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Learning from mistakes – Epic FBA Fails

We usually focus on success stories. But it’s fair enough to say that a lot of FBA businesses do just about okay, and some are really quite epic failures.

We’re not going to be negative. We’re actually being quite positive here, because the really big failures usually stem from one of a relatively small number of problems – and when you know what the mistakes are, you’re much less likely to make them!

Let’s take the two most dangerous mistakes first. (This is our version of learning how to put the brakes on before we let you out on the highway.) They are the dangerous mistakes because they can lose you a whole lot of money. Other mistakes will usually just stop you achieving a profit or a worthwhile profit (working for a year to establish a business turning over $100 a month is pretty sad).

First, spending on PPC advertising without setting some targets and some limits. If the problem lies elsewhere, no amount of advertising is going to get you sales – but it will cost you money. Setting a limit is easy to do, so do it!

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Bundles for Amazon

If you own a brand on Amazon FBA, you can bundle your products to create an all-in-one package. That’s an advantage that unbranded sellers don’t have, and it can help you sell more product at better margins.

First, think of your customers. What are the experiences that are likely to lead them to want a package? For instance, “I just got a new puppy, what do I need?”

If you’re in this space, a chew toy, harness and leash, litter tray, food bowl, water bowl, collar with name-tag, and puppy bed all packaged together could make a great package for first time dog owners.

“My granddaughter’s moving into her own apartment…what can I get her?” If you have kitchen products for instance, a gift pack bundling things she’ll find useful with some appealing items – spatula, measuring cups, pans, a recipe book and some spice packets – could sell well.

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Fads versus Trends

Fads can make you a fortune fast. Two kids who were among the first to sell fidget spinners in 2016 made $350,000 in just six months.

But the problem with fads is that they can die very quickly. First, the big guys notice the market, create their own products, and use their immense economies of scale to bring the price down. Fidget spinners started at $25 and ended up selling for $5 each by mid 2017.

And eventually, a fad has nowhere to go. I saw a market trader trying to sell some a while back – three for a buck! (I wonder what he paid for them?)

So how do you spot a fad, as opposed to a trend?

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Groceries on Amazon

It’s true – more and more people are buying groceries on Amazon. Partly because of Covid-related concerns about visiting big stores, or because of local lock downs, partly for convenience – particularly for people who are working at home, and partly for choice.  A year ago, about a third of US customers had bought groceries on Amazon – now it’s well over 40%.

Some specialty foods are particularly difficult to get if you don’t have much choice where you shop – for instance for those living in small country towns. Gluten free, Kosher, and Vegan specialties aren’t always available while many consumers want to know they’re eating Fair Trade or Organic food. These could all be good niches.

But selling groceries on Amazon is a bit tougher than selling dog chews or pencil sharpeners. Amazon needs to know you’re not going to poison anyone, and it also needs to know you’re a reliable distributor. So first of all, check whether you’re automatically approved (if you have a good track record, that could happen), or get approved by providing a purchase invoice from a manufacturer or wholesaler for at least ten units as well as live photos of the product and packaging.

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Amazon Business Reports – the Four Essentials

Amazon Seller Central provides far more data than most sellers ever use. It will tell you about your stranded inventory, it gives you advertising reports, sales totals, page traffic, FBA fulfillment reports. There’s a whole lot there, but you need to cut through the plethora of data to get to the essentials.

Essential 1. This is your conversion rate, shown as ‘unit session percentage’. A conversion rate of 5-10% is good; that’s better than most websites, as people tend to go to Amazon when they are ready to buy, not just looking for general information. If you have a conversion rate lower than 5% then you have an issue.

That could mean your listings page isn’t good enough. Do you use A+ content? If you qualify for it, you should definitely use it. Do you have great images and a good video?

It might mean you have bad reviews. You’ll need to do something about that. Or it could mean your price is too high – check comparative listings.

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What You Need To Put On Your Packaging

Packaging design is partly about branding – and we’ll get on to that later. But there are also a few things that need to be on your packaging, and without which, you won’t be able to sell – or worse, you’ll be doing so illegally. Don’t worry, it’s not too difficult to comply with the regulations, as long as you carry out the following steps.

1. One of the most important things that needs to go on your packaging is your FNSKU – the stock number that Amazon issues you when you create your listing. You could ask your supplier to put it on with a sticker, or actually print it on the packaging (for instance if you’re using a cardboard box).

You can also get Amazon to do it – but that costs money. It’s much better to get it done by your supplier. (You’ll need to generate a pdf file from Seller Central, where it says ‘Print item labels’.)

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Get Your Launch Off To A Good Start

There are a good number of ways that you can kickstart a new product. That’s good, because Amazon is a very, very big marketplace and it’s not easy to get your product noticed.

For instance, you could use a ‘deals’ site to promote your product. Use Seller Central to create your coupon codes, and give those away via the site. For real impact, try half price, or even 70% or 90% off, just to get the ball rolling. Remember, this isn’t a loss making product, it’s a marketing investment.

The idea is to get people who would be “kind of” interested in your product at the regular price to say “hey, at this price it’s a no-brainer”. You’ll be able to rack up some sales quickly that way. However, ensure you set a maximum order level to prevent people being naughty and buying your product to resell at a profit!

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Managing Inventory For Better Margins

Managing your inventory better can save you a lot of money.

If you want to know how well you’re managing, first stop is to go look up your IPI score on Amazon. This will give you a broad view of how well you are managing. If it’s not too good, then there are a number of actions you can take to improve your inventory turnover and reduce your storage charges.

First off, identify any items in long term storage – that is, over 365 days. It’s a pretty simple calculation to compare this with your sales figures to see how long it will take to sell off all this stock. If it looks like it’s going to take a while, then you need to take action now.

You could, for instance, run a promotion or reduce the price. It’s pretty simple to calculate your break-even price for selling the stock against paying another month’s storage charges. (Of course, that assumes you do sell the stock.) If your product is just slow selling but ticking along, this is the right thing to do.

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Make ‘long tail’ keywords work for you

Keywords have a demand curve, like any other good. If you imagine it starting right at the top left side of the chart, there is a huge number of searches for a single overall keyword. As you get more and more specific, the number of searches falls off – but so does the amount of competition for that specific keyword (or, if you’re advertising, the amount you’ll pay for it).

Let’s take an example: “dress”. There will be millions of searches for “dress”. What’s the chance you’ll be at the top? Zero. You can’t afford it.

“Black dress”. Not quite so many searches, but still a lot. And this is a keyword where big sellers are going to dominate, and the keyword’s really expensive if you want to advertise.

“Little black dress”. Fewer searches, more specific.

“Little black dress Azzedine Alaia.” Then “Little black dress Azzedine Alaia size 12.” Now you’ve got a very specific keyword. Anyone who wants Chanel, Givenchy, Saint Laurent… you’ve excluded them. And you’ve excluded the customers who want another size.

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Refine your keywords to increase your sales

If you think of Amazon as a kind of store, or a big depot, you’re wrong. What is its business model, really? It’s the same as Google – a massive search engine.

Unlike Google, it’s a search engine that results in a transaction rather than just a click-through. But it’s a search engine, and once you understand that, you understand that it works on keywords as well as on other algorithms.

Keywords need to be relevant. And you need to get that relevant data into the customer’s head ASAP.

Yes, you can have a great long title on Amazon that includes all kinds of information about your product. But you need to put the most important information up there first. For instance, brand. If I’m looking for a Samsung phone, I need to see the brand up front. If I’m looking for a cat carrier and the word ‘cat’ doesn’t appear right at the beginning, I’m not going to read on.

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Help! I’ve been hijacked!

Amazon hijackers can be very sneaky. You might not even realize you’ve been hijacked, if your sales aren’t much affected. But someone has copied your product, and they’re selling it with your brand on it, and taking away your business.

Now there are sometimes viable reasons for a second seller. You may have an authorized reseller, or someone may have bought your product with a coupon and is reselling it. But other times, you’ve been hijacked – someone noticed you were doing well, and they’ve decided to skim the cream off your success.

You might only notice when suddenly you start getting one-star reviews. What’s going on? People who think they’re your customers are getting low-quality product from the hijacker, and blaming it on you.

So let’s see how you can reduce the risk of being hijacked, and stop it continuing if it’s already happened.

#1 Being in the Amazon Brand Registry program should help; it will give you more control over your listings. While it won’t stop hijackers, the program will put dedicated protection at your service. (But you do need to have a trademark first, which can take 18 months, so this isn’t a short term solution.)

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Amazon Product Listing Text

A really, really important key to planning your product page on Amazon is to think about what you’d want to see there if you were considering buying it.

#1 Benefits, not features

What potential customers want to see is a list of benefits. But probably, what you have is a list of product features.

One copywriter has a way of extracting proper benefit information from clients. The client will say “my spatula is lime green.” The copywriter asks: “Which means that…?”

The client looks puzzled, and says “Well, it means it’s green.”

The copywriter nods, and the client gives the next feature. “It has a cool-touch handle.”

“Which means that…?”

And then the client gets it, and says, “Which means that if you use it, you’re not going to burn your fingers.”

I’d suggest you do the same. And keep asking till you get something that will really make people want to buy. “This coffee press has double walls.”

Which means that… “The coffee will keep hot for longer.”

Which means that… “I can make two cups of coffee at the same time.”

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TikTok For Amazon

TikTok is immensely powerful once videos go viral. A single TikTok post had one Amazon seller working overtime with over 10,000 sales in a single day.

Yet so far, brands aren’t well represented on TikTok. Probably it will take the big brands some time to get on to this platform, so right now, it’s less competitive than Facebook or Twitter.

•    Start by building a presence. Tailor your content for the platform – short, snappy, amusing. And when we say short, we mean short – 15 seconds, that’s it! (On the other hand your video quality doesn’t need to be top-notch – a decent smartphone will produce all you need.)

•    Make sure your content is all relevant to your niche. Keep everything on-brand; content, hashtags, the influencers you collaborate with, your bio, even the emoji  you use.

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Negotiate Like A Pro

Every $1 you save is $1 extra profit. In the short term, this does not seem like a lot. But what if you sell 30,000 units a year?

The cheaper your product is – the higher your profit margin will be and the less you need to invest in inventory. Your cash flow improves too.

We will cover some of our top strategies for reducing your costs.

Finding a Supplier

If you only ask 3 factories for a quote – it is unlikely you will get the best item for the best price. It is super important to make sure that you have contacted every available supplier for the item. Go through Thomas Net, Alibaba, Global Sources and any other platforms that may have suppliers making your type of item.

Request quotes from all the suppliers that can make your product. This way, you can be sure to have the best initial pricing. You will also get the best quality product this way too!

Even if you have an existing product already selling on Amazon – you can reduce the price by negotiating with your existing supplier or changing suppliers.

Target Price

Give your top 10 suppliers a competitive target price to hit. E.g. If all the suppliers quote you $4 to $8 for your item – ask them all if they can do it for $3.20 and see what they say. If they say – no – and come back at $3.50 you still just saved over 10%!

If your target product sells for around $30 on Amazon, you want to buy it for under $6 to maximize margins. Start with giving suppliers a target price lower than your optimal buy price.

Suppliers usually have a very large margin built into the product. They expect to negotiate and might have 10 to 30% added into the product just to give away as a discount. By giving them a low target price, a few of the suppliers will come back with much better pricing.

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Boost Your Amazon Profits

What are some ways you could increase your profits without spending a lot extra on your Amazon business?

In this article we outline some strategies to help you increase your net profit.

Improve Your Listing

The better your main image looks, the more people that will click onto your product and buy it. The same for your other listing page images.

If your images were taken in a dark room with your iPhone, it is gonna be really hard to justify a higher price & people will not trust the item is good quality.

If you invest in high end professional photos, great copywriting and excellent images for your product – then customers are going to perceive the same item as higher value.

The same item will look more valuable with better photos.

The same item will seem better if the copyrighting helps users see the benefits of your products.

Without changing anything but levelling up your amazon listing you can potentially increase the value of your product in customers minds.

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Reviews: Why Customers Leave Feedback

What is the reason why a customer will leave a review? Is it because they had a good experience with the product? A bad experience?

In this guide we deep dive into some of the main reasons customers leave reviews.

Great Product!

A large percentage of customers will leave a review simply because they think that the product is good and they want to share their positive experience with the product.

These are the type of reviews we want to get the most of. By not overpromising on the listing, showing accurate photos and description of the product & working to make the item good quality – we can gather more good reviews in the long term.

Help Other Buyers!

A major reason for customers leaving feedback is not for the seller! They want to help other buyers to understand the product better. They may even have suggestions on how to improve the product too.

Reviewers know that other people like them might be considering the product. They point out the good and bad points of the product so other potential buyers can have a better understanding of the product.

As a seller, you should read all these reviews and incorporate the feedback into improving your product over time. By acting on the suggestions – you will turn more future buyers into happy customers that leave positive reviews!

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Follow the Trend

Instead of trying to catch up with what is popular now, look into the future and see what will be popular. There are some huge trends and shifts happening – making some niches sell a lot more in the long term.

Even before Covid-19 there was a huge shifting of people working more remotely and more from home. The Coronavirus just accelerated an existing trend.

More and more companies were letting people work at home, work remotely or spend part of the week at a home office.

What other big trends and shifts are taking place that you could benefit from?

Working From Home

The trend of working at home is not going to disappear. Yes, many people will go back to working in an office. But, workers of all types are requesting at least 1 to 5 days a week to work from home.

If this trend continues, which products do you think will be popular?

Everything from desks, to computer accessories have had their sales explode upwards. Instead of going after the main work at home trend, try to think of complementary products you could sell.

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Improve Your IPI Score On Amazon

Amazon has recently changed the way it calculates inventory storage limits. Now the IPI score, Inventory Performance Index, is the main factor in determining your allowed storage levels.

The IPI score also shows you how your business is performing on Amazon.

Why is this important?

Excess Inventory

This measures how much extra stock you have. It serves as a warning light if your product is not selling enough relative to the stock level.

In the short term, FBA storage fees are not too expensive. But if a product stays in Amazon over 12 months it gets hit with Long Term Storage fees which are many times more costly.

This section of the Inventory Dashboard highlights which SKUs have too much stock and Amazon even calculates how much it will cost you in storage fees.

It is usually cheaper to store the product in an FBA prep warehouse than Amazon itself – so pay attention to this and reduce stock levels so you don’t get hit with big fees!

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Promoting Products on Amazon

Why are promotions important? How can they help you scale your sales & profits? In this article we will cover the top tips for running promotions on Amazon.

Tip 1 Why Promote

Amazon ranks products firstly by their relevance using keywords, then it compares the overall sales performance of similar products.

If you’re on page 2 and don’t get much traffic and it’s hard for you to sell a lot of products, you’re always going to be ranked on page 2. The reason for doing a promotion is to get more traffic for 7 or 10 days and increase your organic sales.

By doing this, your product sales will increase such that Amazon will put you on page 1. Using a tool like cash cow pro you can see the exact number of units you need to give away to be able to rank in the top 10.

Tip 2 Preparing for Promotion

The first thing you need to do before launching a promotion is to make sure your listing is fully optimized.

There’s no point driving lots of extra traffic to a product if the images are not high resolution and the copywriting is not optimal. Once you’re confident you’ve done everything you can to make a listing as good as possible, the next thing to do is to drop your price just before starting a promotion.

The reason for this is you want to maximize sales while the boost from a promotion is helping you to rank. The more sales you can get the more likely it is you will stick to the new higher position.

Just boosting BSR is not the goal: you want long-term organic sales.

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Amazon FBA: Getting Help

Sometimes you just get stuck with your Amazon business. If you are having a problem or issue – or you are not sure what to do next, we put together this guide on resources you can use.

In this article we cover the top tips for getting help with your Amazon business.

Tip 1 Seller Central

If you have an issue with your listing or account, the fastest way to resolve it is to contact Amazon through the help section in Seller Central.

During normal business hours they are very responsive and can usually fix most issues within a couple of hours. You can also email an Amazon representative and they usually provide a detailed response to your problem within a day or so.

For critical issues, always call the Amazon help desk for sellers.

Tip 2 Amazon Forum

If you have a seller central account you can also ask questions in the Amazon forum.

You may want to bounce ideas around for strategies and determine what is and isn’t acceptable on Amazon by asking your peers in this group. Amazon also monitors the discussion and responds to questions and issues.

This is a good place to get general tips, such as how to find a good supplier.

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