Why only few online sellers are successful?

Why only few online sellers are successful?

Become an Amazon seller with free credit of 2000 rupees

Some people learn from mistakes others learn from observing others making the mistakes.

If smartly done, online sales can become profitable and a full time business.

Following are some tips, tricks and secrets for new online sellers to turn profit on their first attempt.

These are the lessons i learned by selling online in third party stores like Amazon, Flipkart etc. in India.

Very important to stick to these rules if you are a new seller.

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Following tips are for new sellers, those who don’t own a brand & plan to buy from wholesaler or manufacturers.

Avoid branded products - unless it is your own brand.

I learned it the hard way. I tried selling branded sports(Nivia) products that I bought from wholesaler. The margin itself was low and competition was high.

And many sellers were trying to empty the stock by selling at lowest possible price.

Trick here is to get exclusive deal from the brand to sell online. You must be one of the handful of sellers with a deal with the brand.

Also make sure brand follows strict Minimum retail prices.

As a general rule of thumb When you are just starting online selling, it is better to avoid branded products from other companies.

Reason is, if it is an established brand, that means they have many wholesalers, distributors and offline retailers.

The margin that each one in the distribution partner get is decided at a fixed rate.

Sometimes the wholesalers also sell through online store at lowest allowed price set by the brand. That means as a new seller, you will not get any profit.

The margin is low & competition is high. And you don’t even know whether the brand will allow you to sell in the platform of your choice.

So the right way is to own your own brand.

Buy from China but not for wholesale(unique product and low cost).

Those who make the maximum profit as retailer are, those who buy directly from China.

But the problem here is that, if you don’t buy at large quantity, shipping cost is higher than product itself.

So next best option is finding the wholesale seller in your own country, those who gives the best margin.

Even better option is finding & buying directly from a manufacturer in your own country.

Create your own brand/product.

The best ever option is having your own product/brand. This way you only decide the margin, price & control the cost.

But for a seller who is starting with very minimum capital, this is not a possibility. But if you already have a product that you created, building a brand and registering the trademark is the way to go.

Avoid selling high value product - cost of damage & low margin.

If you are not an established business that can handle the losses, stay away from high value products. Some of these products have low margin even though they are high value.

New sellers will struggle to bear the risk of return, damage and other issues associated with high value products.

Avoid too low price items.

Beginner sellers often make the mistake of choosing low price products to sell.

Similar to high value products, low value products also have the issue of volume. If you are not selling in high volume, chance of loss when dealing with such products is high.

  • Low price item gives low profit margin also.
  • Shipping and other costs higher than product value.

When the product is in low price category, shipping and other costs are higher than the price of the product itself.

Buyers know that the same product available at offline stores at lower price.

Scarcity in local market, trouble of traveling to store, trouble of finding the exact item, or item not available in remote areas etc. are some reasons for an average buyer to purchase such items.

Take advantage of local and zonal markets.

New sellers should take maximum advantage of location they are at.

Provide free shipping to the local and zonal buyers. Getting a product without any shipping cost attracts many price sensitive customers.

You can add a rather high shipping fee to buyers from the other side of country to discourage those buyers.

This strategy will ensure low shipping cost, better price for local buyer, fast delivery and more.

Avoid bulky/heavy products - cost of shipping.

For new sellers it is better to avoid, bulky/heavy products. Heavy & bulky products will add many other extra costs like more shipping cost, more packing cost, more return cost etc.

Buy in bulk & from real wholesales - not second hand/third hand seller.

Only way to get real wholesale price is to buy bulk(unless you have strong tie up with wholesaler). Make sure that you have minimum 66% margin on unbranded products.

For small items, see the price of existing listing & make sure that you are getting product at 1/3 of the price.

It is almost impossible to make a profit on products that are bought from second or third level wholeseller. So be careful when buying from them.

Go for unique product - avoid high competition.

New sellers tend to choose best-selling products. The problem here is that best-selling products almost always have high competition.

Selling in high competition, best-selling, product category will limit the seller’s ability to increase price.

Only when there is less competition, sellers can increase the product price to improve the profit. Always keep looking for unique products with less competition.

Manage accounts religiously.

Some sellers only realize the losses they are making, at the end of the year. But many people don’t even know they are making a loss.

There are 3 main reasons for the loss: returns, (platform fee + pickup fee + tax) and packing cost.

Most new sellers forget to add the overhead cost of returns. You have to add a 20% expected return cost to the cost of product itself.

Add 20% return cost, 10% risk cost, to the total product cost.

When calculating the total product cost, you have to add minimum 20% return cost. This can be calculated by multiplying the shipping cost & platform fee with .20 (for 20% expected return) and adding that to the product cost.

For example if the 80+80 = 160 is the total fees you have to bear in case of a customer return, then 160 * .20 = 32. You have to add this to the product cost.

Packing matters - presentation & condition of package when buyer recieve it matters.

Packing of the product is very important.

Poorly packed products will not only get damaged, it will create a bad first impression on they buyer.

This will result in high product return rate.

So make sure to invest in some packing materials. Cardboard boxes, some bubble wraps & plastic covers(with website branding) are required.

Packing should not only be able to withhold the rough courier journey to the customer, it should also give a very good first impression when the buyer receive it.

Think about wholesale & other opportunities.

While it is totally possible to make profit as an online seller, you always have to look at other options too.

Dinamics of the ecommerce industry is changing rapidly. Always be prepared to look at other opportunities.

Third party platforms can ban you at any moment. Be prepared for this and create other sales channels like your own website, wholesale selling etc. too.

Take a close look at payout calculator.

Most third party stores have payout calculator / profit calculator. But the problem with this is that, they show the best outcome to the seller.

For example, payout for a prepaid purchase from local is totally different from payout for a prepaid purchase from COD order from national buyer.

So always have a close look at the calculator & change the location & opther options to find out the best outcome.

Prepare yourself for returns, unexpected costs & damaged products.

If you are new to selling online, and did not prepare(both mentaly & in calculation) for return & return cost, you will be surprised.

It can take you by surprise, especially when the product that gets returned to you is damaged. Or the cases where the buyer is not satisfied with the product. Or the buyer is fraud or fake buyer.

Thomas Updates from thiruvalla.