29
Dec

How the Best Amazon Sellers Boost Profit Margins

From Appeagle author Erik Mathes:

In business, profits are everything. That’s why smart sellers are always testing out new strategies to improve their margins. If you’re looking for new ideas, here are a few unique ways that the best Amazon sellers boost profit margins.

Eliminate FBA fees and improve margins with Seller Fulfilled Prime

Seller Fulfilled Prime (SFP) allows Amazon sellers with stellar metrics to offer free Prime 2-Day Shipping without using FBA. SFP sellers pick, pack, and ship directly to customers, and can still display the Prime badge on listings.

According to Amazon, sellers must “agree to all shipping, returns, and customer service requirements applicable to Prime items” when enrolled in SFP.

To enroll, sellers must complete a rigorous trial period to prove they can meet Prime shipping demands. Sellers who successfully complete the trial are automatically enrolled, and must maintain the following requirements in order to stay enrolled.

SFP listings don’t incur FBA fees, and SFP sellers gain access to Amazon Logistics, which offers the same great shipping rates that Amazon itself receives. So, if you’re able to fulfill orders yourself for cheaper than you’d pay using FBA, it only makes sense to do so.

Minimize FBA shipping costs with Inventory Placement Service

The default setting on FBA accounts is to allow what Amazon calls “Distributed Inventory Placement.” This means that your initial FBA shipments can be split between up to three different fulfillment centers—with the added shipping costs passed back to you.

As Amazon puts it:

To avoid paying shipping fees on split shipments, FBA sellers can change their settings to the only other option provided: “Inventory Placement Service.”

This premium service ensures that most of your items get shipped to just one fulfillment center in your initial shipment, locking in lower shipping fees than you’d have when shipping to multiple destinations.

But, there’s a per-item fee associated with Inventory Placement Service and certain product categories are exempt from this option, so sellers must calculate and compare the costs of the two options to see which one boosts profit margins the most.

Use strategic product bundling to drive sales and boost profits

The smartest Amazon sellers know that product bundling is a surefire way to own the Buy Box.

By developing unique product bundles—a tennis racquet, tennis balls, wristbands, and a guidebook on tennis, for example—sellers get to create a new ASIN that only they sell…at least until another seller copycats their bundle.

Buy Box ownership will definitely drive bundle sales—if the products within them make sense and at least some of them are in-demand.

Better yet, well-crafted bundles can also boost profit margins.

Say you sell guitars and accessories, and you have boxes of poor-selling straps taking up inventory space. Instead of continuing to list the straps individually, you can remove that listing and create bundles including a decent-selling guitar, a strap, a DVD, and a tuner.

Then, when coming up with your bundle price, you can price it slightly higher than you’d price all the collective items individually. Since some of the items within the bundle will not be available as individual listings, buyers won’t easily be able to shop around and compare prices—and you can reap higher profit margins on every bundle sale you make as a result.

Want more ideas on how to succeed as a marketplace seller? Check out the Appeagle blog and subscribe for exclusive!

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