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Amazon FBA vs FBM: Which is Better?

After the success of our last interview where he revealed tips and advice on how to sell books on Amazon, we invited Amazon bookseller and playwright, James, to contribute another post — and the good news for you is that he agreed. In today’s post, he focuses on a common seller dilemma — what fulfillment option should I use to sell on Amazon, FBA or FBM?

Amazon

Firstly, if you don’t know what those two Amazon acronyms mean, you’re probably not ready to answer the question yet. If you know exactly what they mean then you’re probably looking for a list of the pros and cons of using FBA v FBM.

Something to help you orient your business into a model that works best for you. And that’s the question you need to ask yourself. One that’s at the heart of whether you want to use FBA (Fulfillment by Amazon) or FBM (Fulfillment by Merchant) to sell and ship your Amazon inventory.

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Get yourself a plain piece of paper and a pen and at the top of the page write, ‘What will work best for me?’ Then have a day off. You’ve earned it. Just kidding. You got a lot more things to do now.

The answers to these questions might not be apparent at first, but as you begin taking your first tentative steps into selling on Amazon, the decisions you make will shape the business you create.

Everything about you, your life and your current situation will play into whether you decide to use FBA or FBM.

Benefits of Using FBA

For a fairly hefty chunk of your profits per sale, Amazon will take the hassle of ‘booking’ (my new verb) out of your hands.

You’re outsourcing almost everything but finding your stock to Amazon. They will store, coordinate, package and deliver your book whilst you sit in your own home and do whatever your little heart desires.

Now before you start printing labels and booking the UPS, it sounds far more relaxing than it is. You’ll still have to manage your inventory, deal with stranded inventory and occasionally Amazon will damage your books.

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Once you start FBA you realise that there’s a whole bunch of additional things that you didn’t necessarily sign up for and these can be a hassle and a little daunting.

Whilst it’s relatively easy to FBA your stock, getting answers about what to do when things go wrong is about as easy as getting a PhD in Astrophysics.

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A Sellers Guide to Amazon Business Reports

As an Amazon seller, you might already have peeked into your Seller Central account and asked yourself, what are Amazon Business Reports at some time during your selling career. Unfortunately, it may have been a brief look due to the somewhat intimidating nature of the section.

Reports

There is such a vast amount of data presented in Amazon Business Reports that it’s easy to see why you may have become overwhelmed, but you’re not alone. It’s easy to disregard information when you are faced with rows of figures and graphs, either because you don’t know what to look at first, or what is actually useful to you and your Amazon business.

The truth is, that if you are an Amazon seller and you are not accessing your Amazon Business Reports, you will fail to grow your sales. This is because you are not taking advantage of some vital metrics available to you from within your account. We’ll talk some more about that shortly, but first, you must take a moment to understand what Amazon Business Reports are.

What Are Amazon Business Reports and Where Do You Find Them?

Amazon Business Reports aim to provide you with valuable data that you can then use to perfect your marketing and advertising strategy. You can find reports located on the main tab within your seller central account.

These reports can provide you with a wealth of insightful statistics, alongside some pretty confusing information, so you must concentrate on analysing only the data that will help you become a more successful Amazon seller.

Think of Amazon Business Reports as ‘the story of your store.’

The data you have right at your fingertips can reveal to you how your customers interact with your products, how often they order your products and how many of your product they’re willing to order in a single transaction. This type of data is invaluable to the growth of your Amazon business, so you should use it to become more successful.

Types of Amazon Business Reports

The amount of data available to you within your Amazon Business Reports can appear overwhelming and hard to understand at first glance. But, what if you just focused on the most critical aspects available to you within Amazon Business Reports rather than trying to decipher every tiny piece of data?

In reality, within Amazon Business Reports, the most important metrics available to you and the factors which will allow you to keep track of and improve your Amazon business are the following:

  • Units Ordered
  • Total Sales
  • Page Views
  • Sessions (Traffic)
  • Unit Sessions Percentage (Conversion Rate)
  • Buy Box Percentage

The good news is that once you get your head around the sessions and unit sessions percentage data, you will be able to measure how much traffic is coming to your listings easily.

You’ll also see how much of that traffic is converting to a sale – undoubtedly the two biggest challenges for all Amazon sellers!

Understanding this aspect of your Amazon Business will be a game-changer for you as you’ll be able to take control. So, let’s take a look at each of these metrics, one by one and discover how you can use the data to ramp up your Amazon sales.

Total Sales (Ordered Product Sales and Gross Product Sales)

What the data means: This is simply your item price multiplied by the number of units ordered, which gives you a total sales figure. Gross product sales consist of your product sales, any add ons such as gift wrap and also the shipping cost. This is the total amount of money your customers have spent to get the product – not just the price of the product itself, which is shown in the ordered product sales data.

How you can use the data: You’ll be able to keep track of total product sales both with and without add ons and shipping costs, so you’ll have net and gross figures to work with. You must know precisely how much money you make from your Amazon store!

What action should you take based on the data: Your revenue is another component that influences your ranking. Correlate total sales with units sold alongside page views and sessions to keep on top of how well your Amazon business is performing as a whole.

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Page Views

What the data means: Page views are the number of visits your store receives. Each page in your store is counted separately, so if a customer views more than one page within your store, they will all count as individual page views.

How you can use the data: From your page view data you’ll immediately be able to see when page views go down. By spotting a slump early, you’ll be in a position to make any necessary changes to reverse the trend.

What action should you take based on the data: If you are not getting page views, your products are not being seen, it’s as simple as that. So, you’ll need to discover why your page views are low. Check whether you are winning the Buy Box and that your product titles are keyword rich. Remember that as a general rule, more traffic means more conversions and more conversions mean once again that you’ll get a higher search ranking for your product, so ensuring page views is a vital part of the process.

Sessions

What the data means: The sessions metric is just a means of tracking traffic, and you’ll be pleased to know that there’s a super simple way to understand this aspect of your Amazon Business Reports.

Think of it like this:

  • A customer enters your Amazon store.
  • They view product one but don’t add it to their basket.
  • They view product two and add two units to their basket.
  • They view product three and add one unit to their basket.
  • They browse further, view product four, add two units to their basket, then change their mind and remove one from their basket.

Each of these product interactions, although all different, are page views, so that’s four page views in total, but this equates to only one trip to your store.

So, Amazon counts this as one session. It’s the same as if you went to the supermarket and picked products from the shelves there. You will have viewed multiple products but all during the same trip.

How you can use the data: By analysing this data and find that your page views and sessions are equal, for example, four page views and four sessions, it indicates that your products are not holding the interest of your shoppers. The indication is that they are looking at only one product and then leaving your store immediately. One page view equals one session.

What action should you take based on the data: If products are not holding the attention of your potential buyers then you can’t expect to convert them, so using the data you will be able to evaluate possible reasons for this. If you discover your product listing has less than 100 sessions per month, check that you are listing in the correct category, that your title is keyword rich and your images comply with Amazon’s guidelines. Your pricing strategy may also need looking at. Importantly, you will have the opportunity to make improvements that will make a difference to your page views and sessions metrics.

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Buy Box Percentage

What the data means: The Buy Box percentage shows how often your product appeared in the Buy Box position to customers.

How you can use the data: If your Buy Box Percentage is high that’s a good sign as it means you are winning the buy box consistently, so Amazon sees your product as a good deal and wants to show it to customers, and so you are likely to have increased sales. If your product was out of stock at any time or another seller’s product won the Buy Box, this will have a direct impact on your page views data.

What action should you take: If your Buy Box percentage is low, consider whether your product was out of stock at any time or whether you are competing for the buy box with another seller. Keeping stock levels regular is essential, and you may need to tweak your pricing to ensure you win and keep the Buy Box. Buy Box eligibility is also based on your customer service standards and shipping options, so try and offer free shipping if you can.

What About Other Data Within Amazon Business Reports?

Honestly, Amazon Business Reports are packed full of data and metrics, and much of it is not worth you spending time trying to understand! The six main metrics covered in this article are all you need to effectively analyse how your customers are engaging with your product pages and how well you are converting sessions to sales.

By keeping the range of metrics you evaluate simple, if you then see that your units and sales are down, you can immediately look at your Buy Box percentage, page views and sessions to see what’s happening with your conversions data. You can then take immediate action to make revisions which will increase engagement and boost your rankings.