3 Ways to Increase Your Profits and Efficiency When Selling on Amazon

Amazon dominates ecommerce. In fact, it makes up about 38 percent of online retail sales (eMarketer, May 2020). Even small companies can get their products in front of millions of customers at a fraction of the marketing cost it would take outside of Amazon. But it has its challenges, as any Amazon seller can tell you. It can seem daunting if you are a new seller or you don’t have the additional resources it takes to manage everything Amazon.

3 of the most important decisions you can make are; whether to sell Fulfilled by Amazon (FBA) or Fulfilled by Merchant (FBM), how to handle the demands of selling on Amazon, and how to create ad campaign strategies and tactics.

Should I sell FBA or FBM?

Challenges

It is important to have a strategy for selling on Amazon and really weigh the options. While selling FBA is a great opportunity, there are things to be aware of for optimal profitability.

Selling FBA only can be very costly, which is especially challenging for small businesses. Often, sellers overlook selling FBM because it is time consuming to pack and ship orders in house. During the pandemic, many companies have downsized, making FBA seem even more attractive. However, selling FBM can increase margins and profitability in uncertain times. The savings when compared to selling FBA can be significant.

When a company sends their inventory to Amazon fulfillment to sell FBA, it becomes part of the Amazon system. If another company or reseller sells the same products as you do, all those products go into what is called a comingled bin. When Amazon fulfills an order, the product is pulled from the comingled bin. There is no guarantee the customer is getting one of the items you sent to Amazon fulfillment. This is usually not a big problem if the item is a book or something non-perishable, but it becomes an issue if you are concerned about counterfeit products or expiration dates. Controlling resellers, which is inevitable, is an ongoing issue for most Amazon sellers.

Amazon Support can be time consuming and frustrating. It can also be very difficult to reconcile inventory with a lot of accuracy.  After your inventory is shipped to Amazon fulfillment, it is distributed to different locations. This means your products could be in a dozen different places around the country without your oversight or permission. Millions of sellers use FBA and it obviously works, but you may have reasons for wanting more control. Amazon has good tracking, but if a complication arises, it can take months to straighten out. Last year during the pandemic Amazon placed restrictions on selling products, so it may be a priority for you to have more control over your inventory availability.

Solution

Consider an FBA, FBM hybrid strategy. Selling FBA and FBM using a third party fulfillment center is often an efficient, cost effective solution.

Working with FBM and an independent fulfillment center gives you more control, efficiency, support and transparency. To maximize your efforts selling on Amazon, you want to be as efficient as possible. It is common for companies to offer customers the option of buying FBA or FBM to have more control over inventory levels. Some products are considered restricted on Amazon, in which case, a seller can use the FBM option. If you can’t sell through FBA, you can often list products through FBM.

COVID 19 and USPS disruptions have shown how vulnerable your process can be using FBA as your only channel.  The hybrid approach allows you the flexibility, control and the higher margins you need to mitigate shipping disruptions.

How do I handle the demands of selling on Amazon?

Challenges

An Amazon account takes time and energy. Time sensitive issues can come up that require immediate attention. For example, when a customer contacts you, Amazon requires a response from you within 24 hours. Also, Amazon can remove listings for various reasons without notification, making it necessary to investigate and communicate with Amazon as soon as you can. Another example is the monitoring of reviews. If you receive a large number of reviews in a short period of time, Amazon may flag your listing and remove it for suspicious review activity. Some competitor black hat tactics involve posting a large number of reviews on your product to make it look like you paid for reviews, which is against Amazon policy. Monitoring reviews allows you to catch suspicious reviews, then contact Amazon to have them removed to avoid listing removal. Most businesses have a hard time keeping up with the demands of managing an Amazon account.

Solution

Use a dedicated team member(s) for Amazon management. Be sure to include training time. Another alternative is to outsource your account management. There are dozens of companies out there who can help you manage your seller account. We strongly advise retaining control over your Brand Registry. If you allow another company to set up your Brand Registry for you under their company name, Amazon recognizes the other company as the authorized brand owner. They are authorized to act on your company’s behalf. They control your brand on Amazon. There may be dozens of people with access to your Brand Registry Account and company information that you won’t know about. Later, if you want to take back control of your Brand Registry Account, it may take weeks for all of the users to be removed. It is a good idea to find out how they make their money. If they are buying product from you and selling on Amazon, it can be a conflict of interest if they have other clients competing in the same category. 

T&C can free up your time and energy by managing your seller account for you. Your account is in your name, you keep control and T&C will take care of the day to day for you. Our fee structures are simple with no hidden fees. When choosing a seller account management service, make sure you understand what you are signing up for.

How do I create ad campaigns? What is my strategy?

Challenges

It is no small feat to coordinate inventory levels, seasonal products, holidays, ad campaigns, Amazon storefront management, along with the day-to-day operations, like order processing. It’s important to make sure you are coordinating campaigns and creative with seasonal products, logistics, inventory levels and events like Prime Day.

Solution

Be mindful of timing. In order to take advantage of seasonal highs, including Prime Day, ad campaigns should be coordinated on and off of Amazon. Aside from December, Prime Day is the highest sales season to prepare for. If you are selling FBA, you will want to make sure you have enough inventory to cover Prime Day. For FBA, inventory must be shipped early so that it will be processed and available several days before Prime Day with enough to cover several days after. Ad campaigns can be turned on during peak shopping times and turned off if you run low on inventory.

FBA works if you are comfortable letting Amazon handle your inventory. Selling FBM, you have the most control over your products. If your inventory is low, or you are not sure about inventory levels, you can prioritize where your products are shipped only with FBM. Just like Amazon ad campaigns, you can turn your FBM listings on and off whenever you want.