Why Multi Packs Make You More Money On Amazon FBA

First let’s define what a multi pack. Say you have a widget. You put 3 widgets into a poly bag. Now you have a multi pack. It is more than 1 of the same product.

Now if you say you put a widget and a rock in a poly bag, that is not a multi pack. It is a bundle. When you have 2 or more different products that are sold together, it is a bundle and many people get this confused.

Quick fact: You are not suppose to make new multi packs on the Grocery category per Amazon policy. People still do but it is suppose to be only used when the manufacture does it. The old listings seem to be grandfathered in and people still sell on them even though they are not from the manufacture

So now that we are on the same page about what multi packs are, now we can look at why they are more profitable.

Amazon Fees Are The Enemy

Every item sold incurs fees from Amazon. You can roughly figure that everything sold FBA incurs about a $4 fee ( slightly less)

This is why many sellers do not sell anything under $10.

Now a multi pack is considered a single item when it comes to fees.

Quick fact: The multi pack are usually listed under new UPC codes and this why they don’t show up when you scan the items in the store ( some are listed under the same UPC and will show up. It is hit or miss)

So take the example that you have 10 widgets.

You can sell the individually and incur $40 in fees ( again, rough estimate) or sell a single 10 pack and incur $4 in fees ( actually it would be more due to the higher selling price) . Which sounds better?

Advantages of Multipacks

Lower Amazon fees

Fewer sellers

Better value for customer

Disadvantages of Multi packs

Usually higher sales ranks

More work to package

Case Example Of A Mulit Pack

Here was a product that I sold. I got 3 of them at a flea market for $3 each.

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http://www.amazon.com/dp/B00FQR7V2C

I had the choice to sell it as 3 singles or 1- 3 pack.

If we look at the return for the single, after fees, I would get $5.80 back, which is a $2.80 profit and 93% ROI. Not too shabby for a product at a sales rank of 7k in beauty.

Amazon Multi Packs

http://www.amazon.com/Burts-Bees-Volumizing-Shampoo-Pomegranate/dp/B006XMHPF2

Now if I sent in the 3 pack, after fees I would get back $21.06 ( if I sold at $29.99, which would be a better value for the customer) . This gives me $12.06 profit and an ROI of 134%, which is 40% more ROI on the same investment. Now we have to note that the sales rank is worse , 135k ( but there is no FBA sellers at this writing)

FBA Multipacks

Now the Fast Turners want nothing to do with this. They will sell theirs the first day it hit the warehouse and wait 2 weeks to get paid.

My 3 pack will also sell ( FBA Toolkit says 1 sells per day at this rank) So I too will get paid 2 weeks later but have 40% more profit in my pocket.

The thing that people focus on is the sale rank. I will admit that I love me a good sales rank but my goal is to make the most money I can, not to have the best sale rank of any FBA seller ever.

So I understand that people have been brain washed into the Fast Turn business model and I know how on paper it works out so good. ( Yeah I remember all the people that were going to retire multi millionaires because of their 401ks. The math proved it. Yet I have never seen it work out for anyone I have known)

So onward. Lets say that you have 180 units of these and you need to be sold out in 30 days.

Simple math for selling the singles. At this sales rank, you are going to blow through them really quickly ( at least that is what you think), FBA Toolkit says 4 of these sell a day ( I am making assumptions that you get all the sales, which doesn’t happen, but let’s go with it)

Well guess what, it is going to take you 45 days. WTF? But you are a Fast Turn God!

Ok, if we send in all as 3 packs, then that is 60 days worth. Still not working out.

Now lets say we sent 90 in as singles and 30 -3packs. It will take 23 days to sell out the singles and 30 days to sell out the 3 packs. Hey, we just made it in the 30 days like we had to.

Didn’t think of that? Huh? Listing your products two different ways. It isn’t an all or nothing thing, but most people look at 7k vs 137k and think it is a no brainer and take the 7k listing every time.

What about the money. Show me the money!

The profit on the 180 singles is $504 at the 93% ROI, but the profit for the mixture of both listings is $613.80 at 114% ROI.  That that is an increase of 21% ROI on just mixing them up.

So I made the assumption that you would sell what the FBA Toolkit predicts ( which won’t happen). Well it is actually more likely on the 3 pack due to the number of sellers vs the sellers on the single listing.

So let’s go the other direction. What if I messed up and this doesn’t sell. Which one do I have the most room to drop prices to at least get back my investment?

Well this one is simple. The 3 pack. ( just look at the profit / ROI)

What about if I have to place a removal order or have product removed? Well the 3 pack will save me money over the singles.

The Take Away

So what is the action steps to take? Well it depends.

You should look at your options. Don’t just jump on the best sales rank as your default. Remember that you are going to have to pay about $4 for everything you sell which will lower you profit,

Next check to see if there is a multi pack listing already there. Not all multi packs listings are worth getting on. Some items people don’t want to buy in bulk.

If there is the no multi pack listing, consider making one. Sometimes you are jumping on the parent listing, sometimes you have to make it. Remember that you are usually selling the unit cheaper in the mulit pack and this makes it easy to use the Amazon ads for product promotion. People look at the single and your ads pops up and it is cheaper per unit.

One last thing to think about. If the product is discontinued and people can’t find it and want to stock up, the multi pack may actually be more attractive to them over the single.

Your objective is to make as much money as you can on Amazon FBA, not source and send in as much as possible and this is a perfect example of how knowing the numbers can help you make more money.

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