The first and foremost mission of online sellers is to ensure that their entire in-stock inventory is effectively available for sale. If you are not ensuring that your entire inventory is available for consumers to purchase during Q4, you would be failing to perform your main duty as a retailer, which is generating online sales, by selling ALL your available products.
Therefore, you should make sure not have any stranded inventory on FBA, nor any suppressed listings. Stranded FBA inventory simply means, that your Amazon FBA inventory for a certain listing (ASIN) is inactive. A suppressed Amazon listing means that your listing is technically available on Amazon, but cannot be found by shoppers when searched on the Amazon search box. This practically means that your listing is dead, since shoppers cannot search, find and purchase your product. Make sure to look for such issues on your Amazon account and fully reactivate your listings. Amazon usually specifies what are the issues that need to be fixed by the seller. Make sure to get this done with no delays.
The second mission you should focus on is trying to predict how much inventory to source and have in stock. This mission is a bit tricky since you have to balance between having enough inventory for a successful Q4, and potentially overstocking, thus having too much stock left when Q4 is over.
The most recommended strategy for Amazon seller is to stock up inventory for Q4, only if you are able to financially afford to have your funds tight up in inventory. And then smoothly sell your overstock during Q1 for a decent profit, maybe also for break-even, and avoid taking a loss.
Listing Optimization
Your Amazon listing is the virtual shelf of your digital storefront where you can present your products in the most attractive way possible. Make sure that all your Amazon listings are “sparkling with glitter”, and are fully optimized for conversion.
If you sell a seasonal product, make sure to put a strong emphasis on the seasonality of your product and “dress up” your listing in the holiday spirit. Showing off your product as a seasonal gift in your images, and mentioning on your copyright that the product makes a great gift, can do most of the trick.
Do not assume and take for granted the mindset of consumers. Capturing their attention and turning it to the holiday spirit can tremendously help your listing greatly convert, when compared to a competing listing, that is plain, boring, and not focused on the holiday spirit.
Finance
Many Amazon sellers can expect to triple their revenue during Q4 and beyond compared to regular year. If you can clearly identify being able to triple your sales, and your profits accordingly, make sure you can financially afford to source triple of the quantity you usually do.
If you do not have enough cash to lock your funds into inventory and still run your business smoothly, you should consider taking a loan and raising debt. You should always do so responsibly after clearly identifying that by taking debt, you will ultimately increase your sales, fully repay the debt, and generate more profit as a result.
There is no glory in tripling sales revenue and making the same or even less profit. You should remember, that the purpose of your Amazon business is to generate the most profit possible, and not the most sales revenue possible.
Cashflow management is a major component that all retailers must master. Growing rapidly in sales, but not staying attentive to the financial consequences of your business can be lethal and greatly damaging. Many upcoming Amazon sellers are revenue millionaires, but they are bleeding money and are generating losses without even realizing it. The reason is that they do not manage the financial side properly and get drunk on the power of revenue growth versus profit growth.
Logistics
The year 2020 and the Coronavirus pandemic presented itself as the most logistically challenging year for Amazon sellers to date. During the end of Q1 and most of Q2, most Amazon sellers were not able to ship their inventory to Amazon’s fulfillment centers all over the country. Amazon has blocked products from non-essential categories from shipping to FBA centers at the height of the pandemic lockdowns.
Many sellers needed to pivot quickly and adapt to the new logistical realities. Now it is safe to say that the best set up for Amazon sellers is to have each ASIN set with two SKUs for two separate fulfillment options. One SKU for FBA mode, and another SKU for Fulfilled By Merchant (FBM) mode. This way, if you stock out of your FBA SKU, your FBM SKU will kick in as a backup, and allow your sales to keep running, and not take a hit on losing your Best Seller Rank (BSR).
Amazon sellers can set up listings with an FBM mode using their own warehouse, a garage, basement, and/or turn to a third-party logistics center (3PL) to handle the logistics. If you need a 3PL, it is recommended not to simply turn to the cheapest option, rather, make sure to turn to a 3PL that is really experienced working with Amazon sellers, shipping FBM and FBA orders, and is highly reputable.
Even if working with high-performing and experienced 3PL centers can come at a premium cost. It will be far less costly if you encounter setbacks with an inexperienced lower-cost 3PL provider, which might result in loss of revenue, listing rank, customer satisfaction, and Amazon suspensions. Using high performing 3PL centers is especially important during the prime time momentum of Q4. Do not be cheap. Less can cost much more in this specific matter.
Advertising
When you are watching the NFL Super Bowl game, the advertising ads during the game are the most expensive on earth. And for a good reason. The eyeballs of everyone are fully attentive to the advertisement, and the impacts of these ads generate lots of Return On Investment(ROI) for the advertisers.
The same principle applies to advertising on Amazon during Q4. The eyeballs of so many shoppers are fully attentive to the Amazon marketplace. Much more than the regular season. These eyeballs are ready, able, and are with full intent to make a purchase. It is your mission as a retailer, to capitalize on this great momentum, pay the premium for the ad spend, compete for the advertising space, drive tons of traffic to your listings and boost sales.
Advertising costs will sharply rise during Q4 due to the great potential stored with the eyeballs and attention of shoppers. Make sure to be ready to spend more, and have the financial ability to do so. The key here is to spend more so you can generate more sales, but most importantly generate more profit. If you can clearly identify that by spending more on ads, you will generate more profits, GO FOR IT, and do not hold back.
Sourcing - Chinese New Year Warning
If you source your products from China, make sure to keep in mind that the Chinese New Year of 2021 will take place between the end of January until the end of February. Therefore, make sure to place all your orders during Q4, so you will get your inventory during the end of Q4 or at the very latest during mid-January of Q1.
It is very important to juggle this matter smoothly, so you do not stock out on inventory. Especially after having a strong momentum in Q4. You do not want your Amazon BSR to peak just to crash right afterward due to the lack of inventory. If you can financially afford it, the best practice would be to source your products for Q4 and Q1 with a bulk purchase, and maybe even try to negotiate a better price from your suppliers due to the larger bulk order.
Account Health
Your Amazon account is the most expensive digital machine you probably have at your disposal. Therefore, make sure that there is no rust in your machine in the form of complaints and notifications received from Amazon Seller Performance(SP).
The best practice to keep your Amazon account in good health is to quickly respond and reply to any SP notifications. Make sure to have all your available information ready for action. This information involves any documents that can prove you are a legitimate seller such as invoices, trademark certificates, patent registration, copyright registration, and much more.
The Amazon marketplace can be notoriously brutal when it comes to having your Amazon listing or account suspended. A suspension can happen to any seller, at any size, and at any time for whatever reason. The best way for Amazon sellers to handle this frail reality is to, firstly be a fair and square seller, and to not involved with anything that is not legitimate in any way. And have all the documentation and evidence to support your position if you ever get challenged.
Accounting
Needless to say that Q4 closes the tax year for Amazon sellers and therefore you should focus on closing the year strong along with financially closing your books. By capitalizing on the huge momentum of Q4, many Amazon sellers can greatly improve their financial results and bring some reassuring news to their accountants.
Do not forget to include in your end of the year inventory count, your Amazon FBA inventory, FBM inventory, and even your inventory under production (if you are the factory, or you paid a factory for production). Amazon will provide you with a end of the year tax statement called the 1099-Form. Make sure to download this form, and send it to your accountant.
If you have paid any interest during the year on a loan, do not forget to expense the interest payments as they are tax-deductible. Make sure to use a Profit and Loss tracker that will clearly calculate all your business expenses, and drill down your numbers to see if you turned a profit or a loss at the end of the year.
If you or your accountant are having trouble understanding Amazon’s income statement reports on Seller Central. Here is a free eBook that is available for your convenience.
Amazon FBA Auditing & Reimbursement
If you really want to boost your Q4 profit and finish the year strong, you can conduct an FBA audit to find FBA discrepancies, file claims for FBA reimbursement claims, and maximize your available Amazon FBA reimbursements. Many Amazon sellers are not even aware that they are eligible to get a handful of reimbursements back from Amazon for a variety of FBA discrepancies.
The overall Amazon FBA discrepancy rate can range from 1%-3% of the annual FBA revenue for sellers. Amazon generally provides an 18-month lookback period for most type of FBA discrepancy claims. After the available time frame, the eligibility for getting paid for discrepancies eventually expires.
If an Amazon FBA sellers do not cash in on all the available claims at their disposal, they are guaranteed to be leaving lots of money behind. It is highly recommended for Amazon sellers to cash in on all available FBA reimbursements, and significantly boost their bottom line profits. DO NOT MISS OUT!
If you are an Amazon FBA seller and never audited your account, and have no idea even where to begin. You can reach out to GETIDA for help. It is free to join GETIDA as they do not charge any money upfront. They only charge a fee from successful FBA recoveries they generate.
GETIDA is providing a $400 offer for the readers of this article so you can get $400 in free FBA reimbursement to get things started. Remember, your money is always best kept in your pocket instead of elsewhere. An effective utilization of your available FBA reimbursements can ensure that your money always stays in your pocket. Hopefully this added money will help you keep growing your Amazon business.
Summary
We hope you have found the Q4 check-list for Amazon sellers useful in clarifying the main business functions you should focus on. According to all expectations and projections, the fourth quarter of the year 2020 is expected to a record-breaking season on Amazon. We wish you to be highly successful making history this year and many more years to follow.