June FBA monthly update at $182K

2019 june fba revenue
Upfront disclosure.

The numbers and information I share in these monthly updates are selective and for educational purposes as there are people I know personally who reads this. Keeping trade secrets and sensitive information under wraps of course.

The purpose of this monthly review is to organize my thoughts on the Amazon FBA side of things and reflect on the past month.

We’ll see how these posts evolve based on how you find it, and what information is helpful or not.

June FBA results

I’m writing this during Prime Day. Amazon created their own sale event to fight against slow sales right in the middle of summer.

Brilliant.

I’m going to leave out what we did to prepare for Prime day for next month’s update. Don’t want to spoil the fun.

We ended the month at $182k. A 5% drop from last month. 10k sounds like a lot, but when you look at the percentage difference, it’s not as bad as it sounds or looks.

We were around 125k last year so a 45% growth in sales is great for us considering we haven’t launched any new products so far this year. Growth has come through optimizing existing products, creating different bundles, improving listings, photos and PPC.

For the second half of 2019, we have a good lineup of new products on the way with the first to arrive in July. Our product development always takes a long time because we are investing for the long term.

We don’t private label anything. Everything is OEM, meaning:

  • Custom designed
  • Mold investment
  • Patented in China and US
  • Then we launch

It starts slow, the momentum takes longer to build up, margins get compressed.

Yes it’s expensive.

But once we sell through our initial order and get the “snowball” past the tipping point and rolling down the hill, for us the hill turns out to be a very long one.

Happenings in June

(That’s not me by the way)

In last month’s update, I went over some of the things we do during the slower summer months.

Things like:

  • plan and develop future products
  • update processes
  • re-train staff
  • upgrade assets
  • and improve other areas we can identify

In the past month, we’ve already executed and started most of the 5 points above.

  • We took some time to update documentation
  • Brainstorm product ideas and improvements to current products
  • New packaging ideas
  • Upgraded simple equipment to make work easier

The biggest in June was our 2 week trip to Hong Kong, China and Taiwan.

We were exhibiting at an event in Hong Kong (nothing related to the Hong Kong fair or Canton fair). Once the show was over, we visited our suppliers throughout China and Taiwan.

I never look forward to China trips. It’s rough because we are traveling from city to city every few days, in factories from early morning to evening where the temperatures easily get over 104F (40C).

Not much to look around and do when you are in the industrial zones of China.

But one thing is for sure.

Every visit we make is a good move in hindsight.

There’s only so much you know when doing business over a keyboard. But when you visit in person and see the full scope, capacity and capabilities of what a factory can and cannot do, you can:

  • identify new products you didn’t think about
  • find ways to improve your current product without increasing costs
  • speed up the conversation and finish in 2 days what would have taken 2 weeks over emails
  • find out how incapable your supplier is and look for a new factory

If you are on the fence about visiting suppliers in China, I highly recommend you to.

2 years ago, we found our best supplier from a factory scouting tour. Rather than just doing it through Alibaba, this was an important product that we needed to replace with a new supplier. We set up dates with 4 factories over a 2 week period. Took trains from city to city and came away with a partner that has served us and protected our products with utmost integrity.

Having seen their facility and capabilities, we’ve scaled our production and line up with this factory.

Win-win.

On the flip side, during this same trip, we discovered how incapable one of our current suppliers were and stopped dealing with them immediately.

This is only possible when you visit and see in person.

Margins for June

Margins were hit hard again in June as we made a large container purchase. Gross (using cash accounting) ended at 26%. At the end of 2019 Q2, our gross is at 29%.

Far below the 40% I am seeking. So there is a LOT of work to improve that.

The double edge sword is that as we try to gain international accounts and also create a distribution business, the margins are going to get squeezed further as we go for volume.

With Q2 finished, I’m not rating our business too highly this year.

I’d give it a 6 or a 7 out of 10 so far.

  • Top line growth of 45% – pass
  • Gross margin of 26% – fail
  • New products introduced – fail
  • PPC goal – improving
  • Cash flow management – pass
  • R&D – pass

Our account ACoS for June was 26.7% which is a good improvement over the 28.4% from May. It was previously 31% in the earlier months.

Still working to get it down to 25% without affecting sales.

Overall as a percentage of sales, PPC spend was 13% by the end of Q2.

3% away from our goal which is a big task to improve.

Wholesale and our online store

I’m not including our direct or wholesale sales in these numbers. Amazon makes up the majority percentage.

Free FBA spreadsheets for all

If you’re looking for free FBA spreadsheetsto help you run your numbers, you can get the templates for free.

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. Makes work so much easier when you don’t have to manually update data or log into accounts constantly and wasting time.

Gorilla ROI huge performance increase

We’ve invested a lot of time and resources into supercharging the data import.

Now you can load up to 2,000 data points in a few seconds straight into Google Sheets.

Try getting that much data manually or using pivot tables and you’ll be dizzy with the amount of data you need to pull.

Enter a formula, set your parameters and boom – you are done.

This ends the June update.

Come back for the July figures to find out what we did for Prime day and how the start to the second half went.

May FBA monthly update at $192K

May 2019 FBA Revenue
May 2019 FBA Revenue

Upfront disclosure.

The numbers and information I share in these monthly updates are selective and for educational purposes as there are people I know personally who reads this. Also need to keep trade secrets and sensitive information under wraps of course.

The purpose of starting this monthly review is to organize my thoughts on the Amazon FBA side of things and reflect on the past month.

We’ll see how these posts evolve based on how you find it, and what information is helpful or not.

May FBA results

Sales is slowing down for the summer months. We don’t sell seasonal products, but when the sun comes out, people tend to go out and delay their purchases.

You can see it from the chart above as well. Last year, we were flat from Feb to June.

This year is an improvement though.

Our slow month kicked in starting April this year. Our best month ever was March which was a major surprise.

For the month of May, FBA revenue was flat coming in at $192k. Same as April.

If we can keep things steady for the next couple of months, instead of experiencing any big drops during the summer months, that’s a win for us. With some major expenses coming up, I’ll need all the cash coming in.

Summer slow downs have a positive aspect though. It’s a great time to improve our operations like:

  • plan and develop future products
  • update processes
  • re-train staff
  • upgrade assets
  • and improve other areas we can identify

Once July comes around and sales picks up again, the goal is to be prepped with inventory ready to go and have the improved processes implemented and ready to go.

Our office relocation in September isn’t going to make things easier. More furniture, more office updates and more improvements are going to be needed.

If it was still me, I’d be working out of a cardboard box, but with a team to take care of and making sure each person operate effectively, efficiently and safely, I don’t skimp on expenses required for such operations.

Also, getting enough product ready so that we can have a full 1-2 week blackout period is going to be crucial.

Area of weakness year to date

One aspect of the business lacking is our product development and getting new products into the pipeline.

The pipeline is thin at the moment as some projects just continue to get delayed again and again. Other projects were also pushed back for a later date as we try and make smarter product development decisions.

There are products that I thought would be super easy to make and push to market. My initial goal was to get it finished and launched within 2 months.

  • Found a supplier
  • Made sure they were legit
  • Specs delivered and confirmed
  • Samples received
  • Samples failed testing
  • More back and forth to clearly define requirements
  • New samples received
  • New samples failed testing

Since we do OEM stuff and never rely on reselling existing products, the process takes longer. In this new case, I find out after testing that the supplier is trying to use cheaper raw materials in order to maximize their own margins.

Usual sneaky stuff. Rightfully called – quality fade.

If this is something you want to know more about, you have to read Poorly Made in China. One of the best books that I’ve come across on doing business in China.

 

Thankfully, I do have some new products arriving this month. We’ve created different variations of a good selling product to expand our reach on Amazon. Also makes it easier if we can reuse raw materials to achieve scale and lower cost – every penny counts.

Now, let’s get into the numbers.

Margins for May

Last month, I mentioned that our gross was 45% and not to get excited because it’s just a single month.

Not to be expected as the norm.

May proved that case to be true. Our gross was just under 38%. I haven’t finished cleaning up the numbers, but it’s close.

38% gross is just ok.

Not great.

But again, the same argument holds. It’s just one month.

I was looking up the financials for Proctor and Gamble which is a great template for us to follow. I try to model our company performance based on Proctor & Gamble as well as Helen of Troy.

Check out the financials for PG though.

Proctor & Gamble Financial Statements 2013 to TTM
Proctor & Gamble Financial Statements 2013 to TTM – click to enlarge

To make it easy, I highlighted 4 main line items.

  • Gross profit of 50%
  • Operating profit of 20%
  • Income after taxes around 15%
  • Net income around 15%

Knowing these types of numbers and having a model company to base your company and where you want to be is very important.

Your strategy is going to determine your margins.

Are you operating a dollar store concept? Reality is your margins will be lower with more volume. Think 3-4% operating margins.

Are you more of a reseller? Then follow the footprint of Target’s margins.

  • Gross margin of 30%
  • Operating profit of 5-6%
  • Net profit of 4%

You can’t expect to get 40-50% gross margins when you run a Target business model.

For us as OEM sellers and brand builders, we work towards the 40-50% gross range.

The hardest part?

The discipline and objective decisions required to execute on those margins every quarter.

Biggest expense item

  • Amazon fees eat up 40% of expenses.
  • PPC came in at 12% of revenue. Ugh.
  • COGS is what it is.
  • Payroll – nothing I can do

These make up the bulk of the expenses, but as you know, there’s no way around any of these.

The best option is to increase ROI on the PPC ad spend. Our account ACoS for May was 28.4% which has improved from 31%. I really need to get it down to 25% in order to stay within the allocated budget.

Staying at around 25% ACoS means that PPC will be 10% of total revenue. If we go above 10%, then that spells trouble. Last month, it was 12% because we are still optimizing as well as experimenting with some new PPC strategies.

Exploring new ideas in PPC always equates to higher spending and pain in the short term.

I’m also starting to get into Facebook ads to drive external traffic. ACoS needs to be optimized and improved further so that there is more buffer to explore and experiment with other platforms.

Wholesale and our online store

I’m not including our direct or wholesale sales in these numbers. Amazon makes up the majority percentage.

Free spreadsheets for all

The free FBA spreadsheet resource page is now up and available to download for free.

These are spreadsheets I’ve been sharing via email but now you can download it immediately without having to sign up for anything.

Just copy straight to your account.

Some are simple, manually updating spreadsheets that analyze your data. Others can be used with the free addon from the Chrome store to auto load your Amazon data into Google Sheets

You can use it for free for any 3 FBA sku’s. FBM is not supported.

Bookmark, share and download it as I’ll be updating the page with more free spreadsheets to make it a destination for your one stop free FBA templates resource page.

Gorilla ROI now saves historical inventory levels

You can now extract your historical inventory data by dates and using the preset time periods we offer. The purpose of this function is to know when you went out of stock.

When you are planning and forecasting for inventory purchase, you can exclude the days you were out of stock from the equation for a more accurate picture.

Documentation and the functions page will be updated soon.

Here’s how it works if you happened to come across it while working with your spreadsheets.

It works exactly like GORILLA_SALESCOUNT() and SALESTOTAL()

=GORILLA_INVENTORYHIST(periodskumarketplacestatusstart_dateend_date)
=GORILLA_INVENTORYHIST("Custom""US", A1:A500, "INSTOCK", "2018-01-01", "2019-01-31")

this example will dump your historical “instock” levels from Jan 1 to Jan 31.

For Agency users, the formula includes the seller ID as the first variable.

GORILLA_INVENTORYHIST(sellerIdperiodskumarketplacestatusstart_dateend_date)

This ends the May update.

Come back for the June figures as it will be the halfway point of 2019 and I’ll have a better picture of our progress as we work towards our mid term goal of $5M in revenue.

April FBA monthly update at $192K and new PPC spreadsheets

April Amazon FBA revenue
April Amazon FBA revenue

More stuff for you today and an update to our April numbers.

The numbers and information I share is selective and for educational purpose as there are people I know personally who reads this. Trade, company secrets and sensitive information need to be private of course.

The purpose of starting this monthly review is to organize my thoughts on the Amazon FBA side of things and reflect on the past month.

Maybe monthly will be too often. Who knows?

We’ll see how these posts evolve based on how you find it and what information is helpful or not.

New updates for April

In April, we added more free and PRO templates and documents to the library of PRO Business Spreadsheets.

I already posted a detailed version here, but in addition to that, we added 2 new spreadsheets last week that everyone can take advantage of.

To date, we now have the following spreadsheets added to our library of PRO templates.

  • [NEW] PPC dashboard for keywords and customer search – manual spreadsheet. Not automated.
  • [NEW] English/Chinese NNN agreement template to use with suppliers.
  • [NEW] English/Chinese Manufacturing PO agreement package to use just before you place an order.
  • Seasonally adjusted sales forecasting calculator
  • Accurate product pricing calculator
  • Simple inventory check in/out
  • Amazon cost analysis database
  • Amazon sales performance report and dashboard

The list and value of the package continues to grow. If you don’t have the PRO access yet, get it before prices go up.

One price. One payment. Access to all future templates, docs and tools for life.

Two new PPC Spreadsheet Templates for everyone

Amazon FBA PPC analysis spreadsheet template
Amazon FBA PPC analysis spreadsheet template

As we are working on adding PPC data to Gorilla ROI and Gorilla Agency, I’ve tweaked and prettied up my manual PPC spreadsheets that I’m happy to share in the meantime.

Amazon has plenty of data, but the area they lack is providing insights into the data. I always end up coming back to spreadsheets because I can see things the way I want and create my own KPI’s.

  • Number of converted keywords
  • Ratio of converted keywords to non-converted
  • The ratio of spend for conversion to total spend
  • CTR of converted keywords
  • and so on

Amazon does not provide this type of insight and no other tool provides the metrics I want to see.

This is a manual spreadsheet version. You export the reports from your Amazon Seller Central, copy and paste the data and that’s it.

Export your report, then copy over the entire contents of the report to the spreadsheet and everything is automatically calculated.

how to download PPC keyword targeting report from seller central
how to download PPC keyword targeting report from seller central – enlarge

The free version has a simplified dashboard.

Download with the following links:

PRO Version of the PPC Dashboard

The pro version is also manual at this time. Once we are able to pull PPC data, this will be automated.

The PRO version is available from your account, and comes with in-depth KPI’s like I noted above. Here’s a screenshot of what you’ll see.

PPC analysis and kpi dashboard
PPC analysis and kpi dashboard – click to enlarge

Your KPI’s will be different, but breaking down the data like this for us helps our team see what we are doing good and what we need to improve.

Free FBA Spreadsheet resource page in the works

I’ve received a number of requests and seen a lot of people posting for help related to getting a handle of their Amazon numbers.

To help with this, we are in the process of putting together a free resource page where you can download free versions of the spreadsheets we’ve created for Amazon FBA sellers.

If there is a particular spreadsheet you would like us to create and post for free, leave a comment below.

Trying to grow online sales

Finally got around to finishing this website and one of our ecommerce sites. All for the purpose of getting into paid marketing outside of Amazon.

I’m not including our direct or wholesale sales in this number. Amazon still makes up the majority percentage.

Our goal is to try and ween as many sales off Amazon and directly onto our own site. Our products and presence has grown where we can do 4 figures through our site with no marketing. All repeat purchases or people who found us through trade shows.

Now onto the FBA numbers.

April FBA Monthly Revenue

April Amazon FBA revenue
April Amazon FBA revenue

Coming from an investment background, one of the things I won’t do is breaking things down in too much detail.

No tables of income vs expense.

If you have been selling for a while, you know that all the fees, services and expenses that go back to Amazon eats up about 50% of revenue.

  • FBA fees
  • Pick and pack fees
  • Shipping fees
  • Storage
  • All the charges that Amazon takes from your account related to customer service
  • PPC costs

For April, we ended with gross margins of 46%. It sounds impressive, but it doesn’t mean much because the quarterly and annual numbers are more important.

The problem with providing month over month analysis and change is that I may end up focusing too much on trying to make the numbers look good.

That’s why most public companies succumb to please wall street analysts as they try to get their stock higher, rather than make decisions that hurt in the short run, but add value to the long term health of the business.

Why were margins so high?

I wish our margins were always like this.

Typically, we range between 36-40%. So last month was an anomaly because of reduction in PPC spend, and reducing costs in fatty areas.

Fluctuations naturally occur depending on the month and the season.

On the flip side, March is an example where we reinvested large sums of money after China came back from their holidays.

Whereas for April, it was the start of our slow season. We cut back on expenses and optimize areas of the business that haven’t received the attention it needed.

Most likely for the next 3 months, our spend will go through the roof as we move to a large location. Lease will be around 40% as we need to reinvest in a bigger space and grow into it.

New office means more furniture, shelving, equipment, and more expenses.

Not something I like, but need to bite the bullet as I don’t want to go through the ordeal of trying to find new space when we are at 150% capacity. Not a good feeling.

What about profit?

Another thing with providing too much detail is that there are always people who whine about “profit”.

They most likely are talking about Free Cash Flow. Money you can take out of the business that is not required to run the business.

I’ve analyzed hundreds of public companies and valued them, and what most Amazon FBA entrepreneurs don’t understand is that businesses operate at different stages of the life cycle.

business life cycle. Source: IdeaBuyer

The problem with prioritizing profit as #1 is completely wrong because it is dependent on the stage you are operating at.

If you have been in business for 20+ years, have everything established and happy with 12% top line growth, then profit and FCF is a high priority.

If you’re still young and trying to grow at 50-200% YoY, forget about profit. Focus on growth, gaining market share and increasing the value of your equity value.

Once you hit the tipping point of large numbers, wind down the growth and rake in the profits.

For us, we are currently aiming for $3M in revenue this year, however, we could easily dial it back to $2M like what we did last year. If we did, I could reduce staff hours, cut back re-investments, new product developments, trade show costs, travel and other expenses to fatten margin by 5-10%.

Just a long winded way of saying we are barely breaking even from a financials point of view, but our investments will pay off in several years.