Amazon Seller Guide to Success in the Holidays (Q4)

Transcription

1 Amazon Seller Guide to Success in the Holidays (Q4)

2 November, and December are the best months of the year for most Amazon sellers. The holidays are in full swing; Thanksgiving, Christmas, Hanukkah, Kwanzaa, and New Years all fall inside a 40 day period. And there is one thing that all of these celebrations share in common >> gift giving! Employers dish out holiday bonuses and the whole world goes shopping crazy. Normal budgetary restrictions are dismissed as everyone wants to get the perfect gift for their loved ones or for themselves. Merchants are in the perfect position to take advantage. Huge retailers, like Apple, time the release of their new and improved products with the holidays because they know shoppers are loose with their cash and eager to get their hands on the coolest new toys. Amazon sellers (myself included!) need to take a page from Apple s playbook. We need to have a sophisticated marketing and operational strategy specific to the 4th quarter. Let s take a look at Amazon statistics during the 4th quarter for an idea of the explosion in demand, which occurs during the holidays. 4 million Americans join Amazon Prime for the holidays. Those 4 million Amazon Prime members represent a new market that didn t exist during the prior 3 quarters. A massive portion of them will use the Amazon Prime trial for their holiday shopping, and will then cancel their membership once the festivities are over. 2

3 Amazon s revenue jumps to 10 billion from Q3 to Q4 every year Amazon doesn t release FBA sales numbers but they don t have to. Just looking at Amazon s revenue during the holidays gives a very clear indication of the spike in business that Amazon sellers can expect to benefit from. This book with give you some tips and tricks for having the most successful 4th quarter possible. We ll go over three guidelines for you to follow, focusing on one guideline per chapter. 3

4 Ch.1 Inventory Prepartion Estimate Q4 Sales FORECASTING Inventory preparation is primarily about forecasting sales for the 4th quarter. We want to try and predict how many units we will sell, of each product in our lineup, so we know how much inventory to keep in stock. The best way to do this is with historical data. If we were selling on Amazon during the previous holiday season, we can get a good idea of what might happen this holiday season by looking at our historical data. 4

5 Fetcher makes it very easy to look back at historical records for guidance in forecasting sales. In this view of Fetcher s orders section, we see a huge bump in sales right around Black Friday and Cyber Monday: But this doesn t help me. I sell in a European Union country that doesn t celebrate the American Thanksgiving. Trust me! it doesn t matter if you aren t selling in amazon.com! Fortunately, for e-commerce business owners like us, the whole world has adopted Black Friday and Cyber Monday...and they are usually the biggest shopping days of the year. With the detailed data we can see in Fetcher, or in Seller Central, we can try and predict what our sales will be this year. That s the starting point for understanding how much inventory we need to have in stock. If this is your first holiday season as an Amazon seller, or your business this year looks nothing like it did last year, don t worry! There are some basic guidelines that will help you with forecasting demand. 5

6 Expect 2X increase in November and potential 5X increase in December! 6

7 SUPPLIER NEGOTIATIONS Once we know how much inventory needs to be ordered, it s time to speak with suppliers and negotiate the best possible rates...because along with a bump in sales, the 4th quarter also comes with a spike in returns. In the past, I ve been able to show my suppliers the increase in return rates during the 4th quarter and negotiate down the price of my order as a result. I also like to include a lead-time clause in the contracts with my suppliers, since it s absolutely critical that they complete my order in time for the holidays. This step is as simple as adding an addendum to our supplier contracts, stating when the product is expected to be ready for shipment. It may even include special parameters, stating that the price to be paid for the goods will be reduced by X% for every day the goods are late. 7

8 TIMING SHIPMENTS We aren t the only Amazon sellers who want to take advantage of the holiday increase in demand, though. Sellers around the world will be rushing to get their goods into Amazon s fulfillment centers in time for the rush. Therefore, I recommend getting inventory batches into Amazon s Fulfillment Centers at least one week before Black Friday and Cyber Monday. And because Amazon deliveries to the Fulfillment Centers can get backed up by several weeks during the busy season, we need to be sure to book our appointments as early as possible. I book mine well in advance of the goods landing at the port. AVOID OVERSTOCKING & UNDERSTOCKING The overall goal of our inventory preparation phase is to avoid overstocking or understocking your goods. Too little inventory and we will run out of stock and miss the opportunity of the year. Too much inventory and we run the risk of losing our holiday gains in margin to the enormous FBA storage fees that Amazon charges in November and December. In the past, standard-sized storage fees have been increased by 3x, and oversized storage fees by 2x. In my opinion, this is the single hardest step in your 4th quarter planning. We must be diligent and trust the historical data, if we ve got it. 8

9 JANUARY 2018 Next, it s critical to place our post-holiday orders as quickly as possible. After the holidays, vendors everywhere will be looking to replenish their stock. That includes our competitors, and other sellers who use the same suppliers we use. Chinese suppliers get backed up in January with fresh orders, as everyone is eager to get back in stock. If we wait to place our order, it may be delayed several weeks. On top of that, China basically shuts down for the Chinese New Year in mid to late February. I use several factories that are closed for three weeks. If we miss the boat on that re-order, we will end up waiting until the 2nd quarter before our goods will ready! Definitely not ideal if we ve sold through everything in November and December, as we re projecting. 9

10 Ch.2 Power Up Listing Final Preparations BOOST BSR We want our products to be searchable when shoppers come flooding to Amazon.com, and the best way to do that is by improving our BSR. And the best way to boost our BSR is by increasing our sales velocity quickly. Two of the best ways to increase sales velocity is by running Lightning Deals in Seller Central, or by running promotional giveaways on sites like JumpSend.com. Giving products away at a discount will hurt in the short-term, but since this is all about getting ready for the big rush, I m comfortable spending a little cash now to make more during the holidays. To accomplish this, I recommend running a big Lightning Deal or promotional giveaway on JumpSend.com during the week of Black Friday. In the U.S, Monday, Tuesday or Wednesday of that week would be best, as most Americans won t be doing much shopping on Thanksgiving Thursday. I book mine well in advance of the goods landing at the port. 10

11 HOLIDAY LISTING We also want to take advantage of shoppers festive spirits by appealing to their emotions a little. :) We can spice up our listing with simple copy improvements that will connect better with our shoppers during the holidays. One liners like makes the perfect Christmas gift might be the difference between winning a sale away from our competitors, or losing it to someone else. Similarly, we can add HTML emoji tags to our listings that will stand out. Holiday emoji s like a menorah, Santa Claus and/or wrapped presents will do the trick. Another idea is to add a product image of our products wrapped in holiday themed wrapping paper. Amazon offers gift wrapping on all FBA orders and an image of our wrapped gifts sends another subliminal message that our products makes an excellent present. CREATE BUNDLES Something else to consider is that an increase in demand means an opportunity to put out special offerings that might not be as successful during the rest of year. One idea is to create new ASINs bundling products that normally sell independently of each other. Bundles offer a higher perceived value, and even though the bundle will be more costly, this is the time of year when shoppers are less worried about cost and more concerned about value. This is an excellent way to sell through some of our slower moving inventory, pairing them with our more popular items, which will sell regardless. 11

12 RAISE PRICES And that brings me to pricing, where basic economics come into play. An increase in demand means a likely decrease in supply and, therefore, better margins for sellers. Historically, all of my products have sold better at higher price points during the holidays, and it s very likely that you ll be able to increase the prices of your products too, and still see a big increase in sales. But finding that price that optimizes our profits is the longest-lasting challenge for all merchants. We can manually experiment with pricing during the holidays, though it is in our best interest to use a price optimization service like Splitly.com to find the sweet spot automatically. 12

13 Ch.3 Track Performance Small Refinements Once the holiday rush begins, it s time to sit back and watch what happens...for the most part. The hard work will be over, but there are still small refinements that can be made throughout November and December that will pay dividends later. 13

14 INVENTORY TRACKING Everyone likes to check sales during the holidays, but I prefer to pay close attention to my inventory levels. I trust the sales will come (and I m definitely peeking!), but I prefer to asses Q4 performance after the fact. During the event, I m focused on ensuring I have the right amount of inventory in stock. spot automatically. Fetcher s inventory dashboard tells me exactly when I can expect to run out of inventory for each of my products, and it warns me when I need to place a new order. Big orders and sea-shipping are unlikely to arrive in time for the holidays, if Q4 is already underway. However, we may be able to sneak in a quick back order of goods by air freight if our sales velocity is higher than expected. And, obviously, higher-than-anticipated sales velocity is a good problem to have...but what if our products don t sell the way we expected? Well, this means we re subject to high FBA storage fees in November and December, which is another reason to pay close attention to the inventory module in Fetcher. It might be best to liquidate or remove some of your slow-moving inventory, to avoid super-high storage fees. 14

15 REFUND TRACKING As I mentioned earlier, returns will go way up during the holidays. Take a look at this Profit and Loss snapshot from Fetcher to get a glimpse of how refunds are likely to spike bit in November, December and January. The best approach is to monitor refunds carefully and maintain positive customer relationships. We need to know if we ve got a quality issue on our hands - which could be disastrous - or if we re looking at a normal influx of returns...and the only way to know which one we re facing is by talking to our customers. Fetcher s refund page compares the refund rates of all of our products in one place, and shows us a record of every refund we receive, with a link to the refund transaction in Seller Central. This is a sweet feature, since it allows us to click the link and get access to the address of the customer who initiated the refund. Contacting customers will give us insight into why they returned the product and it also reminds them that there is a small business owner behind the purchase they made. Generally, shoppers are less likely to leave negative feedback, or critical reviews, when they receive a personal communication from a remorseful small business owner. 15

16 Follow these three guidelines and you ll be sure to have a successful 4th quarter! Shane Director of Fetcher Contact us directly at if you have additional questions or if you d like to learn more about Fetcher. Happy holidays and happy selling! After becoming an Amazon FBA seller himself, Shane left the silicon valley tech scene. Now he spends his time travelling the world and working on Fetcher, an Amazon Analytics platform that helps sellers fully understand their financials. Shane is a science fiction nerd and jiu jitsu fighter.