You have to see how much gross profit and net profit is there in the product sale. Let's assume the net profit is X then you could ask around 15% to 20% of the net profit. It also depends on how much efforts you are doing and who is paying for the paid ads. It also depends on how much efforts client is doing to build his brand on social media and other channels because if he is doing efforts, there will be more sale of goods.
There are better ways to model this to protect yourself and align your goals, but 5%-10% off the top is common. This may seem low, but allows you to focus on throughput and not margin optimization while still allowing them to capture a large percent of the payment.
My suggestion is %/sale, rather than %/profit... as %/sale is way easier to track + manage.
Amount can be complex to calculate.
Relates to many factors + funnel stop product sale relates to + also LTV of customer.
Best to book phone calls with people on Clarity who understand this process, to assist.
And... Once you switch to using Amazon you lose all metrics + ability to add riders to outgoing boxes.
All physical product I ship in my businesses is handled by in house staff, because for me, having real metrics + ability to toss an rider in any box produces highest profits.
Also... sigh... Amazon will still your product + you clients, as follows.
1) If your product sells well.
2) If Amazon can figure out where you have it made or they can contract with a Chinese company to under cut you...
Well... They will...
Recently one of my client got $10K worth of sales over a weekend for a gizmo he was selling on Amazon.
He quickly shipped product to Amazon to fulfill all orders.
As soon as product arrived....
Amazon contacted him + told him they would no longer honor orders for his product, because they had recently gone into the same business...
And they would be fulfilling customer orders out of their inventory.
Then they offered him one cent on the dollar to purchase his inventory or he could pay shipping + pull prices to Amazon to return all his product.
Lesson - Unless you really understand how to cloak product arriving at Amazon to be sold, best not to use Amazon, because they'll steal you blind.
You must only ship product from your facility + hide sources of all components or ingredients to produce your product.
Seriously good idea for you to talk with people who have lots of experience with Amazon... before you pitch a client to sell their product on Amazon.
It would depend on what I think the sales revenue will be. If I think the monthly overall sales revenue will be $20,000 or more, then I would negotiate between 5-10% of sales. If I think it is going to be less than $20,000 per month, then I would negotiate between 10%-50%, depending on how much less. Obviously, I would want a higher percentage, the lower the expected sales. The bare minimum for me to consider selling the product at all would be $4,000 in monthly sales revenue - if I think it will have less than $4,000 in monthly sales, I would want a reasonable percentage (maybe 10-15%) but also charge cash sales fees between $2,000 to $5,000 depending on how much work is involved in doing the competitive product research, keyword and listing research, and whether I will have access to recommending product changes based on negative reviews, or bundling options based on reviews, questions answered, and Amazon's suggested 'also bought.'
I will suggest a market research, because as you know we are in a pandemic and economies are struggling extremely hard to get on the track. To be a successful Amazon, these are the key aspects to remember:
a) Low seasonality: Look for products that can sell year-round and aren’t limited to season sales.
b) No legal problems: Avoid picking up products that have the trademark or legal issues.
c) A price that is greater than 18 dollars: You can easily increase the ability to make millions of dollars through sales by having a higher price per unit.
d) Lightweight and small: These types of products tend to generate better sales than the ones that are not. This is due to two reasons- one: lower shipping charges, and two reduced storage.
e) Room for improvement: If you can choose a product that can perform better than your competitors, then it increases the chances of making more sales.
Here is a quick checklist of what is required to come up with the right product. With these criteria, your job gets easier.
1. Product prices that fall between the range $10 and $50
2. Products that make at least 10 sales a day
3. Similar products that feature best seller rank of at least 5,000 in the main category
4. The top 3 related keywords have 50,000+ monthly searches on Amazon
5. Not seasonal products. They can be sold year-round
6. 2-3 products with less than 50 reviews on the first page
7. Small and lightweight products (under 2 to 3 pounds)
8. No brand names or trademarks associated with the product
9. A product can be set up for 25% or even lesser than the sale price
10. Proper room for product optimization and improvement of present listings
11. Multiple product-related keyword opportunities
12. Quick and easy product sourcing from China
13. The product should not be fragile
14. Ability to expand your brand with related products
15. Can make a superior product over similar products in the market
16. Product encourages recurring purchases
17. The product should not have any legal issues
There are two types to perform an Amazon Product Research:
2. Automated tools
1. Manual Method
If you want to do it manually, then Amazon itself a great resource to carry out a few things for the process. This involves doing two simple steps:
Step 1: Check the Best-Sellers List
Amazon offers you with substantial help for researching about a product and this is through Amazon’s Best Sellers page. In fact, this is the foremost step you should be doing, as Amazon displays all the top-selling products here.
You can search for products based on their categories & sub-categories. Perform a quick check at the listings to determine what items are sold the most. This, in turn, will also assist you in deciding a niche (perhaps, if you are not sure which one to go with). From a product’s selling info, you can predict what products can appeal your target audience. In addition, you can even check the related items to help you have an idea about the ways you can expand your business into. Try to choose products that are neither priced too high nor too low. Besides this, a limited competition also gives more prospects to sell the product. Generating a product idea can also be done through the following ways:
a) Amazon’s best-seller list
b) Amazon storefronts
c) Exploring the retail stores
d) Amazon’s Movers & Shakers
e) Amazon Basics
f) Browsing about a few products on Pinterest
g) Exploring the Shopify stores
h) Looking at the eBay’s trending list
i) Checking the section – “Customers Also Bought”
j) Amazon’s product sub-tiers
k) Seeing through the AliExpress’s Weekly best-sellers list
Once you have an idea about the niche and the respective product, see if the product is in-demand or not through the following ways:
1. Google keyword planner
2. Sellerapp’s Product Intelligence tool
3. Google trends
Step 2: See What the Competitors Are Doing
The second step is to analyse what your competitors are doing to sell the product that you have picked. The Amazon’s Best Sellers page enables you to see through your primary competitors. You can check for their product listing pages and their official website if available. The insights give an idea of what items are selling the most, the ones that are getting good ratings and customer reviews. Apart from this, you can spy on your competitors outside Amazon by typing the appropriate keyword on Google or other search engines and see if their results are showing up. Also, you can purchase the product from your competitor (if it is affordable for you) and check the kind of service they offer. You can always learn those best practices from them and find out ways to improve them while selling yours. When you check a product page in detail, you will tend to get multiple new ideas. With thousands and thousands of products listed, it is quite easy to be carried away, it is important to be clear to understand what you are exactly looking for. When in doubt, ensure to follow the tips mentioned below:
1. Look for any type of product from the Amazon’s Best Seller page, as that is adequate to help you come with ideas.
2. Focus more on the Sponsored Products, Frequently Bought Together, and Customers Also Bought sections, as they provide better data intelligence, which you further might want it for increasing or up selling your inventory.
2. Automatic Method (Quick Way): This is indeed one of the quickest ways to perform product research. They save your time and come handy. Just Imagine Scouring through the bestseller lists, checking the hot-selling items, analysing the product criteria, images, description, bullets, listings, and competition can be time-consuming and maddening. Moreover, you will have to check if there is enough demand for the product and see if it can sell easily. Also, is the product seasonal or is it only good if is sold during holidays? What will be the return or refund rate and how expensive it can be to ship? Do customers want it to work impeccably for years? Would this necessitate proper customer support? You can either do all of the above, visit all the websites, click on all the potential products, put in all the price, weight and other criteria that are mentioned above, go to all the competitors, go up and down on scrolling through all the products, go back and forth switching tabs and spend hours and hours of energy and you still may not come up with any product idea. All you need is to access the Sellerapp’s tools and get everything at a single place. The tools are exclusively designed to give you an estimate of monthly sales, monthly revenue, number of reviews, and a bunch of other useful tools to make the research more enhanced, efficient, and organized. It is a great way to validate your Product Research quickly and easily. If you are going to be a “private label seller,” then understand that not all items are created equally. You need to avoid choosing some complex products such as Cameras, Photos, Paintings, Home Appliances, etc. for some reasons. Do not pick products that have complications with shipping and manufacturing, as they turn out to be the biggest headaches later. This is mainly because such massive products involve liabilities, quality assurance, returns, and customer reviews. In addition, anything that foes “in” or “on” your body – like foods, lotions, creams, nutritional supplements tend to have potential liabilities. So, it is good to ignore such products. On the other hand, categories like shoes and clothing are worth noting too. Since most individuals have their brand preferences, creating your brand might not be successful.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath