Last summer, an alumnus of our school gave me an opportunity to learn how to purchase OEM products, then post them on Amazon and optimize them according to Amazon’s product ranking algorithm to generate organic sales. Today, I want to share with you my sales experience on Amazon and some lessons I have learned.
What is an OEM?
OEM is the abbreviation of Original Equipment Manufacturer, which literally means original equipment manufacturer. It refers to a manufacturer that manufactures products and accessories according to the requirements of another manufacturer, also known as OEM or authorized OEM.
Product: Unique packaging design / brand is more likely to stand out
Many of the products on Amazon are sellers’ own-brand products, and the Bluetooth headsets I sell are no exception. Products are produced by manufacturers, third-party sellers brand them, and then sell through e-commerce channels such as Amazon and eBay.
As shown above, my headset is priced at only $12.99 and the price is very affordable. It’s also worth noting that these headphones stand out in this price range with their unique packaging design/brand. Many of the competitors’ packaging designs in this price range are not attractive, and their logo/brand names are generic.
In many cases, Amazon’s consumers will decide whether to buy based on the beauty of the product/listing, as this will help these headsets to be sold quickly. The irony is that the sound quality is the biggest weakness of this headset. They are not clear enough at high frequencies, and they don’t emit bass when they are low frequencies that are common in hip-hop and electronic music. Even so, they are still quite good at listening to the gym or running, after all, the price is less than $13. This is a good choice for those who don’t want to worry about losing or damaging expensive headphones.
Operations: Paid Ads Improve Ranking
In the two months after the product was released to Amazon, I sold out all the inventory, which is 2,400. The initial sales were not very good, I had to use Amazon’s pay-per-click advertising to improve the search ranking of the product on the Amazon platform. This means that regardless of its ranking, the product will appear at the top of the search results, and there is a flag indicating that it is sponsored.
The ACOS for each search term is different, but the overall advertising cost for sponsored listings is $306.92, resulting in sales of $623.52, which is 49.46% ACOS. I was surprised that the entire “click-to-pay” campaign gave me 25,276 impressions. These sponsored ads have a click-through rate of 0.7%, a total of 177 clicks, and an average cost per click of $1.73.
In terms of click-through rate, it is still relatively high on Amazon, which helps to generate organic sales, because when consumers search for keywords corresponding to advertisements, the high click-through rate of sponsoring listing supports Amazon’s algorithm to display the product.
In the two months of selling, my income exceeded 30,000 US dollars, the profit margin was about 40%, and the main reason for the decline in profit margin was the high return rate. The return rate for this product is about 4%, which is quite high for Amazon products. This is because it is a cheap product and the Bluetooth function is not very reliable.
In hindsight, I realized that electronic products are more likely to be defective than others, and predicting these challenges should be an important part of my product research. Another important lesson here is that there is a lot of due diligence on the manufacturer. Since this is not a long-term project, my relationship with consumers is less important than other sellers on Amazon.
Purchasing: Looking for multiple manufacturers
The manufacturer of the headphones I sold was found on Alibaba. Finding a good manufacturer is an important part of the procurement process, but it requires due diligence.
In many cases, it is necessary to contact 30 or more manufacturers. If they respond professionally to their delivery time and product list, you can take samples from them and test their quality, otherwise it will be.
In reality, however, it is difficult to find a high-quality manufacturer even after finding a sample. I chose 10 samples before choosing this headset, but the final quality is still not very good. Alibaba is a reliable platform, but there are too many factories and trading companies on it. It takes time to find a good partner.
Logistics: consider the weight of the item
I am using Amazon’s FBA to handle order fulfillment because I don’t have time to pick up the order in person. This means that I only need to ship a large box containing the product to their distribution center and they can handle the remaining processes, including returns. I am very grateful for the convenience, especially in the days when I sold more than 100 products.
For this product, the cost of FBA is about $3.19, and the biggest factor in FBA cost is the weight of the item. In addition, using Amazon’s FBA allows the product to qualify for Amazon Prime, so Prime members receive a two-day free shipping service.
If the customer has a problem with the headset, they will send me an email or message on Amazon. This is interesting because many people think that I am a customer service representative for a large company. When I reply to the email in an hour or less, they are very impressed with me, I can reply to the email via my mobile phone, so it is very simple.
Find the best product for sale
For e-commerce companies, Amazon is a very strong distribution channel, and many consumers have gone to Amazon to buy specific products, which reduces the pressure on entrepreneurs to obtain customers. Conversely, thousands of products are not sold every day on Amazon. Optimizing products to improve search rankings is critical to organic sales. These headphones are popular because they rank high in the existing high-volume market. In future projects, finding the most suitable product for sale will become an increasingly important part of my work.
The best products sold in Amazon are those with high sales (more than 1,000 monthly sales) and less competitive products;
The ideal product price is more than $20 (because Amazon’s FBA fee);
If the product listing is ranked high and the comments are less than 50, then the competition is quite low.
I think that if entrepreneurs can do the following, they can enjoy selling goods on Amazon.
Have risk tolerance, such as investing more than 1,000 items;
Enjoy direct interaction with consumers and enjoy support for customers, but no technical skills or resources to develop their own platforms;
Excited about the prospect of improving product SEO / sales.