The numbers and information I share in these monthly updates are selective and for educational purposes.
Let’s kick it off with some October highlights.
- Ended October with $202,400 in revenue.
- 20% growth from last year
- Conversion rate of 20.5%
- Met with our EU manufacturer to finalized new products
- Initiated contact with new suppliers and products outside of China
- Continuing to execute liquidation strategy
These are the lowlights for October.
- Gross profit down to 23% – due to liquidating losers
- Several new products not meeting expectations
- Amazon EU continuing to lose money
- Still a lot to learn with Facebook ads
October FBA results
October is the calm before the storm.
Q4 is here and consumer confidence is still high, despite what the media says about the economy.
November, December, and January are always our best months. For whatever reason, our sales are strong throughout Q1. It all depends on the product mix, and before the factories in China go on holidays, we’ll have to submit new PO’s to take us through to Q2.
Revenue is up 20% consistently. The growth rate hasn’t fluctuated over the past few months I’ve been reporting these numbers. Despite not having any winning launches this year, the steady growth is welcome.
A lot of it is a result of continually updating images, creating videos, adding EBC content and other strategies to improve conversions. I wrote a lot about what we were trying to do related to conversions last month.
If you look at this screenshot for October, you’ll notice a few things.
- Units ordered only increased by 7%
- The average order value increased by 12%
- Which results in sales growth of 20%
Small improvements make big changes so it’s always important to continually tweak and optimize.
Never stop optimizing.
Throughout the year, we’ve updated nearly every image for products that sell decently and is profitable. Despite having photos and listings that have performed admirably in the mid to high 20% range, overhauling the images has bumped the conversions for some of our best sellers. On some products, I hadn’t updated the images in 5 years, so it was time.
Gross margins took a hit this month because we sold off a good chunk of inventory at big discounts. It’s certainly better than getting nothing for it or losing money off it.
If you have products you are trying to liquidate, look into utilizing Facebook ads and groups. You can do big discounts and still come out ahead vs selling to liquidators.
Our best seller is continuing to do better and we are working to make it do even better. The conversion rate for this single product was 51.5% in October.
The number 2 product is 17.2% and the number 3 product is 29.2%.
Product #2 needs improvement for sure.
Moving more manufacturing outside of China
From when we first started on Amazon, there have been 2 product families that we designed and introduced to the market in the home and kitchen category. These two products (and the variants) have been copied like the plague.
Unfortunately, we’ve lost our first to market advantage and sales have plummeted from when we first started selling.
Then throw in sabotages by other sellers and it’s a pain in the neck.
After having experienced these copies and attacks, it’s so important to go through the extra effort of creating products that China can’t copy. and also try to get trademarks and patents in China and utility patents in the US.
With that in mind, my wife and I visited our European manufacturer in October to finalize the details of a new product for our oral care line.
If you’ve done business with EU timezones, you know how hard it is. Literally 10-12hr difference.
So far we have spent the last 10 months via email, video calls and shipping samples back and forth. Finally, we couldn’t take it and added an extra leg to our holiday plans to visit the manufacturer first.
If you do volume or develop your own products, you can’t go wrong with visiting and hashing the details in person.
Over 2 days, we managed to finish what would have taken another 6-12 months of back and forth via the internet.
Another reason why I enjoy visiting manufacturers is because I get to see the showroom, get ideas, and learn about new trends. Manufacturers are always the first to witness new trends based on what customers are selling the marketplace.
This is something you don’t know about until you visit in person.
From this visit, we’ve identified a couple of products with great potential, on a growing trend, that China can never compete with. More research is needed for sure, but it checks off a lot of boxes.
This brings me to the next topic.
I finished a book titled Execution: The Discipline of Getting Things Done. It’s a classic.
There are truckloads of books on sales and marketing and the same fluff gets tossed around from one book to another. For all the sales and marketing books out there, there isn’t much on execution.
Especially one written by a former CEO and chairman of a fortune 500 company.
What good are sales and marketing if people don’t understand how to execute it?
That’s what this book is about, and although the examples are outdated, the framework remains true, the questions and the way scenarios are analyzed feels like I’m going through an elite MBA.
I naturally lean on the operational side and I got a ton out of it. I know if the operations are not set up properly or lagging the growth, employees are overworked and stressed and it prevents the business from scaling.
I strongly believe that too many FBA sellers and small businesses in general, fail or can’t get beyond 5 or 6 figures because they don’t understand the importance of operations and execution.
If you are serious about your business or your role in your company, get the book and act on it.
Basic explanation of Facebook liquidation
If you find yourself needing to liquidate, here’s a basic idea of how we are doing it with Facebook.
First, calculate the price. Here are some simple calculations.
Let’s say your product landed cost is $2. It retails for $10.
Liquidators will offer you $0.05 per unit.
The concept to remember is that $2 should be your max loss. This means at $2, it is a 100% loss.
Your landed is $2. If you donate it or dump it, you lose $2 per unit.
If a liquidator offers you $0.05, you are losing $1.95. Better than losing $2, but not worth the effort to orchestrate the liquidation for only 5c per unit. Likely more cost-effective to donate it.
What we’ve been doing is running a 75% discount code and then running ads on Facebook.
By the time the product gets to Amazon, let’s say the total is now $6 after shipping and FBA fees. It doesn’t make sense to sell it at $10 with a 75% discount. I’ll lose more than $2, which is worse and more stupid.
So now, we jack up the price to $20. With a 75% discount, the final sales price the buyer pays is $5.
Since the cost of the product to get it to Amazon and after fees is $6, the math is now simply $5-$6 = $1.
Instead of losing $2, I now lose $1.
Since I’m trying to liquidate, I don’t care if codes are shared with others. In fact, it’s better if it does.
But as I alluded to last month, using this tactic pushed one of the lesser competitive products to be on the first page of the search results and creating organic sales.
What turned out to be a liquidation, ended up being a discounted launch. If it keeps selling and sales increase, looks like I’ll have to order more and flip the strategy on its head.
2019 Q4 Plans
Since it’s November already, if you have products that can also be targeted as gifts or something holiday-related, it is a good idea to create a separate “holiday” PPC campaign. Target keywords related to the holidays that your product can capitalize on.
If I were selling plates, I could target keywords for things like Thanksgiving Dinner Plates or party plates. You get the idea.
Update packaging to liven it up for the season or bundle it with something festive. Easy low hanging fruit.
This is how you can get more eyeballs to your listing and double up revenue. Non-US sellers won’t know about such terms and the proper cultural terms. Use it to your advantage.
Check reviews consistently
If you use another software to check reviews, you can do it easily with Gorilla ROI as well.
We’ve updated the GORILLA_REVIEW function so that it will list the latest reviews from latest to oldest.
Before you had to define the ASIN which meant you only got the reviews for a single product at a time.
Now you can list it all using:
If you want to load more than the default 30, use a formula like below to list the latest 50.
=GORILLA_REVIEW(, , , 50)
We’ve also made changes in the algorithm to get reviews matching your child SKU.
If you have variations, reviews are not tied to your parent ASIN. This way you can check the real reviews of your child products.
Wholesale and our online store
Wholesale revenue is up again. On a nice roll this year. Based on the number of accounts signing up and having success with the product, 2020 for wholesale looks bright.
We’ve been experiencing challenges different to FBA as we are account representatives for the wholesale customers.
Margins are great and really help to offset the thinner margins from Amazon sales.
None of our wholesale accounts sell on Amazon. I had an FBA buyer contact me claiming they had a storefront.
Looking at their address, I could tell it was just a basic office address. But I wanted to check their website and I got a good laugh.
That’s the “storefront”.
There are “gurus” who sell the idea that having a storefront will make it easier to get products at wholesale.
True to some extent, but it shows what people are trying to do to fake it till they make it.
A quick analysis of their website reveals zero history. Must have recently started.
Since we handle all Amazon sales directly, resellers do not offer any value for us unless they sell through another channel.
Keeping up with what guru’s try to sell people is a good way of zigging when others are zagging.
New Gorilla tutorials
To provide better information on how to better use the Gorilla functions, we have been writing tutorials and examples in more detail.
Check out the ones below that have been published. More are coming.
Free FBA spreadsheets for all
If you have messy sheets and need something refined to help you run your numbers, get the free Amazon spreadsheets.
You can download it immediately without having to sign up for anything.
Just copy straight to your account.
If you want to get updated data straight into your own Google sheets, you can use Gorilla ROI. It makes work so much easier when you don’t have to manually update data or log into accounts constantly and wasting time.
I hope you enjoyed the monthly update and got some ideas that you can take with you.