I know, I know. You have all been waiting for this post for the last two weeks. The truth is, I really struggle with my work ethic during the summer months—especially with the exceptionally good one we’re experiencing this year! I know that it shouldn’t be an excuse for a business owner like me, but something magically happens to my brain in the summer. It simply goes into “lazy” mode and, without fail, my productiveness goes down.
Of course, each year, I try in vain to fight this natural urge to relax, but, as you know, when you are the boss, when you set your own hours, it is actually very hard to do. Yes, even though I’ve been in this position for soooooo many years, I still have to fight myself to get back to work and keep my motivation levels high. To be honest, it actually gets worse on some level when you reach a decent level of financial independence; it’s very, very hard to make money your main motivator when you’ve already got a good income coming in each month.
And there’s another thing: this year, this summer, I’ve come to realise that I’m a routine person, which means that I perform at my BEST when I’m in a set routine each and every day.
What do I mean by that? For me, routine means:
- Waking up at the same time every day (6 AM)
- Going to bed at the same time every day (10 PM)
- Eating three healthy meals every day, at the same time each day
- Going to the gym or doing some sort of sporting activity every day
- Being outside for at least a few hours every day
There are a few other nuances, but you get the point. When I follow this routine, I’m the most productive, HAPPIEST, healthiest version of myself. I know that for some people this may seem like a strict military regime. You might think, “where’s all the fun?” The truth is, there’s lots of room for fun in those 16 hours between sleep and three healthy meals—trust me! 🙂 And I’m not saying that this is what YOU should be doing. I’m just saying that this is the way I keep myself feeling my best and most productive—and summertime, long evenings, and dinner parties have ruined that routine for me. Truth be told, I’ve even struggled to put this blog post together…
Anyways, I’m rested, rejuvenated and ready to get back on track with my routine. Enough partying; I’m ready to do some SERIOUS WORK! And there are lots of things to do, as you will find out later in today’s blog post. Seriously, I can’t wait until September starts, the kids go back to school, and the sun goes down before my bedtime.
Now, let’s get back to business—that’s what you’re here for, right?
For those of you who are first-time readers of my monthly results update posts: in these posts, I cover just one of my Amazon businesses. I detail how many sales I have generated, how much money I spent on ads and so on. I highly recommend you check out my previous posts in this series to learn more about the business and results so far.
Ok, without further ado, let’s get started with Amazon UK results!
Amazon UK Results
With summer beginning, I was terrified that June would be the worst month in terms of sales this year, but it actually wasn’t that bad at all. In fact, it was my third-highest earning month so far in 2018, which I was very pleased about.
Every time I launch a new business, it is the first year that worries me most because of the seasonality of a new niche/product. Using Google Trends during the market research phase is all good, and I do it myself, of course, but it is only when you sell the product for a full 12-month cycle that you truly see how demand changes throughout the year. And, so far, it looks all good. As I write this, it’s the end of July, so I can already see that July’s sales will also be very good, but more on that in next month’s update.
Let’s get back to numbers. In June 2018, this business made £15,850.70 in sales on Amazon UK (using FBA, of course), selling 1590 units of the product:
As you can see, the number I’ve stated is the same number you see in the screenshot of my Amazon account, right? Or not? Have I Photoshopped this screenshot? Changed the numbers and graph? Inflated my sales?
This is precisely what some people on Facebook and YouTube have accused me of! They’re saying I’m publishing fake screenshots! Well, for all those people and anyone else who doubts my word (after 10+ years of running this blog), from this month on, I will start recording quick videos showing these sales numbers directly, so that there are absolutely no doubts about my honesty about my sales numbers:
I hope it’s clear to everyone that these numbers are real. I have no intention of faking my sales numbers, but I understand the concern. There are YouTube stars, 18-year-old “millionaires” with Lamborghinis, and all kinds of shady people online who claim to make hundreds of thousands per month doing very little work.
I’m not doing this to sell you a get-rich-quick lifestyle; my goal is to give you a real-life glimpse into what is possible by selling on Amazon, as well as the level of consistent work that goes into it on a daily basis. I share my real-life experience in real time, and that includes the financial results—good or bad!
So, let’s get back to numbers for this month: I sold 1590 units and as I’m making a £4 profit per unit after paying Amazon Seller fees, Amazon FBA fees and VAT (as explained in previous posts), this means that I made a profit of £6360 (1590 units multiplied by £4 profit per unit).
But, of course, there are advertising costs that I need to subtract:
● Sponsored Product ads: £1,384.96
● Headline ads: £436.44
● TOTAL ad spend: £1,821.40
This means that my actual NET profit was:
£6,360 – £1,821.40 = £4,538.60 (I simply deducted ad costs from the profit number).
And this is how the year 2018 looks so far:
(The total number shown in the Amazon reports is slightly different due to returns/refunds adjustments which can happen weeks after I have created my monthly reports and blog posts).
So, after half a year with this business, I’ve made £100k in sales and £28k in profit. This should finish the year with at least £50k in profit, but I also know that the Christmas season for this product is very lucrative (last year I ran out of stock before it even began), so I will shoot for £60k profit for this year (which is the first full year for this new business). I will see how it goes and you will be the witness of my success (or failure) as I will continue documenting my journey.
I hope you’re not bored by these numbers and calculations each month. Yes, they’re a bit repetitive, but I think it should also help you to better understand how the financials work for your own business; PLUS, of course, it is also interesting for me to have a detailed breakdown of sales, profit, and spend each month.
£4.5k per month profit may not seem like a LOT of money to some of you, especially if you have watched all those fake Amazon millionaire videos on YouTube. But one thing those fake entrepreneurs do get right is the amount of time you have to spend on an Amazon business when you use FBA.
I’m ashamed to admit it, but, in June, I literally didn’t spend ANY time on this business whatsoever. I just checked sales/customer emails once a day—that’s it. And what I mean by “checking emails” is that I marked “No Response Needed” ten or so times throughout the month as I got those auto-replies to my feedback/review request emails, as people are going to vacations, etc. So, in essence, this money is all PASSIVE income. Amazon has allowed me to create a PHYSICAL PRODUCTS business that generates passive income—which is truly phenomenal if you think about it!
Ok, with the UK covered, let’s get onto my Amazon USA results!
Amazon USA Results
Yeah. What can I say? It seems that my worst fears have come true…
Cracking the US market with this product might be mission impossible. Maybe.
I knew that it would be tough but hoped that I would get lucky at some point and that the situation would not be as dramatic as I imagined it, but it seems that is not the case. There are several problems I’m contending with, which I will cover right after the numbers.
So, sales-wise, it may not seem that bad at all for the FIRST month of trading. I made $4,078.86 selling 314 units (averaging ten a day). My profit per unit is $5.85 (calculations shown in my Amazon US launch post), which means that I made a profit of $1,836.90 (314 units multiplied by $5.85).
Almost two grand profit in the first full month of trading. Amazing, right? Hold your horses!!! The ad spend to generate those sales totally wiped out all the profit:
I spent $2,129.84 in Sponsored Product ads on Amazon US in June 2018 (I haven’t started Headline ads yet), which means that I generated a NEGATIVE NET profit of -$292.94 (I get this number by subtracting ad costs from the profit: $1,836.90 – $2,129.84).
So, I lost $300. That’s not a big deal, right? Absolutely! Making a loss at the product launch phase is perfectly fine and what I expected anyway! I know from experience that I do need to burn money in ads to build up sales velocity, which increases organic rankings and sales as a result. All plain and simple; it’s a strategy I have been using for years and I know it works.
But, this time around, I have faced a few major issues and it is not working. While I continue to burn money on ads, my sales are actually not improving, which means that my organic rankings are stalling. This means that no progress is being made. I made roughly the same number of sales per day at the beginning of June as I did at the end of the June, as you can see in the sales graph:
Why is this happening? Why my sales are not improving?
There are a few reasons behind this, but the three most important ones are:
- Design variations.
My price is simply too high. I am an advocate of selling premium products for premium prices, but there is a ceiling to this strategy. People know when you have overpriced something, especially in commodity goods market.
The product is selling successfully in the UK for £9.99 (as you can see from my UK results) and people are actually saying that it’s great value and a great price point, etc. No one has even left any negative comments that the price is not right, so I really believe that £9.99 in the UK is a GREAT price point and actually provides very good value for money.
In the US, I set the price to $12.99, even though I suspected that it probably wouldn’t work out. Why? Because everyone else is selling the product for $9.99 or even less. And that’s not all—they sell a BIGGER product for that $9.99!!! That means that my price point suddenly doesn’t look that attractive at all. Definitely NOT a “good value” price point in the eyes of US customers. Even though customers on Amazon are looking for high-quality products, they do also look for good value deals on those products.
Just to make it more comparable, I have posted price figures from Jungle Scout for the UK site and the US site. As you can see, the difference is obvious.
My product is not something totally unique, of course, and everyone in this niche sells essentially the same product. Ultimately, this means that I’m simply not competitive with my price point.
2) Design variations.
This, in my opinion, is even worse than the price issue. I can lower the price and work on smaller margins, but I can’t change the fact that this product has design variations. It means that I can’t simply pour thousands of dollars into ads to increase my sales above all others. It won’t happen because, with a product such as this where people base their buying decision on the design of the product, you will never be able to do that!
Click-through rates and conversion rates are much lower than with products that have just one variation/design, and Amazon is not showing your ads as often as you would like—even if you have set the highest bid on the market (due to low CTRs, Amazon rotates ads more often).
I already set the bid prices very high (aggressively high, in fact) for my main keywords, but it does not result in sales volume, simple as that. And without sales volume, I can’t reach the sales velocity of my long-established competitors. If my sales stall, I’m wasting all that money on ads and I likely won’t recoup it going forward.
On Amazon UK, I launched the very same product and made almost £12k in sales the very first month (17 sales on the first day), very easily. Why? Because competition levels on Amazon UK are so much lower compared to the US site. I have been saying this all along: Amazon UK (and Amazon Europe, too) is where the big opportunity lies right now. And my experiment in the US only proves it. It’s so much easier to launch a product and get sales on Amazon UK compared to Amazon US simply because competition levels are totally different.
Yes, sales are also much lower in the UK compared to the US site, BUT we’re after the profit, not sales volume, right? Exactly! And for this business, this product, the competition level is EXTREMELY high in the US! This, along with the wrong price point and design variation issue, is the main reason why I’m not seeing the success on the Amazon.com I hoped I would see.
Just so you know, I’m not surprised about any of this. When I researched this market/product, I based my business plans and goals on the Amazon UK platform, Amazon UK numbers/competition/price.
I did check out the Amazon US stats using Jungle Scout too, of course, but I saw that the prices were lower and the competition much higher in the US, so I left it at that. I knew that I would give the US market a chance one day and if it worked out, all good, if not—no problem! At least I have tried, right?
I’m not saying that I’m completely giving up—not yet. I do want to try out few things first, like lowering the price to $9.99 (the price point that most of my US competitors use, even though it would still be a high price as my product has “less” in it) and a few other things. However, mentally, I’m already preparing to leave the US market with this product, which would mean just letting the stock sell out naturally and using low organic sales to at least recoup some of the losses I have incurred so far.
If we talk about ranking techniques, in a case like this, the best thing to do would be to send pre-qualified OUTSIDE traffic to my Amazon listings to bring up my sales velocity numbers. This means using Facebook ads or influencers, for example. The problem is that I’m not a huge fan of this strategy. If I do work/pay for outside traffic, I’d rather send it to my own online shop, not Amazon.
I don’t know; I will have to think about it before I make a decision.
I’m not sad.
In some ways, I’m actually even more excited than before for this business. If the US launch had been very successful, I would probably leave this business at that. I’d just sell on Amazon UK & US and not even think about anything else. It would easily generate a £10k per month profit without much effort on my part, and that would be enough to put me in on sleep mode and probably high enough to allow me to move on and look for something else, something new, a next business idea to launch.
BUT, as it did not go that well, I’m actually planning on expanding the business in the UK. I haven’t decided on which direction to go first. I’ll either launch an online shop (which is probably something you would all want to hear about) or go wholesale/offline first. There is some major planning and thinking to do, which I will cover in a separate blog post (my thoughts on Amazon’s place in our shopping habits and stuff like that).
Speaking of an online shop: obviously, it’s a massive time and money investment, but the Amazon US launch actually reminded me once again how vulnerable we are if we only sell on Amazon. I mean, say I launch a product on Amazon US and invest thousands of dollars into ads/sales velocity to just gain rankings; those rankings are totally virtual, something that can be taken away from us in an instant and without warning. We don’t even get our customer email addresses and can’t communicate with them!!!
I would probably achieve decent rankings on Amazon.com if I were to invest $20k to $30k into a super aggressive Sponsored Products ad campaign over a three-month period. But then again, I could use the same money on Facebook ads, Pinterest ads and influencers to promote my brand and my online shop. I could get at least 1000 customers on my list and thousands more on the opt-in list to send repeat market campaigns. Which one is more valuable and secure?
I’m just touching the bases here so that you can see that these are all difficult decisions to make. I will probably put this thought process (about next steps to take) in a separate blog post.
Right now, I’m concentrating my efforts and energy on preparing stock for the Christmas season. I have had some major delays and issues with one factory in particular being out of business for one month (due to relocation), and this means that I will have even less time to get all the stock ready before the holiday season kicks in! I don’t want to lose out this year due to another out-of-stock situation.
Going forward, I really want to get back to weekly blog posts as there’s so much to cover, seriously! In July alone, we had the Prime Day with Prime Deals and I tested the Early Reviews program in the US. Amazon messed up the sales/ads dashboard for 24 hours or so. On the UK platform, there are new features being introduced all the time, like the most recent one: vouchers.
These are all things that I want to write about, share my results with you, and I’d love to exchange ideas with other Amazon sellers too! Market research, proper use of Jungle Scout and other Amazon seller software reviews are all topics I’d love to dive deeper into, not to mention the importing process and suppliers, which I haven’t touched on for a very long time now! Arghhhh!!! I really wish I could write a post every day until everything is covered and we’re done with this! 🙂
I feel very positive that I will stick with it and do the weekly post throughout the year! If you have any questions about the things I have covered in today’s blog post, please leave them in comments block below.
Also, if you have any suggestions or ideas about what you would like me to cover in future blog posts, I would be very happy to hear from you too!
P.S. For those of you who are interested in my Amazon Sharks program, I’m reopening it TODAY, so you can head over to the Amazon Sharks website and sign-up to get immediate access right now:
Also, I have made a small change in how the sign-up process will work from now on. As you know, I have set a limit of 20 people that I take on board the program each month. Well, for the last three months it has been +/- 20 people who pay reservations, so I see no point in carrying on with the reservation process. It seems that my blog traffic attracts those 20 people or so to the program each month (you get what you ask for, right? :-). So, from now on, I will just leave the program open at ALL times!
This means that you won’t have to wait for the next round to get in! You can sign-up to the program any day, any time you want, and get IMMEDIATE access to all the materials. I will continue to make the weekly payment option available as well as the full, up-front payment option at the same price.
By doing this, I won’t have to maintain a reservation system anymore, which was a pain to deal with. Lots of my email was getting lost in spam/junk mail folders so sometimes I couldn’t contact a person who had made a deposit. No more of that! 🙂
So if you’re interested, CLICK HERE to learn more about Amazon Sharks course!