Generally speaking, the cost of Amazon's agency operation includes three major pieces, namely, agency operation expenses, promotion expenses and basic material expenses required to operate the store.
Agency operating expenses
More than 95% of Amazon's operating companies on the market, the fees are composed of basic services and commission points. Among them, the basic service fee is different for each company, and the average is about 80,000 per year. Among the operating expenses, the biggest expense is the commission at 8 points.
In the second half of 2019, more than 70% of the Amazon stores operated by Silk Road Internet have successfully created explosive models, fulfilling the initial minimum standard of $50,000. Based on an average sales of 50,000 US dollars/month, the commission to be collected in a year is more than 330,000.
In other words, the core profit point of Amazon's agency operation is the commission at 8 points. If monthly sales of 50,000 U.S. dollars are achieved, the cost of Amazon's first year of operation will be more than 400,000. This is the core reason why Amazon's agency operating company will strive to quickly rush up the sales of agency-operated stores. If the performance of an agency-operated store continues to be poor, not only will it not receive commissions, it will also affect the renewal of the second year, and even negatively affect the company's brand.
To do e-commerce, promotion is essential. Amazon’s new store is online. In order to attract traffic quickly, both on-site promotion and off-site promotion need to be carried out simultaneously. What is controversial is the ratio of acos on-site advertising to off-site promotion, which is also a problem that many new Amazon sellers cannot grasp.
In the early stage of store operation, there was very little natural traffic, and on-site advertising was the main source of traffic. Every time I show you the store sales in the Silk Road Internet Amazon Operation Exchange Group, someone will want to see the proportion of advertising. It is hard for new sellers to believe that the store where the product has just been put on the shelf can make tens of thousands of dollars within a month. The sweeping monk can tell everyone that the proportion of ads in Amazon's agency-operated stores is not low, especially in the initial stage of store operation, advertising accounts for about 15%-20% of sales, and this data will gradually increase in 3-6 months. Decline, the proportion of advertising during the stable operation period is between 10%-15%.
Off-site promotion has high requirements for team resources, and reliable resources are very scarce. There are many off-site promotion channels, such as celebrity blogs, Facebook, Twitter, YouTube, discount websites and so on. The consumption of this type of advertising mainly depends on the needs of operators.
The cost of basic materials is focused on trademarks, servers and vat. Among them, trademarks and services are necessary for Amazon's agency operations. The total cost is less than 10,000. The sellers of vat's European station need to use them. Depending on individual needs, the cost is also different.