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.

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