Table of Contents
Goals: For the Year and for the Months
Real August Stats (Sales, Ad, Spend, and Profit)
PPC Updates: Automation to Manage an Aggressive Competitor
- The Case
- The Rules
- The Results
Million-Dollar Product Line Updates
September: What’s in store for us?
We are officially done with the second month of the year’s third quarter. Each month passing just shows how fast the year is passing by. This update is, of course, for August, another great month for us. As usual, we’ll review the stats and the strategies we employed this month to help sellers with their brands and businesses. We’ll go through our failures and challenges so you can learn from our mistakes but also discuss our successes so you can celebrate and apply them to your business. Also, we’ll look at where we are with our $10,000,000 revenue goal and a quick run-through of our $1,000,000 line.
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Recap of the Past Few Months:
We’ve had a killer Q2 and a pretty good Q3 too. Since April, we’ve been hitting our revenue goals which mean 4 consecutive months of being on target. August was no different. We blew it out of the park with the revenue, so that’s the fifth month in succession.
For TACoS, unfortunately, we ended our 5-month streak. There’s one issue we mentioned in the previous update about a competitor being a big threat in one of our significant niches, forcing us to become aggressive to protect our position, which we’ll get into in this blog.
August Revenue Goals:
For August, we had the following goals:
- Sales Revenue: $1,000,000
- ACoS and TACoS: 21% and 13%, respectively.
- Net Profit Margin: 16%
Some adjustments were made to our ASIN forecast, which we use to set our revenue goals based on how July went. Mainly, two product lines are continuing to grow. We believe that the growth of these two lines should slightly offset the slowdown we expected with our other products. As such, we set our goal at 1,000,000 with the same PPC Goals as last month.
Real August Stats (Sales, Ad, Spend and Profit) - Success!
Summary:
- Ended the month at 1,235,005.10 vs $1,328,018.60
- Down by 93,013.5 (8.2%) vs July 2022
- Overall Conversion Across All 100+ ASINs: 6.93% vs 10.75% Last Month
- Session Value: $4.39/Session vs $5.01/Session Last Month
- ACoS: Up to 21.91% vs 19.73% Last Month
- TACoS: at 14.35% vs 12.92% Last Month
- Profit% at 15.11% vs. 16.84%
August 2022 Sales:
We were right with our prediction on the two product lines we mentioned earlier – sales skyrocketed and even exceeded the expected units sold. In fact, we were even having trouble keeping one of the product lines in stock. At the end of the day, this only helped us exceed our revenue goals by $235,000
It was a pretty great month! If you look at the sales graph above, you’ll see that we hit our average daily revenue goal every singly day! There were days that we were just hitting it almost exactly, but those were primarily weekends when we were expecting lower sales. Unfortunately, conversion rates and session values are down, which we hope to see as we naturally go out of season. However, if you look at the conversion values, the drop was quite significant – almost 4%. Multiple ASINs in one of our categories just started dropping exponentially, which makes sense as they’re the most season-reliant category of products we have.
August 2022 PPC Performance:
PPC is one of the most important components of selling on Amazon – some experts even argue that you shouldn’t expect to do well on Amazon if you don’t know how to run PPC – which we agree with. This is why we take time to discuss strategies we implemented over the month.
Last month was pretty smooth for us due to a full month of implementation of PPC Automation. However, we did run into that expiration problem, which forced us to lower prices on a major product line, contributing to a major increase in TACoS. Although that issue was resolved last July, we ran into a few problems this month – a new competitor started coming for one of our niches that we’ve historically dominated. I’ll get into that in a specific section of this update. But the sum is that we were forced to go into overdrive with our PPC for this niche. Mind you, this line is one of our best-selling, if not the best-selling, amongst all of our product lines, which means this has a SUPER HUGE effect on our performance. This caused the 2.18% increase in ACoS and the 1.43% TACoS over the previous month. It may not sound like a huge difference but when considering the effect on profit, it’s a pretty huge number – roughly $10,000 (comparing the 16% goal and the 15.11% actual profit).
Now that we’re done with the first 8 months of the year, we’ve generated a total of about $8.38M which means we only need to generate $1.62M in the last 4 months of the year. Considering the total goals for the past 8 months we should have generated a total of $8.3M. SO WE DID IT! We finally closed the gap generated from not meeting revenue in the first 3 months of the year. This was earlier than expected as in the previous update we said that we were expecting to close this gap in 2 months.
PPC Strategies: Automation to Manage an Aggressive Competitor
1. The Case
We’ve already given a short brief of this case in the past update but let’s recap. We’ve been huge in a specific sub-niche on Amazon for years. A few weeks ago, we had a new competitor come into the niche priced about 50% cheaper than ours with incredibly aggressive Sponsored product ads. This dangerous combination caused a sales dip for us, resulting in them taking about 15-25% of our market share. We had a deep discussion on our plans regarding this competitor, and we decided to play offense based on the following points:
- They probably intentionally priced their product this way to start gaining momentum for their product. It probably wouldn’t be sustainable for them if they continue to keep it at this price long term.
- Profits are pretty thin with how aggressive they were being with their ads. We found this out by trying to outbid them, but even at a 15-dollar bid, they were still outbidding us.
- We wanted to plan for the long term, and try to slow them down this early to prevent them from continuing to make their mark in the niche, which could definitely hurt us in a few months if we let that happen.
So, it’s time to play offense. We wanted to try to get this competitor to increase their price by outbidding them – making the price point unsustainable for them. We could also just steal back so much of the market share that their revenue wouldn’t be enough for them to move forward.
We tried manually raising our bids at first to keep their one ASIN out of the top-of-search. We already have multiple ASINs selling in this niche, so we definitely have enough to kick them out of the first four spots. However, whenever it looks like we’re able to kick them out, they’re able to respond superfast and can steal back the spot. We suspect automation is in place, so it only makes sense to combat them with the automation as well.
2. The Rules
In the last update, we briefly explained what rules are – they are automation conditions that result in action when met. We’ve set some rules for this particular case to combat the competitor.
- Ranking Rule:
- Conditions: If Sponsored Rank > 0 and If Keyword contains highly relevant keywords (we were the ones who set the keywords to be prioritized)
- Action: Increase keyword bid by 30% every, occurs every hour
- Limits: Bid Cap of $30
- Explanation: This does an hourly check of our sponsored ad ranking every hour for the keywords we’ve identified as top priority, if we aren’t in the first position, it raises bid but stops at $30. This rule is duplicated 3 more times to cover the other 3 positions.
- Reset Rule:
- Conditions: If Keyword contains highly relevant keywords
- Action: Decrease bids by $25
- Limits: Lower Bid Cap of $5
- Ranking Rule:
3. The Results
- Now, for the results. It is hard to track accurate results relative to our competitors because they went out of stock a few times. It did look like they were raising prices and slowing down, and we were stealing the majority of the ad spots again for a good chunk of the day, but whether the slowdown was intentional on their end to prolong their sales period, we weren’t sure. As such, we wanted to emphasize some critical effects on our sales and PPC metrics:
This comparison shows an increase in TACoS across almost all of the products we went hard on. Product 1, in particular, was a new product that we launched in late June, which slowly gained traction over the course of August hence the big sales jump there. Product 3, on the other hand, is our star ASIN in this niche. Even with the new competitor, this was still the number one product, both in sponsored ads and organic, in the niche which is why it was hardly affected, and conversions were still strong.
Overall, even though we were unsure of the results of our efforts because of the points mentioned on the probably intentional slowdown of the competitor, we were at least still able to increase our revenue generated by all the products involved in this niche.
Fast forward to a few days after August, we noticed that this competitor was barely an issue. We’re not fighting for our lives for the top ad spots anymore so we deactivated our automation to prevent unnecessary spending. Plus, their sales have continued to decline. We think this was a win but I don’t think we’re entirely out of the woods as they just went out of stock 5 days ago. I do believe, at least, we were able to manage this threat.
Million-Dollar Product Line Updates
Product 1:
Due to some limitations with Amazon’s PPC manager, specifically the date range, we can only show the lifetime view so this includes data until half of September (unlike the previous parts of this report which is only until August)
- Sales Revenue: $86,119.58 (Up by $9,210.34)
- Unit Orders: 1017 (+127)
- Ad Spend: $12,425.81
- ACoS: 24.59% (vs last month’s 26.19%)
- TACoS: 14.42% (vs last month’s 16.69%)
This line, like most of our other products, peaked during the first part of the year. With quite a noticeable decline after April. However, when we realized that we weren’t doing enough to market this, we tried being more aggressive last month, which resulted in bigger sales (as you can see above with the orange line increasing again in August). We hope to continue this sales trend in the last few months but we aren’t super optimistic as winter isn’t the best season for this product.
Product 2:
- Sales Revenue: $27,692.55 (up by $6,083.22)
- Unit Orders: 740 (+174)
- Ad Spend: $3,882.71
- ACoS: 19.35% (vs last month’s 19.01%)
- TACoS: 14.02% (vs last month’s 13.47%)
For product 2, it’s very similar to product 1’s trend where we were able to get it moving again in the past month while maintaining profits.
Product 3:
- Sales Revenue: $9,894.11 (up by $2,314.67)
- Unit Orders: 384 (+82)
- Ad Spend: $2,045.38
- ACoS: 33.40% (vs last month’s 37.01%)
- TACoS: 20.68% (vs last month’s 26.39%)
This third product was a headache since one of the sizes got taken down for 3 weeks which definitely killed momentum. During those weeks, competitors and other ASINs in the same niche were able to catch up. When we got it back, it was really hard to gain back that momentum we lost so we tried decreasing prices but that killed profit. So right now, we are still trying to balance price, sales velocity and profit.
Product 4:
- Sales Revenue: $6,447.71 (Up by $2,391.05)
- Unit Orders: 225 (+93)
- Ad Spend: $914.67
- ACoS: 70.44% (vs last month’s 80.07%)
- TACoS: 14.19% (vs last month’s 20.28%)
This one was quite a surprise to us. It has some of the best ratings we’ve had in this line at 4.7 stars but sales are nowhere near where we want them to be. We’re not giving up just yet because we know we’re offering a really great product. This just needs some innovative way to market these and get more eyes on this particular product. We need to be able to challenge long-term customers of our competitors to consider switching over to ours.
So far, we’ve sold a total of $130,000. Still a small fraction of the goal of $1M. Right now, it’s too late to develop more products that complement this line as this is a pretty season-dependent product line. We’re trying to develop more products to just help us lock in that $10M goal.
September: What’s in store for us?
While we don’t think we’re completely in the clear for the competitor we mentioned, we want to be cautious. Plus, there’s another competitor for the same niche but not a super big deal as the niche is generally slowing down.
Actually, almost all of our current product lines are very much slowing down, and it’s super evident with our sales at this point. However, we won’t let this stop us from closing in on that $10M Amazon revenue goal. We still have a ton of tricks up our sleeves and we’re not only preparing ourselves for Q4, but also for next year with all the products we’re developing!
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