#66 Q & A Tuesday No. 10 - British Amazon Seller - the UK Private Label Specialist

#66 Q & A Tuesday No. 10

Q.1 Stefan CONVERSION RATES

Lets talk conversion rates – what sort of % are you all getting through ads and through organic? I am in patio, lawn, garden and getting a terrible 2-3%. I think it might be my main image.

I have tried the price. Its really weird – I tried price points between $10 to $25 and am not seeing a big difference in conversion %. Obviously at $10 I am getting more conversions, but I’m also getting more sessions. The conversion % is still 2-3%…. 🙁

Broadly: below 10% is not good in most categories; 5% or under is emergency level.

I would test price, which sounds like you have, and test main images.

Yes it will affect CTR but it will also affect conversion as well.

Q. 2 Alexandros BREXIT

Hello guys, does anyone here have an idea on how the Brexit is going to affect FBA businesses (apart from making importing more expensive) ?

As you say, main effect is making importing more expensive if you’re converting out of pounds and buying from the Chinese in USD (or probably RMB too).

If you have USD, keep them! They are more valuable than they were to UK sellers and probably will stay so for a while.

If you haven’t already done so, set up a USD account in the UK (eg Metrobank, my bank; HSBC) and set up a receiving account to receive your USD from amazon.com with Currencies Direct.

The Euro is also more valuable at the moment if you have been selling in Europe, but seems to be a more troubled currency than the USD. You can set up a similar setup (I haven’t done this yet as not yet selling in Europe).

Q.3 David PROFIT/AMAZON ADS

PROFIT HUNGRY: Just looking for some advice on whether or not I should keep PPC running on one of my new products…really trying to maximize the bottom line, not just increase revenue. This maybe be only answered by A/B split testing +/- Ads.

Below is a quick snapshot. Thanks!

1. Launched with no reviews this month and ranking on page 1 for just about any keyword I can think of now with only 2 organic reviews.

2. 1/2 my sales are coming from PPC.

3. Avg. CPC is ~ $0.50.

4. A lot of keywords I am in position 1. For keywords where I am raking 4-5 organically, PPC pushes me to the top stop on all Ad keywords.

5. Eventhough, the ACOS is acceptable on the main keywords, this Ad spend is driving down my profit margin.

OVERALL, IS THE AD SPEND WORTH IT? WILL I GET ROUGHLY THE SAME # SALES WITHOUT IT?

Broadly: is your ad spend worth it?- depends on a. your conversion rate b. your profit margin. Your ACoS of 11-14 % roughly looks good as long as you have a healthy profit margin.

EXAMPLE

If you spend 50 cents a click average (As you say) and you have for example a conversion ratio of say 20% (1 in 5), it will cost you $2.50 ad costs per sale made though Advertising;

Then if your organic sales are 50% of your overall sales (as you say) then your average cost of advertising across ALL your sales would be $1.25 a unit. If you have a $5 profit margin, fantastic; if it’s $1, you’re making a loss.

So the missing pieces are: conversion %age and profit margin.

In answer to “Will I get roughly the same sales without advertising” – simple answer: no! You said yourself – only 50% of your sales are organic. You will nearly always get more sales with advertising; the P & L question is whether you make overall more profit with it than without. To answer that, you need to crunch the numbers.

Q.4 Ben PROMO CODE WORRIES

I’d just like to clarify some details regarding discount codes.

I understand that I can limit these to one use per customer.

But does that limit it to one ITEM per customer?

So, a customer might be able to use the code once, but in that one purchase wipe out loads of my inventory?

Thanks everyone 🙂

Good news: as long as you use only a $ amount off, you are perfectly safe.

EXAMPLE A1

customer has your coupon code for $19 off.

Buys 1 unit of your $20 product, pays $1.

Example A2

customer has your coupon code for $19 off.

Buys 3 units of your $20 product, pays $41.

NEVER use %age off for a giveaway. Here’s why:

EXAMPLE B1

customer has your coupon code for 95% off.

Buys 1 unit of your $20 product, pays $1.

Looks okay, right?

BUT…

EXAMPLE B2

customer has your coupon code for 95% off.

Buys 3 units of your $20 product, pays JUST $3

or even…

EXAMPLE B3

Buys 300 units of your $20 product, pays just $15!

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