July August 2020 sales update
Here’s the current Gorilla ROI Amazon sales progress. To see the interactive version, go to our income reports page.
Note: These monthly updates are for educational purposes.
Here’s my agenda for this update.
- Ugliness with policy notifications
- Our simple steps to growth
- Supply lead time calculations and Q4 preparedness
- Free online Amazon summit for team growth
In 2017, my wife and I were discussing the goal of getting to $5M, followed by $10M.
We were at $1.25M at the time of this discussion and $5M sounded like a big step, but we both knew it shouldn’t be harder than getting to $1.25M.
Scaling from $1M to $5M is much easier than getting from $0 to $1M.
As I look at the chart above and track progress in my Amazon income report, we will reach $5M this year.
I have to admit though, the biggest driver to going from $2.5M last year to $5M this year was COVID.
Can’t deny that.
I bet the same goes for a lot of you.
But I also believe luck comes from hard work and the foundation laid leading up to it.
But first the numbers.
- $501k in sales
- 150% growth from the same month last year
- +8% growth from the previous month
- Conversion rate of 26%
- PPC for best sellers and related variations still turned off
- FBM slowing down further
- ACoS rose to 19.6%. Trending towards COVID levels.
- $424k in sales
- 96% growth from the same month last year
- -15% growth from the previous month
- Conversion rate of 27.5%
- ACoS rose to 25%. New listings, more aggressive bidding.
- Summer sales lull
Ugliness with policy notifications
Maybe it’s just us, but over the past 3 months, we have had an onslaught of policy notification related to listing variations.
Either Amazon’s algo is on the extreme sensitivity setting, or we have a competitor who is combing through all our listings and reporting anything with a variation.
Trying to get the listings recombined and listed again has been a major drain with day to day activities. It eats up a full day for a team member of trying to get to the bottom of things, contacting Amazon for certain issues that are not being saved and updated and so on.
And yes these are valid variations.
E.g. it’s all the same product where the only difference may be quantity or size.
Sales have taken about a 10% hit because all the variations are scattered everywhere. Just one more ugly part to throw into the life of selling on Amazon.
Are you seeing similar things with your account?
Our simple steps to growth
Getting to the first $1M is always the hardest because of all the mistakes and losses that come with it. Hovering around the $1M mark is no man’s land on Amazon. You are too big for a home operation but too small to benefit from scale and margin expansion.
I said that sellers should decide to go big or stay small. Don’t be caught in between.
The effort to get from $1M to $2.5M was very minimal. And as we approach $5M this year, I look back at the changes we made to get from $1M to $5M, and it was relatively minor because we had the systems and processes in place.
When my wife suggested we should aim for $5M and then $10M next year, it was simply breaking down the steps needed to get there.
The conditions were that we had to:
- maintain or improve margins
- have a healthy balance sheet to ride out any downturn
With this revenue goal in mind, it made things simple for us.
- Focus on the products that were doing well and why
- Create more SKUs based on the products that sold well
It’s that simple.
Sure, it’s an oversimplification because I skipped all the details like doing PPC, listing management, inventory management, marketing off Amazon, other channels and so on.
That’s why laying the foundation of creating systems and processes is important. It makes scaling easier. It was just plugging more SKUs into the business.
Most sellers who remain small, floundering around, tend to focus too much on tactics like overemphasizing scouting software results, and running their business and decision on little things. This leads to products all over the map. Baby diapers, battery cases, slippers etc.
The hard part is focusing on what is working and being able to say no to new shiny objects.
I love the “inch wide, mile deep” approach. Getting so good in a niche and dominating it. I also call it the “become a brain surgeon, not just a general doctor” approach.
It’s not for everyone, but it works for us and every successful company on the planet is known for one thing. Coca Cola focuses on beverages. They don’t make microwave food.
By not being spread out too thin this year, our focus leads to margins being the best it has been and giving us the ability to build cash reserves for emergencies, and taking advantage of opportunities when it comes.
Lead times and Q4 inventory
With Q4 coming up, it’s a good time to revisit lead time calculations. The lead times between off-peak and peak season isn’t by a few days. It could be different by as much as 30 days end-to-end.
The biggest pitfall with supplier lead times is that you underestimate your true lead time. This difference is bigger if you source from overseas.
The image above shows the standard way of how most people think about it.
- You ask the supplier what the lead time is
- They say 45 days
- You put the order in and expect it to be ready in 45 days + shipping time.
In reality, it looks like this. (click to enlarge)
I did a short webinar on 3 ways you can improve your inventory management and the 3 steps are:
- Lead time calculations
- Apply weighting system
- Better velocity calculation
Short version is to:
- Identify every step in your supply chain and determine the worst case scenario for each step
- Include inbound shipping and outbound shipping stages
- Sum up the total for the true lead time
- Figure out which months are your busiest and apply a weighting factor to give more emphasis to busy months and less to slower months
- Update your velocity calculations to use more time periods. Not just the last 30 days from Amazon which will 100% leave you out of stock.
It’s how I’ve been able to go from constant out of stock issues, to being in stock at a much higher rate and having inventory to sell while competitors didn’t.
I’ll be writing about the presentation and posting the video in another post. Here’s the presentation in the meantime.
Q4 is approaching, but 2020 Q4 will be even more important because the media is pumping up COVID hard. Freight is backed up and there’s a high chance that the delays will be the worst we’ve ever seen.
I don’t see things returning to normal any time soon, this means, more online sales and being ready for it.
Demand is obviously going to be higher and if you can’t take advantage of it this year, you will miss out on a huge 2020 Q4. An opportunity to level up your business to a whole new level if you are prepared.
Speaking of leveling up..
Free online Amazon Summit for team growth
I’ve been working with Orange Klik on video advanced tips to selling on Amazon.
I’ll be part of an online Amazon conference where I went into super detailed info on 5 metrics to measure and grow your business.
Another huge way to grow your business and figuring out how to get to 7 or 8 figures is by listening to people who are there already.
Not some guy on youtube who is selling $10k/month and calling himself an expert, and then pushing a $2000 training course.
The speakers here are all fairly large sellers, tons of experience and know what they are talking about.
It’s a free sign up for the videos and there are some must watch topics that can be used to train your team members.
- How to Launch, Rank and Maintain your TOP Ranking Position on Amazon
- Systems Thinking In an Amazon Business
- How to Create Competitive Advantage on Amazon
- and more
Wholesale and our online store orders
I’ll update this when something significant happens.
I’m still trying to find the best channel listing software for updating the various channels. I’ve tried pretty much everything on the market, but ultimately, a person has to finish the remaining 20-30% of the missing information when posting to other channels.
If you use something that you love, let me know.
New updates and tutorials
We’ve published some awesome tutorials and spreadsheets for you.
- NEW: Free Bill of Materials template spreadsheet to negotiate and track pricing
- NEW: Use Gorilla ROI function to find how many 1-5 star reviews you received over any time periods.
More free Amazon FBA spreadsheets for all
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 easy when you don’t have to manually update data or log into accounts constantly and wasting time.
What is Gorilla ROI?
Gorilla ROI automatically pulls Amazon data into Google sheets for you to make sense of the data without the inconvenience of manually downloading, sorting and updating spreadsheets.
Learn how you can centralize your data and use it to increase your ROI.