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Five Business Tips to Improve Your Amazon Sales

By: Skip McGrath

#1 - Convert to FBA (Fulfillment by Amazon)

 I have been selling on Amazon since 2006. I also sell on eBay. Back in those days, eBay was responsible for about 80% of my sales with only 20% selling on Amazon.

We were merchant fulfilling (MF) which means every time something sold, we had to ship it to our Amazon customer. In 2010 we converted to FBA. FBA is a service Amazon provides whereby you send your merchandise into Amazon, and when an item sells, Amazon collects the money from the customer (and takes the credit card risk), and ships the item to the customer. They also handle any returns and customer service issues.

Once we converted to FBA, within about four months our Amazon sales increased by almost 800%. Today we are now 80% Amazon and only 20% eBay.

Convert to Amazon FBA

 

#2 - Develop and keep excellent account metrics

Another way to improve your Amazon sales is to pay attention to the statistics.  Amazon looks at several of your account activities to see how well you are doing. These include:

  • Order defect rate
  • Negative Feedback rate
  • Filed A to Z claim rate
  • Pre Fulfillment cancel rate
  • Late shipment rate
  • Refund rate
  • Valid tracking rate (Amazon wants you to ship and enter tracking on 90% of your shipments within 24 hours)
  • Delivered on time
  • Buyer/Seller contact metrics (Amazon wants you to answer all buyer emails within 24 hours and counts those that take longer against you)

Keeping these metrics within Amazon Standards are critical for two reasons. One is if they get too bad, Amazon will simply cancel your account. The second reason is that Amazon uses these metrics as one of the major factors when they determine who wins the buy box for a given product that is being sold by several sellers. Price is the biggest factor when Amazon determines who wins the buy box, but if your metrics are poor, you can lose the buy box even if you are the lowest price seller.

Pay attention to your sales metrics at Amazon

#3 - Grow a Large Inventory

There is a very simple rule on Amazon: The more items you have listed (and in stock), the more you will sell every day. I am always amazed to see sellers who have been selling on Amazon for more than a year or two and they have less than 50 to 100 listing SKUs. (SKU stands for Stock Keeping Unit. It is a number you make up and assign to keep track of your products. Each separate item you list on Amazon requires a SKU )

I used to have over 1000 SKUs (different items listed). When I was at that level, my daily sales were about 55 units a day. Recently my wife and I decided to scale our business back (We are getting older and just wanted to slow down a bit). So , now we are down to about 600 SKUs, and that translates to about 30 items sold per day

So as you sell, keep investing your profits (or at least a good portion of them) into finding more items to sell. And watch your inventory levels to make sure you replenish items when you start to get low on stock. When you run out of stock, Amazon removes that listing from results and your sales rank on that product will drop when that happens.

#4 - Get Rid of Non-Performing inventory

Non-performing inventory (NPI) is inventory that sells either very slowly or not at all. Having this inventory in stock hurts you in two ways. The first is the opportunity cost. You have money tied up in stock that could be used to buy stock that sells. The second way is, if you are using FBA then you are paying Amazon monthly storage fees on items that are not selling.

The best way to reduce NPI is to lower the price. Almost anything will sell if the price is low enough. But sometimes, even that doesn't work. When this happens, I remove the inventory from Amazon, kill the listing and donate the inventory to my local thrift shop for a tax deduction.

#5 - Raise Your Average Selling Price (ASP)

Last, but not least, another way to improve your Amazon sales is to raise your average selling price. If you sell 50 items a day and make a dollar on each one, then you are making $350 a week or $1,470 per month. But, if you make an average $10 on each item, now you are talking about some serious money.

The lesson here is don't source products that will sell for under $25. My personal goal is $35 and currently we are close to that at $33.75.

If you are selling in FBA, look at these two images below. Both of these are products I sell. Your net from Amazon (the last line) on an item that sells for $12.95 where your product cost was $6.50 including inbound shipping and shipping to Amazon. So, since your net from Amazon was $7.94 - less your product cost, your profit was $1.44. The various deductions are all Amazon selling and FBA fees

The second item is an item I sell where my product cost is $17.50 (again including inbound shipping and shipping to Amazon). I sell that item for $49.95 and my net is $38.40. So less my product cost of $17.50, my profit is $20.90.

So, which one would you rather sell more of? Don't get me wrong, I do have a few low price selling items. The $12.95 item is a garlic slicer, but I sell about 50 of those per week. The second item is a gun holster that only sells about two per week, but as you can see I make almost as much profit on those as I do on the higher selling garlic slicer.

Smart Pricing on Amazon Products

Would you like more information on improving your Amazon sales?  Check out The Complete Amazon Marketing System...

The Complete Amazon Marketing System is a two-volume printed training manual over 350 pages long. It also comes with several training videos, over a dozen free bonuses and free lifetime membership in my Wholesale Sourcing Members Site.






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