Amazon Sellers Brand Strategists and Snake Oil

[Ray272]

I have a product that only sells well on amazon.com market place in the USA.

The rival product, only one rival, for the last 6 years, sells on avg 2500 units per month.

The total sales per annum for the rival on the amazon is circa $3m per year.

We sell 50 units a month, every month for at least 36 months.

Our product offerings are the same.

Our Production facilities are in the US, same as the rival.

Our pricing is the same.

They have Zero partners, everything they advertise towards on amazon is going to them.

My colleague spent 5 years on this project, a software developer, learning how to manage advertising strategies on amazon, bad fit.

It has really stolen a lot of time from us but I understand the dilemma.

We turned on the advertising in 2021 to understand how they generate those sales.

We saw quickly how much they relied on the advertising, we were doing 1500-1800 units a month for a few months in 2021.

We then pulled the advertising and it all stopped.

Is this worth pursuing, could an amazon centric ecommerce company see the opportunity and understand the challenge?

If I can provide a price per unit with 10% below Keystone pricing, providing adequate built in marketing budget, is that not tempting to an amazon centric company, if you provide them with a complete blanket exclusive in all of North America.



Happy new year to all BTW.

 

[fisicx]

Amazon doesn’t really care. If you pay to advertise they make more money so they will push the listing to the top of the page.

 

[AmazonGeek]

This is really complicated and not easy to answer in a post. If you can message me a link to both your product and your rival's I will have a look and let you know what I think. I am away skiing from Saturday until the 10th but if you can let me know before then I will have a quick look.

 

[NickZ]

The rival product, only one rival, for the last 6 years, sells on avg 2500 units per month.

How do you know?
Anyway to remain in Amazon which went thru some huge changes, punishing many small time sellers, copying their product etc.. Why don't you have set up shops additionally to Amazon shop?
A domain an a hoster can be had @ 40 to 50 Quit (Pound Sterling)
Etsy, eBay also exist, so do a ton of others.

 

[Ray272]

How do you know?
Anyway to remain in Amazon which went thru some huge changes, punishing many small time sellers, copying their product etc.. Why don't you have set up shops additionally to Amazon shop?
A domain an a hoster can be had @ 40 to 50 Quit (Pound Sterling)
Etsy, eBay also exist, so do a ton of others.

Hi Nick,

I know as amazon reports the sales online and have been monitoring for many years.

I wish it was that easy but in the US Amazon is way too big of a channel to try and ignore and this solution has only ever sold well on amazon. Strange but true.

 

[AmazonGeek]

Lots of other sites exist but none has the traffic that Amazon has. You could create a fab website but if no one knows it is there, how are you going to get sales? You can pay for traffic of course but that is what Amazon's commission is for - traffic. Ebay is nothing like it was - we get around 200 Amazon sales for every Ebay sale, and the fees are about the same. And Etsy is only for certain products.

 

[apricot]

I have a product that only sells well on amazon.com market place in the USA.

The rival product, only one rival, for the last 6 years, sells on avg 2500 units per month.

The total sales per annum for the rival on the amazon is circa $3m per year.

We sell 50 units a month, every month for at least 36 months.

Our product offerings are the same.

Our Production facilities are in the US, same as the rival.

Our pricing is the same.

They have Zero partners, everything they advertise towards on amazon is going to them.

My colleague spent 5 years on this project, a software developer, learning how to manage advertising strategies on amazon, bad fit.

It has really stolen a lot of time from us but I understand the dilemma.

We turned on the advertising in 2021 to understand how they generate those sales.

We saw quickly how much they relied on the advertising, we were doing 1500-1800 units a month for a few months in 2021.

We then pulled the advertising and it all stopped.

Is this worth pursuing, could an amazon centric ecommerce company see the opportunity and understand the challenge?

If I can provide a price per unit with 10% below Keystone pricing, providing adequate built in marketing budget, is that not tempting to an amazon centric company, if you provide them with a complete blanket exclusive in all of North America.



Happy new year to all BTW.

Are you and your company based UK or US?

 

[NickZ]

I wish it was that easy but in the US Amazon is way too big of a channel to try and ignore and this solution has only ever sold well on amazon. Strange but true.

The advantage a new shop has vs the already established shops is a often a lower operational cost.
Scaling and marketing is the art. Being in the US you have an advantage.

 

[fisicx]

The advantage a new shop has vs the already established shops is a often a lower operational cost.
Scaling and marketing is the art. Being in the US you have an advantage.

That makes about as much sense as many of your other posts.

 

[NickZ]

Why am I not surprised?

That makes about as much sense as many of your other posts.

with a little hop @Ray272 gets it.

 

[lesseo]

Work with a professional consultant on ads with a larger budget for just 3 months.

 

[AmazonGeek]

Work with a professional consultant on ads with a larger budget for just 3 months.

If this is advice then yes, PPC on Amazon is a massive part of being successful but it can make or break you.

To do it properly you really need software to manage it (Helium 10 Adtomic is a good start but we now use Scale Insights which is incredible and not that expensive) plus someone who knows what they are doing with it (I have a specialist VA for this).

Typically, more than half of all the positions on the page are ads these days and if you aren't in there, then your competitors are. And of course, on Amazon the sales you get from your ads directly affect your organic positions, which is a complete game changer.

For example, if someone types in 'blue widget', clicks on your ad at the top of the page and buys from it, then your organic placement gets a boost. This is unique to Amazon and means your advertising strategy can be break even. I would rather sell 1000 units per month, break even on half of them and make profit on the other 500, than do no advertising and sell nothing because I am on page 3!

This is where you get into ACOS and TACOS...

ACOS - a bit like the opposite of profit. If you sell something for £10 and make £2.50 profit, your profit margin is 25%. If on average it takes 10 clicks to get a sale at 25p per click, then the ad spend for each sale is £2.50 and your ACOS is therefore also 25%. On this basis, your ads would break even. Every sale you get makes you £2.50 profit but it costs you £2.50 in ad spend to get it.

TACOS - this includes your additional organic sales. If you know what you are doing then sales from your ads will result in higher organic positions and natural organic sales.

For example, based on the above you might make 500 sales from your ads each month and an additional 500 organic sales, which means...

Total units sold: 1000
Revenue: £10,000
Ad spend: £1250
TACOS: 12.5%

In other words, you have to be careful when looking at TACOS. If you only account for the sales that come directly from ads, then you can end up making bad decisions. You can even be happy losing money on certain search terms if they generate a lot of extra organic sales, especially if your product is a consumable (and LTV therefore comes into play).