What i Learned From My First Month Selling on Amazon & Flipkart India.
Bitter truths about online sales, and what i Learned From My First Month Selling on Amazon & Flipkart India. Read this before you start selling on Amazon, Flipkart, and others
I started selling online in Indian online stores a few months back.
I joined as a seller wayyy back in both Amazon and Flipkart, but started shipping products just a few months back.
But this is actually my second time selling stuff online. Few years back, I used to sell some products on eBay India, which is now closed down.
During that first time, I learned a lot of things, and those bits of knowledge turned out to be very useful the second time.
But it turns out that I had much more to learn.
Packing and shipping takes more time than you think.
When I started selling, I did not expect a lot about packing time. It was the least of my concern. Finding the right product to sell, sourcing, preparing catalog etc. took the center stage.
Therefore, only after orders started coming through did I realize how much time is needed for packing. Also, the amount of packing materials you require is often underestimated.
But this is not that big of a problem. And can be easily optimized. But for a new seller, especially if not prepared, packing will be a sudden challenge.
It all depends on your packing method, though. If you have ready-made packages, it is lot easier.
If competition is high, it is very difficult to make profit.
One of the most important tricks to make profit selling online is this. Veteran sellers know this, and that is their secret.
Finding the products that are in demand, unique, with less competition is the secret to success here.
Many sellers sell items at low cost just to empty their stock & move on.
New online sellers are launching every day. Most of them make some sourcing mistake and end up with a pile of products that they want to get rid of so that they can move on to the next product.
Such old stock is a problem for the sellers because they end up making a loss. This also affects other sellers trying to make profit with the same product.
Get products at a very high margin or make losses.
The number one mistake most sellers in online platforms is this. Buying wholesale without enough margin.
Most new sellers fail to calculate the packing, shipping, and return costs in online sales.
Your ultimate goal should always be to make your own product & brand.
Buying from wholesalers or manufacturers and selling on online platforms can work if you have the right connections and good margin.
But your ultimate goal should always be to start making products on your own and creating a brand.
This is especially true for small scale sellers who don’t have the advantage of economies of scale.
The next logical step after building a brand is to create your own online store.
Don’t take advice from the platforms you sell too seriously
From time to time, online platforms that you sell on will give recommendations and suggestions on pricing, promotion, or shipping.
Always keep in mind that the ultimate goal of online platforms is to become profitable—They care about sellers only because they need sellers.
20 percent of sellers make 80 percent of profit.
Pareto’s distribution is in play here, like almost anything in the universe.
Most of the sellers that sell online are in loss. Very few main players are the only ones making good profit. These are seasoned business people who invest a lot of money and make a lot more.
Product return & cancellations can ruin the operation.
For offline stores indirect costs like rent, electricity, advertising etc. can be estimated easily. But in the case of online stores, customer return is a bit difficult to estimate and thus is a risk to the entire operation.
Always add 20% of the return cost.
Return cost (courier and customer return) should be a major concern for every online seller. Percentage of returns vary across different product categories, but you must always expect an average of 20% returns.
If you are lucky, it will be 10 %. But in some categories it goes up to 40 or even 50%.
On top of returns, there is the possibility of damages and fraud too. So always add extra 20% of the product cost on top of product price as an ‘overhead cost of return’.
Cost of product should include shipping, packing, and return.
I read a story of an online seller of home appliances in some forum. He realized that he was making a lot of losses only at the end of the financial year after checking the accounts.
Many people, especially those coming from the offline retail sector, underestimate the extra cost of shipping, returns, cancellation, and packing.
It is more complicated compared to offline stores. So you need to add these extra costs to the spreadsheet and estimate the overhead costs.
Bonus tip—Make use of free ad credit.
Both Amazon and Flipkart give free advertising credit of 2000 to new sellers. It is like free money to advertise, so make maximum use of this.
This will not only help you to get some good sales, but also help you learn paid advertising and campaign management.
So make use of this free credit and promote, learn and optimize the campaign. This will be very useful in the future too.