How to have a super-profitable Q4

The last three months of the year are always the time that most retailers make the most profit, and that’s true for FBA sellers too. However, the pot of gold won’t arrive of its own accord – you need to put some hard work in. It can get hectic.

First of all, you need to act now if you don’t have enough inventory. It’s no good hitting the beginning of December and realizing you have nothing to sell. This is your last chance to source product, so ensure you do.

Secondly, you need to concentrate on the things that will actually make you money, and not do the things that will waste your money or time. For instance, generally it’s a bad idea to reduce your prices in the holiday season. Low-priced suppliers often sell out fast, so you’ll get a better return on your investment if you wait, then sell at a higher margin.

Don’t change your strategy or start tweaking your keywords in Q4 (other than tweaks like adding ‘gift’, ‘present’ and so on to your keywords). Don’t introduce new products, unless they’re in a category you already sell and know well. Your existing strategy and products should hit Q4 running.

Don’t put all your eggs in one basket. That applies to product, but it also applies to timing;  don’t concentrate on a single event like Black Friday or Christmas. Instead, aim to sell well throughout the period. Don’t promote just one product. And don’t go for fads, or for the highly promoted best-seller toys, where manufacturers with very deep pockets will be competing hard.

Q4 is a little tricky to get right because Amazon drastically increases its storage fees. So it can be worth your while really paying attention to the supply chain. Use a buffer of stock in your own garage or warehouse and then concentrate on tracking sales and getting replacement stock into Amazon as fast as you can.

Prioritize your products. Look at your top selling ASINS and those that are growing their  sales fastest, and crank up your advertising spend on those products. If you have historic data, check on last year’s sales and the trend this year. That can give you a good base for forecasting likely sales. You can also assume sales will be up 30 to 50 percent on Q3; that’s a good rule of thumb if you have products that are less than a year old in your portfolio.

Push the smaller items, as good stocking fillers. But you should also think about having bundles available; often, people are happiest buying a variety assortment for family if they’re not sure quite what individuals will like. For instance, if you’re not sure whether mom prefers Lapsang Souchong, Pai Mu Tan or Pu Erh tea, then buying a ‘Chinese gourmet tea package’ is a safe bet.

Make sure you use your financial resources to the full. You’ll need to ensure you have enough inventory, but you also need to push your advertising spend. Reinvesting is a great idea; if you make a good profit in November, buy more ads for the same products for December. Look for long tail keywords, and when you increase your spend, increase it on the best converting keywords so you’re getting the best return on your ad cost.

Offering free shipping is also worth considering as a way to differentiate your product.

Finally, remember that you can’t relax once Q4 is over. Lots of people will receive gift cards for Christmas, and they’ll probably be looking to spend them in January. Don’t try to run out of stock at the end of Q4 or you’ll miss those sales. And of course you won’t get much rest before St Valentine’s Day comes around, plus Chinese New Year, St Patrick’s Day, the Superbowl, and Easter!

If you source from China, you should also remember Chinese New Year will be January 22 and the whole country will shut down for a week or more. So if you have sourcing to get done, make sure it’s done well in advance!

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