Many sellers pick up the fundamentals of one of the selling models, such selling wholesale or engaging in online arbitrage or retail, quit...
.webp "Amazon Growth")
Many sellers
pick up the fundamentals of one of the selling models, such selling wholesale
or engaging in online arbitrage or retail, quite quickly. A common problem for
many is scaling their business.
This post
will explain what a growth stack is, how to apply repricing inside that model,
and the systems mindset you should have in order to consistently improve sales
month over month.
Taking a
systems approach
Two books
drastically altered my perspective on my company. Sam Carpenter, "The
E-Myth Revisited and Work The System" They both impart the same idea,
though I think Work The System is more applicable: your company is a collection
of processes that you can adjust to get the outcomes you want.
Do you want
to raise your net profit per unit on average? Adjust your pricing and sourcing
procedures.
Would you
like to manage the whole company from any location using a laptop? Adjust your
physical systems, such as getting ready.
By the time
you finish both volumes, you will have a clear understanding of the three main
functional domains of any Amazon company: sales, operations, and sourcing.
The term
"sourcing" is rather self-explanatory; it refers to the process of
selecting suppliers for your inventory, determining whether it will be
profitable to buy, and other critical business decisions.
A number of
systems, including those that are used for inventory preparation, tracking of
goods coming in and going out, hiring new staff, and tax management, can make
operations a little more complicated.
Sales,
however, is a rather simple process. The goal is to increase sales and
profitability each and every month.
Sales and
sourcing have the most potential for automation of the three main sectors;
these tasks can occasionally be managed totally by software and automated
rules.
Applying
leverage when it's feasible
You have to
do something with this newfound understanding as soon as you start to view your
company as a collection of systems. That's the situation when leverage is
useful.
Making one
plus one equal more than two is the idea of leverage. It's critical to realize
that leverage has practically endless applications. Leverage is not a fixed
resource where our time is. This is where our success is measured, not by the
number of hours worked but by the results produced.
A few
potential sources of leverage are as follows:
People: Hiring the right people can have a
big impact on achieving your objectives.
Systems: create once, utilize always!
Technology:
start utilizing software, which we cover in more detail in the post that
follows.
Rule-based
decision-making:
make a judgment once and use it repeatedly to prevent decision fatigue
Elimination: getting rid of stuff that isn't
essential or valuable
Learning can
save you a lot of time. It only takes a little effort to become more efficient
or to use a product better.
Now that you
have your systems in front of you, you can start thinking critically about what
kind of leverage I should be using on each system.
For
instance, you can have a lot of trouble finding profitable merchandise. Maybe
you should concentrate on improving your skills.
On the other
hand, you can be an expert at finding products, but you have trouble allocating
enough time to the work. In this situation, you should start employing rules to
expedite your decision-making, minimize duties to free up more time, and
consider hiring someone to source for you.
Upon
completion, you will have a list of items that require improvement along with a
menu of choices for each item. Say goodbye to being indecisive and wondering
what to do next or what's preventing you from hitting your sales targets for
the year.
It's all
about carrying out that map after that.
Assembling
your growth stack
For a
moment, I'm going to borrow a tech term from the startup industry and apply it
to Amazon. All that a "stack" is is a grouping of items, which could
include rules, frameworks, systems, tools, etc.
A stack is a
word used by the supplement industry to refer to a collection of supplements
that complement one another nicely.
A group of
technologies or tools is referred to as a "stack" in the startup
industry; examples include a tech stack, marketing stack, customer service
stack, etc.
I believe it makes sense to think about your Amazon business using this word for our purposes. Which sourcing stack do you use? Do you source your Online Arbitrage inventory using techniques such as Tactical Arbitrage?
How is your
stack for operations? Do you write SOPs in a program like Notion to record your
various processes? Do you outsource all of your prep work to a prep center? How
does one go about dealing with them?
Which sales
stack do you use? Do you use a repricing technology like GoAura to make sure
inventory sells for a competitive price and funds keep flowing, or do you ship
product into FBA and forget about it?
At first,
all of this may seem daunting, but start with one area (sales, in my opinion)
and work your way through the others. In a few months, your company ought to be
operating smoothly. No more restless evenings speculating about possible
problems.
The role
of repricing tools
An advanced
repricing solution such as Aura is one of the easiest things you can add to
your growth stack. With the help of pre-configured repricing techniques, you
can optimize your pricing for maximum sales and profitability across the board.
You may also
guarantee that funds continue to flow into your company, since far too many
Amazon merchants have tens of thousands of dollars' worth of product stashed
away. Rather, make sure that never happens by using the repricing method, which
will free up more of your time to focus on other aspects like sourcing!
Suggested
initial tactics
Repricing
can seem intimidating when you first start. It's almost a strategy sandbox that
you could start experimenting with. 80% of our inventory may be easily covered
by just two techniques, as opposed to developing and testing every strategy
that could possibly be thought of.
The
Oscillation Strategy and the Liquidation Strategy are those two tactics.
When working
with both new and seasoned vendors, we always use the oscillation method. It
makes use of the way Amazon operates, which is to cut prices to boost sales
volume and raise prices to keep average net profit margins high.
Overcoming
the notion that you're "tanking the price" is crucial when using this
tactic. There is no way that this is not the case. We must be in the Buy Box if
we want to improve sales volume. We need a slightly greater offer in order to
be in the Buy Box. Profit and sales are high due to the straightforward
reasoning.
After the
price reaches the minimum, it is "reset" to a marginally higher
amount. This contributes to keeping the average net profit per unit high. The
end result is higher sales while keeping overall net profit levels healthy.
It's quite difficult to defeat!
For many
vendors, our second tip is less thrilling. Naturally, I'm referring about the
Liquidation Strategy. Even though nobody enjoys the thought of losing money on
inventory, it happens when a firm is run.
We
occasionally make poor purchasing choices and must recoup our investment. The
number of vendors we encounter holding tens of thousands of dollars in
"stale" goods is uncountable.
A
liquidation strategy aims to return your capital as soon as feasible so you can
use it for profitable spending right away. Additionally, you save money by
avoiding long-term storage costs, which further reduce your earnings.
Generally
speaking, we advise setting a maximum period of time (three to four weeks) for
merchandise to be put up for sale before implementing a liquidation strategy.
Final
Thoughts
We are
systems thinking nerds, as you can see. It's difficult to locate a prosperous
business leader who didn't use systems to help them accomplish their goals.
To get a
great deal more information on how your business is doing and where you can
have the most growth impact, we strongly advise you to finish the
above-mentioned research.
Read More:
Top 10 Unique Ecommerce Business Ideas for 2023
Top 10 Crucial E-Commerce Pricing Techniques to Outperform Your Competition
You Can Launch These 5 Small Businesses for Less Than $20,000.
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