When Amazon first launched in 1995 as an online bookstore, Jeff Bezos had a vision for Amazon to eventually become the “everything store,” but even he couldn’t have predicted just how exponentially his company would grow into the largest ecommerce marketplace in the world 20 years later, selling a whopping 120 million different items. Just as Bezos launched Amazon out of his home, many of today’s 3rd party sellers on Amazon have created profitable home-based sales businesses that allow them the flexibility to create their own schedule and the freedom to be their own bosses.
Getting to the top on Amazon isn’t easy, but it’s possible if you know how to create the kind of advantages that propel profitability beyond the short-term. In fact, more than 4 times as many sellers make $1 million in sales on Amazon as compared to eBay, according to Web Retailer. New sellers to the Amazon marketplace should start with these three insider secrets when building a sustainable business plan for long term ecommerce success.
1. Don’t compete with Amazon: Even if you somehow have a lower cost of doing business than Amazon, it is prepared to lose money on orders just to get the customer sale. While Amazon seeks to find sellers who will serve as backup suppliers on items that Amazon carries, the long-term viability of profitably competing with Amazon is not good for sellers. Amazon controls its ability to win the competitive sale at even unprofitable levels, so you’d be wise to either sell a product that Amazon does not sell themselves, or focus on margin profits instead. Free tools like keepa.com allow you to track Amazon’s inventory and price history.
2. Stick to margin: Too many sellers go after the sale rather than the margin. You need to know your all-in costs so you can properly gauge how much margin you are making on each sale – that way, you can responsibly stop yourself from lowering your price to unprofitable levels just to get the sale. You will need discipline and data to manage your business to long-term success. Don’t get intimidated though— over 55% of Amazon sellers report profit margins over 20%, so success is well within reach. Consider repricing software like FeedVisor that monitor competitors’ prices 24/7 and reprices your inventory accordingly.
3. Learn from Competitors: Selling on Amazon involved plenty of experimentation and observation. Fortunately, there are hundreds of thousands of other sellers ahead of you that have done a lot of trial and error experimentation of their own. What are other successful sellers doing with their product titles, bullet points, images, product descriptions, and product classifications to drive the traffic and sales of their items? You should spend time regularly looking at other sellers’ listings, so you can extrapolate what appears to be working and not working for others.