Open Blog - Selling on Amazon - 2016 February

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February 2016 Summary

  • Orders                          76
  • Orders per Day              2.62
  • Revenue                       $1099 (£774, €1014)
  • Gross Profit                  $708 (£499, €653)
  • Average Order Value       $14.86 (£10.46, €13.70)
  • Time Spent                    9 hours

This month all of our sales were fulfilled by merchant (FBM). We believe FBA orders will be rare. As an Amazon seller, we chose FBM as we want to maximize profits and the fulfillment work is minimal. FBA inventory is only to increase our buy box percentage. The more Amazon services you use, the more of a valuable merchant you are to Amazon so even if you don’t make any more sales off of the Amazon services you should consider how you can “use” the service to boost your buy box.

Financial Summary

We set a revenue target of $500 (£352; €382). We exceeded our expectations as we didn’t know if our prices were going to convert. We sell heavily commoditized products. We had doubled the price to test price sensitivity and we’re banking that our product listings were that much better. Better as in getting consumer confidence we were able to meet their needs with this product. We did a lot of keyword research.

February was our first month of Amazon revenue of $1099 (£774; €1014). We had 76 orders and 2 refunds for an average order value of $14.86 (£10.46; €13.70) and 2.62 orders per day.

Shipping (expedited) fees made up only 2.7% of the revenue. We break this shipping out because this is an interesting revenue component that we hope to leverage more. Amazon fees were $202 (£112; €147) sitting at about 14.5% of revenues. Cost of goods sold (COGS) were $159 (£112; €147) equaling 21.1% of revenues. The largest component of COGS was shipping at $164 (£116; €152) 15% of revenue. The shipping number will most likely jump around given we will be experimenting with expedited shipments as the time criticalness allows for potentially great revenue.

Finally, gross profit was $708 (£499; €653) leaving us with 64% of revenues. We think that’s a great margin for a simple yet already commoditized product.

Next Month

We hope to get more orders by securing the buy box so we can then purchase Amazon PPC which should further our buy box penetration. Revenue growth goal is 50%. Pricing shipping is a hard exercise and is naturally different for niches. We want to test conversion behavior on expedited shipping and where that sweet spot might be. Let us know if you have any questions in the comments.

Thank you!

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