Brad runs a one-stop consulting firm that helps Amazon sellers and one of the strategies they use is not to think of a product or product sales life cycle one dimensionally. There are different phases a product goes through. You want to identify those phases and what is need for each phase. A lot of people are wondering what to do for an Amazon launch. After the review blast is over, what do you do?
They have something called “Spur the Machine” that they do for their ASINs and sellers. It’s a four phase approach to the first step of getting something up on Amazon. In their experience, it takes about three months to get a product up and running and there’s a lot going into this.
The big thing is to take a snapshot, then stop and review your data. People tend to keep going and make small adjustments along the way. Doing that makes it difficult to see what’s happening and what’s causing it.
Some research was done on this topic. They gathered data from millions of SKUs and they found that the number of reviews stop mattering after 21 reviews. After that, it’s the amount of stars you have. Reviews matter for sure. Intuition would say that a product with 3000 reviews would do better than one with 100. However, according to the data, what really matters is the star rating.
Brad has found that when you run promotions, there is a higher rate of reviews that comes from people buying your product. The normal rate is about 1-3% of people who buy your product, will review your product. That number jumps up quite a bit when you run promotions. Usually, you don’t have to give away more than 30-50 units on products with a lower price point. With product over $100, you could probably get away with less.
A Facebook crowd around your brand is a great resource. You can promote new products there and get a good response
If you have built up a following around your brand. i.e. A Facebook page or group. You can leverage that following to help you. When you have an Amazon launch and are trying to get a new product out there, you can post about it on your page or group and tell them about your promotions, and ask them to leave a review. It’s a great resource if you have that following.
You can. It’s the idea of making your Facebook community feel special.
It’s hard to say. Within Amazon, it’s an individual person making the call every time. They have their SOPs that say if someone is given a promotion for a review, take it off. If it’s in a grey area, Brad has seen them overreach their bounds too much. However, there should be nothing against giving away promotions for your products.
It shouldn’t. It’s such a new thing and Brad doesn’t know what the internal procedures are but it’s not an incentivised review. You’re not saying, “Here’s a product so that you’ll review it for us.”
Brad could see that argument between two VPs as he has seen in the past, however, he doesn’t have much more insight than that. All he can really go on is the success of promotions in that past that his firm has experienced.
The final 5th part of this miniseries of 5 episodes, this completes this overview of Profit Maximizing Strategies. Remember the basics: you can only increase profit 2 ways:
We looked last time at decreasing your overheads. Here we address the other profit killer: your Direct Costs.
Otherwise known as COGS=Cost of Goods Sold.
look at your Total Landed Cost (TLC): Here are some ideas for reducing these:
-Manufacturing cost – can you negotiate with your supplier for lower costs? If you order more units, can you get a lower per unit price?
-Freight cost – get multiple freight quotes. Order more in bulk so you can sea freight rather than air freight etc. Choose lighter products!
Also consider your Amazon costs when choosing a product:
-Weight handling costs: Consider product weight & calculate costs very carefully if considering a heavy product. Will it make a profit?
-Oversize product costs: same things to consider as heavy products.
-Amazon Warehousing/storage – generally these are low but again very bulky products may increase these – do your P&L calculations carefully as well.
Other supply chain cost reductions:
This 2nd way of increasing sales is so neglected, you can get ahead simply by implementing anything in this area!
The simple idea is to increase the AOV=Average Order Value.
It can be more difficult to implement on Amazon than just getting new customers but is potentially much more profitable.
If someone usually buys a $10 widget at 50% margin, you get $5 profit per sale. If you usually sell say 10 orders of 1 $10 widget a day, your profit per month=$5X10X30=$1500
If you can increase the AOV by say just $1, you would end up with $11X50%X10X30 profit=$1650. $150 extra ie 10% extra.
Multiply such effects across several products and it can add to your bottom line quickly.
The simplest way to increase your AOV is simply to increase price! But you have to weigh up against conversion rate changes etc. to see whether that increases or decreases your price.
Another way is to bundle together products physically eg a 3-pack, 4-pack, 6-pack etc etc. Easy and very very easy to sell on Amazon.
Another way that is even easier is to offer a discount via a promotion code. Eg BOGOF (Buy One, Get One Free) or buy 3, get 10% etc etc.
If you set things up wrongly, you’ll make less profit, not more, so know your numbers going into this! Done right, this is a simple way to edge up your profit margin.
A harder way but possible on Amazon, is to do cross-sells eg “this is also bought with X” (spatula with slotted spoon for example). It’s possible to influence this again using promo codes – you can offer a 25% discount off a slotted spoon, for example, when you buy a silicone spatula etc.
Another way that is hard to do on Amazon but possible, is to upsell eg from a $5 spatula to a $25 frying pan. Same kinds of methods.
Increasingly, we are looking at strategies that will work best when you have control – in other words, you start to build your own email lists (and other assets like social media subscribers/followers etc.).
There is one more basic way to increase sales that is used least of all by Amazon sellers but could be the most powerful of all…read on…to the next episode…
To find out more about the Amazing FBA London Mastermind mentioned in the episode, click here
#85 The sea…and Natural Rhythms
It’s funny how interacting personally with basic natural forces reminds you of some Business basics for Amazon. Here are a couple of thoughts that have struck me while swimming in the sea off the South-East coast of England:
There is a natural rhythm to everything in business. Just like the ebb and flow of the tide, it’s almost like a force of nature. If we learn to recognise hear or see those rhythms, we can work with them not against them.
Examples of natural rhythms include:
If you can schedule things in these various levels of business in a way that works with the natural rhythms rather than against them, you’ll find you are riding the waves rather than fighting against the tide!
This episode is one of the **Summer Series** of bite-sized chunks of Amazon Strategic Goodness!