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Five Business Tips to Improve Your Amazon Sales

By: Skip McGrath

#1 - Change your account to use Fulfillment by Amazon (FBA)

 I have been selling on Amazon since 2006 and eBay since 1999. Before Amazon came along, eBay was responsible for about 80% of my sales and I only sold about 20% on Amazon. Today we are now 80% Amazon and only 20% eBay.

Back then, we were Merchant Fulfilling (MF) which means every time something sold, we had to ship to our Amazon customer. In 2010 we converted to FBA. And, by 2011 we were 100% FBA.

FBA is a service Amazon provides where you send your merchandise to Amazon, and when an item sells, Amazon collects the money from the customer, takes the credit card risk, and ships the item to the customer. Amazon also handles returns and customer service issues.

About four months after we completed the conversion to FBA our Amazon sales increased by almost 800%.

Fulfillment by Amazon (FBA)

#2 - Maintain Excellent Account Metrics

Amazon looks at all of your account activities to see how well you are doing. These include:

  • Filed A to Z claim rate
  • Late shipment rate
  • Negative Feedback rate
  • Pre Fulfillment cancel rate
  • Order defect rate
  • Refund rate
  • Tracking rate (Amazon wants you to ship & enter tracking, on 90% of your shipments within 24 hours)
  • Delivered on time
  • Buyer/Seller contact metrics. Amazon requires you to answer buyer emails within 24 hours, and they count those that take longer as negatives


Keeping your metrics within Standard norms are critical!

If your metrics get too bad, Amazon will suspend or cancel your account. Also –this is important to your overall sales because, Amazon uses these metrics as a major factor, when they determine who wins the buy box.

Price is still 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.


Amazon Account Metrics
(click here for larger version of this image)

#3 - Increase Your Inventory

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, who have less than 100 to 150 listing SKUs. (SKU stands for Stock Keeping Unit. A SKU is a number you make up to keep track of your products. Each separate item you list on Amazon requires a SKU. If you don’t assign one –Amazon will assign a random one.)

My wife and I used to have over 900 SKUs (different items listed). At that level, our daily sales were approximately 55 items per day.

We're getting older and wanted to slow down, so we decided to scale our business back. Now we are down to about 500 SKUs, and that translates to about 25 to 30 items per day. As you can see, there is a direct correlation between the number of active SKUs and your daily sales.

Keep investing your profits in finding more items to sell. Watch your inventory levels to make sure you replenish items when you start to get low.

#4 - Reduce Your Non-Performing Inventory (NPI)

NPI is inventory that sells either slowly or not at all. Keeping this inventory in stock hurts you in two ways.

  1. First is your opportunity cost. You have money tied up in stock that could be used to buy stock that is selling steadily.
     
  2. Secondly, if you are using FBA then you are paying Amazon monthly storage fees on items that are not selling –and perhaps even long-term storage fees twice a year.

The fastest way to reduce NPI is to lower your price.  But sometimes, even that doesn’t work. When this happens, I remove the listing and the inventory from Amazon. Then, I donate the inventory to my local thrift shop for a tax deduction.

#5 - Raise Your Average Selling Price (ASP)

If you sell 50 items a day and make $1.50 on each one, then you are making $525 a week or $2,100 per month. But, if you make an average of $5 on each item, now you are talking about some serious money ($1,750 per week or $7,000 per month).

The key lesson here is: don’t source products that will sell for under $25. My personal goal is $30 and currently we are near that at $33.75.

If you are selling in FBA, look at these two images below. This is a shot of the Amazon FBA Revenue calculator.

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). Since your net from Amazon is $7.94 – less your product cost, your profit was $1.44. ($794 – 6.50 = $1.44). The deductions you see are 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.
 

ASP - Average Selling Price

Which one would you rather sell more of?

Don’t get me wrong, I do have a few low price selling items. My $12.95 item is a garlic crusher/slicer. I sell about 25 of those per week.

The second item is a concealed carry pistol holster, which only sells about two per week. But, if you do the math, I make almost as much weekly profit on those two holsters, as I do on the faster selling garlic slicer.

So, there are 5 great tips to help build your business. If all you do is read them –you won’t see much difference. But, if you put the steps and techniques in place, you will see results quite soon.
 

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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