From September of this year forward, we have seen an unprecedented number of Amazon policy changes. Some changes have had major repercussions such as the TOS update posted on October 3rd of this year, and some updates have had minor impact such as the requirement of a customer account to have spent $50 in order to be eligible to leave a review. Posted the weekend of the 18th, we have yet another update, which from our perspective, should be chalked up as a minor change.
What Is The Policy Change
Over the weekend, Amazon updated their customer’s Community Guidelines, specifically under the section “Additional Guidelines for Customer Reviews”.
The new statement reads:
“Customers can submit 5 non-Amazon Verified Purchase reviews each week, starting on Sundays.”
Just below that bullet is a statement that reads:
“When we find unusually high numbers of reviews for a product posted in a short period of time, we may restrict reviews of these Amazon Verified Purchase reviews.”
I am not sure if the second statement is new or how long it has been there, but I find it a bit peculiar which I explain down below.
What It Means For Your And Your Business Moving Forward
A month and a half later and there still seems to be plenty of debate as to whether or not it is okay for reviews to be solicited/left on purchases made at a discount. In a blog post published a week or so after the TOS update of October 3rd banning the practice of giving products away at a discount, we stated that Amazon’s legal department had said specifically that reviews received from promotional sales were within Amazon’s Terms of Service. Naturally, there were still many skeptics, which I completely understand. However, with this update I imagine the air will be cleared.
In my opinion the most significant aspect of this change is simply that it serves as public proof that Amazon is accepting of unverified reviews. It seems as though there is no further room for debate as to whether or not soliciting honest feedback from discounted purchasers is within TOS. While we have known this for a few reasons, there were a lot of rumors floating about in various groups that receiving un-verified purchase reviews could result in a suspension from Amazon, or worse. If you have read some of my other posts, you know of my disdain for misleading rumors. I’m glad Amazon has disproven yet another.
How will this limit the number of reviews you are able to obtain from running promotions? I’m not quite sure the answer to this and I am even a bit confused.
There are two known limitations given by Amazon (from the customer’s perspective) when it comes to the quantity of reviews a seller is able to receive. The first limitation states that each customer is able to leave just five non-Amazon Verified Purchase reviews each week. While we are not allowed to track review rates from the promotions being run through Viral Launch, we know simply from what our seller’s report that the review rates are low. There is little expectation that this will have any measurable negative impact on the value of promotions as the previous benefit from receiving reviews was marginal.
The next bullet point also talks about limiting reviews, but it is odd because it is referring specifically to limiting Verified Purchase reviews not non-Amazon Verified Purchase reviews. I am pretty well connected and well aware of a lot of things going on in the space. I am not, however, currently aware of any common methods of quickly driving inauthentic Amazon Verified Purchase reviews (not that I want to partake, it is my job to know however). Obviously I am not aware of everything going on, but I am curious if this will have an impact on sellers that are great at running external traffic to drive high volumes of sales and that also have a great feedback funnel (just wait until you see what we’re launching to help you with both of these aspects 😉 ). It will be interesting to see what Amazon means specifically with the phrases “unusually high” and “in a short period of time”. I would hate for sellers to be limited in their ability to generate authenticverified purchase reviews knowing just how valuable each and every review is in this day and age.
All in all, this new Amazon policy update is a great thing in my opinion! There is a lot of blackhat and underhanded activity going on in the marketplace that most sellers are not aware of. The more Amazon reigns in those activities, the greater your chances will be at succeeding so long as you focus on executing all aspects of your private label business well. This is a blow to dishonest sellers accumulating reviews from dishonest practices. I think Amazon deserves a “thanks” here. 🙂
As always, we’re here to help you succeed in everything you do. Let us know how/if we can be of any help in your journey to achieving success.
Let me first begin by saying just about every product available to sell on Amazon as a private label product is a GREAT product to source, so long as it fits into your business’s strategy, you have the resources, and it makes sense for you as an entrepreneur. So the difficult thing is not finding a product to source. Go to Amazon.com’s home page, and you’ll see plenty of sourceable widgets. The difficulty lies in finding a product to source that fits You and Your business.
In this article, it’s our goal to help you identify what makes a product great for you, so you can build the foundation for the level of success you are looking for!
Identifying What Private Label Success Looks Like To You
While we are largely going to try to help you identify how to choose products that fit your ideal success model, we are also going to be challenging your definition of success. We’ve seen many many sellers succeed, and unfortunately our fair share of sellers fail despite our efforts. With the experience and data we have, we’d like to help you avoid the pitfalls we’ve seen others make.
So what does success look like to you in the private label world? Are you looking to hit a couple of home runs with some high volume products that profit you $10,000+ per month each? Are you looking to source a variety of low volume products that when added up bring in a hefty profit each month?
This is a decision you will have to make for yourself. If you expect to profit $5,000/month on a single product, but get into a product market where the average sales price is $10 and the average sales volume among the top sellers is around 500 units per month, you will be severely disappointed. If you are looking to source 5 products that add up to a monthly profit of $5,000/month, then this very well may be a good choice. See how expectations and how you define success matters?
Obviously we would all like 100 products that profit us $20,000 per month, but so does everyone else, which means you are going to be competing with a ton of other sellers. So in order to appropriately define your definition of success, you also need to understand how plausible your ambitions are given your current resources both financially and time-wise. Do you have a big team? Do you have thousands, tens of thousands, hundreds of thousands, a million+ to invest in your Amazon business?
Questions To Ask Yourself In Determining What A Successful Product Should Look Like
How Much Money Do I Want To Invest?
Do you have thousands, tens of thousands, hundreds of thousands, a million+ to invest in your Amazon business? The amount of money you have to invest will determine how much inventory you can afford. This may influence the products you select based on their per unit cost. This also has an impact on how large of team you can build initially (if necessary). The quantity of inventory you are able to purchase also has an effect on the amount of promotional units you will be able to give, having major implications on your ranking strategy.
How Large Is My Team? How Large Of A Team Do I Want To Build If Necessary?
Some sellers prefer to not grow any larger than themselves and a couple of VAs they hire hourly. Other sellers are willing and ready to build a massive infrastructure of warehouses and employees. Obviously this is not a question if you are just getting into the business, but for some later stage sellers this may be a barrier to growth if growing a large team is outside of your comfort zone.
What Kind Of Profit Margin Am I Looking For Per Product And Collectively?
Are you wanting to go deep on a few high volume products? Are you looking to go wide meaning going after a larger variety of low to mid volume products? There are pros and cons to each, and we’ll outline those down below!
In total are you just wanting to add a few thousand dollars to your bank account each month or are you looking to build a mammoth $1,000,000/month Amazon business?
How Many Products Am I Looking To Sell In the Next 3-6 Months?
For sellers just getting started, again, this is not a question you can answer accurately right now. It is also highly dependent on your capital. Some sellers are okay launching just a couple of products and reaping the benefits each month. They don’t want the added stress and pressure of continuously launching product after product. Keep in mind the amount of profit you are looking to make total. Going after a couple of products that may add $1,000 of net profit will not get you to your total goal of $5,000 if you are only wanting to sell two products in the next 3-6 months.
What Is My End Goal With This Business?
Is this going to be a lifestyle business for you or are you looking to maximize sales to shoot for an acquisition?
This may or may not have an effect on how you choose your products. For example, from our experience with Amazon business acquisitions in the private label world, companies are looking for strong brands. So selecting products that will allow you to build a cohesive brand will be important. With that said, Amazon businesses that are purchased solely for cashflow purposes do not typically put emphasis on having a unified brand(s). Either way, it is an important consideration in how you will position yourself for acquisition if that is your goal.
How Things Will Change With the New Amazon TOS Update
Post TOS update, from our perspective, sellers must be more precise in selecting a “good” product because the playing field has been leveled. Pre-update, it was very easy to give away a large amount of product in exchange for reviews. Doing so generated a competitive number of reviews and built a sales history that got that product ranking for each and every keyword that the seller selected.
So if you had a super competitive product, you were okay so long as you had the money to run enough promotional sales.
Post-TOS update, generating a competitive number of reviews becomes much more difficult. Generating reviews today rests solely on having a killer product that customers want to review and leveraging a killer email follow-up sequence to ask your customers to actually leave a review.
So how will this affect your decision making in selecting products to source?
You need to be drastically more concerned with the number of reviews page one and two competitors have. While there is some misinformation in the space around a “magic number of reviews” needed to generate organic sales, our data shows us that the key to selling well organically is having a “competitive” number of reviews relative to those listings you find yourself around.
What that means is, if the page one sellers have reviews that look like this RUN FAR AWAY!
Here is a screenshot from the same keyword, “vitamin c serum” that shows how important having a competitive number of reviews is. The listing ranked 6th has 10,000 reviews and is selling 3,000+ units per month. The next guy, although ranking really well for a very high level keyword, is only seeing 270 sales per month. At the 8th position they have a decent number of reviews, especially compared to the the 7th and 9th position, so they are seeing a moderate volume of sales. At position 9 the seller is hardly seeing any sales at all because they have 0 reviews! While there are multiple factors that come into play when a customer decides which product to ultimately buy, reviews and price typically have the most substantial effect.
Are Home Runs Dead?
The short answer is no. Not at all. If you have already been working on a home run type product (home run = high volume product), then definitely don’t give up. Depending on where you are at in the product launch cycle, you may need to adjust your strategy, but don’t worry, success is still a very attainable goal.
If you are just getting started with a home run and it is your first product on Amazon, beware. It is likely to be a long and costly battle depending on what the market looks like. It can be best to get started with a relatively simple product to understand the market, the processes, and the expected results.
Our suggestion for new sellers is to get into markets where a “competitive” number of reviews is below 500. Ideally you could find a product where page one sellers ranking between #3 – #12 have a sales volume of 500-1000 units/month and have around ~250-500 reviews. These products are much easier to break into the market with and allow you to learn a lot of the ins and outs of selling on Amazon without investing too much money.
Keys To Sourcing Great Products Regardless of The Amazon TOS Update
Find a quality product!
Reviews are king on Amazon! If you have a poor quality product you are going to find yourself with a product that continues to generate poor reviews. Before too long you end with a product noone wants to buy. There is nothing worse than having thousands of dollars in unsellable inventory.
Quality products can result in the sales boosting effects of word of mouth, positive reviews, and repeat customers (depending on the product of course).
Find a product at a great price!
If you are sourcing your product at a 25% higher cost than your competitor(s) for the same exact product, they will always be able to beat you on price. You can quickly lose to the competition on listing price, promotion capabilities, etc.
Product sourcing Guru Alan Basinger has a quote that I love! He says, “You have to win on the buy!” It is spot on. Alan has a logistics company that helps bring products into the US as well as sourcing directly from manufacturers in China.
Go to China directly! The Viral Launch CEO recently went to Yiwu with a group called SourceInAsia as a mentor and saw just how powerful working with manufacturers directly can be to negotiating quality product at a great price.
Find a product with great margin!
Margin is a huge consideration for product price. Make sure there is a great margin between the price at which you source and the price at which you sell is key! If you’re not making much money per item what is the point in selling? The other fear is if the market decides to start competing on price you want to make sure you are not priced out. We’ve seen this happen all too frequently over the last couple of months.
Watch Out For Name Brands
We’ve seen a couple of sellers get into products that are largely dominated by name brands. This is common in baby/children’s products. For example, sourcing crayons as a private label product can be insanely difficult because the first couple of pages are almost completely dominated by Crayola. Good luck competing with them.
Also be weary of sourcing a product where the main keyword(s) is also a brand’s name. Ex. “Yeti Mug”. It can be very difficult to outrank a brand if the main keyword is the search term. Amazon attributes a LOT of rank power to the brand’s name.
Consider product size, weight and durability!
Knowing how the size and weight of a product will affect shipping is crucial to estimating margin and expense. Work with your sourcing agent or manufacturer to understand the costs associated with shipping your product into the country, to your warehouse, and/or FBA.
You will also need to know what Amazon’s FBA fees associated with shipping will be. For that you can use Amazon’s FBA Revenue Calculator which will give you a good idea (don’t bank on the accuracy of the fees).
Durability is key to providing a good customer experience and avoiding customer returns. You may want to avoid easily damaged items.
Long-Term Brand Building Or Revenue Generation
Are you looking to build a long lasting brand or just looking to solely focus on increasing revenue (not that building a brand won’t help you generate revenue)? If you are looking to build a brand, make sure to choose products that will allow you to easily add products that make sense such as a yoga mat, and some yoga massage balls. The added benefit here is you can take advantage of bundling and upselling. It also saves you time and money by allowing you to pay to have one brand created (logos, label/package archetypes, etc.).
If you are looking to simply grow revenue you can be very selective in the products you decide to source. Meaning, if the numbers make sense, source it. Sellers who take this approach end up selling products as different as a eye cream and a pet bed.
Either approach is great so long as it aligns with your idea of success in running a private label business.
Make Sure Your Product Is Created With Customer Approved Materials
You don’t want to source a cream that is going to cause rashes.
If you say your product is organic/natural/paraben-free/etc. make sure that it is. If all of your competitors are able to make such claims, you will miss out if you cannot, but don’t lie to your customers. Trust me, they will find out if you are!
The Viral Launch team uses the Jungle Scout Chrome plugin religiously when putting together launch strategies. This tool is great at allowing you to quickly analyze the most important stats of products that rank for a given search term without clicking into each listing (at least that’s how we use it). Jungle Scout also has the most accurate sales estimates overall I’ve seen.
When sourcing, Jungle Scout also allows you to easily compare how a style of product is selling better than others. For example, let’s say you are wanting to sell grill/cooking gloves (which I would advise against due to the amount of competition). You would want to know if you should invest in the type of gloves that have 5 fingers or the mittens that have one slot for your thumb and one for the rest of your fingers. Choosing incorrectly could have major implications.
We also use Jungle Scout to estimate the number of units we will need to give in promotions to achieve keyword ranking and to help give for reviews. With the TOS change these numbers will differ (which we will get into in a different section of this guide), but having an idea as to the number of units you will want to use for promotion are crucial to understanding the total costs associated with launching a product.
Greg at Jungle Scout has plenty of tutorials on how to effectively use the tool. We personally use the tool for a very limited scope of its total potential!
Project Sourcing Success (Name To Be Announced Later)
Viral Launch has seen too many sellers lose thousands of dollars by making bad sourcing decisions. By the end of October of this year we are planning on launching a new tool that will help you make more intelligent decisions around product sourcing. It will go wonderfully along with Jungle Scout or similar type tools.
If we can help our clients avoid bad sourcing decisions, we will gladly seize that opportunity!
It would take us many blog posts to effectively cover the entire ins and outs of product sourcing, and to be honest, we are not the best company to handle how to source end to end.
With that said, our extensive knowledge, data and experience in running over 11,000 product launches and working mega sellers doing 50-100 million a year in sales on Amazon, we do have plenty of beneficial tips and knowledge that can help you avoid some major pitfalls that can have serious repercussions. At the end of the day, you need to make sure you are selecting products that appropriately align with your idea of success and your resources. What is a good product for the next guy may not be a good product for you.
If you have any questions, we will be happy to answer them in the comments! If you have any feedback, we would love to hear it as well!
“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” – Albert Einstein
Working with thousands of brands across Amazon has been an incredibly insightful journey. We’ve generated over 1,000,000,000 data points and garnered an incredible amount of experience. We’ve worked with thousands of sellers in a wide variety of capacities. Sellers ranging from $100’s/month in revenue to $100m/year in revenue and capacities ranging from simply running promotional giveaways to managing entire accounts. It’s this data and experience we leverage to build insights into the Amazon market and make decisions for our clients and Viral Launch as a company.
How Amazon is Shifting
(I want to first preface with the fact that these insights are largely regarding private label merchants and product manufactures as they comprise approximately 97% of our customer base.)
A few years ago selling on Amazon was easy. If you sourced it, they would come. Meaning, if you threw a product up on Amazon, with little to no work, you could capture a healthy portion of the market. Standing out in the spacewas easy.
Fast-forward to present day and now everyone and their mother is in on the gold rush called Amazon PL. With some search terms having thousands even millions of results (please save yourself a mistake and thousands of dollars and do not get into the cell phone case market), standing out above the competition can be insanely difficult.
Go back to 2014 when simply having your product ranking on page 1, meant you were selling well. Back then what was the trick to ranking page 1 for your keywords? Keyword stuffing your product title, running some decent PPC campaigns and getting a couple of friends and family to buy and review your product. Depending on your market, it could take anywhere from a week to a couple of months to get a product up and selling well.
In late 2014, Viral Launch and other promotional giveaway services came into the market and started to expedite the ranking process by driving high volume sales. At this time landing your product on page 1 almost always meant a major increase in sales. We were literally helping people get rich overnight!
At present day, landing your product on page 1 no longer guarantees a major increase in sales. Has Viral Launch become worse at doing our job? Not at all, we’re actually really good at this and have become more effective as you can read here.
How Viral Launch Fits In
Viral Launch’s job has always been to increase the keyword ranking of your product, which can still do quite easily. By improving ranking, we increase exposure to potential customers and give your product more opportunity to sell. Driving the actual sale depends on a multitude of factors, only you as the seller can control.
We’ve seen it time and again, and more frequently, where a product lands on page 1, but the product does not take off in sales.
We’ve also seen older products and brands watch their sales start to slip and new competition moves in and quickly dominates the market.
Standing out becomes even more difficult when you realize that the majority of your competitor’s products are relatively the same. If you search on Amazon for fish oil, you’ll see 100,000+ search results. Most of those results are relatively the same offering at approximately the same price.
Amazon’s Magic Bullet
So what is the secret magic bullet to getting your product to stand out and sell insane amounts of units? Why were you never able to turn your existing products into successful big earners? Why is competition passing you by? How can I streamline my product launches?
We have the data and experience to tell us exactly what that magic bullet it is.
We’ll give you all the answers tomorrow…(and hint: there is no secret magic bullet..)