Playing the Numbers Game with Marketplaces

A creative mathematician has all of the analytical tools to be a successful businessman. After all, what is business? It’s a numbers game – there’s some arithmetic, a bit of probability, a touch of algebra. Put all of that together and you are golden!

Because the Internet lets you be as big as you want, playing the numbers game on Amazon and other marketplaces is actually really easy. Sure there’s some trial and error involved, but it’s something you can definitely do yourself for a little bit of side income.

To really grow, however, you’ll need to play a numbers game on top of your existing numbers game. In theory, you could rinse and repeat for as long as you want.

Confused? Don’t be, it’s easier than you think, and we’ll show you what to do.

Intrigued? Awesome! Let’s get started.

The tools you will need

To make the numbers game work, there are a few tools to automate your entire process, or at least get it as near to automation as you humanly can. Here’s what you need:

• A calculator
• An account with a drop-shipper(s)
• A listing management solution 

That’s it. Put these three things together, and if you are lucky, you can optimize your sales over and over again and maximize your gains.

Note: this method is a good way to get a taste for eCommerce, but is by no means a complete guide to building a business that can sustain your lifestyle. This is just automation – if you do it right, there are an extra couple of hundred bucks for you every month.

Step 1: Find a drop-shipper

Drop shippers are manufacturers that blind-ship the product directly to your customer. That means you process the order, collect money from your customer, and place an order with the drop-shipper, who sends the item to your customer. You pay them for the item cost and pocket the difference. Sweet, right?

Find drop-shippers with catalogs of 3000+ products. You can find them by either searching in Google for phrases that have the word “distributor,” “distribution,” or other conjugations. There are also drop ship directories, such as Worldwide Brands.

Note: you will need to be a registered business entity with a reseller ID for drop shippers to entertain you.

Step 2: List products onto your marketplaces

Most drop shippers have product data feeds, which are large excel files that contain information about their products, such as product name, product ID (also known as SKU or stock keeping unit), wholesale price, retail price, and quantity on hand.

With that product data, you can easily bulk upload the product to your marketplaces with simple multi-channel listing software. Let’s say, in this case, you are going to start out with Amazon.

Amazon requires you to create a Pro Seller (at the time of this writing) account to be able to bulk upload products using a feed. At this point, don’t mess around with pricing. Leave them at the manufacturer’s suggested retail price, because you will need to make adjustments later once you have more data.

Once you are done with this step, you will potentially have thousands of products listed for sale on Amazon.

Step 3: Get sales and optimize

Here is where the numbers game part is really important. Of all of the products you list, you will probably be facing stiff competition on more than 90% of them. That’s ok. Because Amazon is so big, and you have so many products, you WILL make some sales.

There’s no telling whether it will be 1, 2, 3, or even more per day, but you WILL make sales. After a month or two of selling, you will have some good data.

Make sure you maintain a proper spreadsheet of what items you sell, how much they cost you, how much Amazon took for the sale, and what you pocketed.

After collecting data for a few months, you will get a good idea of which products are A) selling well and B) raking in the most money. Ideally, you want to focus on a handful of products which are doing both.

Optimizing is pretty simple. If your best-selling products are doing well in the entire Amazon catalog itself, and you have stellar seller ratings, you can try adjusting the price or making your offer more compelling.

Adjusting the price doesn’t just mean lowering it. You can even try increasing the price marginally. This is a classic tactic used by many eCommerce entrepreneurs – essentially, you are increasing your profits without having to increase your existing traffic or conversions!

If you do lower them, be careful. You don’t want to start a pricing war that will kill both you and your competitor.

You can also offer things like free shipping or limited promo codes to help drive sales.

Don’t just focus on your own best-sellers

If you have some products that are not selling well for you, but are doing well in the Amazon catalog itself, you can try the same tactics listed above to make your listing stand out even more.

Rinse and repeat

Optimizing isn’t a one time thing. Revisit your products every few months and repeat the steps detailed above. This way, you are constantly optimizing and have the best chance for continued growth.

If you find after 6 months or so that your entire catalog isn’t doing too well, then perhaps this line of products isn’t the best fit. You can try again with another supplier, too. Ecommerce is all about testing, testing, testing – so don’t get disheartened if you aren’t a millionaire in the first shot!