April 23, 2020 by Andrew Minalto - 4 Comments

HOW Coronavirus TRIPLED my Amazon FBA Sales OVERNIGHT!

Spread the love

Amazon FBA business profits coronavirus

Today is the 23rd of April, and I really hope that we’re past the worst by now. Some countries already are relaxing the restrictions and allowing shops to open up for business, so hopefully, within the next few weeks, things will improve everywhere, and people will be able to partially enjoy the lovely warm weather and upcoming summer. Even if it means no public gatherings are allowed, at least there will be a small chance that the economy will not be totally destroyed.

I’m actually quite surprised by how POSITIVE the markets are looking right now. If we look at the S&P500 index, it currently stands at 2,799.31, which is NOT that far away from the all-time highs experienced earlier this year in February, when the index reached 3,393.52. This means that, in general, investors are looking at this whole situation rather optimistically and are hoping for a quick recovery.

S&P 500 INdex

Let me remind you that the S&P500 went dangerously close to the dreaded 2000 mark just one month ago, on the 23rd of March (2,191.86), but since then, it has been improving.

If everything continues as is (not saying it will), looking back at the figures in ten years’ time, you wouldn’t even notice that there was a major global crisis in 2020. It would look like just a quick market swing. I did buy-in some extra at 2,500, so I still feel like I got a good deal. However, only time will tell how the markets will play out in the long term, as the financial impact on the world’s economy is yet to be seen.

Obviously, this is just the financial market in the US, and there are LOTS of problems this crisis has caused that will take YEARS to recover from. I can’t even imagine how small business owners in the travel and leisure industry must feel right now.

I mention small businesses because large corporations will likely survive this using the government’s money, by going through a take-over by someone else, or simply by going bankrupt. But for small business owners, it’s not that simple. Usually, the business is EVERYTHING to that owner/family, and they won’t get access to institutional money to survive this crisis.

Anyways, this blog is about Amazon FBA businesses, so I want to share a quick strategy I am implementing right now to (hopefully) strengthen my business and improve my overall, long-term ranking positions when this crisis is over.

How to IMPROVE your Amazon FBA Business During the
COVID-19 CRISIS!

My Amazon FBA Sales

Now, if you closely follow your niche and competitors, you will most likely notice if you’re working in a category where demand has risen due to the pandemic, most sellers will have either:

  • Run out of stock;
  • Increased their prices;
  • Increased their prices and THEN run out of stock!

I don’t blame them. It’s human nature to take advantage of increased demand, and there’s nothing wrong with an entrepreneur on Amazon slightly increasing their prices when they see that most of their competitors are out of stock, right? Yes, totally. But I was thinking about this a month ago, and I decided that I would do the opposite:

Instead of raising my prices, I LOWERED them by 20%, hoping that the Amazon algorithm would pick this up and give me boost in organic rankings and sales!

I also paused all my PPC campaigns as I really wanted to give this strategy a three- to four-week period to see how well it works without the impact of PPC and prove if my assumption was right.

And let me tell you, it has worked like magic!

  • My sales sky-rocketed within the first three to four days of making these changes;
  • I have accumulated dozens of Amazon choice badges for various keywords;
  • My rankings have improved significantly for most of my keywords; and
  • My conversion rate has never been as high as it is now!
Sales Impact FBA

My sales would most likely have increased anyways, as my niche as a whole has seen an increase in demand, just like many other categories on Amazon, BUT I highly doubt the results would have been so good if I had not lowered my prices.

Yes, my NET margin went down from 40% to 32%, but as I’m not spending any money on PPC, my actual profit is HIGHER now than before, even when selling at lower prices. You may ask why my NET margin only went down from 40% to 32% and not 20%? This is because my Amazon fees also went down with the reduction in price, so the actual “net” reduction for me was just 8%.

NET Profit Margin

Now, I don’t know how long this will continue, as this increased demand most likely won’t last longer than a few weeks, until most of the restrictions in the country are lifted. Also, summer is just around the corner, and that is typically a time when my sales go down. This happens every year and I expect it.

But the main goal of my experiment is to see how this will affect my organic rankings in the long term: in three, six and nine months. I hope that this boosted sales velocity, improved conversion rates and rankings will “stick”, and that Amazon will reward me for this in the long term. I will update you on my results in a few months’ time, but for now, all I can do is make sure I manage the required inventory levels and don’t run out of stock.

People are still reporting that they have some random limitations on the shipment creation side of things, but most categories should be open by now. Processing times are also not bad at all. My most recent pallet went in and first inventory was available within 24 hours (last Friday). So, I hope that the French lockdown on Amazon won’t hit us with another inventory restriction wave and things will go back to normal very soon.

Should you try to implement this strategy in your business?

It really depends on your situation. It may be a bit too late, but there should be still at least a few weeks of increased demand left. So if you want to, you can give this a go, BUT ONLY if you can manage your stock levels AND not go out of stock! If you lower your prices and then go out of stock for weeks on end, it could damage your rankings instead of improving them!!!

Also, if you already rank in the top three positions for your main keywords, it may not be worth giving up your margin right now. Since people are buying your products anyway and many competitors are out of stock, it simply wouldn’t make sense.

But for many sellers who have “average” rankings, this could be a way to improve the situation, increase conversion rates and boost organic sales in the long term. And you don’t have to turn off your PPC ads—in fact, you probably shouldn’t! I did it because, as an experiment, I wanted to see results based purely on the organic sales. If you have PPC campaigns that are working well, you should probably continue running them to give your listings an extra boost and increase sales velocity even more.

That’s it for today. I really hope this was helpful and that some of you will benefit from this strategy. If you have any questions or need help, feel free to leave your comments below the post and I will answer them within 24 hours, Monday to Friday.

If you want a more personal consultation from me, you can always send me a support ticket here.

Lastly, as I have repeated over and over for the last few weeks, this may be the perfect time to start your own Amazon FBA business (if you’re just thinking about it), as e-commerce sales worldwide are reaching new heights! If that’s something you want to do, check out my Amazon Sharks video course and get a FREE seven-day trial of the first module!

Andrew Minalto

P.S. All metrics, sales numbers and dashboards from my Amazon seller account provided by SELLICS.


Spread the love
Join 500+ Amazon Sharks Members
and Start your OWN Amazon FBA Business TODAY!

4 Comments
Click Here to Leave a Comment

  1. I can’t seem to start a small business because shipping from China is so expensive!

    1. Andrew Minalto

      Hi John,

      Thanks for stopping by.

      Shipping from China is not expensive. You’re most likely looking at too small order and that’s why it seems expensive for you.

      To keep shipping costs from China down, you have to:

      1) Order in high enough quantity
      2) Choose the most suitable ship[ping method (courier/air/sea).

      When you do, the shipping costs are low. For example, you can ship a full container load from China for about $2000. That container load could contain say 500 kids beds, which means you pay just $4 per each bed, in shipping fees. Is that expensive? I don’t think so. It all depends on your perspective.

      Thanks,
      Andrew

  2. Minesh Shah

    i did the exact same as you! However on the day i was going to send stock in Amazon put that restriction in place so i have now ran out of stock!

    1. Andrew Minalto

      That’s so unfortunate…many sellers were in the same boat.

      Luckily I had good reserves at Amazon and they allowed me to send in new stock very soon – I think it was just 2 weeks of lock-down for me.

      Andrew

Leave a Reply