Comparing Amazon Sales From Jan 2014 and Jan 2015 - Results and Lessons Learnt
Higher Selling Prices
Strategy no. 1 is to look for products that sell at higher price points on Amazon, which is always helpful to reduce the percentage of fees paid to Amazon, resulting in higher profits. Having a higher selling price also allows me to move away from looking for products with the often mooted 3x selling rule that sometime confuses people. The 3x guide is not a rule it's a guideline for new sellers (just asthe theory of evolution is just a theory not fact). If you are not sure about how to count your costs, I strongly recommend you get familiar with using Amazon's free FBA Revenue Calculator which I used to calculate all my profit numbers below and for everything before I decide to sell it or not.
I know a couple of very successful sellers who will only sell something if they can make a minimum of $10 profit per sale. For them the $10 threshold helps them focus on maximizing their productivity so they don't spend their time packing items to make a dollar or two. Personally, I like to sell anything that I can make at least $6 on after all Amazon and third-party prep fees. Since I don't pack anything myself, I don't mind the lower dollar amount margins. I will even go down to $3 in net profit for some products that sell well (low bestseller rank aka sales rank within the top 3% of a parent category), have very low competition and can be easily re-stocked, for example from a wholesale supplier. When checking prices on Amazon, I zoom in on products that have a price of $15 or more. I especially look out for prices that are $19or more and love anything that is $35 or higher.
Strategy no. 2 is multipacking. A multipack is putting 2 or more of the same item together such as 4 tubes of Colgate toothpaste. I like multipacks for several reasons. First, it raises the selling price (see strategy 1 above) resulting in higher profit compared to selling singles. For example, I sell a grocery item that is currently selling for $10 .48 each on Amazon. My cost is $2.98 each. If I sell it as a single at that price, my net profit is $2.18 per sale. However I also created a 2 pack and a 4 pack which I price at $19.99 and $37.50. The 2 pack nets a profit of $6.68 which works out to $3.34 per unit vs $2.18 - that's over 53% more profit per unit. For the 4 pack, my net profit per sale is $15.56 which is $3.89 profit per unit - that's 16.5% more per unit than the 2 pack and over 178% more profit per unit compared to selling single units. You'll be surprised how many people will buy in large quantities - it's one of the reason McDonald's does so well by training counter staff to suggest up-sizing a meal to every customer. Secondly, there tends to be lower competition on multipacks. I guesstimate that a large proportion of Amazon sellers are sourcing from retail arbitrage, which means they are scanning UPC codes in stores. By creating you own multipacks with a new UPC codes, you immediately become invisible to the mobs of scanners because your multipacks will not show up on their scanners since the UPC codes are different! The proof is in the pudding and many of my multipacks still have zero competition after being listed for months, some for a year! The third reason I like multipacks is I can order in larger volumes from my wholesale suppliers. This helps me meet minimum orders to get free shipping or volume discounts with some of them. I think it also helps them to like me since I am now a buyer with bigger orders. For example if I sold 1/day of a single, I would order 30 units a months. However if I sell 1/day of the single, 2 pack and 4 pack, that's 7 units a day or a monthly reorder of 210 units vs just 30.
Strategy 3 is creating bundles. It's similar to multipacking (you also get the benefits of higher selling prices and profits as well as even lower competition) except a bundle consists of 2 or more different but complementary products. For example a shower curtain with a bath mat and/or towels. Or salt & pepper shakers bundled with salt and pepper. Or a water bottle with a cleaning brush. The possibilities are endless!
The key to creating bundles with a higher chance of success is to include at least 1 product that is popular or a hot seller which buyers are searching for. Then you just add something (s) in a package that makes sense for that customer so that when they see it they think, "yes, it makes sense for me to get those items together" or " that would make a great ready-to-use set/kit or a gift". A quick way to get ideas for bundles is to look at the Frequently Bought Together section as Amazon tracks what every customer buys in order to suggest related products to increase sales. Just this week I've created a new bundle from 4 products from 2 different suppliers. 1 product I sell 3-6 units/day at $15.99 with a cost of $3.90 and the other is the number 1 bestseller in it's subcategory
A good bundle can be amazing and is effectively like a private label product except better- you can leverage on a product's or brand's existing popularity and by bundling it with something from a different supplier or even a simple 1 sheet how to use guide you insert together, you have effectively made it like a private label listing. Effective bundles can be amazing. One of my bundles was ranked under 800 in grocery this week and I did not have to do any SEO, PPC advertising, giveaway offers for reviews or any other marketing that comes with typical new private labels!
These 3 strategies are simple to employ. If you take action, you will see results.
If you need help with how to create bundles check out the Proven Bundling Course which is also a module included in the Proven Amazon Course.