Maybe you are already selling on Amazon or you are thinking about starting. In this article we cover the main growth stages building your multimillion dollar Amazon business.
Stage 1: Test
When you’re first starting out you won’t know everything about creating the best possible converting products on Amazon. The key is to just start with a small test so you can learn the process and apply it to future products.
A great way to do that is with the hundred unit test. Do some product research to select the niche to target.
Don’t try to be fancy and develop a totally custom product. Instead, go to sites like Alibaba and Aliexpress, buy 100 units of your chosen item and get them shipped into Amazon ASAP. You should be able to go from choosing an item to having it in Amazon within two weeks.
Don’t expect to make profit with this item. You might lose all your money. The whole point is to learn the process quickly.
List the item, optimize the photos and listing and try to sell the hundred units. This will teach you more than any book or course about how to sell something on Amazon.
Stage 2: 1 Product
While you are conducting your test, you can also be building a list of potential products.
Don’t commit to ordering them until you have completed the hundred unit test. You will learn things about competition, price, complexity and pay per click from your trial that will help you understand which products you should be selling.
Your goal with product one is to hit 10 sales a day, with at least 100% markup after Amazon fees. For example, if the product sells for $20, Amazon takes five dollars, and you are left with $15. Your product and freight should cost no more than $7.50, so you at least double your money.
It may take two weeks or four months to hit 10 sales a day, but stay on it until you do. Optimize a listing at least once a month, and build your off-Amazon marketing during this time.
Stage 3: 3 Products
Once you’ve hit the one product goal, you want to repeat the process and scale up to 3 products. One product could be making you $3000 a month, so your next goal is to hit $9000 a month. Stay focused until you reach this level.
Do something new every week to improve your listings and increase your overall marketing for your products. At this level you will generate at least $100,000 a year profit.
Stages 4 & 5: 5 Products then 10 Products
Making 3 products successful on Amazon is the hard part, but it gives you the chance to build up your skills and knowledge of Amazon’s systems.
Stay focused and scale up to five products, and then 10 products, over the next 6 to 12 months. All products are slightly seasonal, and having five or more will balance your sales across the year.
You may find that one product suddenly becomes much more competitive and you have to drop it. If that was your only product it could kill your business, but because you have five or more the other four will support your growth.
Also, any improvements you do to increase your sales for one product can be copied and applied to other products. So a strategy that boosts a single product by 10% can be used to drastically improve your bottom line across all products.
Stage 6: E-commerce Shop
Once you have 10 items selling well on Amazon, then you can shift your focus to develop traffic for your e-commerce store. Your Amazon business already has the traffic, so it’s much easier to simply sell into the existing flow of customers.
Your return on time and effort on Amazon will be much higher than through your own shop. But once you reach 10 products you’ll have enough sales, experience and profit to reinvest into growing your brand over time.
Aim to get five of your products selling well through your own shop. This gives you a more diversified income stream and you may find that your own shop matches or exceeds your Amazon profits.
Stage 7: Expansion
Once you’ve reached level 1, then level 5, then level 10 and eventually built your own e-commerce shop, this puts you in a strong position for future expansion.
No matter what level you reach, try to focus on the bigger picture, producing solid profits that will grow and improve your business. So no matter how hot it gets, stay focused.
From this strong base you’ll be able to expand further both on Amazon and off-Amazon using systems and a dedicated team.