"Build" Guide - how to Build your Private Label Business
Today I have a simple but powerful marketing principle: Triple M. This isn’t so much about your mindset, but rather about understanding the mindset of the consumer. By that I mean a shopper that has the potential to buy from you. I feel like people don’t truly understand this and therefore there is an opportunity for you on Amazon.
This is key in driving sales and conversions. Let’s unpack this in non-internet terms. This is a fundamental process that applies in any market in any medium whether it’s face-to-face or online or wherever.
If I was in a room full of cat-owners and they hated dogs, I could offer them the best dog food in the world. I could say, “it would make your dog leap for joy and it will make him/her the happiest and healthiest dog and add five years to their lives. It is normally £50 and I will sell it for £3.” How many responses would I get? Zero! Now, if I had a room full of dog owners, the response would be much different. Message to market match is crucial.
Amazon does its best to ensure there is good message to market match because it leads to happier consumers. Happier consumers will like and trust Amazon more and keep coming back.
Keep in mind that we are leveraging people’s trust in Amazon. When someone does a search on Amazon they are saying, “I am looking to buy xxxx.” Amazon then looks at all the listings it has available. Then compares keywords that are in the title and the bullet points. Then determines whether those keywords have helped that product sell, and delivers the best matches to the consumer.
If you are selling dog food, and the shopper puts in the word “cat food”, you have to hope that Amazon does not display your listing. If it does, then it is just a waste of everyone’s time because the cat owner isn’t looking for your product.
You need to be very clear about the market you’re going after. Instead of trying to find keywords that will help you sell a product, you should be thinking of the customer’s search terms, and finding a product that will fulfill that search.
Let’s use “red dog bowl” as an example. Here is a great way to find a niche market where demand is high but the obvious keywords, dog bowl, are hyper-competitive. It would take a lot of work and giveaways to gain any traction. Now, let’s say you search for red dog bowl and the search results show a black dog bowl, and a silver dog bowl, etc.
That means that Amazon couldn’t find an exact match for the terms had to display similar products that aren’t exactly what you’re looking for. That tells me that there is an opportunity. If I am a shopper that is looking, specifically, for a red dog bowl, and my search results come up with one red dog bowl and the rest are different colours, then I will likely click on that one. This will help your click-through rate and this is called dominating a niche market, which is internet marketing 101.
The other thing to think about is when people have gotten on your listing, they are pretty likely to buy. As long as you don’t actively put them off, they are likely to convert. So you will be getting better click-through rates as well as conversion rates. Therefore, if you’re buying Amazon ads then you will be getting a better return on your investment.
Let’s say you’re paying $1 per click for “red dog bowl” and 30% of people that click end up buying, then the cost per sale. Averaged out, will be $3. Whereas, if you were to pay $2 for the keyword “dog bowl” and people click on it, then see several other listings that are very similar and end up clicking on another product. That conversion rate will be much lower. Let’s say the conversion rate is closer to 10%, you are going to end up paying $20 per sale.
You can find a niche market. Also, if you can find a niche market where you can supply the exact thing that people are searching for and no one else is supplying it, you can secure niche dominance and will have very good click-through and conversion rates. This will lead to fantastic sales since there is less competition.
The next stage in message to market match is believably. If you are selling that miracle dog food to a room full of dog owners. This time you’re giving it away for free. That raises the question of whether or not they can trust you. That question, I will answer, in the next episode.
After having found great product ideas, the big phase we are now in is the FILTERING stage – panning for gold!
Now we look at the overall Demand and check for demand depth. If nobody wants your product – just eliminate and move on.
The easiest tool I reach for here is the same each time: the Jungle Scout Chrome Extension.
Firstly: Don’t get obsessed with units sold per month. Traditionally you look for 3000 units/month sold on page 1 – which means per product, about 300 units a month or 10 a day.
I no longer care about that. I just want $10,000 per month per product – even $5000 a month is fine if profit margins are high . It’s in fact much better to have the same turnover from fewer, higher priced products because a lot of the costs per unit are similar – so in other words, you make more profit if those units are
If you strip out the top 2-3 sellers (by $ or £ or € etc) on page 1, and you have little demand left, it’s not going to be worth going into this market.
Simple filters, but they will remove quite a few potential products – the ones that are left are the ones to take the next stage!