5 Simple Tips to Improve Amazon Profit Margins

In order to be successful on Amazon, it’s crucial for sellers to maintain high profit margins. More profit on every unit sold means more capital to grow your business faster and the ability to reach your goals even sooner.

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However, many sellers struggle to find ways to improve their margins and maximize profits. To help you put more of every dollar back in your pocket, this article will cover five effective tips that can help you improve your profit margins and create a more successful business on Amazon.

1/ Sweat the small stuff

Whilst it might not seem as glamorous as some of the topics we’ll get to, having a good handle on the finer details and logistical workings of your business is fundamental to growing your profit on Amazon.

Understand your margins

Before you try to increase sales, ensure you have a clear idea of what numbers you’re working with. By using a detailed reporting tool like Sellerboard you can quickly and easily understand what costs you are paying at a SKU level and identify areas that can be improved. This kind of detailed information can help you make informed decisions on where to invest in better marketing, negotiate better prices, and potentially even cut SKUs from your inventory.

Stay in stock

One of the biggest mistakes that erodes profit for Amazon sellers is stocking out of key products. When learning how to sell on Amazon, sellers discover that launching a product on Amazon in most categories will require a marketing strategy that includes competitive pricing and aggressive sponsored products campaigns.

As time goes on and your listings gain more organic ranking for a wider range of search terms and more positive reviews you can begin to increase your price and improve your marketing efficiency. However, if you are constantly running out of stock on your most important items then this will mean you need to “re-launch” every time you’re back in stock to claw back the momentum of your original launch.

This leads to great inefficiencies in your business and is one of the most important things to overcome when asking how to increase profit on Amazon.

 

2/ Improve your supply chain

Once you’ve nailed your numbers, the next step is to master your supply chain and ensure it is as efficient as possible. Here are a few quick wins to help you do that.

Improve your cashflow

As mentioned previously, stocking out is one of the biggest enemies of making profitable sales on Amazon. A new Amazon seller only has so much capital available and, due to Amazon’s delayed payout schedule, proceeds from sales can take some time to catch up with the level of stock needing to be re-ordered.

To help improve this some sellers look to utilise 0% interest offers when making inventory purchases or adding more personal funds into the business in order to get over the cashflow hump early on. It’s also highly advisable to avoid any unnecessary costs in your business and ensure you can funnel as much capital back into inventory as possible in the early days.

Negotiate with suppliers

Another way to improve cash flow is to negotiate with suppliers. Of course, there is room to negotiate with your supplier for a better price, but chances are you’ve already done that and got the best price you can. Aside from placing larger orders or shopping around for other suppliers to decrease your unit cost, you can also negotiate on terms.

Whereas most suppliers will expect 30% deposits and 70% balances paid on completion of manufacturing at first, many will be open to improved terms over time. My main supplier for a brand I own has recently agreed to a payment structure of 10% deposits followed by the balance paid when goods arrive at the port of destination. As you can imagine, this is a huge boost to our cash flow!

Use efficient payment methods

When starting your online business and paying small amounts for your first inventory orders the payment method you choose will not make a great deal of difference. But as you begin to spend thousands, and tens of thousands of dollars you will be able to find optimized ways to pay your suppliers. Whilst services like PayPal or credit cards may charge 3-5% on transactions, you can find currency exchange and transfer solutions that charge a fraction of this price.

Pro tip: the same can also be said for how you receive money. If you’re selling in more than one currency and allowing Amazon to do the currency exchange for you, you’re losing another 2-3% there.

Ship inventory efficiently

Most shipping firms will have minimum charges such as a set price up to 3 cubic meters (CBM), then a price per CBM beyond that. If you’re only shipping 1-2CBM you’ll still be paying the full 3CBM price, so you should always look to try and max out the minimum required volume. As your business grows you’ll also be able to consolidate shipments and look towards shipping full containers.

By following the above steps and improving your inventory management and cash flow you’ll also be able to avoid expensive air shipping and instead ship all orders by sea saving further shipping costs and adding dollars to your profit margin.

 

3/ Optimize your product for profitability

Whilst your manufacturers of course want you to be profitable so you can continue to place more orders, they are far less concerned with your profit margin than you are. That’s why it’s essential that you take the time to optimize the end product according to your goals.

Optimize packaging for fulfilment fees

A small increase in package size can lead to a large increase in Amazon fees. I once sold a bath pillow and my manufacturer told me they were increasing the size by just a few centimetres as this would improve the experience for the customer. “Great!” my new Amazon FBA seller brain thought.

Little did I know this extra size would bump this product into the small-oversized category and almost double the Amazon fulfilment fee. With this in mind, you can proactively work on ways to decrease the volume of your products by creating smaller packaging and saving on costs.

Using Sellerboard is a great way to identify how much you’re paying for fulfilment across all your products and if there are ways you can reduce these costs. 

Remove unnecessary parts

You can also consider what is within your product and how much of it is essential for creating an excellent experience for your target audience. If there are items within or aspects of your product that are surplus to requirements then make sure you get them removed. The physical cost of the materials and the potential shipping cost savings will be more than worth it.

 

4/ Increase your selling price

The obvious route to increasing Amazon profit margins is to raise your prices. But it’s not quite as simple as that, and there are some things you need to do in order to make that a successful strategy. Here are a couple of things to consider.

Justify a higher price

You can’t just set a ridiculous price and expect to make sales. If you’re going to price your products at the higher end of any given market then you need to give customers a reason why they should buy your product at a premium.

If you want a high profit margin but still want to make more sales and maintain a good sales rank then you need to clearly differentiate your products with premium packaging, extra features, and sometimes even a unique design.

Bundle products together

Additionally, you can look to bundle items in one package. Let’s say you’re looking to sell a hammer but on its own, you will struggle to make a very high profit margin. You know that customers who buy hammers also buy screwdrivers, so rather than sell these two items separately you could look to package them together helping you increase sales and save fulfilment fees leading to higher profit margins.

 

5/ Improve key metrics

Once your foundations are set, your product is sourced, and your price point established there are still more areas you can improve your profitability. Let’s look at three key metrics that when improved can quickly increase your profits.

Improve your CVR

Conversion rate, or CVR, is one of the most important numbers in your Amazon business. Simply put it’s the number of sales you make in relation to how many customers visit your product listings. If you have 100 visits and 15 sales, your CVR is 15%. A study by MarketPlace Pulse stated the Amazon-wide average as 12.5%, but regardless of what your number is you should always be looking to improve it.

Things that improve your CVR are on-page aspects on your Amazon listings such as high-quality product images, detailed product descriptions with sales-focused copy, and more reviews. Each of these aspects is extremely valuable in driving more Amazon sales and increasing your profits so you make more money.

Improve your CTR

Click-through rate, or CTR, is a key metric in the digital marketing world. It measures the relevance of your product in relation to relevant keywords and tells you how many customers are clicking through to your listing from the Amazon search results page. By improving this number you will get more visits to your products and show Amazon your product is desirable and help it move up the search results rankings.

Improve your ACOS

ACOS is a key Amazon metric and stands for Advertising Cost of Sale. In essence, it represents how effective your sponsored products ads are on Amazon. It’s calculated by dividing ad spend by ad sales and multiplying by 100.

For instance, if you’ve spent $40 on ads and made $200 in sales, your ACOS would be 20% (40/200*100). By learning how to improve your ACOS with good PPC management you can decrease your customer acquisition costs and improve overall profits.

 

Conclusion: Think long term

It’s important to take a long term view when attempting to increase profits on Amazon. Applying all the strategies shared in this article will help improve your margins, but it will take time. The more you test your listing to reach more potential customers and provide excellent customer service to generate more online reviews the more established your products will become.

In time as you boost sales you’ll be able to increase order quantities and drive down your unit costs and shipping costs to further increase your profits. Keep focused on the big picture, stay patient, and apply these best practices to ensure your profit continues to grow year over year.

 

How to Sell on Amazon for Beginners: 4 Best Books?

Selling your goods on Amazon isn’t difficult – closing those sales, however, is quite challenging, especially for solo entrepreneurs. According to recent findings, small business sales account for 60% of total sales on Amazon, with marketplace merchants accounting for 55% in Q1 of 2021. 

You don’t need to have a large international brand or a network of influencers available to sell on Amazon successfully. What you do need is literature, guidelines, and books on how to do it right. Here’s how to start selling on Amazon and scale your business successfully, with the best books on how to do so.

Why Sell on Amazon in the First Place?

Selling on Amazon can be overwhelming for beginners, at least at first. It is such a vast marketplace with established sellers and niches that you simply can’t compete – but is that true? Whether you’re a reseller, small business owner, or sell your DIY products, Amazon has a nook for you. 

According to statistical reports, Amazon owns 90%+ market share in five different product categories worldwide. The same stats show that 86% of sellers turned a profit on Amazon in 2020, with 92% continuing to use the platform for eCommerce. Amazon is in a constant state of growth and expansion, and more and more sellers worldwide are establishing their marketplaces on it. With that in mind, what are some of the most tangible reasons to use Amazon instead of a different global marketplace?

  • Access to a global customer base

  • Lower advertisement costs compared to running your e-store

  • More frequent and more lucrative sales

  • Access to complex customer interaction metrics

  • Improved SEO of your brand and product names

Best Books on How to Sell on Amazon for Beginners

  1. Amazon Selling Blueprint by Scott Voelker

Let’s assume that you’re at the beginning of your Amazon FBA journey. Handling the complex jargon, abbreviations, and inside lingo can be jarring, especially if you don’t have experience in online selling yet. Worse yet, it’s easy to get discouraged when you see successful sellers and resellers on Amazon who seemingly have no competition.

The Amazon Selling Blueprint is the perfect starting point for any seller. It will teach you the basics of Amazon FBA, as well as how to use the platform’s sales features to your advantage. Students can use it to launch their online businesses via Amazon while thinking, “I’d like someone to write my research paper for me”, for example. That’s how easy this book is to pick up and apply practically to your Amazon store. Scott’s everyday language will help you kick-start your Amazon marketplace in 90 days or less, as advertised.

  1. Product Research 101 by Renae Clark

No matter which industry or niche you want to establish your name in, you will face fierce and unrelenting competition. This is where books like Product Research 101 come into play. Renae Clark managed to dilute the complexity of conducting market research and pricing your products accordingly down to a science. 

This book will help you identify upcoming changes in your industry, find the right suppliers to work with, and test the market before launching products. You can also use this book to gauge when to drop prices, when to run sales campaigns, or when to invest in paid ads. It’s a very beginner-friendly publication, and it will surely help you launch your storefront more easily on Amazon.

  1. The Everything Store by Brad Stone

Sometimes, the best thing to do is learn directly from the source. Jeff Bezos didn’t build Amazon overnight, and his journey to becoming a billionaire is chronicled in The Everything Store. This book will teach you everything you need to know about Amazon as a company, its history, development hurdles, and major milestones. 

It is an amazing publication for sellers who want to start on Amazon and expand to selling on their online stores late, like students. You can think, “I want someone to do my assignment for me”, and instead spend time developing your online entrepreneurship plan in your spare time. This is a great way to come out of college swinging and immediately have a business plan to lean on while building your career. This is what The Everything Store can do for you and then some.

  1. Online Arbitrage for Amazon FBA by Kris McCauley

Coming to grips with Amazon FBA can be tricky if you don’t know anyone who can help you in the first few months. But, you can pick up Online Arbitrage for Amazon FBA and make your onboarding experience simpler and more productive. Kris McCauley gives the readers a step-by-step guide on how to learn about Amazon FBA and use it to their advantage. 

It will help you make Amazon sell your full-time job or a successful passive income that will augment your household income. This is a no-filler publication with actionable tips and guidelines. Meaning, you won’t have to spend hours going through hundreds of pages of dry theory before getting to practical sales tips. Online Arbitrage for Amazon FBA is suitable both for solo sellers and small businesses looking for ways to expand their Amazon presence.

Overcoming Amazon as a Beginner Seller (Conclusion)

Being a small fish in a big pond isn’t easy. It can be easier however if you learn from the right resources and build your marketplace properly from day one. Give these books a shot and see if you can apply their principles, how-to guides, and case studies to your marketplace. 

Amazon is quite versatile with the tools it provides its sellers with, so don’t shy away from experimentation and creativity. Once you find your ideal tool stack and tip combination, stick to it, and the right buyers will flock to your listings organically.

Bio: Donald Fomby is a professional digital marketer, copywriter, and editor with extensive experience in business development, sales, and advertisement. He closely collaborates with professional dissertation writing services and aims to deliver the best possible papers, essays, and case studies to his clients. Donald is an avid reader and a passionate cooking aficionado in his spare time.

 

Image source: https://www.freepik.com/free-photo/top-view-freelance-asian-lady-using-laptop-shopping-online-with-credit-card-table_14407667.htm 

How to Become a Successful Amazon Seller? (Ultimate Guide)

How to Become a Successful Amazon Seller? (Ultimate Guide)

More than 2.5 million active sellers work on Amazon, and among all of them, just a few can be Amazon successful sellers, who increase their selling day by day. In this article, you get familiar with the secrets and mysteries of succeeding on Amazon. Don’t miss this article if you decide to come to the world of Amazon sellers or currently sell your products on Amazon.

What Is Amazon FBA?

The most advanced fulfillment networks worldwide belong to Amazon. You can store your products in fulfillment centers of Amazon with the Fulfillment by Amazon (Amazon FBA) service. Amazon will provide you picking, packing, and shipping service. In addition, customer service for these products will be done by Amazon. With Amazon FBA Business, you can increase your sales and reaches more customers.

How Much Do Successful Amazon Sellers Make?

There are many ways to sell on Amazon, but Amazon FBA is the most popular one up to now. Based on the report of Amazon and surveys that different companies have done, an average  Amazon FBA seller can earn $1000 to $25000 monthly in sales. If you assume an average profit margin of 10%- 20% for an Amazon FBA seller, making $100 to $5000 a month in profit is imaginable. 

There are three main types of sellers in Amazon FBA sellers working on the market for more than one year. In below summary table, you can have a glimpse of their profits and revenue:

Important Tips for Succeeding at Amazon

To improve your selling and become a successful Amazon seller, you need to be up-to-date and follow the below steps:

  1. Marketing for your business
  2. Keep your items’ price competitively 
  3. Choose the right pricing strategy

  1. Participate in Amazon Prime
  2. Have diversity on your sourcing list
  3. List your products correctly
  4. Identify your most profitable product
  5. Select the right fulfillment option
  6. Customer service 
  7. Go global

Actually, these 10 steps of success would not happen overnight, and you should put in the effort and hard work. 

Another simple way that helps you be successful and make money easily, is to use OABeans online arbitrage lead lists. These lists are practical for both newbie and professional Amazon sellers and the leads are checked on different criteria like 90-days price history, category selling rank, being gate/ungate and etc. By using this list, you can earn up to $5000 monthly profit.

What Products Sells More on Amazon?

Amazon is known as a great place to have an e-commerce business. You can decide what to sell there, but you should select the best selling products to have a reasonable profit. Your selling products determines your success rate. Therefore choose them attentively. You can go to the Amazon best-sellers section, which is updated hourly. It is possible to find the products that are bought frequently. They are listed under each department with their trending rank. Best Seller Rank (BSR) will give a score to each product on each individual category and the related sub-categories simultaneously.

You should keep an eye on the seasonal products as their popularity changes very fast, while other products like books, electronics, and games hold their constant position. During the pandemic and lockdown, the products like personal self-care items and fitness equipment became more popular. By the way, any time you want to add new products, it is required to check the market to ensure that the products are still in demand. In general, the sales potential on Amazon for the following categories are high:

  1. Electronics
  2. Toys& Games
  3. Video Games
  4. Camera & Photo
  5. Clothing, shoes & jewelry
  6. Books
  7. Home & Kitchen

When you want to use Amazon’s best-sellers list, pay attention to the following points:

  • All sellers have access to this information, so selecting the right product is very competitive
  • Not all of the best-seller products are profitable because of their sales margin
  • The trend of particular products may stop so that you can jump in  

Final Thoughts

In Amazon FBA, Amazon will perform all steps for you. There is a big competition on Amazon selling, so the amount of money you can make depends on many factors. Optimistically, you can join many of the existing profitable Amazon seller stories by following our ten seller tips.

For selling profitable products on Amazon and take the path to success faster, you can use the websites that provide the leads on Amazon. OABeans.com is one of these successful websites that offer money-making leads to the users and customers. We hope that this article helps you on becoming an Amazon successful seller. To study more articles about Amazon, you can visit the blog on the SellerBroad website.  

Put Your Profit First in Your Amazon Business (Interview with Cyndi Thomason)

Our guest on the 30th of August, 2021,  on the sellerboard show, was Cyndi Thomason, the writer and the owner of the Bookskeep accounting and consulting firm for e-commerce companies.

We talked about:

  • Explanation of the “Profit First” notion.
  • How often an e-commerce seller should reconcile in the books.
  • Benefits of hiring a bookkeeping and accounting outsourcing company.
  • Main things sellers should know before the international expansion of their businesses.
  • What are the common cash flow challenges in the e-commerce business.

Watch the full video here: https://www.youtube.com/watch?v=a2hobAOjdng  Continue reading “Put Your Profit First in Your Amazon Business (Interview with Cyndi Thomason)”

Scale Your Business on Amazon in 2021 (Interview with Robyn Johnson)

Our guest on the 9th of August, 2021,  on the sellerboard show, was Robyn Johnson, the owner of Marketplace Blueprint and the Amazon expert.

We talked about:

  • Navigation through Amazon regulations vs sales and profit maximization. 
  • Advice for product listing optimization.
  • What’s the difference between launching the business on Amazon in the past and in 2021.
  • Marketplace Blueprint Academy for the Amazon sellers.
  • Misconceptions that brands and individuals have when entering Amazon in 2021.

Watch the full vide here: https://www.youtube.com/watch?v=QKekJCWi_20  Continue reading “Scale Your Business on Amazon in 2021 (Interview with Robyn Johnson)”

Amazon and Beyond How to Choose the Right Marketplace (Interview with Richard Hurtley)

Our guest on the 20th of July, 2021,  on the sellerboard show, was Richard Hurtley, the co-founder and managing director at Rich Insights.

We talked about:

  • Factors to consider when choosing the next marketplace whether its Amazon and beyond.
  • Things to bear in mind when launching outside of Amazon.
  • How to prioritize different opportunities.
  • The key commercial drivers such as profit and sales.
  • How to smart plan a successful launch.

Watch the full video: https://www.youtube.com/watch?v=vQHVn6ZiS1k&t=386s  Continue reading “Amazon and Beyond How to Choose the Right Marketplace (Interview with Richard Hurtley)”