Tag: dispelling myths

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.

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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.

Your Amazon Best Seller Rank does not help you drive future organic sales, in the same way that a report card from a previous semester does not impact your grades in a new semester. It is only an indication of the past.”

In an effort to continue expanding our capacity for helping Amazon private label sellers solve their problems, achieve success, and increase profitability, we spend a good amount of time engrossed in a plethora of conversations across the various FBA/Private Label centered Facebook groups. As we’ve mentioned before, this is the true breeding ground for rumors, misinformation and miscommunication. It can get ugly. For young, novice sellers still trying to understand how to navigate the space, listening to rumors can lead to costly mistakes and sometimes even financial ruin (literally). We’ve seen it plenty of times. It’s terrible, unfortunately, and becoming more and more common!

As a company that cares deeply for people and enjoys watching/helping people succeed, rumors/misinformation are extremely frustrating. This is especially true when we see “gurus” or service providers profiting off the misinformation. So, in our effort to help sellers succeed, we’re doing our best to clear up miscommunications and rumors so you have all the information necessary to make informed intelligent businesses decisions to help you prosper!

Now to the subject matter.

The Amazon private labelling world has an obsession with the Amazon Best Seller Rank (BSR). Everyday we have sellers emailing in, wanting us to help them improve their BSR or help them to reach a specific BSR threshold. We see the same in the Facebook groups. It is completely unnecessary and is founded on misunderstanding. We explain how..

Myths Around Best Seller Ranking / BSR:

  • Best Seller Ranking (BSR) helps keyword ranking.
  • Best Seller Rank impacts sales.
  • “I need to improve my BSR”
  • Reviews are taken into account when calculating BSR
  • Keyword ranking impacts BSR
  • Listing price at the time of sale impacts BSR

What We See/Hear Sellers Saying About BSR in Facebook groups:

  • “My BSR increased, but why haven’t my organic sales?”
  • “How can I improve my BSR?”
  • “My BSR is better than my competitors, but they are outranking me. Why?”

How Is Your Listing’s BSR Calculated?

An ASIN’s Best Seller Ranking is calculated solely based on the number of units sold over a given period of time. That is it.

Your BSR is not directly related to your listing’s keyword ranking, price, quantity of reviews, or any other metric.

Sales estimation tools like Jungle Scout operate on this same premise. By looking solely at a product’s BSR in specific categories, they are able to estimate that product’s monthly sales volume with a decent degree of accuracy.

For example, if listing A sells more than listing B, listing A will have a lower/better BSR. It’s as simple and rudimentary as that.

When describing Best Seller Ranking, I often use an analogy of a report card. BSR is like a report card showing how many units you sold compared to others in the same category. Just like a report card, your BSR is a representation of past activity. Your BSR does not help you drive future organic sales, in the same way that a report card from a previous semester does not impact your grades in a new semester. It is only an indication of the past.

Debunking the Myths of Amazon Best Seller Rank

Myth: Best Seller Ranking (BSR) helps keyword ranking.

Our Amazon product launches have uncovered the most contradictory evidence to the BSR assumptions. When running a promotion with a poorly optimized listing, we see a great spike in BSR (ex. #28,400 to #1,600), but see little to no movement in keyword ranking.

Example:

Amazon Best Seller Rank 1

This is the Jungle Scout data from the search “dog toys”.

As you can see, the two listings in the red box have higher Best Seller Ranks than the listings in the blue box. If BSR had a direct effect on rankings, we would expect to see a more uniform increase in BSR scrolling down the search results. Many searches will show similar results.

There are many factors being taken into account when it comes to keyword ranking and sales. It is especially difficult to properly attribute the cause of keyword ranking between increases and BSR and sales simply because BSR increases from sales.

Myth: Best Seller Rank impacts future sales.

Referring back to data we’ve obtained from our product launches, we’ve observed plenty of instances in which promotion increases a listing’s Best Seller Ranking significantly but does not lead to an increase in organic sales for a variety of reasons. This particular listing was not optimized for rankings (targeted keyword(s) were not in their title), which is why we suggest working with one of our Amazon seller coaches. There is a lot that goes into improving a product’s sales on Amazon, which is why we continually preach the importance of doing everything extremely well. Cutting corners leads to lost money!

Myth: Reviews are taken into account when calculating BSR

This is definitely false. The cause of this misconception again falls to misattribution. Reviews generally have a significant impact on sales (click conversion). Typically, listings on page 1 with more reviews drive more sales, which means their Best Seller Rank will improve.

Amazon Best Seller Rank 2

This is the Jungle Scout data from the search “iphone 7 plus case”. (Update: we have since released Market Intelligence, the best Amazon product research tool in the galaxy, with sales trends, the most accurate sales estimates, and a star-rating validation).

As you can see, the listings within the red boxes have far fewer reviews than the listing in the blue box, however, their BSR is significantly better/lower.

Amazon Best Seller Rank Myth

Here is an example of a listing with over 1,000 reviews at a star rating of ~4.5 with a Best Seller Ranking of over 10,000.

If BSR was impacted directly by a listing’s review rating and/or quantity, we would expect different figures.  

Myth: Best Seller Rank is affected by a product’s price at the time of sale.

There are a few key indicators to this myth being false.  We can’t rely solely on Jungle Scout data for reference as we don’t know if their sales estimation algorithm is taking price into account or not. Simply looking through the search results at varying BSRs and comparing the current selling price is not sufficient as we don’t know how many units are actually being sold. The question is, “Does the price at the time of sale have weight on calculating the BSR,” not “Does your current price have impact on your current BSR?” If that were the case, raising your price would result in an instant improvement in Best Seller Ranking, which we obviously know is not the case.

Route 1: Looking at the BSR of similar ranking products with varying price points.

Amazon Best Seller Rank Myth 2

These are the search results for the keyword “coasters”. As you can see, the second listing is 25% more expensive, yet has a higher BSR. The listing priced at $12.95 has a lower Best Seller Ranking than the $18.99, $15.99, and $14.99 options. Again this is not concrete proof but one example.

Route 2: Looking at actual sales data.

We mange a good number of listings by now. Going through a number of those product’s sales and BSR history within the same category, we are able to see that regardless of price, the products fell within the same BSR range when sales were similar. If you have just a couple of products in the same category that sell fairly similar volumes, it is pretty easy to see for yourself.

How Can You Use BSR To Improve Your Sales?

Should you try to increase your BSR?

When we see this question, it is generally in reference to using promotional services to increase BSR, in which case the answer is no. Increasing your Best Seller Rank through promotional sales serves no direct purpose apart from pushing to obtain a best seller badge, which happens to be against Amazon’s TOS.

Since Viral Launch has been in business, we’ve seen plenty of sellers get excited about an improvement in BSR driven by giveaways. From our perspective it’s a no brainer. Of course the BSR improves. If sales are the sole factor in calculating your Best Seller Ranking, and you drove additional sales, whether at full price or at a discount, then of course the BSR is going to improve. And like we mentioned, that improvement in Best Seller Ranking will have no direct impact on future sales.

For example, (keyword ranking aside) if you gave a massive volume of units to help you reach a BSR of #2 in all of Health & Beauty, you would see no improvement in organic sales as a direct result. Customers do not find products to purchase by sifting through the browse trees, they purchase products after running a search, selecting an item, and then making a purchase.

Essentially, if you give units away at a loss with the intention of improving your Best Seller Ranking, you are wasting money. That is not a strategic move.

How BSR Can Help You Make Smart Business Decisions.

Using the Best Seller Rank metric is fantastic for estimating product’s monthly sales. Even though current tools are not incredibly accurate, they are far better than pure guesses and can be extremely helpful when putting together launch strategies, optimizing your listing, and validating sourcing ideas. From our perspective, this is the only real use for this over-hyped vanity metric.

Should You Be Paying Attention to Your Product’s BSR

Largely, no. If you are using BSR as a sales estimator for your own products, then you should look at your actual sales volume as shown in your Seller Central dashboard as those figures will be more accurate. Generally, the only benefit of watching your BSR is in comparing yourself to your competitors. Is your BSR increasing, but competitors’ BSRs are not? Then you you need to make some adjustments to your offering/listing so you can continue selling at the same volume as your competitors are. Is your BSR increasing at the same rate as competitors? If so, this is typical of seasonal items. As sales slow for a sub-market, all competitors will see an increase in BSR.

Your listing’s Best Seller Rank can fluctuate quite a bit over the course of a day, week, or month. The focus should really be on maintaining/improving search rankings, optimizing your listing, and improving your review funnel as these are the activities that will have an impact on your organic sales and ultimately your business’s bottom line. Continually watching your BSR is like watching the grass in your yard grow, it’s going to grow and at varying rates depending on external factors, but you watching your yard grow does not affect the process. It is only a waste of time. Being aware of your actual sales and responding to changes in the market or your listing are activities that will lead to better bottom line.

Conclusion

More often than not, rumors and misinformation are spread simply due to wrongful attribution. It’s so easy to wrongfully attribute the cause of sales improvements, ranking changes, BSR changes, etc. simply because there are so many moving parts. Amazon is a complex animal. It is wrongful attribution that I hold as the culprit for a lot of the myths around Best Seller Rank.

Know any other rumors? Have any questions? Am I wrong? I’d love to know what you think in the comments!