Marketing Strategies to Sell Millions More on Amazon and Improve Profit Margins

Transcript

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Welcome to today's episode.

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Today, we are talking about how to grow your business by selling more products on Amazon and, even if it hasn't worked before, how to make it work.

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And we have a great guest to help us talk through this today Robin, welcome to the show.

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Thank you so much for having me.

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I love getting to share kind of the power that Amazon can have for brands, even if what they've done before didn't go, their experience on Amazon had been rough in the past.

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We like to help people, help brands, smooth that out.

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So, before we jump into this amazing topic, why don't you just give us a minute or two of background about who you are and what you do?

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Yeah, so I've been eating, sleeping, breathing Amazon for about 14 years now, which, in e-commerce space, is like dinosaur ages.

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And you know we started as resellers ourselves.

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We started with a hundred dollars, built that into a million dollar business, started coaching high volume sellers.

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About eight years ago we started our agency and because we saw what a big problem Amazon was for brand owners whether it was managing their presence or controlling resellers or even just being able to grow effectively, because so much of Amazon is kind of backwards and inside out so that's really what we specialize in Amazon and some Walmart, focusing on helping brands kind of manage that landscape.

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And I love what I do and I love getting to be a part of this like rapidly changing platform and there's always be problems and puzzles to solve.

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Indeed, lots of puzzles to solve as marketers, of course, so why don't we jump in?

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We're ready to be inspired.

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What is some of the best marketing you've been able to do on Amazon and or do with your clients on Amazon?

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There's so many stories and I'm like, well, there was this big publicly traded company that we worked with and there were these, you know, pre-revenue brands and that was really great too.

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So I decided to pick something kind of in the middle of the road and we had a company, a home and garden company so seasonal.

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They had been selling to somebody else that had been selling it on Vendor Central which is kind of when you sell to Amazon and they had had all of these.

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You know they'd had really great success, but the margins just were really really tight, where they weren't really making any money.

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So they decided, hey, well, we should just sell on Amazon ourselves.

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And they had been really trying and they had made some traction, but they were really stuck around $300,000 a year.

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Now, this is a brand that's in Costco, home Depot, lowe's, and they really felt that their hero product should be doing maybe a half million a year.

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That would be awesome if they could just have that one product do a half million a year by itself.

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But they had all these other products and so we took them on in the beginning of 2021.

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And we started by updating the listings to make sure that they were optimized for Amazon.

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There's a lot of best practices on Amazon that are really unique to the platform because the way that conversions impact organic rankings on Amazon and, in turn, the way that advertising impacts organic rankings.

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So once we did that, we started to really adjust the ads and we did something that might seem counterintuitive we cut the ads on most of their products and what we did is we focused it primarily on that hero product because there were a lot of competitors, chinese knockoffs, those kinds of things.

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What we did is we focused it primarily on that hero product because there were a lot of competitors, chinese knockoffs, those kinds of things.

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What we did is we focused that ad campaign specifically to get that product to rank organically for its most important keywords, and that's one of the things that makes Amazon unique.

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On Amazon, every advertising conversion you have helps Amazon say, oh, this is a good fit for this keyword, so you can kind of force organic ranking through strategic advertising management.

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So we really focused on that.

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As we got each of one of those hero products profitable, then we would change the ad spend and readjust and heal out to a new product, and that allowed us to.

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At the end of each season they have some evergreen, some seasonal products to shift, where we were focusing that ad budget to make sure, as each product came into its seasonality, that it would be well-ranked and capture as many organic sales as possible, and so what we did is that really kind of helped them expand out.

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At the same time, we were helping them with Walmart and we got them on the Walmart fulfillment service as well.

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They went from maybe $3,000 a month on Walmart, if it was a good month, to almost a half a million a year on Walmart and then on Amazon they're doing anywhere from two to four million a year, and you know so, and they've had months where they're they're like pie in the sky dream for what they could get in a year.

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We've had in less than a 60 day period.

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So and that's been like throughout stockouts.

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One of the issues that we faced recently is that there were the product is in such demand that they can't keep up with production, and so we've had some stock outs which can impact.

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One of the things that people don't always know on Amazon is if your product runs out of stock, that will also hurt your organic ranking.

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So we've been kind of helping them manage that by adjusting the ad spend depending on where the inventory is.

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That by adjusting the ad spend depending on where the inventory is, and then as we started to get really great success in 22 and 23, we started to see a surge of resellers people who are buying their stuff at Home Depot, lowe's and Costco and reselling it on Amazon.

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And when you don't have, when you have a lot of resellers on your products on Amazon, it makes it so you can't run ads.

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And as ads are such a big part of trying to get your product to rank organ products on Amazon, it makes it so you can't run ads.

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And as ads are such a big part of trying to get your product to rank organically on Amazon, this started to cause a problem for them.

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So what we did is we headed into the next season with Amazon specific SKUs and you know, if it had been a smaller brand, what we would have done.

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As we've said, the brick and mortar stores would get a new SKU.

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They weren't really in a place to renegotiate with Walmart on that.

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So what we did is we created some Amazon specific SKUs and then we launched those and focused all of the attention on those.

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That very small set of SKUs got them to outperform and outrank organically their old SKUs, which gave them control of the buy box and allowed them to really control their growth and ramp up their growth on Amazon.

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So not only were we able to get the reseller issue controlled, but we were able to use that to drive growth and stop what used to be called brand health alerts on Amazon, because, in addition to the resellers, what they found is that when Lowe's would run a discount for their products, amazon would say hey, hey, hey, it can't be cheaper on Lowe's than it is on Amazon.

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We're going to make your product not eligible for the buy box.

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And so by doing all of that, we were able to kind of negotiate all of those things to make sure that they were able to have that consistent growth and to be able to maintain control over their Amazon strategy.

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So now what we do is we work with them to seasonally adjust their ad strategy and campaigns for the seasonality of each of those products.

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We work with them ahead of time to plan their advertising budget and product launches and even do things like.

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One of the things that we did for them that I think was really cool is they had a scarecrow owl and it was on a rotating head and we found that if we could get them to shrink, wrap the head, just so it was pointed down just a little bit they were able to save $4 per unit on fees for each product, and this is something that they sell tens of thousands of a month product, and this is something that they sell tens of thousands of a month.

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So it made a massive difference in allowing them to increase their margins and to be able to make their overall platform more profitable.

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Wow, that's really amazing that you were able to work through all of these nuances and help them sell millions of dollars of their product on Amazon and Walmart marketplaces you mentioned.

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One of the biggest ones is the privilege of focus.

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Don't spread your ad dollars evenly across all your SKUs, but focus on your hero product.

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I love that strategy.

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It makes sense to me that that would really work.

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Having the privilege of focus is a great thing, and then some of the other things like strategies of how to work through competing with Chinese knockoffs and resellers.

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It feels like there's quite a lot of nuances and finesse that people have to work through to be successful on Amazon and Walmart, right, yeah, and you know there've been more and more compliance issues that can kind of throw people off.

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For example, right as we started to take this client on, amazon was really cracking down on pesticide uses.

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So you can't say like antimicrobial for your sock unless you have an EPA registration number, and so one of the things we had to navigate with this particular brand was for the items that had EPA registration numbers, you know we could say those words, but for those that are not, we really had to adjust the marketing and the content to make sure it fell within those guidelines.

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So what are the top two or three things thematically that you see across your clients that are challenges to them breaking through and being able to sell really awesome volumes on Amazon and Walmart?

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Are there, thematically, a couple of things that are a challenge for lots of brands?

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Yeah.

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So I think the biggest thing is, you know, when you're looking at your ad strategy on Amazon, we have to make sure that you're looking at it as a strategic, holistic process.

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So where people will say we're trying to run ads, where you know, maybe on Google Shopping you're running ads and you're just the ads are yielding that incremental sales and that's what they're supposed to do.

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On Amazon, you have to almost behave like you're disciplining a toddler Pick your battles, but win your battles that you pick at all costs.

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So that means being realistic about your ad budget and looking at what products you really do want to focus on Amazon.

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Trying to launch a garlic press on Amazon is incredibly difficult because those keywords are really really expensive and really competitive.

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So sometimes starting with a more niche product can make more sense.

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And then, looking at when we're running that ad spend, we're making active, realistic calculations to say the ad spend that I'm going to spend for this product and for each of these keyword targets is it going to be enough to cause me to rank organically?

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Because we need both of those to maintain that profitability.

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Amazon fees are expensive and so you really do have to watch your margins.

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And then there's just a lot of you know policy and programmatic stuff that if you're not involved in then you know on a day-to-day basis.

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It's easy to really miss out on some of the more powerful tools that are within the Amazon marketplace.

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Things like if you have a consumable product using not only subscribe and save, which is Amazon's version of auto ship, but there are specific coupons that you can run, where they get that discount, a larger discount, only on that first purchase, and we find that that is a great way to get kind of these repeat sales and decrease the percentage of ad spend that you'll have over time.

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In fact, that company that I was sharing with you before, for all of those sales, we're spending less than $100,000 a year in ads and the ad percentage of sales is less than 25%.

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That's good.

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Yeah, I think that's one of the biggest challenges I think that a lot of marketers have is the advertising is too expensive because it ends up being a lot more than 25%, and that breaks the financial model for a lot of these companies.

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Right, they just don't have, like you said, that much margin.

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Helping clients in this.

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Sure you're able to help people break through these challenges and come up with the right ad strategies and figure out how to use all the right tools in there so that people can break out and get great results.

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It's possible.

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That's what you're saying.

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It is, and you know now there are some things that made this brand do so well, and one of the reasons why we're able to spend so little in ad spend is they do have an established brand affinity.

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So if you're running on Lego, of course you're going to need to run a lot smaller ad budget than, let's say, if you're launching a brand new board game and nobody knows about your board game.

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Other things to know about Amazon it's great at capturing existing demand.

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It's working on being able to create demand.

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So things that are more difficult if you have something that's new to category doesn't mean you can't use Amazon as an acquisition tool for customers, but just know it's a heavier lift.

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And so we want to take into account, kind of like, how much search volume is there for your brand, for your keyword, primary keywords that are relevant to your product, and you know how much existing demand is there for your product and the number of competitors.

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So that's kind of what we do when we first look at, you know, potential onboarding of a client is.

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You know, do all those stars align in a way where it makes sense, where there is a path to profitability?

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Because I think that it's really important that any agency that you're working with does kind of give you those numbers.

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There are a lot of tools that can help you say, you know, in order to rank number one for this particular keyword, you might need eight sales a week.

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You might need 10,000 sales a week.

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So you know, if your ad budget is $500, it's just not realistic and then you end up burning a lot of cash.

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That's interesting.

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So would you say that you were able to achieve with the client that you shared?

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The example on their advertising cost was less than 25% of their sales number.

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What is an ideal target for you and what do you recommend to your clients that they try to achieve as like an ideal goal?

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Well, I mean, if you look at their in Amazon we talk about tacos a lot, which is total advertising cost of sale, not Target, but total advertising cost of sale is kind of like a sort of an Amazon version of Troas, right?

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So their tacos are, you know, for this year sitting about 6%, which is really good and comes from many years of working with them and being able to get those numbers down and reshifting their product mix in a way that allowed them to do that.

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In general, for tacos you're going to want to range from anywhere from, you know, 10 to 15 percent.

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Over 20 percent really becomes untenable for most brands as far as margin wise.

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So one thing is that a lot of times people will look at a cost only, which is the advertising cost of sale.

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And the reason why we don't want to look at that just by itself is that, especially when you're launching, you're relaunching or you have a ranking campaign that can get up pretty high but still yield really good total sales when you include the organic, because there are so many ads now on Amazon, I used to say you want to be in the top 25 positions organically.

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Really, now you really need to be in the top 10 organic positions in order to be on page one, which you know.

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As you know, the joke's been made a million times the best place to hide a dead body is page two of search.

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That's definitely true of Amazon as well.

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That makes sense.

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Those are very interesting metrics.

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Thanks for sharing.

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I'm wondering what is the main difference between selling product on Amazon and Walmart.

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If people come to you and they ask for a strategy, is there some guiding principles there of what Amazon or Walmart?

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If people come to you and they ask for a strategy, is there some guiding principles there of what Amazon or Walmart are better at?

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So one thing that is different there's a lot of D2C companies that really struggle on Amazon and that's because the strategy, the pricing, so much of it is very different.

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When you're just doing D2C, you're driving people to your website and you're trying to convince them to get the sale there and you might be trying to get them to get to a purchase point when they may not be in a buyer intent mode.

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So the power of Amazon is everybody that's on Amazon.

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It's very end of funnel.

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You know so good to see, you know easy to kind of generate some end of funnel sales, right.

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The negative is that you're right there, neck to neck with your competitors.

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So if you're eight times the cost or you don't have good reviews, then that really stands out and so you really have to think about on Amazon, in addition to everything else that you think of on Amazon, you need to think about how you position yourself.

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If you are more expensive, how can you show that in the copy, in the images, in the A-plus content to demonstrate the higher quality and benefits of your product?

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And then if you have negative reviews, that is a real.

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We see that once you drop below that four and a half stars, and even more so when you drop below that four and a half stars, and even more so when you drop below four stars.

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Your ads are going to get much more expensive and your conversion rate is going to take some serious hits.

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So one of the things that we do proactively is we monitor.

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On Amazon, they have this dashboard called voice of the customer, and if we see more than three complaints that all have the same complaint, like the shirt fit too small, you might say, well, there's nothing I can do about the shirt being too small.

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Yes, what we want to do there is we want to say we want to add an image that shows that it's tighter in the waist and maybe have some measurements.

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If they say it didn't work you know the luggage didn't work it, you know, with their European carry-on maybe we need to demonstrate the size in not only inches but centimeters.

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So on Amazon, you kind of have to make sure your images are stopping any potential confusion.

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Because you want to, you're keeping those reviews up is so much more important because it's right there in the SERPs, it's right there on your product speech and your competitors are literally on the same page as you.

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Yeah, I think those are all great, great points.

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It's a wonderfully complex thing, but it sounds like, from what you're saying, the payoff is worth it.

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If you can manage all of these variables, the upside is pretty significant, right.

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It is, and you know we have some brands that we manage on Amazon that we don't even manage their ad spend, because what they're really, they want to make sure that people who are looking for their brand and their product because there are some customers that will only purchase on Amazon they like the little friction, they like the easy returns, and so there are some brands that just manage a presence there to make sure I mean you run some defensive brand of ads just to keep competitors from taking their market share.

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That might not feel comfortable purchasing off an ad on Facebook or they might not feel comfortable putting their credit card in to a website.

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So Amazon has been expanding this out to including options with Buy With Prime for your own D2C sites if you're looking to reduce the friction there.

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And there's some new benefits that are coming, like having the shipping speed and those things available as that kind of goes through the schema for Google.

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So if we were sitting down and having a coffee and you wanted to give me the best piece of advice as a marketer to be successful on Amazon, what would you broadly tell me?

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I'm sure it varies a little bit client to client, depending on their products and the vertical, like you're saying, but what are some of the 10 commandments, if you will, if you want to be really successful?

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So the first you cannot be reactive in your ad strategy.

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You need to be proactive, meaning that you have a plan that you're working towards profitability and that plan should be aiming towards profitability within the first 90 days.

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There are exceptions to that, but anybody that tells you you need to run ads for seven or eight months on Amazon to be profitable that is not the case in my experience.

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I'm sure that there is not the case in my experience.

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I'm sure that there is an edge case for it, but in general that's not.

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You know, that's not the general place.

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If you, your product is not some crazy new invention that nobody's heard of before.

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The other thing is, you really need to think about your most of your ad creative is going to be your primary image, which is supposed to be only your product and your title.

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So when you're testing that creative, you really need to think about organic and paid together in every aspect, when it comes from to content, to ad strategy, to you know what keywords to include in what part of your listing.

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All of that needs to be a little bit more strategic, because everything in the Amazon ecosystem is all fixed.

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There's no worrying about attribution.

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There's no worrying, there's very little worrying about indexing as far as, like you know, will.

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It is something in the plumbing set up incorrectly.

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But there is a lot of things that you need to think about in order to make sure that you're targeting keywords that you can afford to convert for and that your ad spend is being targeted in a way that it will yield more than those incremental sales.

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And then, don't run out of stock.

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If you know you're going to run out of stock, stop running ads.

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Don't run into discounts, because every time you run out of stock, your competitors are getting sales and you're not.

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So it causes this toilet bowl effect where you're swirling down the tubes and your competitors are rising because you didn't plan that inventory.

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Well, amazon used to be the wild wild west, so there are companies that say there's passive income, buy this thing for $35,000.

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I have never seen that once in 14 years go well, many people have been taken to court.

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They've had the FTC investigate them.

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So I'm not saying, I'm saying be cautious if anything that sounds too good to be true.

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Amazon is evolving into a mature marketplace where you need mature marketing strategies and I know a lot of Amazon sellers who make a lot of money.

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I don't know any of us that have been on Amazon for a period of time that would say Amazon is passive.

00:22:53.632 --> 00:22:55.919
There's always new challenges.

00:22:55.919 --> 00:22:58.205
The platform is always changing.

00:22:58.205 --> 00:23:12.077
You know, when you have a company where their motto is always day one, you can expect there to be sudden changes, and so you really do need to be staying up on things in order to get Amazon to work.

00:23:12.077 --> 00:23:21.635
But it can be a really massively powerful tool to give you access to the same customers that big brands have in a way that's not available in retail.

00:23:22.885 --> 00:23:37.513
Robin, thank you so much for joining us today, sharing your story, your insights and talking about how marketers can use advertising strategies to sell millions more on Amazon.

00:23:38.355 --> 00:23:38.877
My pleasure.

00:23:38.877 --> 00:23:43.317
Thank you so much for having me and creating a place where people can share about marketing.

Marketing Strategies to Sell Millions More on Amazon and Improve Profit Margins

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