Welcome to Basilio Inc. Build. Grow. Exit Big: The Professional’s Guide To Selling On Amazon. If you’re thinking about starting up your own business as an Amazon seller, stick around, because you’ve come to the right place.
Amazon is the world’s largest ecommerce site. As of 2018, Amazon had $233 billion in revenue, and more than 5 million third-party sellers currently operate across Amazon’s 12 worldwide marketplaces. So selling on Amazon represents a huge opportunity—if you know where to start and what to keep in mind as you build your Amazon seller business. In this comprehensive guide, you’ll learn everything you need to know about selling on Amazon. Here’s what to expect as you make your way through it!
Preparing For the Holiday Shopping Season
For most sellers, the holiday shopping season is a crucial and bustling time of the year. Whether you are a seasoned seller or new to Amazon, it’s essential to prepare meticulously for this peak period. In this chapter, we will guide you through the necessary steps to get ready for the holiday shopping season on Amazon.
For newcomers, it may be hard to fathom the scale of sales and customer inquiries that take place in late November and December. The volume of activity during this period can be overwhelming, and it’s crucial to be well-prepared.
We will delve into the daily tasks required to effectively manage your business throughout November, December, and into January. We will explore strategies for inventory planning to prevent running out of stock well before the end of the holiday season. Additionally, we will address the importance of avoiding unnecessary stock-outs immediately after December 25th.
It’s important to note that if your product experiences high seasonality during a different time of the year, the same principles apply. Adjust the timing mentioned in this chapter to align with the onset of your peak season, typically 1-2 months before it begins.
Failing to prepare adequately for the holiday season can result in significant opportunity costs for your business. During this time, missed opportunities may translate into lost revenue and profits due to inventory depletion or mispricing when demand is at its peak.
By following the strategies outlined in this chapter, you can optimize your chances of success during the holiday shopping season on Amazon. Implementing effective inventory management, pricing strategies, and proactive customer service measures will help you capitalize on the increased customer demand and maximize your revenue potential.
Six Focus Areas to Prepare for the Amazon Holiday Season
During the two- to three-month period leading up to the holiday rush, there are five key areas that demand your utmost attention on Amazon. Effective inventory planning, a well-thought-out pricing strategy, leveraging marketing and advertising tools, delivering exceptional customer service, and ensuring efficient fulfillment and shipping processes are crucial for a successful holiday season. By analyzing past sales data, forecasting demand, adjusting prices strategically, optimizing product listings, utilizing advertising options, providing prompt customer support, and streamlining fulfillment processes, you can maximize sales, meet customer expectations, and create a positive shopping experience during this critical time.
Listings
Take the time in September and October to ensure that your listing data is accurate and complete. Regularly check your listings throughout November and December to identify any issues that could negatively impact customer experience or search performance. To do this, go to Seller Central and navigate to Inventory -> Inventory Reports -> Listings Quality and Suppressed Listings Report. This report will highlight any errors or omissions in your product feeds. While not all errors are critical, address issues such as missing product descriptions or images as they can significantly improve customer decision-making and conversion rates.
If you want a comprehensive view of all the fields in your listings, reach out to Seller Support and request the activation of the Category Listings Report. This report is accessible for a limited duration of 7 days in the Inventory Reports section. By utilizing this report, you can review all the data you have submitted and identify any incorrect or missing information in important categories.
Inventory
Inventory management is crucial for a successful holiday season on Amazon. Your performance metrics, such as negative feedback and return rate, directly impact your ability to win the buy box. It is essential to assess your inventory well in advance of the holiday rush to ensure smooth operations and maintain your account’s health and buy box eligibility.
To make informed decisions, identify specific ASINs that contribute significantly to negative feedback or returns. By doing so, you can pinpoint whether a small number of products are causing a disproportionate number of issues.
Here’s how you can analyze these dimensions:
- Customer Feedback: Gather your customer feedback data from the past six months and organize it by ASIN. Identify which products have received a significant amount of negative feedback.
- Customer Returns: Access the Reports section and navigate to Fulfillment -> Customer Concessions -> Returns. Examine the returns data for your products over the past six months to identify any items with a high rate of returns.
Demand Modeling
Preparing for the holiday shopping season on Amazon requires careful attention to several key areas. One crucial aspect to consider is demand modeling. By analyzing past sales data, you can estimate the surge in demand during the holiday season. Typically, November sales are 1.5 to 2 times higher than the previous months, while December sales can be 2 to 2.5 times higher. In categories like Toys, December sales can exceed 5 times the average monthly sales. It’s important to anticipate these spikes in demand and plan your inventory accordingly.
Inventory management plays a vital role in meeting customer demands and avoiding stock-outs. Regularly review your inventory reports and consider sending additional inventory to FBA or reordering for self-fulfillment. Monitoring inventory levels on a daily or bi-daily basis during the holiday season is crucial. If feasible, it’s advisable to purchase extra inventory that can sustain sales not just in December but also through January and February. Having surplus inventory available can help prevent stock-outs and ensure a smooth supply during high-demand periods.
If you utilize FBA, utilize the “Set Replenishment Alerts” tool in the Inventory section to receive notifications when inventory levels fall below a specified quantity. This feature can save you time and prevent inventory shortages. Timing is crucial in managing inventory for the holiday season. Ideally, most of your holiday supply should be ordered before mid-October. By the third week of November, the inventory should be ready in your own warehouses or prepared for shipment to FBA facilities by the end of the second week of November.
To avoid potential issues with FBA facilities reaching maximum capacity, it’s advisable to send your products to FBA a couple of weeks earlier than necessary and pay for the additional storage time. This ensures your items are received and ready for sale before Thanksgiving and the start of the busy holiday period. Keep in mind that being out of stock in the final days leading up to Christmas can result in significant opportunity costs, as you miss out on potential sales. Monitoring inventory levels and sell-through rates daily in December is crucial to adjust your strategy and make timely reorders if needed.
Another aspect to consider is clearing out slow-moving inventory in mid-December by offering discounts when customer demand is high. Planning for January is often overlooked, but it’s important to ensure you have enough inventory to meet post-Christmas demand. Many sellers experience stock-outs during this period, leading to lost sales. Aim to have sufficient inventory available through mid-January, as suppliers also take time to recover from the holiday season.
By taking proactive measures to manage inventory, monitor demand, and plan for both December and January, you can maximize sales opportunities and avoid costly stock-outs during the holiday shopping season on Amazon.
Fulfillment by Amazon (FBA)
To capitalize on the guaranteed pre-December 25 shopping period that Amazon offers to FBA sellers, it’s worth considering sending some inventory of your fast-moving SKUs to FBA, even if you fulfill most orders yourself. Amazon informs customers that FBA products purchased up to 2 to 3 days before December 25 will arrive in time for the holiday. In contrast, self-fulfilled products don’t receive the same messaging, putting sellers at a disadvantage during the crucial days leading up to December 25. Customers tend to prioritize purchases that will arrive by December 25 during the last 3 to 5 days of shopping. Therefore, having a strategy to utilize FBA, even if only for a few days before December 25, is highly beneficial.
Regardless of your previous usage of FBA during January through October, it’s advisable to allocate some inventory of your key SKUs to FBA in November and December. By doing so, you can ensure smooth order fulfillment without the need to hire temporary warehouse staff. Amazon’s capacity and staffing management for FBA are more efficient than most individual sellers, minimizing capacity-related challenges in your own warehouse. Leveraging FBA during the holiday shopping season in November and December can help you avoid operational headaches and maintain a seamless fulfillment process.
Pricing
During the holiday shopping season, it’s important to consider pricing your unpopular inventory competitively to attract shoppers who are purchasing gifts for others. Since demand for popular items tends to be higher, you can adjust your pricing strategy to clear out slow-moving inventory after December 12 to 15. By reducing prices, you can avoid being left with excess inventory after Christmas when demand significantly declines for both popular and unpopular items.
It’s essential to adhere to Amazon’s rules regarding price-gouging, which become stricter during the holiday season. If you price your products more than 10 to 15 percent above the stated list price, Amazon may restrict your ability to benefit from your Featured Merchant status, even if you use FBA. Keep in mind that sales conversion rates significantly decrease for offers that don’t appear in the buy box. The buy box winner receives over 90% of all sales, and your product won’t be featured in the buy box if it is never featured.
Charging more than the list price during periods of high demand involves a tradeoff between higher margins and lower visibility for your products. It’s crucial to assess what your competitors are doing with the same items and determine which approach aligns best with your business goals and market conditions.
Returns
It’s important to consider the two types of product returns that can occur during the holiday shopping season
Returns to Suppliers: To avoid being left with excess inventory after Christmas, it’s crucial to have discussions well in advance with your suppliers to determine their return policy. If your suppliers have a generous return policy, it may be beneficial to stock up a little more for the holiday season. On the other hand, if your suppliers have a limited return policy or none at all, it’s advisable to start liquidating items that are moving slower than expected around December 12 to 15. This way, you can minimize the amount of product that would take a long time to sell during the non-holiday period.
Customer Returns: With the increased number of orders during November and December, it’s important to plan for the higher volume of customer returns in January. You’ll need to have the necessary staffing and processes in place to efficiently process returns and send the returned products back to your suppliers. Additionally, it’s important to anticipate that returned items may not be in new condition and may be missing original packaging, instructions, or warranty materials. To address this, you should develop a process for reselling returned items, which may involve listing them as used condition products on Amazon or other appropriate channels.
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