The 80/20 Rule For Amazon Sellers

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.

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