How to Start a Profitable Business on Amazon – Guest Post

The following is a guest post by Mark Armstrong. Mark started off as a business consultant for small SEO and web design companies. Eventually, his heart went towards e-commerce and all the awesome things that are happening in that niche. He has a plan on creating his own website but for now, he is focused on reaching out to people with a similar mindset and getting his name out there.

The reason why FBA (fulfillment by Amazon) is such a revolutionary program is due to the fact that it made online trade (and trade in general) simpler than it ever was before. In fact, this feature is on a rapid rise in popularity and this year alone there are 1,029,528 new sellers on the platform. In the past, there was a belief that the use of a third-party marketplace is a stepping stone or a temporary move but this is no longer the case. Amazon went above and beyond to allow its users to customize and improve their presence in order to persuade them to see this marketplace as a permanent solution. Nonetheless, getting there is much easier if you have a solid start. Here are some tips that could point you in the right direction.

1. Finding the right product

As soon as you pick the niche (which is somewhat subjective), you’ll be faced with the most important task of them all – picking the right product. Here, there’s no one-size-fits-all solution but there are some factors that could make your life a lot easier. For instance, an item that’s light in weight is easier to transport, whereas an average product sale price that’s between $10 and $50 tends to be the most profitable.

Also, when inspecting other products, you need to check the number of monthly searches of their top 3 keywords. Ideally, you would see over 100,000 searches per month. One last piece of advice that a lot of people tend to forget about is the question of whether it’s a seasonal product or something that generates revenue all year round. Remember, there’s no right or wrong here but the degree to which these fit your plans may vary.

One of the things that you won’t hear that often is the fact that China is probably the fastest-growing market on Amazon. In fact, its share is about 25 percent of the Amazon marketplace and there’s a growing number of sellers from this region (especially in Hong Kong). Therefore, finding an item that sells well in China might give you a boost.

2. A frugal start

The main reason why FBA is such a popular feature is due to the fact that it allows you to launch with as little as $2,000. This means that you can enter the business world without selling assets or getting in debt. In fact, you can use this program in order to amass an initial capital, regardless if you aim to make your own e-store later on or remain on Amazon for good. Still, just because your break-even point is close, this doesn’t mean that you can afford to underestimate or ignore it. Therefore, you should make all the necessary steps to cut your operational costs even further.

The first idea you need to consider is the notion of drop shipping, which allows you to trade in items without having to purchase them first or keep them in storage. Of course, this minimizes your profit per unit but it also insulates you from the risk of overinvesting in a product that people aren’t interested in. It also allows you to keep your logistics much simpler, due to the fact that you don’t actually have to handle the issue of storage yourself. One more thing you can do to minimize the cost is to find a local manufacturer and supplier. Here, the term local refers to the proximity to your customer, especially if you’re trading in a foreign market.

3. A good return policy

Perhaps the most important reason why you need your own e-store, other than avoiding the fee, is the fact that there are so many fake items on platforms like Amazon. This somewhat ruins the reputation of the platform and causes a general audience to be less trustworthy towards those using this business model. Needless to say, the only way to avoid this is with the help of a good return policy. Nowadays, this process can be automated and facilitated with the use of an Amazon refund tool.

What you need to consider is the fact that by offering a refund for your products you A) demonstrate that you are confident in their quality and B) have respect for your customers. This way, you’re also demonstrating that you’re more interested in maintaining a good relationship with your customers than making a one-time sale. Also, a person returning the product is usually not satisfied with it and offering them a full refund might, potentially, prevent them from leaving a negative review. In this way, a good return policy also becomes a method of damage control.

4. Work on your brand

In theory, all you have to do in order to start selling on Amazon is make a registered account, however, in order to maximize your profit, you need to do substantially more. First of all, you should host a website, potentially even a blog. Nonetheless, like Amazon, there are just platforms for the promotion of your business. What you also need are brand markings like a logo, a slogan, and a company name. You need to understand that buyers tend to judge products by the title of a listing. In order to maximize your appeal, you need to include a brand name, the name of the product and list a couple of features to the title.

5. The importance of images

The downside of selling items on Amazon (and of e-commerce, in general), lies in the fact that your audience can’t personally examine the product like they would if they were to visit a brick and mortar retail place. The closest you can get to make up for this is to take quality photographs, use adequate photography methods and upload them to the product page. The method is particularly important and it depends on the type of the product. For instance, a ghost mannequin is ideal for selling clothing items, while it’s an unavailable option for other product types.

Conclusion

In the end, you need to understand that the choice of staying on Amazon or switching to a platform of your own depends only on your preference and long-term plans. As for the profit and chances of advancement, there’s really no limitation. You see, over 70 percent of all U.S. consumers have a tendency of buying from Amazon and there are those who managed to profit from this idea. In fact, the simplicity of this process is something that could potentially allow a one-person startup to earn several thousand dollars per hour. Nevertheless, it will take quite a bit of time and effort until you reach this stage.

What Happens When Amazon or Facebook Comes After Your Business?

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It can be scary at times looking over your shoulder at a larger company that seems to have the intention of swallowing you whole. There are sharks in the tank that are gobbling up the rest of the fish, growing ever larger, taking over new terrain, all in the hopes of being the biggest and most powerful.

These sharks have names. They are called Google, and Amazon, and Facebook, and to a lesser extent Apple and Microsoft. They are tech giants, born to do one thing, grow.

They cross different industries and seem each to have economy-dominating aspirations at times.

And so you, with your little business, which is quite successful now, is constantly at risk of being pushed aside by one of these giants. Should they decide to enter your market and compete for your customers, what should you do?

1. Don’t Panic

I know they’re big and scary and as soon as they announce a new product or service it makes waves. But you are not in trouble just yet. The worst thing you can do – for your business and your health – is overreact and do something that doesn’t make sense. The best thing for you and your team to do is be patient. It’s business as usual until you have a clearly defined strategy for how to proceed.

2. Do Your Research

Get to the bottom of the threat. Make sure it is a threat. In the initial hype or announcement, a lot can get lost in translation. Do your best to look under the hood and find out exactly what you will be up against. It is only by knowing the details about their plans that you can develop your response.

3. Determine How You Win

There is a reason why you have been successful to this point. You are doing something right. Do you know what that is?

Your unique value proposition is the reason why customers do business with you in the first place. One of the sharks might go after your business, but they might not understand the real reason your customers chose you. So identify what you do well, and focus all your energies there.

4. Focus on Making Customers Happy

Your existing customers are your best defense against any impending threat. So long as they are happy, you won’t lose them. And with a customer base, you have an attentive audience and an army of potential sellers.

Continue to put your efforts into delivering on your promises and turn your customers into advocates on your behalf.

5. Consider Reaching Out

Often, when one of these tech giants first enters a new market, they may be looking for an easy win. And that might mean they are looking for existing companies to buy out.

Maybe you have no interest in selling. But then again, maybe you do. And if that’s the case, it never hurts to get in touch via a lawyer or experience sales agent.

Will Amazon Take Market Share from Google and Facebook?

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Last week, we posted about the growing importance of Google and Facebook in the online advertising space. Today, let us consider another giant of the new economy that – though many might not think of them in this way – has a chance to eat into the market share dominance of the other two.

Amazon as Advertising Platform

When we think of Amazon, we probably don’t think of them in terms of digital advertising. We think of them as an ecommerce store where one can buy everything from books to clothes to furniture. We think of them as a technology company – responsible for a line of smart devices (Echos, Fires, TV). Businesses might even think of them as a provider of cheap cloud services.

But the truth is, Amazon has the potential to be an important player in online advertising. The reason why is because they have the three big things that any great platform needs to have:

  1. A large, engaged community
  2. Loads of consumer behavior data
  3. A place to display ads

Recently, Amazon has been courting advertisers for several new advertising programs run by the Amazon Media Group, the department responsible for turning Amazon into an advertising powerhouse.

Brands can display product ads in category searches, on product pages, across Amazon’s network of third-party sites, on Amazon’s shopping app, and more. Shoppers are targeted based on their prior purchases and browsing habits – all of which Amazon has been collecting and storing for years to offer better product recommendations and offers.

With so many people now turning to Amazon for their shopping, it is no wonder they are looking to capitalize not just through sales of their own goods. Advertising has the potential to turn into a serious new revenue source for the company that long ago launched as an online bookstore.

While it may be difficult to imagine any company taking market share away from Google and Facebook when it comes to online advertising, Amazon has the right combination of factors going for it to do just that. Could the big two become the big three?

Make Your Product an Advertisement for Your Business

When a product you ordered from Amazon is mailed to you, it’s mailed in an Amazon box. To anyone who has ever seen an Amazon box before, you know right away that it’s an Amazon box.

When Zipcar members check out a Zipcar for the day, the car is branded. It has the Zipcar logo plastered right on the side of it.

Fashion brands from Old Navy to Michael Kors prominently display their logo on nearly everything they design.

All of these are examples of a company using its products to market themselves.

Someone in my office gets the Amazon box delivered, and I see it. Someone drives past me on the street in a Zipcar, and I see it. Someone sitting across from me on the train has a Michael Kors bag, and I see it.

It may not feel like marketing or advertising, but I am being exposed to the brand. It’s just another reason why product design is so important, and why marketers should absolutely involve themselves in product development.

How can you turn your company’s products into ads for your business?

Marketing to your Customers: Recurring Sales

This is the second of a three part series entitled “Marketing to your Customers”. The theory here is a very basic one, selling to existing customers is far easier, and cheaper, than finding new ones. So in order to be successful, it’s vital that you master the basic skills of marketing to existing customers. And those skills are different in many ways than the ones required to market to non-customers.

Part one of the series gave us tips on how to use upsell opportunities to make more money.

When a GM owner trades in their old car for a new model, is this a new sale? Is it an upsell or a cross-sell if they buy a different, or more expensive model? For the sake of arguments, let’s assume that any future sale by your company to an existing or past customer is a recurring sale. And this post is all about making more of them.

First, let’s look at a number of different recurring sales examples. The GM example above, a shopper returning to the same supermarket every week, a book lover who only buys from Amazon.com, anyone who is brand conscious about anything for that matter.

The most important thing to understand is why your customers buy from you, or buy at all. Are you the easiest option (location of the supermarket), the cheapest option, the most well-known? Advertising might bring them in the store once, but what keeps them coming back? Great service, great prices, great product?

Whatever it is, the power to increase those return customers lies with you and your marketing team. First, don’t ignore existing customers. And don’t miss the chance to capture their attention when they first purchase. An email, phone number, or postal address allows you to stay in touch with them. A newsletter list or community page gives them somewhere to connect with your brand.

Once you have their attention, use it. Loyalty programs designed to keep long term customers offer special discounts or value added features just for existing customers. How can you offer people more value if they choose you more often?

This group should also be the first to hear about news and press about your company, new products or special offers, and events they might interested in.

This group of people has said to you, “You’ve proven yourself to me in so far as I will give you money for what you’re offering.” Don’t squander their faith in you. Love them for it. And let them know you love them for it. And you’ll get more of them back in for a second, third, and fourth time.

Tomorrow we’ll look into a third way to market to your existing customers in order to increase their value.