A few days ago I was invited to speak at the Cross-Border Summit and I listened to most other sessions, one of which covered advice for “Fulfilment By Amazon” sellers.
The 4 panelists were Chris Davey, Meir S. Simhi, Gerard Nieuwenhuis, and Wilson Blues.
Here are my notes.
How to pick the right products to sell on Amazon?
- Scout Amazon for products that are “best selling” (some software can help do this).
- How to come up with a better version of a product currently being sold? Read the reviews, see how the product should be improved.
- Make a good product and develop your own brand over time if you want to have a business viable in the long term.
Are there categories to avoid?
- Many Chinese factories are selling mobile phone accessories and other simple electronics at or close to a loss. They are focused on “pushing” a lot of products. They will always be cheaper.
What keywords to choose, in order to catch people who search on Amazon?
- In some categories the keywords are obvious. Don’t forget other companies’ brands or product names that people search.
- Tools such as Google Trends, Keyword inspector, Merchant Word, etc. can help.
- Amazon’s search box has an “autocomplete” feature that shows related keywords when one keyword is entered.
- Keywords can be tested by paying for clicks on Google Adwords or Facebook.
Strategy for launching an Amazon-based business
- Start with a simple, generic product (in a branded carton) on Amazon and iterate little by little based on the feedback (e.g. click-through rate on Amazon, what keywords performed well so far, the reviews you got…)
- Do tests outside of Amazon — pay for traffic from Facebook or Google to an landing page where customers can pre-order the product. Track the important metrics: click-through rate on Facebook/Google, conversion on the landing page, etc.
- Quality of photos and copy writing can be A/B tested with specialized software. All these brand management aspects are very important.
How to calculate all costs before setting the price?
- Purchasing price + logistics (based on the volumetric weight) + import duties + Amazon’s fees (30-35%) + returns (around 3-5%, and might be higher for electronic products) = total cost.
How to manage cash flow?
- Find the right supplier and negotiate for lower minimum order quantities — it is sometimes better to work with a less reliable supplier, control their quality carefully and systematically, and enjoy their extra flexibility.
- Some companies provide loans specifically to e-commerce sellers; Amazon also provides loans to some sellers.
Quality control and liability
- Quality inspections are quite important for stopping issues before the goods are sent to Amazon’s fulfilment centers.
- In theory, every Amazon seller should have a liability insurance — but Amazon doesn’t enforce this in practice.
Negotiating good pricing
- Going to the factory is helpful in getting a good price and low MOQs, and it is very good for understanding production processes — which is good for getting ideas for product improvements.
- Mentioning prices from other suppliers, and using the industry jargon, helps get better quotes.
- Getting a price for a certain quantity and then negotiating a lower MOQ for that same price usually works.
How to protect one’s own brand (apart from legal tools)?
- Going deep in the details of the product (when it is customzed for your orders) will help build the brand identity and differentiate it from generic products.
- The more customized the product, the longer the development time but the less likely it is to get copied.
- Be creative and stay ahead of the curve — always be working on the next thing.
How to get initial reviews?
- Many companies give products away, especially to “top 500” or “top 1000” “verified” reviewers.
- Giving too many products away is a problem — reviewers end up expecting products for free and stop buying.
- Commenting on bad reviews is good to show the company is listening and improving the product.
- Some studies show that an average of 4 stars is more conducive to sales than an average of 5 stars!
