Is it time to think about scaling your FBA business?

We’d all like to build the kind of business which grows sustainably, provides us with a solid income and gives us the freedom to make the lifestyle choices we’d like. There are many stories circulating of sellers who are absolutely killing it through FBA and jetting their debt-free selves wherever they please.

What separates those highly successful sellers from the rest? What factors provide an edge when it comes to scaling your business? Here’s what we’ve found:

Stay on Top of Your Numbers

Successful sellers sell large volumes and make a profit from them; wildly successful sellers are those who stay firmly on top of the vital numbers of their business.

This includes having a good grasp of exactly what they are making on every product they sell. Many people focus too much attention on metrics which are really only vanity. This means that they are only paying close attention to measures which may make them look good on the surface, but become meaningless when you dig down to the truth.

For example, there are sellers who will gaze starry-eyed at their gross revenue; “I sold $500,000 worth of products!” Pure vanity. It’s quite possible to sell $500,000 worth of products but be operating at a loss. Obviously in this case, you should be more concerned with net profit.

Which metrics should FBA sellers know? Grab our quick guide here.

Margin is another one to be careful of. Have you got the right measures in place? This means you should be focusing on your adjusted gross margin the amount that is left over once you take out all overhead costs.

On average, FBA seller’s usually make 15% – 20% adjusted gross margin, but the high volumes of sales which are made possible by the Amazon platform help to keep their businesses doing well. If any of your products are making less than this, you’re giving yourself very little room to move, especially if you want to stay competitively priced. If that’s the case, you may want to investigate either raising your prices or moving on to a different product one which you can make a reasonable margin.

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Inventory Management

If you want to be able to scale your Amazon business, you need to have a good grasp of inventory management for each product you have. Are you losing valuable sales to stock-outs? Do you have inventory languishing in the warehouse, costing you storage fees and effectively tying up your cash on the shelf?

The bigger you grow, the more products you have to manage, so knowing these details can become more difficult. This is where having good inventory management software for FBA (such as Forecastly), can help you to grow your business.

Build a Website

You don’t need a website to start selling things on Amazon, but as we’ve mentioned previously, having one sure helps if you want to boost your web presence and create a scaleable brand.

Building your own website gives you room to extend your online presence using a platform that you actually own. Amazon is great, but you don’t own it so you’re forced to comply with their own rules for what you do. Your own website gives you flexibility outside of Amazon. (By the way, you can still use FBA for sales made via your own website).

The other advantage of creating your own website is that you can capture customer emails, get more detailed data about who your customers are and segment your customers so that you can do some very targeted marketing.

Owning a large and active email list helps to not only boost your own marketing power, but create a valuable asset for your business which will be attractive to others should you ever choose to.

Lastly, having your own website allows you to market and drive traffic straight to your website knowing that you are the only seller there for people to buy from. Sure, you can advertise on Amazon or send traffic to your Amazon listings through other types of ads, but given that there are thousands of other sellers on Amazon, some of whom may sell the same or a similar product, you run the risk that people will click away to another seller.

Do Something You Enjoy

This is just from the point of view of your own motivation to grow a business. Some people are motivated by the idea of making money, but for most this is not a strong enough factor to keep them going when it comes to putting in the hard yards for a business.

Selling products you are actually interested in is a great start if you want the motivation to continue, as is selling something where you have good connections who can help to promote or grow your business in some way.

Improve Your Best Seller Ranking

The best way to improve your best seller rank is simply by outselling your competition, though of course this is easier said than done. There are several factors which go into how you are positioned on Amazon and whether or not customers are enticed to buy from you. We’ve written about a few of them previously. You could:

If you’re trying everything to improve sales but you’re not getting the growth in your category that you’d like, you may need to look at a less competitive category or for some other factor which will give you a competitive advantage.

Find a Competitive Advantage

The biggest sellers on Amazon often have some kind of competitive advantage which is difficult for others to replicate. They might have a better marketing plan than everyone else, but the chances are that includes working on building relationships that others don’t have.

For example, if you sell kitchen products, what might happen if you develop a good relationship with a well-known food blogger or even a celebrity chef?

These kinds of advantages might seem far off to some sellers, but it’s all about cultivating relationships over time. A good place to start could be with your own suppliers. If you make yourself a desirable customer to them, the chances are you’ll be able to negotiate more.

For example, could you be an exclusive seller of a certain product? Perhaps you’re able to negotiate a better price for the supply of your products and generally nurture a better business relationship. Competitors can copy almost anything, but it is very difficult to replicate the relationships you have with others.

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Photo credit: Chris-Håvard Berge via Visual hunt / CC BY-NC

Have Good Systems in Place

One of the keys to scaling any business is the systems and processes you put in place. Most FBA sellers don’t want to have to hire on a lot of employees, for example, that’s usually a reason why they opted for FBA. No matter how big you grow, Amazon can handle your fulfillment.

So, if you don’t want an entire team of staff (or, if you want to make it easier to hire on one or two people and quickly get them up to speed), having simple, scalable systems is the way to go. This includes having the right tools to automate your processes as much as you can.

We already spoke about inventory management earlier; some of the other areas you could look at putting a process around include:

  • Accounting – have a good automated software in place.
  • Product re-pricing – an automated software can help you win the buy box.
  • Rank and keyword tracking – tools such as Amazooka or AMZTracker can help.
  • Marketing – Have a good plan and find tools which help to streamline the process. For example, schedule social media or blog posts and use a good email tool which allows you to send out automated emails.
  • New products – every successful seller tends to have some kind of system for testing and choosing new products to sell. You can find a lot of advice on this in the seller forums, but one of the markers of top sellers is that they have developed a system that works for them. Usually they will develop a range of products within the same category so that they can build a brand around them.
Do you know the metrics you should be on top of to scale? Get our quick guide here.

Final Thoughts

If you want to create more financial freedom for yourself and the kind of business which you can sell later on, then scaling up your Amazon business is the way to go.

There are a number of factors which separate highly successful sellers from the rest, including staying on top of their numbers, building a competitive advantage for themselves, creating their own website and devising systems which allow them to scale.

It all starts with a plan, so sit down and work out how you can scale your business to being dominant in your category and what advantages you will need to cultivate to do so. Put tools in place which allow you to automate and easily scale your processes. Lastly (and importantly!), have fun with your business. If you do, it’s more likely that you will be committed to continuing and making those growth decisions.

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