5 Ways to Avoid Selling CRaP
Coined internally at Amazon, CRaP (which stands for “can’t realize a profit”) has become industry language for products that cannot yield profit according to the online retail giant’s algorithm. When an item receives the CRaP label, Amazon bans it from the “subscribe and save” program, inhibits promotions and restricts access to stocking and shipping at fulfillment centers.
Clearly, brands don’t want CRaP in their inventory—but what can they do to avoid it? Here are five best practices to follow.
1. Enforce a MAP Policy.
When other merchants sell the same product at a lower price, profits take a nosedive. Providers should keep an eye on the minimum advertised price (MAP) for each of their products and enforce a MAP policy with authorized vendors.
Before you decide how to enforce a MAP policy, you must find a way to monitor advertised prices across the web for each of your products. Running manual searches is costly and time consuming, and violations could still be missed. Deploying an automated MAP monitoring platform, such as Pricebox, simplifies the task. To use it, you’ll need to collect and enter specific product data, including ASINs/SKUs, and the platform will then alert you via email or Slack when a seller violates your MAP policy. Be sure to choose a service that tracks products across many online platforms (not just Amazon) to further streamline the process.
MAP enforcement practices
Once you’re aware of a MAP violation, what should you do about it? First, come up with a standard method for documenting each offense. For example, you might want to take a screenshot of the advertisement in question as evidence of the violation. Then, create guidelines for policy enforcement. If you’ve established an authorized dealer program, consider taking different approaches to authorized and unauthorized vendors. While consistency is key, it makes sense to respond more strongly to unauthorized vendors, who are already selling your products without permission—not only violating your MAP policy. With these offenders, it might make sense to send a letter outlining the situation and threatening legal action if they do not comply. When you’re dealing with authorized vendors, consider a more diplomatic approach, such as suspending their inventory for a period of time if it’s a first offense. If the vendor repeatedly disregards your policies, remove them from your list of authorized dealers.
2. Consider item weight and packaging.
Heavy, low-cost items (under $15) are most likely to end up on Amazon’s CRaP list. The most common offenders are packaged food items such as snacks and bottled drinks, but any item that’s bulky and inexpensive could make the list—office supplies, toys, toiletries, and household items like dishes and furniture. Amazon is asking some brands to optimize their packaging for online sales—for example, restricting low-cost products to bulk-only sales—and some brands are taking the further step of shipping directly from their warehouses so Amazon doesn’t have to handle that task. Whether or not the retail giant contacts you directly, take a close look at your products and how they’re packaged and shipped. Does the cost of shipping a heavy, bulky package outweigh the value of what’s inside? If so, could increasing the volume of product (if it’s a consumable) in a package help offset those shipping costs?
3. Manage your inventory.
Amazon doesn’t want hundreds of slow-to-sell items sitting around in a distribution center. Too much inventory triggers automatic price markdowns, bringing an already low-priced product closer to CRaP status. Here are a few ways you can work to keep your inventory on the move—so it’s not taking up space in Amazon’s warehouses:
Use an inventory tracker.
Some e-commerce management tools, such as Pricebox, include features for tracking inventory. These tools make it easy to check sales and stock levels for each of your products.
Advertise and price items strategically.
Depending on product markets, sales might follow a typical pattern throughout the year. If it’s a slow season, boost sales with an advertising campaign, but make sure your item stock is high enough to meet resulting sales increases. Take a strategic approach to pricing items, ensuring that you leave an adequate profit margin that balances costs of advertising—not to mention packaging and shipping.
Analyze sales data.
Take a look back at your stock, sales, and pricing data over time and use it to identify trends and forecast future needs. If an item isn’t selling well, consider changing your strategy or removing it from your inventory altogether.
4. Ensure that products are designed for online sales.
The most successful online products are designed for the world of e-commerce, rather than sales in a brick-and-mortar store. From size to weight to packaging to style, everything about the item needs to work well with online sales. Bestselling products are unique, streamlined, solve specific problems or speak to niche audiences who are searching for certain keywords. While niche products target smaller markets, they’re often easier to brand successfully.
5. Vet potential products with the Fulfillment by Amazon revenue calculator.
If you’ve sold products using Fulfillment by Amazon, you might be familiar with the FBA revenue calculator, a free tool that breaks down the cost of selling an item and helps vendors visualize potential profit margins for items they’re considering. Most large brands don’t use FBA, but the revenue calculator can still serve as a handy vetting tool when you’re considering a new product. Amazon strategy consultant Andrea K. Leigh suggests entering your potential product and its marketplace price in the tool—and if your item would be profitable in the FBA program, it will likely be profitable in their retail channel as well.