One step forward—let's say you know you can make a product different from the rest of the pack. You can solve a problem that the competition does not. But how do you know that this product is the one that can provide margin for you and those you love? Follow these four steps:
1. Build a visually differentiated product.
Imagine yourself as the customer on Amazon. You search and you go down a list of pictures and texts in order to decide what to buy.
In a brick-and-mortar, you can smell and touch something in front of you. Online, you only have visuals.
Even if you've differentiated a product and have made it objectively better, will your customer be able to tell? When choosing your product, ask yourself—how does any differentiation you do lend itself to visual representation? Will it jump off the front page and show its value?
If you take a spy camera and add great features to an interactive app, they can't see that in the Amazon thumbnail as they scroll by. It takes something more to be noticed. You have to generate interest before you can secure that sale. A bubble cat carrier, on the other hand, immediately stands out. Cats can look out from the backpack and better experience the world with their owner! How cute is that?
Take the above picture as an example. The one on the left is foldable—quite convenient for storage! Both of these carriers are differentiated from the standard box with holes, but it's much more apparent how on the bubble backpack.
When a customer glimpses the photo, they can tell immediately that there's differentiation. Don't just differentiate the product; make it visually obvious how.
You will get more clicks from people browsing and ultimately higher conversion.
2. Decrease your competition by increasing your product's value and price.
In this age, the easiest way to minimize competition is pricing strategy. To show you why I believe so much in selling a higher priced item, let me ask you a few questions:
- What price range do you get told to sell at?
Most tell you $15-$25. It's cheaper to produce and promotes impulse buying. It's not so costly that the consumer evaluates it too much.
- What MOQ (minimum order quantity) are sellers told to have for their first order?
1000 units. Sometimes 500.
- How much capital would you say new sellers have on hand to place that order?
We know what others are telling people who want to sell on Amazon because we at Just One Dime have done the market research and buy the courses from the competition to assure that we provide the best possible service to our members.
Think about all these new sellers getting this old advice. There are 3000 new sellers on Amazon every day. To be fair, there's about a 60% retention rate a year later. So, let's average it out to about 2000 real new sellers every day.
If they all follow common sell pricing structure of $15-25, follow an MOQ of 1000 units, and only have $3000 to spend, that's a cost of $3 per unit they can afford—which is insanely cheap. If they follow an MOQ of 500 and get to spend $6 per unit, it's still low. The costs would have to be maybe $5 for manufacturing and $1 per unit for shipping. That product isn't selling for more than $25 when it's a cheaper product. In both scenarios, you have the majority of sellers pricing low.
Your biggest opportunity in this climate is to break that mold. Start thinking dynamically and approach your business differently. Start selling at a higher price and stop following this herd. 🐄
This way, you're not just differentiating your product, you're differentiating your strategy. Put yourself amongst a smaller group of sellers.
But there's a still a problem because higher priced products sell less. Or do they? We averaged the price of the top selling items on the entire Amazon platform, and we came up with $62.
When online buying first started happening, people were nervous about the novelty. An online store could in reality be an identity thief or straight up just not give you what you paid for.
Nowadays, people are used to Amazon and confident enough to buy larger items.
Stay in the impulse range at a higher price point.
3. Increase profit margins by taking advantage of the fixed costs that don't go up with price.
Let's take an example of two spy cameras. They each have the same packaging and are the same weight but one is $50 and the other is a $20 option.
There are certain costs that are fixed in our e-commerce model. Getting product from China to the USA when it's the same size is the same price. Let's say $2 for our example.
Amazon FBA Fulfillment fees are also based off of size, not price. $6 for both.
When it comes to PPC advertising, they're both bidding on the same exact keywords. The cost per click (CPC) is going to be the same. Let's say $1 cost per click.
When you add these up, you have a fixed cost coming off the top of your revenue at $9—the same for both.
For the $20 option, that represents 45% of the total sell price. For the $50 spy camera, that same nine dollar cost is only 18% of your revenue, leaving you with a much better margin.
Still not convinced that you should sell a higher priced product? You might be thinking that the cost of manufacturing is still too high if you're minimum order quantity is 1000 units. Now that you're selling something that costs $60, the cost to manufacture is probably going up to $10 or $15 per unit instead of $5 or $8. That's expensive. To most, that's a barrier.
Use this tip: Buy your first batch at a lower minimum order quantity.
Easier said than done? Not at all.
Let's say you have to order 1000 units. That makes it unobtainable if the cost is $20. But you don't have to do 1000 or 500 units.
Manufacturers of these products are less inundated with new seller enquiries and are open to lower MOQs.
If the cost is higher, the MOQ goes down for most manufacturers.
But then what about running out of inventory? Then your business is stopped. Okay, Negative Nancy, we have something to say about that too.
I will take the situation where my product sells so well that it sells out for 2-3 weeks than be stuck for 6-7 months with hundreds of unsold units because I followed the herd and sold at the same price level as everyone else. Simply reorder as soon as you can! (And freeze your listing so Amazon doesn't drop your ranking while you're not selling.)
A lower MOQ also reduces your risk. Movement is life. You want your inventory moving.
Inventory fees go up after six months. What's the point of 500 units sitting at Amazon's Fulfillment Center being frozen assets that you can't use? You can move through 200 much quicker than 1000 units.
4. Choose a product with more search terms.
Let's say you're deciding between two items which have all the criteria for a potential product to sell, both having the same differentiation potential and the same profit potential. When they're so even, it becomes hard to make a decision. If everything seems equal, consider costumer search terms.
For this example, we're comparing a tourniquet medical device and a spy camera.
If you needed a tourniquet today, what would you type in the search bar in Amazon? Tourniquet. It's very limited. Maybe a brand name. What else would you search?
On the spy camera, you also have "nanny cam", "hidden camera", "security camera" and with different versions! You have a spy pen. Or a spy plug with the camera embedded in a wall outlet.
Pro-tip! Where you have keyword variation, you also have product variation.
When you run ads, which you will do at some point, it's like an auction. Amazon is the auctioneer. You're raising your paddleboard up to bid for keyword placement.
If Amazon stands on the podium and sells the keyword "tourniquet", and you sell tourniquets, what are you going to do? You know that customers mainly only type in that keyword when searching for your product. All of your competitors will think the same way! When you have so many competitors bidding on a single keyword because it's the only game in town, the price goes up. It's the law of supply and demand.
The more sellers bidding on one keyword, the higher the price goes up! 💸
When we look at the spy camera—because we have so many different keywords that could apply to a varied product—what ends up happening is the price per click goes down. Sellers move their bids around, spreading out the keywords, and that drops the price.
When starting out, you can focus on a lower cost keyword and get your product out there.
Essentially, your advertising cost goes down as a result of having more keywords.
Let's say you have a spy cam that clips onto your shirt. You would focus heavily on those types of keywords and ignore the ones that other sellers want to focus more on. Sellers won't have to all bid for one keyword. When you have a different niche, you can carve out your own riches.
You can apply these specific tips to make money and create freedom for yourself and those you love. Our Just One Dime members get a ton of applicable knowledge like this plus coaching, a great community, and more! Curious? Get started with 90 minutes of training for free!