Amazon’s compliance team issued a warning, which turned into a suspension after the seller missed the 48‑hour response deadline.
4. Buy Box loss — The three‑week stockout triggered Amazon’s algorithm to award the Buy Box to a lower‑priced competitor, slashing the seller’s sales by an estimated 60 % in a single day.