Oh, don’t you just LOVE this time of the year!!! 🙂 The time of year when the kids go back to school and you’re lucky that you’re old enough to just be the driver or sandwich maker in the morning. YES! I don’t know about you, but for the most part, I hated being in school. I didn’t like it at all—well, apart from the partying and hanging out with friends. I was lucky enough to be born “smart”, so I didn’t have to put in much effort at all to sail through those school years. Looking back, I almost never did any homework and still, somehow, I magically made it through.
Anyways, back to the present day with my own kids, and I obviously look at the whole situation from a completely different angle. Still, in my mind, September is the clearly defined line when summer ends and the real work begins. These next four months in the lead up to Christmas are always the most productive for me—and the most exciting, of course! Anyone who is in the retail business is excited for the 4th Quarter because we all hope to break new sales records and end the year with tons of profit to splash out on unnecessarily expensive Christmas presents.
And this is the first FULL 4th Quarter for my new Amazon business—the one that I have been covering in these monthly posts throughout 2018, which makes me super excited! If you haven’t been following my earlier posts, you can find them all here.
There are three big reasons why I’m excited:
- Starting from October, I will have the previous year’s sales data for comparison, so I can see whether or not I have made any significant progress with this business.
- I have been extra careful this year. I have prepared double the stock amount I had last year. Hopefully, unlike last year, I will not run out right before the busiest shopping days!
- I have two new Christmas variations of the product prepared, so I am hopeful that this will also help with sales and reaching a wider audience of Christmas shoppers.
And, of course, there’s ongoing work on the Amazon.com site too. The new product is in production right now, and I plan on starting to sell it in October. Even though it’s not a product directly related to the holiday season, I do hope that I have finally managed to crack the correct version and price point, but more on that in a moment.
For now, let’s take a quick look at how my Amazon UK FBA account performed in August 2018!
Amazon UK Results
After AMAZING July results, where I made more than £20,000 in sales, August has brought me back to my normal sales level of just above £15,000 with 1511 units sold. This just proves again how powerful Amazon Prime day and week is. It’s obvious that Amazon specifically does it in the notoriously slowest month of the year (July) to offset low sales caused by people going on holidays, spending time in the sun, etc.
Also, let’s not forget about the Mallorca Style summer we have been having this year! Extremely good weather often makes things even worse because people are spending lots and lots of time outside and don’t shop as much online as they do during the wintertime.
For people who have been selling online for many years, you will know what I’m talking about here. It obviously depends on the product you sell, but in most cases, there will be clear patterns on good vs. bad weather and how that can affect sales. And there will be clear patterns on weekdays and sales proportions, especially on Amazon! For example, for this business, Monday to Thursday are my best days with the highest sales, but things are pretty quiet on the weekends:
What’s interesting is that on the weekends, I still spend quite a lot on ads and my ACoS does go up considerably! At some point, I would like to test a theory by pausing my ad campaigns over the weekends and resuming them on Mondays. It would be interesting to see how this affects my organic rankings and overall sales. I want to test this out but, honestly, I’m afraid to totally mess things up in Amazon’s eyes. If you happen to have done any such tests, I would love to hear from you in the comments box below this post.
Ok, going back to my Amazon UK sales for August 2018. I sold 1511 units, which means that my profit before ad spend was:
Total Sales: £15,068.33
Units sold: 1,511
Profit: 1.511 x £4 = £6,044
But that’s not my net profit as I did spend money on Sponsored Product Ads as well as Headline Search Ads, so I need to take that amount off:
Advertising cost: £1,810.06
NET profit: £6,044 – £1,810.06 = £4,233.94
By the way, Headline Search Ads have performed very well in terms of ACoS. While my average ACoS is just around the 40% mark (slightly above in August), HSA have improved dramatically and show an ACoS number of 25%, so they’re profitable on their own:
I’m very happy about this because, in the beginning, I could not get my ACoS lower than 100% for Headline Search Ads. However, as you can see, they now perform very well after some bid optimisation. The problem, though, is the low search volume, but I can’t do much about that. At the end of the day, they are ads and they look like ads, which is what causes click-through rates to be so low (below 0.5%).
If you’re not using Headline Search Ads yet, I highly recommend you give them a try! Even though you can’t get massive traffic via these ads, the clicks are cheap because not many sellers are using them, so you don’t have to bid that high.
Going back to the sales results, this is how the year 2018 looks so far:
(Total number in Amazon reports is slightly different due to returns/refunds adjustments which can happen weeks after I have created my monthly reports and blog posts).
Another great month finished!
If sales continue at the current rate, we’re looking at a solid £200k year in sales on the UK platform alone. But, with the Christmas shopping season just around the corner, I really hope I will be able to reach £220k or maybe even more! Profit should exceed the £50,000 mark too, which is amazing for the first year of trading for this business—especially selling just one product.
The long-term goal, of course, is to expand properly onto Amazon US too, because that’s where I could easily DOUBLE overall sales in 2019! So, let’s take a closer look at the latest developments on Amazon.com!
Amazon USA Results
I have scared off too many people with last week’s email, so apologies for that! But I did that on purpose, of course. I really wanted you to OPEN my email, read it, and check out the detailed blog post that went with it. Amazon’s new Inventory Performance Index is no joke and while it’s not introduced in the UK yet, I really hope that by giving you a heads up, you will be able to prepare for it properly so, unlike other sellers, it won’t affect your Amazon account in any negative way.
Yes, by the way, my catchy email title did work out! As you can see from the screenshot below, this email broadcast achieved almost a 30% open rate, which is amongst the highest rates I have ever seen for my newsletters:
And this stuff is real!!! It has been less than two weeks since I wrote that article and already my IPI on Amazon.com has dropped down to 577 (from 594). That’s almost 20 points in a very short period of time—even though I’ve got an Excess Inventory percentage that is currently in the GREEN!
I guess it hasn’t been updated to include the latest end-of-August sales, but I did exactly what I promised to do in my Inventory Performance Index (IPI) article. Last week, I lowered the price of my product from $9.99 to $4.99 to quickly get rid of any remaining stock (still around 1000 units). The idea is that doing this would prevent my IPI from being lowered by so much that I get penalised when I launch my new product version (more on that in a moment).
Altogether, there are four variations of the product. I lowered the price for three of them and left just one selling at $9.99 as it has less than 20 units remaining in stock (clearly a bestseller):
Yes, by selling the product at $4.99, I’m making a loss, but it’s still cheaper for me than simply destroying the goods. Besides, I’m continuing to earn seller feedback and maintain a recent sales history, which should be worth something. But, basically, when the time comes and the new item arrives, I will probably get rid of the remaining stock so I can start from a blank page, so to speak.
If we look at the sales data in August, it actually didn’t go too badly at all! I sold 246 units and almost all of them were for full price—and without spending a cent on advertising!
215 units (or so) sold at the full price of $9.99, which at a profit of $3.30 each means a NET profit of $712.80 for the month of August 2018.
The remaining 30 units sold at a loss but, all in all, I will still make a profit in August. Honestly, I don’t even count it anymore. At this stage, it doesn’t matter because I’m fully committed to the new product version and have very high expectations of it.
There was even a day when I sold 30 UNITS!!! But it turned out that someone bought 20 units, so it basically was a one time luck, nothing else:
From what I can see now, when I finish with this first version of the product (the 2000 units of it that I sent to Amazon), I will probably come out at a slight loss—maybe about $1000 or so. But I’m not looking at that as a negative experience. FAR FROM IT!
1) This was just an experiment. A real-life experiment where I gathered highly important market data that I could not get in a virtual way using a product research tool. Now I know for sure that my product—one that works well in the UK—simply isn’t suitable for the US market.
2) With this knowledge, I can now create that PERFECT product that is suitable for the Amazon US platform, and hopefully I can make that one a huge success. There is, of course, still an element of uncertainty (mostly regarding ad cost and ranking because the niche is super competitive), but judging from results I’ve gotten so far, I’m pretty confident that I will be able to make a decent profit with the new version of the product.
3) How can you call it a loss? You can’t! It’s an investment that pointed me in the right direction. Also, as I’m now actively selling on Amazon US, I can see firsthand what new tools, features or rules Amazon are working on, like the new Inventory Performance Index, which allows me and YOU to stay ahead of any such news!
That’s about it on the Amazon US side of things. I will update you one more time on these remaining units in my September update. After that, hopefully, it will be all about the new product and my journey to create a high-ranking, high-converting, highly profitable, private-label FBA product listing on the Amazon.com site!
So, what’s the latest on the new product? Let’s find out!
The product is almost finished, YES! 🙂 If everything goes to the plan with logistics, I hope to have the product IN STOCK on Amazon.com in October—right before the Christmas shopping starts. Even though this product is not directly Christmas-related (at least, not the variation I’m starting with), I can tell from experience that it still helps to launch a product during the 4th Quarter!
Yes, advertising costs are often higher during this period, but people are also buying like crazy! And many people buy gifts that… are not actually gifts? I can totally imagine that my new product can be used as a gift too, so that brings extra eyeballs to my listing. Besides, conversion rates also go through the roof during Q4 because people simply don’t have that much time to carefully consider each and every purchase—they just buy, buy, buy!
With that being said, unlike some so-called “Amazon gurus”, I’m not the type of person who will tell you to ONLY launch new products during Q4. I can’t see why you can’t do it any other time of the year, especially if your budget is limited and you can’t spend lots of money on PPC. During the high sales season, those click costs go up in the majority of categories, making it an expensive time to launch for new sellers. So, launch your product whenever it’s ready and don’t try to plan your launch specifically around Q4!
Let’s get back to my new product. I already explained in the July update post that the product is essentially staying the same. I’m just bundling together three variations of the existing product, making some new packaging and selling the pack at a higher price. We’ll get down to the numbers when the product goes on sale, but during the months of September, October and November, I want to cover the tasks I’m going through to create a new product listing and share that information with you.
We’ll start off with packaging! It’s something so many people don’t pay close attention to because they don’t realise that packaging is actually the easiest way to differentiate yourself from other sellers on Amazon and create a true BRAND at the same time. So, next week, I will have a detailed post on how to design, create and manufacture custom-made packaging for your Amazon FBA private-label product, including lots of images, real-life examples and contacts!
After that, we’ll probably look into photography, listing titles, bullet points and descriptions. I will also cover shipping, which will become a huge thing now with the new IPI being introduced. Once things take off, I myself will probably have to find an Amazon prep company in the US (probably in early-2019) because sending this item via air is expensive (just 600 units on a pallet at a cost of around $3 per unit). In my case, using a combination of sea freight and an Amazon prep company should bring that cost down quite a lot.
I will try to continue publishing one post a week, covering one topic at a time.
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And make sure you open those emails I send you! You never know how important that information may be! I understand that not all of the topics I talk about are of interest to you, but I do really appreciate it when you at least open the email and go to the blog post to see what the latest fuss is all about.
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Until next week!