Conquering Q4: A $10M Amazon Seller’s Top Tips

By Chen Melamed
Published on September 14, 2017 | 1337 views

Conquering Q4

ShipStation and Feedvisor recently caught up with multimillion-dollar Amazon seller Michael Ward for a live interview about his killer tips for Q4 success. ShipStation and Feedvisor helped Best Costume & Toy Deals owner Michael grow his business from a $1 million operation into a $10 million empire in just four years. In this post, you’ll discover Michael’s actionable tactics to maximize holiday sales, strategies for avoiding stock-outs, and use of technology to plan for a profitable Q4.

1. Key Dates for Q4: Cyber Monday and Black Friday

With 80% of his annual revenue coming from the Halloween and peak Christmas seasons, Michael spends most of the year preparing for these two months. On Labor Day, Michael’s Halloween sales kick off with a 100–200% revenue increase; and in November, Christmas sales result in a revenue increase of up to 800%. On Black Friday, sales can increase by as much as 600%, and Cyber Monday sales can increase by 800%.

Michael’s Top Tip

Make sure you have a solid plan of action. Because of the significant increase of sales that commonly occurs on Amazon during Q4, it’s important to know which actions to take at which time. January through August, Michael plans for Halloween and Christmas so that by the end of February, his ordering for Halloween is done. By March, he’s done with receiving and processing stock.

2. Get Your Products into FBA Early

Two critical dates for managing your FBA inventory are February 15 and August 15, the days Amazon assesses inventory for long-term storage fees. Since consumers start to shop for Q4 early on in the year, the demand for stock is high and so working out how to store your products is important. To avoid paying long-term storage fees, it’s best to start sending merchandise into Amazon’s warehouse only after February 16. Also be aware of any changes, like the cost of storage. Storage fees for November and December tend to be a lot higher.

Michael’s Top Tip

Be strategic about which products you send to FBA, as Amazon’s fulfillment centers are jam-packed during the holiday season.

“Amazon hits sellers who store their items in FBA facilities during peak times because they don’t want their warehouse filled with things that may or may not sell. Don’t send stuff to Amazon that might sell or you might be surprised when you see that storage bill and all your profits are gone.”

3. Keep a Close Eye on Your Inventory Levels

You might sell out faster than you think during Q4, so figuring out how to balance inventory should be top of mind for sellers.

If you’re a newcomer on Amazon, you’re more likely to be limited by cash flow, and that’s why you’re better off selling through your merchandise. The last thing you want is to get stuck with stale items that’ll eat into your profits. But if you’re a seasoned seller, then it pays to take certain risks.

Michael’s general rule of thumb is to have enough stock for Halloween, Black Friday, and Cyber Monday. If he has any leftover costumes and toys that don’t sell, he stores it in the warehouse, recycles that inventory, and resells it next year.

Michael’s Top Tip

Always refer to last year to know how to prepare for this year. Use last year’s data to help you forecast this year’s sales and create an effective inventory strategy. Once you get good at understanding the season, then it boils down to how much risk you’re willing to take.

“If your goal is to sell out for Halloween, for example, and you’re out of stock by October 10, then you’ve underbought, and that’s a cue to order more stock for next year. But if on November 1 you’re left with too much stock, then you overbought and need to order less next year or employ a more aggressive strategy to sell out on time.

“If your cash flow is tight, keep in mind that by January, prices for seasonal items will decline. It’s better to sell at a loss then recall items; otherwise, you’ll get hit with long-term storage fees. Stale inventory is better to sell at a loss, because when items die, it’s a slippery slope.”

4. Apply a Competitive Strategy to Stay Profitable

Since competition for the Buy Box culminates during the holiday season, sellers may get caught up in a price war. It’s important, therefore, to decide on a competitive strategy up front. Is your focus on volume of sales or profit margin?

If you want to fight tooth and nail for the bottom line penny, you might sell out faster, but in the end you’ll miss the margin.

Michael’s Top Tip

FBA and SFP will give you a leg up on the competition as your sales continue until December 24, whereas if you use FBM (Fulfilled by Merchant), your sales will decline. If you want to win the Buy Box, then ignore the low-cost sellers. They’ll be out of stock before the season kicks in. For example, if your competitor is selling a Halloween costume at rock bottom prices and it’s September, then chances are they might end up making a 5% profit on that item. But by October, they will sell out. And that gives you the upper hand to price competitively. So if you wait till mid-October, then you can make 40% profit on that item.

5. Manage Your Inventory With the Right Technology

Michael uses three different types of software to help him manage his inventory more effectively. They include:

Solid Commerce: The inventory software manages all your inventory on multiple channels such as Amazon, eBay, and Walmart. It informs you how many items you have at the same time and updates each channel once an item is sold. It maintains FBA inventory so you can migrate your FBA items and resell them on Walmart or eBay.

ShipStation: The shipping software funnels all your merchant fulfilled items, whether it’s on Amazon, eBay, or Walmart, and determines the ultimate shipping route for you.

Feedvisor: The Amazon repricer has a lot of different reports and data Michael uses to scout, order, sell, and plan inventory. “Using Feedvisor does the thinking for us. I let the software do the hard work. Every opportunity the repricer gets, it ups the price. If you look at how much money Feedvisor makes you, it’s really not a cost factor, it’s more about what the software can do for you.”

Michael’s Top Tip

Once the shipping route is decided on, batch print all the labels, and send it back to the warehouse for packing and picking. So each of these softwares work together, but each has its specific purpose.

Conclusion

Michael’s must-have tips for winning Q4 are based on his extensive expertise and proven methodologies. When it comes to your online store, you can tailor and apply each strategy to fit in with your individual business needs and figure out what works best for you along the way.

About the Author

Chen is a copywriter at Feedvisor with her finger on the eCommerce pulse. She loves easy-to-chew creative content, good food and discovering hidden gems.

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