Category Archives for "Amazon"
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.
It’s a great question and the first answer is going to depend on what you plan to sell. If you want to sell your used/new unwanted items just to get them out of the way or raise some extra cash, then Ebay is the best place for this.
However, if you plan to make a regular income selling new items that you source and then sell to make profits, Amazon is without question your best bet.
Amazon has twice as many shoppers as Ebay. So more potential customers to tap into. 300 million to be precise!
Amazon customers buy and spend more than Ebay shoppers do. Figures show that Amazon buyers are spending at least double on average per annum, than Ebay buyers.
The average Amazon shopper has a higher annual income than the average Ebay shopper and is willing to spend more on an item.
On top of this, Amazon has it’s own loyalty scheme called ‘Prime’ membership where customers pay an annual fee in order to gain certain benefits such as free shipping. This brings Prime customers back to shop on the platform over and over again because they naturally want to get the most bang for their membership buck. According to recent reports, the number of Prime members in the US is more than 60 million!
Why is this good for sellers? Because these Prime customers are frequent shoppers and will often purchase several items in one session. AND, because of their above average annual household income, they will readily pay more for an item than the average Ebay shopper. This means that you, the seller, don’t need to sacrifice your profits by selling at ridiculously low prices in order to make enough sales.
In order to fully benefit from this as a seller, you should be selling via FBA (Fulfillment by Amazon). This is where Amazon warehouses your items and ships your orders to your customers. In any case, you’d be crazy not to take advantage of FBA because it cuts your workload down and takes away the headaches of packaging and shipping orders to customers.
So providing you sell through FBA, all those Prime customers will see a little icon beside your item listings, letting them know that your item qualifies as a Prime purchase. Many Prime customers will ONLY buy items that qualify, putting you at an advantage over other non-FBA sellers.
There one really BIG advantage of choosing Amazon over Ebay if you plan to sell items regularly…
It’s less work!
When you list an item on Amazon, you don’t need to keep re-listing it. Nor do you need to take the payments for customer orders. Amazon do that on your behalf. FBA sellers don’t need to deal with refunds either, because once again, Amazon does this.
In summary, if you are in thinking about selling on one of the big online marketplaces, Ebay or Amazon, the only time that Ebay would be your best bet, is when you want to sell some unwanted personal items or perhaps a one-off lot of stock. Otherwise, Amazon is a much better option over all.
Amazon selling fees are quite low when you take into account the fact that as sellers we use their platform, leverage their trust and credibility, and make use of their registered customer base of close to 3 million shoppers.
Shoppers on Amazon tend to be prepared to pay a little more for items than they would on say, Ebay for example. Therefore we can set our prices that little bit higher, which helps to offset some of the fees.
That being said, we still need to know what these fees are so that we can work out whether or not it’s possible to make a profit on an item we want to sell. Sometimes new sellers simply look at the wholesale cost of an item, compare it to the selling price on Amazon, and think they can make a great profit. They completely overlook the fact that Amazon needs to make money too!
Amazon Referral Fee
This is a percentage of the selling price of each item sold on Amazon and it’s usually 15%, although there are some categories where this percentage is a little higher or a little lower. Generally, though, you can expect your referral fee to be 15%.
For example. If you were selling a dog lead for $22.99, Amazon would take $3.45 (15%) from each sale.
This only applies if you are using ‘Fulfillment by Amazon’,. This is where Amazon stores your items at their warehouse and then ships them out to customers as your orders come in. It’s a great service because it takes away the headache of packing and shipping out orders.
For most items this fee is around $2.60 If the item is large and bulky, it will be a little more than this and if your item is classed as ‘small and light’, it will be less.
If you are not using FBA, this fee does not apply.
Both the Referral Fees and the FBA fees are taken from your earnings. You don’t need to pay either of these fees from your own pocket.
FBA Long-Term Storage Fees
Again, this only applies if you are using Fulfillment by Amazon and these fees are very small unless you have stock at the FBA warehouses for longer than 6 months. Meaning, your stock is slow selling. There are ways to avoid this happening, but if it does happen, then you need to factor in around $0.55 per item per month
Professional Seller Account Fee
As a seller, you can either open an ‘Individual Account’ or a ‘Professional Account’
There is no monthly fee for an Individual Account, but you will pay Amazon $0.99 per item sold in addition to the costs listed above
The Professional Account has a monthly fee of $39.99, but you do not pay the $0.99 per item sold.
Generally, if you intend to sell more than 40 items a month – which hopefully you do – then the Professional Account is the one to go for.
Even when factoring in the fees, there’s good money to made as a seller on Amazon providing you do your calculations first. Of course, there’s more to it than just making sure you can turn a profit. You also need to know how to choose the right items to sell, where to get them, how to create listings that convert to sales and more. Even so, Amazon is still a great place to sell. New sellers can still make their mark and it doesn’t require a big start-up budget either 😉
As a new seller on Amazon, you may be feeling a bit uncertain about which categories to start selling in. When I started selling back in 2013, I had no idea which categories were the most popular or which were the most competitive, and I know from my student’s feedback that choice of category can be a sticking point.
With that in mind, I’ve sectioned out some of the main categories on Amazon.com into high, average and low volume:
Updated May 2018
Health & Household
Beauty & Personal Care
Home and Kitchen
Toys & Games
Kitchen & Dining
Patio Lawn & Garden
Tools & Home Improvement
Arts Crafts & Sewing
Camera & Photo
Computer & Accessories
Cell Phone & Accessories
So does this mean that selling in low volume categories is a waste of time?
No, not at all! However, you should expect to sell less in these lower volume categories and if you plan to use FBA (Fulfilment by Amazon) to store and ship your items to customers, then you should definitely consider selling in a category with a higher turnover.
Generally, when starting out, it’s simpler to sell in a ‘medium volume’ category. There are literally 10’s of 1000’s of suitable products to sell in these categories and you won’t face the same fierce competition associated with the highest volume categories.
However, even the high volume categories have sub-categories with less volume and less competition. So it’s a good idea to ‘drill down’ a bit and uncover some of these potentially very profitable sub-categories.
Amazon offers endless possibilities, but that’s part of the problem! Don’t let too much choice hold you back. Choose a category and stick to it until you have your first product listed and selling on Amazon. Action is the key!
Want to supplement your income by selling on Amazon?
Today, more and more sellers are fulfilling their ambitions and earning truly life-changing incomes.
Nova Smith started selling on Amazon four years ago after borrowing money from relatives for a few units of stock. In 2014 she generated 3 million in sales. That’s pounds sterling by the way, the equivalent of about $5,000,000 US at today’s exchange rate.
Nova had found herself down on her luck and struggling to pay the mortgage after her son was born with serious health complications and had to spend two years in and out of hospital. Fast forward to today and her Amazon selling venture has probably exceeded her wildest dreams.
The fact is that Amazon is open to almost anyone who wants to begin an online venture. Whether it’s just to earn some regular extra cash, or, like Nova, to build a multi-million dollar empire. Or anything in between!
In the UK alone (which is a much smaller marketplace then the US), the number of sellers generating over £1,000,000 in sales annually on Amazon, grew by 33% in 2014. That’s a massive increase and goes to prove that the opportunity to profit on Amazon is still very much alive and kicking!
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