In late July, Teikametrics hosted a one-day event in NYC for elite FBA sellers who were interested in optimizing their Amazon business. Our guests were able to attend talks from our four knowledgeable speakers on how to use cutting edge analytics to grow their Amazon sales. We got such great feedback on the event that we wanted to make sure our blog readers got the chance to get the inside scoop on everything from the latest tips and tactics for FBA, to strategic insight on scaling your FBA operations. We hope you enjoy our Elite FBA Summit series!
When is the last time you used a floppy disc or an 8-track tape? If you are familiar with either of those things then chances are you have lived through more than a few technological advances in society. These advances are often referred to as a paradigm shift – a time when the usual and accepted way of doing or thinking about something changes completely.
At the Elite FBA Summit, Teikametrics CEO, Alasdair McLean-Foreman, discussed how retail is experiencing a paradigm shift fueled by Amazon and other online giants. Those who fail to evolve with this shift will become as extinct as a floppy disc.
For much of the 1990’s Polaroid was untouchable as their peak revenue reached $3 billion. Polaroid, which was once described by the Boston Globe as a “juggernaut of innovation,” experienced a major downfall that they haven’t been able to recover from since. Their failure to adapt from film to digital ultimately rendered them bankrupt in 2001.
Businesses like Polaroid provide a worthwhile lesson that it’s important to look ahead of the curve because there is always room to improve your business.
Hiring and Managing a Team of Data Driven Traders
Alasdair believes the most successful sellers treat Amazon like the stock market. Their investments are short-term focused and fixated on wringing the most profit from their portfolio. These types of sellers are less focused on what manufacturers are presenting to them and more targeted on seeing products as commodities completely driven by the dynamics of the market.
In addition, as you expand, you will need to hire a team of retail buyers that can be effective in helping you grow your business. They must be able to excel at excel and focus on the data that will make you money.
In order to effectively manage your team, Alasdair suggests that you provide a transparent framework that objectively measures their performance. The numbers then speak for themselves and hold each individual buyer accountable.
The Metrics for Success
Gross Margin – What pays the bills
- This is the most important single metric to be focused on as you scale.
- The amount of money your business is earning per sale – usually presented as a percentage.
- It’s important to view this metric for every investment, down to the SKU and supplier level.
Stale Inventory – What bankrupts you
- This is the worst nightmare of any retailer – especially an FBA seller.
- If you are not cognizant of stale inventory you could be funding bad investments with the profit you are generating. All it takes is a couple of bad investments to spiral into a perpetual cycle of never getting paid.
Metrics without actions or actions without goals don’t provide much benefit.
Once you set your goals you can measure your success. For example, if 60% of your inventory has been in Amazon’s warehouse for over 90 days, try setting a timeline for yourself to get it under 20%.
Incentive Based Pay
In addition, it’s a good idea to set goals for your employees and reward them based on incentives. For example, if you know your shipping crew makes a lot of errors, incentivize them to decrease the amount of errors in order to make your operations more efficient.
About The Presenter
Alasdair McLean-Foreman started selling on Amazon in 2004 as one of the platform’s first third party retailers in the sporting goods space. After growing his store to a multi-million dollar operation using Fulfillment By Amazon (FBA), he sold his business to help other sellers with growing pains using automated software solutions. He also founded the weight loss and fitness company Traineo and has built and provided e-commerce solutions to large organizations including Newscorp, The Times of London, L’Oreal, and The New York Marathon.
Top Amazon sellers trust Teikametrics for a data-driven approach to scaling their businesses for growth. Founded by a former multi-million dollar Amazon seller, Teikametrics offers FBA inventory management software, repricing, and marketing services.