Why create a business plan for Amazon? Whether you own a small shop or are sourcing from somewhere such as Alibaba for Amazon, This is a business!
Any failed Amazon Seller will tell you it came down to two things: the product didn’t sell, or it was popular but not profitable…. which means two things: Planning and Execution. Running the numbers is part of the product research and validation process – we use this Amazon business plan to choose the correct product. Businesses need to consider:
- Profit margin
While anyone on the Amazon top sellers list will tell you that now, we realize it’s tough to know where to begin, which is why we’re going to walk you through each step in creating the perfect Amazon Business Plan. We use a custom template created by SellerGizmo.com however you can use what works best for you just as long as you account for all of the following:
Section I: Selling Price
This section includes all the basic parameters however is usually where everyone stops:
- Unit Sizes: This effects shipping and storage fees. (In our table, it is connected directly to Amazon Lookup Tables)
- Product Selling Price: The Amazon list price
- Estimate number of units sold per month
- Discount Coupons (found under the Advertising Section of your Seller Central Account) Tip: We always used a fixed amount. It has better conversion Did you know Amazon has a 60% redemption cost on coupons?
- Landed Costs: This means Shipping costs, Inbound Duties/Tariffs, Inspections, Labeling
- Liability Insurance: This is something we always recommend if there is any risk to the buyer
- Shipping Costs to Amazon: You will only use this if you are not shipping the product directly
- Selling Plan Fee (Professional $40, individual $1) Tip: Fees are according to your selling category
- FBA Label Service: Amazon will charge 20 cents per unit. Tip: we integrate the bar code into to branding
- Prep Service Fees: This is for special products (Fragile, liquids etc.)
- FBA Fee: a set fee based on the size and weight of the product
- Monthly Return Processing Rate: Returns happen for everyone! Everyone — no matter the brand most will see a 1 – 2% refund rate. This must be accounted for. Tip: Electronics and Fabrics tend to have a higher return rate of 5% or more
- Monthly and Long-term storage fee: if you don’t have a high sales velocity, you will be paying large fees at Amazon’s warehouse
- Box Content Storage Fee: This is $0.11/unit and refers to the “gift” option you may choose to offer (this is activated in your seller account) Tip: we recommend activating this! It increases conversion.
- Inventory Placement Service Fee: this is a Seller Account option which, if left activated, allows Amazon to move your product to another warehouse Tip: We usually recommend you deactivate this option to avoid paying Amazon each time you send new inventory.
- Unplanned Service Fees: Amazon requirements of bubble wrap, warning labels, a missing (or in the cost-saving case noted about: damaged barcode) label etc. These things unfortunately can’t be predicted any further than this
At this point, our team’s worksheet displays a summary per unit.
Did you know? Each Amazon category has its own fees?
Section II: One time Startup Costs
These expenses are deducted from your first year’s profit. (No Surprises!)
Why? A new product takes 6-9 months to reach the sales projections in their business plan. The second -year of sales reaches the full revenue.
As we’ve previously detailed, the startup costs for any Amazon Business include
- Product Design
- Package Design
- Startup Inventory
- Shipping Costs
- Listing optimization
- Initial social proof
- Second inventory costs and inventory Tip: Most sellers expect to have enough sales to pay for this and often give up here or panic. More often than not there just isn’t enough time for this to occur – budget for this and you will be on track
- Main picture split test
- UPC codes
Section III: Ongoing Operating Costs
There are only a few to start, but once done correctly your Amazon business will take off and it is always good to know what the plan will be.
Once your business grows there now “big business” considerations:
- Accountants, business licensing etc.
- Website and Social Media Accounts (Instagram, Facebook, Pinterest)
- Advertising costs PPC Management (we recommend outsourcing this task — here’s why)
- Break-even costs
Did you know, you can save a lot of money on the FBA Label Fee by selecting “me or my supplier”
Section IV: Marketing
- Fixed Costs (Monthly Marketing budget)
- Amazon PPC
- Promotional Giveaways
Questions about building your Amazon Business Plan?
Reach out on Facebook we’re happy to help.This is a business, and there is a lot too it. Find answers to common questions like is selling on amazon worth it ? (um.. yes) or why does it cost $6000 USD to sell on Amazon in 2020 and stay tuned for our advanced articles and tutorials teaching you how to become a seller on amazon, Avoiding Listing on Amazon Fees, how to sell on Amazon step by step, Amazon Gated Categories, avoiding fees, and more.
Are we missing a topic? Submit a request anytime. If you have questions about how to sell products on Amazon you can Ask Anything About Selling on Amazon on Facebook to connect with our CEO directly.
My name’s Fabian David, and as the CEO of AMZ Savages, I believe in offering clients a unique and personalized service. AMZ Savages is not a generic online course or launch promotion – we offer a business model designed to empower customers so that they can go on to prosper as independent Amazon sellers. With over 6 years’ experience as an Amazon consultant, I know exactly what your business needs to compete against the established professionals, and I’m happy to share this knowledge with you. I believe in a truly individualized experience, which is why I’ll be the one taking your calls and sharing my screen with you every step of the way. The rest of the AMZ Savages team will be on hand to support the overall execution of your product launch, ensuring things happen on schedule and as agreed. Best of all, we tailor our hands-on initial product launch to suit your specific needs, so we’ll still teach you how to sell products on Amazon, even if you want to use your own services wherever you’d like (saving you some extra money along the way).
Still Need Help Finding Products to Sell on Amazon?
You can also create a free account for our Legendary Product Research Tool here.