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Goals: For the Year and for the Months
It’s that time of the month again! Read along as we detail our experiences in selling on Amazon. This blog series will give detailed stories of our difficulties and problems selling on Amazon, and how we deal with them. We also celebrate successes on this blog so that you can learn and apply them to your businesses. This year, we’re challenging ourselves to reach $10,000,000 on Amazon. One of the primary thoughts we’ve had when strategizing for this was to release a million-dollar product line to aid us in getting to that $10M easier.
Can we do it?
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June Brief Recap:
July was incredible, the 3rd month in a row hitting and exceeding our revenue goals. It’s also been the 4th month in a row that TACoS has gone down, and we wanted to make sure it stayed low.
July Revenue Goals:
For July we had the following goals:
- Sales Revenue: $1,200,000
- ACoS and TACoS: 21% and 13%, respectively.
- Net Profit Margin: 15%
Coming off our peak season, we wanted to set goals for ourselves realistically. Of course, we used our ASIN forecast based on market research and trends to estimate our expected revenue. So, this month, we wanted to generate at least $1,200,000. We made our PPC goals a little more difficult since we’re using automation software starting at the end of June, which should help us lower our ACoS and TACoS even more.
Real July Stats (Sales, Ad, Spend and Profit) - Success!
- Ended the month at $1,328,018.60
- Down by $5,318.2 (0.4%) vs June 2022
- Overall Conversion Across All 100+ ASINs: 10.25% vs 9.74% Last Month
- Session Value: $5.01/Session vs $4.97/Session Last Month
- ACoS: Up to 19.73% vs 19.71% Last Month
- TACoS: at 12.92% vs 13.55% Last Month
- Profit% at 15.11% vs. 16.84%
July 2022 Sales:
As I’ve mentioned in the previous section, we’ve hit our sales goal for 3 months now, so we had a lot of pressure going into July. But through our collective efforts and planning, we not only hit our goals but also exceeded them by $78,018.6.
In the daily sales graph we have up here, we can see that the first half of the month is stronger than the latter half. This is a similar sales trend we’ve been getting for the past two months. There are two possible explanations: (1) It’s a natural tapering-off effect from a stronger month; coming off-peak season, we can expect some retention of sales velocity, which slowly goes down as we get further away from peak season. The 4th of July weekend was also a slow start to the month for us. (2) We usually start the month pretty aggressively with ads, so as we get more data, we start cleaning up our PPC to meet our TACoS goal, reducing sales.
The percentage conversion and session values are also slightly up this month (although the latter’s increase is pretty negligible). The increase in conversion translated into better sales for us as comparing July and June; July was stronger in revenue by 0.4%.
June 2022 PPC Performance:
PPC is important on Amazon. That’s why we talk about it a lot in these updates! We knew coming out of June that we’d get some help from our automation software in managing our PPC this month, so we lowered our PPC goals (ACOS: 21% and TACoS: 13%) for us to keep pushing ourselves to maximize profit. Luckily, we hit our ACoS and TACoS goals and ended the month with 19.73% and 12.92%, respectively. Unfortunately, we carried over a problem from June that made our profits incredibly thin – we had a product line that needed to sell quickly, and we had to lower prices immensely. This product line is within our top 5 revenue generating, and with the price drops, we had reduced margins by at least 10% on them. This caused our profit margin to plummet to 13.20%, way below our 15% goal.
With the first 7 months of the month done, we have now generated a total of $7.14M. If we were to add up the goals for the first 7 months of the year, we should be at $7.3M. From the last update, we were about $235,000 behind this year’s goal up until July. But this month, we’ve sold extra to bridge that gap, and we’re now only 160,000 behind. With some more launches coming up and some grander plans, we’re confident that in 2 months, we could catch up.
PPC Strategies: PPC Automation Galore
In last month’s update, we mentioned that because of our growing business, PPC is becoming more and more challenging to manage. With each new product launch comes a new portfolio to manage; at this time, we have about 700+ active campaigns. Our plan with automation is to use it as a back-up, like a fail-safe system. We still believe that manual intervention is best for optimization since these types of software can’t detect external factors that you may consider when optimizing, like inventory, competitor aggressiveness, etc. So here are some of the rules we’ve set up that have helped us out a lot:
For Automation, we use Viral Launch’s Kinetic. This automation software relies on ‘Rules’ or conditions that you set to trigger an action (I.e, if ACoS is 10%, increase keyword target bid by 10%). Here are some of the major ones that we’ve set:
1. Bleeding Targets
- Conditions: If PPC Orders = 0 and Spend > ___ (Depends on the respective niches)
- Action: Pause Target
- Explanation: This serves to pause targets that have spent more than a certain spend threshold and have not generated orders. Targets here mean either a keyword or an ASIN target. We also vary the spend threshold depending on the product niche since some products that are on the more expensive side can afford to spend a little more than cheaper products.
2. Target Negation
- Conditions: If PPC Orders = 0, Clicks > 10, Spend > ___ (Depends on the niche)
- Action: Add as Negative Keyword Target
- Explanation: This main purpose is to filter out irrelevant targets or anything that won’t convert. It’s similar to the previous rule, but we added the click condition to gauge relevancy since if people are seeing and clicking our ads, chances are it’s not what they’re looking for. We reset negative keywords a few times a year to give them another chance if it is a related keyword.
3. Keyword Transfers:
- Conditions: If PPC Orders >= 1, ACoS <= ___ (Depends on the niche again)
- Actions: Add a negative keyword to existing campaign, Add as an Exact Target to another campaign.
- Explanation: This one is a little confusing due to the main action. For context, we like to separate Auto, Broad/Phrase, and Exact match campaigns, with the first two serving as “research” campaigns to catch any new search terms. This particular rule is only applied to Auto and Broad/Phrase campaigns, wherein if a search term generates at least one sale with a good ACoS, it copies the search term to an exact match campaign AND negates it in the previous campaign (to avoid redundant targets). The purpose of this is to make sure that the search terms generated from the first two types of campaigns are given enough spend to grow sales by moving them into a campaign where they can get higher bids.
Earlier, I mentioned that our TACoS for July was lower than June. I am pretty much attributing 60% of our success to the automation rules that we set in late June. As shown in the graph above, this was our week-over-week TACoS data. Wk0 referred to the week when automation wasn’t implemented. Results were pretty much immediate after that, with a 2.5% decrease in a span of 2 weeks, a feat that’s difficult to do with 700+ campaigns to keep in mind. Fluctuations were pretty normal since we were encountering issues with inventory, pricing, etc. that we had to adjust our aggressiveness to get rid of stock, and so on. Automation has been a huge help.
The One Major Problem: New Major Threat to an Established Niche
This month was a breeze, except for some issues that carried over from last month, like the expiry issue with one of our product lines which thinned out our profits. However, we also have a threat that we had to deal with during the latter part of July that thinned out our margins even more. It was time to go into fighting mode.
So, our brand is known for its incredibly large market share for a particular niche on Amazon, and we are best known for a specific ASIN in this niche. Suddenly, this new brand comes in, selling a close copy of our product much cheaper. Not only that, they were clearly using black hat tactics. We suddenly noticed our market share decreasing, and we discovered that they were stealing the top of the search ad spot. We didn’t mind them for a few weeks since we trusted that they would soon increase prices since they held their bids pretty firmly, and we knew that that was already unprofitable for them at the price they were selling. However, two weeks have passed and there is still no sign of price increases from them so we decided to take action. We brainstormed and discussed that it would be best for us to protect our dominancy and so we decided to increase our ad spend on all of the products in that niche to try to steal away the competition’s ad spot, advertise heavily on their detail page, etc. Basically, we were going ALL OUT on ads. The thought is to keep our ads incredibly high (because we do have the margins to do this) until one of two things happens: (1) they’re forced to increase price to be able to compete with us in ads, or (2) they just lose traction and not generate enough revenue for them to continue. We saw a short-term increase in revenue and a decrease in theirs.
We are still currently carrying this strategy until now, but this has contributed to the thinning of our net profit, but it’s the long term that we’re keeping in mind – to make sure that we get rid of the threat early in their life. To know more about the results of this, stay tuned to next month’s update.
Million-Dollar Product Line Updates
Due to some limitations with Amazon’s PPC manager, specifically the date range, I can only show the lifetime view. For this update, I will include that data as well.
- Sales Revenue: $76,909.24 (Up by $9,642.5)
- Unit Orders: 890
- Ad Spend: $11,300.93
- ACoS: 26.19% (vs last month’s 26.39%)
- TACoS: 16.69% (vs last month’s 18.44%)
The first thing that you might notice is that from July to August, our spend is going up slowly. We again decided to increase our aggression on this product due to incredibly thick margins. We realized we need to keep aggression high as we have room for aggressive advertising on this particular product. We have yet to finalize the results, but we have seen an increase in this product’s sales velocity for the past couple of weeks.
- Sales Revenue: $21,609.32 (up by $7,503.22)
- Unit Orders: 566
- Ad Spend: $2,911.76
- ACoS: 19.01% (vs last month’s 27.02%)
- TACoS: 13.47% (vs last month’s 20.24%)
For product 2, the recovery we mentioned in the previous update seems to be continuing, with a huge % increase in sales. Furthermore, the TACoS on this particular product has gone down quite a lot. This doesn’t have as thick of a margin as the previous product, so we are more careful in spending on these.
- Sales Revenue: $7,579.44 (up by $3,171.19)
- Unit Orders: 302
- Ad Spend: $1,877.32
- ACoS: 37.01% (vs last month’s 38.49%)
- TACoS: 26.39% (vs last month’s 26.39%)
This third product was just launched early June. We had the biggest issue with Product 3 amongst all ASINs in this product line. This product comes in 2 sizes and one of the sizes got restricted for no particular reason. It took us 3 weeks for this product to become unrestricted. The problem is that the size that got taken down was the more profitable one between the two, so we definitely had to reduce our spend on this portfolio.
- Sales Revenue: $4,056.66
- Unit Orders: 132
- Ad Spend: $822.86
- ACoS: 80.07% (vs last month’s 38.49%)
- TACoS: 20.28% (vs last month’s 26.39%)
For this 4th product, it’s still pretty new, but we’re still in the works of improving the marketing on this as we weren’t expecting this product to move this slowly even with a product rating of 4.7 so far.
Overall, we are still nowhere near $1M for this product. So far, we’ve only earned $110,000. We’re now currently employing more actions to launch products that don’t necessarily belong in the same niche since we’re seeing a slight slowdown in the niche. So, you should expect more updates regarding those soon.
Expecting a more difficult month
Due to a few issues we’ve been trying to deal with that will still carry over to next month, we want to be extremely cautious with our action steps. We’re expecting that we will have difficulty balancing our ACoS and Profit due to the competitor threat issue I mentioned. Nonetheless, these difficult times make a strong company, and we’ll be better equipped for these types of issues in the future.
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