With the advancement in the technology and online e-commerce builders, it has become very easy to build an e-commerce store, but has become very expensive to attract buyers to your store.    

Before we talk about building a profitable e-commerce business, it is very important to have a product-market fit, which means one should identify the need for the product in the target market.  

Once this is established we should think about, how to go about not only selling them but also profitably... 

According to stats:

Twenty-nine percent of small businesses go out of business because they run out of cash, and despite the significance of this statistic, less than half of small businesses are profitable and nearly 30 percent are actually losing money. 

What is the problem❓

​Retail brands have majorly 3 sales channels.

  1. Offline Retail (through distributors)
  2. Marketplaces like Amazon
  3. Own Website (Shopify, WooCommerce...)
  • Majority (>60%) of any brand's sales come from either offline retail or marketplaces like Amazon.  These channels have their own challenges:
  • - Offline Retail requires a huge CAPEX investment and building a long supply network.
  • - Marketplaces like Amazon charges hefty commissions (>30%) and don't guarantee sales 
  • None of these channels lets brands connect with their end consumers.  Due to this brands have to be dependent on these channels (#1, #2) and have to spend hefty budgets on advertisement as well as pay large commissions.
  • And with growing # brands & competition on these channels, it is very difficult to get the consumer attention and grow the sales sustainably. ​

What is the best strategy to grow your e-commerce business profitably?

For any retail brand, it is important to sell products, and at the same time, grow the business. Hence, brands need to focus on 2 things:

  1. Velocity: This can be achieved by selling marketplaces or offline retail.  But comes as a very low/ no profitability.
  2. High Margins:  Selling via owned channel sales like your own D2C Website/ App is the only way to grow the business with high profitability. 

Still, why are most of the e-commerce business not profitable from Amazon?

Brands often focus on increasing their sales by increasing their ads spent on these marketplaces. But they lack to incorporate certain basic points, which leads to low conversion rates leading to low RoI on their marketing spending.

Here are 9 ways using which sellers can ensure they have high margins while selling on Amazon:

1. Collect Consumer First-Party Data via Dyrect​

First-Party Data is the most important part of the profitability journey for any brand. Once brands are able to connect with the customer, they can (for life) reach out to the consumers to bring customers to their website and upsell/ cross new product lines. 


Dyrect is world's most advanced 1-click product registration software which help retail brands connect with their end consumers coming from marketplaces like Amazon or offline retail channels.

2. SEO Optimized Title Keyword

Getting your product on the top result of Amazon products is not easy an easy task. 

How Google search uses Keywords to understand the intent of the customers and showcase the relevant pages, similarly Amazon algorithm also uses keywords to identify the customer's intent of buying a product. So ensure to research the keywords that your users must be searching on Amazon to rank on top.

 The best practice is to include Brand Name, Product Name, Product Keyword, Size, and Color in the product title.

The more optimized is the keyword, the higher will be the chances of ranking on Amazon, and the higher would be the conversion which will grow your sales organically.

3. Real & High-Quality Product Images & Videos

When a user lands on your Amazon Product Page, the first attraction for him is the images present in the slider gallery.  So ensure that images are of high resolution and should represent the exact product the user will receive. 

Also, adding a high-resolution video of the product showcasing the usage/specification will increase the buying chances of the products. 



4. Display Social Proof (along with 4⭐+ Rating )

What would you do, if your friend has recently bought a black color sports shoe 👞, and you seem to like them by the looks?
You will ask about his experience with the product before you make a purchase decisio, right?

Similarly, on Amazon, the most important factor to make a decision purchase is based on reviews and ratings from the customers. 

With the abundance of look-alike products on Amazon, reviews & ratings are the most important factor for the customers to finalize their buying decisions.

 91% of shoppers takes out time to read the reviews and 84% trusting them as they would a personal recommendation.

💲 Profitability Fact: We might think that budget must be the most important factor in decision making, but studies show that the average customer is also willing to spend 31% more on a seller that has good reviews. 

Conclusion: # 4⭐+ review is directly related to profitability on Amazon. 

But, how brands can increase Amazon reviews?

Industry experts say only around 0.5 - 3% of customers typically provide a review or rating for products bought online.

Businesses across the globe use solutions like Dyrect which helps in increasing the reviews by up to 5x.​

5. Optimize for the Mobile Device

​Statistics indicate that 80% of all online shoppers start browsing for the products they need or desire on mobile first.

So it is very important that you are optimizing your images, videos, and content in such a way that it is easy to view and read.


Here is a detailed guide on Product Page Optimization for Mobile Devices.

6. Low RTO (Return to Origin)

Most of the business fail only because they encounter high return on their products. These returns could be because of various reasons like defects in the product, sizing issues, mismatch in the expectation of the customers (images vs real) among many others...

So ensure to identify the reasons for the returns from the customers and then act in the direction of fixing them.

7. Offer Refund/ Exchange:

People buy from Amazon for quick delivery & easy of returning the products in case they didn't like it.  Hence, it is very important to provide a 30-day product return window in which customers shall be able to return the products.

 However, more returns/exchanges would mean, high logistical costs leading to high losses.

💡 Tip to be Profitable: Always ensure to highlight product specification and usage on the product landing pages. This significantly reduces the purchasing error from the customers.  

8. Write as many FAQs:

If a customer is using your product for the first time, then there are chances that he/she would want to be assured that yours is the right product for their requirement.

So, please utilize the FAQ section on the product page. This will help in 

  • Reducing return orders
  • Leading to more conversions.   


Conclusion:

Most businesses don't take enough pain to optimize their Amazin listing to the fullest. There is no doubt that Amazon would be a low-margin but high-growth channel.

And if optimized using the points above well, sellers can build a profitable e-Commerce business on Amazon.