Published Date: February 02, 2022, at 10:05 AM
Ever wondered how you can improve your profit margin?
rched and tried different ways to increase our revenue and we discovered things that can help you out in making your margins better.
So, stay tuned as we share with you our tips on how you can have better margins.
In Today’s Roundup:
- The Big Idea: It’s all about margins!
- Seller Data: LTL shipment savings
- Tribe Spotlight of the Week: It’s All About Momentum!
- Meme of the Week
THE BIG IDEA
It’s All About Margins!
4 Ways To Improve Your Margins
Andy here! And today, we’re going to talk about margins. (hooray!)
At the end of the day, it’s all about the dollars.
Nate and I always like to say: Revenue is vanity, Profit is sanity, and cash is king.
Now, why is this? It’s because knowing your numbers can help you build your successful 6 to 7-figure Amazon brand.
This is how we built our $10,000,000 private label that’s selling products left and right without any hitch at all.
And, by knowing your numbers, you too can build a successful Amazon business.
The truth is, it didn’t matter to us at first. But, as we grow our own brand, we realized that knowing our own accounting is really important, especially if we want to gain more profit.
To be honest, this is not a sexy topic.
The sexy part of building a brand is when you are sourcing, finding winning products, selling, and marketing.
The unsexy side of the business, in general, is accounting and dealing with numbers.
And that is the foundation of a
lmost every business. How did we know this?
We talked with someone who recently sold his business for over $100 million dollars.
Based on our conversation with him, the #1 thing that he really looked for as he was building his brand is that there has to be a margin in the product.
Nate has been hammering this with our team these past couple of months on how to get a better margin.
Now, if we only talk about gross margin, the numbers are going to look perfect. You’d be like “WOW! I have an amazing business.
After all, it’s all about how much you sold the product for minus how much you bought the product for.
But, the truth is far from that. There are a lot of things you need to take into account when running a business.
You need to consider the other expenses you’ve made, such as packaging, shipping fee, storage cost, marketing expenses, etc.
This is when the profit margin comes in.
When you add those things up, minus the total gross profit, the total amount is the profit that you made from those sales.
I’m sure you’d be like, “Wait what?! I thought I’d made more money than before.”
This is the common reaction most Amazon business owners do when they run their numbers.
Now, the question is, how do you get better margins?
If you want better margins, you need to take look at four main areas in your business:
- You need to check your PPC. This is important because if you neglect this, you’d be spending a lot of money on ads without any returns. This happened to us a few months ago. We noticed in our brand in October, November, and December a reduction in net profit margin. We dug around and found out that our ad spent is ballooning out of control, which was putting downward pressure on our net profit. If we didn’t check our PPC, we could have spent more on ads without really gaining back anything.
- Make sure you have a good strategy for EVERYTHING. Whether it’s about marketing your products, solving fulfillment issues, or finding alternative ways to ship your product, you need to have a solid strategy that covers all of your bases. This will reduce unwanted costs and help you gain more profit in the long run.
- Don’t keep spending money on products that are bleeding away your margin. Cut your losers even if you like those products emotionally, you need to stay away from them. Business is about doing the right logical thing, even if it meant losing things you like. So, make sure to track the margins that you make on each of your products.
- Dive deep into your financials every month, make sure that you are having a monthly true financial snapshot. This will allow you to spot anything in your business that doesn’t really provide any value in return for the cost you’re paying.
These are the four things you need to do if you want to get better margins. If you want to hear more from us and the other things we do to improve our $10,000,000 brand, click the link below to watch our latest podcast episode.
My $5,000,000 Change:
I still hold to the notion that finding China-made products is easier.
But whether you should always start looking there is starting to change more and more.
Between tariffs, rising import costs, uncertain geo-political environments – there are a lot more factors to consider than when I first started importing from China.
And then a year and a half ago, Nate and I found a couple USA manufacturers that were able to produce products we were looking to bring to Amazon. Since then, we’ve sold over $5,000,000 made in the USA products.
Here’s some other great things about made in the USA:
- Your products are then made in the USA (duh).
- Forecasting demand and lead times is way easier. Our products here take weeks from order to arriving at FBA instead of months.
- Communication isn’t always faster or easier, BUT it has tended to be clearer with less errors.
- Speed. We have been able to make changes and pivot really fast with our USA manufacturers.
So, should everyone abandon China and look for US manufacturers?
Not quite. There are still so, so many things that just aren’t made here. Entire categories and niches basically have to be made in China. And for the products that can be made here, they are still going to be more expensive generally.
But, we are also hearing of more people going to India, Taiwan, Vietnam, etc. So even if you don’t make a change, you may want to start browsing.
And then as far as long-term selling goes…
Saving $$$$ on LTL Shipments
Are you importing your products from China?
The US government is stepping up its game in removing pirated and counterfeited products from all of the e-Commerce platforms operated within its borders.
It has recently added new sites operated by Tencent and Alibaba in their “Notorious Markets” lists.
All of the e-Commerce sites and physical stores operated by these two groups were suspected as businesses that are manufacturing, distributing, and selling counterfeited products, which is against the law.
Now, most Amazon sellers know there have always been fake goods on Alibaba. Ever since we started talking about Alibaba, we’ve told sellers to do due diligence. If you are selling Disney or Nike products you got on Alibaba… you better have done your homework :).
So this is more for unwitting consumers who have been hearing about sites like Aliexpress and Alibaba more and more in recent years.
But, it will be interesting to see if sellers will get some kind of extra import scrutiny in future years.
Right now, the list identifies 42 online markets and 35 physical markets that are reported to engage in or facilitate substantial trademark counterfeiting or copyright piracy.
Amazon also recently poured hundreds of millions of dollars into creating an anti-counterfeit task-force.
Will all this be enough to reduce the number of pirated products being sold on Amazon?
Time may tell.
TRIBE SPOTLIGHT OF THE WEEK
It’s all About Momentum!
See How This Wonderwoman Got Her Momentum In April 2021 and Reached Her Platinum Lanyard Status
“Success is like a snowball. It takes momentum to build. The more you roll in the right direction, the bigger it gets.”
It takes one moment to completely change your life forever. And for one of our tribe members, Kristen, that moment came last year in February when she joined Tribe 5.
Most people think that you need to absorb everything first and understand the core concepts in building your Amazon business before you can be successful.
But, it’s a different thing for Kristen. Instead of learning everything first, she took the most important step in building her business and changing her life forever. That is taking action.
After joining Amazon Sellers Tribe last year, Kristen made her first sale in March. She was so happy and motivated. Because of her newfound motivation, she kept pushing forward, built the momentum she needed to create a successful business.
Then, in April 2021, something amazing happened. Kristen got her momentum and her Amazon business ran wild. She began selling a lot of things, which made helped her grow her business fast.
The simple act of taking action took her a long way. And in December 2021, she already hit $500,000 in sales. This year, Kristen is looking to break her last year’s record and is already on her way to doing so. You can read her full story below:
As you can see, the Amazon Seller Tribe is more than just teaching how to sell on Amazon. It’s about helping each other become better at selling Amazon, and meeting like-minded people who will be there with you through ups and downs.
Inside, you’ll learn the struggles, challenges, and problems that each member had to overcome to reach their goal.
You’ll also learn the right mindset and habits you need to grow your business.
The best part about this amazing group of people is that they’ll be the first ones to push you to take action immediately.
So, if you want to be successful like Kristen, this is your chance to do so. Join the Amazon Sellers Tribe today and become a part of a growing community with the most 7-figure Amazon sellers in the industry.
Want to see their story firsthand? Or perhaps make it your own? You can start a free trial to the Tribe today:
AMAZING FREEDOM PODCAST SPOTLIGHT
Want to see better numbers with your Amazon business?
Are you on the verge of giving up on your Amazon venture because it seems like it’s never going to pan out?
These are some of the things that Nate and I experienced ourselves.
And today, we’re going to share with you how we made our own brand in Amazon and the important things you need to do to get better margins.
- [0:28 to 0:56] The road to entrepreneurial success is never a straight line!
- [7:21 to 7:40] Our very first Insider Magazine is out!
- [35:08 to 35:49] Have a true financial snapshot every month!
P.S. Can you do me a quick favor? Please leave feedback on our Apple Podcast to promote it. We will surely appreciate it if you can leave an amazing comment so more people can see it.
IN CASED YOU MISSED IT
(Here’s a quick roundup of our best reads from the last few weeks)
MEME OF THE WEEK
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