3 Tips On Amazon FBA Private Labelling #Article

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Taking into account the seasonality, and pick a less seasonal commodity if necessary.

For example, let's use a common item on dropshipping platforms for Amazon FBA and AliExpress-marshmallow sticks for bamboo. They will sell about a thousand units per month during the peak months in the fall season. January and February are the slowest months, at about three or four hundred units per month. When we compare it to, say, Christmas lights, which will only sell well for two or three months leading up to Christmas, this is not that seasonal! That makes inventory forecasting very tough and makes it harmful for cashflow.

Google Trends is a fantastic free tool for testing the seasonality of one specific product or niche. It will show you how high it is over the peak months, and how sluggish it is over the low months.

Take Amazon FBA's set fees into account when pricing your product

I get quite a few inquiries from people asking me if I can contact them privately, the reality is I don't have the time to do that so I had to turn them down unfortunately. Nonetheless, a friend recently approached me to let me know that her mother-in-law has been effectively private labeling and then using the Amazon FBA software to fulfill their orders and she asked me if I could work for her. I decided to meet her and offer her advice on the product she was looking for that she would be selling.

One of the items we discussed was that she was going to have to find one while she was sourcing her next product, it had a higher average price point in it. You see, she was selling her first product for just ten dollars a unit. Clearly, selling a product at a higher price point would be good simply because you get to make more money per sale but it's a little more complicated than that.

The Amazon fees were four dollars and 52 cents, leaving her to make the product, ship it to Amazon and sell it with just five dollars and 48 cents. She made a profit but a unit was just around two dollars.

The thing I explained to her was that if she increased the average selling price for her next item, her income would rise exponentially, because Amazon has fixed prices.

You see, the $4.52 fee consists of two parts: the first part is the Amazon Fulfillment premium element-this is a charge dependent on the unit's purchase price. It had a referral fee of 15 per cent for that category for her item, so she was paying $1.50. But the second part is a fixed Amazon pick-and-pack fee, based on your weight. She charged $2.99 in her case, as her element was the least account and she charged a three cents storage charge and her set net charge was $3.02.

The referral fee will rise as she raises her price but the fixed fee is not. I explained to her that if she raises the price of her next product, the amount of money she earns would rise exponentially: at a price point of $10, she had a profit margin of 54.8 percent after fees and a profit margin of $12 – she had a profit margin of 59.8 percent and a profit margin of 64.87 percent at $15 and by selling an item at a higher average sales price she would not have been able to do so.

Generally speaking, I suggest you look for an item that has a price point of at least 15 dollars so you don't pay more than 35 percent in fees.

Be driven by data, not by "good feeling" 

I can't recommend enough to make data-based business decisions. It worries me when I talk to new sellers and they say stuff like: "My gut instincts tell me that this product is going to sell well or my buddy told me or my mom said she was online looking and couldn't find it."

Those are very dangerous pieces of advice to make decisions off of profits. Judge demand and rivalry using the hard numbers. Jungle Scout and the free tools and services do not make such data-driven decisions easier to make. Don't gamble your hard-earned money – get away with the numbers.

Here are my tips to help you pick and sell the best product, using the Amazon FBA system, a private label.




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