Jay Kambo, the founder and CEO of League of Ecom, has mastered the art of leveraging the Amazon platform for business success. At only 19, he has launched, scaled and sold multiple e-commerce-based businesses for profit. Now, his advisory firm coaches entrepreneurs and provides custom automation programs designed to equip others with the tools to gain financial independence.
Kambo recently shared with me what he’s learned from launching, scaling and later selling multiple e-commerce brands, with significant success on Amazon. Here are his five top tips for growing an a business on Amazon:
Uncover the true meaning behind a specific best-seller ranking in each category
Bestseller ranking, or BSR, means how fast or slow a product is selling. For example, a product with a BSR of 1 is the best-selling product in that respective category, and the higher up one goes, the lower the sales are. Since Amazon has such an extensive library of products with high demand, sellers can sell up to 400k BSR and still receive constant monthly sales in specific categories. Still, there’s a catch – only in specific categories. This is a big mistake Jay sees when people start first selling. They use a set criteria of one number like 300-400k BSR and think that any product under this rating means it’s good to list, but this isn’t necessarily true.
Compare two categories like Camera/Photo and Home/Kitchen. As a baseline, look at what BSR usually correlates with for 50 sales per month. Let’s say 50 sales a month in Home/Kitchen correlates to a BSR around 150K. This means if a product listed on Amazon had a BSR of under 150k, the seller would most likely get a minimum of 50+ sales monthly on this one product. Now, let’s look at the Camera/Photo category. If the seller wanted to list a product that received more than 50 monthly sales, the absolute highest BSR for this category would be 2.5K. This is due to several factors, but mainly because of sheer demand in each category. Let’s say you have a product ranked 20k BSR in Home/Kitchen. That will generate roughly 250+ sales monthly, but a BSR rank of 20k in Camera/Photo may only generate 1-2 sales monthly. It’s imperative to understand the difference in these metrics from category to category.
Understand how to win “buy box” against more experienced sellers
Winning the “buy box” on an Amazon listing is how sellers direct sales toward their business. A “buy box” is simply the box that says “Buy Now” or “Add to Cart” on the Amazon listing. Amazon’s algorithm looks at four critical factors when deciding who should “win” buy box: Price, Shipping Time, Fulfillment Method and Seller Feedback. Price and Shipping Time are easy to manage but don’t determine how successful a listing is for each seller. The other two factors also play an equally important role. If a seller has the lowest price and is an FBM (“Fulfillment by Merchant”) seller, they may have longer shipping times than an FBA (“Fulfillment by Amazon”) seller who has free 1-2 day Prime shipping. In this case, even though a seller may be cheaper, the FBA seller may win buy box because they deliver orders faster and make Amazon more money since they are charged more fees.
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To win buy box here, a seller would have to lower the price even more. Another scenario would be if a new seller wants to sell the same product against a seller who has 1000+ positive feedback ratings. If they are priced the same or even slightly lower than this experienced seller, they may still win buy box over you even though the price, shipping time, and fulfillment channel are all the same. The only way for the seller to win the buy box would be to change the only controllable factor: Price. In all League of Ecom programs, once a client starts to push more volume they authorize different software programs that automatically change prices to dominate buy box while staying as profitable and efficient as possible.
Utilize the “Seasoning Period”
Many people see Amazon sellers making tens of thousands of dollars a month and decide to start their own business, but don’t realize those results are not typical. If a new seller joins Amazon, they have zero credibility. This is why “seasoning” an Amazon account is significant. Kambo recommends a 90-day seasoning period where the seller focuses on building a positive relationship with Amazon and a solid foundation for each business. The seasoning period consists of many factors, including a strict listing schedule. This listing schedule outlines the exact days a seller is able to list a product from the moment their store is up and running until the end of the 90 days. As the store grows, you can list products more frequently, but you don’t want to exceed listing a certain amount of products daily to ensure proper credibility.
Understand Sales Velocity
Amazon defines Sales Velocity as “the number and dollar amount of Seller account transactions during any given month.” If there is not enough sales history or buyer feedback to support a seller’s rising sales, their account could be placed under review and or suspended. This doesn’t only happen to new Amazon sellers. Even if an Amazon account is a decade old and suddenly gains a sales increase, it can trigger a review. For this reason, Kambo typically recommends that total monthly revenue growth should not exceed 150%. If a seller did 50K in sales the month before, it’s better not to exceed 75K in sales the next month and so forth. Of course every account and situation is unique, so each of Kambo’s clients are evaluated regularly to ensure no velocity limits are crossed.
Automate routine tasks
As in many industries, working smarter will yield better results than working harder. Many software products are available to the public that help automate specific tasks on Amazon. Once a business maintains a consistent sales volume, it can easily automate processes to create more efficiency. Affiliate programs can be useful for established sellers. By utilizing these programs, as well as several other proprietary systems, Kambo’s team recommends creating more passive income streams.