Do you like the idea of clocking up 100’s or even 1000’s of sales a day on Amazon with only a small handful of listings? Most sellers who do very high sales volumes, do it by having 1000’s of SKU’s.
For example, 1000 SKU’s selling an average of 5 units per week (by competing with other sellers for the buy box), equals around 22,000 sales a month. At a modest net profit (after all expenses) of $2 per sale, that’s a net income of around $44,000 per month.
The biggest downside of this method is that it requires a lot of funding. At any given time, a seller with 1000 SKU’s, could have anything from $100,000 to $500,000 tied up in stock. Aside from that, it requires staff and a very sleek, efficient operation in place for monitoring listings and stock levels, and for continually looking for new selling opportunities and sourcing stock. This is the reason for the net profit of $2 per sale.
But, there IS another way…
By developing your own brand and utilizing smart marketing techniques, you can achieve a similar net profit with just a handful of listings on Amazon.
Take the three highest volume categories on Amazon:
Health & Household
Home & Kitchen
Beauty and Personal Care
With any of these three categories, you have the potential to sell 100+ units a day with a single listing. There are many other categories where a single listing can sell 50 or more units per day. Pets, Office Products, and Toys, to name a few.
But, going back the ‘big 3’, by focusing on creating a brand in one of these categories and selling 5-10 different products under the umbrella of your brand, you can achieve similar results to the seller with 1000 SKU’s who competes with others for the buy box and therefore only averages 5 units a week per SKU.
You don’t need to sell as many units because your net profits are higher. The seller who sells 100’s or even 1000’s of different products, buys his stock from domestic wholesalers and he also has a lot of overheads – paying staff etc.
When you have your own brand, you buy from manufacturers or overseas suppliers (China mainly) which means you pay less. Your overheads are lower because you don’t need a team of staff.
Sounds good but what’s the catch?
The catch is that building your own brand takes work, hard work in fact, but it’s definitely not more work than managing 1000 SKU’s!
The easiest way to launch your own brand on Amazon is to start with a single product and then gradually expand to add a second product, then a third and so on. This is the way it’s usually done and the idea is that you use the profits (or some of the profits) from your first products, to launch the next one.
How many products you ultimately launch is going to depend partly on the potential of the individual products (although you don’t need to stick to ONLY selling them on Amazon) and partly on your own goals and ambitions.
There are a ton of perks to having your own brand on Amazon and one of those perks is that non-Amazon retailers often scout Amazon looking for the ‘mom and pop’ type of brands (as opposed to big name brands) to sell through their own stores – either online or offline. It’s not unusual to be contacted by these retailers and asked if you would be willing to sell wholesale to them. This is the easiest money you will ever get. You won’t make a whole lot of profit per unit, but who cares, a profit is a profit!
So if your dream is to hit those high numbers on Amazon, but you don’t have the capital required to invest in large amounts of inventory, or you simply don’t want to go down the road of having 1000’s of different SKU’s (and I don’t blame you!), then building a brand in one of the high volume categories could be the answer.