June FBA monthly update at $182K
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.
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
In last month’s update, I went over some of the things we do during the slower summer months.
- 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.
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.
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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.
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