Selecting the Right Products to Sell on Amazon Vendor Central - Means Adapting a Data Driven Approach to Maximize Profit & Margin
Starting a business and selling your products on Amazon is a smart move. With millions of customers shopping on the platform every day, it's a great way to get your products in front of a huge audience. But, it's crucial to ensure that you list your products in a way that maximizes your profits and protects your listings from hijacking. In this article, we'll show you how to do just that.
Step 1: Determine Your Average Net Profit Per Minute (PPM) for the Last 12 Months
Before you start listing your products on Amazon, it's essential to understand your current profit margins. Take a look at your business's financial records from the past 12 months to determine your average net profit per minute (PPM). This will give you a clear idea of your target profit margins and help you make informed decisions about the products you list on Amazon.
“Net pure profit margin or Net PPM is a financial metric that measures the profitability of a product or business, taking into account all costs associated with the product or business, including the cost of goods sold, marketing and advertising expenses, and other operating costs.”
Step 2: Identify the Ratio between the Average Selling Price (ASP) and the Cost Price of Your Products
Once you know your target profit margins, it's time to determine the ratio between the average selling price (ASP) and the cost price of your products. This will help you identify the price point at which you'll be able to reach your target profit margins and make a profit.
Step 3: Use Tools Like Jungle Scout Cobalt to Determine the ASP in the Market for Your Products
To determine the ASP for your products in the market, use tools like Jungle Scout or Profitero. Profitero is a powerful market intelligence tool that provides valuable insights into the pricing and performance of your products on Amazon and other e-commerce platforms. With this information, you'll be able to make informed decisions about the price at which you should list your products on Amazon.
Step 4: List Only Those Products That Meet or Exceed Your Identified ASP-to-Cost Ratio
Amazon, is a stock market for products & brands - leverage your understanding of your category and product to win
Finally, it's time to list your products on Amazon. But, before you do, make sure you only list those products that meet or exceed your identified ASP-to-cost ratio. This will ensure that you're only selling products that earn you a profit and help you avoid margin compensation requests and delistings from your Vendor Manager.
