It is important for any business to measure its profit and loss as this helps in determining the direction of the business. It helps in understanding if the business is headed in the right direction or if there are changes that need to be implemented.
Most people, when starting a business, do not have a financial perspective of their businesses; instead, they only pay attention to the sales they make. This mentality does not look at the cost of operation and how it affects the profit and loss figures. Without tracking the cost, it is simply is moving forward making business decisions without the crucial data. This will ultimately hurt your Amazon sales. Today we have Shane Stinemetz of Fetcher to help us understand this complicated subject.
Importance of Understanding Profit and Loss
Understanding the profit and loss information of a business helps in setting up goals and targets. It will help the business move forward and maximize Amazon sales. This helps in making better business decisions. It will give you the information you need to understand where your business stands at a given time. With Fetcher, you don’t need a financial background to understand this data.
Understanding expenses helps you determine what you are spending on a sale. This includes money spent and fees such as shipping, custom fees and other business expenses. Cost of goods refers to the cost of manufacture and getting the products in the market. It is important not to summarize your costs when handling the data as this will give you a clear picture of where money is spent and help in developing a plan of deducing the expense.
How to Calculate Profit from Amazon Sales
You get your profit by subtracting expenses from sales. This helps in understanding the amount of money made and the margin of every product. This is a laborious task. It involves management of big data which discourages many people.
Refunds are reimbursements and are critical in sales because they are offsetting sales that bring in negative sales and this is a loss to the sellers. Fortunately, Fetcher makes all this simple by automating the process.
Challenges in Managing Profit/Loss Data
The biggest challenge that people face is that they are not aware of costs that they incur. This can include shipping and storage because they mainly concentrate on the sales alone. These recurring fees are hidden deep in the reports. Because of this people do not give it the attention it deserves.
It is also important to know how to deal with refunds as this will improve Amazon sales. Returns affects your rankings. It’s important to get in front of the refund process. The first way to do this is to change the mindset from the idea that returns are part of the business. Therefore, the first thing is to track the return rates of the products over time. Secondly, you needs to communicate constantly with the customers in order to understand any quality issues that the customers face. This limits negative comments and reviews that customers make as well as reducing the chances of products being returned. Lastly, track down your reimbursements for any money that you are owed, such as of lost or damaged products. Fetcher will be implementing a new feature that will help get reimbursement from Amazon.
Watch Amazon Sales with Shane Stinemetz Part 1 of 3
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