Maximizing Your Profits: Tips for Successful Selling on Amazon

Amazon is always a crowded marketplace. If you do not keep up with the pace, you may probably lose the game. But, there are smart ways in which you can make the best use of Amazon and maximize your profit. This article gives you several tips to grow your business and maximize profit just by making adjustments in your Amazon selling strategies.

Understand what exactly your business’ profit margin

Your profit margin is the percentage of profit that you make from each sale. 

To calculate the profit margin, use the following formula:

Profit margin =(net income/ net revenue) x 100

Net income= Net revenue – operating expenses

Keeping track of your profit margin will help you understand your business better and make necessary corrections whenever needed. You can not compare your profit margin with that of a company that works in an entirely different industry. Because profit margins vary from industry to industry, and from product to product. 

You can look at the profit margins of companies that sell similar products so that you will get an idea of your own profit margin. 

The common mistakes sellers make while they aim for maximum profit on Amazon

If you aim for maximum profits from your Amazon sales, you should not compromise on shipping. Sellers, especially beginners on Amazon, often tend to provide the wrong product size and weight details in order to save shipping costs. But this, in fact, takes a toll on customer satisfaction. It is highly recommended to give the right information about the product. 

Similarly, if you compromise on the packaging, in an attempt to save money, it may end up with more negative Amazon customer reviews and product returns. When customers receive well-packaged products in their hands, their impression of your brand and products enhances and that leads to repeated purchases and brand loyalty. 

Poor inventory management is another mistake that commonly happens. You must regularly watch your inventory if you wish to improve on the profit front. You can replace all the slow-moving items with the best-selling ones. Keeping an eye on your stock levels and sales trends is also important.

11 tips to improve your profit margin

Research and find the profitable products

Find the most trending products to sell instead of traditional ones. Because, on Amazon, success depends a lot on customer demand. You can do keyword research to find what people look for the most on Amazon. Use SellerAapp’s keyword research tool to find the keywords that customers search for the most. If you do not opt for a paid tool, you can also do this research on your own by manually entering and trying different search terms to find what comes first for each of these keywords. 

Closely watch your competitors

Making informed decisions is crucial when it comes to Amazon selling. Because, each time you fall behind in the race, your competitors are moving ahead. Closely watch your competitors’ pricing, offers, and strategies so that you can take informed decisions to boost sales and profit. Compare your prices and offers with that of your competitors and make adjustments accordingly. 

Avoid heavy products and seasonal products to sell on Amazon

Storage cost is a concern for Amazon sellers, especially if they are FBA (Fulfilled by Amazon) sellers. Because Amazon charges high for huge and heavy products that occupy more floor space. So, if you are an FBA seller who wishes to sell products more profitably, think about lightweight and small products instead of heavier ones. 

Likewise, if you choose to sell seasonal products, your storage charge may go high because of the infrequent sales. The best idea is to choose quick-to-sale items so that you can restock them fast and minimize the storage charges. 

Amazon product optimization

Amazon’s algorithm always ranks the optimized and well-managed listings top in the search results. So, in order to impress the algorithm, you need to optimize Amazon product listing in the best way possible. 

But you can not optimize your listing in a matter of time. It requires your time and effort to research and understand the realities and possibilities. If you do not have enough time to do the groundwork for optimization, you can use any of the Amazon listing optimization services. 

Use quality product images

One of the best ways to attract customers is to display a high-quality product image. A quality image will often make the customer consider your product whereas a low-quality image will make them scroll down the search results. 

Sell products that you can bundle together

Bundling products is usually profitable. Customers love buying products as a bundle as it will cost them less compared to buying the products individually. Besides, you can make a profit by letting the slow-selling products move faster. For each bundle you introduce, you need to create a new listing. You can always choose to break the bundle whenever you find it unprofitable. 

Properly manage your inventory

If you know what exactly is there in your inventory and the stock levels, it will become easier for you to make decisions. Keeping slow-selling inventory for a long period will make you sell it at a deep discount rate or on unprofitable margins. What you can do is, mark such unprofitable items down and eliminate them from your stock in the future. 

Ensure competitive pricing for your products

Pricing is an important factor when it comes to profit-making. Before pricing your product, always do a competitive analysis. If your competitors’ prices are on the higher end for similar products, price your product accordingly. Logically, a high price of your product will bring you profit each time you sell your product. 

Lower the purchasing and supply cost of your products

Lowering purchase and supply costs is very important for making the most out of your business. You can ask your vendors for discounts and offers like more products at no extra cost. Also, if you buy products in bulk quantities, chances are there for you to get them at a reduced cost per unit. 

You can also check your supply chain for inefficiencies. If your supply arrives frequently with lesser items you may probably need to pay more. Instead, let the shipping happen infrequently with more items so that you can save a handsome amount of money. 

Discover the right Amazon program that works for you

Amazon works in two different models. They are called Fulfilled By Amazon and Fulfilled by Merchant( FBA & FBM). You need to select either of these programs wisely because the level of control over your inventory, branding, and pricing depends a lot on the model you chose. Both models have their own pros and cons. If you are not sure what to choose, you can ask yourself these questions. 

• What is your business objective?
• What is the performance status of your customer service?
• What is the level of control that you want to maintain over pricing, inventory, and branding?
• How do you sync your online strategy with the offline strategy?
• What is your existing operational volume?
• Is it possible for you to adjust the operational volume as per the changing demands?
• How strong and flexible is your supply chain?
• Draw insights from Amazon-specific analytics

Conclusion

Profit on Amazon comes when the majority aspects of running a business act favorably. You need to look at multiple aspects like eliminating unwanted expenses, improving productivity and researching competitor pricing and profit, etc.,. You may also need to optimize your listings to make them more visible to the customers. All these activities require great attention to detail. You can also approach the companies which can work for you to ensure profitable selling on Amazon. 

Author’s Bio:

Arishekar N is the Senior Director of Marketing and Growth at SellerApp, an e-commerce data analytics solution. He is responsible for overseeing the development and implementation of marketing strategies, as well as increasing process efficiency by executing cutting-edge Search Engine Optimization strategies at SellerApp.

Arishekar has over 10 years of experience in marketing analytics and SEO. He has worked as a Digital Specialist for the tech giant IBM and most recently as the Senior Marketing Specialist for ZioTive Technologies where he enhanced their site structure by increasing website and mobile usability. Previously, he worked as a Senior SEO Analyst for Star Group where he was responsible for managing SEO Audits and analytics