Chapter 13 How to Make $5,000 an Hour Selling on Amazon in 2017
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I get it. You don’t understand the complexity that is selling on Amazon, and you don’t have time to learn it.
Don’t worry –– I have it covered.
I’ve sold tens of millions both on Amazon as a third party seller and tens of millions more directly to Amazon. Those millions sold have been made selling a variety of products, among various industries, at a mix of price points and using several different methods.
However, the basic principles are universal, so while I can’t guarantee you a sales volume on Amazon, I can stand behind a productivity number: earn $5,000 in sales for every hour you spend on Amazon activities.
So how can you grow your business to make serious money on Amazon? Let’s dive into some straight talk.
Amazon is the future. It’s time to get on board and excited about it. To do that, don’t just make Amazon part of a growth strategy. Make it the growth strategy for your business.
I’ve worked with an old fashioned manufacturer that has been in business for several generations. Within 18 months they were selling more on Amazon than through their traditional channels. How did they do it? They didn’t mess around when it came to selling on Amazon.
They tossed their whole product line on Amazon, identified the services they needed to outsource and created new internal processes specifically for Amazon.
Here’s the same checklist they used:
- Identify what items make sense for you to sell on/to Amazon.
- Check if the items are already sold on Amazon.Free tools like Keepa.com can help you gauge if the items have already been sold by Amazon Retail at some point.
- Compile the necessary information to submit those items to Amazon. Perhaps use existing Amazon listings for your product. Collect pictures, feature data and descriptions.
- Identify the processes an Amazon order will follow
- Search for and implement software services that simplify these steps
- Recruit Virtual Assistants for any tasks that are not already performed and core to your business
- Create and document processes that absolutely cannot be done within 4 and 5
- Submit the product data to Amazon (Seller Central or Vendor Express)
- Process orders
- Make improvements to 4, 5 and 6 as necessary
Amazon is not overly complicated and does not have to be your biggest competitor. In fact, it can be your initial parlay into household name status, and multi-million dollar sales.
Sell Directly to Amazon
Don’t try to beat Amazon at its own game. Amazon is growing its direct catalog, so swim with the tide –– not against it.
Aside from Amazon becoming your customer instead of your competitor, selling directly to Amazon eliminates the job new sellers are worst at, i.e. forecasting and marketing your product become Amazon’s duty.
The promotion of your products remains your brand’s responsibility unless you pay Amazon to do it for you. According to James Thomson, former head of Selling on Amazon, “If you sell to Amazon, Amazon doesn’t promote anything unless you step up and pay big marketing dollars. Promoting your brand remains your responsibility.”
Also, many items sold by Amazon sell for more and faster, all things being equal. There will be a margin difference for FBA sellers that are not competing against Amazon here. In other words, selling unique goods on Amazon currently not already sold there is how you make the most margin. Re-read the chapter about why re-selling is the least practical method to Amazon success to understand why this is.
So, let’s see: selling directly to Amazon puts you on the right side of the future, is easier and leads to more sales. Keep in mind; this doesn’t mean it is right for everyone, but it certainly is an option.
One Seller’s Growth with Selling to Amazon
Sell on Amazon Yourself
This isn’t [necessarily] a contradiction to the previous section. Start by selling yourself on Amazon if you find it easier to get up and going, or use this to complement your sales to Amazon.
Selling on Amazon along with selling to Amazon keeps Amazon honest and doesn’t allow the whims of their algorithm to lead to stockouts of your products. Selling to Amazon also allows you to jump start sales of new products by giving Amazon’s bots the confidence they need to start bringing it in themselves.
This practice is not recommended for most sellers, especially sellers that are novice to selling on Amazon. Consult an Amazon consultant before using this method.
A Case Study: How to Sell to — and on — Amazon
A sheet metal factory in the industrial space wanted to come out with a line of consumer products to sell on Amazon.
Based on some cursory searches on Amazon for sheet metal products and knowing the limits of their machinery, they created a simple folding work bench to be used in congested garages and sheds.
It was made with the machines they already had, hardware they were already buying and sheet metal they already stocked.
Actual Prototype of Product on a Wall in a Factory Hallway
Their initial production run was four units. Yup, four.
The total cost of labor and materials was less than most people’s weekly grocery bill. They put up an Amazon listing and sold two units in the first week.
Actual Amazon Listing Taken Shortly After Product Went Live
After that first week and with lifetime sales of only two units, the sellers, who had created an account to sell directly to Amazon, offered the product directly to Amazon.
The price offered to Amazon was similar to the net amount the company received from Amazon when selling through Seller Central. Since selling commission and shipping costs were no longer part of the equation, the sellers could sell their product to Amazon for significantly less than $149.95 without actually cutting into their margin.
Within a week of submitting the product, the company received an order from Amazon for five units.
Although Amazon’s Order Had Not Yet Shipped They Still Promoted the Product
Despite only two sales, the product moved to the third result in relevant keywords, in a similar position to items with as many as 138 reviews.
Of course, a sale of five items to Amazon is small time, but the idea of going from product concept to the top of the rankings on Amazon in a few weeks is possible. It is highly unusual, but it is doable.
Use Amazon Cleverly
Once you have become familiar with the inner workings of Amazon, you should take a step back. Look at your business with just Amazon in mind and figure out which services or methods provide you the most benefit.
Level 1: Dropshipping with FBM
Adding non-stock or custom items to Amazon and then dropshipping to customers can add to your revenue, but it can also help reveal new trends or overlooked items that should be stocked as part of a standard offering.
If you are setting up to dropship already, there is nothing to lose. All costs, including Amazon’s, are variable and since items can be added to Amazon with little set up, even the administrative hassle is minimal.
Think this seller has 2,000 sitting on a shelf? No, but if someone preferred to buy on Amazon, they would get the sale.
Amazon allows this seller to be available to millions of shoppers and only produce an item once it has actually been sold.
Not sure how to price your items, especially newly launched products? Play around by adjusting the price on Amazon to see what the effect has on volume.
Because pricing is relatively instantaneous, it is possible to offer a product at a variety of different price points so that in a few days or weeks a brand or retailer has a better idea of the optimal price. This can be helpful because price tags and price sheets have a perceived permanency in the minds of consumers, but online prices do not.
Take advantage of this to test prices for better Amazon margins or velocities, and to optimize those numbers for sales outside of Amazon, like in a retail store or website.
If I didn’t know any better, I would think that the top two organic results for “Pour Over Coffee Stand” were really the same product sold at two different prices to test two different pricing strategies. Hint: they are.
Level 2: FBA for Items Sold Outside of Amazon
FBA is simply just that. Items are fulfilled by Amazon. There is the implication that these items are likely also sold on Amazon, but that does not have to be the case.
Many sellers use Amazon’s fulfillment services to pick, pack and ship items that were sold elsewhere like a retail or online store. This is done even when they may have stock in their warehouse.
Amazon’s shipping rates with the major carriers are so low that, even with the additional charges for picking and packing, their total shipment cost can be lower than negotiated carrier rates for many mid-market firms. This can be true even for shipments within a company’s own state.
Sellers often use this service so they don’t have to split inventory for Amazon and non-Amazon channels. James Thomson, former head of Selling on Amazon warns, “If you use FBA to fulfill orders outside of Amazon (called multi-channel fulfillment), Amazon raises the shipping costs, and you aren’t likely to see much cost saving at all.”
Additionally, Amazon has extremely low 2-Day and Next Day rates, so during the end of the Christmas season, many sellers are able to offer quick shipping for reasonable prices by leveraging Amazon’s buying power.
Cost to Ship from a Warehouse Compared to Amazon Shipping the Same Item
Why not have Amazon ship every unit if you can save 25% in shipping fees, the cost of labor and materials by having them do everything?
Here’s an example from my own product set.
Offering Competitive Products
Odds are that you have competition –– and that they are pretty successful, too. Why not cash in on their sales and success by offering their products on Amazon as well?
Not only might you get better insight into their sales numbers and product features, but you’ll be getting paid to do it.
More sincerely, you probably have holes in your product line: you don’t carry a certain color, they have metric versions you don’t or they have a unit that sells for under $100 and your cheapest offering is $119.
Even if you don’t offer the whole line, you may be able to generate more sales on your own site and on Amazon by extending your product line to include items your competitors offer for which you don’t have a substitute.
Look at these four different clothes dryer lint traps from four different manufacturers. The only way to make money off of every version sold on Amazon is two win the Buy Box for each one like the seller below, Professional Grade Products.
Level 3: Amazon Private Label
Consider offering a line of products on Amazon that is only available on Amazon.
What makes a product unique, technically? To Amazon, a unique UPC. To most customers, a specific model number. That’s it. Not a different patent number, manufacturer or even color.
Whether it is a specific bundle or the same item as normally available, but in a different box, many sellers see the best results by having a unique offering on Amazon. Often, dealers or brands are only concerned about their products and not a brand’s or reseller’s version of a similar product.
In the example below, Vortex is selling the same product, but at a different price point to try to be true to their main “premium” brand, but also get more volume through a generic brand item.
The HUGE Opportunities in Private Labeling on Amazon
In the late 2000’s, and continuing on today to a degree, most brands that had traditionally dominated big box retail channels shied away from selling on Amazon. They feared having their items sold on Amazon would diminish their brand and annoy their existing retail partners.
This led to holes in Amazon’s catalog in many high velocity categories because the brands that dominated that space everywhere else were not represented on Amazon.
Naturally, new “Amazon Only” brands are continually created to fill that space. Can you create the top brand on the world’s top marketplace? We are in a rare moment in time when you really might be able to.
In a search for “flashlights,” for instance, why isn’t it dominated by Maglight or Rayovac, like many retail stores would be? Have you ever heard of any of these? Some aren’t even branded!
As a private label seller, you are still responsible for respecting existing trademarks and patents, and doing appropriate testing on your products.
Value Your Time
Amazon is all about automating and simplifying tasks. All of the other tactics from this chapter lead to sales, but to hit the $5,000 per hour productivity mark, you need to reach out for help.
These outsourcing concepts are so essential to understanding how to maximize Amazon as a platform. So, let’s make these following lines our mantras, and walk through how to actualize each.
- Many tasks can be completed by a computer more accurately, faster and better than by a human.
- If no one has created a program for a computer to use (based on #1), perhaps it is because that task isn’t worth doing in the first place.
- If a task can’t be done better by a computer, but still is worth doing then there are likely people specializing in that task that can do it more effectively than you.
Many tasks can be completed by a computer more accurately, faster and better than by a human.
This is not an exhaustive list and there are many valid programs in this category and others that may fit your business. However, these are the programs I currently use. Do your own research based on your specific needs to find the best fit.
Automatically change your price for an item (with parameters you set up front) to optimize sales velocity.
- Appeagle: Inexpensive way to automate pricing, but very limited. Basically, it lowers your price from a base level if your competition lowers theirs.
- Feedvisor: Very expensive algorithmic repricer that optimizes your margin by trying to win the Buy Box most of the time and taking into account other factors that affect who wins the Buy Box aside from price. Unlike any other repricer, it will raises your price (again, within limits) if you can still win the Buy Box despite the higher price. It also has a bunch of other great reporting and tools.
Keep track of your Amazon vs. non-Amazon inventory and know when to reorder from suppliers
- Stitch Labs: Great integration of sales and inventory when selling across multiple channels, like a BigCommerce site and Amazon.
- RestockPro: Simple, but accurate and customizable methods for knowing where your Amazon inventory is, how much it is worth and when you need to reorder more.
Keep your product and seller reviews frequent and positive.
- Feedback Five: Automatically send emails to buyers requesting feedback.
Logistics Snafu Recovery
Get credited when shippers or Amazon make mistakes.
- Refund Retriever: Scans your FedEx and UPS bills for charges that should be waived due to them not honoring their guarantees. 100% variable cost (they simply get a portion of what they recover).
- Refunds Manager: Audits your inbound shipments to Amazon to file claims for discrepancies (and they do happen). 100% variable cost (they simply get a portion of what they recover).
All ground services available for orders from all channels on one screen.
- Shipstation: Easy set up, few bugs and integrates with any existing shipping accounts. Also, allows non-Amazon orders to be fulfilled with inventory at Amazon fulfillment centers with one click. I ship orders from my phone with their app daily.
Compile sales tax data and file all in one place
- TaxJar: Simple, effective and low cost. Not what you associate with taxes.
Store or even process your Amazon inventory as needed.
- Flexe: Rent local storage space for as little as $5 per day. Take on larger orders or stock up for the holiday season without flooding your store or warehouse.
- FBAPrep: Send your items (even straight from overseas) to be organized, QA’ed, packed and shipped directly to Amazon’s warehouses according to Amazon’s requirements.This allows you not even to touch the products you sell on Amazon.
See how your product sales stack up.
- Jungle Scout: Follows your Amazon searches and seamlessly provides data regarding estimated monthly sales volume. Use this to find new products or estimate your market share.
If no one has created a program for a computer to use (based on #1), perhaps it is because that task isn’t worth doing in the first place.
Many new sellers make the mistake of focusing on the small stuff. They are so eager to succeed on Amazon that they put all their effort into fine tuning a single or handful of listings even though it makes almost no difference to the customer.
There is no software program that reshuffles your product images in different orders, rearranges your bullet points and A/B tests “cozy” versus “comfy” as adjectives in your listing title.
Yes, you want good listings with beautiful pictures. You want to generate some reviews.
But, with competition always on the same page and just a click away, remember that five minutes negotiating a better price with your supplier or using a cheaper shipping service is more valuable than spending 100 hours perfecting an Amazon listing.
Case Study of Priorities in the Wrong Place
The Search: Silicone Pour Over Dripper
The top result spent five minutes creating a listing. They did not pay a service for any product reviews, edit their listing to test different keywords, or frankly, give it a second thought once they sent in their inventory to Amazon. The picture, title, bullets and description are acceptable. Simple as that.
What they did do, however, was commit to 1000 units out of the gate and negotiate exceptionally good pricing so that they could afford to sell it for a few cents cheaper than their competition (See the 4th and 5th items that are from the same manufacturer in China).
Also, unlike those listings appearing below the POVA one, no reviews were paid for, so there was no need to factor in hundreds of giveaways and service fees into the price.
Who knew people shopped based on cost alone?
Alternatively, see page 8 of the same search –– a yellow version of the exact item from a different seller with 17 subsidized product reviews, a bunch of staged photos, a convoluted title (it’s not a filter after all) and for what?
The second mantra put in different terms could be, “Are you productive or busy?”
Are you genuinely adding value to or eliminating waste within the process (like using Amazon integrated shipping software or automating sales tax reporting) or are you trying to “hack” Amazon?
Make no mistake; Amazon doesn’t want to be tricked, so even something that works, for now, may not work in the future. Stick with proven productivity enhancers like the software programs out there for sellers like you.
If a task can’t be done better by a computer, but still is worth doing then there are likely people specializing in that task that can do it more effectively than you.
Listen, a lot of Amazon experts and courses will emphasize the value of pictures, bullet points, and listing titles. I am not saying those are not important. They are, are is customer service, compliance, advertising and listing management.
You need to make sure all of these things get done and are done well. But, you certainly don’t have to do them yourself. Use these services to outsource the work.
Fiverr is easy to set up, has great results and is only $5.
- Need the backgrounds removed for some product shots? 5 bucks.
- Want someone to research relevant keywords and add them to your listing? Just 5 dollars.
- Need someone to scrape data from your site to add to your Amazon listing? $5.
This site also has a bad rap for having been the destination to get fake product reviews. Do not pay for product reviews on Amazon.
Thousands of people with Amazon experience are available for custom jobs through Upwork. The general process is:
- Search for people with a particular skill set or simply post a job description and wait on applicants –– usually you will have two dozen within 24 hours.
- Select candidates, submit any interview questions
- Choose a person to hire
There are extensive reviews on most freelancers and Upwork has programs that allow you to monitor progress and keep the workers honest. Many are well-versed in Amazon-specific tasks and can be hired for a single job or on an ongoing basis.
Users can create a stable of freelancers that have delivered well in the past, helping you to build a network that is more and more efficient over time. The productivity gains here are substantial.
Don’t have time even to worry about hiring people for specific Amazon activities? Of course not, you have been reciting your mantras.
Freeeup was created by an Amazon expert who created a corral of hundreds of Upwork freelancers. Freeeup assigns and manages your team freelancers based on the complexity of the Amazon services.
If you need to create listings, fulfill orders, advise on reorders and handle customer service, you can try to recruit all those people or just send a message to Freeeup and they will handle it all.
Software and outsourcing services can help you execute your plan, but what if you need help developing your plan? This book should give you a working knowledge of how to concoct an Amazon strategy, but invariably each business has its complexities and complications.
There are a handful of good Facebook groups and message boards, but for tailor-made solutions, consider reaching out to someone who walks the walk.