Open Blog - Selling on Amazon - 2016 March

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March 2016 Summary

  • Orders                          187
  • Orders per Day              6.03
  • Revenue                       $2,990 (£2,105; €2,757)
  • Gross Profit                  $2,169 (£1,527, €2,000)
  • Average Order Value      $18.28 (£12.87; €16.86)
  • Time Spent                   13 hours

Like last month all of our sales were fulfilled by merchant (FBM). We believe fulfilled by Amazon (FBA) orders will be rare for us nevertheless we are still an Amazon FBA seller. As a third party seller, we chose FBM as we want to maximize profits and the fulfillment work is minimal. At this time, FBA inventory is only to increase our buy box percentage. The more Amazon services you use, the more of a valuable merchant you are to Amazon. So even if you don’t make any more sales off of the Amazon seller services, you should consider how you can “use” the service to boost your buy box.

Financial Summary

This month there were 187 orders with 2 refunds averaging 6.03 orders per day. Revenue month on month (MoM) growth for March was 50%. We were happily surprised to see our products pick up traction so fast and growth was 207.6% equaling $2,990 (£2,105; €2,757). Last month we had 76 orders and 2 refunds at 2.62 orders per day for a revenue total of $1099 (£774; €1014).

This month’s average order value (AOV) was $18.28 (£12.87; €16.86) compared to last month of $14.86 (£10.46; €13.70). AOV overall grew 23% but expedited shipping was the major contributing factor. Shipping AOV contribution was $2.12 (£1.49; €1.96).

Our idea that we could really benefit on focused shipping strategy worked out. Out of the 187 orders we had 7 expedited orders totalling $392 (£276; €362) in revenue. This means that 3.7% of orders made 11.6% of revenues. Expedited revenues definitely punch above their weight class. For us this is a big win and it proves that it doesn’t take that many orders (7 orders only) to make “easier” profits. All of our expedited services are a next day service in the UK and EU. The expedited costs were $116 (£82; €107) that’s margins of 70%.  

Finally, gross profit was $2,169 (£1,527, €2,000) leaving us with 64% of revenues, same as last month.

This Month

Time spent is interesting component to this online selling experiment as we want to see our hourly rate increase. Currently, we’re tracking our time in excel. Our approximate hourly rate is $230 (£162; €212). This month most of our time was spent on researching expediting shipping prices and Amazon seller tools. Given that we are fulfill by merchant (FBM) meaning we ship our products, we have to answer all customer seller support emails. This might not be scalable in the future but for now our order numbers are low so we get low customer support emails. Also we believe that customers that are willing to pay higher prices complain less. Picking, packing, and shipping can be a huge pain but for us that is our speciality so for 187 orders it took less than 45 minutes for the entire month. This allows us to focus on more value add like the topics below.

Expedited shipping prices were settled on. Even though our private label products are commoditized, we agreed that if the customer needed it bad enough they were most likely using it for a commercial purpose or a certain time constraint like needing it for a vacation. Therefore we made the price of expedited shipping price triple the average product price. The 7 orders that we received 3 of them were shipped to company addresses so I think we’re on to something.

Buy box penetration is key for any Amazon merchant. For March, we got buy box listings in France, Italy and the UK.

We got a few more listings we are working on to get 100% buy box coverage in all the EU territories. We have not started Amazon sponsored products, which is a cost per click advertising model. Amazon product advertising can only be used when you have the buy box on your listing, if not you’re ineligible. Products ads will definitely be a main part of our sales strategy going forward but we really need the box.

Next Month

For next month, we want to see what other operational manual tasks can be automated or at least require fewer touches from us.  Also we’re hoping to see a slight increase in our expedited shipping. We want to focus on increasing our buy box so that we can do proper Amazon sponsored product advertising. Let us know if you have any questions by asking in the comments. Thanks and see you next month.

Thank you!

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