3 Tips to improve Amazon FBA PROFIT MARGINS // Understand this one thing & you will WIN
25 Oct 22 / by Farah
When you are starting out you find a product, but you will probably pay more than you should because you are managing the risk of an untested product. Buy low qty etc.
Amazon seller flywheel consists of three key segments or factors -
- Products at bulk & low cost pricing.
- Operational efficiency - FBA
- Creating sales with amazon ppc at an efficient ACOS.
But when you want to scale.. You have to buy it in bulk.. To get the best price possible. The lowest price possible. This will help you improve your profit margins..
Same thing happens with operation & overheads.. Sellers as you scale your business your margins get squeezed. When you are starting out you do everything yourself but in time you start generating overheads and you have to create efficiency in operations.
Depending on your product, FBA will most likely be the best option because Amazon has shipping rates cheaper than Royal Mail in the UK and I am sure it's the same in the US too.
That is operational saving. If you have dispatch orders yourself.. You are probably taking at least a day off like sunday.. With FBA your orders are being sent out 7 days a week..
This is something we personally experienced.. We were doing a mix of seller fulfilled prime & FBA but it was inefficient.. Once we switched our full catalogue to FBA, we experienced an uplift in sales, less emails and reduced our overheads by reducing the Royal mail bill.
That ultimately translates into improved margins..
Same thing happens in ads.. When you start out, you are up against bigger sellers & budgets.. As your ads start ranking you, your organic sales will improve and your overall cost per acquisition will come down. Which means better margins..
So it's a balance of these 3 things..
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