Improving Your Amazon Sales, Part III: Investing in Amazon

This is the third in a three part series on increasing your sales on Amazon.com. It makes sense to read part one, Quick Wins, and part two, Repackage Yourself, first.

This article focuses on ways to invest in your Amazon presence to drive additional sales. These tactics should be tested thoroughly before rolling out; they don’t work equally effectively across all Amazon sellers. Here’s what I suggest you try:

Advertise on Amazon

In some categories, Amazon still allows Amazon Sponsored Ads. These show up at the bottom of a search result page and drive customers to your product page on Amazon.com. They work very similarly to Google paid search ads. And you pay for them by the click, similar to Google.

This tactic is extremely effective for proprietary product that sells on Amazon, but doesn’t get enough exposure. This can improve the number of people that see your product and increase the number of visits to your Amazon product pages. If they convert to buyers, it’s a huge boost. Amazon won’t show your ad unless you are winning the buy box, so there is some protection from advertising for your competitors.

You do have to be careful not to overspend. You’re already paying Amazon a hefty commission on the sale and this results in more margin going to Amazon. On proprietary product, where you have higher margins, it can be a way to fuel sales. But it doesn’t work well on items that you’re discounting heavily in order to win the buy box.

Get a Lightning Deal

The Amazon Deals Page  is the most visited page on Amazon besides the homepage. Needless to say, it gets millions of shoppers every day. The best (and easiest) way to show up there is to get a Lightning Deal. Lightning Deals move a lot of product. Typically they can sell two weeks worth of goods in two hours. If you make it to the actual deals page, you’ll move two months worth in two hours (roughly).

However, to get a Lightning Deal you have to have enough inventory at Amazon (FBA) to cover their projections and you have to discount at least 20% below the price over the last 30 days and Amazon has to believe it’s a desirable product. Once you pass that hurdle, what is the value in a Lightning Deal?

Well, here’s the theory: Sales Rank means a lot on Amazon. Higher sales rank means you show up higher in search results. You get more merchandising, which means showing up in more emails and on other Amazon.com pages. So theoretically, if you can drive up your Sales Rank, you can lift sales of a product into the future. And the extra merchandising will help hold up those sales.

So, if you have a product that you want to drive, get a Lightning Deal (which lasts 2 hours) and let it drive up your sales rank in order to drive future sales at a (hopefully) higher price and margin. In my experience, this works extremely well for some products and awful for others. It’s something you have to test. In some instances, I also see a halo effect on related products that you sell (they are typically merchandised on the Amazon product detail page). So that’s valuable as well.

This is more of a one-off way to drive a specific product, but it’s worth considering.

Sell Direct to Amazon

Proprietary product is hard on Amazon. The reason is: people don’t really shop on Amazon (or rarely). They buy on Amazon. That means they only visit once they’ve already decided what they need. So if people aren’t searching on Amazon for your product, it can often sit unnoticed without a lot of sales. And proprietary product tends to sit unnoticed.

So consider selling directly to Amazon. If Amazon buys a product and owns it, they have a better reason to merchandise it and move units. In my experience it often drives sales up 3x by selling direct. You do have to give Amazon a wholesale price and to guarantee that you are not selling it cheaper to others. And it needs to be at least 20% below the list price. But you can stop selling to Amazon whenever you see fit and it is a way to move more goods.

The biggest concern here is that Amazon does not adhere (or agree to) MAP policies. So if your product is being discounted virtually anywhere online, Amazon will discount it. They desire to be the lowest price and they generally win that battle. So don’t do it if a discounted price would hurt the rest of your corporate sales too much.

Bonus Idea: Visit Amazon

Buy a plane ticket and go visit your Amazon category reps. This is a fantastic way to improve your Amazon sales and it costs little. I recommend setting up as many meetings as you can with key Amazon employees and talking to them about your business. This keeps your brand front and center in front of them, while also giving you better information about what Amazon wants and needs. It’s a great way to get in on alpha and beta tests as well.

Not enough folks do this. If Amazon is a significant part of your business, you should be talking to them face to face. Take them to dinner. Just hang out some. It’s worth every penny.

Last Thoughts

If I have to leave you with one idea it would be this: Keep Testing. Keep Trying. Keep Learning.

Try new things. See what works and what doesn’t. And move on. Also keep close to Amazon. They are always trying new experiments and usually looking for people to be part of it. There are so many buyers on Amazon.com that almost everyone has a business opportunity on the site. The question is: how can you maximize gross profit dollars?

Good luck!

Improving Your Amazon Sales, Part II: Repackage Yourself

This is the second part of a three part series on increasing your ecommerce sales on Amazon.com. The first article, Quick Wins offers some quick ways to help drive up your Amazon sales. This article focuses on some alternative ways to improve sales that are a bit less obvious.

Not all sales drivers on Amazon involve dropping your price. Some are available to you by thinking differently. These ideas may not work for everyone, but consider how they might impact your business.

Sell in Case Packs

This is a classic way of reducing competition on items where price has become the dominate way of winning. And it works well on Amazon. So think about your items and see if there are ways you could package sets or multiples in a way that consumers will care about.

These GE Water Filters are a perfect example. Notice that there are 45 competitors on the one pack, but only 11 on the two and only nine on the six pack.

If you have a product that folks will buy in bulk or repeatedly over time, put it in a case pack and ship it to Amazon. This also drives up your average order value, which can improve your margins (lower cost to ship in terms of a percentage).

Frustration Free Packaging

If you want to be more aggressive, test out Amazon’s Frustration Free Packaging. Basically you have to create easy-to-open packaging for your goods and get it certified from Amazon as “Frustration Free.” Amazon typically makes the frustration-free option the default when you click from a search results page. I say typically, because I have seen a few instances where this is not true, but it happens 99% of the time when I’m on Amazon.

If you’re the only Frustration-free offer, you win the buy box. The customer would have to select off “Frustration-Free Packaging” in order to even see the competitors, which seems unlikely. So it should reduce price competition, particularly among smaller players who don’t have the resources to go through the certification process.

Be careful with this option: it’s not proven and, as with anything, Amazon can change the rules at any time. But I do think it’s worth testing to see if you can get a bump.

Conclusion

This is the shortest of the three articles on driving up Amazon sales and this one tends to be more about reducing competition, rather than driving up pricing. But on Amazon less competition translates to more sales, so these are still worthwhile tests. Good luck!

Improving your Amazon Sales Part 1: Quick Wins

A few weeks ago at the IMedia Commerce Summit, I did a fast, down-and-dirty presentation of ideas for improving your Amazon sales. Unfortunately I only had 15 minutes to talk, so I really had to run through the ideas. I thought I would take some time now to go more indepth about the opportunity with Amazon and the “why” behind those ideas. For background, I’ve been working with companies selling on Amazon since they launched Z-Shops. I’m betting most people don’t even remember Z-Shops! The clearest thing I remember about Z-Shops was how crazy the secrecy agreements we had to sign with Amazon were.

These ideas assume you are already selling on Amazon. To read my thoughts on Should I Sell on Amazon, click that link. This will be the first of a three part series of ideas.

First, a hat tip to Marketplace Ignition and Mercent. We use Mercent as our tool to sell on Amazon. It reprices almost 100k skus on a constant basis and does a great job handling our feed. We engage with Marketplace Ignition for consulting services as well as hands on management of the feed. They are an invaluable partner to us.

Goals

First, it’s key to understand the point of selling on Amazon. Amazon is a source of additional margin dollars. Typically it’s not a great source of margin percentage, since you’ll have to discount to drive sales on Amazon. And it’s an awful source of customers or marketshare or brand building. Typically a customer won’t even realize they are buying from you on Amazon. And I’ve only seen a handful of situations where Amazon customers have any downstream value to a business.

On Amazon, you need to make a profit on every sale (unless you are liquidating, of course). So it’s key to know your numbers and make sure they are correct. We craft an Amazon P&L for every sku that takes into account return rates, cost of shipping, margin, etc to understand what we need to make on Amazon to hit our goals. Then we are willing to go down to that price, if necessary (Mercent reprices to win the buy box for us, but maximizes the margin we can get while winning it).

So to be clear: the goal is margin dollars. And here are some ideas to increase them:

Price Manage

Amazon is pricing superstore. To win the sale on Amazon, you need to win the buy box. If you’re selling branded, non-MAP products, you should be price managing. Using a tool like Mercent you can continually raise or lower your price to win sales. The key is understanding what price you are willing to sell at before you would rather lose the sale. That’s your floor. Drop your price to win until you hit that floor; tools like Mercent are very good at managing this.

The caveat here is: it’s really difficult to beat Amazon. If Amazon is buying the product directly, you’ll only win when they run out of inventory. You can try to push Amazon’s price down so that they run out faster, but that is a tough game to win.

Use FBA Strategically

Fulfillment by Amazon is where you ship your goods to Amazon’s warehouse and they fulfill the order. You, however, own the goods the entire time. FBA improves Amazon sales in two ways: it allows you to show up on Amazon Prime searches (when Prime customers refine by “Prime Eligible” on the left) and it allows you to win the buy box without being the lowest price; you still have to be close, but can charge slightly more and win.

The cost of FBA is cheap. It’s often cheaper than you can deliver an order from your warehouse. And, if a product is selling on Amazon, it will absolutely increase your velocity of sales. It will not increase sales of a product that isn’t selling. It’s gasoline, not a match. So pick your products carefully and test well.

The risk you take here is in inventory. Don’t send too much. On Amazon a strong selling item can go to zero for any number of reasons: Amazon started sourcing the product; a competitor decided to liquidate; someone added bad reviews; etc. If sales drop to zero, you have to pull the inventory back from Amazon to your warehouse, which is painful. You can sell direct from Amazon’s inventory, but it’s not an easy thing to pull off.

Ask for Customer Reviews

Your reviews matter on Amazon. If your reviews aren’t good enough, Amazon has no issue kicking you off the site. But, if your reviews are better than the competition, you can win the buy box more often than you would otherwise. So reviews do translate into sales albeit in a black box way.

So you should ask your customers for reviews. However, if you ask all your customers, you’ll increase the bad reviews right along with the good and not help your overall score. So be careful about when and how you ask for reviews. I recommend starting by asking for reviews on orders that ship same day and complete. They are most likely to give you a good rating. Then work your way into the rest of your orders only increasing when you see limited bad reviews. Don’t ask if you’ve screwed up the order.

We use Feedback Five to help us by sending review emails and they do a great job.

Build Your Content

Finally, and perhaps most importantly, build up the content you send to Amazon. Amazon utilizes the content you send to merchandise your products both on the site and within search results. This is true of the name, the description, and the bullet points as well as for the categorization. Include as much good information as you can to help their algorithms show your products correctly. This will give you an advantage over anyone not doing a great job. Typically I see this having impact in where you show up within Amazon search results.

A word on categorization: categorize at the lowest level possible for every product and be very vigilant to get this correct. It is a big, big mistake to not take the time to get your categorization correct. Lowest level, correct category. If you take only one thing from this article, do this correctly.

If you’re selling private label or proprietary goods on Amazon, content is a way to help your sales. You can pay for an expanded content page (like this) that gives you a great shot at improving conversion and your placement in search. Be careful, though. These pages rank high in SEO, so on critical products you may end up pulling more search to Amazon than to yourself. It’s something to consider.

Conclusion

This is the first four “quick win” ideas for improving your Amazon sales. Amazon is a massive sales channel and small improvements can drive a surprising amount of additional sales. I think these four are the right place to start and work on improvements. My next article will be about packaging ideas to drive additional sales and the final one is on investing in your Amazon sales channel.

Hope this helps and good luck! Amazon is the world’s largest mall and represents around 25% off all ecommerce. Getting it right is important.

Continue reading with Improving Amazon Sales Part II: Repackage Yourself.