Is there really a way to benefit from paying more money in fees? If you’re able to make dynamic business decisions based on relevant data, then the answer is yes. That being said, you might have to do a considerable amount of leg-work to make that happen.
After all, between the new inventory limits and the fee increases for FBA fulfillment, storage, aged inventory, and more, even the most optimistic seller will have their work cut out for them.
It can’t be said that Amazon is doing sellers any favors here, but what else is new? The trick is to have the kind of mindset that’ll help you get through, around, or over whatever obstacles may come up for your business. This isn’t about the power of positive thinking; it’s about developing strategies that’ll put you at the front of the pack.
Of course, you’ll need more than the right mindset to succeed; you can also use a profit calculator like Shopkeeper to make informed decisions, rather than educated guesses.
Optimizing profit margins gets a lot easier when you can view the margins for each product on the same dashboard, and since the data is displayed in real time, you’ll be able to respond quickly to even the smallest fluctuations, whenever the situation calls for it.
Love Him Or Hate Him, Jeff Bezos Knows How To Run A Business.
The founder of Amazon didn’t turn his company into the biggest ever ecommerce platform for the popularity; he did it for the profits it brought him. And if you start to delve into his point of view, you’ll rapidly find out that where business is concerned, the man is pretty ruthless. And guess what? If your goal is to make money, that’s pretty much the best strategy you could have.
Most sellers aren’t happy about the recently announced fee increases, and that reaction is totally justified. However, they often end up shooting themselves in the foot with what they do next: essentially nothing.
If you want to set yourself apart from that response, you’ll need to develop a victor mentality, not a victim mentality. The sellers who decide to fine-tune their profit margins item by item, rather than assuming there’s nothing to be done, are the ones who’ll come out ahead once all’s said and done.
To put things into perspective, it’s important to realize that when you’re running a business, it’s sometimes hard to tell a difference between being greedy and driving up your profits. Whether you want to get involved with that is an entirely different topic, but if you’re “in it to win it”, that’s what you’ll be dealing with.
Amazon, for instance, is now limiting the amount of inventory that sellers can send to FBAs. This decision definitely isn’t popular among sellers, but for Amazon’s part, it’s a sound step to take. Demand for FBAs has been growing steadily over the past few years, and they either had to put inventory limits in place, or get busy building more facilities.
The goal was to make sure there was room for future sellers, and since that was possible to do without spending huge sums of cash on new FBA warehouses, the choice was probably pretty obvious.
How Can Increased Fees Be An Advantage For Sellers?
There isn’t any special loophole, trick, or hack to be learned here; what’s needed is the ability to react and adjust more quickly than your competitors. Here’s a scenario to illustrate:
Amazon’s inventory limits are causing a fair bit of disruption across almost every category. Since sellers can no longer stock anything and everything they want, they’re having to cut back on what they’re storing in FBAs. They aren’t making data-based decisions, though, so they’re reducing stores of their best-selling items too much, and leaving too many slow-moving items in storage.
You, however, calculated how much of everything you’d need to keep up with projected demands, along with a healthy number of extra items for the best-sellers.
Soon enough, your competitors start to run out of the fast-moving items; eventually you’re one of the only sellers on Amazon with certain popular products. How do you leverage the situation now? You’re in the perfect position to raise the price and enjoy the vastly higher profit margin.
If you wanted to react and adjust this quickly to changing circumstances, you’d benefit from using Shopkeeper to view real-time data on your inventory needs, item-by-item profit margins, sales trends, and more. For example, if you knew that you’d be dealing with storage limits, you could prioritize items that sold quickly and had high margins.
Then the inventory forecast tool could tell you precisely how many of those items you had left, how long your current stock would last, and when to order more. Information like this is technically possible to compile on your own, but it’s much more effective to spend your time acting on information, not entering it into a spreadsheet.
Profits Always Come First.
If you’re setting prices for your products, do you make the decision based on the profit margin you want to get, the prices your competitors charge, or how much people will pay for it? All of the above. Do you also take into consideration the fact that some of your potential customers will think you’re charging too much, and leave without making a purchase? Hopefully not.
Now imagine that same scenario, but Amazon is the one setting prices, and sellers are the ones who may not be happy with them. Amazon may not make popular decisions, but they make smart ones, and that’s why sellers could take a page from their book.
If you want to put profits first, Shopkeeper could help inform bold decisions about how to improve your overall strategy. Even if you already track profit margins, you’ll be able to view everything at a glance with Shopkeeper – and you’ll see all the information as it happens.
Whether you want to optimize margins, track inventory, or simply see how your current business strategies are working out, this profit calculator can be a powerful force in your business. To try Shopkeeper for yourself, sign up for their extended 30-day free trial!
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