Making money is the common aspiration of all sellers who sell things on Amazon. Of course, there is no doubt that we want the higher the profit. However, the profit margin of some sellers can reach 40% or even 60%, but some sellers only reach 10%. The gap between this is very large. So how can we increase your Amazon profit margin of the store? Today we will discuss in detail how to increase your Amazon profits.
Ways to increase your Amazon profit margins
1. Pay more attention to what products to sell
Choose what product to sell is very important. It is directly related to your sales, so you must pay more attention to it! Furthermore, there is a difference in cost between large and small products of the same value in the FBA warehouse. The storage cost of larger and smaller products is higher.
Based on this, we can consider the influence of product size on FBA cost when selecting products. If your products are small in size, the storage fee will not be very high, which is also an indirect reduction in the cost of storage fees.
2. Find the most suitable supplier
Sellers need to find a suitable manufacturer to deal with the problem that the product may need to pay high costs in advance to achieve the minimum order quantity.
But if you sell through inventory, you can benefit from low-profit margins because of lower unit costs. If the seller buys in bulk or from a wholesaler, these products have already been produced. That means they are not private labels, but maybe from well-known brands.
You can negotiate with your supplier to get a product discount. Of course, there is no way can make sure you can get a discount. However, just try it. Besides, you can monitor your supplier. Once they drop the product price, you can purchase in bulk and send them to Amazon to keep your continuous sales.
3. Avoid the cost because Amazon’s error
The easiest and most convenient thing sellers can do to increase their profit margins is to prevent Amazon from charging the wrong shipping costs.
As we have said, the product size directly influences the FBA fees. Definitely, system classification and manual errors will have a significant impact on Amazon’s deductions.
There has been a case showing that an identical product has two completely different FBA shipping rates. The reason is simple. The Amazon fulfillment center that processes the order has changed. Sometimes, entering the variant weight information of the product separately will also lead to inconsistent descriptions of the same product, and different FBA shipping fees will also be generated.
Can you believe it? Because Amazon did not measure the products correctly, some sellers were even charged more than twice the FBA shipping fee.
In order to prevent Amazon from unfairly charging and improving Amazon’s profit margin, I suggest that every seller regularly check the size, weight, and page description of each SKU.
Sometimes, you can make use of powerful software to help you to do that. Just like Captain BI FBA Reimbursement Tool to get the money back that Amazon owes you, no commission.
4. Establish Amazon inventory management strategy
Your inventory management strategy helps you with any loopholes or out-of-stocks in the supply chain.
If you have to manage more than 100 SKUs, it easily encounters some problems. For example, some SKUs have a backlog of excess inventory, while other SKUs are out of stock for a long time. What a pity! It may cause completely unnecessary FBA fees, and it may also cause sellers to lose many potential order opportunities.
What’s more, some sellers even have no idea how much inventory they have and how long these inventories have been stored in Amazon warehouses.
At the same time, we should also know that Amazon has almost been adjusting its policies. If the seller’s inventory turnover time is too long, storage costs will become quite high.
We recommend you try the FBA management tool to better know your inventory. Keep your sale by easily preventing stockouts and reduce the costly long-term inventory storage fees.
5. Bundle product together
Sellers can use the method of bundling to sell complementary products together. Of course, the price of these bundled products is generally higher than the price of individual sales.
And the price of purchasing the bundle product is less than purchasing products individually. It will increase your sales, you can get increased profit either by a higher volume of sales or by moving slow-moving items.
In addition, there’s less competition for the Buy Box, which is another route to increased profit margins.
6. Diversified storage methods
If you have a product selling well, you have to replenish enough stock to avoid the stock out. In this way, there is no need for you to shipping all products to FBA. The cost of the FBA warehouses is relatively high. And Amazon changes the inventory policies over time. If you just rely on the FBA warehouse, sometimes we can not do anything but wait for Amazon to tell us the time we can ship the product.
At this time, we can choose overseas warehouses with relatively low storage costs. It can help us reduce the cost of product storage. And of course, it can help us to avoid the impact of listing out of stock on ranking.
Factors considered beyond Profit
In order to gain continuous growth and become a successful brand seller, more than profit, you should consider more. Just like brand equity, our customer loyalty, and so on. Maybe it will increase your cost, however, it will bring more sales profits for your business in the long run.
1. Brand equity
More and more buyers are more inclined to trust certain brands. When they buy products, they will directly search for the brand name instead of just relying on keyword searches.
Therefore, if a seller does not have brand awareness and does not build a brand, you are losing this part of the buyer group
2. Market share
If sellers want to maintain competitiveness and market share, they need to be outstanding in all areas.
Sellers should ask themselves: Do you know the market layout of your direct competitors? Which markets are their decisive strategic channels? In which channels will there be market opportunities for corner overtaking? In fact, all competitors will face the same operating pressures and challenges. Therefore, falling behind in an important area may undoubtedly affect the overall sales performance of the company.
3. Customer lifetime value
When we run our business, we have to know who is our customers. It is necessary for you to analyze your customers to target your customer groups. Know more about your customers, you can provide better service for them and improve the repurchase rate.
Therefore, you need to adopt scientific sales management methods in order to increase your Amazon profit margins. Including optimizing the listing, removing unsold product inventory, and expanding our sales horizons. At the same time, sellers also need to deepen their true understanding of profit margins in order to obtain all the sales value that Amazon gives every seller.