Sourcing: How to Find a Product to Sell on Amazon (Follow the Data Ep. 10)

Follow the Data Episode 10: Sourcing: How to Find a Product to Sell on Amazon

In order to take advantage of the incredible gold rush happening on Amazon, you need a great product to sell. And in order to find a great product, you need a rock solid sourcing strategy. This episode is all about the what a successful sourcing process looks like and how to find a product to sell on Amazon.


 

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Follow the Data Show Notes

  • The first thing you need to do before you begin your search for profitable products is set your goals. Look at a few products whose performance you want to emulate, and look at the calculated upfront cost using our FBA Calculator to determine what is realistic for you and your budget. 
  • Can’t think of any good product ideas? Look for inspiration online, browsing sites like Pinterest, Fancy, or Wanelo, or use a tool like Product Discovery that will do the heavy lifting for you and save you time. 
  • Make sure you do your due diligence and perform some market research before committing to a product. Our market research tool, Market Intelligence provides up to 2 years of historical data so you can look at sales, price, and review trends.

Podcast Transcript

CASEY GAUSS:

Hey, guys.  Just to give a heads up, this episode is targeted to our more beginner-level sellers.  In order to take advantage of the incredible gold rush happening on Amazon, you need a great product to sell.

CAMERON YODER:

But sourcing the wrong product can be worse for your business than not selling at all.  In order to turn a profit you need a rock-solid sourcing strategy.  I’m Cameron Yoder.

CASEY GAUSS:

And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data we’ve accumulated at Viral Launch from over 25,000 product launches and our experience working with 6500 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.

CAMERON YODER:

We’re embarking on a brand-new series about sourcing, a pillar of success for any Amazon business.  In order to compete with growing competition you need a high-opportunity market and a quality product at the right price.  This specific episode is a little more geared towards beginners.  However, our next couple episodes dive deeper into mid- to high-level content.

CASEY GAUSS:

On today’s episode we’ll talk about how to set realistic goals based on the capital you have to invest, how together a wide variety of potential product ideas, how to ensure that your product is in a good market and finally, how to determine which products are right for you and your business.

CAMERON YODER:

Casey, I love topics like this because even though it’s so simple, I – and even though this is geared towards beginners, I think there is value in this for anybody to, again, just take a seat, think about where you are, where you were and where you want to be and to think about and write out your goals for where you want to go.

CASEY GAUSS:

Yeah, you know, I imagine we’ve said this before, but probably the number one reason we see sellers fail is because they are jumping into the wrong product markets, or they make bad sourcing decisions.  And so kind of the intention with this series is to help steer people away from that. 

So yeah, so let’s jump in.  First we want to talk about setting your goals.  First, let’s talk about kind of where people go wrong here.  So I think the easiest place to, or the easiest way to identify it is, you know, really at the end of the day people would just go and see, hey, I know people are making money with this product.  I am going to source it.  End of the story.  You know, they’re not taking into account, okay, how much money do I have to invest?  How much money am I hoping to make?  How arduous is that process going to be of taking my product from conception to getting to that level of success that I’m seeing other people get?  You know, they’re not asking all these questions, and these questions are absolutely vital to having success, or at least having the expectations set appropriately so that you, you’re able to achieve them. 

So you know, our lead developer, he always says that reality is your expectations versus what really happens, and so if you get into a market expecting to make $50,000 a month because you see other people doing it but you only make $10,000 a month, well, you’re probably not going to be very happy.  But had you have expected to make, you know, $8,000-$10,000 a month and you’re making $10,000, well you’re going to be really excited about that.

CAMERON YODER:

You kind of outlined the goalsetting aspect, right?  One of those first questions that really helps people along the right path is how much money do you have to invest?  Really you’re taking a seat and you’re looking at okay, if I’m looking to get into fidget spinners, do I have enough money to get into this market? 

CASEY GAUSS:

Yeah, so too often we see, you know, sellers are trying to buy as much – they’re maxing out their budget for this Amazon business in their inventory.  And so basically – and this is a big problem, right?  So let’s say you have a $5,000 budget.  Well, these – a lot of sellers will go and spend up to $5,000 on inventory and getting it into Amazon.  What they don’t account for is well, now that’s just, you know, a tenth of the battle.  That’s the easy part of the battle I’d like to think.  The rest is how do I – or I’m going to have to spend money on marketing materials, you know, a la product photography, getting your listing written, keyword research, some software tools around helping you get up and going and optimized, and then marketing to get that product ranking.  You’re going to have to, at the very least, be spending money on sponsored ads or some form of marketing to get your product, you know, in front of people. 

And so if you’re spending all of your budget or close to, you’re going to have a very difficult time getting that up and going.  So you know if you have a $5,000 budget, and you need to be very honest with yourself about this, but yeah, let’s say you have a $5,000 budget.  You need to be allotting a lot of that budget to marketing expenses.  And so maybe spend half of your available capital on inventory.  You really need to look at the numbers.  You need to look at the market and be honest.  You know, what is the barrier to entry?  How much does each widget cost?  What are the fees associated with each sale?  And you know, how many units do I need to purchase in order to be able to be somewhat aggressive in order to have enough stock?  Let’s assume things go well and you’re selling 1000 units a month, and it takes at least 60 days from the time I placed an order until the time it’s in FBA.  Are you going to be able to have enough inventory to pay for, you know, 70 days of sales?  These are all questions that you need to, you know, be asking yourself.

CAMERON YODER:

Casey, let’s say – let’s say someone’s coming in with $5,000.

CASEY GAUSS:

Yeah.

CAMERON YODER:

What qualities should they be looking for in a market if they’re just getting into a market for the first time and they have like that $5,000?  What should they be looking for?

CASEY GAUSS:

So don’t be looking at those markets, or at least not right now, don’t look at those markets where you know you’re hoping to make $50,000 a month because, you know, you’re going to need $20,000 of inventory.  You know, you’re going to need a significant amount of money to invest, right, or at least, you know, significant in this example.  Anyways, so you know, look for those markets where your potential is $5,000 to $10,000 a month, maybe a little bit more.  But you really need to make sure that the barrier to entry is low because with $5,000 you don’t have a ton of budget for marketing.  So again, if you spend $3,000 on inventory, well, that allots you $2,000 to get some professional photos done, maybe get a keyword tool or two to help maybe have you write the listing.  And then you have to have a good budget for sponsored ads.  You have to have a good budget for marketing for running giveaways or however you’re planning on getting this product ranking.  But that’s even for a small market where the opportunity is $5,000 to $10,000. 

And a lot of people like to kind of steer away from these markets because it’s not as sexy.  Everyone wants to get into the markets where, you know, I can make $100,000 a month, or you know, these guys are just making insane amount of money on this one product.  But you know, in reality those are very vicious markets.  If it’s not vicious yet it will be very soon.  So I am actually a big fan of these, you know, unsexy markets where I’m only making $5,000, $10,000 a month but you just go really wide and you get into 10 of those markets.  The barrier to entry is generally low, or make sure that it is.  You’re not spending a lot of time or resources fighting competition.  You just get in, you dominate pretty easily and you just move on to the next one, and you know, you line up 10 of those markets, and now you’re doing $100,000 a month.  Now you have a million-dollar business.

CAMERON YODER:

As you said before, expectation versus reality.  It’s really easy to look at those, to watch those YouTube videos or those articles that talk about oh, hey, I made $1 million on Amazon with X product and think oh, this guy is making $1 million a year selling one thing, where I mean that’s, that shouldn’t necessarily be your expectation going into Amazon selling.

CASEY GAUSS:

Yeah.  Cool, so yeah, next, looking – you need to set realistic expectations for how much money you’re hoping to make.  Again, make sure you’re considering the net as well because it’s very easy to not pay attention to margin and get into a product where, you know, you’re selling a lot of inventory but you’re doing it at a very low cost just to drive traffic and you’re not actually making any money to reinvest.  And so that is very important.  Make sure you’re paying attention to margins.  You know, a lot of people like to kind of throw out these numbers around you should look for this margin versus this margin.  You know, as long as you’re thinking of the long-term strategy I’m actually an advocate of being open to any kind of margin.  If you’re excited about $0.10 on the product but you’re doing just an insane amount of volume, or this is helping you play into some bigger narrative around, you know, I’m using my Amazon traffic to fund my, I don’t know, outside business – I don’t know, but anyways, I think there are scenarios in which case all margins work so long as you’re being very cognizant of what is going on.  If you’re not aware that $0.10 of margin per unit sold is not very good, well now you’re in trouble.  So a really take a look at that.  You know the nice thing here is that you kind of get to control everything here, so if you are looking for a product where the margin is X, those markets exist.  You just have to be willing to put in the time to find it.  And we’ll talk a little bit more about that later.

CAMERON YODER:

This is if – if step one in setting your goals is asking yourself the question how much money do I have to invest, then this would be a comparable step two in asking yourself okay, now that I’ve established how much money I have to invest, now how much money do I hope to make, right?  And with this you’re looking at the long-term market, the long-term market trends, I guess, that really help paint that picture.  You’re also asking yourself in this, in the question of how much money do I hope to make, you’re asking yourself okay, are my goals realistic based on the amount of money that I have to invest?

CASEY GAUSS:

You also need to look at kind of what the end goal is here, right?  So am I just trying to cash flow and make a bunch, you know, as much money as possible as easily as possible?  Well, the answer there is you may want to just go and pick out all these great diamonds in the rough, all these opportunities.  So hey, this product in beauty, I could profit $10,000 a month if I get into it pretty easily.  Competition isn’t very high, so I’ll source this.  And then next thing you know there’s something in pets where you can do the same, and then in health and household, and then in automotive. 

And so I’ve seen people be really successful here.  I’ve not seen a successful exit of a product line like this.  Part of the reason being is not because people are not interested in them.  It’s because I don’t know as many lines that are doing this.  But you know the biggest seller that I know doing this, they’re doing around $30 million a year, and they’re just sourcing everything that has high opportunity for them.  And so it’s working very well from a total revenue perspective.  Could they easily sell?  To the right, you know, private equity firm, for sure.  But I think it’s not as easy, and your multiple will be lower.  The areas where I’ve seen the highest multiples on brands that sell, let’s say that, you know, this is your end goal.  Well, then you want to build a cohesive line of products, in which case you need to not just be looking at one particular product, but you should probably go line up at least a few that you know have good opportunity for you to get in there, the barrier to entry is not too high, competition is not, you know, insane, and you can go start with product one and then go to product two, product three.  You have a decent kind of roadmap ahead of you.  And this will really, again, kind of dictate where you get started as well as where you are going.

And then kind of the last thing is how much time are you looking to invest?  You know, do you have another job?  Is this a side hustle, just something you’re just, you know, doing on the weekends or whatever?  Or are you looking to replace your full-time job and dive all the way into this?  Or are you full-time here, in which case that will kind of dictate, you know, the products that you get into.  And you know, ideally just because opportunity cost is so high, meaning that, you know, for every dollar you’re investing right now in your Amazon business you’re getting $10 back, you know, let’s just say, versus, you know, in some other market, some other opportunity you’re investing a dollar, and maybe you’re getting two, three dollars back.  The opportunity is just so high in Amazon that spending time doing other things or wasting time doing this is just not worth it.  And so you should always be looking for those products where the 80/20 rule easily applies.  So what’s 20% of the work that’s going to get me 80% of the results?  Move on, you know?  Go to the next product.  Do the 20% of work, get 80% of the results, and then, you know, move on to that.

CAMERON YODER:

It’s also really important to ask yourself how much risk you’re willing to take or you’re able to take right now.  Like if you have a family or if you have other people to take care of, then how much time can you put into this, and how much time are you willing to invest?  And how much risk are you willing to take?  Those are all super important questions.

CASEY GAUSS:

Just because you have $1 million of free cash laying around – one, hit me up.  No, I’m just kidding.  But you know, you shouldn’t just dive all the way in.  I think that you should dip your toe into the water, understand kind of the marketplace, how everything works, what are market dynamics, and then start to iterate from there.  Once you really figure it out, okay now let’s start investing more money.

CAMERON YODER:

So we talked about setting goals, the question of how much money do you have to invest, how much money you do you hope to make, building a product, a cohesive product line, and how much time you’re looking to invest.  Now we’re going to dive into specifically finding product ideas.

CASEY GAUSS:

Yeah, so this is something that we’re becoming more and more passionate about.  I think a great place to start, although I have a counterpoint to this, is just looking at products that you’re passionate about, right?  Like you understand those markets better than anybody.  You can stay on top of trends, which are great opportunities to really build a business.  But yeah, look at markets or, you know, products that you’re very familiar with.  I will say that counter to that, generally we see the people that are the most successful are people that are actually not very passionate about the markets that they’re in, and the reason being is a lot of the time the people that are passionate about this, they make emotional decisions.  And so it’s the emotional decisions that can, you know, sometimes lead to bad decisions or less profitable decisions.  The guys that have the most success or, you know, the individuals, men or women, that have the most success are those that are not particularly passionate about their products.  They just really understand how to identify great market opportunities.  They know how to pull the levers to success when it comes to Amazon, and they’re just able to, you know, really, really push forward.

CAMERON YODER:

I think I can offer a unique perspective on this actually.  So back in high school I did something called retail arbitrage, okay?  So I would, back then I would go to Goodwill or just other stores in general, buy something for super low and then flip it on eBay, of all places.  EBay and Amazon, actually.  And during this time when I was getting started developing this a little bit more it really just helped pay for some stuff in high school and helped pay a little bit my way through college, but I got some really good advice as I was just starting to get into everything with flipping online, and it was someone who had been doing it for a little while, doing retail arbitrage, and he told me hey, Cam, just as you’re starting out look into the things that you’re passionate about.  They might not be the best things to sell, but because you’re passionate about them you will be more interested and will not lose your interest as quickly as you might be if you’re not as passionate about it. 

And so, Casey, everything you said I 100% agree with.  I do think, though, that there is something that holds your attention more about if you’re just looking into markets and you’re looking at what it means to sell on Amazon or if you’re looking into products that you might want to source, looking into categories that you are passionate about or is going to help really get you in.  Now it’s important to understand then what makes a good market, what separates a good market from a bad one because if you’re passionate about a market it doesn’t necessarily mean that it’s going to be a healthy one to get into or one that’s going to really help you make a lot of money if that’s what you’re wanting to do.

CASEY GAUSS:

Yeah, no, I think that’s a good point.  Cool, so, and you know another way is if you have a manufacturer or are aware of manufacturers, or you can go find manufacturers on sites like Alibaba, hit these guys up.  Ask them for their product catalog and just see what they offer.

CAMERON YODER:

You can find their product catalog online.  You could just to go to their product page and look through their whole list of what they offer.

CASEY GAUSS:

Oh, well there you go.  So and this is not necessarily a plug for Viral Launch, but whatever.  One great way to kind of just sift through those catalogs really easily is you can do it yourself or have a virtual assistant.  Just go take those product ideas, plug them into Market Intelligence, which is, you know, our market analytics tool, and you can see oh, this is a four-star idea, five-star idea, one-star idea.  If you have a great rating okay, now I know that I need to look more into this market or those stats.  You can just really cruise through and amass, you know, a good potential products idea pretty quickly.

CAMERON YODER:

Literally, so browsing other internet sites, like if you just even check Pinterest, or if you check Instagram, basically keeping your mind’s eye open to okay, when I see a product look it up on Amazon.  Look it up on a research market tool, Market Intelligence, right?  So even if you’re walking through the store, just be in a mentality, a mentality mode of hey, I’m going to write down this list of products that I never thought would be successful to sell on Amazon, and I’m going to check out the market just to see what it’s like.  That’s just helping you expand your mindset on what is even possible to sell on Amazon.

CASEY GAUSS:

Yeah, and another thing, there’s other tools.  You know we have one launching here really soon.  Again, not so much a plug, but just an opportunity.  We have a tool called Product Discovery.  Jungle Scout also has a tool that allows you – you know, we’re tracking tens of millions of products, both of us, and basically you’re able to filter these, you know, massive Amazon product catalogs based on, you know, what you’re looking for.  So you know, I’m looking for a product that is doing at least $20,000 a month in this category and is fulfilled by Amazon, or merchants or whatever.  Yeah, and then we’ll just show you.  Hey, here are thousands, or tens of thousands, or maybe 20 products that all fit your criteria.  Hey, you know here’s maybe the starting.  You can look further into this.  Basically it’s just a shortcut to kind of sifting through Amazon data to understand what’s working and what’s not.  Is it always the best?  No, I think that there is no necessarily best answer.  Just whatever works best for you is kind of that answer.  I think it’s worth, you know, trying out pretty much all of these just to, again, to get a taste for yourself, and depending on what market you’re looking to get into or are already into, the more opportunity to find something good.

CAMERON YODER:

So we’re talking about, again, this whole series is about sourcing in general, and we’ve gone through goals.  We talked through finding a product idea.  The next comparable step would be to look further into those markets, to narrow down your product ideas.

CASEY GAUSS:

Yeah, so we call this the validation stage.

CAMERON YODER:

Right, right, yeah, validation.  Casey, what should people look for when they’re looking to narrow down their search in this way?

CASEY GAUSS:

Yeah, you know, I think we’ve kind of talked on some of these points a little bit in other podcasts, but really –

CAMERON YODER:

Just like a broad, I guess –

CASEY GAUSS:

Yeah, yeah, so just a quick overview.  You know, we want to look at market potential.  So don’t look at any one particular ASIN in a market and expect to replicate that ASIN’s success.  You should be looking, you know, at the averages or high averages of a particular market.  And when I mean market I’m talking about a, you know, the products that are ranking for a particular keyword.  So let’s take grill brush as an example.  Please do not source grill brushes.

CAMERON YODER:

Don’t do it.

CASEY GAUSS:

Terrible idea.

CAMERON YODER:

Wintertime, huh?

CASEY GAUSS:

Yeah, I know.  Anyways, so search grill brush.  Of the top, you know, 20-some products, fifty products or whatever, preferably you know really page one to be honest, but anyways, what are the average monthly sales?  And those of the kinds of numbers that you should be expecting, not what is the top seller or the highest volume seller doing?  Don’t expect that.  Again, it’s all expectations versus reality, and we want to help you set your expectations appropriately.  Next is kind of the barrier to entry, and we think of reviews as kind of being that barrier to entry, like we’ve talked about before, so really we look at this thing.  Should be called reviews to sales ratio.  We call it sales to review ratio because it kind of flows a little bit better, but anyways, really what this is is a calculation of potential versus, you know, how much work am I going to have to put in to get there?  So you know, on average let’s just say on page one if all the sellers were selling 1000 units a month but they had 1000 reviews, that would be a sales to review ratio of one, meaning like that’s not that great, but it’s not too bad, versus a market where everybody had 100 reviews and they’re selling 1000 units a month.  That’s a sales review ratio of 10, and that just means like you don’t need to gain as many reviews in order to sell at market potential, which you know, is more opportunity for you to get in quicker, hit market potential, easier and kind of move on to the next product.

CAMERON YODER:

What about red flags?  What should people – what are some red flags that really pop up?

CASEY GAUSS:

Yeah, so if Amazon is kind of dominating the market, so you know if, you know, 40%, 50% to 70% of the listings are all sold by Amazon, generally that could be a red flag, meaning it’s going to be more difficult to compete against these listings, or there’s a reason why Amazon is selling them.  Again, looking at brand names so it doesn’t matter who is selling them, but again, if a significant share of the market is held by these brand-name players then there’s probably a reason for that, meaning that there’s a chance that people are buying these products for a particular reason from brands.  So there are products where – maybe it’s diapers or whatever, bottles or I don’t know, something where people want these brand names to be their manufacturer.

CAMERON YODER:

So okay, we talked about goals.  We talked about finding a product idea, validating your product idea.  Another aspect is contacting – and the next step, I guess, would be contacting a manufacturer, right?  And so finding a manufacturer is actually a huge aspect of sourcing.  We’re going to have a full episode for you next week all about it.  I go in depth with a very high-level seller about his experience with manufacturers from finding a good partner to negotiating from low-level strategy to high-level strategy.  No matter where you are, no matter where you’re at in the process I think you’ll find something useful in our conversation. 

Well, that is all that we have for this week.  Thank you so much for joining us on Follow the Data.  Join us next week for that manufacturing episode.  For more insight and reliable strategies for taking your Amazon business to the next level, subscribe to the podcast and check out the Viral Launch blog at viral-launch.com.

CASEY GAUSS:

Don’t forget to leave us a review on iTunes.  Your feedback helps us reach new listeners and is super helpful as we develop the show.  Huge thanks to those who have already written reviews, as well as called in and left us a voicemail.  It’s super exciting to see your enthusiasm for what we’re doing, and we can’t wait to bring you more valuable content.

CAMERON YODER:

Thank you again so much for listening.  And if you want to be featured on the show feel free to leave us a voicemail and tell us your thoughts on today’s episode, or ask us your Amazon questions.  Our number is 317-721-6590.  Until next time, remember, the data is out there.

 

About the Amazon FBA Seller Podcast:

Viral Launch CEO, Casey Gauss, and Amazon Seller Coach Cameron Yoder bring data-driven insights to the Seller community in their weekly discussions.

On the show you’ll get the latest Amazon selling strategies and best practices based on the company’s experience launching over 22,000 products and working with over 5,500 brands. Casey and Cam will bring you up to speed on the latest Amazon news, share stories of success and failure, explore the difficulties of entrepreneurship, and discuss the way Amazon is changing retail.

At the center of the show is the Viral Launch commitment to offering reliable information to today’s entrepreneurs.

Be Thankful: How Positive Thinking Can Help You Grow Your Amazon Business (Follow the Data Ep. 9)

Follow the Data Episode 9: Be Thankful – How Positive Thinking Can Help You Grow Your Amazon Business

Taking a break to be thankful can feel like a waste of time. But studies show that positive thinking is a key component to individual success. Join Viral Launch CEO and co-host Cameron Yoder for a discussion on how positive thinking can help you cultivate a success mindset to grow your Amazon business.

Follow the Data Show Notes

  • Reason #1 to be thankful: Prime Day 2017 was huge with more than 60% growth over the previous year. Can you image what 2018 is going to be like? Check out our summary of Prime Day Stats to get a better idea of just how huge this day was.
  • Reason #2 to be thankful: Prime membership is becoming more and more popular with estimates that over 60% of American households have a subscription
  • Reason #3 to be thankful: Amazon is still growing. With stocks soaring, there’s a chance that Amazon will become a trillion dollar company sooner than originally predicted.
  • Listen to Barbara Fredrickson explain her broaden and build theory and the research behind the powerful impact of positive emotions.
  • Check out this article from Entrepreneur about how a positive attitude can influence your success.
  • Want to be on the show? We’re working on an episode that features our listeners! Leave us a voicemail at (317) 721-6590 with stories or questions about your Amazon business.

Podcast Transcript

CASEY GAUSS:
Did you know that positive thinking can broaden your mindset and increase your ability to generate ideas?

CAMERON YODER:
Taking a break to be thankful can feel like a waste of time. But practicing positive thinking might be the most powerful tool at your disposal as an Amazon seller. I’m Cameron Yoder.

CASEY GAUSS:
And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data we’ve accumulated at Viral Launch from over 25,000 product launches and our experience working with 6500 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.

CAMERON YODER:
This Thanksgiving we’re bringing you a special edition episode about the role that positive thinking and thankfulness can play in your Amazon business. Whether you’re just beginning your Amazon journey or already have a serious operation on your hands, there’s a lot to be thankful for this holiday season.

CASEY GAUSS:
We’re talking about what it means to be thankful, the science behind positive thinking and how staying positive and being thankful for what you have can help your Amazon business.

CAMERON YODER:
Casey, I’m actually really excited about this episode just because it’s so unique. It’s so different. We’re talking about how positivity relates to success as an Amazon seller, and not just as an Amazon seller, but success as a person in general, right?

CASEY GAUSS:
Yeah, and for those of you who don’t know Cam, he’s probably one of the most positive people.

CAMERON YODER:
Life is good, man. Life is good. So we’re talking about what it means to be thankful, and a definition – and this isn’t like the, the definition of what it means to be thankful because I think there are many definitions. But what does it mean to be thankful? Thankful, being thankful is the ability to recognize the full worth of something and be grateful for it. So, Casey, what are you thankful for?

CASEY GAUSS:
Dude, I’d like to think of myself as a person with a lot of gratitude, so you know, I just have an insane amount to be thankful for. Everything from my family, you know, having an amazing wife, having, you know, kind of the company of your dreams at the age of 24. Like I don’t think that ever in life I cannot be thankful for everything that has happened to date. And so, you know, I just think that we have an amazing team. Everybody is just working on all cylinders so well. Yeah, you know, I am thankful for Amazon. I am thankful for the current state of the economy to allow us to be where we’re at. I mean, I could just go on and on. But yeah, I guess that pretty much summarizes it. What about you, Cam? What are you thankful for?

CAMERON YODER:
Yeah. No, I mean like you said before, I’m generally just a more positive person. I didn’t used to be that way, but I don’t know, I guess I quickly came to realize that life is too short to really get hung up on the differences or hung up on just stuff in general, and so I’m super thankful just for – I’m 22, and the opportunity just to be here and doing this literally right now is, it’s just awesome. And just meeting people, I’ve been able to go to a lot of conferences over the past couple months to meet a lot of Amazon sellers and just people in general. That’s been an amazing experience. I’m just thankful for, I don’t know, this opportunity and every single opportunity that comes every single day.

CASEY GAUSS:
Yeah. So, what do Amazon sellers have to be thankful for this year? You know, I think there are so many things, obviously.

CAMERON YODER:
It’s a lot. It’s a lot.

CASEY GAUSS:
Yeah, kind of like the top list that we want to talk about, Prime Day 2017 was absolutely insane, the biggest sales day in Amazon history in one day.

CAMERON YODER:
That’s huge.

CASEY GAUSS:
Brand Registry, 2.0, helping sellers to protect, you know, their listings, as well as just getting a leg up on those that are not in brand registry with enhanced brand content, early reviewer program, headline search ads, you know, and I think it’s just going to continue to compound. But thank you, Amazon, for giving us these new features, and we’d love to see more.

CAMERON YODER:
Another stat, there were – or 62% of American households have a Prime subscription. And this is from 2017. That’s – that’s a lot of households. That’s more than half.

CASEY GAUSS:
Oh yeah, and you know, it’s just so awesome because that means that’s that many more people that are going to come and buy your Amazon products. And that’s that much larger of a market that you can sell to.

CAMERON YODER:
Right, that Prime badge, that FBA man, that’s huge. It’s huge. Amazon is also, it’s growing at an astounding rate. So a couple weeks ago Amazon’s stock surged about 13% because their growth is outpacing predictions.

CASEY GAUSS:
Yeah, it’s just crazy. And you know, for the longest time everyone was saying, you know, maybe 2020, 2021, Amazon will be, will represent 50% of e-commerce sales. But it’s looking like that – they could cross that milestone, you know, next year, which again, just means more opportunity to sell more products and just grow your wealth, grow your business, leverage that growth to then go build a business off Amazon. I mean there’s so many opportunities here, and I think that we all kind of just need to be thankful for the work that Amazon is putting in because that helps make our businesses so much more valuable.

CAMERON YODER:
Right, right. Then there’s also, oh man, huge, huge piece of news that everyone was talking about, speculating, still speculating about, but Amazon’s expansion into the acquisition of Whole Foods and the potential or possibility of one day – of people getting their products into a brick-and-mortar store as a result of this is insane.

CASEY GAUSS:
Yeah, and so even if we are not able to get, you know, third-party products into Whole Foods, I mean it just means more Amazon customers, I’m assuming more Prime subscriptions that are using Amazon in –

CAMERON YODER:
More growth, more growth.

CASEY GAUSS:
– yeah, in additional ways. And so it’s just incredible. There’s so many positive things going on in Amazon and, you know, we’re all benefiting from it.

CAMERON YODER:
It’s really easy to get bogged down by the specifics of everything you do as an Amazon seller. And really all this news for Amazon really, I don’t know, it just helps keep a vibe of positivity going up, and it shows that this past year in 2017 Amazon has come a long way even though they were huge before that. But it also just shows that they’re on a pretty good path moving forward into 2018.

CASEY GAUSS:
Yeah.

CAMERON YODER:
So okay, now we talked about what Amazon sellers have to look at as just positivity for Amazon in 2017, but we’re going to break down now kind of the science behind the effect of positive thinking and really just kind of thankfulness in general. So I was going to break it down a little bit to give you some insight into what positivity means for you as an Amazon seller. Barbara Fredrickson has a theory called the broaden and build theory. Now the theory is this. The theory is that negative emotions can cause you to narrow your mindset and your scope of attention in a fight, flight or freeze response to feelings of anger or anxiety. So just to kind of go over that again, basically negative emotions cause your mindset to narrow. And kind of the antithesis of this is that a positive mindset really opens up your mind to newer possibilities.

CASEY GAUSS:
Yeah, so if you remember back to us talking about kind of, you know, this ever elusive silver bullet or sellers getting focused in on, you know, what are these hacks, and I think that maybe this pertains to this specifically, right, so like –

CAMERON YODER:
Yeah.

CASEY GAUSS:
– you know, when I’m in fight or flight I’m just looking for that one little piece of saving grace that is going to take my business, you know, to the moon and back. And you know, what we’d like to think is, or according to the data, and we’ll get into it a bit more, you know, if you’re focused on positivity you’ll be able to take that step back, think of the bigger picture and really kind of disseminate what does it take to build a successful business. And that is not these little hacks. Again, it’s doing everything really well. So kind of just a cool way to tie in some of this awesome data around, you know, positive thinking and success and relate that back to Amazon.

CAMERON YODER:
Exactly. Like the negative mindset is going to create more opportunity for sellers to kind of try and reach and grab at things that aren’t necessarily going to help just because seemingly it’s the best thing that’s in front of them, again, that fight or flight method. So basically negativity really causes people to react, or can cause people to react in a manner that they don’t really think about what they’re doing before they do it. But going back to positivity, so positivity or thankfulness can cause you, the theory states, to broaden your perspective and increase your attention so that you see a wider range of perceived possibilities. So this more open mindset really enables positive thinkers to discover creative solutions, build new skills and ultimately be more successful than negative thinkers just because they’re broadening their mindset. So instead of being so – so I would describe the silver bullet mentality as more of, at least, a narrow-minded approach to business.

CASEY GAUSS:
For sure. And you know, a lot of people say that, you know, what’s the most valuable asset to your business? And a lot of the time it’s you, and people forget that, you know? And so yeah, I just think that this is very applicable.

CAMERON YODER:
Being narrow-minded is relatable to the silver bullet mentality, while positivity is related to learning more or widening your gaze and just learning and building new skills. To add onto this further, there was a study done that was conducted basically to support this theory. In this study each student watched a film that evoked a series of emotions. So there were five films that were showed. Each student watched a single film. The emotions that each film was supposed to – were supposed to convey were amusement, contentment as positive traits, neutrality as kind of the middle line, and then anger or anxiety as the negative traits. So each student watched these films. And then after the film the students were asked to fill out a questionnaire that asked them to list all of the things they wanted to do in that moment. So they watched these emotional, these films that evoked emotion, right, and then they were asked to write down what they wanted to do in that moment.

Now there were 20 blank lines for these participants to fill in. So interestingly enough, the students who watched the films that elicited amusement and contentment, so the more positive traits, came up with more action items on their questionnaire. So more things that they wanted to do in that moment, more. And the other characteristics, the ones that watched the more negative films that evoked a negative emotion did not come up with as many items as the people that had watch the positive films.

And then – after the films – they were shown a visual picture, a visual representation of shapes, okay, so just picture a bunch– you’re handed a piece of paper and on it are a bunch of shapes. And you get to look at it for a little bit, for a small period of time. That paper was taken away, and they were given basically another paper, and they were asked to identify the shapes that were similar to the ones they had seen before. So in this specific study the people, the students that had watched the negative emotional films remembered the smallest visual components of the shapes that made up the image that they had seen at first, and the positive thinkers remembered the overarching theme, or the overall form of the configurations but not necessarily the smaller shapes. The conclusion was at the end that thinking positively tends to help you keep a global or big-picture perspective.

CASEY GAUSS:
So next thing I kind of want to relate it to you, your Amazon business and how positive thinking can help you to be more successful. So I think the biggest one is just that, you know, Amazon is so dynamic, and things are changing so frequently, and the people that have success are the people that are really willing to be, you know, adaptable and to kind of fit whatever needs to happen. You know they’re not focused on the past. And so, you know, employing positive thinking allows you to be very nimble and say okay, here’s this new challenge. Now let’s take what we’ve done in the past, our knowledge and our expertise in the team that we have, if you have a team, and let’s apply that to this new landscape moving forward versus, you know, negative thinking would be so focused on, you know, this sucks, it’s not going to be as easy to have success. You know, I wish things were the old way versus, again, the positive thinking is you’re rolling with the punches. And that’s exactly what you have to be doing in order to, you know, be successful on Amazon because that is inevitable. Things are going to change. So yeah.

CAMERON YODER:
You’re also – so you’re also developing – as an Amazon seller you’re developing a lot of new skills as time goes on. And I want to read this quote from the study before, just because it’s, I don’t know, I think it speaks to Amazon sellers in general. And the quote is, “Researchers have often noticed a compounding effect or an upward spiral that occurs with happy people. They’re happy, so they develop new skills. Those skills lead to new success, which results in more happiness, and the process repeats itself.” So it’s compounding happiness on skill basically, like you are, by having an air or a mindset of positivity you are increasing her ability to develop these new skills by being an Amazon seller, which being an Amazon seller you’ve already developed so many skills, like team leadership even is just one skill that has resulted for a lot of people from Amazon, or different selling methods, or business in general. And there are so many more skills to develop by selling on Amazon. Maintaining that positive mindset is going to help you develop those skills further.

CASEY GAUSS:
Yeah, and you know obviously as a fellow business owner there’s a million things that are going wrong. There’s always going to be fires, not just related to Amazon making changes, someone that you hire doesn’t work out, or you know, oh, your manufacturer is giving you issues, or you know, there’s a million things that can go wrong. And dwelling on those things or, you know, turning very negative or even turning that negativity against yourself, I know that’s very easy to do, you know, that’s just not going to help you to have success. And so always be positive about the future. At least what helps me is I’m always so excited about what is going to come or, you know, the bigger picture of Viral Launch and what we’re trying to achieve. And that really helps you to, you know, go through the kind of valleys or those tough times.

CAMERON YODER:
I definitely want to encourage you to focus on big pictures. So a big picture mentality, for example, would be hey, it’s going to be okay. We have tomorrow to wake up to. If something goes wrong, that’s okay. You have tomorrow. You have next week. You have next month. This Amazon game is a marathon. And it’s not a sprint. So you have all of this time in front of you to allow you to not have to get stressed out and sucked into unproductive pursuits that are just going to cause more stress. So stay committed to the big picture, whether that’s hitting the million-dollar mark or making your first sale. Basically, basically there are a lot of different things that you can focus on, but one thing that you have control of is your mindset. And if you choose to focus on your shortcomings and entertain ideas of failure, then that might be what you live up to. But if you entertain ideas of positivity, you reap what you sow.

CASEY GAUSS:
That’s all we have for this week. Thank you so much for joining us. We’ll be off next week over the holidays, and we encourage you to take a break yourself. Spend some time with the people you love, be thankful for what you have and what you’ve been able to accomplish so far. Also it’s just nice to, you know, take a step back, breathe, read a little bit, challenge yourself and just think of the bigger picture because that is ultimately the roadmap that you need to set to help you achieve success.

CAMERON YODER:
Yo, eat some delicious food. If you’re listening to us and you’re international I say go buy a turkey, you know, get in on this Thanksgiving thing. Go buy turkey, you know, make some good mashed potatoes. It’s going to be a good time. You never know. That moment of contentment could really make the difference in success or failure of your business.

CASEY GAUSS:
Thanks again for tuning in. Don’t forget to leave a review. Please, we all know how difficult it is to get reviews on Amazon.

CAMERON YODER:
It’s so hard.

CASEY GAUSS:
The same is true for podcasts. Guys, we need you. I’m just messing, but it would be awesome. We also kind of, you know, just love to hear what people have to say. So if you want to be featured on the show leave us a voicemail at 317-721-6590. We’d love to hear from you.

CAMERON YODER:
Happy Thanksgiving, everyone. Until next time, remember, the data is out there.

Are Amazon Reviews Going to Change? (Follow the Data Ep. 8)

Follow the Data Episode 8: Are Amazon Reviews Going to Change? 

Reviews can pose a huge threat to the success of new products, and getting legitimate reviews early on can be difficult. Will this barrier to entry stagnate the market and ruin the competitive environment that Amazon shoppers love? Join Viral Launch CEO Casey Gauss and co-host Cameron Yoder as they speculate about the future of Amazon reviews.

Follow the Data Show Notes

  • If only you could get to 21 reviews! Then you could really compete. Check out this Seller Sessions video where Brad Moss talks briefly about the study that found conversion rates didn’t improve past 21 reviews.
  • LinkedIn uses a model that might work nicely for Amazon reviews in the future. Any connections you make over the 500-mark show up on your profile as 500+. Seems a bit of an unfair system for those of us who are extraordinarily popular or have really killer products. But check out some of the hidden benefits that having more than 500 reviews affords you.
  • Amazon’s Early Reviewer Program helps new products get their first 5 reviews and is available as part of their Brand Registry Program. Find out if you are eligible here.
  • Leave us a voicemail at (317) 721-6590 and tell us what you thought of the show. What do you think is in store for Amazon reviews?

Podcast Transcript

CASEY GAUSS:
Reviews are the currency of the Amazon marketplace.

CAMERON YODER:
But is change to Amazon’s current review platform on its way? I’m Cameron Yoder.

CASEY GAUSS:
And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data we’ve accumulated at Viral Launch from over 25,000 product launches and our experience working with over 6500 brands to help you understand the big picture when it comes to Amazon and, most importantly, the best practices for success as an Amazon seller.

CAMERON YODER:
Today’s episode is a bit different. We’re going to branch out a bit and talk more conceptually about Amazon’s current review system, how it currently works, potential impacts and flaws and changes that we think might be on the horizon. Let’s get started.

CAMERON YODER:
All right, Casey, so today’s episode is a little bit different. It’s not as data-driven, right, but it’s conceptual, and it’s important. So what are we talking about today?

CASEY GAUSS:
Yeah, you know, in terms of data I would like to think that maybe the data has helped us to build the conceptual model around Amazon.

CAMERON YODER:
Yeah, yeah.

CASEY GAUSS:
I definitely think that the data has helped us to, anyways, build this theory. And so essentially the theory is that, you know, I think in somewhat the mid-term, the short- to mid-term we’re going to have to see Amazon make a systemic review change, and we’re not talking about, you know, not being able to get reviews from discounted promotions or anything small like that. I think –

CAMERON YODER:
Something much bigger.

CASEY GAUSS:
Yeah, yeah, exactly. And so I’m pretty interested to hear what the feedback will be. I imagine something like this will be somewhat polarizing in terms of people seeing our view, as well as maybe a complete opposite view.

CAMERON YODER:
Yeah.

CASEY GAUSS:
And I imagine other people will have probably better thoughts than I do.

CAMERON YODER:
I mean we have – we’ll touch on this again at the end, but again, we have that phone number, and we’ll read the number out at the end of the episode. But if you have an opinion on this, then seriously feel free to call in and tell us what you think, or again, just ask any questions on what we’re going to go over. But first off –

CASEY GAUSS:
Yeah, please. I mean I’d love to hear people’s ideas and feedback because it can help us better lay out our product roadmap so that we’re making sure to help sellers in the best way possible or help us give better advice. So, anyways –

CAMERON YODER:
Exactly.

CASEY GAUSS:
Yeah, so let’s just jump into it. So just as a quick overview of the current review system, the current system, in how it works is essentially obviously someone buys a product.You are able to go and leave a review as a customer. Let’s – we’re talking from the perspective of a customer.

CAMERON YODER:
Right, right.

CASEY GAUSS:
And so these reviews accumulate. And so if you have 10 people review a product, or 10 people review a product, now it has 10 reviews, and the way that a rating is calculated, so a star rating is being shown, the way the rating is calculated is it takes into account recency, and it also takes into account whether or not a review is verified or unverified and puts together some amalgamation or some, you know, average rating, even though it’s not a straight average, rating of that product’s reviews. And so –

CAMERON YODER:
Do we have data on how recent, how far back it goes?

CASEY GAUSS:
No, so we haven’t tried to, you know, reverse engineer the algorithm of reviews, and I – theoretically I imagine it wouldn’t be very difficult to do. There’s just really, you know, no –

CAMERON YODER:
Not too much point?

CASEY GAUSS:
Yeah, yeah, it’s not going to help us. I mean at the end of the day you need to have a great product that people want to leave good reviews on.

CAMERON YODER:
Right.

CASEY GAUSS:
We’re not trying to game reviews. That’s the last thing that we want to do here.

CAMERON YODER:
Right, right.

CASEY GAUSS:
And so there’s at least right now no point.

CAMERON YODER:
Well Casey, you touched on this a little bit. Just to get everyone in kind of on the whole picture of reviews, you can get reviews from someone buying a product on Amazon, right, but that all reviews on the platform might not be from people that have bought the product on Amazon. Explain that a little bit.

CASEY GAUSS:
Yeah, so unverified – so there’s this concept of unverified reviews, which is now there’s two different camps of unverified reviews. Essentially, one, let’s say you bought a product at Walmart and you want to leave a review on Amazon. You can. And that is an unverified review. It’s completely within Amazon’s terms of service, and they actually encourage it. I think the whole reason behind these unverified reviews is it was, especially when Amazon was a young platform, a way of them, you know, bootstrapping and accelerating their review system.

I mean that was one of their initial kind of advantages is they have this review system that buyers know and trust, and that social proof helps them to make better buying decisions in e-commerce, which, you know, five years ago, 10 years ago, which was a very, you know, different situation than it is now. The trust was very difficult that I’m buying something that I haven’t been able to see, you know, touch or feel. So I don’t know the quality. So now I have to trust in this social proof, or these reviews that other people are leaving. And so that’s what really helped to – that’s one thing that helped Amazon to grow.

But anyways, so a new product comes onto the platform. A new brand comes onto the platform that has maybe been doing well in traditional retail or something like that. Well now that brand can get their customers that are buying somewhere else to come leave reviews on Amazon’s platform. That helps Amazon out because now they have more reviews, more social proof around these products which are going to better drive sales, and then also that helps that brand out because, again, they’re going to drive more sales.

CAMERON YODER:
Because as a big brand it wouldn’t really make much sense to, if you have all this social attraction already, if you have all these reviews already, to not be able to bring them on with you. That would just not attract a lot of big sellers that already have those things in place. And so of course having those things in place is going to be able to encourage big brands to come onto Amazon if they’re not already.

CASEY GAUSS:
Right. And so from a buyer’s perspective reviews do two things. One, they act as an indicator of popularity. So buyers are not looking at a bestseller rank. They’re not browsing through the bestseller rank tree.

CAMERON YODER:
Looking at their reviews.

CASEY GAUSS:
Yeah.

CAMERON YODER:
They’re looking at their reviews.

CASEY GAUSS:
So obviously if something has, let’s just say 10,000 reviews, well, at least 10,000 people had to have bought that. So it must be somewhat popular, right? And so versus a product that has 10 reviews. Well, it doesn’t look like as many people bought that. So it must not be popular. There may be some, or must be some reason that I am not aware of which is the reason why not as many people have bought it. Maybe it’s new and not as proven, or maybe it’s just not as good, or maybe people don’t trust the brand. So I am less inclined to go and trust it as well.

CAMERON YODER:
Right.

CASEY GAUSS:
So anyways, acts as an indicator of popularity, and then obviously acts as an indicator of quality. So you know a five-star product with a great number of reviews seems to be of good quality. A product with a two-star rating and a significant number of reviews seems to be a product of low-quality, so I’m less inclined to buy it. And so anyways, reviews, again, act as this form of social proof giving me confidence to buy the product. And so from the customer’s perspective that’s that. From the seller’s perspective, you know, we really see the data around reviews being the barrier to entry. There’s –

CAMERON YODER:
Right.

CASEY GAUSS:
Okay, so this is a little tangent on a myth, but you know, there’s recently these articles coming around where Amazon, Amazon did this internal study and the magic number to reviews is 21, and so – I believe it’s 21.

CAMERON YODER:
Wait, 21 –

CASEY GAUSS:
Reviews.

CAMERON YODER:
What do you mean, to be successful?

CASEY GAUSS:
So yeah, so the myth is if you have – I think it’s 21. Please don’t quote me. It may be 22. It’s somewhere around there.

CAMERON YODER:
It’s like 20s, right?

CASEY GAUSS:
Yeah, so anyways, if a product has 21 reviews it is able to drive, you know, a significant number of sales. And so basically the myth was if a product had – I believe I saw this quote. Again, not verbatim, but if a product had five reviews but an average rating of 4.8 or something like that, it is less inclined to drive sales than a product with 22 reviews – it’s above that threshold – and an average rating of three stars, right?

CAMERON YODER:
Which doesn’t make sense.

CASEY GAUSS:
At least for me, no, it doesn’t.

CAMERON YODER:
Personally, same

CASEY GAUSS:
And again, looking at a bigger market where a product has 10,000 reviews and the other product has 22 reviews, I’m pretty sure that customers are going to treat these different. The reason why I feel this way is, again, because we have the data around it. We’ve put so many products up on page 1 that have like one review, zero reviews, 50 reviews, and everybody else has 10,000 reviews or 1000 reviews, whatever. They had this significantly high review quantity, and we see these, the people with smaller review quantities struggle to sell at market potential because they don’t have a competitive number of reviews.

CAMERON YODER:
Right.

CASEY GAUSS:
The thing is we don’t know this study, right? So we don’t know what variables did they isolate? Which variables did they not take into account? Are these on, you know, products that aren’t ranking, or you know, maybe they are ranking in a small niche. You know, I have no idea. Or they’re highly-dependent on, you know, some product that really pays attention to creatives. I have no idea, so. I didn’t see the study, which makes it hard for me to judge. I have, you know, we’ve run 25,000 launches, and we’ve seen this over and over. Are there extenuating cases? Are there corner cases in which products with low review quantities do well? Oh, of course, and are there ways to mitigate the difference between a product with high review quantity and low review quantity in terms of sales? Oh, of course.

With that from seller’s perspective the way you see reviews largely as one, as a barrier to entry in a market, two, as this thing that is so elusive as Amazon continues to make getting reviews more difficult, legitimately.

So yeah, so kind of just wanted to paint the picture there. Next, we kind of wanted to talk a little bit about flaws of this current system. And so if reviews are really the barrier to entry in a market, well, just as a function of time reviews are going to increase. So let’s say that, you know, just on average page 1 sellers have 1000 reviews,Well, 50 years down the road those products are, those people on page 1 for fish oil, assuming they maintain rank and people continue to buy fish oil, you know, let’s take out all these other variables that we don’t really need to account for for this example. Anyways, they will have 50,000 reviews. Let’s say on average the product gains 1000 reviews a year. Let’s just say. So 50 years from now you’ll have 51,000 reviews. And so if let’s say this brand-new formula for fish oil comes out –

CAMERON YODER:
It’s really good.

CASEY GAUSS:
It’s way better than everything else.

CAMERON YODER:
Fantastic.

CASEY GAUSS:
It’s also half the price, but you launch it on Amazon, and Let’s say I get on page 1 and I have three reviews. And everybody else has 51,000 reviews and they have just as good a rating, or …

CAMERON YODER:
Put yourself – put yourself in that situation. If you’re buying that fish oil, which one are you going to buy? Which one?

CASEY GAUSS:
You know, everybody’s fish oil says it’s amazing, and you know, says it’s the best, the highest-quality, blah, blah, blah.

CAMERON YODER:
Oh, but shoot, 50,000 people have left a review on this one, on average.

CASEY GAUSS:
And here you are with 50 reviews claiming to be a much better version blah, blah, blah. No, no one’s going to trust you because the social proof is saying that these other guys are better. And so this is a problem because it creates stale markets, and especially over time the problem just continues to amplify.

And so there has to be some method that allows new products to break into the market and compete well. And because you just stifle competition, or let’s say everybody kind of starts to decrease the quality of their fish oil to save on margin. Well, they still have 48,000 or whatever, reviews that have that good rating, and yeah, Amazon does take into account recency. But again, these guys have 50-some thousand reviews that are helping to boost that rating. I don’t know, I just think that there’s so many possible scenarios, and all of them lead to this problem of stale markets because review quantity is a major decision-maker in people buying a product.

CAMERON YODER:
Well, and it’s like if you – that’s from a buyer’s perspective, too, but from a seller’s perspective if you are – if you are – this is another perspective to look at – if you’re a seller and you’re selling that fish oil that has 50,000 reviews you’re probably not going to want to re-enter another product into that market because you’re, I mean in a sense you’re kind of trapped.

It’s a good trapped because you’re making a ton of money because you’re locked in at 50,000 reviews, but you don’t want to refresh or do anything that would have you release a new product into that same fish oil market, for example, and all of a sudden you don’t have access to those reviews – like if you release another SKU into that market. You might be trapped into the markets, into the current markets that you’re selling in because of those extremely high review quantities.

CASEY GAUSS:
Yeah, and you know, I could see – there’s probably a million things I can’t even imagine that would happen here, you know. I could definitely see in some markets like the beauty space, I could see one or two brands just going and buying all the private label brands just so that they can dominate page 1 because okay, I mean we’re already seeing it in some of these highly-competitive markets where these guys have just thousands and thousands of reviews. And it’s tough for new brands to come up.

And so if you had two – two companies go and buy, you know, 50% each of the top selling brands in the third-party beauty space right now or private-label beauty space, these guys would essentially own beauty on Amazon and make it extremely difficult for any new sellers to come into the market. And I, again, I just think that competition is what has made Amazon so great. And you’re really decreasing the ability for new competition to come in.

Actually one last flaw – sorry, that I didn’t mention –

CAMERON YODER:
Yeah, yeah, yeah.

CASEY GAUSS:
– is basically because of the current state of the review system, one, it’s so difficult to get, but two, it is, in a lot of markets the currency to doing well or selling at market potential. People, sellers are going to these black hat methods of driving reviews, and generally in this kind of scenario it’s really just an arms race of, hey, there’s a new tactic of getting around reviews and being able to drive black hat reviews. So then Amazon is just incentivized to figure out that tactic and then put some safeguard in place. I mean it’s anything with internet security you build a wall, and then someone builds a bigger ladder, and then you build a bigger wall, and then they build a bigger ladder, or they find a crack in that wall, you patch it, and then they find another crack, and then they patch it, and so it’s this arms race. And then on the consumer side it’s leading to reviews that you cannot trust. And so it’s crazy. I don’t think that there’s one end all solution for that. I think that’s just a feature or function of any kind of market.

CAMERON YODER:
So okay, we’ve kind of broken down what the current system is and how it is impacting everything right now and its potential for impact even a couple years down the line. But, Casey, what do you think is going to change? Like what – if this would continue, obviously the effects would be crazy, just crazy bad for sellers and buyers, I think, as a whole and just the market as a whole. So what do you think is going to change? Based on what we’ve seen, based on the data that we have and based on this prediction of the future, what do you think is going to change?

CASEY GAUSS:
Yeah, great question. So going to what we see as potential fixes or solutions, you know really I think that the biggest one is I would expect Amazon to move to a rolling 12-day review quantity.

CAMERON YODER:
12 days?

CASEY GAUSS:
Oh, sorry, no, no, no. Sorry, I got that from 12 months because they do that already. So thanks, Cam.

CAMERON YODER:
That’s a quick review turnaround.

CASEY GAUSS:
Yeah, no, I would have kept going. So I – 12 days, wow.

CASEY GAUSS:
The voice of reason over here. No, so I think that what we would see is, you know, let’s say a review was left on December 31st at, in 2016. Well, December 31, 2017 that review is gone, but any new reviews left that day. So it will be a rolling 12 months, and kind of the reason behind that – so some other possibilities is Amazon could go to kind of LinkedIn’s style and say oh, you have 1000 – this product has 1000+ reviews. So if you have 50,000 reviews, still at 1000+ reviews. And that way basically I think that that would potentially be a good indicator because essentially what that’s saying is 1000+ people have verified that the review rating is just, is correct, and you will like this as well.

CAMERON YODER:
Do you think that would be cut off at 1000, or not necessarily?

CASEY GAUSS:
Oh, some number around 1000. Maybe 1000 is fairly arbitrary, but I think –

CAMERON YODER:
Sure.

CASEY GAUSS:
Just from my –

CAMERON YODER:
Just generally a large number.

CASEY GAUSS:
Yeah, yeah, yeah, generally a large number and yeah, so LinkedIn does, if you have 500+ connections I imagine they did some math around average connection – I have no idea what the math was, but they went and looked at the data and came up with that. I don’t think 21 is like, yeah, 21+ reviews. I don’t think so. Anyways, or again, they could go to the rolling 12 months. And the reason for my suspicion in the rolling 12 months is simply because they’re already doing that with seller feedback. And so they’ll show lifetime feedback, but they’ll show feedback over the last 30 days, 90 days and 12 months.

CAMERON YODER:
Right. So here’s kind of another question then. Do you think, so the rolling 12, again, do you think that those reviews, the value of those reviews will still stay in the system, or do you think they’ll be wiped completely clean?

CASEY GAUSS:
Yeah, that’s a good question. Maybe they’ll have a lifetime, but I just really think that on the listing, especially in the search results, you have to show a lower quantity because as it accumulates that’s how people are making decisions to go click into a listing.

CAMERON YODER:
Right.

CASEY GAUSS:
So they’re not even starting a session. If you have 20 reviews and everybody else has 5000 you’re not even going to get the session count a lot of the time because people are not willing to, you know, even look into it. They’re not even considering it.

So yeah, to answer your question, I’m not exactly sure. I think it would potentially – I don’t know. I think it would be potentially cool to have, you know, lifetime review quantity. But it could potentially also be misleading.

CAMERON YODER:
It would be – it would be very interesting to, let’s say this was implemented, to track how many reviews people on page 1 in big markets have and how many reviews would be dropped, right, because I mean sometimes sellers tend to have these huge influxes of reviews, which would then be wiped clean after a certain period of time passes. And so whether it’s – I mean whether it’s black hats or non-black hat activity that gets those reviews, people that have gained a significant number would have potentially, potentially, would have those numbers wiped out clean from those big, big groups or.

CASEY GAUSS:
Yeah, I actually like the – now that we’re talking about it I think I actually like the 1000+ kind of idea –

CAMERON YODER:
Yeah, yeah.

CASEY GAUSS:
– because like, again, if someone is doing some black hat activity around generating reviews, well again, in 12 months maybe they go get –

CAMERON YODER:
More.

CASEY GAUSS:
Yeah, 30,000 reviews.

CAMERON YODER:
Yeah, they can get more, right.

CASEY GAUSS:
This guy is so popular, blah, blah, blah.

CAMERON YODER:
It’s so hard to get reviews, especially when your reviews are wiped clean, and this guy has more.

CASEY GAUSS:
Yeah, exactly.

CAMERON YODER:
It’s like –

CASEY GAUSS:
And I mean so right now let’s say it takes a long time to drive reviews over time for this smaller seller. You’ve been working for the last 12 months to get these reviews. You’re finally at 100 or something like that. Well, a lot of them are now being removed, and so you’ve got to keep up this pace and continue to accelerate it to stay above this mark that you’re at. I don’t know. I don’t know if I like that. Anyways, I think that that’s potential. I also think there is potential for Amazon removing unverified reviews as a concept –

CAMERON YODER:
Interesting.

CASEY GAUSS:
– or at least for products that weren’t purchased on Amazon. So I do think that we could see unverified reviews in a sense that hey, this was bought at a promotional price, so we know that the person actually bought it and they did leave a review, and the unverified reviews that come from people that haven’t bought the products, I could definitely see those being removed. Again, Amazon doesn’t necessarily need to bootstrap their review system anymore. They have –

CAMERON YODER:
Because they’re huge.

CASEY GAUSS:
Yeah, they’re massive. And so I think there’s one, just inherent trust in Amazon as a place to buy products. And so a lot of people still think that you’re buying from Amazon, and they’re saying oh, I bought this from Amazon so I don’t think that, you know, reviews matter as much because I trust the Amazon experience. Anyways, that’s a little side tangent, but so – and I could easily – I just think that there’s a lot of problems that are arising in the black hat world coming from these unverified reviews. And so –

CAMERON YODER:
Well, it’s so hard. It is so hard for a company like Amazon, or anybody, to track black hat activity in some cases, right?

CASEY GAUSS:
Yeah. Oh, for sure.

CAMERON YODER:
Instead of just trying to implement a system that tracks all black hat activity 100% accurately, this system, the system of the LinkedIn reviews would in a way kind of level that playing field and, in some cases, again, negate the effects of black hat activity, which I really like.

CASEY GAUSS:
Yeah, exactly. And so let’s say you have some big brand that now wants to come list their products on Amazon. Well, just make an exception for those big brands. And so anyways I think you could just create an extenuating circumstance for those guys and allow them to come list some unverified reviews on Amazon to give some social proof and get things going.

CAMERON YODER:
Do you think – here’s a random question. Casey, what do you think – do you think Amazon is going to take anything with the early reviewer program further? Do you think that’s a test for something down the line, or do you think they’re – it’s just an initial beginning number of reviews?

CASEY GAUSS:
Yeah, a few thoughts there. One, I would love to see that because the early reviewer program, five reviews is not anything.

CAMERON YODER:
It’s not a lot, nope.

CASEY GAUSS:
I mean it’s better than nothing, but it’s not very much.

CAMERON YODER:
Right.

CASEY GAUSS:
Two, probably not looking at how they’ve handled the Vine program. Vine program is not very good. It’s very expensive. It’s just not a very good program.

CAMERON YODER:
No.

CASEY GAUSS:
And they haven’t done much to improve it. But then third is well, actually you know on the third-party side, especially for brand registry, they’re doing a lot. And they’re moving very, well, pretty quickly. And so I could see it happen because it seems like the team behind brand registry or however they divvy it up, they’re spending more time.

CAMERON YODER:
My mind just went to the inclusion of brand registry in future programs and how brand registry could be affected by a change in reviews. And that’s just where my thought went. But just was curious.

CASEY GAUSS:
Cool, guys. So yeah, next, just wanted to talk a little bit about what this means for you as a seller. So one interesting kind of notion, again, I’m not in the business of buying Amazon businesses, so I have limited perspective here. You know, I had no – I have some friends that buy Amazon businesses, and you know, I have talked to many people that have sold their Amazon businesses. And right now, you know, I kind of think that going back to the notion of review quantity being the barrier to entry and the way that the current review system is now, I feel like brands are a little undervalued, at least brands that have good review quantity are a little bit undervalued.

Again, looking at – let’s take some beauty brand that has good review quantity in, you know, for 20 different products. It’s very difficult to come up and get that same review quantity. And because they have the review quantity they’re selling well, which means they’re driving reviews faster than those who don’t. And so it’s this vicious cycle of these guys have good review quantity simply because they’ve been there longer than everybody else, and they’re ranking well, and they’re selling well. So they’re continuing to drive reviews faster, and basically they’re continuing to increase their barrier to entry. And that increase is accelerating day by day.

And so buying those brands that have that review quantity, if Amazon were to never make this systemic change that we’re talking about, that’s a major advantage that you get to have and continue to build on. And as more people come and buy from Amazon, you have this barrier to entry that people can’t overcome, and Amazon is automatically or, you know, they’re incentivized to drive more traffic to your listing just because they want more customers coming.

So I think that people are kind of undervaluing their Amazon businesses, and in these markets if you have a considerable review quantity it’s a hard decision to make, but I am kind of an advocate of you keeping your business for a little bit because I think it will continue to increase in value. With that said, though, if Amazon is going to make this systemic change in the next year, well now is the time to sell, given that, because the barrier to entry will be reduced quite significantly depending on how they, you know, roll out this systemic change. And assuming it does, but your barrier to entry or your competitive advantage will then decrease, making your brand less valuable than it is now, at least from my perspective, of course. And so just be aware of that when making decisions or plans for your kind of long term. Do you want to sell? If so, when? And just kind of know what’s going on there.

CAMERON YODER:
Well, hey, we want to thank you guys so much for tuning in again. Really, we so much appreciate you listening to this podcast, and of course we do this all for you. So if you really liked what you were hearing today or just any time at all, or if you have any questions –

CASEY GAUSS:
Or feedback –

CAMERON YODER:
– or feedback.

CASEY GAUSS:
– or have any or have any conflicting thoughts, thoughts on our thoughts, we just love hearing people’s perspective, so please share.

CAMERON YODER:
Please share, and let us know. You can write us at Facebook. You can call in. Our number is 317-721-6590. Drop us a voicemail. We would love, love, love to hear from you.

The Success Mindset and the Silver Bullet (Follow the Data Ep. 7)

Follow the Data Episode 7: The Success Mindset and the Silver Bullet

Many courses, gurus, and purportedly high-level sellers promote their latest tips and tricks as the way to find success as an Amazon seller. But is chasing after every Silver Bullet really benefitting your business? Join CEO Casey Gauss and co-host Cameron Yoder as they explore what sets the most successful sellers apart from the rest.

Follow the Data Show Notes

  • Delegating tasks so that you can focus on your overall strategy is an important part of running a successful Amazon business. Check out The Entrepreneur’s 7 Rules for Entrepreneurs to Delegate Effectively
  • Don’t skimp on your product listing. Whether you do it yourself or hire a professional, make sure you’re getting full keyword exposure. Follow our Lead Listing Specialist’s keyword research methods to ensure you’re getting all the relevant keywords for your product.
  • Just getting started as an Amazon Seller? Make sure you’re learning the basics. Here’s a quick rundown of Seller Central
  • Want to be on the show? We’re working on an episode that features you! Leave us a voicemail at (317) 721-6590 with stories or questions about your Amazon business.

Podcast Transcript

CASEY GAUSS:

The idea that you can make quick money on Amazon is intoxicating, but many sellers misdirect their focus and don’t end up capitalizing on the incredible opportunity that Amazon provides.

CAMERON YODER:

In order to be truly successful you have to skillfully leverage your time and resources for maximum output.  I’m Cameron Yoder.

CASEY GAUSS:

And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data we’ve accumulated at Viral Launch from over 24,000 product launches in our experience working with 5500 brands to help you understand the big picture when it comes to Amazon, and most importantly, the best practices for success as an Amazon seller.

CAMERON YODER:

In today’s episode we will examine the silver bullet mentality and the get rich quick language that have kind of saturated the Amazon seller community since its inception.  We’ll talk about how this preoccupation with the easy life can work to your advantage and to your disadvantage.

CASEY GAUSS:

Finally, we’ll discuss the mindset that sets the most successful sellers apart from the rest and how you can make your business more profitable by changing your business outlook.

CAMERON YODER:

We’re going to talk about something today that we’ve kind of touched on in previous episodes, which is this common mindset in the seller community that there is a “silver bullet” to success on Amazon.  So all right, Casey, what do we mean by the silver bullet?

CASEY GAUSS:

So the definition of silver bullet is a noun, something that acts as a magical weapon and solves a long-standing problem.  So really, you know, in the seller community everybody is looking for that magical weapon, that one thing that is going to skyrocket their business, and you know it’s kind of like this excuse to not do everything else well or to skimp on kind of everything else that they’re doing because they have that silver bullet or there will be that silver bullet.

CAMERON YODER:

It’s like a quick fix, right?  It’s like that next hack or that next quick fix that they’re looking for.

 

CASEY GAUSS:

Yeah, no, exactly.  And, you know, I – so I personally feel kind of lame sometimes when I go to these conferences and get up here and talk because what I preach is that there is no silver bullet, and really the thing that works the best is to just do everything really well.  Nobody wants to hear that.  Everybody wants that hack.  They want that silver bullet.

CAMERON YODER:

Because it’s not as sexy, right?  I mean some hacks just sound more sexy than others, than other things like oh, like honing in on your basics, right?

CASEY GAUSS:

Yeah.  Oh, you can double your business.  You can grow your business by, I don’t know, 50%, 30%, month-over-month if you just did this one thing.  And you know to be honest if that one thing, if we had to boil it down to one thing, that one thing is to just do everything well.

CAMERON YODER:

Right.

CASEY GAUSS:

Don’t cut any corners.

CAMERON YODER:

And honestly this mentality is not necessarily one that’s specific to Amazon.  Like this is not a new thing.  I mean pyramid schemes I guess are kind of maybe something like that, but in business in general this mentality has been present.  So it’s not a new concept.  It’s just kind of pervasive in the Amazon community.  But I’ll read the definition again.  I’ll read the definition.  So the definition again of a silver bullet is, again, something that acts as a magical weapon and solves a long-standing problem.  So Casey, in, relative to the Amazon community, what are some specific examples of what people would or might think of as silver bullets?

CASEY GAUSS:

I feel like generally the silver bullet is, you know, for any one particular seller the silver bullet is that thing that you’re not doing, right, because it’s so easy to see the grass as greener on the other side kind of, having that kind of mentality.  And so it’s like I bet if I did this thing then it would solve all my problems, double my business, blah blah blah, while in reality you’re having all these customer service issues, you’re having all these returns and your business is maybe downward spiraling or just not increasing in the capacity that you would expect.  So yeah, I mean increasing BSR is one, you know we’ve already talked about BSR.  We’ve already, you know, but that is definitely one area.  Everyone, so it’s something new all the time, and I think we’ve talked about this other podcasts as well.  So for a while the silver bullet was enhanced brand content, and then it was backend search terms.  And, you know it’s –

CAMERON YODER:

It changes.

CASEY GAUSS:

Yeah, it’s always changing.  But the thing that isn’t changing, the thing that is going to be here to stay is the fact that if you’re not cutting corners you’re going to be doing so much better than cutting corners to get to that quick fix.  So you know, if you want to break it down to where are the areas that people are most often or most frequently cutting corners, that is in product photography.  So we see the most insane photos where people are just using their cousin’s aunt, or I don’t know, somebody

CASEY GAUSS:

Anyway, you’re looking, you know, for your Uncle Herb or something that has a camera to come shoot your stuff, or you are doing it with your iPhone.  Granted, yeah, iPhone cameras are great –

CAMERON YODER:

It’s not bad yeah.

CASEY GAUSS:

– but are they great for product photography?

CAMERON YODER:

No.

CASEY GAUSS:

No.  And as the bar, the standard of product photography continues to increase in your market the iPhone photos are going to work less and less.  So anyways, product photography, people are always cutting corners.  They’re always trying to Photoshop in some just terrible photo, some stock photos, and people just aren’t willing to spend the money there.  People aren’t willing to spend the time or the money in doing their keyword research, in building a great listing.  People are too willing to cut corners on product quality, like I have so many people that ask me all the time – it doesn’t matter if these sellers are doing $1000 a month or $20 million a year.  I promise you these guys are coming to me and saying, you know, let’s be honest, how important is product quality?  Do we need to test the samples, or are we just good to go?  And when you cut corners on product quality it’s going to come back and bite you.  It’s going to limit your ability to have long-term success because it doesn’t matter how much black hat activity you do for reviews.  You’re still going to be getting a ton of negative reviews from organic sales, and –

CAMERON YODER:

People will know.  Like people will know.

CASEY GAUSS:

People aren’t going to come back and buy your product.  They’re not going to recommend it to friends and family.  You know, nor are they – maybe they’ll return your product, and now you have higher returns, and maybe that listing gets shut down.  Whatever.  That is one area where people are cutting corners an insane amount: product quality.

People are always cutting corners when it comes to your review funnel, so not setting up a killer email follow-up sequence.  Like you have to spend time on these things.  If you’re like oh, reviews are just going to come.  If people like it, they’ll review it.  Well, now you’re putting yourself in a significantly worse position when it comes to competition because now your reviews aren’t going to be increasing as quickly as your competitors, meaning your competitors are driving more sales, and they’re getting a higher review percentage from those sales, putting you further and further behind.

And so there’s no hack.  There’s no this one thing that is going to significantly increase your sales, especially assuming that you’re not doing everything really well.  So yeah, you can run a promotion to get on page 1, but if you don’t have great photos your conversion rates are not going to be that great.  The number of people that click into your listing from search results isn’t going to be that great.  If you don’t have a great, well-composed listing backed by great keyword research, well when you run that promotion you’re not going to rank for nearly as many keywords.  You may have to give away more units to rank as well because maybe your main keyword isn’t in your title.  If you’re not putting in the time, it’s going to throw off literally all other elements of the Amazon selling journey.  And so cutting corners on literally any one element makes all other elements that much more difficult, making it that much more difficult for you to find this, you know, proverbial silver bullet to significantly increase your sales.  So it doesn’t matter if you’re on page 1 if you’re not doing everything else really, really well.

CAMERON YODER:

It sounds so backwards to suggest the basics when something sexy like a hack or a fix is so hot right now.  But honestly, it’s kind of sad that what isn’t being talked about or the advice that isn’t being given to people is to really hone in, as you said, hone in on the basics and just get them solidified as you expand your SKU count, right?  Like what’s being talked about right now, what the advice that being given is, is to focus on these hacks that are starting to pop up, when in reality – and this is why we talk about, why we mentioned it so much – but to focus on those basics.

CASEY GAUSS:

And really what the hacks do a lot of the time is – they may seem cool.  They may seem sexy, but a lot of the time you see hacks like helping you grow your business by 5%, 10%, maybe a little bit more.  Let’s say you’re selling $50,000 a month on Amazon.  Well, and you have five products.  Well, the fastest way to get to $100,000 is to launch five more products.

CAMERON YODER:

Right.

CASEY GAUSS:

And doing all those things really well.  And again, you know, I know that you don’t have that much time, but that means you need to build the process that includes adding people to your team or hiring VAs, whatever.  You need to build a process so that every product that comes through your system has no choice but to go through this process where no corners are cut, everything is done well.  And those corner cutters that may be getting away with it now, as more and more competition comes in more sophisticated players are going to come in and be competing against you, and these are people that will not be cutting corners, and that is going to put you at a serious disadvantage.

CAMERON YODER:

Being able to step back and say okay, what are the most important aspects of my business allows you – for each of your SKUs – allows you to really hone in on what’s important.  And like you said, when you make that plan for each of your products, then your focus is not tempted to shift towards those hacks or those cuts, but instead they’re shifted to solely focus on what’s important with each of your SKUs.

CASEY GAUSS:

Yeah, and going back to Cam’s earlier point, you know, why are the gurus or the people with audiences always talking about hacks?  It’s because if everybody just got up there and talked about the basics no one would listen, you know? Like we want to hear oh what’s this cool new thing that can help me grow my business?  That’s great, but I just feel like these gurus are so incentivized to put so much emphasis on them because the cooler their hack seems, the more people that are going to listen, the more it’s going to get shared, the more people are going to revere that course leader or whatever as this master of Amazon because they knew something that you didn’t.

CAMERON YODER:

Sometimes when sellers are looking for or implementing these hacks they’re not even necessarily like seeking to cut corners on everything.  They honestly believe that it will help improve their business, right, that it is worth the time – because again, it’s what everyone’s saying.  Everyone’s saying to focus on these things, on these subjects.  And so from a –I’m putting myself in the mind of a seller right now.  It’s like okay, well if this is my community and my community is telling me to do these things and I believe that each of them are selling well, then I want to do that, too, right?  And so I’m going to implement it myself because it’s what everyone else is saying to do.  But in reality, again, they’re kind of just going forward with these hacks without questioning them, without saying okay what’s really important here.

CASEY GAUSS:

Yeah, for sure, you know at the end of the day the people – there’s thousands and thousands of people that take ASM or these other Amazon seller courses, and they don’t end up having success.  And the people that end up going on to have the greatest degrees of success are the people that are willing to, you know, really think about things for themselves, really try them, see what the data shows them from these tests and basically, you know, again, just distilling out what they hear down into these are things that actually work.  And kind of what Cam is talking about to another degree, one thing that’s really, really frustrating is in the Facebook groups it’s really the blind leading the blind, right?  So some –one thing that you don’t see is how much money or how successful these people giving you advice really are.  I’ve seen it a million times where someone is giving like just terrible advice, and then I go look at their account and they’re doing like, you know, $4000 a month, and this guy that he is giving the advice to is actually doing, you know, $20,000 a month, and they don’t understand kind of who has more experience in this area or who knows more than whom, and it just leads to bad decisions.  So now this guy that is doing $20,000 a month is taking advice from somebody who has significantly less experience and is probably going to go implement this bad tactic or this, whatever, go employ this bad advice.  And he doesn’t know it’s bad advice.  And he isn’t able to qualify who is giving that advice because there’s no indicator of that person’s success.

CAMERON YODER:

So let’s move on to another question.  Why are – why do you think sellers in general are really chasing after these hacks, these quick fixes, this silver bullet?  What do you think sellers are really after?

CASEY GAUSS:

Yeah, to answer your question, sellers just want to have as much success as possible, and they’re looking for the quickest path to get there.  I mean I think we all are.

CAMERON YODER:

Makes sense.  Makes sense.

CASEY GAUSS:

You know, but I think if you take a step back it’s so easy to focus on how much – what is my revenue today, what is my revenue tomorrow, how can I make sure that I have more sales tomorrow?  And in reality what you have to think about is what is the quickest path, the shortest path to success in the long term?  So what is my goal really?  Is it to sell for $1 million?  Is it to sell for $10 million?  Is it to get into retail, to merge with this large CPG company and exit for $50 million, or maybe even nine figures?  Really you need to take that step back, really conceptualize where you want to go, really think about what are my dreams, what do I, in an ideal scenario, what am I able to achieve?  And I think a lot of the times people just sell themselves short for that quick buck.  They’re like, oh you know, if I do this thing I could probably go from $10,000 a month to $30,000 a month.  And in reality, like you need to be making those decisions that aren’t necessarily going to take you to $30,000 a month next month, but are going to set you up to do $1 million a month in a year, whatever.  You really need to be thinking about the long-term because if you’re always making these short term decisions, you’ll only get that short-term benefit.  And so –

CAMERON YODER:

You brought up a really good point about people’s dreams, people’s goals.  I don’t think that you as a seller should let someone else tell you what your goals or what your dreams are or should be, right?  I think that process should be something that you sit down or you take some time, at least some time to sit down and think about.  Again, as that is your solid base.  That is your foundation.  And as you come across different data, or different hacks, or different tips, then you can kind of apply them to okay, is this part of my goal?  Is this what I want to do?  And is it going to work, or is it a part of – again, is it a part of those basics, or is it taking away from those basics that are going to bring success for me?  So part of an answer I think to the silver bullet is analyzing – or part of that answer comes from analyzing sellers that have been successful, have had a lot of success and kind of breaking down why, I guess.  So Casey, you’ve been able to meet and just be with a lot of successful sellers in the space.  And so when you look at successful sellers in the Amazon space with the idea of a silver bullet, what do you see?

CASEY GAUSS:

Yeah, so just to give some light into some of our friends that are, you know, really successful guys, so a couple friends of mine, they’re brothers, they last year did just under $100 million on Amazon.  Outside of Amazon they actually do bigger numbers.

CAMERON YODER:

They’re killing it.

CASEY GAUSS:

Yeah, it’s just insane.  They’re really young guys.  They’re actually under 30.  It’s just incredible.  And you know, my wife and I, we got the privilege of going to one of their weddings.  We get invited to kind of their big family events.  Another friend of mine, they do, last year I think it was just over $50 million across.  They have a few different accounts, and, you know, been to – he’s in Atlanta, been to like their version of SeaWorld or whatever, the biggest aquarium in the US.  Anyways, so we just get the opportunity to rub shoulders with some really, really big sellers.  And so yeah, plenty of guys that are in the like $20-$30 million range.  Not too many people make it outside of there from my experience so far.  But anyways, you know, again, these guys are really focused long-term, and I would say that possibly one of the areas that has allowed them to get to where they are the fastest is just having the framework in terms of the team structure in place to allow them to really scale.

You know, it’s very, very difficult if not impossible for a one-man shop to go to $50 million a year in sales on Amazon.  That’s so much inventory that you’re going to have to move.  And so these guys just have, they have it all down.  They have a very, very streamlined process of I’m going to launch this product.  Here are the people on my team that are handling each of these scenarios.  They’re outsourcing for various things that make sense, where again, they’re just focused on efficiency because doing that kind of volume you have to have, you know, the economics to make sense both from a time perspective and financially.  And again, these guys are also launching tons of products. So let’s say your maximum sales potential in a particular market is 1000 units a month.  And let’s say you’re at 800 units a month.  Well, you know, that’s pretty much there. That means it’s time to go focus on the next product.

So the time that it’s going to take you to go from 80% to 100% of maximum sales potential in a market is not worth the time.  You can take that same amount of time and go launch another product up to that 80%.  Again, should you settle for being in the middle?  No, but you should have a system in place that is designed to maximize sales for that product, based on that market’s potential and move on.  You should not, again, be spending your time focused on going from 80% to 100%.  That’s where people get caught up.  That’s where the big guys don’t worry about it so much.  Like they have the people in place that are focused on going from 80 to 100.  You need to be focused on the bigger picture, how many products can I launch, how quickly can I get them up and running, and how can I align my team and my team’s focus in like the entire products process or the whole launch process from going from nothing, from concept to launch?  That’s where you need to focus.  That’s where these big sellers are focused.

Again, they’re not cutting corners.  They’re not focused on the hacks.  You know, some of them have been involved in some black hat activity at some point, but really they realize that these are like, for the most part short-term solutions to these big problems, and again, you know, doing black hat stuff if you’re small and not doing it at scale, you may be getting away with it now, but if you’re doing it on 100 X more products or even 10 X more products, you’re – that significantly increases the likelihood of you getting caught.

CAMERON YODER:

Of course.  I think, Casey, I haven’t spent as much time with these guys as you have.  I have been able to spend a decent amount of time with successful just business people in general outside of Amazon, and some people in Amazon itself.  And from the perspective of the get rich quick mentality, I see a lot of people implementing the positive aspects of that mentality.  I mean there are positive and negative aspects to the get rich mentality, of course, and some of the positives that I see these successful people pushing or just naturally emphasizing are things like competition, or discipline, or innovation or speed.

CASEY GAUSS:

Or hustle.

CAMERON YODER:

Hustle.  Like hustling, these guys are implementing all of these things, and they are doubling down.  They look at what is bringing them success, and they double down on that.  Like they are very aware of themselves.  They’re very aware of what they’re capable of, what they’re not capable of, bringing people on to fill in those gaps, and then just doubling down on what’s bringing them profit.

CASEY GAUSS:

I agree.  A couple points, going back to previous questions, one area the people always cut corners on is design aesthetics.  You need, you absolutely need to have killer labels if you have labels on your product or packaging because it makes all the difference.  Go check out, you know, go check out some of the big supplements like testosterone boosters, stuff like that.  You will see Zhou Nutrition.  One, they rank for everything.  They’re absolutely killing it.  But they have incredible – their aesthetics are awesome.  There’s cohesion across their line so if someone goes and buys, you know, a neuro booster as well as a testosterone booster – or let’s say they go buy this testosterone booster.  They happen to buy Zhou’s, and they love it.  Well, when they go buy some other ancillary product or something that makes sense, or maybe it doesn’t make sense but it’s a supplement, and they see that same packaging like aesthetic, well they already love Zhou’s testosterone booster so now, yeah, they’re going to buy that.

CAMERON YODER:

It’s brand recognition.

CASEY GAUSS:

Yeah, yeah, yeah.  And so anyways, the aesthetic is so critical.  You know, and again we’ve talked about this before.  It’s easy to think that yours is good because, you know, you’re emotionally biased and yeah, it’s definitely a subjective kind of metric, but definitely you need to make sure that you’re killing it on aesthetics.  And then going back to why looking at the long-term helps you to avoid these hacks is, when you’re focused on these hacks you’re like zigzagging from here to there, to here to there, but when you have this broader perspective of where I want to go and what that looks like at the end result it’s a lot easier to draw, you know, this linear path there. So looking at product photography as an example, let’s say I’m just hacking on product photography and I get some stuff up.  Well, as my competition five months from now springs up, well now they have better photos than me, so now I need to shoot just a little bit better photos than them or photos that match.  And then six months down the road competition now has even better photos.  Well, now you need to go and get the best product photography possible.  And so now you’ve spent time reiterating on your photos three times and – or two times, however you want to count it – and now you’re wasting all that time.  That’s more money spent in the aggregate, whereas if you would have just thrown up amazing photos right off the bat, then you would have been a lot closer to your end result when you first got started, and you weren’t zigzagging.

CAMERON YODER:

I would like to ask – I like to ask people the question, if you had the choice of being the best in the space that you’re selling in, would you do it?  I mean of course, of course we all want to be the best in the space that we’re in.  If we had the choice we would all do it.  And so if that’s the case, then why wouldn’t we spend time just right off the bat having the best photos, or the best listing, or the best review follow-up?  All of it connects, and all of it makes your products just the most likely to sell right off the bat.  

CASEY GAUSS:

Thanks for joining us this week on Follow the Data.  If you’re interested in learning more about how to avoid cutting corners to help you achieve your long-term dreams subscribe to the podcast and check out the Viral Launch blog at viral-launch.com.

CAMERON YODER:

Also, huge thank you to those of you who have called in with your questions and comments about the show.  We are hard at work on an episode that could feature your voice, so just leave us a voicemail and tell us your thoughts on today’s episode, or really just ask us any of your Amazon questions.  Our number is 317-721-6590.  It’s always posted in the show notes for you to find when you’re done listening.  So feel free to give us a call.  We actually would really love to hear from you.

CASEY GAUSS:

Until next week, remember, the data is out there.

Dispelling Myths: Diversification (Follow the Data Ep. 5)

 

Follow the Data Episode 5: Diversification

Selling your product on Amazon alone is a bad business model. Or is it? Join Viral Launch CEO Casey Gauss and Amazon Seller Coach Cameron Yoder as they discuss whether diversifying your business efforts across multiple ecommerce platforms is really worth it.

Follow the Data Show Notes

  • Amazon is the go-to online retailer today, and Prime shipping is a huge incentive for shoppers. According to RetailWire, “The average Prime program participant spends $1,300 per year,” and Prime membership is only increasing, which means the potential for third-party sellers continues to grow.
  • Check out this recap of 2016 Amazon third-party sales. With 2017 shaping up to be an even bigger year, there’s no denying that Amazon offers third-party sellers a sales opportunity like no other online retailer.
  • Another great recap from last year is this infographic by Visual Capitalist, depicting online market share.
  • Take a look at these Viral Launch Case Studies for a few examples of sellers who decided to double down on their Amazon businesses and saw huge results
  • Don’t forget to check out our redesign of Market Intelligence. With a brand new look, a built-in FBA calculator, and the most accurate sales estimates in the galaxy, Market Intelligence has everything you need to streamline your sourcing process. Check it out at viral-launch.com/newMI
  • Want to be on the show? Leave us a voicemail at (317) 721-6590

 

Podcast Transcript

Casey Gauss:                      

Approximately 55% of online shoppers start their product search on Amazon.  As an online retailer you know Amazon is the place to be.

 

Cameron Yoder:              

But is selling strictly on Amazon the most profitable approach?  I’m Cameron Yoder.

 

Casey Gauss:                      

And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 20,000 product launches and our experience working with 5,500 brands to help you understand the big picture when it comes to selling on Amazon, and most importantly, the best practices for success as an Amazon seller.

 

Cameron Yoder:              

The first four inaugural episodes of Follow the Data are all part of our Dispelling Myths series in which we explore topics that have garnered a lot of conversation among the Amazon seller community but until recently have not been proven or disproven using factual evidence.

 

Casey Gauss:                      

We’ll talk about why these Amazon theories make sense and what the data is saying about what’s actually happening.

 

Cameron Yoder:

Today we’re talking about diversification.  Now there’s this conversation happening among sellers, whether to focus solely on Amazon or whether to diversify and sell on other platforms.  We’ve heard a lot of people talk about this at conferences.  For example, some sellers are listing their products on eBay or Walmart, Shopify, BigCommerce, Squarespace or other big names  that others are talking about. But this is the conversation today.  The conversation is whether it’s worth it or not. Casey, you’re passionate about this.  Take it away.

 

Casey Gauss:                      

Yeah, so I mean it’s pretty much like public knowledge at this point that – or general consensus:  Okay, I need to diversify away from Amazon as soon as possible because Amazon is going to ruin my business.  And I totally get it, right.  So everybody assumes it is like okay, I have a business on Amazon.  I have to diversify right away.  And there’s just a lot of issues with that.  So basically – but I get it, right.

 

Cameron Yoder:              

But why do people think that right away?

 

Casey Gauss:                      

Yeah, yeah

 

Cameron Yoder:              

Why is that?

 

Casey Gauss:                      

I mean it totally makes sense.  At the end of the day if you are amazing at Google PPC and/or Facebook ads and this is just a talent that you have, then it completely makes sense.

 

Cameron Yoder:              

Sure.

 

Casey Gauss:                      

And I totally get it, right.  So the area of seller that we see this happen the most are the guys that are doing, you know, they hit that million dollar a year mark, or maybe the 1 to like 3, maybe 1 to $5 million a year mark, and then they really, really want to protect what they have.

 

Cameron Yoder:              

You’re saying diversify – like those are a lot of people that you see consider diversifying?

 

Casey Gauss:                      

Yeah, yeah, yeah.  So once they get to this mark they’re like wow, I really want to protect what I have, and so what is the biggest threat?  Well, the biggest threat is that I’m on the Amazon platform.  I don’t control the customer, which is a totally valid consideration, right?  Those are definitely – I totally see where you’re coming from.  But there’s a few issues with that.  

 

So what I typically see happen is that those sellers that try to begin diversifying – one, they’re paying all this money for these courses teaching you how to diversify, which generally don’t work.  But the thing is that people forget what got them to that 1 to $5 million a year mark, and what got them to that 1 to $5 million a year mark is launching more products on Amazon and/or really just figuring out that launch process on Amazon.  If you’re doing, you know, $2 million a year, you know how to launch products on Amazon.  And so how do you go to $4 million?  How do you go to $10 million?  Well, you just launch more products through that same exact process you’ve already established.  The answer is not to go and diversify.  Anyways, so –

 

Cameron Yoder:              

Well do you think having – do you think having a presence on these other platforms does contribute to extending your – as other people would say – brand reach?

 

Casey Gauss:                      

Yeah, so I think that you should have at the very least a Shopify store.  I think that you should go and have – you should have somebody on your team go and list your products on these other platforms.  I mean just by happenstance, you know, if you are the only vitamin C serum – which isn’t the case – but if you’re the only vitamin C serum on Walmart, yeah, you’re going to get some traffic.

 

Cameron Yoder:              

Sure.

 

Casey Gauss:                      

Right?  But you – I don’t think that you should be consid — spending a considerable amount of time on these other platforms.  But again, we’ll get into that –

 

Cameron Yoder:              

Sure.

 

Casey Gauss:                      

– in a minute.  So basically at the high level people want to protect what they have.  I totally get it.  There’s a lot of gurus that are pushing for people to diversify.  We’ll get into that in a minute.  But again, you know, if this guru that is, you know, absolutely killing it is telling you that they’re doing this or that you should be doing this, no, you know I totally understand why you think that.  And again, logically it makes sense.  Okay, I’ve had this success on Amazon.  People like my brand or whatever.  Brand is in quotes.  Then like I will be able to go and replicate this in these other platforms.  And the answer is just no.  It just doesn’t happen that way.  So, yeah.

 

Cameron Yoder:              

Let’s take a look at – so one main aspect of what other people are saying in this argument for diversifying is that a seller can control the buyer experience more, right?  So in Amazon – you touched on this at the beginning, but when a seller is on Amazon the control of the buyer experience is not – it’s not that much.  You can’t control it as much as you would in your own website, for example.  So people, again, are saying, right – and correct me if I’m wrong – but people are saying that oh, my argument for diversifying is that I can control my buyer experience.

 

Casey Gauss:                      

Yeah, and I totally get what you’re saying, but my answer to that is, for how many people, right?  Oh yeah, you can go and control the conversation for 100 new customers a day.

 

Cameron Yoder:              

Right.

 

Casey Gauss:                      

But I’m going to go sell 5000 units a month on Amazon, right?

 

Cameron Yoder:              

Right.

 

Casey Gauss:

The problem is yeah, you get to control the buyer experience, but for how many people?

 

Cameron Yoder:              

Yeah.

 

Casey Gauss:                      

You know what I mean?  Like sure you can have control of 100 people a month that are coming and visiting your Shopify store or that you’re paying an insane amount of money to get to your Shopify store or wherever.  But I’m going to be on Amazon selling 5000 units a month while you’re selling 100 units a month on Shopify.  We’ve seen, you know, we’ve seen this happen so many times where basically sellers, they’re doing really well on Amazon.  Again, these are the guys doing that 1 to 5 million, sometimes a little bit more, but then they try to diversify.  They try to get into retail, or they try to push heavily into Shopify, and they spend all of their time or a good portion of their time not growing their Amazon business.  And so what happens is yeah, maybe you grow revenue by 5% or something, but what we see happen a lot of times is in the meantime their Amazon business starts to lose traction.  It starts to lose market share. They get out of tune with what’s working.  And they’re just, you know, out of touch.  And so competitors just start to pass them by.

 

So yeah, they started making a little bit extra money on their Shopify store or whatever, but they’ve really started to lose out on their Amazon business.  They are trying to avoid the very situation they end up creating, which is they are trying to protect their sales for the long-term by diversifying, and calculating opportunity costs they lose out on sales in the long term.

 

Cameron Yoder:              

Right.  Other arguments that people have, which I think there is kind of one main answer and you already touched on it to all of these, a couple reasons that sellers opt into listing on different platforms, there’s a pretty comprehensive list.  One is a lower barrier to entry.  So again, Walmart is an example.  Walmart has a much lower barrier to entry than Amazon.  There’s less competition. There’s no monthly fees or startup fees, lower listing or product fees, and you own your own storefront, right?  But, but like you said, I feel like all of these arguments can be honestly just like crushed with the fact that all of the traffic is on Amazon.

 

Casey Gauss:                      

Yeah, okay.  Lower product fees, okay, yeah.  I’ll pay – versus paying let’s say it costs $5 to ship my widget and sell on Amazon.  But it only costs $1 to sell on Walmart.  No, that’s great, but you’re still only selling 100 units.  And so –

 

Cameron Yoder:              

But dude, you don’t have a $35 monthly fee.

 

Casey Gauss:                      

Those things just don’t make sense.  So really I mean we’ve worked with over 5500 brands.  I have really good relationships with guys that are doing 100 million a month.  Whoa.

 

Cameron Yoder:              

Holy –

 

Casey Gauss:                      

100 million a month would be insane.

 

Cameron Yoder:              

I’d like to meet them.

 

Casey Gauss:                      

Yeah, me too.  100 million a year, 50 million a year, guys that are doing – plenty of guys that are doing around 20 million a year, and everybody in between, right?  And the thing is is I do not know – I’m not aware of any seller that has successfully taken their success on Amazon and then brought or built a considerable revenue stream outside of Amazon from their private label business.  Like it just absolutely doesn’t make sense.  These guys that have a major $35 million brand, it’s the third-largest brand in their category, in the top-level category: I’m talking cell phones and accessories or beauty or health and household.  Like these guys have the third-largest brand by volume, and their sales on their website, they’re spending – they have a huge team, and they’re spending a good amount of money trying to drive those sales on their website.  And they’re just not seeing the volume.

 

So what – you know I have some friends that they do 50 million a year, and they tried pushing on their website, and they realized it just didn’t work.  And they saw a dip in revenue when this happened like two years ago.  And now they’ve just doubled down on Amazon because they know exactly how to launch products when it comes to Amazon.  So they just doubled down on that.  

 

The opportunity is on Amazon, and if you are spending, you know, a week – let’s just say a day.  You’re spending a day out of your week trying to build these other sales channels.  Well that’s a day a week that you’re not building your Amazon business.  And so for every dollar, you know – these are arbitrary numbers, but it’s something like for every dollar you spend building your Amazon business you get $10 back, let’s just say.  But for every dollar you spend building your Shopify business you’re getting like $1.50 back.  Maybe you’re getting $2.00, but probably not.  You know, net net across your Amazon sales in everything you’re seeing maybe $1.05, or you’re seeing $0.95 out of that dollar spent.

 

And so, you know, I do think that you should diversify.  Like I said at the beginning, you know, if you have the team or you have the skill set – if you have the skill set to drive an insane amount of Facebook ads or whatever, yeah, definitely check out that model.  But you still need to run the math and calculate: Do I make so much more money when I’m spending that same amount of time and that same amount of money pushing my Amazon brand?  Well, then do that.  You know, like – and again –

 

Cameron Yoder:              

Keep on going

 

Casey Gauss:                      

So the other argument for diversifying is everybody’s afraid of getting banned from the Amazon platform, and now their revenue stream dries up.  That’s what these guys that are selling $1 million, $5 million a year, that’s what they’re so afraid of.  And the thing is is we’ve worked with 5500 brands, right, and we know of a lot more, of course, right?  I only know – we only know of one brand that has actually gotten banned from the platform, and these guys were asking for it.  Like these guys had gotten suspended so many times.  They just kept doing, you know, whatever it was that was getting them suspended, and they were pushing the envelope in every direction.  And you know, eventually Amazon said no, we don’t trust you guys to reinstate you because you’re just going to keep doing this stuff.  You guys are banned.  You guys are not able to sell on the Amazon platform.

 

And so at the end of the day, again, thousands and thousands of brands – we’ve definitely seen people get suspended, but they get pushed right back up.  And so I don’t know how legit that fear of getting banned is.  I understand why you’re afraid, of course.  I totally get it.  But at the end of the day, how likely is it to happen?  Well, according to our sample size –

 

Cameron Yoder:              

Not very.

 

Casey Gauss:                      

– one in 5500, which is pretty low. I would like to think that it’s more. And again, the thing is is sure, you can go spend a ton of time trying to diversify.  But in reality will you be successful at it?  You know, I really doubt it.  The data just does not show us in the 5500 brands that we have worked with. That it is likely that you can take your Amazon success and turn it into external success.

 

Cameron Yoder:              

I like to relate, I like to relate this subject to – and Casey, you’ve heard this before – I like to relate this, the idea of diversifying, to the gold rush, right, like the classic American gold rush where once people heard that there was a ton of gold in one place they all rushed to it, right?  I feel like Amazon is that source of gold right now. More and more people are starting to hear about it, and not that – I mean there was a limited amount of gold, right, and not that Amazon is going to run out or go out of business or anything, but the game is changing as time goes on.

 

Casey Gauss:                      

And it’s getting more difficult.

 

Cameron Yoder:              

And it is getting – it is.  It is.  The gold has not run out yet at all.  If you see this huge mine of gold that you know is there, it’s Amazon, then why would you go to another gold mine, like Walmart or Etsy, that you can’t see the gold?  Like sure there’s some benefit there, and there will be benefit in the future. I think, just in terms of taking advantage of the moment, that’s the best thing.

 

Casey Gauss:                      

Yeah, you know, I think maybe if you have that 1 to $5 million brand and you have a team, then maybe you can hire somebody that’s great at customer acquisition or digital advertising or whatever.  And they can try to build those sales, and you know, they can be compensated accordingly.  And you can have them focus on that, but what you need to be focused on is on what you know how to do really well, and that is selling on Amazon.

 

Cameron Yoder:              

Right, right.  And opportunity cost, right?

 

Casey Gauss:                      

Yes.

 

Cameron Yoder:              

Like it’s going to cost something.  If you choose to focus on another platform, it’s going to cost time

 

Casey Gauss:                      

Yeah, and again, every minute that you’re spent focused outside of Amazon, a competitor is focused on Amazon, and they’re just going to steal that opportunity or that potential from you down the road.  But I think that people are really underestimating the value of the Amazon business right now.

 

Cameron Yoder:              

Yeah, I agree.

 

Casey Gauss:                      

I think that time will show us that your brand is actually more valuable than you think.  And again, going back to Cam’s comment of reviews being the currency, like this is the way to go.  Yeah.

 

Cameron Yoder:              

It is.

 

Casey Gauss:                      

So basically to sum everything up, Amazon is huge right now.  It’s still growing.  It’s supposed to be growing an insane amount. They’re just snagging such a big portion of the e-commerce sales.

 

Cameron Yoder:              

Remember.  Remember what got you here, right?

 

Casey Gauss:                      

Yeah.

 

Cameron Yoder:              

Remember what got you here and triple down on it.

 

Casey Gauss:                      

Right.  Yeah.  So yeah, basically at the end of the day we don’t know anybody—doesn’t matter if they’re doing 100 million a year, 50 million a year—it doesn’t matter. We don’t know anybody that has successfully gone and diversified.  Does it mean it’s not possible?  No, it’s definitely possible.  But that’s not what’s happening.  That’s not where you should be focusing.  You need to be focusing on building your Amazon business.  Are we biased in saying that?  Yes.  Is it the truth?  Is that what the data is saying? Yes.

 

Cameron Yoder:              

Yes.

 

Casey Gauss:                      

Does it make logical sense?  No, not really, but it’s the truth.

 

Cameron Yoder:              

Well hey, that is all for this week.  Thank you so much for joining us on Follow the Data.  For more reliable information about what’s really happening on Amazon subscribe to the podcast and check out the Viral Launch blog at Viral-Launch.com

 

Casey Gauss:                      

And don’t forget to leave a review on iTunes if you like the podcast.  We really appreciate your feedback.  We love, love honest feedback.  We love to hear what your thoughts are.  And if you enjoyed the podcast and want other people to hear it, please share.  Reviews also help other people to understand how good or terrible of a job we’re doing.

 

Cameron Yoder:              

We’ll link to all of the information and sources that we referenced in this episode in today’s blog post.  Check out the blog and subscribe to our email list to stay up-to-date on all the latest Amazon updates and best practices.

 

Casey Gauss:                      

Want to be featured on the show?  Leave us a voicemail and tell us your thoughts on today’s episode, or ask us any of your Amazon questions.  Our number is 317-721-6590.  Join us next week when we dispel the myth of suspension.  Until then, remember, the data is out there.

Cameron Yoder:

Hey! I wanted to let you know about a webinar that Casey and I hosted last night where we made an exciting announcement. We’ve updated our product research tool, Market Intelligence, with a brand new look, easier navigation, and a built-in FBA calculator. If you missed us last night, you can find our announcement and our walkthrough of the tool on our YouTube channel. The calculator feature is super slick, essentially calculating how much it costs to break into a market showing you upfront costs, month expenses, monthly profit, and total profitability.

 

Market Intelligence offers sellers the most accurate sales estimates in the galaxy and up to 2 years of historic sales data so you can see big market trends like price and overall sales. With the newly integrated FBA calculator, this latest version of Market Intelligence really does have everything that you need to research your next product. Visiti viral-launch.com/newMI to check it out and to start your free trial.

Dispelling Myths: Sales Velocity (Follow the Data Ep. 4)

Follow the Data Episode 4: Sales Velocity

Keep increasing your sales, and Amazon will reward you with a coveted spot on page 1. Sounds like a simple formula, but the facts say there are other factors in play. Join Viral Launch CEO Casey Gauss and Cameron Yoder for episode 2 of “Dispelling Myths” to find out why sales history, not sales velocity, is the key to maintaining high rank on Amazon.

Listen on iTunes . See All Episodes

Listen on Stitcher / Listen on Google Play

 

Follow the Data Show Notes

  • We’ve been busting myths since Day 1, and the misunderstanding of BSR is one we’ve been embattled with for some time. Check it out our Amazon BSR Myths blog post from December 2016.
  • If you’re just starting out as an Amazon Seller and feeling lost trying to figure out how sales velocity, sales history, ranking, and promotions all work, check out our 3 Keys to Success seller guide.
  • Here at Viral Launch, we’re just crazy about sales history. Not only is it important to maintaining rank, it is also a great indicator for how a product will perform in the future. Market Intelligence shows up to two years of sales history for a product market so you can make realistic projections about future sales. Sign up for a free Viral Launch account to get a free trial of Market Intelligence.
  • Want to be on the show? Leave us a voicemail at (317) 721-6590

 

Podcast Transcript

Casey Gauss:

Do not focus on BSR. Forget it. Only pay attention to ranking. And then really focus on building a strong sales history. Don’t go in and just give away a product over 5 days just because you want to improve your velocity and you think it’s that is going to help you maintain rank and the drive organic sales from there. Really, you need to focus on building up your average per day sales history.

Casey Gauss:

No one can find your product when it’s buried at the bottom of page 10 search results.  To climb in the rankings and capture more traffic you need sales.

Cameron Yoder:

But are all sales created equal?  I’m Cameron Yoder.

Casey Gauss:

And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 20,000 product launches and our experience working with over 5500 brands on Amazon to help you understand the big picture when it comes to Amazon, and most importantly, what it takes to have success.

Cameron Yoder:

These first four inaugural episodes of Follow the Data are all part of our Dispelling Myths series in which we explore topics that have garnered a lot of conversation among the Amazon seller community but have not been proven or disproven using factual evidence.

Casey Gauss:

We’ll talk about why these Amazon theories make sense, where they’ve come from and what the data is saying about what is actually happening.

Cameron Yoder:

Casey, can you define – can you define sales velocity for us?

Casey Gauss:

Yeah, yeah.  So sales velocity is the rate at which you are selling.  It’s simple as that.  You know, one thing is, I think it probably just sounds like a cool term so people want to throw it around.

Cameron Yoder:

Velocity.

Casey Gauss:

Which, which, you know, I don’t blame them.

Cameron Yoder:

That’s pretty cool.

Casey Gauss:

Yeah.  Basically sales velocity is this myth that if your sales continue to increase, then Amazon will favor you with good keyword ranking.  You know, as an example, people like to set up promotions where they’re incrementally increasing because it shows that their velocity is increasing, and they think that that is what Amazon likes to see because, you know, to them it looks more organic, and they think that Amazon wants to see things that are more organic.  Also, you know, pretty much on any website or service provider’s website you’ll find the term sales velocity on there, and they are trying to tell you that it’s sales velocity Amazon cares about when it comes to keyword ranking, and it’s just not true.

Cameron Yoder:

If it’s not sales velocity, what is it?

Casey Gauss:

Yeah, it is sales history.  So it sounds –

Cameron Yoder:

Interesting.

Casey Gauss:

Yeah, not as cool of a term, but it’s a lot more accurate in how Amazon looks at your sales and then decides how to rank your products based on, yeah, sales.  One thing that we do kind of want to point out here is, you know, this myth we’ve been trying to kill it forever, and that is just BSR, the myth of BSR.  So essentially what BSR is is BSR is like a report card.  It’s basically an indicator of past sales, much like in a report card where you do some work and then your teacher grades it, and then you get a letter grade post-work, saying how well or how much work you did.  And so the same is true with BSR.  If I sell 100 units it will impact my BSR, but my BSR does not impact my bestseller rank, does not impact my future sales.  So please never try to improve your BSR.  Try to improve your sales, and then yes, of course, your BSR will improve from there, but yeah.

Cameron Yoder:

Hey guys, Cam here. I just want to break and clarify something that is–in a lot of ways–so obvious for us here at Viral Launch that we often forget to say it explicitly, and that is that BSR is not the key to visibility on Amazon. Keyword ranking is. You might have a great BSR but if you aren’t getting sales through a keyword, you aren’t going to gain keyword ranking which is how shoppers will find you in search. Got it? Not BSR, keyword ranking. Okay, now back to the show.

Casey Gauss:

You know, I think the analogy is as simple as this.  So if I’m standing on the Earth’s surface, to me it appears flat, right?  But when I take that 10,000-foot view, or that mile view, or however high you need to be to really start to see the curvature of the earth, you’re really able to get a different perspective.  You’re able to – you get in more data and are able to really start to understand, hey, it’s not actually sales velocity.  It’s actually sales history.  The perspective that we have of the space running hundreds and hundreds of promotions daily, we’re able in tracking keyword ranking for many keywords that are found in the listing or the targeted keywords.  We’re able to really get a great perspective of what is Amazon paying attention to when it comes to sales history or sales in general and driving keyword ranking.

Cameron Yoder:

All right, so we’ve talked a little bit about, again, defining sales velocity and defining sales history, and taking a look at what the myth is saying and what other people are saying.  But let’s jump into the data.  What – Casey, what have we found when it comes to sales history?

Casey Gauss:

Yeah, so both from the data that we’ve been able to aggregate, as well as indirectly from Amazon, we know that Amazon is actually tracking sales in these buckets, right?  So they’re tracking what does the average per day sales look like over the last 24 hours, 48 hours, three days, five days, and then in these seven-day increments, out until, you know I don’t know how long, but I know it’s at least 180 days.  Basically what that shows us is yes, Amazon cares about most recent sales, or they more heavily weight recent sales, which is where people are coming with the sales velocity, right?  So if your velocity is good then your most recent sales history is good.  So maybe the last day, maybe the last five days, who knows?  What the sales velocity kind of algorithm doesn’t take into account is history, which Amazon is definitely heavily weighting.

Cameron Yoder:

Right.

Casey Gauss:

So I can give a couple of examples of some promotions that we’ve run, which then give us insight into the sales history.

Cameron Yoder:

Go for it.

Casey Gauss:

Yeah, so, so many people have run these promotions – and it’s pretty common knowledge, I’d like to think – right now where you can’t just run a one-day promotion.  Back in, you know, 2014 you could do that.  Running a one-day promotion, a big spike in sales would help to improve your keyword ranking, but Amazon is more – more so heavily weighting sales history where if I run a one-day promotion, yes, my velocity is good.  My BSR is going to increase quite significantly.  But when Amazon goes to calculate your seven-day sales history or your 30-day sales history, it just doesn’t match up to those guys that are ranking page 1 and have been for the last six months.  Their sales history is very solid for that particular market.  So what we’ll see is maybe you’ll get a decent blip, but usually with a one-day promotion you won’t even get that nice blip anymore because there is no sales history to back it up.  What we do see if you run a 3 to 5 day promotion is generally you will get ranking because you have your most recent sales history is good.  But then it’s very short-lived because you don’t have enough sales history.  You don’t have, you know, 90-day sales history to help rank among those guys that are selling, or have been selling, again, for six months.  So we see those guys fall right back down.  

And what happens if you run a 7-day promotion and don’t see any sales right off the bat?  We see ranking sustained a bit further simply because yes, the sales velocity may end up being very bad after we’d run a 7-day promotion giving away 50 units per day, and then there is another three days after that where there are no sales at all.  Let’s just say, you know, they have terrible images, they have terrible reviews, they just don’t convert at all.  What we’ll see is that product will maintain rank for at least a little bit depending on the market, sometimes longer, sometimes indefinitely.  It really depends.  But for the majority of the time – and this is where having so much data, so much perspective really helps to reinforce these correlations or these trends, but this person will generally maintain rank for at least a week, or sometimes a lot longer, because they’ve built up that sales history.  So the more sales history they establish, the longer that rank will maintain even though their velocity is really bad because they’re not selling anymore.  Their rank will maintain because their sales history is actually pretty decent.  

A case study kind of on the other side is in terms of maximizing ranking, is we had a seller in a very, very competition-heavy beauty niche, right?  And so they’re giving away 100 units a day at a promotion, promotional price.  They’re also selling organically.  But after – it took them 30 days to get to position number three, or sorry, position number four.  This is a pretty brand-new product, and they’re maintaining this position, but they’re not increasing just by giving away 100 units a day.  Their BSR was better, so you know, assumedly their velocity was much better than the guys ranking ahead of them.  And so anyways, what they had to do was they had to start giving away 125 units a day, and they did that for another 15 days, which put them to position two.  But even still this guy in position one had probably been ranking for at least the last, you know, six months or so.  And so over the last six months, you know, he’s built up a really, really solid sales history.  And so it’s very difficult for this newer product that when Amazon is going and calculating the 90-day sales history, maybe 180-day sales history, you know they just don’t have any sales because it’s a brand-new product.  And so they’re not able to compete.  And so it took this guy 60 days of giving away – 30 days at 100 units a day, another 30 days at 125 units a day on top of now at this point they’re selling really well organically.  It took them that long in order to be able to outrank this guy in first position because the guy in first position had such a strong sales history.

Rebecca Longenecker:

Are you looking to launch a product but feeling overwhelmed and frustrated by how complicated the process seems?  Giving away inventory can be nerve-racking.  That’s why Viral Launch offers free coaching.  Talk to one of our trained Amazon seller coaches and create a custom launch strategy.  Don’t have time to talk with a coach?  Check out our How to Launch course on the Viral Launch YouTube channel.  You can have a coach walk you through the whole process at your convenience and with the option to play back all the information.

Cameron Yoder:

To summarize – and correct me if I’m wrong, Casey – but to summarize, if you have a longer history of sales with and for your product it will carry more ranking weight than sales for a product with a shorter history, right?  So longer history carries more ranking weight than shorter history when it comes to sales?

Casey Gauss:

Agreed.  At the same time, though, that’s not to say that, you know, if I’m giving away 100 units I would definitely put those 100, depending on the market, I would put those 100 units over 10 days or five days, depending on how competitive the market is.  But you know, if you’re giving away 10 units I would probably rather give away those 10 units over three days than 10 days because it’s not really going to – when Amazon is calculating your average per day sales, you know, one unit a day is not really going to be enough to move the lever.

Cameron Yoder:

Right.  You have to have – well you don’t have to, but it is more effective and efficient to have the combination of the right strategy for sales velocity combined with the presence of a sales history.

Casey Gauss:

Yeah, correct.  And you know, another example, or another almost anecdote is basically – so it’s definitely more difficult for us to rank products that have been on page 10, or you know, not selling very well for, you know, a couple years.  So products that were launched maybe in 2014, off to some initial success and now not doing so well, those products are definitely more difficult for us to rank.  And the reason being is they’ve actually built up a really poor sales history.  And so when Amazon is going and calculating the 180-day average, maybe they’re looking out to a year, maybe further.  It is definitely, you know, when Amazon goes and calculates, oh, you know, you’ve sold 1000 units over the last year, the average per day sales history is very, very poor.  

Even if your velocity is killer right now, Amazon is definitely looking at your sales history.  So maybe you’ve sold 1000 units in the last, you know, 10 days, right?  100 units a day.  That’s really awesome.  Of course, depending on your market.  But that’s really great.  But even still, Amazon is still looking at oh, how have you done over the last 30 days, 60 days, 90 days, year?  And so it just doesn’t compute, and what we see is those guys end up losing their keyword ranking much more quickly, simply because, you know, they don’t have the sales history to compete against those on page 1.

Cameron Yoder:

Right.  So launching – we talked a little bit about launching and what it takes to get to the top of page 1 for a pretty volatile or competitive market, right?  How even if you have a history of a lot of sales or a history of not too many sales, it takes a decent amount of units to get to page 1.  But talk about – talk about less volatile or less competitive markets when it comes to sales history.

Casey Gauss:

Yeah, so sales history is all relative to the market that you’re looking to enter, right?  So if you’re entering a really niche market where these guys are selling page 1, you know, top of page 1 on average.  They’re selling 300 units a month, let’s say, so that’s 10 units a day.  So you only need to build a sales history of 10 units a day.  So you don’t need to be nearly as aggressive as the guys that are selling 30,000 units a month.  It requires the same strategy, right?  Like the same metrics are involved.  The same math is involved on Amazon’s algorithm.  So you just have to put the right numbers in.  It may be a giveaway of seven units a day for 10 days at a promotional price to maintain that rank or to build a good enough sales history to maintain that rank.  Of course you need to sell well organically post-launch in order to continue –

Cameron Yoder:

Right, to maintain.

Casey Gauss:

– to build sales history so that you can continue to maintain that rank.

Cameron Yoder:

Like you said, it’s relative to the market at hand.

Casey Gauss:

Completely.

Cameron Yoder:

Completely.  So the big takeaway, what is our – what is our audience’s takeaway, Casey?

Casey Gauss:

Two things.  One, do not focus on BSR.  Forget it.  Only pay attention to ranking.  And then two, really focus on building a strong sales history.  Don’t go in and just give away product over five days just because you want to improve your velocity and you think it’s that velocity that is going to help you maintain rank and then drive organic sales from there.  Really you need to focus on building up your average per day sales history.  And so if you have older products, you know, there’s some great ways of relaunching those products within Amazon’s terms of service.  Please don’t violate Amazon’s terms of service.  We’re never advocates for that.

Cameron Yoder:

Right, right.

Casey Gauss:

But maybe you should find a way to couple it with some additional product that you throw into the packaging or something so that you can relaunch that ASIN, if you’re trying to revive an old ASIN, just because it has, you know, such a bad sales history.  The tough part is, you know, if you have a great review quantity relative to the market then you have to figure that out.  But anyways, please focus on building that sales history, not sales velocity.

Cameron Yoder:

I am an advocate for the mentality, in this case especially, that it is a marathon, and it’s not a sprint.  Gain that sales history.

Well hey, that’s all for this week.  Thank you so much for joining us on Follow the Data.  For more reliable information about what’s really happening on Amazon, subscribe to our podcast and check out the Viral Launch blog at Viral-Launch.com.

Casey Gauss:

And don’t forget to leave us a review on iTunes.  Please, please.

Cameron Yoder:

Please.

Casey Gauss:

If you like the podcast, of course.  If you didn’t, please let us know how we can improve it.  

Casey Gauss:

We like honest feedback, so please send us your honest feedback. If you want to be featured on the show leave us a voicemail and tell us your thoughts on today’s episode and/or any questions you have about Amazon Viral Launch or, you know, life in general.  We’ll take them all.

Cameron Yoder:

We’d love to hear your life advice, please.

Casey Gauss:

Our number is 317-721-6590.  Join us next week as we dispel the myth of diversification.

Cameron Yoder:

Ooh.

Casey Gauss:

Until then, remember the data is out there.

 

About the Amazon FBA Seller Podcast:

Viral Launch CEO, Casey Gauss, and Amazon Seller Coach Cameron Yoder bring data-driven insights to the Seller community in their weekly discussions. 

On the show you’ll get the latest Amazon selling strategies and best practices based on the company’s experience launching over 22,000 products and working with over 5,500 brands. Casey and Cam will bring you up to speed on the latest Amazon news, share stories of success and failure, explore the difficulties of entrepreneurship, and discuss the way Amazon is changing retail. 

At the center of the show is the Viral Launch commitment to offering reliable information to today’s entrepreneurs.

BONUS: Q4 Part II Inventory Planning & Promotions (Follow the Data Ep. 3)

Follow the Data Episode 3: Q4 Part II Inventory Planning & Promotions

With more people shopping on phones and tablets, your listing needs to be optimized for mobile. Then, once you’ve made your listing shopper friend, carefully planning your inventory and perfectly timing a product promotion are crucial if you want to ride the wave of holiday sales. Join Cameron and Casey as they dive into planning for Q4.

 

Listen in iTunes . See All Episodes

Listen on Stitcher / Listen on Google Play

 

Follow the Data Show Notes:

Podcast Transcript

Casey Gauss:
You need to have your ducks in a row for Q4 because this is the biggest shopping season of your career.

Cameron Yoder:
And we’re back with part two of our Q4 episode to talk about the role of enhanced brand content in optimizing your listing, how to make sure your products look great on mobile, how to predict your inventory needs and how to time a product launch to ride the holiday sales wave. Let’s get started.

Now let’s talk about enhanced brand content, EBC.

Casey Gauss:
Yeah, at the end of the day, you guys, anything that you can do to improve conversion rate, to improve – drive sales at the end of the day, you should be doing, right? And so enhanced brand content, these are things you should already be doing, but you know, our hope is that you’re really concerned about these Q4 sales and that you’re going to, I don’t know, get your house in order, whatever the saying is, in order to maximize sales for Q4. And the best way to do that is to have enhanced brand content because some of your competitors are not going to. And that’s a leg up. Or they are going to, and that’s a leg up they will have over you. So please have enhanced brand content.

Cameron Yoder:
If you aren’t brand registered yet, it’s too late right now for this holiday season, for Q4, but – unless you’re already in the process of going through the trademarks and everything. But this might be a good step for you to take if you don’t, if you aren’t brand registered and if you don’t have enhanced brand content. So basically you might be better off focusing on other things if you aren’t already brand registered this holiday season.

Casey Gauss:
True.

Cameron Yoder:
And this might be a good thing to focus on for the next year or to start the next year. Overall, basically what I like to think of is if you have your listing photos and everything else as optimized as possible this is kind of the next viable step or option to dive into.

Casey Gauss:
And honestly it doesn’t take that long to file for a trademark.

Cameron Yoder:
No.

Casey Gauss:
And just some other side benefits of brand registry, why you’d want to be in there, this is outside of Q4 unless you are in brand registry, is just the Early Reviewer Program, getting those initial five reviews, really I don’t think people value reviews enough, and this is a good way to grab some of those reviews.

Cameron Yoder:
Reviews, the reviews are like the currency of Amazon.

Casey Gauss:
Yeah, that’s how I feel. Anyways, you get your own Amazon stores. We’re still looking for the data on how important those are. Headline search ads, those are very, very powerful, at least right now, so get brand registry so you can have access to all these things. Also, enhanced brand content, we put out a blog post recently about this, but it’s also on mobile. And I think Amazon said last year 70% of shoppers used, made a purchase or ran a search on the mobile app. And so that means that more and more people are going to be seeing your enhanced brand content, and so put that out there.

Cameron Yoder:
Mobile is, in general, just another really good thing to focus on in Q4. I mean another stat – Casey, you touched on one stat – but the mobile app actually grew by about 56% last holiday season.

Casey Gauss:
Oh nice.

Cameron Yoder:
And so it’s going to grow again, I mean not 100%, I don’t know that 100%, but I’m predicting that it’s going to grow this holiday season. One other thing that I would also consider if you are, again, going through all this and enhancing your listing and photos and everything, is to go – if you don’t, or if you haven’t yet, go look up your product or products on a mobile device just to see how they look and how they feel because then if you haven’t yet you can take a look at that and see okay, if there’s this large of a percentage of people ordering on mobile I need to make sure that my stuff is optimized on mobile. And if you haven’t seen it yourself yet, then you probably should.

Casey Gauss:
Yeah, at the end of the day you need to understand how your customers are perceiving your product.

Cameron Yoder: Exactly.

Casey Gauss:
We have just a few additional things, honestly what I think is the most important or the biggest actionable takeaway coming up.

Rebecca Longenecker:
Did you ever wish you could go back in time and get into the Amazon market earlier? What if you had been one of the original sellers? Well, here’s your opportunity. Amazon is starting to ramp up in other countries. If you’re looking to get in early and launch your products in Canada, the UK, Germany, Italy, France, Spain or all of the above, we’ve got exciting news. Viral Launch is now offering international launches. Set up a promotion for Amazon Canada, UK Germany, Italy, France or Spain with the launch experts you know and trust. Stay tuned for additional countries like Japan and Mexico.

Casey Gauss:
First off, just know your turnaround times. You have very limited time to place a purchase order for – if your stuff needs to be in for Christmas. So definitely make sure that you are well aware of your turnaround time, which has got to be coming right up to the end of it. Make sure that you are aware of the trends with market intelligence, basically what we’re doing for a particular market. Let’s take candy canes as an example. This is a classic example for us. If you go search candy canes and then you run market intelligence and move over to the market trends tab, we will show you exactly when sales start to increase across the market for this particular product. So if you run market intelligence through candy canes you can see in 2015 and in 2016 when the sales started to increase, and it’s pretty awesome because you can see here’s when sales started to increase, here’s to what degree they increased, you know, what were the orders per day, how long did that increase sustain?

Cameron Yoder:
What were prices like?

Casey Gauss: What were prices like, how did prices change throughout that? And this is different than looking at Keepa or CamelCamelCamel that has all this historical data because we are showing you across the market, whereas let’s say one particular candy cane seller, if you’re just looking at their BSR history maybe they ran a promotion. Maybe they were running outside sales, and that’s why the spike happened in October instead of November when everybody else’s increased. It’s not very indicative of the market if you’re just looking at one ASIN. You need to look at the market as a whole. But this is a really, really cool feature of market intelligence when it comes to seasonal products. The same is true for Halloween. This will probably be out before Halloween. So if you run through market intelligence through candy canes, you can see in 2015 and in 2016 when the sales started to increase, and it’s pretty awesome because you can see here’s when sales started to increase, here’s to what degree they increased, you know, what were the orders per day, how long did that increase sustain?

Cameron Yoder:
What were prices like?

Casey Gauss:
What were prices like, how did prices change throughout that? And again, across the market versus seeing one guy who raised his price like an insane amount and his sales didn’t reflect that increase or didn’t help support, didn’t show that people were actually buying it at that price point. So anyways, what you need to do, go look. If sales increased on October 15th you need to have your inventory checked into FBA at least 10 days before that so that you can prepare.

Cameron Yoder:
I mean this is one of the biggest questions that sellers have around this time of the year is okay, what can I expect in terms of inventory? How much inventory am I going to need in preparation for Q4? And this is one of the best answers in predictive software that is going to let you know how much or around how much you need to order and have in place and also when you need to have it in place. Once you’ve got your holiday inventory figured out you need to start strategically positioning yourself to ride the wave of holiday sales.

Casey Gauss:
We saw people have insane amount of success when it came to Prime Day. Riding the wave is really, essentially as sales increase you need to make sure that you’re on top of that wave of new traffic or sales increase so that you can ride it. And here’s the example, right, so let’s say right now barely anybody is buying candy canes. So let’s just say those guys are doing five sales a day on average. People in top 10, selling five units a day on average. But during peak time these guys are selling 300 units a day, let’s just say. So to get ranking in the top 10 for candy canes, right now all I need to do is give away five units a day, and I’ll be in the top 10, and that’s really cheap. But if you time everything just right and you run a promotion so you are ranking in the top 10 right when that sales wave happens, right, then you will get to take part in that wave of sales increase. So when sales moved to 15 a day, well, I’m at the top of page 1, so I’m getting a bunch more sales. And then, you know, by December or whenever the peak is, I’m seeing an insane amount of sales because I was ranking at the start of it, and I just continued to maintain that rank because people continued to buy my products.

And so what we see other people try to do is let’s say with the candy canes again, by November 15th everyone is selling 50 units a day or 100 units a day. Let’s say 50. So in order for me to get ranking the top of page 1, well, now you have to run a promotion giving away 50 units a day in order to try to hit page 1. But the problem is these guys also have a great sales history, which we recently talked about. Basically the analogy is riding the wave, right? So if you run a promotion before things start, you get on top of that wave and you ride it up as sea level increases, or whatever. But if you don’t run that promotion now you are under this wave of 50 sales a day that you now have to paddle all the way up to, now catch your breath, now try to ride that wave up.

So what we saw with Prime Day is people that were – they ran promotions across their entire account, and they saw 400, this one particular person, saw $400,000 in that 24 hour period because with their 10 products or so they ran a promotion so that they were raking at the top of page 1 for each product right before those Prime Day sales kicked in. And so as Prime Day sales kicked in, they rode that wave, and they absolutely killed it. And so we really, really hope that you guys do that. Whatever your method of ranking is, whether it be Viral Launch, whether it be some other competitor, whatever your method is, make sure that you are ranking at the top of page 1 right when that wave of sales increase begins to happen because you definitely don’t want to be paddling from underneath, and you definitely don’t want to be fighting these competitors’ better sales history.

Cameron Yoder:
It’s just going to be, in the long run, kind of summarizing what Casey said, it is just going to be much easier to jump on when sales are lower but at the very beginning of when they start to pick up so that you’re visible, you’re on page 1, so again, you can ride that wave like a California surfer.

Casey Gauss:
And the research that you did to understand when those trends start to pick up is going to inform you of, okay, let’s say it’s October 15th that sales start to increase. Well, walk back seven days. Walk back five days. That’s the day your promotion needs to start so that at the end of that promotion you’re ranking page 1, and as sales start to increase you ride along with it.

Cameron Yoder:
Another good action step for this podcast is to encourage you guys to really just lay out the dates that you need to follow things through by because there are a lot of dates involved with Q4. Again, we went through the deadlines, but even more than that it’s days to make sure that you’ve run your promotions by, that you’re on page 1 by, that you’re ranking by, while taking into account the fact that you have to or should be following all these deadlines for like Black Friday or Christmas. So I would say just go lay out, whether it’s a physical calendar or a digital one, and make a strategy for Q4.

Casey Gauss:
And you have to do this for each product, right?

Cameron Yoder:
Yes.

Casey Gauss:
Because each product is going to have a different pickup date in terms of sales.

Cameron Yoder:
Right, right, right, right. There was a product whose big point of Q4 was actually after the Christmas season. So that person is going to have to plan their launches and their inventory a little differently than someone whose peak is right at that November-December point. So again, like Casey said, just go through each ASIN, each product, and create a plan individually.

Casey Gauss:
Yep, and you know, same is true, ride the wave for Black Friday, Cyber Monday. The last thing we want you to do is to come to us for, you know, these candy canes on October 15th and say hey, more people are starting to buy these candy canes. Can I run a promotion to help get ranking? Or, you know, the last thing I want to see is that happen in December because –

Cameron Yoder:
Oh, geez.

Casey Gauss:
– to ride that wave like you’re going to have to be spending thousands and thousands, if not five figures, to catch up.

Cameron Yoder:
That’s a lot of candy canes there.

Casey Gauss:
Yeah.

Cameron Yoder:
Well, that’s all for this episode. Thanks for joining us on Follow the Data, and good luck as you prep for Q4. For more reliable information about how to succeed during all four seasons, subscribe to the podcast and check out the Viral Launch blog at Viral-Launch.com.

Casey Gauss:
And don’t forget to leave a review on iTunes if you like the podcast. We really appreciate your feedback. We like to know how to be better, so we would love your honest feedback. And if you like what we’re doing, leaving a review helps other people find us as well.

Cameron Yoder:
Exactly. And if you’re wondering about how exactly Viral Launch helps Amazon sellers, make sure to check out one of our more recent blog posts, a Viral Launch review by marketplace director Lindsay Todd. She’s great. She shares three awesome stories about a few of our clients that utilize Viral Launch software to take their businesses to the next level. We’ve also got a new course up on our YouTube channel about how to set up a product launch. You can have a coach walk you through the whole process at your convenience and with the option to play back all of the information.

Casey Gauss:
Want to be featured on the show? Leave a voicemail and tell us your thoughts on today’s episode, or ask us any of your Amazon questions. Our number is 317-721-6590. Join us for Episode 3 where we dispel the diversification myth. Until then, remember, the data is out there.

 

About the Amazon FBA Seller Podcast:

Viral Launch CEO, Casey Gauss, and Amazon Seller Coach Cameron Yoder bring data-driven insights to the Seller community in their weekly discussions.

On the show you’ll get the latest Amazon selling strategies and best practices based on the company’s experience launching over 22,000 products and working with over 5,500 brands. Casey and Cam will bring you up to speed on the latest Amazon news, share stories of success and failure, explore the difficulties of entrepreneurship, and discuss the way Amazon is changing retail.

At the center of the show is the Viral Launch commitment to offering reliable information to today’s entrepreneurs.

BONUS: Q4 Part I Optimizing your Listing (Follow the Data Ep. 2)

Follow the Data Episode 2: BONUS Q4 Part I Optimizing Your Listing

The holiday season begins in October for Amazon sellers, but it’s not all fun and gifts. Being aware of fee changes, having crucial deadlines circled on your calendar, and optimizing your listing to move sales is just part of the diligent work it takes to beat out the competition and increase profits during the biggest shopping event of the year. Listen in as Casey and Cameron detail how to prepare for success in Amazon Q4.

Listen on iTunes . See All Episodes

Listen on Stitcher / Listen on Google Play

 

Follow the Data Show Notes:

  • Check out this Amazon press release for more cool and crazy stats about Q4 2016 like those featured at the opening of the show.
  • Important Dates
    • Oct. 1 – Reduced Fulfillment and Increased Storage fees
      • Fulfillment Fees will be reduced and will now be consistent with Fulfillment Fees in November and December. With the reduction in Fulfillment Fees, if you reduce the storage space you use in October, you have the opportunity to pay lower total FBA fees in October.
      • The monthly inventory storage fee for October will be increased for standard-size and oversize items to be consistent with the monthly inventory storage fees for November and December.
    • Mid-October – FBA Cutoff for new FBA Seller Accounts
      • This one is for those who have not sent a product into FBA through their seller account. On October 10, 2016, Amazon denied new FBA sellers in anticipation for full warehouses. This year, watch for the same cutoff in mid-October. As confirmed by an Amazon rep, this restriction is account-based, not ASINbased. So if you’re planning to start selling later this fall, send in a few products to FBA now to ensure your eligibility for the 2017 holiday season
    • Nov. 7 – FBA Inventory Deadline for Black Friday and Cyber Monday
      • This one is crucial. Make sure you plan to have your Black Friday and Cyber Monday inventory arrive at Amazon before early November (or even well before then, just to be safe).
    • Nov. 24 – Black Friday
      • The day after Thanksgiving, regarded as the first day of the traditional shopping season will set the holiday shopping in motion. From now until Christmas, FBA sellers must be on top of their game to capitalize on the immense sales potential.
    • Nov. 27 – Cyber Monday
      • comScore reported Amazon ranked #1 among online retailers in Cyber Monday traffic for 2016, and this year will likely follow suit. Gear up for massive sales on November 27th.
    • Dec. 1 – FBA Inventory Deadline for Sending in Inventory to be Delivered by Christmas
      • The peak worldwide shipping day during the 2016 holiday season was December 19th. Just because Black Friday and Cyber Monday are over doesn’t mean you should pump the breaks. Make sure your Christmas inventory is in Amazon’s warehouses by the December 1, if not earlier.
  • Optimizing your Listing
  • For more helpful tips about preparing for Q4, download the Viral Launch Q4 Guide.
  • Check out our How to Launch YouTube Course
  • A Viral Launch Review: 3 Amazon Product Launch Case Studies
  • Want to be on the show? Leave us a voicemail at (317) 721-6590

 

Podcast Transcript

Casey Gauss:
In just three months during 2016 Amazon generated almost a third of its yearly revenue, and with growth projections pointing skyward, we’re expecting an even bigger holiday season for Amazon this year.

Cameron Yoder:
Q4 is almost here, and if you’re not already preparing, it’s time to start. Competition is fierce around this time of year, and only those who meet the season head-on will truly benefit from the extraordinary amount of traffic Amazon is likely to see. I’m Cameron Yoder.

Casey Gauss:
And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we’ll leverage the data we’ve accumulated at Viral Launch from over 20,000 product launches and our experience working with 5500 brands to help you understand the big picture when it comes to Amazon and, most importantly, the best practices for success as an Amazon seller.

Cameron Yoder:
We’re taking a break right now from our four-part series on dispelling myths to help you start preparing for the most important sales quarter of the year, yes, Q4. In this episode we’ll run through all of the must-know dates and all the vital prep that will set you up for success for this holiday season.

Casey Gauss:
By the time the episode is over hopefully you’ll have your work cut out for you and a proven prep strategy that will help you take advantage of the crazy Amazon Q4 sales coming your way.

Cameron Yoder:
Q4 2016 on Amazon was an event like the US economy has never seen. In the course of three months Amazon delivered enough men’s jeans – men’s jeans – to fill an Olympic -sized swimming pool. That’s crazy. Customers purchased enough 4K TVs to reach the peak of Mount Everest more than nine times, and 2.5 million watches were purchased. That is a watch sale every 1.5 seconds.

Casey Gauss:
I heard they had to actually go to an Olympic pool to measure the jeans there.

Cameron Yoder:
Yeah, I think you’re right actually.

Casey Gauss:
It’s pretty interesting.

Cameron Yoder:
You know, out of all those TVs I still don’t have a 4K TV.

Casey Gauss:
Missing out man.

Cameron Yoder:
I know.

Casey Gauss:
Viral Launch needs to pay you more.

Cameron Yoder:
Ah, geez.

Casey Gauss:
So Q4 was huge in 2016, and it’s going to be even bigger this year. If you want to claim your share of Q4 sales you need to make sure your business is set up to succeed. Let’s get started.

Cameron Yoder:
Yep. So we’re talking about important dates right now. I would encourage you, if you’re in a spot to be able to write them down or type them out, then follow through with us. But if not, then you can just go back and listen to the podcast and get those dates.

Casey Gauss:
We’ll also have some show notes.

Cameron Yoder:
Yeah, oh yeah, right. Well, I guess that helps, too. So the first date we’re going to talk about is October 1st. Now this is coming up. It’s soon. October 1st is the date where fulfillment fees will reduce and inventory and storage fees will increase.

Casey Gauss:
Amazon does not want to be a warehouse, but they do want to ship your goods when sales are happening, and they want to make sure that they are the warehouse to do that. So definitely make sure that you mark this down. Make sure that you have inventory moving, and ideally, if possible, don’t use Amazon as a storage facility.

Cameron Yoder:
This is – we’ll go through some of this later, but really having your inventory planned and numbers planned kind of goes into account here. Now these numbers, the reductions in fulfillment fees and increase in inventory and storage fees, will go into effect in October, but they’ll last through November and December, so again, throughout that holiday season.

Casey Gauss:
In mid-October last year in 2016 we saw a cut off for new FBA seller accounts.

Cameron Yoder:
Now this was actually kind of crazy for new sellers because Amazon did not announce it beforehand.

Casey Gauss:
Yeah, so if you had $500,000 of inventory that you purchased because you thought you were going to get rich in Amazon Q4 but you hadn’t created your seller account and sent inventory in, like you were just completely screwed. So Cam has got the trick for you.

Cameron Yoder:
I’ve got the trick. Here’s a trick that should work. Again, we’re not claiming that it’s going to work indefinitely for every single person. However, however, we have seen this work for others. So if you are a new FBA seller and you have not sent in inventory yet, here is something you can do to ensure, or hopefully ensure, that you will be able to send in inventory if you plan on getting your inventory in after mid-October, which you should get it in as soon as you can. But if you haven’t created an order yet you should go to the store. You should buy something, and you should send it in to Amazon FBA. Basically you should do what’s called retail arbitrage. So you’re going to go to the store, you’re going to buy something, and you’re going to flip it basically and sell it on Amazon. You’re going create a separate shipping order. If you need instructions on how to do that just Google Amazon retail arbitrage or how to ship retail arbitrage stuff into Amazon, and it will take you through it. But basically by doing this you are creating a shipping order for Amazon which will basically get that one, that one or that first shipping order out of the way, and Amazon will then allow you to create another shipping order once your inventory gets in or is on its way.

Casey Gauss:
Next date is November 7th. This is the inventory deadline for Black Friday and Cyber Monday, and this does not mean send your last shipment on November 6th at midnight. It takes time to get your stuff checked into FBA, and during the holiday season Amazon is definitely ramping up staff to make sure that they can process all the inventory and all the orders. But sometimes there’s major delays, and you know we’ve definitely had friends that their inventory gets stuck in customs, or it gets stuck in FBA going through the check-in process. So the earlier you can get your inventory in in preparation for Black Friday/Cyber Monday, the better, and the more likely it is that you are able to guarantee that you’ll have the inventory you want to sell.

Cameron Yoder:
So if you want to make some crazy good sales for Black Friday and Cyber Monday, have your inventory in before November 7th. Again, in Amazon. Now as for Black Friday and Cyber Monday, Black Friday is on the 24th of November, and Cyber Monday is on the 27th. So again, November 7th, 24th, 27th. Cyber Monday was – this is just a little fact — but Amazon reportedly ranked number one among online retailers for Cyber Monday traffic in 2016. We’re assuming it’s the same thing for 2017.

Casey Gauss:
Yep, and then final date just to be aware of, December 1st is the deadline to send inventory in to be delivered by Christmas. Again, please expect delays. Do not expect things to go quickly. Make sure that you have your inventory in as quick as possible. Another interesting little fact is the peak worldwide shipping day in 2016 was December 19th.

Cameron Yoder:
Geez. I want to reiterate the deadlines. Again, mid-October is at — unconfirmed, again unconfirmed cut off for new FBA sellers. November 7th is the deadline to have your stuff in for Black Friday and Cyber Monday. December 1st is that Christmas inventory deadline.

Casey Gauss:
So next we want to talk about optimizing your listings in preparation for Q4. You know, really at the end of the day this should go without saying, but we kind of want to dive in a little bit. You need to have your ducks in a row for Q4 because this is the biggest shopping season – not single-day; that’s Prime Day assumedly – this is the biggest shopping season of your career. Like it’s not worth cutting the corners or, you know, being lazy and just expecting the money to roll in. Will some money role in? For sure. But if you could be making tens of thousands of dollars more by taking an extra day or two extra days, it’s totally worth it.

Cameron Yoder:
And all this stuff, I mean this advice for optimizing the quality of your product, should be taken into account every single day for the rest of the year.

Casey Gauss:
For sure.

Cameron Yoder:
But it’s going to matter probably the most around this time of the year.

Casey Gauss:
Yeah, everything is just amplified. Cam, let’s talk about photography.

Cameron Yoder:
Yeah, let’s talk about it. Let’s talk about photos, yo. With photography, honestly, the most important thing is to have high-quality, a high-quality professional hero image that stands out to accentuate all product features. It tells a story, or your photos in general tell a story, and establish and build an emotional connection with whoever is seeing it. What do people see when they search for products? Your photo. They see your photos. They see your listing. So having something that’s really well done in that realm, in the realm of photography, is going to be important. I think, from what I’ve seen after talking with a lot of sellers, people get lost in their own photography. And personally I think they need to – I think sellers need to get the opinion of other people that they trust to tell them what they think about their photos. It could be going to like five people and asking them, hey, what do you think of these photos? Are they good, or are they not?

Casey Gauss:
And don’t even tell them that they’re your photos. And you become emotionally attached to your product and whatever materials are surrounding it. And so you are obviously biased that your photos are good, or your photos are better than the competition, and you would just not believe the photos that we have seen where sellers, you know, asking us to optimize their listing or help them increase sales. And you know we just see the images, and it’s absolutely insane that these guys think they’re great. You know it’s hard for us. We want to be nice –

Cameron Yoder:
Of course, of course.

Casey Gauss:
– and say hey, you know, we think you should maybe consider getting or improving your images. And then, you know, they’re like oh no, I’ve had professionals do that.

Cameron Yoder:
They’re good. They’re good to go.

Casey Gauss:
And it’s like it’s just absolutely laughable. And so you know, you’re probably not a creative. You’re probably not the best judge to say whether or not your photos are as optimized as possible. Definitely using split testing to get some data around, you know, what is the best image, what is the best main image, what is the best photo set, what is the best order of my photo set? These are all things that we’re constantly split testing because we want to understand what makes the best photo sets possible. How can we improve sales as best as possible? Definitely, like Cam was saying, having a high-quality main image is important. If you’re having someone shoot photos, have them shoot three or four different potential hero images so that you can identify this one is driving the most clicks; this one is driving the most sessions. Typically it’s not the main image. The main image is just driving clicks. Definitely invest in some high-quality lifestyle shots so customers can really build an emotional connection to your product so you can really tell that story. See much better conversion rates when we have high-quality lifestyle photos. You just cannot supplement those with some Photoshopped who knows what.

Cameron Yoder:
Let’s move on. Let’s move on to listing. Casey, what you got?

Casey Gauss:
You cannot have temporary language, or you’re not supposed to have temporary language in your listings. I have a friend; they’re doing like 150 K a day, and they had their entire account suspended because they had the term “holiday sale” in the title of one of their listings, just one of their listings. Their entire 150 K-a-day operation was suspended for a little over a week, which is pretty insane. So please do not use holiday type language. Some of your competitors will get away with it. Some of your competitors will not. So if that’s a gamble you want to play, I mean –

Cameron Yoder:
It’s not worth it, in my opinion.

Casey Gauss:
Yeah, I mean yeah, that’s completely your call. Definitely make sure that, again, everything is as optimized as possible. Make sure that your language is tailored to the holiday shopper, but again, don’t use that temporary language like sale, holiday, unless holiday is very descriptive of what the product is. Backend keywords, really backend search terms just don’t matter very much. I mean, at the end of the day you only need to include a word one time in your listing. Keywords in your title are much more heavily ranked than anywhere else in the listing. So if you should be worrying about anything, it’s your title. You should be keyword stuffing as much as possible, as much as possible while still giving like a cohesive title so you can maximize the number of keywords and the total views possible for your listing.

Cameron Yoder:
There is a confirmed limit on – basically byte limits for the backend keywords. In the United States it’s 250, but again, that’s 250 without – or characters without spaces for indexing from the backend, 500 in Japan, 200 in India.

Casey Gauss:
Yeah, and, you know, at the end of the day, again, you should not be repeating those backend search terms. So everybody’s like all up in the air about backend search terms, and in reality that’s only 250 characters. There’s so many – I don’t remember of the top of my head anymore – but you have, you know, 100 characters in the title, 100 characters in the five bullet points on your listing and then 2000 characters in your description. So why are you so, you know, worked up over this portion of your listing that’s not even 10% of your listing’s content? Anyways, basically use backend search terms. Don’t repeat any words that you’ve repeated or already put in the front end of the listing. Just don’t worry about them.

Cameron Yoder:
Hey, thank you so much for joining us for part one of our Q4 episode. Feel free to join Casey and I for part two where we’ll talk about the role of enhanced brand content in optimizing your listing, as well as inventory planning and the best way to perfectly time a product promotion to make it big this Q4. I promise you won’t want to miss it.

 

About the Amazon FBA Seller Podcast:

Viral Launch CEO, Casey Gauss, and Amazon Seller Coach Cameron Yoder bring data-driven insights to the Seller community in their weekly discussions.

On the show you’ll get the latest Amazon selling strategies and best practices based on the company’s experience launching over 22,000 products and working with over 5,500 brands. Casey and Cam will bring you up to speed on the latest Amazon news, share stories of success and failure, explore the difficulties of entrepreneurship, and discuss the way Amazon is changing retail.

At the center of the show is the Viral Launch commitment to offering reliable information to today’s entrepreneurs.

 

Dispelling Myths: 90% Off Promotions (Follow the Data Ep. 1)

Follow the Data Episode 1: Dispelling Myths: 90% Off Promotions

Do launches work? Amazon gives higher keyword ranking to products sold at full price, leaving deeply discounted promotional products in the dust… Or so the myth goes. In the inaugural episode of the “Dispelling Myths” series, Viral Launch CEO Casey Gauss dives into the data to validate, or dispel, this widespread concern among Amazon sellers.

Listen on iTunes . See All Episodes

Listen on Stitcher / Listen on Google Play

 

Follow the Data Show Notes:

 

Podcast Transcript

Casey Gauss:
Everyone’s looking for like that next hack. It makes logical sense that 90% off promotions don’t drive as much keyword ranking. You know the problem is that the data just doesn’t show that.

Cameron Yoder:
The buzz about town is that running promotions to get ranking may not work the way it used to. Today we’re diving into the data to see what’s really going on. I’m Cameron Yoder.

Casey Gauss:
And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. So in this show we leverage the data we’ve accumulated at Viral Launch from over 20,000 product launches and our experience working with over 5500 brands on Amazon to help you understand the big picture when it comes to Amazon and, most importantly, the best practices for success as an Amazon seller.

Cameron Yoder:
These first four inaugural episodes of Follow the Data are all part of our Dispelling Myths series in which we explore topics that have garnered a lot of conversation among the Amazon seller community recently, but that until now have not been proven or disproven using factual evidence.

Casey Gauss:
We’ll talk about where these Amazon myths come from, why they seem to logically make sense, and what the data is saying, and what is actually happening and how you can apply that moving forward.

Cameron Yoder:
All right, Casey, so this is Episode 1 of Dispelling Myths. We’re talking about promotions here. Can you tell us a little bit about this myth? What exactly is this myth?

Casey Gauss:
Yeah, so essentially this myth is basically stating that Amazon gives higher ranking power or effect to sales at full price versus, you know, the promotions at 90% off. The theory is that if you are running a promotion, if you’re giving a product away at a discount or selling it at a discount, especially 90% off, you’re not going to get nearly as much ranking power as a full-price sale.

Cameron Yoder:
So someone selling on Amazon, let’s say they give away items at 50% off. People are saying that those are not as effective or efficient as – or that the 90% off promotions are not as effective or efficient as the 50% off coupons. Is that right?

Casey Gauss:
Yep, correct.

Cameron Yoder:
Okay, okay. So where – or when, when did this idea start? Like where did it come from?

Casey Gauss:
Yeah, you know, we’ve seen this idea ever since 2014 when we got started. To be honest, I think that it’s definitely had a resurgence. We’ve seen people say you know back in the day oh Amazon will only let a review stick, or you can only get review power if it is at zero dollars, or if it’s over five dollars. You know there’s always these kind of arbitrary metrics that people throw out, and so now there’s just this resurgence. You know I’ve probably seen it a lot more over the last three months maybe, maybe around May, maybe around June, somewhere around there.

Cameron Yoder:
So why do you think it’s researching? Like why is this coming back?

Casey Gauss:
The – so yeah, so I mean with any myth I think a lot of it boils down or finds its root in everyone’s looking for like that next hack. It makes logical sense that 90% off promotions don’t drive as much keyword ranking. You know the problem is that the data just doesn’t show that.

Cameron Yoder:
Another point I guess that’s important, right, is that I mean it would be really, really great if it wasn’t true, right, that oh, that means if 90% off promotions aren’t as effective or efficient, then we don’t have to give products away at 90% off. Like that is a very appealing notion, right? So then that means that sellers don’t have to give products away for extreme discounts.

Casey Gauss:
Yeah, okay, yeah, very true. I would definitely like to point that out as – so it’s called consistency bias, right?

Cameron Yoder:
Yeah, right.

Casey Gauss:
And so you don’t want to spend the money associated with selling product at 90% off, and so you would like to tell yourself that it is great to – or that Amazon prefers full-price sales, and that’s why you want to head that way. Oh yeah, so another instance in which this kind of comes up is, you know, people run one promotion and they don’t get the keyword ranking they expected to see, right? So I’m selling a fish oil. I think I need to give away 50 units a day, let’s just say. And so I do that, and I expected to get to page 1, but I only got to bottom of page 2, right? And so then instantly everybody would jump to oh my gosh, promotions don’t work nearly as well. It must be full-price sales that are the answer. And you know the problem with that is here’s where, you know, the Viral Launch data or perspective really comes into play is that we’re running hundreds and hundreds and hundreds of promotions every day. So we have tons of data where you know, we’re tracking keyword ranking –

Cameron Yoder:
Right.

Casey Gauss:
– for keywords, the targeted keyword, as well as keywords that we find in the title, in the bullet points, in the rest of the listings. So we really, really understand how sales interact with the content of a listing, or tracking the price point of sale, or tracking are coupons present when we have MWS access. And so yeah, we’re able to really get this really broad perspective of the market versus you run one promotion, maybe your keyword, main keyword, wasn’t in the title. Maybe it wasn’t in your listing at all. Maybe, you know, you weren’t even indexed for it, or you know there’s a number of different factors that – and sometimes you know there’s things like cursed products where we just cannot get those things to rank in –

Cameron Yoder:
Cursed products.

Casey Gauss:
Yeah, that’s what we call it. So yeah, there’s so many different variables coming into play that running one test and then not getting the results that you had expected or intended is not enough of a sample size to really draw a strong correlation or a strong conclusion.

Cameron Yoder:
Right. And we, in terms of data – like you were talking about data – we really have that sample size. Again, like we run – we run promotions every single day, and they’re all built off of – or not every single one, but almost all of them are built off of 90% off promotions.

Casey Gauss:
Yeah.

Cameron Yoder:
If that didn’t work and it wasn’t effective, it wouldn’t work for us.

Casey Gauss:
Right.

Cameron Yoder:
And we see it every single day.

Casey Gauss:
Yeah, so I mean getting into the data of it, simply we’re running hundreds and hundreds of launches, and the amount— our ability to drive keyword ranking is just insane. And so at the end of the day Amazon is paying attention to did a sale happen? They’re not paying attention to the number of units that occurred or the price at which it is actually purchased. I think Amazon cares or is paying more attention to the price that the product is listed at.

Cameron Yoder: Let’s transition to a break. We’ll be back right after this message.

Rebecca Longenecker:
Hey, I’m Rebecca Longenecker, the producer for Follow the Data, and I wanted to let you know about a really cool resource the Viral Launch team just published. With this holiday season promising to be the biggest yet for Amazon, we’re offering an e-book that walks you through every aspect of Q4 preparation, from inventory planning, to optimizing your listing for mobile, to making sure your product is showing up in search. We’ve got you covered. There are also fun facts, helpful notes and handy little checklists you can use to evaluate how prepared you are. Don’t miss out on this year’s holiday sales. Go to viral-launch.com/Q4 to download the e-book now. That’s viral-launch.com/Q4. Thanks!

Cameron Yoder:
And we’re back again talking about the myth of giveaways and promotions. So Casey, let’s talk a little bit more about the data that’s backing this dispelling up. Can you touch on everything just a little bit more?

Casey Gauss:
Yeah, you know I think the really simple analogy or the simple logic here to kind of give everyone an example is as simple as this. So let’s take fish oil as an example, and someone wants to run a promotion to get ranking for the keyword, “fish oil.” Well, what we do is we go and we look, okay, here’s page 1 for fish oil. You know these guys are selling, let’s say it’s 50 units a day average page 1 or bottom half of page 1. And we want to get ranking there. So what we will do is we will give away 50 units per day targeting this keyword, “fish oil,” and after three days, five days, maybe seven days we’ll be ranking bottom of page 1 for fish oil, and we did – we ran 90% off promotion. So 90% of the sale price, these guys are selling 50 units a day at the organic price, and we sold at 90% off, and we’re still able to drive the same amount of keyword ranking. And so again, if Amazon did not – or reduced the amount of keyword ranking power as some kind of function of the purchase price we would not be ranking alongside these people that are selling just as many units except at the organic price. So that alone kind of just busts that myth, completely dispels that.

You know, another area this myth came from is there are these, you know, quote unquote experts or service providers in the space that are saying oh, you have to do these full-price deals with us, and the reason they’re doing that and they’re promising these crazy affects, right? So if you come and use our service we will guarantee you hit page 1 or number one most of the time, and we guarantee you will stay there for 30 days. The reason our method is so effective is because we’re using these gift cards to run full-price sales, and in reality what people didn’t realize was this person was running a bot or this artificial ranking method to your listing, and that’s what was getting you the results. That’s what was helping to maintain those results. It wasn’t the fact that you used these gift cards. And so that’s really frustrating to me because one, you know this person is operating on your business without your consent in a black hat manner, and two, they’re just, you know, completely lying about what is driving the results, which then goes and leads people down these dark paths. You know, it is against terms of service to compensate someone or reimburse someone for buying your product. It is absolutely stated explicitly in the terms of service that you cannot do this. It’s black hat. You know, will you get caught for it? I personally don’t know anybody that has. But you know, I think it’s one little slip up and now you’re in trouble for, you know, manipulating Amazon’s system or compensating buyers for purchasing your product.

Cameron Yoder:
Right. Let’s touch a little bit on just like the mentality of why, like why 90%? So why not? Why not? Why can’t – people are asking, why can’t I just launch my product at 50% off? It’s still a heavy discount, right, so why is 90% necessary? Touch on that.

Casey Gauss:
Yeah, so the discounted price or percentage is not a function of effectiveness.

Cameron Yoder:
Right.

Casey Gauss:
It is really, you know, we’re running generally around 450 or so launches a day right now, and so yes, we have a buyer list of 350,000 in the US, but you know these guys have – some of these people have been on our list for, you know, years and years and years.

Cameron Yoder:
A long time.

Casey Gauss:
And so if we’re selling an iPhone 7 case or a fish oil, like this demographic that we have only has so much discretionary income, and if you’re selling your product at 50% off, let’s say $10, versus the usual $1, $2, whatever, like that’s $8 less discretionary income they have to go buy our other products. And so in order to make sure the demand is high enough in the group for every launch that we’re running, we want to keep prices as low as possible so they have the money to buy more stuff.

Cameron Yoder:
Right. The 90% off is very much – it’s a means of control. Like you need to move – you need to move, if you’re launching, again, for fish oil, you’re going to have to move an insane amount of units to get to the top. The 90% off really gives control and gives you the ability to launch to page 1 for that. So the 90% off is a means of moving the launch forward and making it effective.

Casey Gauss:
And you know, to be honest, from like a competitive standpoint, you know if I were a larger seller I would actually kind of prefer this because the smaller sellers don’t have the budget –

Cameron Yoder:
Right, right.

Casey Gauss:
– to be really aggressive in these high-volume markets at these low prices. So they have to, you know, work their way up in a much slower process. And as a larger seller, yes, it is more expensive, but you’re essentially pricing or paying your competitors out of the market, which, you know, for large sellers that works. For smaller sellers, you know, this is why we definitely suggest getting into smaller niches where you don’t have to give away 100 units a day for seven days just to get on page 1, let alone maintain that ranking or whatever.

Cameron Yoder:
Oh, but what about fidget spinners?

Casey Gauss:
Yeah. We don’t want to talk about those.

Cameron Yoder:
No, no, no. So that’s actually a good transition into the takeaway. Let’s talk about what is the main takeaway? From my perspective it’s all about the risk, right, the reward of the risk. You have to take a huge risk. You are taking an investment, kind of an investment with giving away this many units. But giving away this many units at a 90% off discount is going to give you the control and get you on to page 1. And from there, then you will be able to make that increase in sales.

Casey Gauss:
Yeah, oh, completely. I would say, especially like – or specifically to this particular myth I think the takeaways are one, really be careful of who you’re trusting and paying attention to. Two, definitely make sure that you are getting a really solid sample size when you are making conclusions. Again, running one promotion that doesn’t get the ranking effects that you expected it to, you know, maybe you underestimated the number of units needed to give because the guys on page 1 are selling more units through that keyword than you had anticipated. Who knows? But anyways, yeah, please pay attention to your sample size when drawing conclusions because the last thing you want is to draw some conclusion and then spend the next three months and $20,000 trying to build a business around this, you know, this wrongly-founded conclusion. Yeah, and then three, really is at the end of the day, like you have to spend money to make money, like Cam is saying.

Cameron Yoder:
Right, right.

Casey Gauss:
And you know, unfortunately that’s the case right now. And yeah, you know, we’re definitely biased in saying that, but the problem is in that bias like we’ve just seen so many people have success. We just posted three Viral Launch case studies where this guy came, and he was doing $400K a month, and he came in, ran promotions across his product line, and after 30 days he’s doing $650K a month organically just because he improved the keyword rank position of his product. So yeah, he spent a bunch of money. I thought it was $250,000 to get that ranking, but now, you know, his sales are just killing it compared to where he was at. So –

Cameron Yoder:
Yeah.

Casey Gauss:
Yeah.

Cameron Yoder:
Take a zoomed out perspective. Ask why with everything that you’re doing. Make sure you’re getting all the data. Make sure you’re getting all the facts.

Casey Gauss:
Awesome. All right. We’ll see you guys later.

Cameron Yoder:
Hey, that is all for this week. Thank you so much for joining us here on Follow the Data. For more reliable information about what’s really happening on Amazon subscribe to the podcast and check out the Viral Launch blog at Viral-Launch.com.

Casey Gauss:
And don’t forget to leave a review on iTunes if you liked or enjoyed the podcast. We really appreciate your feedback as we work to build this podcast for you. Want to be featured on the show? Leave us a voicemail and tell us your thoughts on today’s episode, or ask us any of your Amazon questions. Our number is 317-721-6590. It will be linked in the show notes. Join us next week when we dispel the myth of Amazon sales velocity. Until then, remember, the data is out there.

 

About the Amazon FBA Seller Podcast:

Viral Launch CEO, Casey Gauss, and Amazon Seller Coach Cameron Yoder bring data-driven insights to the Seller community in their weekly discussions.

On the show you’ll get the latest Amazon selling strategies and best practices based on the company’s experience launching over 22,000 products and working with over 5,500 brands. Casey and Cam will bring you up to speed on the latest Amazon news, share stories of success and failure, explore the difficulties of entrepreneurship, and discuss the way Amazon is changing retail.

At the center of the show is the Viral Launch commitment to offering reliable information to today’s entrepreneurs.