One of the online monetization models we use is selling physical goods on Amazon.com. In this post we’ll share our personal success strategy for selling on Amazon.
Now, to be perfectly accurate, we do not sell $1000 a day on Amazon every day. But we do get our share of $1000 days, and that’s always an awesome feeling.
This is the strategy we use for selling on Amazon.
What we are selling is new merchandise that we buy at wholesale, usually from drop shippers.
We don’t do arbitrage – yet – but we have considered it and we are interested to try it. The main reason we’ve haven’t tried Amazon arbitrage yet is that we are in Canada, and when we looked at the arbitrage business model, it seemed virtually impossible because of all the logistical issues in shipping goods we buy in Canada over to Amazon.com in the US. Shipping costs in Canada are so much higher than they are in the US, that it seemed to make the arbitrage model ridiculously cost prohibitive and non-feasible.
Sure, we have Amazon.ca here in Canada, and Amazon has its Canadian fulfillment centers, but you’re never going to make any real money just selling into the Canadian market through Amazon.ca. It just isn’t big enough. The real money is being made in the US market at Amazon.com. So that was a bit of a bummer. I felt like the kid being kept out of the playground.
HOWEVER, we have just recently come across a Canadian seller who has worked out the arbitrage strategy for selling on Amazon.com from Canada. I was pretty excited to discover this. He teaches the process, and as soon as time permits, I will be getting his course to learn how this is done, and then hopefully we’ll get in on the arbitrage action. I’m a pretty savvy shopper and I know I can find the deals to make some good revenue with the arbitrage model. This sounds more like recreation to me than work – I’m always up for a little retail therapy 🙂 Its just a matter of finding the time to venture into a new project – our plate is pretty full right now with all the things we are juggling; and we have learned (the hard way) in the past that you never want to spread yourself too thin or you risk becoming a master of nothing!
So back to what we ARE doing, and what’s working for us now.
We use FBA (Fulfillment by Amazon) to streamline our process, and it works wonderfully. Earlier in our business, we used to handle all order processing, packing, shipping, and customer service. It, quite honestly, was a labor intensive nightmare.
There would be times when we would run out of shipping materials or packaging supplies, so orders would be held up while we ran around town to get the supplies we needed.
There would be times when we were tied up with other aspects of our business which were placing demands on our time, so order fulfillment and shipments ran long. And of course, that would lead to dissatisfied customers, which in turn led to us being very angry with ourselves and feeling like we were failing the people who bought from us (we were!). That’s not how we like to do business.
Our business was built on providing exceptional customer service, and we prided ourselves on that – and then as things grew, there we were, letting our customers down. We were making great money, but we weren’t exactly happy with our business because we just couldn’t keep on top of what needed to be done. And the customers suffered – and we weren’t okay with that! Yet, we didn’t know how to put in processes to fix it.
Then came Fulfillment by Amazon. Hallelujah! This was THE solution to our problems. It was the fix we had been needing for a long time.
I can never understand the shortsightedness of online marketers who say they don’t want to pay for the FBA service to handle their order fulfillment. They say they don’t want that added expense eating into their profit margins.
The fact of the matter is that the small fee Amazon charges (relative to all the time and effort they save you) is a BARGAIN. You can not hire an employee to take care of these tasks for anywhere as little as you pay FBA to prep and ship your orders for you. Its an incredible efficiency. And it makes our business run smoothly and makes it scalable.
So it goes without saying, FBA is a key part of our strategy for selling on Amazon (frankly, we now use it for other non-Amazon sales too, that we make right off our own websites and ecommerce stores. It just makes life easy!
If you use FBA, in total, Amazon will take from 30-35% of your product price, but they are handling shipping and everything else, including customer service. As far as the cost of doing business goes, realistically, this is a very good deal. It frees up your time to focus on growing your business, sourcing out new products and suppliers, market research, etc – all of the stuff that will really grow your business. These are things you cant easily outsource (and have them done well).
There is a simple formula for doing well on Amazon:
Popularity of product + medium or high rating of product = sales for you
When deciding on a product to sell on Amazon, we look for similar products that are already selling on Amazon, and are ranked 4000 (top level category).
We are aiming for products with a selling price between $10 and $50 dollars. Why? Because there are a high volume of transactions in this range.
We get more specific product ideas and keywords simply by typing the product into the search bar and looking at suggested searches.
When writing product titles, we study keywords in the titles of competitors products to ensure we are writing strong, competitive titles.
If the product is made in the USA or Canada, we make sure to emphasize this in the product description – this is very important to a lot of consumers, and will often sway a buyer to purchase from you if competing products are not domestically made.
We always use a bullet pointed format for writing our product descriptions. It makes them easy to read for buyers, and this is important.
We always have a back up supplier for every product we sell in case one runs out. We can not have ordered delays or fulfillment problems – that doesn’t play well on Amazon.com and will lead to negative feedback, or even worse – Amazon could close your account.
When giving feedback on their purchase, the customer will be asked to rate you on the following:
- was item as described?
- did it arrive on time?
- did they receive good customer service?
So make sure that you keep this in mind at all times, at every step of the process – when selecting the products you will sell on Amazon, when writing your product descriptions, when you receive the order, and at every touch-point with the customer. Your objective always needs to be providing the customer with an awesome buying experience. That’s how we approach every transaction (and every product we list – don’t list crappy products!), and its really contributed to a strong quality score, which has the effect of propelling our Amazon business steadily forward.
Negative feedback is a tough pill to swallow, especially if you are truly putting your heart into providing a good customer experience. Yes, its happened to us. Sometimes its hard to figure out exactly what customers are thinking when they post something which can only be described as absurd (we’re pretty sure its been a competitor trying to do a little sabotage when its happened to us because its just been that far off the mark). But those are the perils of selling on a platform.
Its pretty hard to get negative feedback removed, even if its not legit, unless you can absolutely prove its bogus. And that’s almost impossible. For that reason, as much as it hurts, we’ve never even attempted to have the occasional piece of negative feedback removed, because it would just be a wasteful expenditure of time. And by this point in our business we’ve learned to always be assessing everything we are spending our time on, and to always make sure our time is going into tasks that are truly top priority, because heaven knows there are simply never enough hours in the day.
You can get negative feedback removed if any complaints were the fault of FBA and not yourself.
Your refund rate should be lower than 3%. Anything higher and you are going to get Amazon’s attention (and not in a good way), so again, this goes back to making sure you a selling products of quality, that your description is accurate and detailed so customers know what to expect, and that you are providing an amazing customer experience.
How to maintain a good quality score:
We have found that maintaining a good quality score is not that hard to do (assuming first and foremost that you have a decent product!) if you adhere to certain principles. We make it our policy to:
- answer customer email quickly
- take care of customers
- give exceptional customer service
- answers inquiries in less than 24 hours
- check for messages 4 times a day and answer immediately
- when answering inquiries, always convey a super-friendly, helpful tone that shows the customer you genuinely appreciate them and value their business
You’re probably getting the picture (there’s a bit of a theme there) – a lot revolves around simply being responsive to customers messages and inquiries. We’re talking really responsive. Fast replies that clearly answer the question or resolve the issue, in a super-friendly and helpful tone, are the basic strategy we use to maintain a good quality score on Amazon.
If you fail to maintain a good quality score, Amazon can close your account.