Just about anyone can sell products on Amazon thanks to the platform’s ease of use and the Fulfilled By Amazon (FBA) program taking care of logistics. Selling products for a solid profit on the other hand is a more difficult task. Sellers need to factor cost of goods, seller fees, and pricing into the equation. Turning a profit is key to any successful Amazon business, and in this guide we’ll cover some of the best ways to manage and increase Amazon profits on your store.
Identify and Take Advantage of Trends
As the saying goes, “if it ain’t broke, don’t fix it”. If you can identify something that is working, whether that comes from Amazon as a whole or your business specifically, you should try to ride that wave for as long as it continues to have success.
- Trends on Amazon – Access to useful trends on Amazon are available right from the main page. In the top left corner on Amazon.com, you can use the “All” drop-down menu to gain access to the “Trending” section, which includes “Best Sellers,” “New Releases,” and “Movers and Shakers.”
- Each of these pages can be explored in sections and subsections, allowing you to target your specific niche. Study what is hot in your area of expertise so you can source products, create bundles, and build successful advertising campaigns.
- Trends in Your Store – One of the top reasons to use an Amazon Profit and Accounting Tool is for the insight that you will get into what is and isn’t working in your Amazon store. You can quickly and easily navigate through month-over-month trends or simply navigate through your most and least profitable products. Having a greater understanding of what is driving your business’s success or holding it back can put you in position to make the necessary changes you need to increase profits.
Decrease Seller Fees
Seller fees are an unavoidable part of doing business on Amazon. Most fees are calculated automatically and are outside of your control. But there are a few ways to cut down on seller fees, and making use of these methods will make your Amazon business more profitable.
- Upgrade to a Professional Account – When you sell products on Amazon without a professional seller account, you will be charged a 99-cent fee on every item sold. If you haven’t upgraded to a professional account and are selling more than 40 items per month, the $39.99 monthly fee is worth the cost to ensure that you don’t pay more than $40 on this fee.
- Cut Down on FBA Inventory Storage With Planning – A great profits and accounting tool can keep you up to date on exactly how much product you are selling and what you can expect from specific seasons based on current and past data. Having too much product in stock at FBA warehouses can lead to paying too much in monthly fees or even long-term storage fees if the product sits for far too long. Look for inventory improvements that can save you money on overstocking fees.
- Cut Down on Shipping Costs – Could buying boxes, tape, or shipping labels in bulk save you money? Are there any local businesses that might offer you a better deal on shipping products than the big box stores do? Can you get access to free boxes that a local company is throwing out or recycling? Get creative and search for ways to save money on shipping products to customers or to Amazon’s warehouses.
Use Metrics to Track Success
There are a handful of helpful metrics that you can use to measure your Amazon store’s profitability besides just total sales. Here are a few you should get to know.
- ACoS – ACoS stands for “Advertising Cost of Sales”. This metric measures the total amount that you spend on PPC (pay-per-click) advertisements divided by the sales that those advertisements led to. For example, $100 in ad spending producing $500 in sales would come out to a $100 divided by $500 = .20 (or 20%) ACoS. A low ACoS indicates a high return on investment for this ad campaign.
- TACoS – TACoS stands for “Total Advertising Cost of Sales”. Instead of only factoring in the sales that came directly from the advertisement, this calculates all of the sales on that product during the the time of the campaign. So $100 in ad spending and $1000 in total sales would produce a TACoS of $100 divided by $1000 = .10 (or 10%). Sometimes high-ACoS campaigns still help with brand recognition and overall sales; TACoS helps to provide the overall picture.
- AUR – The Average Unit Retail on your products can be found by dividing your total revenue in dollars from the sales of a product by the total number of units sold. So if one product produces $1000 in sales across 30 sales, the AUR would be $1000 divided by 30 = $33.33 per unit. This metric can help you see the big picture on the profitability of a product even if its selling price has fluctuated.
Equip Yourself With the Right Tool
Virtually all of the methods of increasing and maintaining profitability on your Amazon business boil down to research and data. Taking the time to collect sales data and study trends will allow you to find areas of improvement that other sellers unwilling to put in that work won’t be able to find.
Of course, doing all of this research without the help of a tool or service can be extremely difficult and time-consuming, especially for Amazon sellers who already have plenty on their plate. The FeedbackWhiz Profits and Accounting Tool can give you access to all of your Amazon store’s sales data in easy-to-read and fully customizable charts and graphs that will make optimizing your profitability a much easier task.