Amazon Seller Beginner Mistakes #5: Not Defining your Goals

In this series, we will cover some very common, but easy to avoid mistakes that many brands make when selling on Amazon. We call these “beginner mistakes”, but even some longer-term sellers make many of these beginner mistakes as well.

By learning to avoid these mistakes in advance, you can put your brand in the best possible position to success on Amazon.

Amazon Seller Beginner Mistakes #5: Not Defining your Goals

One of the most common mistakes we see beginner and even long-term Amazon sellers make is not defining what their goals for Amazon are and if they align with the overall goals of their business.

Selling without a Goal

Many Amazon sellers don't think about what they are actually trying to accomplish with selling their products on Amazon before they start. What ends up happening is they have no metrics or KPI’s that they can use to understand if they are on the right track or going off course. Selling on Amazon without a goal is like trying to use your GPS but not knowing the address you are trying to get to. You end up driving in circles for a while until you give up and go home.

What Should my Goal be?

Your Amazon business should help you achieve whatever the goal is for your business. Every business’s goal will be different to some degree, but typically the goals of an Amazon business will fall into 1 of 3 general categories.

Common Goal #1: Grow at all costs

While this goal was more common a few years ago, there are still businesses who have the capital to invest a large amount of money into launching and growing their product on Amazon. These businesses have a goal of growing their sales and grabbing market share as fast as possible.

They are comfortable selling at a loss for a period of time in order to gain market share quickly. They make also run aggressive price promotions. This is especially true for products that naturally have repeat customers, like grocery or beauty products. These businesses are focused more on metrics like subscriber growth, market share, and lifetime value than they are on profit margin.

Common Goal #2: Grow at near breakeven

Currently, this is probably the most common goal we see with brands on Amazon. Money is tighter than it used to be and businesses expect to at least breakeven on their Amazon sales.

It’s important to have a very strong understanding of all your costs, including cost of goods sold (COGS), inventory shipping & storage, Amazon referral fees, Amazon FBA fees, refunds, advertising spend, and more.

For these businesses, it’s important to maintain a price point that allows for all these costs and leaves room for growth through advertising spend and promotions.

Amazon reporting isn’t great, so you’ll have to build your own reporting and track your profitability to make sure you are on track.

Common Goal #3: Maximize profit

A common goal for established brands and product lines is maximizing profit. You want to maintain or slowly grow market share while producing as much profit as possible.

The goal for these types of businesses is to increase prices, reduce costs, and manage inventory as efficiently as possible.

The goal for these businesses is often to use profitable product lines to fund product development and launching of new complementary product lines. This is a great way to use Amazon customers to grow your business.

This goal won’t work for newly launched product lines, as it requires a significant share of organic sales. New products won’t rank well organically and breakeven strategy is probably more appropriate.

Conclusion

It’s really important that an Amazon seller knows their goals and tracks the appropriate metrics to make sure their Amazon business is on track. Not choosing a goal means your Amazon business will be directionless, potentially leaving a lot of money on the table that your business needs to grow.