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Goals: For the Year and for the Months
If you’re new to here, this is where we share real-time updates from our personal experience selling on Amazon. In this blog series, you’ll learn all about our failures, successes, and strategies we’ve gone through in 2022. This year, we’re treading uncharted waters trying to do something we’ve never been able to accomplish before – reach $10,000,000 on Amazon in one calendar year. Let’s breakdown all of the strategies we’ve developed in order to build our brand and achieve our goals. Now, in order to do this, of course, we’ll need a product line to bridge that sales gap – a product line which we’re expecting to get us $1,000,000 in extra revenue.
It’s officially the last month of Q2, where did we end up? Well, keep reading to know our total for this quarter. Subscribe to our Monthly Blog updates to keep track of our progress and we guarantee you’ll pick up one or two tricks from us to help you grow your brand!
May Brief Recap:
We had an incredible month in April, the first time we’ve hit our revenue target all year. So, in May we had to make sure that we followed this up and that we kept our momentum strong. For the second month in a row, we were able to hit and exceed our revenue target of $1.3M and actually sold $1.368M dollars’ worth of products. Not only this, we were able to kill it with our PPC targets and got to 14.21% TACoS and a net profit percentage of 16.85%. Going into June, we felt April and May breathing down our necks. We had to kill it this month, too.
June Revenue Goals:
For June we had the following goals:
- Sales Revenue: $1,250,000
- ACoS and TACoS: 23% and 14%, respectively.
- Net Profit Margin: 16%
For June, as usual we depended on our per ASIN forecast (with a small multiplier to keep it challenging) to determine our end revenue goal. For this month, we determined that $1,250,000 would be a suitable goal for us. We wanted to keep our PPC and profit targets about the same as we determined not much should change from May and it should still be a demanding enough goal for our brand.
Real May Stats (Sales, Ad, Spend and Profit) - Success!
- Ended the month at $1,322,700.4
- Down by $46,085 (3.4%) vs May 2022
- Overall Conversion Across All 100+ ASINs: 9.8% vs 9.9% Last Month
- Session Value: $3.36/Session vs $4.57/Session Last Month
- ACoS: Down to 19.71% vs 20.69% Last Month
- TACoS: at 13.55% vs 14.21% Last Month
- Profit% at 15.11% vs. 16.84%
June 2022 Sales:
Capping off the last month of Q2, we were able to meet and exceed our sales goal once again by $72,000. That makes it three consecutive months of goals met! Overall, the first half of the month was a lot stronger and more consistent than the second half. This was because of a product line we had that we had to slow down quite a bit due to profit issues. I’ll get into this in a later part of this blog update.
I’d also like to address the lowering of the session value. It’s actually tied to the product line I just mentioned. We basically had to reduce the price of the entire line composing of about 4 products. These 4 products are responsible for 15% of the total sales for the past two months, which is a pretty big deal. I’ll go over why we made this decision later.
June 2022 PPC Performance:
PPC is important on Amazon. That’s why we talk about it a lot in these updates! We set goals of ACoS and TACoS: 23% and 14%, respectively. Both goals we were able to hit! We were able to decrease our ACoS by less than 1% to 19.71. Similarly, we were also able to drop our TACoS by the same amount to 13.55%. Keep reading for specific changes we made with PPC. As for profit, our target was 16% again but as you may have seen in the summary of numbers above, we were only able to get to 15.11%. Not to keep dodging the discussion but this also ties back to the product line we had to make extreme price drops on which a thinner profit margin is a big consequence.
PPC Strategies: Building on Older Strategies
The strategies we’ve implemented last month were one of the biggest reasons why we were able to get out TACoS down. So, it only makes sense to retain and improve on them for this month. Again, being in our peak season has undeniably helped us through higher overall interest so we focused on managing bleeders and high TACoS targets due to the onset of larger traffic. Here are some of the major improvements or edits we’ve made on previous strategies:
1. TACoS Tracker
*Note the number on this photo are made up. The image is added to showcase the format of the tracker.
To quickly recap, the purpose of this sheet is to be able to monitor three main things, (1) Spend, (2) Sales, and (3) TACoS. There is an alert system that highlights these columns based on its performance compared to the goal – whether it’s underperforming so far into the month, etc. We added a few sections here:
- The individual ad type ACoS – as you can see there is a section above indicating the ACoS per ad type. The purpose of this is to add an additional indicator layer. Let’s say we notice the ACoS for the account is going up. Before we’re only able to check which specific product is causing the increase however, there are times that we wouldn’t be able to pinpoint the specific product and we later find out that it’s actually because of brand ads. Remember the TACoS does not consider brand ads due to the nature of the ad type – reports don’t give you the product bought through brand ads. This is a big help since we’re also quickly able to see changes per ad type day per day and we are able to take action if we see something suddenly going above the normal range.
- Family TACoS and Profit – a lot of our products are grouped together in a variation. If you have sold anything as a variation, you might know that one of the prime limitations of variations is that you can only show one ASIN per search term. Let’s say you have 4 ASINs in a variation and you’re running ads on those 4 ASINs. Only one of those ASINs will show up per keyword search.
- Let’s use the table above as an example. The spend is condensed to the most popular ASIN in the variation, ASIN 3 in this case, making it appear as having the highest TACoS. What might happen is we start shutting down that ASIN on some of the campaigns, then we’ll end up increasing TACoS on another ASIN when in reality the entire variation family was doing just fine. Adding the Family TACoS and Family Profit allowed us to see the bigger picture by ensuring that we’re optimizing for the entire variation family.
These were the modifications to one of the most helpful things we’ve ever implemented. We really suggest setting up one especially if you’re starting to sell over 10 ASINs. Having this just allows you to look at big picture things and tie it together with inventory, etc.
2. Realtime TACoS Tracking and Dayparting
We went through all the details of how we started with dayparting in the previous blog. Please give that a quick read if you want to find out our main difficulties and hesitations with dayparting. Until now, we haven’t done a complete adaptation of dayparting across all of our ASINs just because Amazon hadn’t released a feature for us to monitor hour by hour data to figure out when in the day are customers clicking the most – an important piece of data essential to efficient dayparting. Instead, what we have been doing the past 2 months is identifying trouble products (those that have ACoS above a certain threshold) and turning off ads on off-peak hours based on the hourly sales graph adjusted a little to consider the difference between the time of purchase and the time of clicking the add.
In June, we also started monitoring our TACoS every two hours after about 2 PM (PST) – Note that Amazon’s day ends at 12 AM PST. By monitoring the TACoS, we’re able to see pinpoint when we need to start slowing down ads for the day. By slowing down, what we mean is we turn off ALL ads that have not converted during the day, or ads that have an ACoS of more than around 35%.
Let’s take this as an example, in the left set of numbers is a day where we don’t daypart. Just because by around 12 MN our TACoS seems to be low enough that we don’t need to slow down or turn off ads. In the set that’s highlighted in orange, we actually start turning off ads by 12 MN since we are noticing that TACoS is increasing too fast. To make sure, that we don’t exceed our TACoS goals, we start turning off ads based on the criteria mentioned above. Now, it is important to take note, that we only do this if the sales goal has already been met or is incredibly close to being met for the day. Of course, with our knowledge of our account’s behavior we can tell how fast TACoS is going to increase if we don’t start slowing down – something you must take into consideration if you are planning on doing this.
Speaking of results, since we’ve only been doing this for one month – let’s compare the number of days we went above our TACoS goal in May and June. In May, we went above 14% TACos 16 out of 31 days or 52%. Comparing to June, we went above 14% 10 out of 30 days or 33.3%. Out of those 10 days, 6 are from weekends when we’re not able to implement this. The remaining 4 were less than 1% above TACoS. Just as another additional tidbit of data, as I am writing this as of the 20th, we’ve only exceeded our TACoS goal 3 out of the 19 days for the month, 2 of which are on the weekends.
Automation basically allows a program to do certain actions (pause a keyword, increase bids) based on conditions you’ve set. We’ve already done automation in the past, around 2020 to early 2021 but have since stopped due to losing track of maintaining the automation rules and our belief that we are still able to best optimize our ads manually. However, growing our business has definitely taught us that if we can find a way to have a computer do it for us without issue, then let it do it. It’s going to allow us to free our heads for higher level thinking and higher level actions to grow the brand. So, we came to that realization when optimization started getting more hectic with the addition of new products.
We don’t have a lot of updates to give you just yet but comparing a week without automation turned on with a week with automation turned on, we were able to reduce TACoS by 1.3%. We started automating the pausing of keyword bleeders based on spend thresholds per product line.
Watch out for next month’s update to get a full update of what type of automation rules we’ve set up and the overall results.
The One Major Problem: Sell-by Dates – Pricing and Profit
We we’re so close to a perfect month – one without big trials and tribulations but I guess you’re not a big enough seller if you’re not hit with these problems at least once a month? 🤪 I guess I already gave a brief introduction early on this update when I mentioned a product line which we had to decrease price.
Last year we started selling a new product that had a limited shelf life. Specifically, December 2022 and May 2023. We had ordered a ton of these products due to our sales history. However, with the major slow down during Q1, we undersold these products. In our recovery phase a few months ago, we prioritized profit above anything else that we completely forgot that these products have an expiry date. So, now in our forecast, at this current prices and conditions, we won’t be able to sell through these before the determined by sell-by date (a few months before expiry dictated by Amazon’s policies).
Now, we’re facing a ton of stock that we need to sell through within 2 months. The sensical thing to do of course, is to lower price across the variations to make sure that we sell them all so that we don’t throw these out, which would hurt a lot more. To give you a picture of how it affected our profit margins:
|Margin at Old Price
|Margin at New Price
This is a pretty major price decrease especially on products 1 and 4, which have the most excess stocks. Through quick calculations with the assumptions of the same PPC performance prior to the price change, the overall net profit would decrease by at least 0.7%. These numbers are just based on the larger price drops for Products 1 and 4. This was a major contributor to the profit margin drop this month.
Right now, we are managing and it looks like we are able to sell through all the expiring stocks by the sell-by date determined.
Million-Dollar Product Line Updates
Due to some limitations with Amazon’s PPC manager, specifically date range, I am only able to show the lifetime view which includes the data up until now, as I write this, on July 14. For the purpose of this update, I will include that data as well.
- Sales Revenue: $67,266.74 (up by $15,104.88)
- Unit Orders: 756
- Ad Spend: $12,405.01
- ACoS: 26.39% (vs last month’s 26.33%)
- TACoS: 18.44% (vs last month’s 21.42%)
The slowdown is looking like is continuing. We’ve identified that we are spending too little on these products since our profit margins for this product is so large, it’s almost only organic sales that we are getting. So, we have since ramped up our spend and made sure to be more aggressive.
- Sales Revenue: $14,106.10 (Up by $4,513)
- Unit Orders: 389
- Ad Spend: $2,855.33 ($2,301.29)
- ACoS: 27.02% (vs last month’s 32.71%)
- TACoS: 20.24% (vs last month’s 23.99%)
For product 2, there was a small sign of recovery already this month, and it looks like we’re going to make more than, the previous month.
- Sales Revenue: $4,405.25
- Unit Orders: 171
- Ad Spend: $1,162.54
- ACoS: 38.49%
- TACoS: 26.39%
This third product was just launched early June. From, the looks of it, It looks like we are slowing down quite a bit even at higher spend. This could be indicative of overall lower product interest which we’ll have to monitor closely moving forward.
Overall, we are not moving as fast as we wish we would. However, we are still looking into releasing a few more products that could potentially fuel the million dollar line again and get it moving to where we want it to be. Not to put pressure on ourselves but we have 6 months to do that. We can do it still, right?
Moving into Q3
We’ve already put in place our sales projections and inventory needs for the rest of the year. It’s going to be tight whether we hit our $10M Amazon goal. We definitely need to put pressure on ourselves to keep exceeding sales goal to ensure that we lock in that $10M! Check back next month to see where we are at.