If you’re bringing in an annual profit of around $1 million, it’s a safe bet that your business is already on the right track. But moving from $1M to $10M comes with its own set of challenges. Feedvisor, the award-winning algorithmic repricer, has teamed up with Amazon seller Michael Ward to show you how to attain the highest rungs of profitable growth.
Michael, who won the Inc. 500 award for owning the 140th fastest growing company in the U.S., attributes his success to using these best practice and strategic methods on Amazon. Here are the 4 actionable steps you can start implementing right away to grow your business.
1. Make strategic purchases
A great Amazon business starts with great products. But what exactly characterizes a great product? When browsing potential items, it’s important to always think strategically:
Read product reviews. A high number of positive customer reviews is important. Just remember that not all reviews are relevant to the actual product.
Examine patterns in price history. Extreme fluctuations can indicate price wars.
Amazon Search results placement. An ASIN that appears on the first or second page is likely high ranking already. One that’s further back offers new opportunities.
Pro tip: Don’t be afraid to expand into new categories. You may specialize in selling from one category, but there’s nothing stopping you from selling in another.
2. Keep a lean operation
Running a lean operation is instrumental to maximizing your revenue and profitability. There are two key strategies used to achieve a lean business with a growth mindset: using Fulfillment by Amazon (FBA) and adopting technology.
Making the most of the latest technology is a cost-effective way of maintaining a scalable business. There is plenty of software that helps to automate your operational process and keep your headcount down.
FBA is another strategic way to save on manpower. By essentially outsourcing the packing, shipping, and customer service to Amazon’s experts who are already running a well-oiled machine, FBA is one of the easiest ways to expand your customer base and reach Amazon’s best customers: the Prime members.
Pro tip: Focus your business on what matters; jumping on the FBA bandwagon allows you to ride on Amazon’s reputation and keep your day-to-day operations streamlined and under control. This will have the advantage of increasing your bottom line.
3. Stay in stock
Amazon favors stable sellers who have a history of staying in stock, a healthy inventory and can keep up with the demand that winning the Buy Box creates.
Anticipating increased demand of seasonal items will allow you to keep an eye on your lead time and order enough stock in advance.
Pro tip: Make sure you’re regularly checking up on your Amazon Seller Central account to ensure you’re still in stock. Technology can assist with key areas such as velocity control and replenishment.
4. Invest in a repricer
When you start experiencing more serious levels of business growth and are selling hundreds of SKUs on the Marketplace, you stand to gain from selecting automated software to reprice your products.
According to a 2016 survey by Feedvisor and Web Retailer, 64% of the highest-rated Amazon sellers—defined as those with a yearly revenue of $2.5 million to $10 million—report using a repricer.
Why is repricing software so important? First, it frees you up from the time-consuming and laborious task of setting the prices yourself, allowing you to focus on managing business critical activities. And second, it constantly scans competitors’ prices – meaning your price is more likely to reflect the dynamic market.
But not all repricers are created equal. Here are two ways to determine that you’re looking at a winner:
Repricing is in real time. Remember, Amazon’s prices change as often as every 15 minutes.
Price points are optimized. Merely lowering prices, without taking into account vital seller performance variables, can lead to price wars – and leaving money on the table.
Pro tip: Look out for an algorithmic repricer. Algorithms are self-learning and data-driven. Unlike rule-based repricers which are subject to human error, algorithmic repricers are designed to maximize profits by analyzing and connecting multiple data points in real time.
Growing Into The Future
Strategic business growth comes from making smart decisions. If you want to turn your business into a multi-million dollar success, you need to strategically evaluate which software solution works best for your specific business needs. An algorithmic repricer is frequently the most profitable option for larger retailers.
(This is an excerpt from Feedvisor’s eBook: How to Grow Your Amazon Business from $1M to $10M)
This article comes from our magazine “E-Commerce Solutions – Insights for Online Sellers.” Download now to read lots more best practices on selling online!
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