Generally speaking, the costs required for Amazon agent operations mainly include three parts, namely agent operation costs, promotion costs and basic material costs required for store operations.
Company operating expenses
More than 95% of Amazon operators in the market are compensated through basic services and commission points. Among them, each company’s basic service charging standards are different, with an average of about 80,000 yuan/year. Among the agency’s operating expenses, the largest expense is the 8-cent commission.
In the second half of 2019, more than 70% of Amazon stores operated by an Internet agent have successfully created hot products and have completed the initial minimum standard of US$50,000. With average monthly sales of $50,000, annual commissions will exceed $330,000.
In other words, the core profit point of Amazon’s agent operations is the eight percent commission. If sales reach $50,000 per month, Amazon’s first-year agency operating costs will exceed $400,000. This is the core reason why Amazon agents strive to increase sales quickly. If the agency’s performance continues to be poor, not only will it not receive commissions, but it will also affect the renewal of the contract in the second year, and even have a negative impact on the company’s brand.
Promotion costs
In e-commerce, promotion is essential. Amazon’s new store is online. In order to quickly attract traffic, on-site promotion and off-site promotion need to be carried out at the same time. What needs to be paid attention to is how to grasp the ratio of website advertising ACOS to off-site promotion. This is an issue that many new Amazon sellers cannot grasp well.
In the early days of opening the store, there was very little natural traffic, and the main source of traffic was advertising. For example, when the Silk Road Internet Amazon Business Communication Group displays store sales, some people will want to see the advertising ratio. It is hard for new sellers to believe that a product that has just been launched can sell for tens of thousands of dollars in a month. I can tell you that Amazon’s advertising ratio is not low, especially in the early stages of operation. The advertising ratio accounts for about 10-20% of sales. This data will gradually decrease after 3-6 months. The advertising ratio during stable operation is Between 10% – -15%.
Off-site promotion requires high team resources, and reliable resources are very scarce. There are many promotion channels outside the website, such as Internet celebrity blogs, Facebook, Twitter, YouTube, discount websites, etc. The proportion of this type of advertising mainly depends on the needs of the agents.
Basic costs
Basic costs are mainly concentrated on trademarks, servers and value-added tax. Among them, trademarks and services are necessary for Amazon agent operations, and the total cost does not exceed 10,000 yuan. VAT sellers in Europe are required to use them, the cost of which depends on their individual needs.