How is 2018 shaping up for you on Amazon?
Hopefully, you’re reading this following a successful Q4 sales season, but if not, now is the time to plan for a much more prosperous year ahead. If you did well last year, then make this one even better!
The Amazon platform continues to grow into a virtual behemoth, making it a valuable place to build a presence. Here are some key statistics:
- 43% of all US online retail sales in 2016 happened on Amazon
- Of US adults, 1 in 4 has Amazon Prime. (That means as an FBA seller, you have approximately 63 million people from whom to find your target market!)
- Amazon’s valuation is bigger than major retailers Walmart, Target, Best Buy, Macy’s, Kohl’s, JCPenney, and Sears combined.
While Amazon tends to be coy about exact numbers where sellers are concerned, they did reveal earlier last year that around 45% of sales on the platform go to third-party sellers. While you have a lot of competition as an FBA seller, there is still plenty of opportunity if you put the right strategies in place.
Let’s look at shaping up 2018 to be your best sales year yet.
Reflect back on the past year
It’s always appropriate to begin by reflecting on how you did over the past year. What worked for you? What could be improved? What was an utter disaster? Know where you’re beginning from so you can make a clear plan to improve.
Here are some specific areas we would look at:
Obviously, you’ll probably look at sales numbers, but while that can be a measure of the popularity of the product, it doesn’t really tell you how well you’re doing. You may have shipped 100,000 units of one particular product, but what if you’re only making a few cents profit on each one?
Assess your product portfolio and make some decisions; for any that aren’t profitable enough to justify the effort, is there anything you can do to improve the margin? If not, it might be time to reassess and put more effort into a product you can make a decent margin on.
Amazon account standing
Your good standing with Amazon is a known factor when it comes to winning the buy box. Take a look, how are you doing?
Amazon publishes their performance metrics here. We would take the opportunity to look at each and assess whether there is anything you could be doing to improve. Your ability to hold the buy box can have a major impact on your overall sales.
Your logistics provide the foundation that keeps your business running and enables sales to happen. We would look at metrics like:
- Sales velocity – how many units per day, week, or month are being sold of each product? You may need to look at your pricing if a particular product is spending a long time on the shelf, for example.
- Lead time – how long does it take from reordering a product for it to be available in the warehouse at Amazon? If it seems to be a long time, sometimes you can work with your supplier to cut this down.
- Instances of stock outs – If you’re out of stock, you’re not selling! We’d look at how often this is happening and get to the root cause in order to make improvements this year.
Look back at your sales trends and any marketing measures you tried. What worked or didn’t work for you? Ask yourself questions like:
- Were we consistent across our marketing campaigns and/or social media platforms?
- Did we maximize strategies like email marketing and list-building?
- What was our ROI from marketing campaigns?
- How did customers respond to our social media and/or marketing campaigns?
- How did any competitors respond?
Boosting your FBA sales
Let’s look at a few sales strategies to give you a boost this year.
Be ready for early Q1
Many sellers will prepare themselves for more returns than usual early in the first quarter, especially as that holiday rush wears off, but what about an influx of sales after the holidays? Yep, this happens. Customers have received gift cards over the holidays and often look to spend them in the New Year.
This may be a time to assess your pricing. You may have been able to raise prices during December as other sellers went out of stock, but their stock is probably coming back in now and if you want to capitalize on those with gift cards, you need to ensure your pricing is competitive.
Perhaps think about any upcoming holidays too (Valentine’s Day is February 14th!). If your products are the sort that can be gifted, consider how you’re going to package and market them to target the holiday.
Another early Q1 issue to be aware of is Amazon’s long-term storage fees. These are charged on any product that has sat in the warehouse for 6 months or longer (with a greater fee on anything that has sat for more than 12 months), on February 15th. Rather than having a last-minute scramble to avoid fees, assess your inventory early and strategize to sell it off.
Get more reviews
We all know how important product reviews are for making sales. If all other things seem equal, a customer might compare yours and your competitors’ reviews to make a purchase decision. The number and quality of the reviews you have will play a big role. For example, below we can see that one seller has far more reviews than the other, so who is more likely to get the sale?
How can you begin a drive to get more reviews? Chris Dunne of Feedback Express recently wrote an article about it for us. You can’t offer incentives in return for reviews, but you can request that people write them.
This means that putting an automated system in place (if you haven’t already) for requesting feedback is a great step to take in order to help boost your sales this year. Quite honestly, it takes a lot of email requests (something like 100) to get one or two customers to give a review, so you want to make sure those emails are getting sent out. Feedback Express is a great option that allows you to customize who gets sent a request (for example, you might not want anyone to receive a request who is “blacklisted” for previous negative reviews).
Review your listings
Are your listings up-to-date and accurate? This is a factor that directly feeds into your reviews as well – a customer who feels that they were misled by the description of the product is more likely to leave a negative review.
Make sure every listing has high-quality images and that your product is shown from different angles. Try to give customers some context within your photos, such as showing the product being used.
If you have a large range of products and the idea of reviewing listings seems daunting, begin by prioritizing your best sellers. Creating good product listings is also something that you can potentially hire someone else to do.
Review your inventory management
Did you find stockouts when you reviewed your performance over the last year? These are something you should be concerned about, particularly if they’re happening often or for long periods of time. If you’ve found a systemic issue as the root cause, then it’s time to put measures in place to prevent those stockouts and boost your sales.
We may be a little biased, but of course, we recommend Forecastly as a good, automated tool to bring your inventory management under control. Predictive analytics help you forecast your inventory more accurately and nudge you to reorder at the right time. Give it a try for yourself with a free two-week trial.
Plan your marketing
If you haven’t already, plan out a marketing schedule now. Consistency is a big deal when it comes to making more sales. If people aren’t hearing from you on social media or by email, they’re unlikely to pay attention when you finally surface and start messaging them.
As for paid campaigns, you can plan a lot of these out in advance to target specific holidays or times of the year, while leaving room to add in the odd coupon deal you want to do for a slow-moving product. Honestly, while you may feel that you’ll get to it later on, it’s often the case that sellers become so busy that the time to get organized has passed them by. We’d start with a calendar of key dates and work from there.
We know that the idea of “New Year’s resolutions” often doesn’t work, but if you’re serious about the success of your business, the new year signals a great opportunity to reflect and strategize.
This is something that top sellers always do – if you want success, you’ve got to know where you are right now and where you want to be. We hope you do take some time out to reflect and plan. Importantly, remember that random “strategies” aren’t usually good for long-term success, but a coherent plan with parts that work well together is.