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ASD Market Week recently had the opportunity to interview Skip McGrath, an experienced and successful Amazon seller. Skip's success comes from being an experienced, online seller since 2006. Discover what Skip has to share with ASD regarding online selling and what you can learn from his experience for your own ecommerce business.
ASD: Skip, you have been a long time seller on Amazon. How long have you been actively selling on Amazon?
Skip McGrath: I started in 2006 and moved into Fulfillment by Amazon (FBA) in 2010.
ASD: Historically you used to sell on other marketplaces such as eBay but now exclusively sell on Amazon. What made you decide to do this?
SM: eBay was becoming too difficult for sellers – including me – and eBay sales were running about 7% of my Amazon sales. After a while, it was just a waste of my time.
ASD: Among the most important responsibilities of an online seller is understanding the algorithms that influence online purchases. Keeping this in mind, what can you offer for other Amazon sellers to learn from based on this?
SM: The most important factor related to the search algorithm is the keywords you select. The most important place to put your relevant keywords is the title and in the first 100 characters of the product description.
I use a keyword tool called Merchantwords that generates the best keywords to use in your Amazon title and back-end keyword field. If your readers go to www.merchantwords.com/skip they discount their service by $20 a month.
"The most important place to put your relevant keywords is the title and in the first 100 characters of the product description." - Skip McGrath, Amazon Expert
ASD: Speaking of best practices, what do you consider to be among the most important variables for online sellers to consider when selling on Amazon? Please explain.
SM: I have 3 really important ones...
1. Always follow Amazon policies 100%. Not doing so can get your account closed.
2. Register as a professional seller.
3. Sell with FBA.
ASD: Great advice! Now let’s talk about the importance of margins when it comes to being a profitable seller. How do you factor in margin into your overall selling strategy? And what can you offer others to learn from when it comes to better identifying inventory that has strong margins for their businesses to benefit from?
SM: Amazon now shows you your total fees (including FBA) for each product. So, it's now very easy to calculate your margins. Typically, your net margin after fees is less than 12%. This means you have to carry a lot of SKUs. Don’t be put off by such a low margin because, remember, Amazon runs 24/7 365 days a year.
As for the last part of your question, try to find small, lightweight items to sell because this keeps your fees to a minimum.
ASD: Fantastic insight there, Skip. And on that note, margin is undoubtedly an important factor in selling success… but so is selling the right inventory. What helps you ultimately decide on the inventory you will sell and likewise, will not sell?
SM: It might surprise you but I use a lot of trial and error. I am not afraid to try new products – but if they don’t start selling quickly I dump them really fast. One category that has always done well for me is kitchenware. It’s a category where it’s very easy to create product bundles which can be quite profitable.
ASD: Finally, what is your best advice to offer retailers as they look ahead to 2019?
SM: I’d say to constantly increase your SKUs. The more SKUS you have equal more sales. Next, don’t be afraid to experiment. Finally, provide extra customer service and answer customer communications quickly. When you get a question from a customer, Amazon wants you to answer it within 24 hours and if you do not, that is a demerit against your account.
You can see customer questions in your Seller Central just to the left of the page, and you can set up your account so customer questions are forwarded to your email. That way you can answer them even if you are not currently working on Amazon. With smartphones, you can even answer them from your phone.