Making money selling online isn’t as easy as some people would like to make it out to be, but for the e-commerce savvy entrepreneurs, it’s always in the cards. It’s just a matter of sticking to sound basic principles of marketing and sales, and taking advantage of what promotional features are available on the particular platform you’re using.
Amazon is undoubtedly one of the best selling sites for dropshippers mostly because it has such a huge following. Exposure is assured as long as you have a sellable product and you are willing to put in the effort to abide by the rules and regulations of the site. If you are a beginner, you can follow along our step by step guide where we show you how to get set up correctly.
One of the ways you can make more money in your dropshipping business is to be featured in Amazon Deals. Being front and center flashing “deal” or “discount” or “special” attracts more impulse sales than any other marketing strategy in retail. Amazon Deals are usually time-constrained, so buyers are compelled to make a quick decision and buy that which they would otherwise dawdle about under normal circumstances.
Sellers featured in one of the various types of Amazon deals say that it is a more effective strategy than other offerings such as an Amazon shipping coupon. You can make a killing with Amazon Deals if you know how to maximize the opportunity.
But how do you do that? That’s what we’re here to explore.
Go Amazon Merchant Pro
If you haven’t yet upgraded your account to Amazon’s professional selling plan, you really should do so. Sure, you can qualify for Amazon Deals, even Deal of the Day, with an Individual account, but you’ll be losing money that way. “Why’s that?” you may ask.
It all has to do with volume. Individual accounts are intended for sellers who are off-loading their extra stuff and don’t expect to sell more than 40 items a month, so they don’t mind the $0.99 closing fee per item. Serious sellers, especially dropshippers, want to sell more because that’s how they make the big bucks.
The $39.99 monthly fee Amazon charges for a pro account, where the closing fee is waived, evens out at around the 40th sale. After that, you’re losing money every time you sell an item, and since the profit margin for dropshippers is usually no more than 30 percent, the $0.99 may represent a significant chunk of your profit.
If you doubt that you’ll sell more than 40 a month, then you probably won’t qualify for an Amazon Deal anyway. You can’t pay for that privilege; Amazon has to invite you, and Amazon typically chooses sellers who sell in large quantities. You can actually request through Seller Central, but you only get access to that site when you have a pro account.
A pro account also gives you access to the Amazon Marketplace Web Service (MWS), which basically automates the selling process so that you don’t have to spend so much time handling each transaction manually. This is important if you want to sell through Amazon Deals, where a minimum of 100 items should be available for sale.
This service also lets you handle high volumes without fear of transactions falling through the cracks via errors in listings, delayed shipping, or the wrong item being sent; all of which can affect your customer feedback and standing with Amazon. You become more efficient as a seller, and that’s always a good thing, even if you don’t get into Amazon Deals.
So, go pro.
Prepare to Cut Prices
With such a relatively narrow profit margin, you may think that cutting the price back will leave you with little or nothing to show for all that effort. However, you need to be competitive to sell on Amazon, and especially when you get a slot in Amazon Deals, which requires that your sale price to be at least 20 percent less than your listed price. But if you sell more— and there’s no reason why you shouldn’t if it’s a marketable product — you’ll earn a lot more in the end.
Say that you have an item you get from your supplier at $10 all in. With a 30 percent margin, your retail price is $13. If you sell 40 of these items in a month, you take home a profit of $120 less the $39.99 monthly you pay for a pro account, so you actually make $80.01.
Now, let’s say you mark down the price by 20% so instead of $13, the customer pays $10.40 and you sell 400 units; you make $160 less $39.99, for a total of $120.01, or 50 percent more.
Note that your sale price on Today’s Deals needs to be lower than that of any another seller for the same item. Oh, and you’ll also have to be prepared to pull out the item from retail listing if you want to participate in Amazon Deals.
Be Ready to Invest in Stock
As a dropshipper, maintaining inventory is counter-intuitive. If you do get invited to participate in Today’s Deals, however, you must be ready to buy stock from your supplier, because Amazon requires that the item/s listed are in stock while the deal runs, and the minimum number is 100. This doesn’t mean that Amazon guarantees you will sell that many, but 100 units is actually not a whole lot. You’ll also be required to ship the items to Amazon, because all items in Amazon deals are fulfilled by Amazon, the so-called FBA.
The good thing about this is that most suppliers will give a special price for bulk orders, so even if you cut back on your profit margin, you recover part of it. The more you order, the higher your profit margin. Of course, before going all kamikaze and ordering a million of one item for the discount, make sure that you can actually sell most of them.
One of the requirements to be part of Amazon Deals is that you have sold at least 10 of that same item in the last 30 days, so you’ll have an idea of how fast it sells; you can project from there to determine how many discounted items you’re likely to sell.
Take note that aside from the quantity, Amazon requires a minimum deal value that varies depending on the item. The item should also have a minimum retail price of $10.
Keep Your Nose Clean
Amazon is notorious for suspending sellers who get negative feedback from customers, and will definitely disqualify from Amazon Deals anyone who has poor customer feedback and reviews, and who’ve been cited or suspended before for failing to fulfill the conditions of the sale, i.e., delayed shipping.
A seller has to have a minimum of 3.5 stars and 10 customer reviews in order to be considered for inclusion in Amazon Deals. Maintain a good reputation as a seller and you will do well on Amazon, in and outside of Today’s Deals — and on any other online auction site, for that matter.
However, a word of caution: Don’t think that you absolutely have to get into Amazon Deals to make good money as an online retailer. Think of it more as the gravy on your mashed potatoes; great to have, but mashed potatoes are still pretty amazing on their own. But everything’s better with gravy.