Today’s topic is one that just might give me nightmares because I’ve personally made some of these mistakes BUT learned from them. Today is a great day because now you can learn from these and avoid them like the plague in your business! There is a plethora of mistakes that Amazon sellers make on a regular basis but can easily be avoided!
Let’s dig into the top 5 that I see on a regular basis and how to avoid them.
1. Not Having the Exit in Mind
I can’t tell you how many times I hear the following from clients, “Jon, oh how I wish I thought about my exit from Day 1!” It’s heartbreaking to hear but you can fix that today! You really need to be positioning yourself and your business for an exit from the beginning. It’s crucial to understand what the market is looking for and how to attain the highest multiple possible.
Here are some quick tips:
-Maintain clean financials.
-No one SKU should make up more than 20% of your revenue.
-Build out your off-Amazon presence on social media and Shopify.
-Start filing for design patents when possible.
-80/20 split of Amazon vs. Shopify revenue. If hiring an agency to make this happen is needed, do it.
-Cohesive branding. No random products in your store.
2. Hiring Too Many Employees
I’ve said this before and I’ll say it again, if you are doing $10 million and under on Amazon, you need 2-3 employees max and they can be VAs from the Philippines. Thanks to smart software, the need for bloated staff is simply unnecessary. It not only kills your cash flow but makes your business that much more complicated when it doesn’t need to be! The key here is to run lean and keep more of your profits!
3. Neglecting Financials
Growing on Amazon is one thing but maintaining a strong net profit is another. To ensure you are actually profitable and running at a strong pace you need to be doing a couple things: monthly P&L statements (use your CPA for this), daily cash flow analysis, and net profit tracking software. Basically, know your numbers. At any one time, you should know where you stand from a profit standpoint, how much inventory is at amazon, how much is on the way, and how much is at your factory.
4. Not Outsourcing PPC
This is easily one of my biggest regrets. I held onto managing PPC on my own for far too long due to pride. I thought I was that good. I was wrong. Once you hit $250/day in PPC spend, it’s time to outsource. Let the pros take over and really start scaling your ads. Trust me, you won’t regret it. Between plummeting ACoS and growing revenue to heights you couldn’t have imagined, it just makes sense to outsource this task as soon as you can. It’s also going to save you TIME! If you need a strong PPC agency, there are only a few I trust so please reach out and I’ll connect you!
5. Launching the Wrong Way
Many sellers fall for the myth that the only way to grow on Amazon is to have never-ending product launches for new products. Reality disagrees! The fastest way to $10 million a year on Amazon is through variation expansion. For example, if you have a parent listing with a single color doing $50,000 a month and has 500 reviews, why not add three colors and continue to expand? Use those existing reviews to your advantage! In terms of a variation cap, I like to limit it to 7 to avoid “purchase paralysis” with customers.