In today’s episode, I’m going to share with you my results and key lessons learned in my first 90 days of selling on Amazon. So far, it’s been an amazing ride and I have learned some incredibly valuable lessons that I believe are going to serve me very well over the next 90 days.
My goal with this post is twofold: to share with you how I’m doing, as well as to share with you some of the key lessons and take aways.
My hope is that you will use this information to improve what you are already doing, or, if you haven’t started on Amazon yet, to serve as a kick in the pants to encourage you to get going!
Listen to the Audio
In This Episode, I Discuss:
- My Revenue, ROI, and Profit Margin
- The effect of Prime Day on my sales and profits
- The massive boost in sales from Amazon Lightning Deals
- Some of my biggest mistakes
- Software tools I’ve tested
- My wildly successful Social Media experiment
- The major shift in my business going forward
Total Revenue, ROI, and Profit Margin
My first product listing went on live on April 11, 2016, and since then, sales have happened pretty much every day – which is one of the things I love about selling on Amazon.
As you can see on the image below, my total revenue as of the end of July 12th (Prime Day) was $18,763.54. My profit margin was 17% and the total profit generated was $3,234.58.
During that time, I received 1,790 orders; 470 of which were promotions where I heavily discounted the product (usually 80% off) to generate reviews.
Behind the Scenes Breakdown By My Top Products
Prior to selling anything, all you ever get to look at is estimates of how much products sell (using tools like JungleScout). This is all fine and dandy, but the real learning begins once you start selling. My hope with this section of the post is to give would-be sellers insights into what is actually possible once you take the plunge.
Here’s a screenshot of the very first product I launched. My total investment in inventory for this product was $861.
As you can see, it’s been a very good product for me with an ROI of 216% and a profit of $1,577.77. I have now received all my original investment back twice over, and the best part is that I still have 142 units in stock, so all sales going forward will be 100% profit.
The only problem with this product is that it has limited demand, because, like many new sellers, I was very careful to choose a product that wasn’t overly competitive. In hindsight, I was too cautious.
What you can’t see from this screenshot was that prior to the Lightning Deal I ran on it, this product hadn’t done nearly as well from a revenue perspective – due to the limited demand I just mentioned.
Prior to the lightening deal, my profit margin (ROI) for this product was just shy of 50% when I wasn’t running any promos.
Below is the report for this same product before the Lightning Deal. As you can see, gross sales were $4,8333.81 and my profit was just $174.71, largely because I ran a LOT of promos on this product to generate reviews. It now has 195 reviews with a 4.5 star rating.
The process of launching this product and getting reviews taught me a great deal of valuable lessons, so it was worth every penny.
Here’s the original JungleScout report that I used to make my decision to invest in this product. As you can see, there is relatively low demand. Also, at least one of the top 5 sellers (for this keyword) had fewer than 100 reviews. (Note: there are several other keywords that people use to find this product, so for each of those keywords, the report below would be slightly different.)
This next product has been an excellent investment. I say so because, despite the fact that it also has low demand, it’s earned a fantastic ROI and has a killer profit margin.
My total investment in inventory for this product is $1,194, and as you can see below, I have already received all my original investment back, and I still have another 192 units in stock, so going forward, all sales will be pure profit.
To create this product, I actually combined two of the products from my very first order into a combo in an effort to differentiate myself from the competition. My landed cost per unit is $3.41 and the product sells for $19.97.
Thanks to promotions, this product now has 26 reviews and ranks fairly well, as you can see in the chart below. Each line represents a keyword that my listing ranks for. Over on the left, you can see which page of the SERPs, my listing, for a given keyword, will appear.
In the last 30 days, this product has earned me $685.45 in profit, which I am thrilled about because this income is now totally passive.
Here’s the original JungleScout report that I used to make my decision to invest in this product. As you can see, the demand is really low. So low in fact, that I would not normally have chosen this product. The only reason I ever bought it was that my supplier for product #1 told me that I should buy it, so I thought, “sure, why not?” and I placed a small order for just 100 units.
The big take away here is that if you don’t swing the bat, you can’t hit the ball!
If you are one of those people suffering from analysis paralysis, my hope is that seeing this will help you to realize that you have to take action in order to be successful.
Here’s a screenshot of another product that I invested in with my first order. My total investment in this inventory for product is $738.
As you can see from the screenshot below, total revenue for this product so far is $3,309.95 with a 215% ROI and a $784.71 profit. I now have all of my original investment back, and I still have another 220 units to sell!
Much like product number one, this product has limited demand (it targets most of the same keywords as product #1). This was another of the products that I ran on a Lightning Deal and the day we ran this product on the Lightning Deal, it sold $890 worth (60 units).
To get the 69 reviews this product has, I’ve run 79 promos (not everyone who buys the promo leaves a review) where I offered it to buyers for 80% off.
Note: when you see that I’ve offered 80% off, I actually lose money on every sale because even though my cost of goods sold (COGS) is covered by the 20% I receive, Amazon’s fees still apply and they take about 1/3 off the top. For example, If I have a product that is normally $10 with a COGS of $1 and I give 80% off, I receive $2 per sale…BUT Amazon charges me about $3, so $10 (retail price) – 80% = $2 net proceeds – $3 (Amazon fee is based on the $10 “normal” price) – $1 (COGS) = a $2 loss per sale.
Products #4, 5 & 6
These next three products make up the majority of the remaining sales, and of them, one (#4, on the left) is a product that is in very high demand with a TON of competition.
So far, this product is one that I’ve run 15 promotions on to earn a total of 11 customer reviews. My initial investment in this product was just $753. My landed cost per unit is $5.02 and it sells on Amazon for anywhere from $16.99 to $26.99.
Here is the JungleScout screenshot for one of the main keywords for this product. As you can see in the screenshot, there are prices above $26.99, but the pricier products have more features than the one I’m selling.
As you can see, there is massive demand, plenty of depth, and a few sellers in the top 10 have under 100 reviews. It was this low review count, combined with the very high demand that made me want to take a risk on investing in this product.
Including the extra 1050 units I’ve just ordered, my total investment in this product will be $6,026 and between PPC and promotional expenses that I expect to incur, I do not expect to make an immediate profit on my $6K investment. Instead, I’m hoping that by investing heavily in PPC, I will be able to get this product ranked organically. If I am successful, over the next year, I could sell over $500,000 worth of it and make a killing in the process. Or, I could just break even. Time will tell.
This product will represent my last significant investment in a private label product for a while. To understand why, read the rest of this post :)
Products # 7 through 14
I do have another eight products that I have invested a total of $8,474 into. What about them?
Good question! Six of them are very similar to each other. So similar in fact, that I’ve asked Amazon to combine all six listings into just one listing with 6 variations. I await their response on that. My thinking is that the one listing will be easier to get to rank because all the sales & promotions will be focused on just one listing vs the 6 that I have now.
Another of the listings is for a product that I think I just goofed on…though, I do plan to run more PPC and promotions to get it to rank as it is kind of similar to the six above…though not similar enough to combine (though maybe it is?).
I invested $2,715 in this product, and, worst case scenario, I’ll just drop the price and wait for them to all sell to get my money back.
The last product (#14) of this bunch is a very high demand product, similar to #4. I have invested $1,595 into this product and, to be honest, I just haven’t put in the necessary effort to promote it; largely because the ROI is much lower than product #4 and they pretty much serve the same purpose for a customer. I will probably continue to run promotions on this product and see how that affects the listings rank in the Amazon SERPs. I suspect it will turn out to be a “learning experience” and not much more – though I’m sure I will still get all my investment back.
This year was my first time being a seller for Amazon’s Prime Day – which I’m told is like another Black Friday for Amazon Sellers who get to participate.
Unfortunately, I wasn’t invited to directly participate in Prime Day; however, I still benefited by creating some one-day specials on some of my more popular products. As you can see below, the day was still a pretty decent one at about 2.5X my regular daily sales.
If you aren’t familiar with what a lightning deal is, it’s a promotional tool offered by Amazon to 3rd party sellers like me.
I don’t yet know much about how to qualify for one, other than to say that you must have a product that Amazon allows you to run a deal on, plus you must have at least 99 units and be willing to offer a discount of at least 20%.
Once approved, the deal gets scheduled to run for 4 hours and then it’s over.
Last week, the first 3 of my Lightning Deals went live, and as you can see, each of them had massive impact on July’s revenue!
As you can see, over the 3 consecutive days that I ran Lightning Deals, total revenue was $4,892.10, compared to just $233.63 over the same 3 days the week earlier (the prior week was unusually slow and I don’t know why).
Profit from the Lightning Deals totaled $2,180.44 with a 385% ROI. Suffice to say, I’m going to be running as many more Lightning Deals as possible.
The major lesson here is this: you must get your products selling enough to qualify for a Lightning Deal, and if you have to use promotions or PPC at a loss to do it, the profit generated in each of the subsequent Lightning Deals will most likely make it totally worth it. In my case, it was definitely worth it!
Major Mistakes I Made
It is impossible to succeed in business without making a number of mistakes along the way (and ironically, fear of making a mistake is the #1 reason newbies never get started).
In fact, the mistakes I make are generally the source of my greatest lessons – which is one of the reasons that I am such a strong believer in “taking action” instead of just endlessly reading about what others are doing.
Side note: If you want more details how how taking action will lead to success in ways you didn’t expect, watch the video below. I recorded it back in 2010 and it’s been watched about 2.7 million times since, so I must be saying something people resonate with – and it’s particularly applicable to product research.
Listing Products in the Wrong Category
When I started selling my fashion jewelry, I wasn’t able to get un-gated in Health & Personal care where similar products are sold, so I opted to list them in Jewelry instead. What I didn’t realize at the time was that in the Jewelry category I would not have access to promote my products with Amazon’s Sponsored Products (PPC).
To rectify this problem, I tried repeatedly submitting invoices from my Chinese suppliers to Amazon to get approved to sell in Health & Personal Care and I was turned down every time. To say it was wildly frustrating is an understatement!
In the end, I had to hire a consultant and spend nearly $1,000 to get approved to sell in Health & Personal Care (I also got approved for Grocery and Beauty at the same time) so that I could ask Amazon to move my products into this category. Luckily for me, I ended up being able to “trade services” with the consultant (she needed help with marketing) and my cash outlay was just $250 instead of the full $1,000.
Not fully understanding the restrictions of each of the categories that I participated in was a HUGE mistake! Make sure you read the fine print BEFORE you order your inventory!
Too Many Similar Products
Another mistake that I’ve made is created separate product listings for each of my fashion jewelry items, instead of creating a single product listing with variations. Had I gone the single listing route, I would have a lot more reviews on the one listing, instead of having to spread these reviews around the 6 separate listings. Plus, if I had just one listing, it would have recorded more sales; thereby (presumably) helping its rank in the Amazon SERPs.
I’m working on getting the listings consolidated now and will report back in a future episode how that helped (or hurt) my sales.
Want to learn more about the best strategies for product research?
Listen to episode 201: The Art & Science of Choosing Your First Product to Sell on Amazon
What to hear more about mistakes I’ve made and lessons I’ve learned?
Listen to episode 207: May FBA Income Report, New Products, Huge Mistakes, and More!
Seller Tools I’ve Tested
I love me a good software tool! They save me time, give me valuable data, and make my life easier.
So far I have tested a number of tools and I’d like to share some brief comments on each of them in the hopes of helping you to better understand which one(s) you should use.
JungleScout: This is without a doubt my favorite tool because it makes product research so much easier. It comes in two versions: a browser extension and a web application. Both are incredibly powerful and I couldn’t live without them.
With Junglescout, I’m easily able to figure out the key data that I need to quickly determine if I should stock a product or not.
ReviewKick: This app is made by the same people as JungleScout and is the primary app that I’ve been using to get reviews for my products. For a long time it was free, but now it’s a paid application and starts at $29/month. It’s super easy to use and very effective.
Want to learn more about getting product reviews?
Listen to episode 204: How I Generated 154 Product Reviews in 6 Weeks
AMZTracker: This is an app that I have used on and off as I have tested other tools that had overlapping functionality. The key functions that is performs include: getting reviews, tracking keyword rank, performing keyword research, providing an on-page analyzer, and producing Sales Tracking. If you don’t need a second source of getting reviews, some of the other apps I’m going to mention below will do pretty much everything else AMZTracker does. AMZTracker starts at $50/month.
Inventory Lab: This app is the first app that I tested to get profit and loss reports for my Amazon business. It starts at $49/month and does little else besides accounting reporting. If that is all you need, it’s a terrific app to try out.
Sellics: When I switched from Inventory Lab’s accounting app, I decided to give Sellics a try and I was really glad that I did. It’s kind of the Swiss Army Knife of apps for Amazon sellers and I highly recommend it. It’s packed with features, including KPI dashboards, keyword rank tracking, competitor spy, review tracking, basic profit & loss reporting, PPC manager, and a product search tool very similar to JungleScout’s web application. If you can afford only one app, Sellics is the one I recommend.
HelloProfit: If you want the best Amazon seller accounting application that money can buy, Hello Profit is it. The dashboards and reports are insanely good (this is the app I have used for many of the screenshots up at the top of this post), plus it allows me to track my products’ keyword ranks, download my customer lists, track PPC performance, search for best selling products, and much more. I LOVE this app!
Feedback Genius: This app is the very first one that I used as my auto-responder for people that bought my products. The goal is to get them to leave seller feedback and product reviews after buying and the app does a terrific job of that. I highly recommend giving it a try.
SalesBacker: SalesBacker is another app that is pretty much just like Feedback Genius and it’s the one I’m using at this point in time. I decided to use this instead of Feedback Genius because I like to test apps and for me, I found the user interface a little easier to use…plus I’m friends with Chris Guthrie, the owner. If you need to get more product reviews from people who’ve bought from you, I highly recommend this app as well.
Chrome Extensions to Speed Up Product Research
The next four extensions are all free and incredibly powerful for speeding up product research for wholesale products. They will be of much less use if private label products are your only focus.
Keepa – Amazon Price Tracking Chrome Extension: Keepa is a static app. It creates a price history chart right below a product image on any Amazon product page. No click involved. For many products, Keepa also tracks if and when Amazon has been a seller of the product as well as the sales rank history of the product. This information is displayed in an easy to understand chart. Download Keepa here.
TWF Buy Box Scope: This extension creates a box that pulls up the ASIN, category and sales rank to the top of the product page to save you scrolling, and it also lists all FBA sellers that offer prices within 2% of the buy box. Download TWF Buy Box Scope.
DS Amazon Quick View: This an app that displays rank information and category information in the Amazon search page saving you time to see if a product is even worth your click. Download it here.
My Hugely Successful Social Media Experiment
Back when I decided I was going to get into the pet supplies niche, I created a Facebook page for dogs. The goal was to buy likes and see if I could use this audience to help me launch my dog products, get reviews, build a subscriber list etc…
As you can see below, I had to spend $550 on FB ads to buy enough likes to get the ball rolling. During the 2 1/2 months that I was spending $6/day on ads, the growth was ok, but not mindblowing by any stretch.
But then around mid-June, the organic growth just started to go crazy and we’ve been steadily adding close to 1,000 likes a day since.
As if that is not enough, check out last week’s post reach and engagement. We reached 325,416 people (this means the post showed up in their feed) and a whopping 145,795 people commented, liked, or shared our posts. Insane!
Here’s the best part: adding content takes me under 10 minutes a week because I have figured out how to pretty much automate it using Pinterest, Buffer, and Zapier. All I did was create a zap that automatically added a new pin to my Buffer Queue so now every time I click on the button on Pinterest to save a pin to one of my boards, that image will get posted to my Facebook page. The result is effortless content curation.
How I Plan to Leverage My Facebook Audience
As it may not be immediately obvious how I plan to get a payoff from my $550 investment in building this audience, I thought it might be a good idea to point out some of the ways that I plan to leverage this asset.
Product Launches: Each time I launch a new product, I can create posts about it and then choose to boost them with additional spend. If I offer these products at a discount, I will be able to get reviews, just like I’m doing with ReviewKick now.
Contests: I have just started to experiment with asking for user-submitted videos. I’m telling the audience that if they submit a video, they will be eligible for a discount coupon for our products. This will create awareness for our site and our Amazon listings. Plus, I expect I’ll end up with some pretty hilarious videos :)
Build an Email List: Having access to this audience is kind like having an email list, though not as good. I plan to offer promotions, coupons, etc…as a way of collecting email addresses, which I will then use to promote additional promotions, coupons, product launches, etc…
Establish Wholesale Accounts with Brands: As you’ll read about in a minute, despite the reasonable level of success I’ve experience in my brief adventure in private label products I’ve decided to make a major shift in my business.
Going forward, I’m going to focus on wholesale instead of private label, and as a part of that, I will need to establish relationships with pet suppliers so that they will sell me their products at wholesale prices.
During those conversations, you can bet I’m going to going to point to this Facebook page and say, “look, I have a huge audience that I can promote your products to” and, as the size of this audiences continues to increase, that statement is going to carry an increasing amount of weight with potential suppliers….or so goes my thinking.
The Major Shift in My Amazon Business Focus
Ok, so I’ve kinda saved the biggest announcement for last.
Ever since I interviewed Dan Meadors and learned how well he was doing with branded products that he was buying wholesale from US suppliers, I have been super keen to learn more about the benefits of this model vs the private label route that I’ve followed so far. My next inventory investment will be in branded wholesale products.
Why have I made this shift, you ask?
The Major Challenges in Private Label
Building a private label business take a lot of work. To succeed, you have to do the following:
- Find products with just the “right” amount of demand vs competition
- Find suppliers on Alibaba to source from
- Deal with China – which means getting up super early, or working in the evenings (which I hate doing)
- Figure out the logistic of importing goods from China (which can be uber complicated)
- Create fully optimized Amazon listings (lots of work)
- Shoot super-high quality photos (expensive)
- Trademark your brand(s) (to prevent listing hi-jackers)
- Give away a TON of product on promotions to get reviews (expensive)
- Spend lots of money on PPC campaigns (that lose money – unless you are lucky) to help build your organic rank
- Ensure you never run out of stock (your listing’s sales rank gets KILLED when you run out of stock – I learned this the hard way)
In the last 4 months, I have done every one of the things you see above, so trust me when I tell you that private label is no walk in the park. It’s still a terrific business, but I don’t think I can ride that horse to my goal of $5M in annual revenue, much less the $10M that will be my next goal after $5M :)
The biggest surprise I’ve had with my Amazon business so far is just how hard it is to get visibility for my product listings. It’s much harder, and much more expensive, that I’d thought it would be.
Keep that in mind if you are going the private label route.
The Wholesale Business Model
In the wholesale business model, as Dan and his partner Eric helped me to realize, all you have to do to be successful is:
- Find products in high demand without too many “competitive” sellers (you will learn in Dan’s course that not all other sellers are “competitive”)
- Find suppliers in the good old USA to sell them to you at a reasonable price
- Earn a share of the “Buy Box”
You don’t have to create product listings, get them ranked, shoot pictures, get reviews, worry about trademarks, and deal with the hassle of communicating with, and importing from, China.
With wholesale, all you do is add yourself as a seller to an existing listing and that takes virtually no effort at all.
The best part is that when you are dealing with high demand branded products, the chances you won’t be able to sell your inventory to get your money back is near zero, because these listings are already ranked and product is selling every day.
There is obviously a lot more to succeeding in wholesale, and I’ll be sharing those lessons as I learn them. With that said, you are probably now thinking wholesale is the way to go… especially if you want to build a multiple 7-figure business like I’m planning to do over the next couple years.
If you do want to learn the wholesale business from Dan, check out his free video training series.
Want to Learn From the Best? Follow Dan’s Wholesale Formula
Shortly after my interview with him, Dan was kind enough to give me access to his Wholesale Formula training program and I have learned a great deal as a result. (Dan will be opening up access to his course again on July 21, 2016 for just one week)
Here’s just a few of the most valuable things I’ve learned from Dan’s Wholesale Formula:
- They key metrics to focus on for wholesale product research
- LEAF sourcing (Dan’s acronym for his method of research)
- How to contact suppliers, and what to say (and not say!)
- How to improve my odds of getting approved for a wholesale account (I’ve already been approved for about a half dozen in my first two weeks and I will be placing my first orders in the next week or so)
- A TON of critical details for streamlining my wholesale business, including:
- Creating optimized SKUs
- Shipping alternatives
- Checking in my orders
- Setting up critical alerts
- Dealing with business constraints that could slow me down
- and much more…
As an example, thanks to Dan’s guidance, I’ve built a team of virtual assistants and completely delegated product research and contacting potential suppliers. This saves me a HUGE amount of time every day.
Now all I have to do each day is look at a short list of products that meet my criteria and respond to replies from potential suppliers.
How big of a deal is that? Well, finding products and contacting suppliers is the #1 time pig in wholesale (as well as in private label), and it’s also the #1 most important activity to undertake in order to grow revenue, so I think it’s a pretty huge deal.
You can’t sell what you haven’t sourced, so sourcing as fast as possible will lead to the fastest revenue growth. Period.
My first 90 days have been an amazing ride, I’ve had a blast, and I’m super excited to see what I can accomplish in the next 90 days. I’m willing to bet it will be a LOT more than I’ve accomplished in the first 90.
If, after reading this, you think that you want to get started, I want to offer you this one caveat: If you aren’t 100% committed to working your ass off to be successful, you don’t need to invest in your education by watching Dan’s videos and/or buying his training course, as it will be a total waste of your time and money.
So, with that said, if you want to see the first one of Dan’s free training videos, you can see it here.
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