If you sell private label products on FBA you are a bit of everything. You’re a product manager, a marketing executive, head of finance, and purchasing manager, and probably copywriter, photographer, and international freight purchaser are in the mix somewhere, along with a good few more job titles.
You may not have ‘reader’ as a job title but you really should take a little time out to read about the Amazon business, and about business in general. If you’re starting out, or still finding your way around, there are a couple of books that can make a big difference to your life. One is Scott Volker’s Amazon Selling Blueprint. He goes through how to launch your first private label product, and he includes not just one but two case studies – his own business, and someone one’s – as well as access to an online course.
Renae Clark’s Product research 101 is another book that’s useful for getting your business up and running. The book takes you all the way through the process from generating product ideas and checking out trends to testing the market and working out what price to sell at.
Some business books are good at stopping you from getting stuck in a rut. Seth Godin always manages to provoke; you’ll see things differently after you’ve read one of his books. Purple Cow is about how to get your product noticed – let’s face it, that’s an issue for Amazon sellers, with such a lot of competition.
Occasionally I like to catch up with what’s happening in the world of academic research. It might not sound particularly interesting, but every so often I find a great nugget of wisdom hidden away on a university website.
St Edward’s University’s research on frugal spenders is one of those nuggets.
Frugal individuals, the research says, are actually more likely than big spenders to fall for big discounts.
Big spenders will buy the thing they want, and if they can get a discount, it’s nice. But a cheese-paring frugal consumer, having seen a really deep discount, will convince themselves that they absolutely need the item involved – even if they don’t.
Usually, frugal individuals divide their shopping into luxuries and necessities. And usually, they’re pretty good at sticking to those necessities. Even a 10 percent discount isn’t enough to get their fingers hitting the buy button if they’ve decided the item is a luxury. If they don’t need it, they won’t buy it.
But faced with a 60 percent discount, their frugality crumbles. They tell themselves a whopping big lie. It’s that huge discount that does it. They’re just too tempted. But a frugal consumer won’t admit that they’re buying a luxury item on the cheap. Instead, they redefine it as a necessity – letting them enjoy the discount without feeling the guilt.
This is particularly good news for Amazon sellers who can make discounts right now, because the frugal state of mind becomes much more evident when the economy is facing a possible recession or when household incomes are stretched.
However, there are limitations to using deep discounts to motivate frugal shoppers. The item you’re selling still needs to be a moderate-need to high-need purchase and not a frivolous or luxury purchase. You can move someone from “I have to replace that dog blanket sometime soon” to “wow, 70% off, I better replace that dog blanket right now”; but it’s more difficult to sell, say, jewelry or a novelty tee shirt.
And apparently, deep discounts don’t motivate spendthrifts at all. But that’s okay – they’ll buy your product anyway, and probably pay full price, which is great for your profit margin.
So that gives you one really good reason for using Vipon. Consumers who’ve signed up to Vipon are discount hunters by nature – so you’re showing your best deals to exactly the people most likely to be motivated by them. At the same time, you’re keeping your prices on Amazon high enough that your profit margins don’t get wrecked, because only signed-up Vipon members are going to be able to use the coupons to get that brilliant deal.
Source: Sommer Kapitan et al, What a great deal…I need that! Updating need drives frugal consumers’ responses to deep discounts, Journal of Business Research (2021).
If you’re discounting your Amazon products, you want to make sure you’re discounting the right ones. That’s particularly important because a rule called the 80/20 rule or the Pareto principle says that you’re going to get 80 percent of your returns from just 20 percent of your products, or actions, or customers.
So you can see if you pick the wrong 20 percent to focus on, you won’t do as well as you hoped. And if you pick the right 20 percent, you’ll really start to pick up business.
But of course, you need to pick the right 20 percent. So here are our suggestions.
• The product that’s selling like hotcakes without your even having to market it, that always gets the buy box and is at the top of the search rankings? Don’t even think about discounting this one. If anything, see if you can increase your price a little.
• The new product that is having a tough start to life? This is a product where a coupon promotion can really help. Give customers a significant enough discount to get them excited, and once the product is beginning to roll, you’ll be able to cut the coupon program and still keep the sales coming.
• The product where your competitor’s price is just that tiny bit below yours? If they’re a serious competitor, you’ll want to drop your price permanently – not just hold a temporary promotion. Or you’ll need to offer something extra that your competitor doesn’t.
• The product that started really well but is now faltering? A coupon promotion can help you here, but you’ll need to work out which of the two situations you’re dealing with. It may be that you haven’t promoted the product much, and it’s just a bit tired, in which case a coupon promotion could give it a quick shot in the arm. Or your product may be ‘old news’, like last year’s fashion, or missing a feature that most products now incorporate. In this case, use coupon promotion to get your stock moving out of the warehouse.
• Coming up to the holidays, like Mother’s Day, and so on, you may want to think about discounting your best sellers to take advantage of the seasonal boost. (Another way to do so might be to create bundled packages that sell at a discount to the total value of the individual products included.) In the last case, you’ll want to work out what amount of discount will enable you to close out the inventory without losing money. But when you’re doing your calculations, remember to allow for FBA charges on holding stock – it can be better to close out fast since you won’t have to pay those charges.
When is the best time to use a discount offer? We could easily say ‘all the time’, but there are certain times when having a special offer on Amazon will deliver the greatest benefit to your business.
For instance, around holidays, you’ve got a lot more people shopping, looking for ideas for gifts. This might not help you much if you sell dehumidifiers or cleaning products, but even if your product isn’t usually ‘giftware’, you could benefit from having a discount offer just before the holiday.
Thanksgiving, the winter holiday season, mothers’ day, and fathers’ day, are all good times to push your products into the foreground. You don’t need to take a lot of money off – just a 5% offer will get your products to stand out from your competitors. Don’t forget celebration days that are meaningful to your particular customer base – International Cat Day, veterans’ commemorations, Black history month, or International Women’s Day.
Lightning Deals are a great way to sell down inventory, for instance at the end of the season, or to push a product for a limited time. They’re featured on the Amazon Deals page, usually with the deepest discounts featured first (though other factors are also used in Amazon’s ranking algorithm).
So are Lightning Deals a great idea? Not necessarily.
For a start, you’ll need to create the deal at least 3 weeks in advance. The deal itself will only run for a few hours.
And Amazon is choosy. Not all products are eligible. You’ll see on Seller Central if your products are eligible or not.
Plus, competition is tough. Some weeks are already filled. You won’t be able to book a date if this is the case.
And it’s Amazon who decides exactly when your offer will run. If you’re lucky, you’ll get a weekday morning when everyone’s shopping over their cappuccino. If you’re unlucky, it will be a weekday morning – 2am to 6 am. If everyone’s asleep when your product shows, tough.
Plus, you’ll have to pay a fee, which varies (and can go to $500 a listing for Prime Day, for example) but will probably be around $150.
A Lightning Deal can give you a big boost – sales usually rise 50-60% on the day, and are still up after a week, but the impact fades away after that. So you need to do the math – figure out your gross profit per unit, and work out how many more units you need to sell to break even on the fee.
Having a coupon offer can really help your rankings on Amazon. Let’s explain how it works, both short-term and in the longer term.
In the short term, because Amazon has a dedicated ‘coupons’ tab, you get better discoverability – customers who are looking out for special deals in Amazon will click on the ‘coupons’ tab. You’ll also get a ‘coupons’ badge in the results. (This is a particular advantage of coupons against promotional offers, which only show up once a customer has already arrived at your product listing.) That will help you capture more shoppers from the search results, even if you’re not at the top of the list.
So that’s great news if you’re launching a new product, which Amazon will automatically rank quite low to start with.
You can also target who gets your coupons on Amazon. For instance, you can target Prime members only, or student members, or moms. If you sell study aids, diapers, or kids’ toys, you know where to target. You can also target customers who have bought particular products – yours or another seller’s – identifying them through the ASIN. So for instance, you could stimulate repeat business by offering a coupon to people who already bought your product once, or you can target customers who usually buy a rival product to try yours.
Some sellers ask why they should use a deal site like Vipon. Why not just use coupons on Amazon?
The answer is that deal sites add to your reach while cutting down on your competition. That’s got to be good news.
For instance, with Vipon you can reach 3m potential buyers who belong to the site and are actively looking for deals. They’re a different kind of buyer from most who are heading straight to Amazon – they don’t just want a good price, they want a super low price, and when they find it, they’re very motivated to buy.
You probably started your Amazon business to make more money and work less. To do that you need a steady stream of profits from your business. In this article, we cover some of our best tips for boosting your profits – without spending a fortune.
Increase Your Sales!
It sounds obvious, double your sales and you double your profits. But that is not always so easy to do.
One great way to boost your sales rank, organic sales, and gain new customers is to launch a promotion for your item. That’s where a platform like VIPON for Sellers can help.
Top Sellers on Amazon do consistent promotions every month to keep growing their business. We have a ton of info on VIPON on how to run successful promotions.
Increase Your Price
Another super simple way to increase your profits is simply to increase how much your product sells for, your price. Some products sell better at a higher price and some sell better at a lower price.
You don’t know what is the best price without testing. Sometimes an increased price will result in a drop in sales. But often it can have the opposite effect and lead to more sales.
Why?
If I offered you a $50 wine and a $5000 wine which one would you want to try more?
Customers associate a higher price with higher quality – so if all your competitors are dropping their price – you might look better if your price is slightly higher. So simply increasing your price to be slightly above your competition can give the perception that your product is better. See the next section on how to make this actually work.
Optimize Your Listing
You need to make sure your images, text, and product look amazing on Amazon. You only get 1 chance with a customer – they will never come back to check your product again in the future. The same item will look more valuable with better photos.
If your images were taken in a dark room with your iPhone, it is gonna be really hard to justify a higher price.
Make sure to invest in high-end professional photos, great copywriting, and excellent images for your product – then customers are going to perceive the same item as a higher value. The same item will seem better if the copyrighting helps users see the benefits of your products.
Without changing anything but leveling up your amazon listing you can potentially increase the value of your product in customers’ minds. It will also lead to more conversions too.
If 100 customers now order 20% of the time instead of 10% of the time. This can result in an instant 200% boost to your profits.
Lower Your Costs
The other way to boost profit is to find a way to lower your costs.
Every $1 saved from your costs becomes profit. It also means you use less capital when you re-order stock, your margin improves and your cash flow improves also.
This could be reducing shipping costs by using SEA freight instead of AIR freight or it could be by renegotiating with your supplier for higher volumes.
One example is to order more stock. You might be able to get a discount from your supplier for more as well as save on the cost of transportation as you are moving more units so the cost per unit goes down.
I found when I ordered my product in larger quantities I was able to save 10 to 20% or more on my cost of goods. Small shipments are more expensive per unit. Also, factories give you a discount for buying in bulk, you just need to ask them at which quantities can you get more discount.
Storage costs and ad costs are two other major areas of costs for an FBA seller. Optimizing your PPC spend may result in a boost in sales while at the same time a drop in costs, a fantastic way to boost your overall profitability.
There are lots of ways to promote your product and increase your sales.
How can you increase the sales of your Amazon Products without spending a fortune on marketing?
#1 Optimize Your Amazon PPC
Optimizing your PPC can have a massive impact on sales. You are probably doing Amazon advertising already. But, most sellers do not optimize the PPC campaigns or use all the strategies available to them. When was the last time you optimized your campaigns?
Each extra sale via PPC also boosts your organic ranking for your products leading to more sales. The best strategy is to optimize your Amazon PPC every 2 weeks.
Try to add extra keywords to your listing & campaigns, remove bad performing keywords or make them negative keywords, and boost your budget for keywords that are doing well.
