Questions

If you were given a product to sell on Amazon for a traditional retail company, what percentage of sales would you charge?

6answers

You have to see how much gross profit and net profit is there in the product sale. Let's assume the net profit is X then you could ask around 15% to 20% of the net profit. It also depends on how much efforts you are doing and who is paying for the paid ads. It also depends on how much efforts client is doing to build his brand on social media and other channels because if he is doing efforts, there will be more sale of goods.


Answered 2 years ago

There are better ways to model this to protect yourself and align your goals, but 5%-10% off the top is common. This may seem low, but allows you to focus on throughput and not margin optimization while still allowing them to capture a large percent of the payment.


Answered 2 years ago

I would charge from 10 to 15% of the selling product cost.


Answered 2 years ago

Generally, the client will negotiate a fee with you. The commission would be determined by price, whether the item is small batch or mass produced and the profit margin.


Answered 2 years ago

My suggestion is %/sale, rather than %/profit... as %/sale is way easier to track + manage.

Amount can be complex to calculate.

Relates to many factors + funnel stop product sale relates to + also LTV of customer.

Best to book phone calls with people on Clarity who understand this process, to assist.

And... Once you switch to using Amazon you lose all metrics + ability to add riders to outgoing boxes.

All physical product I ship in my businesses is handled by in house staff, because for me, having real metrics + ability to toss an rider in any box produces highest profits.

Also... sigh... Amazon will still your product + you clients, as follows.

1) If your product sells well.

2) If Amazon can figure out where you have it made or they can contract with a Chinese company to under cut you...

Well... They will...

Example...

Recently one of my client got $10K worth of sales over a weekend for a gizmo he was selling on Amazon.

He quickly shipped product to Amazon to fulfill all orders.

As soon as product arrived....

Amazon contacted him + told him they would no longer honor orders for his product, because they had recently gone into the same business...

And they would be fulfilling customer orders out of their inventory.

Then they offered him one cent on the dollar to purchase his inventory or he could pay shipping + pull prices to Amazon to return all his product.

Lesson - Unless you really understand how to cloak product arriving at Amazon to be sold, best not to use Amazon, because they'll steal you blind.

You must only ship product from your facility + hide sources of all components or ingredients to produce your product.

Seriously good idea for you to talk with people who have lots of experience with Amazon... before you pitch a client to sell their product on Amazon.


Answered 2 years ago

It would depend on what I think the sales revenue will be. If I think the monthly overall sales revenue will be $20,000 or more, then I would negotiate between 5-10% of sales. If I think it is going to be less than $20,000 per month, then I would negotiate between 10%-50%, depending on how much less. Obviously, I would want a higher percentage, the lower the expected sales. The bare minimum for me to consider selling the product at all would be $4,000 in monthly sales revenue - if I think it will have less than $4,000 in monthly sales, I would want a reasonable percentage (maybe 10-15%) but also charge cash sales fees between $2,000 to $5,000 depending on how much work is involved in doing the competitive product research, keyword and listing research, and whether I will have access to recommending product changes based on negative reviews, or bundling options based on reviews, questions answered, and Amazon's suggested 'also bought.'


Answered 2 years ago

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