The eCommerce boom is far from over, but there is always that feeling that another seller has the initiative and the buying power to pinpoint your bestselling lines and purchase stock in bulk for a better wholesale rate.
It is a well known myth that Amazon are continuously scanning its own catalogue to find smaller niche markets with highly profitable lines. I have personally met many sellers who simply refuse to sell their product lines on Amazon in fear of Amazon’s buying power. So, what is a seller to do? Here a few things that I have seen from others:
The use of Repricing Software has become very popular over the course of the last two years on Amazon.
If ensuring that your feedback and logistics tick over nicely was not task enough, competing with other sellers to offer the best price is the latest trend, a trend always feared by sellers. The trend that implies that your product is no longer niche, and that your market is saturating.
Oh and using FBA, that will get you visibility and a stab at the Buy Box, Amazon Genius. Don’t get burned with Repricing Functionality, some of you may remember the £1 Story of last year’s Black Friday.
Many say that Repricer is a race to the bottom, what do you think?
Normally, the aftermath of a seller considering a repricing solution.
In order to be competitive, a seller must be able to sell at competitive prices. How can I squeeze another 5-10% out of my lines? Commonly thought ideas are as follows:
Buy More for Less
Suppliers will offer better rates on their inventory if you are able to purchase more at a time.
Ask yourself a few questions:
- Will this even increase my margin by 1%?
- Can I hold this stock?
- Can I shift this stock?
A warehouse full of stale stock is a seller’s worst nightmare, do not invest heavily stock that you cannot move.
Buy From the Right Source
Are you sourcing your products directly from the manufacturer? If not, how much of that margin is being allocated to the middle man, the wholesaler, the distributor.
- Can you afford to go straight to the source of your product?
- How much are you spending on freighting your goods?
- Is there a local distributor that is more affordable than a Chinese manufacturer?
If you specialise in a particular niche product line, be sure to re-assess your purchasing options on an annual basis at the very least. Compare the supplier market, compare the freight costs, a lot can change in 12 months.
Think Outside of the Box
Buying differently and buying more are not always the best ways to optimising your margins, sometimes doing the above can have a detrimental impact on the short-term operations.
Think about the platforms and marketplaces that you are selling on.
Here are a few ideas worth considering:
- Can you lessen commission on marketplaces and payment processing platforms by selling more and in turn having more transactions? Invest in new lines, diversify your portfolio of products.
- Are you using any tools for your business that charge using a revenue share model? How much of your margin are losing using this? Is it worth it? Are there other flat rate options?
- Can you better direct sales to your commission-free website? Website Sales can evade the 15-18% commission that a marketplace might obtain. Sell your product for 5-8% less on your website, but keep the 10% in-between.
- Can you re-negotiate on courier and logistical expenditure, or look to use an alternative? How much can you save, but also what service do you lose?
More is sometimes less.
Take a step back and carefully analyse your current business operations, you are never at any point running your business in the most cost-effective manner, maybe this is for good reason.
But, I am confident that you can find at least one way of optimising your processes and making an extra 10p per sale on any line.
Okay. Maybe not necessarily global, and certainly not overnight. But, if you are struggling to get traction in a domestic market, try an international market.
Why race to the bottom in a domestic market, when you can open up your product line in a European market where your product might not even be listed. Sellers are able to increase profit margins by up to 30% just by listing in another vertical market.
Of course there is further expenditure, on translation, customs, logistics etc. But international retail generally is considered to be a highly profitable strategy, if executed correctly.