FOR A LIMITED TIME: Get up $5,000 in Cash Back when you get Working Capital funding. Offer expires 12/10/21. Learn more

Bullets background banner

The Complete Guide to a Healthy Amazon ROI for Sellers

Today’s eCommerce sellers are thriving. The acceleration of online sales has created the modern version of an online retail gold rush era, with no signs of slowing.

Even a glance at the stats reveals a bright future. In 2020, US-based etailers experienced an impressive 44% sales increase in Q3

During that same period, SellersFunding clients saw an average 85% sales increase compared to the previous year. SellersFunding merchants selling across borders performed even better, with a whopping 95% increase in sales.

The best part for you? 

Amazon Sellers have found a deep pot of gold! Research by market and consumer data firm Statista found that Amazon’s estimated market share in US retail eCommerce rocketed from 34% in 2016 to 47% in 2020. And in Q3 2020, Amazon made a shocking $96.15 billion dollars in net revenue.

Bottom line: There is serious money to be made on Amazon. 

But increasing your revenue is just part of the equation. To succeed at Amazon selling, you’ll need to work towards a healthy return on investment (ROI) — and a vague idea of what this number is, isn’t going to cut it.

Let’s jump into the specifics of what you need to calculate, track, and enhance in order to boost your Amazon ROI and keep your business on an upward trajectory.

What Is Amazon ROI? (And What Does It Say about Your Seller Profit Margin?)

In case you haven’t already, at some point in your Amazon selling journey, you’re going to come across the term ‘ROI’. At its core, ROI is a performance measurement. It assesses the productivity of an investment — whether that’s the number of ad conversions, or the actual net profit after a month’s worth of sales on your seller marketplace of choice. 

In Amazon selling, calculating your ROI involves taking the net profit, dividing it by the cost of goods sold (COGS), and then multiplying this figure by 100 to get a percentage amount.

For example, your Amazon ROI could look something like this:

3000 / 1500 * 100 = 200%

(Net profit) / (COGS) * 100 = ROI 

An ROI of 100% means you’ve doubled your investment, an ROI of 200% means you’ve tripled it, and so on. The higher your ROI percentage, the better you’re doing at a.) increasing net profits b.) reducing COGS or c.) all of the above.

(Psst! Not a fan of math? Don’t sweat it! Use the Amazon FBA ROI Calculator in your Amazon Seller Central account to get to your real ROI).                                                                                                                

Now that you know your actual ROI percentage (and not just some vague ball park figure in the back of your mind), you’ll want to keep a watchful eye on your Amazon profit margins and ROI to help you boost the money-making potential of your current and prospective products.

The Undercover Benefits of Amazon ROI

Did you know that over 50% of Amazon sellers generate revenue between $100,000 – $500,000?

Revenue is the starting point for Amazon selling success.

But unlike revenue, the benefits of Amazon ROI extend beyond being able to cover your business expenses or the luxury of having extra cash. A healthy ROI can be the catalyst to scaling your business because you’ll have capital to reinvest.

With a solid Amazon ROI, not only will you be able to explore more product lines, markets and advertising campaigns — you’ll also widen your funding options to help you invest back into the business on your terms. A healthy ROI will also open up more doors if you decide to sell your store in the future.

Now that you know why a healthy Amazon ROI is crucial to growing your eCommerce business, you might be wondering, ‘What’s a good ROI for Amazon FBA?’

Our answer: Aim to triple your investment. 

This will give you extra room for costs like advertising and complementary products, while leaving some extra for you to grow with.

Amazon Seller Profit Margins: What It Really Takes to Build Enviable ROI on Amazon

To lay the foundation for great ROI, you’ll first need to do a full health check-up on your Amazon business.

This will help you rectify any missed opportunities or costly bottlenecks that could rob you of your hard-earned profits. Here are a few areas to focus on.

Get a Handle on Your Amazon FBA Fees

Love it or hate it, Amazon FBA fees are the costs we incur to do business. They can vary depending on your selling plan, category, item type, and warehouse storage length. 

This can make it extremely difficult to know whether you’re being charged correctly.

While Amazon does a pretty good job of calculating fees, they aren’t perfect. So, it’s crucial you check your records.

Ensure you’re being charged the correct fees for your product according to your product category, size, and weight. 

Cross-check the amounts in Amazon’s official rate cards with the amount you’re being charged. If you suspect an error, contact Amazon support to request a re-measurement of your goods. Check out the rate card for your region here: US, UK, EU, AUS.

Also, make sure you choose the right Amazon plan for your goals. 

For instance, If you’re aiming to drive sales in your business, the professional plan is the way to go. Choosing the right plan will help you avoid unnecessary fees that cut into your profits.

Finally, think about your inventory. Develop a strategy for managing your stock, increasing sell-through rates, and decreasing refunds to keep in line with Amazon’s ever-changing Inventory Performance Index (IPI) threshold. 

NOTE: It’s crucial you keep your IPI above the threshold to avoid costly repercussions like inventory limit reductions.

Also, watch out for any stranded and poor performing inventory. 

Think about whether you need to:

  • Reduce the price of performing goods to avoid long-term storage fees (which are significantly higher than monthly storage fees).
  • Run promotions to generate more sales and reviews.
  • Fix stranded inventory listings to start generating sales from your product.
  • Check the address on your removal order to avoid your goods being marked abandoned stock and disposed of.

Taking an analytical approach to your Amazon FBA fees will help you avoid penalties that can drain you of your ROI.

But in a capital-intensive business like Amazon selling, FBA fees aren’t the only cost to keep an eye on. It’s also important that you stay up-to-date on your expenses to avoid cash flow issues and synchronize your balance sheet with your biggest Amazon ROI goals.

Let’s look at some of the other areas to review and optimize for peak Amazon ROI.

Use Technology to Drive Growth and ROI

If you’ve spent any amount of time in eCommerce, you’ve probably received an avalanche of advice on how vital it is to tap into tech tools that help you: gather accurate data, deploy the best keywords, launch timely promotions, get more reviews and more. 

But beware. Subscriptions may not look like much, but over time they can add up to eye-watering amounts.

Our advice? Avoid overkill. 

The right technology can be a big help in maximizing your ROI on Amazon. But do you really need three keyword research tools. Or can you work with one?

Question every expense to ensure each of your subscriptions adds significant value to your Amazon business. You might even want to set a repeating calendar task to review your subscriptions on a quarterly basis and cancel any that are not adding value.

Negotiate Better Rates with Your Suppliers and Freight Forwarders

As your sales volume grows, your next move is to renegotiate stock pricing.

Speak with your suppliers to establish better rates. Then, do the same with your freight forwarders.

For example, can they freeze the amount you pay in shipping once you hit a certain cubic meter or weight?

Be fair in your requests so you don’t damage the relationship, but remember that it doesn’t hurt to ask. One simple shift in terms can be a great way to raise your ROI with minimal effort.

Avoid Bad Exchange Rates and International Transaction Fees (Like The Plague)

Every Amazon Seller who’s been there knows that whatever you do, you don’t want to get trapped by sky-high exchange rates and fees — these will absolutely cut into your profits and ROI.

Luckily, there are now numerous options for receiving and executing payments affordably (our Digital Wallet is just one option that can help you save a ton of cash). 

With the right tool, you can receive revenue from various sources like marketplaces, platforms, customers, and even your own bank account in up to 37 different currencies at the lowest possible cost (and almost always significantly lower than what Amazon charges to convert your currency for you).

Don’t settle for outrageous fees. Click here to find out more about how Digital Wallet can help boost your ROI!

Optimize Your Ads to Drive Down Your ACoS

In the game of eCommerce, all it takes is a few unprofitable ad campaigns and before you know it, you’re hemorrhaging money.

Underperforming ads cause your Advertising Cost of Sales (ACoS) to skyrocket, putting a ton of negative pressure on your Amazon ROI. So if you’re looking to boost that net profit percentage, you’ll want to get your ad campaigns in order, stat.

Once you’ve found and validated your target keywords, focus on optimizing sales to increase your ad conversions. The average Amazon PPC conversion rate stands at 9.95%, CTR at 0.41%, and CPC at $0.71. Aim to reach these numbers or better!

If you don’t have the skill set to run profitable ads and aren’t interested in learning, seek help from an Amazon marketing agency or consultant. Also, don’t be afraid to look for other ways to advertise, like influencer marketing on social channels such as Instagram and YouTube. You could even try out Facebook and Google ads as your sales climb.

Remember, having a diversified marketing strategy that lets you test and track different channels will help you improve your overall ROI over time.

Improve Your Listings (and Products!)

Amazon sells over 12 million products — and that’s excluding services, wines, books, and media.

Improving your listings is essential for standing out amid the noise and winning the attention of potential buyers. Since customers can’t see or touch the items in real life, listings are their way to experience your products before hitting the ‘buy’ button.

Make their experience memorable by investing in showstopping images, infographics, and benefit-driven descriptions.

One more thing: As sellers, we often spend so much time thinking about our listings and ads that we neglect the main star of the show, our products! 

Remember, you can improve your product continually and incrementally. This will help you attract new buyers and keep your existing customers happy, all while boosting your sales and ROI.

Shop Around for an ROI-Friendly Funding Partner

The leading cause of small business failure is a lack of cash flow, with a shocking 82% of owners citing cash flow problems as the reason they closed their doors for good.

Thanks to innovations in the funding industry, it doesn’t need to be this way. Look around for specialized eCommerce funding options that will meet your business needs, while keeping you on a steady path toward healthy ROI.

Here are a few things to look for to make sure you find the right funding provider for your Amazon business.

Competitive Interest Rates and Low Fees 

Fees and interest rates can rack up quickly, ensure your funding solution is fair and affordable with no tricky terms or unclear approval processes.

Flexible Credit Limits & Quick Turnaround

Look at the funding provider in question and ask:

  • Do they have flexible borrowing limits, lengths, and repayment amounts?
  • What does the repayment schedule look like?
  • How does it stack up against funding from Amazon Lending?
  • Can they approve funding requests quickly?

Whether it’s buying in bulk to prepare for Q4, getting ahead of the Chinese New Year, or jumping into a new market or product line at just the right time, flexibility in funding is key.

These factors are crucial to ensuring your business maintains the working capital it needs to grow and generate a healthy ROI on Amazon, no matter how big your growth goals.

Proven Track Record 

Your funding provider should have specialized experience working with growing eCommerce businesses (bonus points if they’ve been there themselves). This will ensure they understand the unique challenges you face as an eCommerce owner and have purpose-built products to support your growing business.

Integrity

The last (but hardly the least) item on your funding provider ROI checklist is good old-fashioned integrity. 

Just because traditional banks aren’t usually an option for eCommerce sellers, doesn’t mean you can’t have the kind of warm, personal relationship you’d expect from a local lender.

Look for a funding partner with a strong emphasis on customer success and don’t be afraid to conduct a background check on prospective lenders. You need to know with 100% certainty that they take values like honesty and ethical trading seriously, and that they haven’t been involved in any situations that could bring your own integrity into question.

Cash Flow Is King When it Comes to Healthy Amazon Margins

For sellers who know how to make the most of it, Amazon is the gift that keeps on giving. But to succeed, you’ll need more than steady revenue — generating consistent ROI is a must.

To achieve this goal, keep a keen eye on things like your FBA fees, costs, supplier relationships, inventory limits, marketing expenses, listings, and products.

Remember that just like sales and expenses, Amazon ROI fluctuates. Focus on improving your approach continuously, and you’ll be well on your way to the kind of ROI that keeps your Amazon shop moving in the right direction.

Need ROI-friendly funding? SellersFunding’s Credit Line may be just the thing. We offer eCommerce businesses the capital they need to reinvest in their business on their terms. Check it out for free today!

How to Grow Your Sales with Amazon Subscription Boxes

Subscription boxes have sprung into the limelight in recent years. Whether it’s a beauty addict getting their fix of the latest glow up products or an expert time-saver getting their monthly essentials delivered on auto-pilot, Amazon subscription boxes offer something for everyone. 

In fact, the subscription box market is growing fast. According to research by UnivDatos Market Insights, the market for subscription boxes is tipped to grow an additional 68% to reach a jaw-dropping $478 billion by 2025.

In typical Amazon fashion, the eCommerce giant sought to claim its slice of the subscription box pie by launching its ‘Subscribe and Save’ subscription service model in 2007 — and it’s been a hit ever since.

Amazon’s subscription services (including Prime) made a staggering $19.21 billion in revenue in 2019, around 20% of its total revenue. Not only that, research by Hitwise (now a division of Connexity) found that 58% of eCommerce subscription buyers were Amazon shoppers, doubling the odds they’ll buy on Amazon.

If that weren’t enough to convince you that subscription business is good business, there’s also data showing that Amazon’s subscription buyers are more engaged and ready to spend.

A study by Consumer Intelligence Research Partners found that Amazon’s subscribed buyers spend $600 more than those not subscribed to any services.

Clearly, Amazon has cracked the subscription box code — and there’s still room for creative sellers to get in on the action.

But what does it really take to succeed as an Amazon subscription box seller? Let’s find out.

What Are Amazon Subscription Boxes Anyway?

Amazon’s subscription service, ‘Subscribe and Save’ allows customers to sign up for deliveries of items they frequently use at a promotional price for regular, repeat purchases.

Here’s how it works:

  • Amazon operates a tiered discount system ranging from 5-15% (with the bill footed to you, the seller). Plus, any offers your store is running at the time of purchase will also be applied to the order. 
  • This discounting strategy removes a nice chunk of change from what the customer would have bought anyway, adding to its appeal for buyers. 
  • To seal the deal, Amazon offers free FBA deliveries on all subscription orders and a commitment-free guarantee.

This smart combination of excellent customer service, markdowns, and convenience is how Amazon lures buyers in and keeps them.

Ready to sign on the dotted line for your business? 

Wait one second. There is a catch.

Amazon ‘Subscribe and Save’ isn’t open to every seller. There are specific requirements you must meet in order to qualify for enrollment. 

Aside from requiring that your selling account is in good shape, and that you are the brand owner of the items you wish to enroll in the program, Amazon will judge your eligibility using four criteria:

  1. Fulfillment history and in-stock rate
  2. Sales performance
  3. Product category
  4. Average selling price

You can read more about what it takes to get accepted into Amazon’s ‘Subscribe and Save’ program here.

Selling Subscription Boxes on Amazon: Is It Really Worth It?

If you’re the skeptical type, you may look at the Amazon subscription box model and think, ‘All these benefits sound great for the buyer, but what’s really in it for me?’

As the seller you are sacrificing a significant chunk of your revenue to discounts, after all.

Luckily, the benefits of enrolling in Amazon’s ‘Subscribe and Save’ program aren’t one-sided.

Let’s breakdown its top advantages:

Explode Your Customer Lifetime Order Value

Whether your buyer is aware or not, a subscription to your product in order to snag a deal and have one less task to worry about makes them loyal to your brand until they decide to cut ties.

This in-built repurchasing model increases the lifetime order value of the customer exponentially. Research has found that each dollar or pound put into Amazon subscription boxes generates a 7X ROI on average.

Boost Your Customer Acquisition Rate and Sales

An Amazon subscription service is an excellent customer acquisition strategy as it allows you to cast your net wider to reach more customers, as well as different types of customers.

For instance, research has shown that 52% of UK 25-34 year-olds have signed up to at least one subscription box. Since this age bracket is already using subscription boxes and is likely to include working professionals, your discount could be just the thing that reels them in while they’re window shopping.

On the flip side, the same study found that 12% of 55-64 year-olds and 8% of consumers aged 65+ have one or more subscription boxes. These demographics tend to be in the late stages of their career and likely in management positions, or have multiple commitments.

Those taking advantage of subscription services are probably looking for a predictable, convenient service that’ll lighten the life admin burden — which is where your Amazon subscription boxes can step in and save the day.

Steadiness on the eCommerce Ride 

It’s a fact that the eCommerce market is performing exceptionally well. But this doesn’t mean it’s without its faults, such as high return rates and long waits for payouts — both of which can kill your cash flow.

Having a recurring source of revenue in a product-based business is something to be proud of. Consistent income can inject stability into your business, lessening the effects of the natural peaks and troughs inherent in selling online.

Recurring revenue can also lay the foundation for other business initiatives like providing the capital needed to invest in new products and marketing channels.

It’ll also help you keep your sell-through rates in line with Amazon’s Inventory Performance Index (IPI) requirements.

This setup can have positive knock-on effects for your business. For instance, once you’ve built up a good IPI score, Amazon may remove inventory limits from your account. From there, you can reduce the amount of money you spend on third-party logistic companies and increase your ROI.

Get Your Brand Noticed 

Amazon’s ‘Subscribe and Save’ model gives you what every business wants: more eyeballs. 

The additional exposure increases your pool of potential customers, which can boost your brand awareness (and sales!).

The more traffic you have, the higher your chances of converting these leads and accelerating your sales volume. This additional traffic can also solidify your reputation by helping you become more well-known in your niche.

For example, Bio Schwartz, a supplements company, reported an increase in repeat customers from 10 to 30% upon enrolling in the program and selling its Amazon monthly subscription boxes.

The Amazon subscription box model is also a great way to lure in new customers.

For instance, a subscription box could work well for customers eager to try different types of snacks, but unsure where to start. It can even capture the attention of thriftier shoppers who may have passed on your item for another store because of a great deal or promotion.

Also, Amazon regularly features the best performing offers on its dedicated Amazon Subscription Boxes page, which is yet another avenue for new customers to discover your brand.

Grab that Buy Box! 

Registering your products on Amazon ‘Subscribe and Save’ boosts your chances of securing the coveted Buy Box. 

This is because the brands that can use the ‘Subscribe and Save’ button are brand owners enrolled in Amazon’s subscription service.  Amazon will help you draw attention to the changed button. For example, once you’ve enrolled on Amazon’s subscription service, your buy button will automatically default to the ‘Subscribe and Save’ option to draw more potential buyers’ to it.

Customers love Amazon subscription boxes, and Amazon awards the Buy Box based on factors like quality of customer service, price, shipping options, and seller rating. 

The Amazon subscription box’s popularity and the superior service it provides automatically places your business in a better position to win the prized Buy Box.

3 Top Selling Subscription Boxes to Inspire Your Own

Now that you have a clearer picture of what Amazon’s monthly subscription boxes can do for your business, it’s time to get your creative juices following. 

Don’t be afraid to think outside the box for ways to increase the value of your boxes. 

For example:

  • Bundling other useful items with your main product
  • Creating a bundle of the same product but with different quantities
  • Offering a free digital download with tips on how to get the most out of the product or reach a particular goal related to the product

To give you some inspiration, let’s take a peek at some top brands that have nailed their product strategy and created top selling subscription boxes on Amazon.

FaceTory

This skincare brand taps into their target buyers’ curious, beauty-conscious mind by bundling the latest Korean face masks at affordable rates.

This brilliant mix keeps customers engaged by enabling them to explore the brand’s trendy product offering. This approach could also lead to repeat purchases of their favorite products later on down the line.

The Simple Loose Tea Company 

This brand brings adventure to their potential customer’s doorstep by enabling them to taste various teas from around the globe. 

The Simple Loose Tea Company has capitalized on the customer’s desire to ‘try before they buy’ by offering a low-cost ‘sampler’ subscription box option.

This strategy offers a great way to capture people who don’t want to commit without knowing what their buying options are.

Once these buyers have discovered the teas they like, they can progress down the customer journey to buy larger, more precise boxes.

Sock Fancy

Sock Fancy uses the element of surprise bundled with tons of color to brighten up their subscription holder’s day.

Subscribers can look forward to one surprise sock each month in vibrant colors and bold patterns. 

Props to Sock Fancy for finding a way to make the average sock something to get excited about. Plus, they have dedicated sizing for men and women.

Ready to Start Your Own Subscription Box Service? The Time to Act Is Now!

With more and more people signing up to subscription boxes, it’s clear they are here to stay and slay the eCommerce market.

The great news for sellers is that this market shift opens up a simple, cost-effective way to get the upper hand over your competitors and raise your business profile by selling subscription boxes that add value through discounts, convenience, and of course — excellent customer service.

To make a lasting impression, get creative with your bundles to make signing up a no-brainer for customers. 

And if you need some extra funds to get started, we can help. SellersFunding’s Working Capital solution can help you invest in new product lines like subscription boxes and complementary products to keep your business growing. 

Sign up today and find out how SellerFunding can help you win at Amazon selling.

I Just Found Out I Need Insurance to Sell on Amazon? Now What?

I Just Found Out I Need Insurance to Sell on Amazon. Now What?

I Just Found Out I Need Insurance to Sell on Amazon? Now What?

February 24, 2021

Ashlin Hadden

Protect your ASSETS because you should AND because Amazon Requires it.  

Most new sellers start out thinking they can just sign up for an account and start making millions like all the TikTok and YouTubers say. But what you forget is that there are expenses that go along with running your own business.  

And yes, an Amazon 3rd party seller is your business!  

A huge mistake you can make is when you signed Amazon’s Terms of Service (TOS) agreement, it states you must have insurance and that you will provide it at any time to Amazon. So, what happens when you don’t have insurance and can’t provide proof? 

 

What is required by Amazon 

If you have a Professional Selling Plan, Amazon requires you to have General Liability Insurance. The requirement states: 

“Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include products liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Participation Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.” 

 

What are the insurance requirements?  

Your commercial liability insurance policy must meet all of the following criteria: 

  • Policy limits must be at least $1 million per occurrence and in aggregate, covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury; 
  • Policy must cover your sales through the Amazon.com website;  

 

But what does all that mean? 

Blah Blah Blah, buy an insurance policy. They want you to have a general liability policy that covers up to $1MM in damages if one of your products harm someone.  

All jargon aside, we know you take pride in your products and strive to sell only the best to your customers. But in the event that one of your products malfunctions, causes a reaction or causes any other harm, you’ll want to protect your business against a lawsuit. 

This is where liability insurance comes in. 

 

Why is Amazon doing this? 

Time after time, Amazon keeps getting sued for faulty goods and are being held liable for 3rd party seller’s products. If they require you to have an insurance policy and list them as additional insured, your insurance will help pay for the lawsuitnot just Amazon.  

Amazon has lost several recent legal decisions that hold it liable for defective products. 

 

Want to know more?

Join Ashlin and SellersFunding for a free webinar “Amazon Sellers Insurance: What You Need to Know” on Thursday March 18th at 11am ET. Register Now to save your spot! 

About Ashlin Hadden 

Her agency, Ashlin Hadden Insurance, focuses solely on eCommerce sellers. She has spoken and attended at over 40 conferences, is in the Facebook groups and has even walked the Canton Fair with clients to see how they were sourcing. She is your one stop shop for eCommerce insurance. 

I Just Found Out I Need Insurance to Sell on Amazon? Now What?

Protect your ASSETS because you should AND because Amazon Requires it.  

Most new sellers start out thinking they can just sign up for an account and start making millions like all the TikTok and YouTubers say. But what you forget is that there are expenses that go along with running your own business.  

And yes, an Amazon 3rd party seller is your business!  

A huge mistake you can make is when you signed Amazon’s Terms of Service (TOS) agreement, it states you must have insurance and that you will provide it at any time to Amazon. So, what happens when you don’t have insurance and can’t provide proof? 

What is required by Amazon?  

If you have a Professional Selling Plan, Amazon requires you to have General Liability Insurance. The requirement states: 

“Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include products liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Participation Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.” 

What are the insurance requirements?  

Your commercial liability insurance policy must meet all of the following criteria: 

  • Policy limits must be at least $1 million per occurrence and in aggregate, covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury; 
  • Policy must cover your sales through the Amazon.com website;  

But what does all that mean? 

Blah Blah Blah, buy an insurance policy. They want you to have a general liability policy that covers up to $1MM in damages if one of your products harm someone.  

All jargon aside, we know you take pride in your products and strive to sell only the best to your customers. But in the event that one of your products malfunctions, causes a reaction or causes any other harm, you’ll want to protect your business against a lawsuit. 

This is where liability insurance comes in. 

Why is Amazon doing this? 

Time after time, Amazon keeps getting sued for faulty goods and are being held liable for 3rd party seller’s products. If they require you to have an insurance policy and list them as additional insured, your insurance will help pay for the lawsuit, not just Amazon.  

Amazon has lost several recent legal decisions that hold it liable for defective products. 

Want to know more?

Join Ashlin and SellersFunding for a free webinar “Amazon Sellers Insurance: What You Need to Know” on Thursday March 18th at 11am ET. Register Now to save your spot! 

About Ashlin Hadden 

Her agency, Ashlin Hadden Insurance, focuses solely on eCommerce sellers. She has spoken and attended at over 40 conferences, is in the Facebook groups and has even walked the Canton Fair with clients to see how they were sourcing. She is your one stop shop for eCommerce insurance. 

Amazon Out of Stock: Exactly What to Do to Replenish Your Inventory and Never Let This Happen Again

Never go out of stock.

But despite your best efforts, it’s still possible you’ve endured the ultimate hair-pulling experience: Inventory starts falling, replacements aren’t coming in, and then it happens—you’re out of stock.

Worse, you’re “Amazon out of stock”.

Now, you’re in Amazon’s bad books, and it could cost you. That’s because in Amazon’s eyes, going out of stock creates a poor customer experience and signals that your business can’t be relied on to keep their customers happy.

And there’s no way to sugarcoat it, the repercussions can be harsh. From losing sales or your prized Buy Box, and even suspension for repeat out-of-stock offenders—this is a situation you never want to be in. At least, not more than once.

The first thing to know if you’ve gone ‘Amazon out of stock’ is that it’s not always your fault. According to market and consumer research firm Statista, Amazon receives more than 200 million unique site visitors each month. That’s a lot of people to serve!

Even the most advanced Amazon sellers have trouble keeping up.

But not all is lost. With a proactive attitude, iron cast strategy, and a dash of creativity, you can keep your Amazon inventory in line, starting now.

Let’s get into some of the ways you can achieve inventory mastery to grow your business and never again go out of stock on Amazon.

First, Know How You Got Here

While it’s no consolation for the extra work and stress, working out why you hit Amazon rock-bottom can set you up for successful inventory management in the future.

Let’s look at some of the most common problems:

  • Peak season woes – Crisis and peak periods can make stock management challenging even for a seasoned pro. The holiday Q4 is notoriously unpredictable on Amazon, with sales growing year-on-year. For example, during its 2019 Q4 buying frenzy, Amazon raked in a whopping $87.4 billion in revenue and $3.3 billion in net profits—that’s an increase of 21% compared to 2018’s Q4 results.
  • Unforeseen changes to Amazon’s terms – Hop into Amazon’s forum, and it won’t be long before you see people complaining about the ever-changing terms of service that cause major headaches for sellers. For example, when COVID-19 hit, Amazon temporarily stopped accepting non-essential items into its warehouse. This unavoidable issue had even the most diligent sellers struggling to stay in stock.
  • Sloppy inventory management – Whether innocent ignorance or downright laziness, poor supply management skills will have you out of inventory faster than you can say the word ‘stock.’

One of Amazon’s more recent changes was inventory limits, which are now influenced by your Inventory Performance Index (IPI). Your IPI assesses four key metrics to determine your account’s health before confirming your inventory storage allowance—it’s definitely something to keep an eye on moving forward.

No matter how you got here, the goal is to get yourself out of this situation as quickly as possible. Here’s what to do next.

Amazon Out of Stock: What to Do When Your Worst Nightmare Comes True

First thing, don’t panic. There are specific steps you can take to rectify the situation and get back in Amazon’s good graces.

Here’s what you need to do:

Call in Reinforcements from Your Suppliers

As soon as you get that pesky ‘out of stock’ notification, you know you need to act fast. The first step is to get your replenishment order on the road ASAP. 

Be sure to call your supplier directly to express the urgency of the situation and find out if they can produce your goods quicker, without compromising quality or safety standards.

To get your items into Amazon’s warehouse faster, you can send some of your inventory by air. But be careful because this can get expensive. The amount you air cargo should be enough to cover the maximum shipping time of your chosen transport method, plus an extra two weeks’ worth of buffer stock in case any delays occur.

This will bridge the inventory gap while the bulk of your order makes its way to Amazon by sea and is then processed by Amazon.

Temporarily Hike Your Prices

Raise your prices so that they’re higher than your competitors’. This will act as a deterrent to buyers because many people window shop before purchasing and are more likely to go with the better deal.

To avoid being flagged by Amazon for price gouging, make sure the change is significant enough to be noticed, but not significant enough to be called ridiculous.

A week or so before your goods arrive at Amazon’s warehouse, you can begin reducing your prices. Do this in small increments, spaced out over time.

A listing with significant drops in price can trigger Amazon’s alarm bells if done over a short period of time. This can lead to a price alert problem and can even result in having listings removed from featured product promotions. So, like all things Amazon selling, you’ll want to proceed with caution.

Switch to Fulfilled by Merchant (FBM)

Temporarily Amazon out of stock? Switch your account to FBM and start fulfilling orders yourself. This may be a bigger challenge if you’re a dropshipper, but it’s still achievable if you can get some domestic stock to your address until your FBA stock arrives.

Seek help from an external fulfillment center or even your internal team. Just be sure to give your staff a realistic end date and explain that this is an ‘all-hands-on-deck’ moment for the business. This will help you avoid issues with your team, which can further delay your recovery plan.

And, yes. It is true that your rankings may fall slightly since Amazon prefers FBA sellers with swift delivery times and solid customer experience. But at least you’ll have a means of getting revenue back into your Amazon business and can avoid being entirely out of stock.

Set a Restock Date or Apply the ‘Holiday’ Setting in Your Store

If you find yourself Amazon out of stock, you can switch on the ‘temporarily out of stock’ notice by setting up a restock date in your Amazon Seller Central account.

This will allow you to take back-orders for up to 30 days before your stock lands in Amazon’s warehouse.

Alternatively, if you can get a new batch of goods to Amazon within three days, there’s the option to turn on the holiday setting. This will make your listings inactive and hide them for 36 hours.

Here are the exact steps to take: 

  1. Go into your Seller’s account and click ‘Settings’, and then ‘Account Info’.
  2. On the ‘Seller Account Information Page,’ click the hyperlink ‘Going on holidays?’
  3. You’ll then have the option to either make all your listings in all your marketplaces inactive or choose specific marketplaces to deactivate.
  4. Click ‘save’

And, that’s it!

Now that you’re safe for 36 hours, go get your emergency stock to Amazon, stat!

How to Never Run Out of Stock on Amazon Again

While it may at times feel like going out of stock on Amazon is inevitable, you can avoid it completely with the right strategy, tools, and attitude.

Once you’ve replenished your inventory and are safely out of crisis mode, sit down and develop a plan to make sure this never happens again.

Become a Sales Forecasting and Inventory Management Ace

As an Amazon seller, it’s vital to invest in sharpening your sales forecasting and inventory management skills.

Acquiring a strong aptitude in these areas will be invaluable for fine-tuning your stock orders and scaling your business. Plus, they’ll save you a lot of money and sleepless nights.

And you don’t have to do it alone. With the right tools, managing tedious inventory tasks with spreadsheets and emails can be a thing of the past.

Not only is Amazon’s recommended ship date for restocks incredibly accurate, but there’s also plenty of software to help you predict your stock requirements with greater accuracy, such as Sellics and Brightpearl. You can even set up automatic stock reorders that activate when a specific inventory threshold is reached.

Lean into these tools to gather insights on your Amazon store that will help you make accurate, data-driven decisions and never go out of stock again.

Craft a Robust Inventory Management Strategy (and Get Busy Executing It)

Businesses can avoid many issues with proper planning. Unfortunately, most of them still fail to make and implement a plan.

In one seminal study, Harvard Business School found that an astonishing 90% of companies fail to implement their strategies successfully, and 86% of leadership teams dedicate less than one hour per month discussing strategy.

Spending less than an hour a month on strategy isn’t going to do a whole lot for any business, let alone Amazon sellers.

Once you’ve laid a strong educational foundation, you’ll need to figure out how to consistently replenish your stock and stay ahead of the eight-ball on Amazon. Document and share your new strategy with your team and schedule regular monthly, quarterly or seasonal check-ins to review how the strategy is performing.

The beauty of this approach is that it will allow you to optimize through incremental changes, while preventing you from being the bottleneck since your staff will now have access to a defined plan of action.

There are three main areas your inventory management strategy should include.

1. Think ahead when ordering stock 

While it can be easier and more cost-effective to send inventory from your supplier to Amazon’s warehouse, it leads to a dangerous guessing game of when to reorder.

Shipping by sea from countries like China has lead times of up to 50 days, so waiting until the last minute is risky. It leaves no room for production issues, port closures, customs backlogs, and Amazon warehouse processing delays—all things that are par for the course in any eCommerce business.

Instead, set a minimum ‘in stock’ number. Use your forecasting tools to work out the date you’ll reach this figure, then place a refill order 6-8 weeks before that date.

Also, be sure to order more than what you’ll be sending to Amazon directly. You’ll need some product for restocking and the rest for your backup plan (which we’ll dive into shortly). Double your usual order, and you should be covered.

2. Partner up with a reputable Third-Party Logistics (3PL) company 

To slash your lead times for stock replenishment, enlist the help of a 3PL company to send some goods to a domestic warehouse.

Since 3PLs can feed your stock into Amazon and send you inventory level notifications, you can almost eradicate Amazon out of stock issues completely simply by bringing a trusted 3PL into the mix.

3. Have emergency supplies at the ready

As the saying goes: ‘Stay ready, so you don’t have to get ready’. Apply this mindset to your Amazon stock management strategy and you’ll have way fewer headaches in your future.

Here’s what an ‘Amazon out of stock’ ultimate backup plan could look like:

  • Keeping inventory in your home or personal storage
  • Ordering raw materials and packaging to assemble
  • Having a local supplier that you can order small stock batches from
  • Pulling stock from another outlet you own and replacing it once your bulk order arrives (i.e., an eBay or retail store)
  • Securing a line of credit limit to replenish inventory when cash flow is tight

No two eCommerce businesses are the same, and there are many feasible routes to take. Choose the options you can stick with and those that will cause the least disruption to your business.

Amazon Seller Inventory: Your Game Plan Is Key to Your Growth Goals

Going out of stock is a hair-raising experience. You’re in a battle to save your business’ revenue, growth momentum, and the brand you’ve worked so hard to build.

It’s a tough road to recovery, but with good planning and razor-sharp execution, you can get back into the Amazon good books.

Have you managed to dodge the Amazon out of stock bullet so far? Good for you! You can keep this up through solid preparation, starting with the tips outlined in this guide.

If you’re looking for funding options for the next stage of your Amazon journey, SellersFunding’s Credit Line solution can help. We help eCommerce businesses like yours secure working capital for full control of their inventory.

Don’t wait for an Amazon out-of-stock disaster. Take control of your business today by securing the funding you need to optimize your inventory management and thrive. You can start here with zero strings attached.

The Importance of Amazon Customer Reviews and How to Get Them

Why Are Amazon Reviews Important?
One of the main features Amazon introduced to the marketplace world was the customer’s feedback on Amazon for its sellers. This simple review feature, added to the internet power of giving everyone instant access to information, changed the game. But beware! The power it gave to consumers to hurt businesses is way greater than the power it gave businesses to lure consumers in.
Adding to that, the number and overall quality of the reviews your products generate goes a significant way toward determining where they appear on Amazon’s product lists. The Amazon platform has millions of sellers, with many offering the same products, and an essential part of how Amazon separates the wheat from the chaff is to push the sellers that garner the best reviews. At its core, Amazon wants to offer a convenient, reliable, and good-quality experience for online shoppers, and the best way to do that is to promote the sellers that its users deem to be the best. 

Psychological Study from Association for Psychological Science371321-636283011013428914-16x9

“We found that people were biased toward choosing to purchase more popular products and that this sometimes led them to make very poor decisions,” says researcher Derek Powell of Stanford University, lead author of the study.

The researchers wanted to see how people would actually use review and rating information when choosing a product. In one online experiment, 132 adult participants looked at a series of phone cases, presented in pairs. The participants saw an average user rating and total number of reviews for each phone case and indicated which case in each pair they would buy.

Across various combinations of average rating and number of reviews, participants routinely chose the option with more reviews. This bias was so strong that they often favored the more-reviewed phone case even when both of the options had low ratings, effectively choosing the product that was, in statistical terms, more likely to be low quality.How-to-Get-Amazon-Reviews-the-Right-Way

It’s About Product Rankings
The number and overall quality of the reviews your products generate goes a significant way toward determining where they appear on Amazon’s product lists. The Amazon platform has millions of sellers, with many offering the same products, and an essential part of how Amazon separates the wheat from the chaff is to push the sellers that garner the best reviews. At its core, Amazon wants to offer a convenient, reliable, and good quality experience for online shoppers, and the best way to do that is to promote the sellers that its users deem to be the best.

People Trust Amazon Reviews
55 percent of shoppers use Amazon reviews to research products, and that includes people who may be standing in a physical store in front of the product they’re interested in buying. What this underlines is that people deeply trust Amazon reviews, and they’re more likely to believe and act on the information they find on the platform.

More Reviews = More Sales
The reason people trust Amazon reviews so much is that the platform takes a great deal of care in weeding out fake reviews. Add to this the fact that Amazon’s algorithms afford more weight to detailed, longer reviews, and it’s easy to understand why good reviews for your Amazon products are paramount to building trust and increasing sales.

How to Generate Amazon Product ReviewsTurn-Online-Shoppers-760x380

The Amazon Feedback System
We’ve all received those post-purchase emails from Amazon, but what many sellers don’t realize is that they can customize the emails to encourage reviews.

However, it’s important to know that you shouldn’t actively ask for positive reviews, as this is something Amazon doesn’t like. Instead, ask for ‘feedback’ in a positive tone. If the product and buying experience was good, then you’ll generate the good reviews you seek without having to ask for them.

Use Inserts
An excellent way to remind a buyer that you’re a business that relies on reviews for success is to include inserts in the packages you ship out.

An insert that tells the buyer about your business and who you are has a good chance of fostering a review – and it also keeps your business in the customer’s mind for longer. When a customer feels more connected to your brand – as they should after receiving an order that meets or exceeds their expectations – they’re more likely to go the extra mile and leave you a glowing review.

Amazon’s Big Three
When it comes to the types of reviews Amazon prefers – and these are things the platform users to determine the ranking of your product – there are three key things you need to know.

  • Amazon puts more weight on Verified Purchase reviews than other types of reviews. The platform knows these types of reviews are genuine, so they consider these reviews as the gold standard.
  • Secondly, Amazon prefers reviews that are longer and more detailed over shorter reviews or simple star ratings. Again, the platform sees these reviews as a more authoritative source and will take them into account when ranking your product on search results.
  • Lastly, the platform loves photo and video reviews or attachments. These elements provide real insight for other potential customers into the benefits and features of a product – which is great for Amazon and great for the business generating the review.
ecommerce-precauciones-e1481848384762

Special Note: Careful of competitors

  • Reading comments on groups specializing in Amazon Sellers, we found a tricky way one seller was hurting another seller’s business. Seller A created a listing for product X and sent 32 units to FBA. They also enabled orders up to 32 units. Makes sense, right? 32 units for sale, hopefully, one buyer comes and buys the whole thing. In this case, it critically backfired.
  • Seller B (their competition) bought all 32 units of the product, making it unavailable (damaging Seller’s A rating and probably losing the Buy Box), and then opened a return request, waited until the last day, and returned all items.
  • What happened? Seller A lost the Buy Box, got its rating damaged, got out of product, out of money (payment delay), and returned their product a few days later. In all, you can spend 21-30 days in this cycle and lose a lot of money.
  • What to do? NEVER make it possible to buy your whole inventory in one transaction. Set a limit and monitor your inventory regularly.
Capa Linkedin2

Sources:
https://www.psychologicalscience.org/ 
https://www.eurekalert.org/
https://www.forbes.com/