Long time blog readers will know that I’ve always preached outsourcing and utilising software and tools as much as possible in your online business. After all you don’t want it to turn into an online job as I call it, where you spend the majority of your day doing menial, repetitive tasks.
No! That’s not the idea at all and in fact you should be doing the opposite and trying to maximise the time you spend on high level tasks and decisions that can make a real difference to your business.
But I will warn that there’s a limit to this. Don’t be one of those people searching for the best software for every little part of your business, when 90% of it isn’t needed!
I’ve seen this happen many times, where a newbie starts an online business, be it Amazon FBA, Shopify or anything else, and immediately they start searching for that must have software. Before you know it they’re paying hundreds of pounds a month in subscription fees before they’ve even started selling!
I know what you’re now thinking – make up your mind Andrew do I need software or I don’t need it!?
Well my answer is… YES! 100% you do. But focus on the few vital tools that will make running your business significantly easier or quicker.
And that’s exactly what today’s post is all about. I’m going to go through what I consider must have software for creating a successful arbitrage selling business on Amazon UK.
I’ve spoken before about the best tools for a private label business on Amazon but these are quite different to what you use in a flipping business
So let’s get to it.
Sourcing and purchasing products is really the crux of a successful flipping business and this is just common sense.
Say you had a business selling £10k a month on Amazon with 25% margins. That means a gross profit of £2,500. To make the calculations very simple let’s pretend that all products are sold for 2x the purchase price and that gives you a 25% margin.
Now the absolute easiest way to increase that monthly profit is by spending more! For example it would be extremely difficult (almost impossible) to increase your margins from 25% to 37.5%, thereby increasing your monthly profit to £3,750.
But on the other hand it’s very achievable to increase your spending by £2,500, up to £7,500, giving you that same £3,750 a month in profit.
And there’s one tool that is king when it comes to sourcing for your Amazon flipping business:
For once a company’s tagline is 100% accurate as SellerAmp really does simplify your sourcing analysis.
As we spoke about in a recent blog post covering the results of one year of flipping on Amazon UK, there are many different sourcing methods available but they can be broadly split into OA (online arbitrage) and RA (retail arbitrage).
And SellerAmp covers them both.
They have a Chrome extension which can be used to analyse a product on any website which will immediately tell you if it’s a profitable flip or not.
So from any product page you simply click the extension and you’ll get this pop-up window:
As you can see it immediately shows you the profit and return based on the current Amazon selling price as well as how many units are sold each month for this product.
It also shows you the dimensions and has one click links to take you straight to the product page on Amazon or to search google for that product.
As well as the Quick Info there’s multiple other tabs, such as:
Ranks and Prices
As you can see SellerAmp provides a ton of information and tells you pretty much everything you need to know to be able to make a buying decision.
And for retail arbitrage their mobile app gives you all the same information as the web app.
So when you’re out and about and see a deal on a product, you can immediately find out if it’s profitable to sell on Amazon.
You don’t even have to search for the product and can simply scan the barcode to make sure you get a perfect match.
So what does all this functionality cost you?
Well, SellerAmp has two plans – Getting Started and Getting Serious:
The only real difference is multiple installs and active sessions, which isn’t really needed unless you have business partners and other people sourcing for you.
And at £11.95 + VAT a month, which you can bring down to £9.95 + VAT paying yearly, I think SellerAmp is amazing value and a priceless addition to any flipping business.
For this next tool, some people might say it’s not really needed when you’re just starting out and you can get by with SellerAmp alone.
And while this may be true, I think that for anyone serious about their flipping business, you want to learn to use this tool as soon as you can – otherwise you’re simply leaving money on the table.
I won’t actually go into too much detail now as there’s already a ton of great resources out there on Keepa and it would require its own dedicated blog post to even start to cover it.
But put simply, Keepa is the next step up when it comes to product sourcing and it can drastically increase your profits by allowing you to use historical Amazon data to time your sales and purchases.
At a certain point it’s not enough to just look at a deal and the current Amazon price and then decide whether it’s a good purchase or not as there are multiple other factors you have to look at.
Often Amazon will price match other offers, so their current price may be short lived.
It may be a seasonal item that has lulls and then peaks of demand where the price shoots up.
There may be an influx of sellers, causing the price to crash temporarily.
And with Keepa you can see all of this!
As well as this sourcing information, it also shows you variation sales, allows you to track products on Amazon and get price alerts, and even has its own Product Finder tool which you can use to find profitable products to flip.
All in all, I think Keepa, in conjunction with SellerAmp, is a must have tool for any serious flipping business.
Once again Keepa is also great value, with a free and paid option, which costs just €19 a month.
You can see the full difference between the two options here:
P/L Tracker and Sales Dashboard
In my opinion this is the final must have tool for any serious Amazon arbitrage seller. Some people may argue that you don’t need this straight away but you’re just giving yourself more admin work to take care of that way and starting out right off the bat with a P/L tracker saves you so much time and makes your accounting much more straightforward.
Now there are a ton of options in this space but the vast majority of them are geared heavily towards private label sellers on Amazon and lack a lot of the needed features for flipping.
For this reason, like a lot of UK based resellers, I started off using an app called Seller Toolkit, which is a lot more flipping focused.
This costs £32.99 a month on the Level 1 plan (up to 3,000 orders a month) and £53.99 for Level 2 (up to 6,000 orders a month).
And while I didn’t have any major issues with the software, I did always find it a little bit clunky and slow.
Seller Toolkit vs Shopkeeper
I recently had the chance to try Shopkeeper specifically for my flipping business and have loved it!
Right away I preferred the look and feel of Shopkeeper as it’s a lot more premium and responsive vs what I was used to with Seller Toolkit.
It also has some integral features that I really needed, such as the ability to add different costs for the same product.
Previously I would have to create multiple SKUs for the same product or manually calculate my average purchase price and then apply it over all orders, which was of course a very clunky and inaccurate way of recording sales and profit!
For example say I had an item that I bought for £25 and sold for £50, making a 50% ROI after fees, and I bought and sold 100 of them.
Fast forward a few months and the price is now £30. If I updated my COG for this product on Seller ToolKit it would apply to all previous orders as well and skew my past P/L! The other “solution” was creating a different SKU for every shipment of the same ASIN and then having to re-enter the COG every time, even if it’s the same.
Shopkeeper solves this problem completely with their Cost Period tool that allows you to add multiple costs for the same product, set over any custom period of time.
So for this one product I can set an unlimited amount of cost periods and accurately track my changing profit over time.
This feature alone was enough to make me switch over to Shopkeeper completely!
And the whole switchover process was extremely simple and painless. For one Shopkeeper offer unlimited back data from Amazon for free (most other software, including Seller Toolkit, charge you an additional fee for this) and they also have a great tool to upload all your COGS quickly and easily.
You simply go to Settings > Products – Bulk Upload:
And from there you can tell Shopkeeper how to pull data from an existing spreadsheet and automatically apply it to all your products!
So all you have to do is download your COGS from Seller Toolkit (or whatever software you currently use) and upload it to Shopkeeper and your COGS will be updated – as simple as that and the whole process takes literally minutes!
There are loads of other little tools and features in Shopkeeper that I love, including their Presentation mode, which allows you to hide all identifying product information (after all who doesn’t love posting flex screenshots), as well as their ka-ching notification that alerts you to every new sale (the best motivation tool when spending hours product sourcing!).
On top of that they have some very interesting further upgrades coming, including a VA mode – where you can set exactly what sections of the software you want to provide access to, and also more in depth inventory management.
Shopkeeper starts at $20 a month for their Novice plan, which covers you for up to 250 orders a month.
Next up I’m also going to add in one bonus software to our list. I wouldn’t include this as it’s not at all integral, but it’s very useful and has one important feature that gets it in – it’s FREE.
Unfortunately Amazon customers very seldom leave reviews and the easiest way to increase this is simply by requesting it. This can be done manually on your order page but why not save time and use software to do this for you?
That’s exactly what FeedbackWhiz does, and most importantly it’s free for up to 150 requests a month.
There are other options available here, like Feeback Five and Sagemailer, but they all do pretty much the same thing so it’s really a matter of personal preference (or really which one offers the most free requests a month!)
So there you have it. The three must have tools for running a successful Amazon FBA flipping business
In total they will cost you less than £50 a month, which is amazing value for money, and they provide everything you need to create a 6 or even 7 figure reselling business.
So without any further ado from me, let’s get to it!
Rather than make you wait until the end to find out, let’s get straight to my final results and then I’ll work backwards and break it all down in more detail.
In total, from June 2021 to the end of May 2022 – I sold £100,520.82 with a profit of £25,755.21
Was I happy with this? Well – yes and no.
When Andrew first asked me to try flipping / arbitrage selling as a test I was fairly hesitant. I imagined it being very time intensive and something more like an online job rather than a true Amazon FBA business.
It turns out on this front I was almost completely wrong.
Yes, flipping does require a lot of upkeep compared to private label and it is very time dependant BUT there are so many different models within flipping.
You have retail arbitrage, online arbitrage, Amazon to Amazon, seasonal items, long term holds, etc!
So don’t make the mistake of thinking that flipping only means driving around tonnes of stores scanning items endlessly (not that there’s anything wrong with that sourcing model, plenty of people make good money with it).
But back to my point, and when I agreed to do this and document the results, I honestly would have been happy making £500 a month as a little extra side income.
So based on that I’m ecstatic with making over £25,000 profit! Especially when I consider how little time I really devoted to this.
But I also can’t help being a bit disappointed because I’ve seen what the potential is with flipping and I know I could have made even more, especially as it was really the golden age of flipping with lockdowns and no holidays abroad.
This can be perfectly illustrated by going through my results month by month.
The Amazon Cash Cow
As you can see I had an amazing start and in July and August, my first two full months, I made more than £4,000 profit each month!
If I had kept that going for the full 12 months I would have easily passed £50,000 profit for the year. But even at the time I knew that wouldn’t be possible.
Why? Because my sales in those months were nearly all coming from one single product…
And with flipping this will never last. Sooner or later I knew other sellers would find that product and the price and margins would come crashing down.
After all you have to remember that this isn’t like private label where you control the listing and are the only seller. With flipping you’re competing with tens and sometimes even hundreds of other sellers for any product and this invariably means that prices and margins come down over time.
Which is exactly what happened with this particular product for me and within a few months it wasn’t even worthwhile selling it anymore.
In total I sold 314 units of this product, which accounted for a huge almost 40% of my total sales for the entire year.
And that’s the main reason for the drastic drop in sales and profit in September and particularly October, where I sold a paltry 15 units, making £2760 in sales and a measly £335 profit.
Thankfully I managed to bounce back from this big setback and in fact in December I was close to matching the highs of the summer months in terms of profit. This is mainly due to the fact that I had bought and held quite a few toys from the summer onwards and tried to time selling them during the Christmas rush, which led to some good returns.
Long Term vs Short Term Holds
However I’m not 100% convinced by this long hold strategy as often it didn’t make sense from a pure ROI perspective.
If I buy a product for £100 and hold it for 4 months to get a 60% ROI, that sounds great right? It’s giving me a 3x higher return that if I sold a product for 20% ROI…
But really when you’re comparing ROI it’s much fairer to look at your annualised return. Or to put it simply, if I can buy a product and sell it for a 20% ROI but do that on a monthly basis, then after 4 months I’ll have more than doubled my money.
That 60% ROI suddenly doesn’t seem so great now does it (the power of compounding!)?
Of course to get a bit more advanced it’s not quite as simple as that either as you still have to take into account your available funding (it might not be a question of a 20% short hold vs a 60% long hold if you have the money to buy both) and also obviously your time loss from dealing with more units.
Either way ROI is integral to a flipping business as it shows you how well you’re utilising your money, so I’ll be testing and tracking these different selling methods further this year.
FBM vs FBA
Another important point is that during this transition where I had to find new products to replace my green origami duck (side note – I love this presentation feature on Shopkeeper!) I also switched over from FBM to FBA and this made a huge difference to my business!
Going from having to package and post all orders myself to Amazon taking care of nearly all the work made everything so much easier. On top of the order fulfilment I also saved a tonne of time and stress not having to deal with customer queries and no longer worrying about my seller metrics (as it’s very hard to mess these up when you’re selling via FBA).
It’s safe to say that I now truly appreciate what Andrew’s been saying all these years about the dark days of fulfilling orders yourself on eBay and I will never go back to being majority FBM.
That’s not to say I don’t sell via FBM at all as it still has its place, mainly when you’re not 100% sure about a product and want to be able to return it if needed (one of the joys of flipping vs private label!) and also when it’s just more cost effective (usually for larger items).
But as you can see these make up a small minority of my sales overall:
Increasing ROI with A2A Flips
Moving on from December and the Christmas boost and I saw an inevitable big drop in sales in January, but actually Q1 of 2022 was very consistent for me and my profit held up really well from January to March due to increasing ROI and margins.
You can see what a huge difference margin makes to your bottom line as while January’s sales fell a big 66% from December, actual profit was only just a little under 50% less.
This was achieved by focusing more on Amazon to Amazon flips which I saw a lot of success with on a few products in particular. But don’t worry, it was still a good mix of profit and not overly reliant on a single item like before.
If I could go back in time I would have bought hundreds of the top two products as they were easily selling multiple units a day with a great profit per unit and more than a 100% return on cost price!
But unfortunately at the time I didn’t quite have enough knowledge and experience to go all in with these.
Unlimited Amazon Buying Account
And sadly as Q1 drew to a close another slight reinvention became necessary as I lost my unlimited purchasing on Amazon!
As you’ve probably already seen, as a buyer most products on Amazon have order limits preventing you from buying in bulk.
For a while I didn’t have these and could pretty much order as many of each product as I wanted and this of course helped hugely when I focused on Amazon to Amazon sourcing.
But in typical inexplicable Amazon style (nobody really knows for sure why some accounts get unlimited order quantities) the order limits came back on my account. And once again the effect of this can be seen by the drop in sales and profit in April and May, ending my first full year on a slightly negative note.
Projections and Goals for the Year Ahead
However I am not deterred and after seeing the potential of flipping I am determined and quietly optimistic that I can match and surpass my first year.
Some months will be undoubtedly hard to match but I should definitely be more consistent overall.
Looking back and the most vital point for me in year 2 is to avoid the big slow downs in certain months due to my overreliance on certain products and sourcing methods.
I plan to avoid this happening again but focusing a lot more on replens (items that you can sell again and again) and crucially – sorting out my storage issues!
Space was a huge limiting factor for me as I would order products, fill up my space, and then not be able to order anything until I sent off / sold my current stock.
This of course meant pausing my spending for periods at a time and in flipping, spending = profit at the end of the day, so fixing this storage problem is my no.1 priority.
I have a few different options here:
Add storage to my house
Get a storage unit
Use a prep center
1 is obviously my preference due to it being the lowest cost overall, but it’s not that feasible living in London with a tiny garden!
That leaves options 2 & 3 which will both cut into my margins and profit. But I already made the mistake of “saving money” on this and then losing out on significantly more sales and profit by not having the space.
And a prep center will not only help with that but it will also save me time, which again is a key part of my targets for year 2.
My goal with flipping has always been to spend as little time as possible on it while maximising profit and the two key areas I can do this moving forward are:
That means a prep center and a VA (virtual assistant) are integral parts of my plans looking ahead at year 2 and I will cover the options and costs here in more detail in further dedicated blog posts.
Overall I am very pleased with my results and am extremely excited to grow this business (and yes, I can happily call flipping a business now Andrew!).
To put an exact target on year 2, as I think setting goals is always helpful, while I could pretend and say I’d still be more than happy with £1,000 a month considering the time I put into this, the truth is anything less than year 1 and I’ll be disappointed!
So there you have it! A £26,000 profit target for year 2. I don’t think it will be easy without the big summer months and lockdowns, but I’m excited to see how Henry gets along with this.
And of course we’ll be covering it in detail on this blog and we already have loads of additional content planned around flipping, such as:
• The Best UK Flipping Groups • Must Have Flipping Software • Prep Centre Showdown • VA Service Showdown
And much more!
So stay tuned for that.
As always if you have any questions at all then leave them below.
The question of whether or not to register a Limited company is one of the first decisions you have to make when starting an Amazon FBA business in the UK. And I’ve written about this extensively and gone over all the pros and cons of operating as a sole trader vs a Ltd company so I won’t cover that all again now.
And when you are ready to take things to the next level and move from a sole trader to a Limited company, you’ll have any decision to make – which formation company should you use!?
As you can see there are no shortage of options out there, with the prices and services also varying hugely.
Can you register a Limited company without an agent?
But before we get into the different companies and who I recommend, let’s take a little step back and first decide whether you even need to use a formation agent to register a Limited company in the first place?
The short answer here is no, you don’t need to use a formation agent and can simply register your company directly with Companies House.
This costs £12 and is a fairly simple process. There are some documents you’ll have to prepare and you’ll need to provide information on all people involved with the company who are shareholders or have significant control.
Once completed your company is usually registered within 24 hours and you’ll receive a certificate of incorporation – a legal document which confirms the company’s existence and date of formation.
All pretty straightforward right?
So as I said you really don’t need a formation agent (despite what some of them make it seem like on their websites!) as it’s a fairly easy process with a lot of help available.
The benefits of using formation agents
BUT formation agents offer a number of additional services and extras that you may want to use! This includes:
• guidance on the type of company that best suits your needs • assistance naming your company, including those that require permission • ongoing company secretarial support • registered office address services • help setting up a business bank account
Coupled with the fact that their formation services are usually very reasonably priced, not costing much more than registering directly with Companies House, and I do recommend most people use them for peace of mind and to make sure everything is done correctly.
But as you can see there are over 120 different options for you to consider! So as always I will make life easier and recommend the 3 best limited company formation agents, based on their reviews online, my own experience, and feedback from my trusted blog readers and Amazon Sharks members.
Without any further ado, here you go:
Your Company Formations
With 4.9* from almost 4,000 reviews on Trustpilot and amazingly priced packages, starting from just £12.48, Your Company Formations are my no.1 recommendation.
While their Digital package offers everything you need for the same price as you’d pay Companies House to incorporate directly, for most people the Privacy package at £27.48 will be the best option:
With this option you get everything in the Digital package plus printed copies of your certificate of incorporation and share certificates plus a registered office address and director’s service address.
Now this is very important and something a lot of people ask me about.
Can people see my details when I register a ltd company?
Yes! All companies are searchable and you are able to see the registered address, director, and director’s address.
So if you don’t have an office and are using your home address for this, which most people do, then this will be public record… and that’s where Your Company Formations come in! Using their Privacy package will allow you to use their address for your registered office and director’s service address.
That way if anyone searches for you or your company your details will be kept hidden.
Well worth the £27.48 fee, which is great value if you ask me!
If for whatever reason you don’t want to go with Your Company Formations then that’s fine, they’re not the only company offering address services, and there are plenty more good options out there.
Once again their basic package costs just £12.99 and then you have multiple other options depending on which features / extras you need:
Last but not least we have Rapid Formations, who average 4.8* on Trust Pilot from over 10,000 ratings. Slightly less than our first two choices but still a very high score.
And actually I’m pretty sure that Rapid Formations and 1st Formations are white label versions of the same company as their websites are very similar, even down to their package names and prices:
That brings me very nicely on to the conclusion to today’s post.
While you don’t need to use a formation agent, I do strongly recommend it, as you really lose nothing and in fact you can see some significant savings if you need any of the extras such as registered addresses, as they cost significantly more if you’re signing up for them separately.
For example Rapid Formations charge £39 per year for their London registered office service.
In comparison their Privacy package gets you company formation, a London registered office, and a London director’s service address, all for £20!
That means you pay WAY less than registering yourself with Companies House and adding it on later, plus you save time.
It’s rare in business to have a no brainer decision, but this really is one.
For those of you who are transitioning from a sole trader to a Ltd company on Amazon, I know there are a lot of horror stories out there about how difficult this is and how it can lead to your account being suspended for months.
But not to fear as most of this is scaremongering and I am going to write a separate blog post where I outline step by step how to make the changeover on Amazon without disrupting your business and losing precious time and money.
As you will have most likely heard by now, from May 12th 2022, Amazon are adding a 4.3% fuel and inflation surcharge to FBA fulfilment fees for the UK, Germany, France, Italy, and Spain.
What has caused the fee increase?
This has mainly come about as a result of increasing oil and fuel costs:
I’ve seen a lot of reactions to this most recent fee increase announcement and they are understandably negative… after all nobody wants to pay more in fees! Especially considering that it’s on top of the small increase to fulfilment fees which already came into place on March 31st 2022.
But I’m going to go against the grain here and say that this fee increase was 100% expected and very reasonable when you consider the amount of money Amazon spent increasing their fulfilment capacity over the last few years of COVID and supply chain bottlenecks.
In fact they actually overspent here in an attempt to deal with the pandemic demand, leading to a first quarter loss for Amazon of $3.8 billion. This is the first time since 2015 that Amazon hasn’t made a profit and the news led to a 14% drop in their share price in a single day:
Overall, Amazon claim to have “more than doubled” their fulfilment capacity across Europe, which us FBA sellers noticed first hand towards the end of 2021 where we saw Amazon fulfilment centre check in times drop severely and the inventory and storage limits, which had plagued many FBA sellers, start to be lifted.
And it’s for exactly that reason that I’m more than happy to pay slightly more in fees, rather than have to deal with inventory constraints.
Now I know what many of you are thinking right now – “but Andrew 4.3% isn’t slightly more!”
But my answer is that it really is.
How much is this fee increase actually going to cost you?
Firstly let’s point out that it’s a 4.3% increase to the current fees, not a 4.3% increase in total.
So let’s say you currently pay £2.21 in fulfilment fees for an item that you sell for £20. That means that your FBA fees works out at 11% of your sale price.
From May 13th that fee isn’t going to increase to 15.3%! No, it’s going to increase from 11% to 11.47%.
And suddenly the fee surcharge seems much more reasonable when you consider it as a 0.5% loss of margin.
I know this is obvious for most of you, but you’ll be surprised at the number of people who see the headline of 4.3% fuel and inflation surcharge and immediately think they’re losing that much margin!
So as I said, I think it’s a very reasonable increase. Especially when you consider how cheap Amazon’s FBA fulfilment fees are to start with!
I showed this in black and white in our Fuflilment Centre Showdown post last year where I tested 4 different UK based fulfilment centres and compared their costs to Amazon for a theoretical product.
And the closest any of them could get was 61% MORE EXPENSIVE than Amazon (with the highest being 255% more).
I hope now you can see why I consider 4.3% to be a very small increase!
What’s the best way to deal with the fee increase?
So rather than get hysterical and start bashing greedy Amazon, let’s see what we can do, if anything, to offset this fee increase.
And really you only have two options here:
Accept a lower margin
This is really the do nothing choice, where you simply absorb the additional costs and keep your prices the same.
Increase prices to maintain your margin
The other option is to increase your prices to keep your gross margin the same.
If you’re using a sales and P/L dashboard, such as Shopkeeper, which is what I myself use and recommend, then you’ll be able to see exactly what affect this fee increase will have on your margins as they include a full fee breakdown for each product.
Should you increase your prices on Amazon?
Which option to choose really depends on your specific business and product and it’s impossible to give one blanket recommendation.
You have to consider your competitors (have they increased their prices?), where you’re positioned in terms of pricing vs other products, if you’ve already increased your prices recently (due to increased shipping costs for example) etc!
Generally speaking I would try to increase prices rather than sacrifice margin, especially if you haven’t done so recently and are presumably already absorbing recent supply cost increases. Sadly it’s the year of inflation so customers will be used to rising prices and it shouldn’t negatively affect your conversion rate and sales.
So that’s all there is to it for now! For most of us these fee increases won’t have made a significant difference.
If however you’re one of the unlucky sellers whose product has now fallen into a different size and weight tier then you may be looking at a much bigger increase in your fulfilment fees.
In that case stay tuned as I have a future blog post planned that could potentially save you a lot of money!
Product pictures can make or break your Amazon business.
Long-time blog readers will now that I’ve been stressing for years now how product photography is one of the most important aspects of selling online, and this applies more than ever with Amazon.
And don’t think I’m exaggerating here! For me product pictures and reviews are the two most important factors when it comes to being successful on Amazon. Even the listing and description, which some people agonise and spend hours over, are nowhere near as important.
Just think about it – customers can’t see or touch or test your product, so what are they relying on? Reviews and pictures!
If your product pictures are premium, then naturally buyers will assume your product itself is premium. So not only will you be able to get away with charging a higher price, you’ll also have a higher conversion rate.
And the importance of this can’t be overestimated – a high conversion rate increases the profitability of everything you do on Amazon!
For one thing it automatically means you make more sales and money off the bat as a listing with a 15% conversion rate will make 50% more sales vs a listing with an average Amazon conversion rate of 10%.
But this also has the knock-on affect of making Amazon love your product and bumping it higher and higher in the search results, meaning… more views and more sales!
And it doesn’t stop there. A high conversion rate can also be the difference between a profitable and unprofitable PPC campaign. Again, it’s all simple maths here – if you pay on average £0.10 per click for 500 clicks a day and make 50 sales from that (a 10% conversion rate) that gives you a PPC cost per sale of £1. But if you instead get 75 sales from your 500 clicks (a 15% conversion rate) that means you’ve lowered your PPC cost per sale to £0.67.
This all makes a HUGE difference when it comes to scaling your Amazon business.
So what am I getting at with all this? Well it’s simple really and the main point of today’s blog post – don’t cut corners when it comes to product photography for your Amazon FBA business – get the BEST pictures that you can.
And yes, that means NOT doing it yourself at home with a smartphone camera! The days where this was good enough are long gone and you need to use a professional for this.
How do you choose the best Amazon product photography company?
Now over my many years of ecommerce, eBay, and Amazon selling I’ve personally tried a lot of different product photography companies – ranging from big studios to small freelancers and even semi-amateurs.
And honestly I’ve had much more success with some of the “smaller” companies, especially local photographers who you can even meet with and discuss what you want to achieve with your product pictures.
For me the bigger photography agencies just don’t offer the level or service and customisation that’s needed for Amazon sellers to create a unique but premium look.
However, using local photographers and smaller freelancers, who are often one man (or woman!) bands, also has the problem of them not always being available, moving away or even stopping their business altogether.
And that’s exactly what happened to me. Margaret, of fineartimaging.com, who I had been using and recommending for years, retired and closed her business.
So last year I started searching for a new company to use for my own projects and also to recommend to my blog readers and Amazon Sharks members.
And from hours of testing and research – here are my recommendations:
This is my no.1 choice as when it comes to quality vs cost, you just can’t beat a good local photographer.
This is especially true when you have multiple products and go back to them often as once you build a good relationship and they know what kind of pictures you’re looking for, it’s plain sailing.
For me this is the main advantage of using a local photographer vs using studios where you usually need to give a lot of input in terms of ideas and copy for your pictures. Also the quality is way more consistent as it’s the same photographer every time. This was a big issue I had testing some bigger companies where the outcome was just too random.
Unfortunately the biggest downside to this option is that finding a good local photographer is sometimes easier said than done and it does require some work on your part as you have to look at local classified ads, check out forums etc. But don’t let that put you off as if you can find one you’re set and this is my no.1 recommendation for getting the best product pictures possible without breaking the bank.
Product Photography Studios
This is my second recommendation, which may be surprising after all the negatives I talked about BUT they can all be minimised by choosing smaller companies that specialise in Amazon product photography.
And this is a big point because never mind the technical requirements, the style of effective Amazon product pictures is different to even Etsy or your own ecommerce store.
Of course it’s not as simple as just searching for “best Amazon product photography companies” as you’ll be met with thousands of results – most of which are completely rubbish. Seriously, I won’t post pictures and attack businesses unnecessarily but so many of the options I looked at are just terrible. And if that’s what they choose to put in their portfolio then I’m scared to even see the normal results!
But thankfully you don’t have to go through this from scratch as I’ll start you off with a few recommendations for Amazon product photography studios in the UK:
Photography Works offer 3 different Amazon image plans, but for what we’re looking for we’re only really considering the Conversion Booster PRO as simple white background images won’t be enough to stand out against the competition.
This costs £299 and for that you get 7 branded images for your Amazon listing.
One important point to note here, you can’t have any branding on your main image and this will lead to your listing being suppressed so be careful with this. I’m sure Photography Works are well aware of this but I wanted to point it out just in case!
Overall I’m really pleased with the quality of their portfolio. That, along with some very reasonable pricing, makes them a solid recommendation.
Photograph My Product again offer 3 different packages for Amazon sellers:
And what I really like about their options is that they all include a lifestyle image! So actually in this case you could quite happily go for the Starter Pack as it includes 7 pictures in total in a variety of styles.
And for £225, considering the quality of their portfolio, it’s another a great option for your Amazon FBA product photography.
Now I wasn’t 100% sure about including this last option, for two reasons.
One, because they really specialise in clothing and jewellery, and two, because as I covered in our product photography test a while back, I find their images to be a bit too “clean” when we’re looking for something more lifestyle focused (think Instagram pictures here as that’s what really sells your product).
But there’s one thing I can’t argue with and that’s the unbeatable pricing they offer, with 3 product pictures starting at £15 + VAT and additional images only costing £2 on top!
So while it’s still not my main recommendation for all the reason written about above, 7 product pictures for your Amazon listing for £27.60 is a crazy price and a solid budget option for people that don’t have £300+ to spend here.
And there you have it!
As I talked about, I have had some great success using local photographers so I always suggest trying to go down that route initially. But if you’re having no luck there then here are some great options to consider.
As always I’d love to hear your thoughts and suggestions so if you have a product photographer that you’ve used and recommend, please feel free to share them below for other blog readers to see as well.
In today’s post I want to share a quick tip that I’m shocked the majority of Amazon sellers don’t seem to know about – how to remove negative reviews! And this is something that really does work 99% of the time.
But before you get too excited I’m talking about seller feedback here – NOT product reviews.
Product vs Seller Reviews on Amazon
For those who don’t already sell on Amazon, there are two types of reviews you can get for an order.
You can get seller feedback, where the customer rates you as a seller, and you can also get a product rating / review.
Now back in the eBay days seller feedback was so important – but on Amazon it really isn’t as unlike eBay you can’t even see the seller rating on a product page.
You have to go to the seller profile for that:
Product reviews on the other hand are to me the no.1 factor when it comes to your Amazon business. Why? Because they affect everything – starting with your conversion rate!
It’s doesn’t take a genius to figure out that if a customer is faced with two products at a similar price point, one rated 5* and one rated 4, they’re going to choose the 5* product… that’s just common sense.
And the knock on effect this has is huge!
A higher conversion rate means Amazon will improve your search ranking, leading to more traffic and more sales.
A higher conversion rate will also improve your ad performance, again leading to more traffic and more sales at a lower cost.
I can’t overestimate how important product reviews are for your Amazon business.
But that doesn’t mean seller reviews don’t matter at all and you can simply ignore them, not at all – I still suggest keeping a close eye on your seller feedback and removing any negative feedback when possible.
And it is nearly always possible when you’re using FBA to sell.
Which Reviews Can You Remove?
Though Amazon state that they do “not remove customer feedback even if it is unwarranted or the issue has been resolved” they also say “there are some situations when Amazon will remove or strike through customer feedback. In such situations, if your request is granted, the impact of the feedback will be removed from your feedback rating and Order Defect Rate (ODR).”
So let’s take a closer look at what these situations are:
• The feedback includes words commonly understood to be obscene or profane. • The feedback includes seller-specific, personally identifiable information, including email addresses, full names or telephone numbers. • The entire feedback comment is a product review. For example, “The Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget.”
However, if the comment contains both a product review and feedback about your service, we will not remove the feedback. For example, “Seller’s delivery service was very slow, and the Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget.”
Striking of feedback
Amazon might strike through feedback in the following cases:
• The order was fulfilled by Amazon: The entire comment relates explicitly to delivery experience for an order that was fulfilled by Amazon (FBA). In addition to the strike-through, the following statement will appear: This item was fulfilled by Amazon, and we take responsibility for this fulfilment experience.
• The order was shipped using the Buy Shipping service: The entire comment is related to a delayed or undelivered order, which you dispatched on time by using Buy Shipping services. In addition to the strike-through, this statement will appear: “The fulfilment issues associated with this order were not due to the seller”.
So there you have it, straight from Amazon themselves.
To sum it up, if your negative feedback is a product review, which is in my experience 80% of any negative feedback left for you as a seller is, Amazon will remove it.
And if your order was fulfilled by Amazon and the negative feedback is about the order fulfilment, Amazon will also remove the feedback (well in this case technically they strike-through it).
As there are practically no scenarios where negative feedback will be related to something other than the product or order fulfilment, that means it’s in fact quite easy to maintain a 100% seller feedback.
How to Remove Negative Reviews on Amazon
Just bear in mind that you need to request the removal within 90 days and it needs to be done via the Feedback Manager. Amazon are very explicit with this, even stating that contacting support teams via Contact Us to request feedback removal can result in account deactivation.
This seems extreme to me and I’ve never actually heard of that happening but better to be safe and follow Amazon’s guidelines here!
So simply head over to Feedback Manager within your Seller Central account. There you’ll see a list of all your recent feedback and beside each one there’ll be an Actions tab.
If you click on this you’ll get two choices: Post a public reply and Request removal.
And that’s all there is to it! As always when dealing with Amazon seller support they may sometimes answer saying it can’t be removed, even when it clearly should be. Simply reply politely stating that according to their own policy, which you can quote or link to, the feedback should be removed and 99% of the time it’ll be done.
So that’s it for today’s quick post and tip.
As always if you have any questions or comments I’d love to hear from you so email me at firstname.lastname@example.org or post below and I’ll personally get back to you.
I know the blog posts have been sporadic recently as I’ve been incredibly busy dealing with some personal issues. But I have some very big plans and ideas for this blog coming up which I’m very excited to share with you all!
This includes launching a brand new product on Amazon FBA and tracking the progress every step of the way on AndrewMinalto.com, right from the product research stage all the way to the launch and beyond.
I’m still considering whether to do it myself or possibly even select one of my Amazon Sharks members or blog readers to do it. That way it would make a perfect live case study for starting an Amazon FBA business in 2022, where you can see exactly what’s involved every step of the way.
Either way I’m very excited!
But more on that very soon as it brings me perfectly to the topic of today’s post.
How much does it cost to start an Amazon UK FBA business?
But I’m warning you in advance that the answer might not be what you want to hear! And I’ve spoken about this before, how I don’t agree with some “gurus” who claim you can start an online business with next to no investment needed.
Of course it is true that we’re in an age of opportunity for business and it’s not like the old days of bricks and mortar where you needed a lot of money to get started – for rent, staff, equipment, etc. BUT that doesn’t mean you can set up your own private label business on Amazon for £100.
Sorry, it just doesn’t work like that.
You’ll notice that I mentioned private label specifically as that’s what I’m talking about in this post. Flipping or arbitrage is a whole other matter and with that business model you CAN start with pretty much any amount (and start turning a good profit almost immediately as we showed in this blog post).
Also, if you’re not completely clear on the differences between private label and flipping then take a look at this post where I covered it all in detail.
But back to the question at hand, and rather than me just giving a blanket figure of how much you need, let’s instead go through the costs step by step as there’s of course a lot of variation depending on the product, and that way you can see where it all adds up.
Generally speaking I like to get 3 or more samples from manufacturers that pass my initial filtering system and this costs about £50-£75 each including shipping via courier. It can be a lot less and sometimes even free if you’re simply sampling one of their own products, but I want the sample to be as close to my final product as possible. That means OEM branding and custom packaging and any other changes I require.
At £75 x 3, that gives us £225 for samples.
I hope you can see why I get frustrated at the people who say you can start selling on Amazon with a few hundred pounds as we’ve just spent over £200 simply to help us choose a manufacturer!
Speaking of custom packaging, this is a must have for your Amazon business where branding is so integral to the success of your product launch. You may also need a logo and some other work done, but in total £150 for design work is enough to cover everything.
Product Inventory – Product Cost, Shipping, and Taxes
This is the big one – the cost to manufacture your product in China and get it shipped to you, including all import taxes that are due.
This can of course vary hugely but working backwards from an ideal product on Amazon can give us a pretty good idea of the initial product cost, so for example something with a £15-£20 selling price and 35% margin would like something like this:
Item cost – £5 / $6.50 x 500 = £2,500 / $3,250
Most real manufacturers will ask for a minimum order of 1,000 units but if it’s your first order with them you can easily negotiate that down to 500, so that’s what we’ll use for our order size.
Shipping – £1,000
For our shipping we’ll be using a freight forwarder as they handle everything when it comes to the import and paperwork, so you won’t be hit with any nasty extra fees.
Then there are a few other small costs that you need to get to this point and they are:
Jungle Scout Software
My long time blog readers will know I never suggest getting a ton of software when you’re just starting out as you don’t need most of it and if anything it just makes your life more complicated.
The big exception to this is Jungle Scout, which you 100% need to do proper product research and validation.
They have 3 different plans:
While you can probably get by on the Basic, it does have some limitations in terms of product tracking and searches, so I’ll use 1 month of the Suite cost instead, which is £50.
And while we’re on the topic of subscriptions that you need to sell on Amazon, a GS1 membership is a must have!
The Starter 10 plan is more than enough for most new product launches, adding another £60 on to our costs.
So we’ve now reached the point where we have our products in hand in the UK and our total cost so far sits at £4,860.
But unfortunately there’s still more to go before you’re ready to start selling on Amazon!
You need to register your Trademark to be able to apply for Amazon’s Brand Registry, and this costs £170 via the Intellectual Property Office.
It’s so often overlooked by new Amazon sellers who think they can do it themselves. After all how hard is it to take a nice picture when we all have high end smartphone cameras to hand? But product photography can make or break your Amazon product launch and even a tiny difference in your conversion rate can mean thousands and thousands of pounds in additional sales and profit.
So please don’t be penny smart pound foolish and skimp when it comes to getting professional product photography done for your Amazon business – I’m talking proper lifestyle pictures and branded infographics here!
£300+ is a good budget to set aside for this.
You’re now ready to send your product in to Amazon! And with the trademark registration and product photography on top, we’re now sitting at £5,330 spent.
And last but not least we have the product launch costs:
Amazon VINE Product Giveaways
Reviews are absolutely integral on Amazon but conversely they’re also very hard to get as Amazon customers just don’t leave reviews that often.
But we can’t simply wait for our product reviews to come in naturally as they’re a big factor in people’s buying decisions, and this is where Amazon’s Vine program comes into play.
I’ve covered this program in detail in separate blog posts but long story short is that you’ll give away up to 30 of your product in exchange for product reviews.
You can of course opt for less, but as long as the product cost isn’t prohibitive, I suggest doing the full 30. In our theoretical case that means 30 x £8.75, which is the landed cost per product, so £262.50 in product giveaways.
Amazon Sponsored Products Advertising
I considered leaving this one out as technically you can launch your product without it and wait for your sales to grow organically but the whole point of this post is to show you the true costs of a real Amazon FBA product launch and a PPC budget is vital here.
Of course the idea here in the long term is that you’ll be covering PPC costs from product sales but initially they won’t be profitable so you need to factor that into your budget. You can be more aggressive but £10 a day times 30 days will set you up nicely. So that’s £300 for advertising on Amazon.
And there you have it!
That brings us to a grand total of £5,892.50
Amazon Sponsored Products
I honestly think that’s a very realistic figure but as always I’d love to hear your thoughts. How much did it cost you to launch your first product on Amazon? Was it more or less than our £5,900 figure?
If you have any questions, or even your own cost cutting tips to share, then feel free to comment below and I’ll personally get back to you.
It’s safe to say the biggest struggle for most Amazon FBA sellers this year has been dealing with restock and storage limits. The change from ASIN based limits to category based limits came with no warning and created some real problems for a lot of Amazon businesses. Here is a typical perspective on the challenges.
Thankfully storage limits are fairly easy to handle once you understand how it works – you simply have to keep your IPI score above 500 and you won’t have any storage limits to deal with. If you do need help with your IPI (inventory performance index) and getting it above 500, then take a look at this recent blog post I did on the topic: https://andrewminalto.com/fba-inventory-limit/
But restock limits on the other hand can be much harder to consistently improve as while Amazon give very clear guidelines on how to improve your IPI in 4 key areas, this doesn’t contribute to your restock limits.
Now I know there’s a lot of confusion and misinformation about this, so let’s very quickly run through the difference between the two.
Restock Limits vs. Storage Limits
What it manages?
Inflow of Inventory
Physical Storage Volume
IPI score relevance
Applies irrespective of IPI Score
Applies if you are below IPI Threshold
Volume (cubic foot or metre)
Any applicable fees
Includes inventory at Amazon and shipments on the way
Includes inventory at Amazon
Difference between Restock and Storage Limits
So as you can see Amazon clearly state that your IPI is irrelevant when it comes to restock limits and they’re instead “determined on historical and forecasted sales and determine the maximum unit quantity you are allowed to send and store in Amazon fulfilment centres”.
Now this doesn’t mean more sales = higher restock limits, and I’ve seen companies with millions in revenue have their restock limits slashed!
What it mainly depends on is your inventory age.
What is FBA Inventory Age and why does it matter?
And this is exactly what it sounds like, the age of the inventory you have stored with Amazon, which is split into 6 ranges:
You can find this by logging into Seller Central > clicking on the Inventory tab > and then going to the new Manage Inventory Health page (which is a consolidation of the previous Inventory Age and Manage Excess Inventory pages).
Now from a number of tests I’ve run myself and from speaking to Amazon Sharks members, it’s clear that Amazon want this number to be as low as possible and they actually start to penalise you for any stock that falls out of the first category of 0-60 days.
And really this makes perfect sense from Amazon’s point of view… they are operating fulfilment centres, not a storage warehouse, and they don’t want sellers keeping stock with them for long periods. They make much more money from fulfilling orders at a high rate and getting their FBA and referral fees with the shortest turnaround time possible.
So what does this mean for us sellers?
Well simply put we now have to only send the amount of stock into Amazon that we expect to sell within the next 2 months.
For example, say you normally order 6 months’ worth of stock from your supplier in China at one time. You now either have to cut down your order size and order more frequently, or you have to store the stock in the UK before sending it into Amazon. Which one should you do? The answer here is simple!
Don’t lower your order sizes on FBA products
In 99% of cases it won’t make any sense to lower your order size. Two months’ stock is simply way too low and you leave yourself open to any small delay leaving you out of stock, which will not only cost you a ton in lost sales, but it will also damage your listings’ search rankings in the long term.
That’s not even considering the fact that you’ll end up paying significantly more per unit with less price breaks from your supplier and higher shipping costs. So just don’t even think about this!
Instead focus on finding the best solution for storing your stock in the UK as you have a few options here.
Store stock at home
This is very dependent on your individual set up and the size of the products you sell. But if it’s something small and you have a spare room / garage available then this is the “cheapest” option.
Store stock at a warehouse
For most people this is a more feasible option, but it does come with the added cost. You can either look for local self-storage companies or speak to specific storage warehouses. As mentioned in a previous blog post I definitely also suggest speaking to the freight forwarder who’s handling your import as they can often offer storage at very good rates as well. The two I recommend are Woodland Global and Westbound Global.
Further to this there’s also one further “add on option” that works in conjunction with storing stock yourself or with a dedicated warehouse – Seller Fulfilled Prime!
Once again, I’ve mentioned Seller Fulfilled Prime (SFP) in a previous blog post and you might remember that I explained how I’m not a big fan as I simply love how Amazon handle everything to do with orders and fulfilment when using FBA.
There’s nothing quite like checking your phone at the end of the day and seeing Amazon have shipped out 100s of orders for you and you haven’t had to lift a finger.
But it’s something that many sellers have turned to in response to the inventory limits as it allows you to still offer Prime shipping and keep that coveted badge, without using up any of your restock and storage limits.
The SFP eligibility requirements are pretty basic and shouldn’t be a problem for most sellers:
Have an Amazon Professional seller account
Have a domestic warehouse from which to fulfil your orders
Ship over 99% of your orders on time
Have an order cancellation rate of less than 0.5%
Use Amazon Buy Shipping Services for at least 98% of orders
Deliver orders with our supported Seller Fulfilled Prime carriers
Seller must agree to the Amazon Returns Policy
Allow for all customer service inquiries to be dealt with by Amazon
The issue is more keeping up with the shipping requirements once you’re enrolled in the program!
As of June this year Seller Fulfilled Prime requires you to post orders the same day, with a 4pm cut off time, and you also have to dispatch orders on at least one weekend day. This is obviously a big problem for businesses operating Monday-Friday and also for anyone who uses Royal Mail, who won’t offer a Saturday collection.
Overall there’s no way I would want to handle the order fulfilment myself as it means a 6 day work week and hiring staff – flashbacks of my days selling on eBay!
Thankfully there is one other alternative – Seller Fulfilled Prime fulfilment centres. In theory this should be as good as using Amazon FBA. You send your goods to a fulfilment centre, who store it and ship out any orders. All while you get the Prime shipping badge and from a customer’s point of view it’s no different to you shipping directly from Amazon, but you don’t have to deal with any restock and storage limits…
It almost sounds too good to be true?
Well that’s exactly what we’re going to find out as I’ve contacted multiple fulfilment centres in the UK who offer SFP to have a little showdown and see if it’s a viable option for Amazon sellers.
Let’s get to it!
In total I contacted over 15 fulfilment centres, asking about moving my Amazon FBA inventory to them to be fulfilled under SFP. A surprisingly large number of them were unable to offer seller fulfilled prime shipping, usually because they couldn’t guarantee the same day delivery cut offs. That was an immediate no from me because it’s integral that we keep Prime shipping – the whole point is lost if not!
And then further to that I discarded a few more options as they had some questionable reviews – of course this is a bit harsh but I can’t take any risks when it comes to my Amazon business and account.
Lastly I also tried to focus on fulfilment companies that weren’t too small, where they don’t have the track record and expertise, but at the same time that weren’t too big and only deal with huge international companies as I’ve had some bad experiences with such fulfilment centres in the past.
This left me with 4 final companies to put into our showdown:
We Prep FBA
Multi Channel Fulfilment
Multi Channel Fulfilment
Now to keep things as simple as possible I’ll be comparing what I pay with Amazon FBA to fulfil each order – i.e. Amazon’s fulfilment fee – vs what I would pay to fulfil each order with these companies, and this is made up of two separate amounts:
the pick and pack fee
the postage cost
Now for the product I used when contacting the fulfilment centres, the FBA fee is £1.77 per unit.
This is a hard figure to beat considering it includes packaging and postage as well, so let’s see how the Seller Fulfilled Prime fulfilment centres get on!
Pick and Pack Fee – £1.08
Royal Mail Tracked 24 – £1.77
DPD – £5.10
So with the normal pick and pack fee and posting via Royal Mail, I’d be looking at a fulfilment cost of £2.85.
That’s £1.08, or 68%, higher than Amazon.
And unfortunately, that’s as good as it gets! As you’ll see fulfilment centres just can’t compete with Amazon’s pricing when it comes to shipping.
Let’s quickly run through the rest of the results so you can see the exact figures.
We Prep FBA
Pick and Pack Fee – £1.79
Royal Mail Tracked 1st Class Large Letter – £4.50
In this case the pick and pack fee by itself is more than Amazon’s FBA cost! And on top of that the only real postage option for SFP works out at £4.50, which completely wipes out any profit.
The total fulfilment cost of £6.29 is more than three and a half times higher than what Amazon charge.
Multi Channel Fulfilment
Pick and Pack Fee – £0.99
Admin Per Order – £0.35
Royal Mail Tracked 24 – £4.24
DHL – £5.45
Once again the postage costs destroy any chance of competing with Amazon, with a total fulfilment cost of £5.58.
And lastly we have:
The Storage Place
Pick and Pack Fee – £0.85
Royal Mail Tracked 24 – £3.15
DPD – £5.25
Amazon Logistics – £3.55
The Storage Place give us the lowest pick and pack fee so far, of just £0.85, but I have to point out that they also charge an account set up fee of £200 and £50 a week for account management support.
To try and make it tougher on Amazon I’ll even ignore those costs but that still gives a total fulfilment cost of £4.
So there you have it! Definitely disappointing results, which shows that it’s certainly not as simple as just using a fulfilment centre to get around Amazon’s storage and restock limits.
In the interest of fairness I will point out that maybe the item chosen was tough on the fulfilment centres as Amazon’s shipping is so low, and for a larger and heavier item the shipping costs will have been closer.
But I was using a real business and product for this test, so the results have to be taken at face value and the outcome is clear – Amazon FBA is still king and seemingly unbeatable. So where does that leave us? Is it all doom and gloom then?
Well no there is definitely light at the end of the tunnel as Amazon have already started to open up new fulfilment centres which will increase their capacity and then hopefully our storage limits. In fact we’re already starting to see some signs of this recently with a lot of Amazon Sharks members and blog readers telling me they’ve seen an increase in their restock limits recently, right in time for the evergreen Q4!
Other than that there’s really no other option but to store excess stock and send in enough to Amazon for 3 months max, ideally 2, as that’s the sweet spot for their aged inventory metric.
And if you weren’t already focusing on it, inventory management has become more important than ever and thankfully we have a ton of tools and software to help with this.
I’ve personally been using Shopkeeper this year after moving over from Sellics and they’ve recently introduced a new feature that helps tremendously with this, which I’ll be covering separately in a dedicated blog post, so keep an eye out for that.
There has always been a lot of interest in flipping, also known as arbitrage selling, but this has really taken off post-Covid where so many people have looked to start a side hustle after seeing how risky it is to rely solely on one source of income.
I covered the flipping business model in detail in this blog post and went over the differences between flipping and private label (the latter being my own, preferred Amazon business) and while I’m personally not a huge fan of the arbitrage model, I do recognise that it can be a great entry point for beginner ecommerce sellers.
Flipping allows you to build up a bank to invest in your private label product and you also get valuable experience selling on Amazon. It can also be started with pretty much any amount, I’m talking literally £100+ here, whereas with private label you’re looking at £5k as an initial investment – a huge difference!
For some balance and for those of you who are too lazy to go back and read my previous blog post, the main reasons I’m against flipping as a long term model are:
Flipping is time intensive
Continually sourcing products, especially if you’re focused on retail arbitrage (i.e. buying from stores rather than online), can be very time consuming.
Flipping is difficult to scale
Scaling is a lot less straight forward than when you’re making your own products to sell. You can’t simply put more money into advertising (doing PPC advertising on Amazon when you’re selling another brand is never a good idea!) or expand your product line (you’ll most likely be selling in multiple niches anyway).
You can never sell a flipping business to an aggregator
This is a big one for me, as you can never create a valuable business and brand which you can sell with flipping.
Flipping is a lot of admin work
When you’re dealing with multiple purchases, often at different cost prices, and hundreds of different SKUs, the admin work can get messy! Now this isn’t a huge problem as there’s always tools and software to help you with this, but compared to private label it’s definitely a lot more work keeping track of your expenses, sales, and profit.
In the interest of fairness, I will point out that the time intensity and scalability can be taken care of IF you do things the right way and build processes and outsource, rather than running around chasing the hot product of the week.
Now I know what you’re thinking – why did I even bother flipping then? Well the answer is I didn’t!
I simply don’t have the time to dedicate to this myself. I’m working hard to get to that elusive 4 hour work week, not go the other way back towards 40! But I have seen the interest from some of my blog readers and in the emails I get, so I still wanted to cover flipping properly. And that’s why I asked Henry, someone who’s worked for me before, to see if he’d like to try flipping and then document his results on my blog for you all to enjoy and learn from.
And thankfully he said yes, so enough from me for now and I’ll hand you over.
How Henry’s flipping business on Amazon started
When Andrew first asked me if I wanted to test out flipping for a blog post, I have to say I wasn’t that excited! I’ve been planning to launch a private label product using Amazon Sharks and this seemed like a little bit of a step down. But I thought why not give it a go, as I had a long summer holiday off from my studying, and I could hopefully make a little extra money. So after a bit of research and reading around, I dove straight in and made my first purchase – 10 swimming pools!
Definitely a very seasonal item but it was early June with promises of an impending heat wave in the UK. Coupled with the fact that with the traffic light system and isolation rules, it looked set to be another summer of local holidays, and I felt fairly confident in my purchase.
I placed this order on June 6th and fast forward just a week later and my mind had been completely changed about flipping. All 10 pools sold in one day!
I listed 4 of them at £174.50 first thing in the morning and by the time I got back from the gym 2 hours later, they had all sold. Then the next 6 arrived and I immediately listed them, this time putting the price slightly higher at £179.95 – and all 6 sold within an hour.
I couldn’t believe it was that easy, buying pools off of Amazon and then selling them back on Amazon 7 days later for more than double the price!
To delve into the actual profit, in total I paid £751.80 for the 10 pools. They sold for a total of £1,777.70 and Amazon’s fees were £326.40. I paid £14.33 per pool for next day delivery via ParcelForce, so £143.30 in total for shipping.
That left me with £1,308.00 or £556.20 in net profit. Not bad for about 30 mins work! It’s safe to say that at this point I was much more interested and ready to give flipping a real go. Fast forward one month, and after a LOT of mistakes and learning, I had total sales of £15,846.23 and profit of £3,065.19
I was incredibly happy with the result considering that because of my uni summer placement, I couldn’t put that much time into it. And on top of that I was actually suspended by Amazon for a week, in which time I couldn’t sell anything!
Getting suspended for flipping on Amazon
This suspension was my first taste of Amazon’s seller support and it really was as bad as everyone says. It was incredibly difficult to get any real help and the answers they gave were always different and never consistent from person to person. Thankfully just as I was starting to give up, someone explained exactly what was needed from me and I got my account back!
Just to illustrate exactly how inconsistent seller support is, after finally being told exactly what document they needed from me, I uploaded it thinking everything was finally taken care of, only for it to be immediately rejected. I then re-uploaded the exact same document and it was accepted…Definitely something to be aware of when you start your Amazon journey.
This is also a good time to point out that Andrew had set a rule for me when starting my flipping trial, that to make it a fair test I couldn’t ask him for any help whatsoever. So whatever my question was – about sourcing, products, shipping to EU, help with my listings etc, I couldn’t ask Andrew and instead had to rely on forums and flipping groups. And actually because of this rule I did run into a few problems and made some stupid mistakes, which I’ll go over now.
Not turning off international shipping when flipping on Amazon
One thing I was very scared of was getting any orders internationally as I didn’t know how it would work with Brexit and exporting to the EU, so I turned off all international shipping on my shipping template, or at least I thought I did!
One day I woke up to 4 orders from the EU, 3 from Germany and 1 from Spain.
After speaking to Amazon I found out that I was auto-enrolled in a program that lists your products internationally. So I was now left with two choices:
Cancel the orders
Ship them out
To me both seemed like terrible choices – shipping them out would have meant paying 3 times more in postage than what I had calculated and also had the whole problem of import charges to deal with. But if I cancelled the orders so early on in my Amazon selling journey, it would have messed up my metrics and risked my entire account.
So in the end I decided to ship out the orders, after messaging all 4 buyers to say that there would be import charges as the items were coming from the UK and confirming that they were happy to go ahead.
In the end 2 of the buyers received their orders and paid the import charges without any issues.
1 was stuck in customs for an entire month and then I refunded their import charges as an apology.
And the final one was the worst result – after refusing the delivery due to the import charges, I then paid it for them and re-arranged the delivery, only for the buyer to then request a return due to change of mind. When I replied saying that’s fine but they would have to pay the return shipping costs, they immediately opened an A-Z case saying the item had arrived damaged and Amazon refunded them in full.
So for this one order I paid shipping to the EU, paid import charges, then paid for shipping back to me as well! About as bad as it could have gone.
Moving on to my next mistake and something that I would have done differently if I had the chance:
Sending in items for FBA while flipping
As well as the 10 Intex pools that I sold first, I also managed to get some Bestway pools and kayaks to sell, but rather than listing these as FBM I decided to send them into Amazon to sell as FBA. My thinking here was that I could get a higher price, and while that was true, I didn’t realise how long it would take for my items to be checked-in at Amazon’s warehouses. For these two shipments, which were sent on 11th June, it took nearly a whole month for the inventory to become sellable.
In that time I could have sold them ten times over. And to make things worse some items were lost after being received by Amazon and I had to make a claim for reimbursement.
I’d heard horror stories with this, with Amazon sometimes reimbursing people less than their cost price, but thankfully for my claim they were incredibly fair. For my missing kayak they reimbursed the exact amount (minus their fees) that I would have received from selling it. So I was very impressed by Amazon here (less so impressed by their ability to lose a giant box but that’s another point).
Moving on to the last point which I would do differently if I started again:
Not properly tracking inventory, sales, and P/L
I thought about leaving this out so Andrew doesn’t see it, as he did warn me about this before starting! But I didn’t properly track my purchases and expenses from the beginning. I kept putting it off week after week and now it’s at the point where it’s going to take me a long time to get it all sorted out.
Thankfully there are a number of tools available to help with this, including spreadsheets and more in-depth software and I’m testing a few of them out now to see what works best for me. The majority of such software is geared heavily towards private label sellers rather than flippers, so I will test a number of them out before choosing one to stick with going forward. Speaking of which, to finish off this post here’s my conclusion and plans for the rest of this year and beyond.
Planning the year ahead while flipping on Amazon
I want to focus on building a more scalable system, relying a lot less on seasonal ‘hot’ items, which is what I’ve been doing so far. I’m expecting a few slower months as a result, which I’m already seeing this September with sales being less than through the summer, but that will be worth it long term if I can build some more consistency. I have also built up a good amount of stock for Christmas and Q4, so so I’m very excited for November and December, which I’m expecting to be good months, especially if the toy shortage takes place!
So there you have it! Henry generated £15,000 in sales and £3,000 in profit in one month. I have to admit that’s better than what I was expecting.
This will undoubtedly slow down as the summer months and Covid restrictions created some opportunities that won’t always be there, but I’m still very impressed. It will be very interesting to see how Henry does over the next few months and if he can start to create a real scalable business with flipping.
If there’s enough interest then I’ll be happy to turn this into a little series for the blog to both track his journey and go into more detail with the process, looking at flipping groups and software etc. So as always let me know what you think, either in the comments down below or you can get in touch with me directly.
And of course if you have any questions for Henry post them below for him to see. Otherwise, until next time!
At this point your auto and manual campaigns should have been running for a few weeks and ideally are already generating sales.
I wouldn’t be concerned about whether or not they’re profitable at this point as we expect to make a loss in the first few weeks while we generate some sales, gather data and also climb up the search rankings.
The next step is optimising your campaigns – and this is where you can start to make some real money advertising on Amazon!
But don’t fear, I won’t leave you there to handle the rest by yourself. In today’s post I’m going to go over exactly how you should optimise your campaigns to ensure they’re profitable, money-making machines.
Because creating the campaigns is just the beginning! If you simply leave them to run like that the chance of them being profitable (i.e. your ACoS being less then your net profit on each item) is extremely low.
So without further ado, let’s get to it!
Optimising your ad campaigns on Amazon is really split into two different parts:
Bid optimisation – adjusting the amount you pay for each click for your campaign or keyword.
Keyword optimisation – adjusting the keywords that you target with your campaigns.
Let’s start with bid optimisation for auto campaigns, as that’s the simplest.
Bid optimisation for auto campaigns
All we really need to look at is whether your campaign is profitable! And we know this from the ACoS (advertising cost of sale) number.
We went over this in Part 1 and 2 of this guide, but here’s a quick recap.
The ACoS tells us what percentage of the item’s price we paid in advertising to get that sale. So for example if I paid for 5 clicks at £0.60 per click and made one sale of a £14.99 item, that means my total advertising cost for that sale was £3.00, giving me an ACoS of 20.01% (£3.00 / £14.99 x 100%).
And then all I have to do is compare this number to my net margin to see if my advertising campaign is profitable or not. Using the same example, if my net margin is 35% then I’m making good profit, but if my net margin is 15% then I’m making a loss.
So look at the data from the first few weeks of your auto campaign and compare your ACoS to your net margin – If it’s above, then reduce your bid amount.
BUT I wouldn’t be too aggressive with this as if you reduce your bid price too low to the point that a lot of your competition is outbidding you, your ads simply won’t be shown and you won’t get clicks.
And remember that the main purpose of the auto campaign is to gather keyword data, so ideally I would let it run for one month before making too many adjustments.
After that you’ll have gathered the majority of useful keywords and can start adjusting the bid prices down until they reach a positive ACoS.
Some people may find that they actually have a profitable advertising campaign right from the beginning, which is great. At this point you may be tempted to reduce your bid prices a little bit as well to make your campaigns even more profitable but DON’T do this.
Sales and Profit
While it may reduce your ACoS even further, making your campaign look more profitable, you’ll actually be making less sales and profit overall.
Let’s run through a quick example so you know what I mean.
Say I’m running an ad campaign with a bid price of £0.50, which generates 50 clicks a day on average.
From those 50 clicks I have a conversion rate of 30%, meaning 15 sales a day.
With a £15 product and 30% net margin, that’s £225 in sales and £67.50 in profit BEFORE taking into account my advertising costs – which is £25 (£0.50 x 50).
As you can see this is a profitable campaign as the ACoS is 11.11% vs 30% net margin.
So I can make this even more profitable by reducing my bid price right?
Because like I said, reducing your bid price will usually decrease your ACoS, which sounds great… but this is what really happens:
I reduce my bid price from £0.50 to £0.40, and because of the lower bid amount my ads are shown less by Amazon, so I only get 30 clicks a day now.
My conversion rate stays the same at 30% which means 9 sales a day.
So my ACoS has gone from 11.11% to 8.88% – which sounds great?
But while before I was making £42.50 daily profit (after all costs) I’m now making £28.50.
That’s a 30%+ drop in actual profit even though my ACoS has gone down! I hope you see now why I say you can’t simply look at one number in isolation to judge your campaign.
And I know all this talk of ACoS, margins, and percentages will completely bore some of you but you absolutely must know and understand all these numbers to make your Amazon advertising campaigns work.
Otherwise just don’t bother starting! So really my advice when your bid price is profitable is to leave it as it is. This applies not only to your auto campaign but also to your manual campaigns as well.
Big optimisation for manual campaigns
Optimising bids for manual campaigns is more in-depth as you can adjust it for specific keywords, which means we have a lot more control.
But the overall strategy remains the same – if the ACoS is at an unprofitable level then you adjust your bid down slowly.
You’ll also find some keywords that haven’t delivered any sales at all. What to do here depends on how many clicks they’ve had; if it’s just a few then there’s not enough data to make a proper decision so you simply let it run as is. If however a keyword has had 25-30+ clicks and still hasn’t made any sales then you delete it and add it to your negative keywords list in your manual campaign as well (to make sure it’s not used again).
But just like with our auto campaign, for profitable keywords within my manual campaigns I don’t adjust bid prices down. In fact I take things a step further here and often increase my bid prices to well above what Amazon suggest.
My reasoning here is fairly simple – the bid amount we set is actually the maximum we allow Amazon to charge but it doesn’t mean they charge that amount for every click and it’s often less.
This means that setting my bid prices high allows me to outbid my competition and grab that extra traffic and sales!
If you want a more conservative approach, then simply leave the bid prices for any profitable keywords as they are.
The most important part here is to monitor for any keywords that are unprofitable and then adjust your bid prices down. This will result in less clicks, but they’ll be profitable!
And that’s really it for monitoring and optimising your advertising campaigns’ bid prices.
When you’re first starting out with advertising on Amazon, I’d recommend you do this weekly, on a set day.
Next up is keyword optimisation and this is more in-depth than bid optimisation and can really allow you to uncover some hidden goldmines on Amazon if you go after less common, long-tail keywords.
The goal here is really to add as many (profitable of course) keywords to your campaigns as possible, allowing you to uncover additional traffic that your competition isn’t reaching!
The best place to start with this is by analysing the Search Term Report, which you can download right from Amazon itself within your campaign manager. This shows you exactly what keywords Amazon have used in your auto and manual campaigns and how many clicks and sales they generated.
This is really priceless information if used correctly and why I keep saying it’s not just about making money with your campaigns initially – it’s this keyword info that we’re really after.
So from the Search Term Report, the most important data for us to analyse is:
Customer search term – this is the keyword that customers have used in their search on Amazon
Clicks – how many clicks this keyword generated
Spend – how much I’ve spent on that keyword (clicks x bid price)
Sales – how much in sales that keyword has generated
ACoS – advertising cost of sales (spend / sales x 100%)
The goal here is very simple – we want to uncover as many keywords as possible that generate sales at a low ACoS and include them in our manual campaigns where we can then further monitor and optimise them.
But as well as this we also want to uncover poorly performing keywords (low conversion rate and high ACoS) and add them to our negative keyword list.
My strategy is to get as many viable keywords into my manual campaigns as possible so any keyword that generates a sale in my auto campaigns gets added to my manual campaigns for all 3 match types – exact, phrase, and broad.
From there I let them run for a week or two, using Amazon’s suggested bid amounts, and then I evaluate the results and start optimising.
That’s it! It’s so simple yet still incredibly effective. There’s really no complicated, magic formula needed here.
Run an auto campaign > add any keyword that generates a sale to your manual campaigns > monitor and optimise your bid prices and keywords on a weekly basis > watch the sales roll in!
One important point to note, as well as getting this keyword data from your auto campaigns, you can also get it from your broad and phrase match manual campaigns.
We covered this in detail in our previous blog post but when you run broad and phrase match campaigns, your keyword will be used in other longer tail searches. For example if my keyword is “mechanical keyboard”, it might show up for searches like:
RBG mechanical keyboard
Blue switch mechanical keyboard
Now some of these searches may be irrelevant to your product, in which case you’ll instead add them to your negative keyword list, but often you’ll find some amazing less popular search terms that you can then target specifically in your exact match ad group.
So that’s why we need to analyse our phrase and broad manual ad campaigns in the exact same way as our auto campaigns.
When you first start this process you’ll find that you’re adding loads of keywords to your manual campaigns and that’s fine, it’s to be expected. As time goes by there’ll be less and less keywords added as you’ll have already discovered the majority of them.
At this point you can take things even further and start searching for even more keywords using 3rd party software such as Jungle Scout, Google Keywords and other such tools.
I don’t recommend doing this until you’ve pretty much exhausted all the keywords generated by Amazon, as it’s less reliable and can also be a strain budget wise if you’re adding so many keywords at once.
So for now you should have more than enough to work on but I’m also planning a future blog post going over some of the PPC software that’s out there and putting them through some tests to see if they’re worth the money.
As always, if you have any questions at all just get in touch with me and I’ll get back to you personally.
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