Wow, where has the time went? It feels just like yesterday when I was still trying to figure out what product I was going to sell! A lot of things have happened since then 🙂
Currently, I have been selling on Amazon for right around 90 days and it has been a rollercoaster ride so far. There have been some downs but, plenty more ups along the way and I am very happy with the success that I have had this early on.
In this 16th update in my Amazon FBA case study, I will be analyzing everything that has happened within the first 3 months of selling on Amazon. There is a TON of information to cover and I am so excited to give you all some updates on the progress I have been making. I will also be discussing the future plans that I have to grow this business away from Amazon at some point.
Lot’s cool stuff going down in this update but, before we can get into it, make sure to check out all of the previous updates in my Amazon journey below:
- PART 1 – Intro to Case Study
- PART 2 – The Game Plan
- PART 3 – How to Find Profitable Products to Sell on Amazon
- PART 4 – How to Find Suppliers on Amazon
- PART 5 – Info About my First Order + Calculating Profit Margins
- PART 6 – How to Utilize your Samples
- PART 7 – FNSKU Labels and UPC Barcodes
- PART 8 – I Placed my First Order + a Minor Setback
- PART 9 – How to Brand your Amazon FBA Business
- PART 10 – How to Setup your Amazon Sellers Account
- PART 11 – My Product has Shipped + Updates
- PART 12 – The Definitive Guide to Getting your Product Pictures Taken
- PART 13 – My Product has Arrived + My Initial Launch Strategy
- PART 14 – Results from my First Month of Selling on Amazon
- PART 15 – Increased Rankings and Sales + Ordered a New Shipment
It’s crazy that I already have 16 updates in my case study and it’s amazing to see the progress I have made since the beginning. For those of you that have followed along since the beginning THANK YOU. For those of you who are first time readers of my site and this is the first article you are reading of mine, THANK YOU. You all are awesome and give me the motivation to keep putting out these updates for you 🙂
I just wanted to give my thanks to you all before we got into the post.
Sales Stats from my First 3 Months
It has been almost exactly 90 days since my product went live on Amazon and all of the sales, earnings and units sold info can be seen below:
Not too shabby of a start for a new business on Amazon!
Interestingly enough, these numbers had the potential to be lot higher if it wasn’t for inventory issues. I touched on these issues in the last update but, the main problem was that I was selling too many units too quickly and I didn’t want to run out of stock.
In the image above of my seller dashboard, you can see at the beginning I was constantly making more sales each day and I had a nice upwards trend going. Then I had to raise my price to slow sales and since then my sales have been lower.
Did I Make any Profit?
This is the most important question.
I always see people talking about how many units they sold and how much REVENUE they made, but rarely do people like to talk the most important thing, profit.
The first thing we need to look at are the revenue and expenses to determine the profit. Below is a screenshot of my Amazon “Summary Report”:
This report does a good job of showing the expenses that you had ON Amazon, but it does not take into account the expenses such as shipping and manufacturing fees. We have to factor these prices in manually.
Total Revenue: $10,939.87
Amazon Expenses (FBA Fees): $5,164.58
Manufacturing and Shipping Fees: 732 units sold * $4.2 cost per unit = $3,074.40
Amazon Ad Spend: $165.08
Other Expenses: $1,058.00
Total Expenses: $9,462.06
TOTAL PROFIT: $1,477.81
Note: The “Other Expenses” includes things such as the cost for the samples, product pictures, inventory placement service and other minor expenses.
In the first 3 months of selling on Amazon I have been able to turn a profit of around $1,500!
This is not fantastic by any means considering that I made close to $11k in revenue but, was only able to turn a $1,500 profit. A big reason for this was because over $2,500 was “lost” due to running my launches for my product. Even though these launches helped me out, it still took a large chunk of the profits away.
All in all, I am happy with making $1,500 in the first 3 months and it proves to me that this business model works. Now it’s time to try and scale it as fast as possible by reinvesting all of my profits back into the business.
Results from Raising my Price
I raised the price for my product from $14.99 to $19.99 in hopes of slowing down sales to prevent me from running out of inventory. While my price was at $14.99 I was selling 25+ units a day at the peak, however, on average it was around 15-20 units per day.
I knew that if I kept the 15-20 units per day pace I was going to run out of stock WAY before my second order could arrive. So on October 28th, I raised the price to $19.99 in hopes of making my inventory last as long as possible.
Below you can see what my sales have looked like since the price increase on October 28th:
In the 42 days since the price raise, I have sold 305 units. This comes out to 7.26 units sold per day.
If you recall from my last update, I did some calculations to determine that if I wanted to make my inventory last until my second shipment arrived, I would need to sell 8 or less units per day. Somehow, I have managed to do exactly that!
Higher Selling Price = Higher Profit Margins
Yes, I have only been selling around 7 units per day since raising my price but my profit margin has nearly doubled on a per unit basis.
- At $14.99 my profit margin was around $4.50 per sale
- At $19.99 my profit margin is around $8.50 per sale
Selling 7 units at $19.99 is practically the same thing as selling 14 units at $14.99 since I am making roughly the same amount of profit per sale. This has allowed me to slow down sales to make my inventory last while not taking too big of a dent out of my profits.
With that being said, there has been a downside to raising my price.
Higher Selling Price = Lower Conversion Rates
As I have explained many times throughout my case study, your product listing conversion rate is the most important metric for your product.
Amazon uses the conversion rate to rank your listing within their search engine for keywords. The higher the conversion rate for a keyword the higher you will rank for that keyword. Also, the higher conversion rate means the more sales you will make. More sales means better rankings within Amazon as well. Conversion rates are a MAJOR factor to ranking in Amazon’s search results.
With my product now at $19.99, I have seen a decrease in conversion rate which has affected many of my keyword rankings. I have seen a decrease in just about all of my keywords I was ranking for since raising my price. This isn’t the end of the world as I am still making sales, but this does prove that Amazon uses product listing conversion rates to determine your rankings.
Overall a Success
I had no idea what to expect from raising the price for my product. The only thing that I knew was that I needed to slow down sales and make my inventory last as long as possible.
With all things considered, I would say that raising the price was a success.
Not only did it do a good job of lowering my sales to under 8 units per day but, it also still made me a pretty nice chunk of profit even with the lower sales. I will continue to keep my price at $19.99 until my second shipment arrives at Amazon.
Update on my Second Shipment Order
I want to give you all a quick little update on the progress of my second shipment. I placed the order for another 1008 units with my supplier on October 22nd and it cost me $2,675. This comes out to be a cost of $2.65 per unit.
On November 28th, my supplier had completed the order and my freight forwarder picked up the shipment. From there, the shipment was placed onto a boat and it is currently on its way to Amazon’s warehouse.
I am hoping to get the shipment to Amazon by the first of the year, which is about 3 weeks from now.
Right now, I have around 268 units left of my original 1008 units. See below:
Assuming my order arrives January 1st, 2016 which is 24 days from now, I need to sell under 11 units per day to make my inventory last. I would think this should be fairly easy as I have been selling around 7 units per day the last month or so. However, with the holidays coming up I am not sure what my sales per day will look like.
I am just hoping that my shipment arrives ASAP and I can stop worrying about running out of inventory!
Finally Tested Amazon PPC
I have been talking about trying out PPC with Amazon for the past couple of updates and I have finally got around to it. Check out the stats from my first campaign below:
I spent a total of $165.08 on PPC ads and in return made $619.99 in sales in 4 days of running the campaign. This was an auto campaign with a $30 daily budget.
The auto campaign is where Amazon will choose what keywords to target for you. I chose the auto campaign mainly because I wanted to see what type of results I would get. I was also able to find some keywords that I didn’t know about that I can now try to rank for within Amazon.
Running the Numbers
Now, even though I only spent $165 to make $620 in sales, this is not all profit. We still have to take into account the Amazon fees, shipping fees and the manufacturing fees.
Note: 31 units were sold from this PPC campaign
Total Revenue: $619.99
Ad Spend: $165.08
Amazon Fees: $7.02/sale * 31 units = $217.62
Shipping + Manufacturing Fees: $4.20/sale * 31 units = $130.20
Total Expenses: $165.08 + $217.62 + $130.20 = $512.90
Total Profit: $619.99 – $512.90 = $107.09
All in all, I made over $107 in profit from running these ads!
This isn’t anything amazing by any means, but it does show promise. Once I am able to mess around with this more I can start running targeted campaigns that go after specific keywords that I know convert well. This will only increase my profits further.
Just for fun, let’s break these numbers down even further 🙂
I sold 31 units and made $107.09 in profit, that means I made a profit of $3.45 per unit sold. Compare that to my normal profit margin of $8.50 per unit when my product is priced at $19.99. Running PPC cut my profit margins more than 50% but, I think I could optimize this with more testing.
I can’t wait until my second shipment arrives so that I can start running more of these PPC campaigns. I am really excited about my results and I think it could be a great way to increase sales while still maintaining a solid profit margin.
Product Review and Seller Feedback Progress
Now that I have been selling on Amazon for 3 months I have been able to get a solid amount of reviews for my product as well as feedback for my sellers account.
Check out the amount of reviews I have for my product as well as the average review ratings below:
I currently have 125 reviews for my product and an average rating of 4.9 out 5 stars. This is awesome to see because it proves that my product is high quality and the customers have liked my product.
I would have liked to maintain a 5 star rating but, as I sell more and more units the likelihood of everyone leaving a 5 star review gets worse. Still, 90% of the people who have left a review have left a 5 star review which is really cool to see.
Below is a screenshot of the feedback I have recieved for my sellers account:
I have 75 reviews at an average of 4.9 out of 5 stars for my account. Also, 100% of the reviews have been positive which is a good thing to see.
The funny thing about seller feedback reviews is that over half of them are product reviews. People accidently leave the product review for my sellers account instead of for the product itself. This is a bummer because I would have an extra 30+ reviews for my product if they were left in the correct spot.
Found New Keywords to Target
I mentioned above that by using an auto PPC campaign I was able to dig up keywords that I never knew existed for my product. I was then able to target these within my product listing. Aside from that, I was also able to find a TON really good keywords from Merchant Words and that is what I want to talk about really quick.
14 New Keywords with at Least 500+ Monthly Searches
By utilizing Merchant Words, I was able to find 14 NEW keywords that all had at least 500+ monthly searches. The screenshot below shows the spreadsheet I created for these keywords, the highlighted green rows are the new keywords I found:
Like I said, the green rows represent the new keywords I discovered and the white rows are the keywords I was previously targeting. Also, the far right column shows where I was ranking within Amazon for each keyword. The ones with “0” mean that I was not ranking anywhere in Amazon for that search term.
The keywords that I am not ranking for are the ones that I am most excited about.
Because these are the keywords that I have not tapped into yet. This means that there is still a lot more room to grow before I hit the ceiling in terms of maxing out the keywords/traffic. It will be interesting to see what happens when I add these “new” keywords to my product listing and/or target them within a new PPC campaign.
Attempting to Grow Brand Away from Amazon
Using Amazon to kick start your brand and to get a lot of eyeballs on your products is perfect. However, in my opinion, the way to truly create a sustainable business is to try and NOT rely on Amazon for everything. This way if Amazon randomly disappeared overnight my brand would not be ruined.
I think the smart move is to make your business self sustainable as soon as possible. I am attempting to start this process by doing the following:
- Growing the brand’s website via organic traffic
- Growing an email list of people who are interested in my products
- Gain fans and grow brand awareness on social media
These are the three main things that I have been focusing on the past couple of weeks and what I will be continuing to focus on in the future. I believe these things will help my brand be less reliant on Amazon and be able to stand by itself as a business.
Starting to Utilize my Website
I have had a website for my brand for a while now (6+ months) but, I have not done much with it. Looking back, I wish I would have started working on growing this site a long time ago.
With that being said, the main thing I am trying to do is grow the traffic to the site by adding new content as much as possible. I am doing this in hopes of the articles ranking for keywords within Google that are related to my brand/product. Doing this will bring in people that could turn into potential customers.
The type of content I am writing is geared towards the overall niche that my brand/product is currently in. The long term goal here is to have a whole catalogue of products that cover all parts of this niche and having content that compliments these products will be very useful down the road.
I am not doing anything groundbreaking here. All I am doing is hiring a content writer from Upwork to write 500+ word articles around my niche and posting them to my site in hopes of ranking for niche related keywords. That’s it.
Right now, I only have two pieces of content on my site and they were both added within the last two weeks. Since these articles are so new there isn’t much to report to you all at this moment. I will make sure to keep you all updated on the progress that the site makes!
Trying to Grow my Email List
This is another major goal I have that will help me rely less on Amazon. Having a list of, for example, 500 interested people that I can email whenever I want is SO powerful for so many different reasons.
I am attempting a lot of different strategies when it comes to growing my email list and I will have a whole post dedicated to my results sometime in the future.
Growing an email list is something that I see as very important, so I will be spending a lot of time focusing on this during the next couple of months.
Becoming Active on Social Media
When I say “social media’ I am mainly talking about Facebook and Twitter. These are the main two that I will be focusing on and using to grow brand awareness. I think that I have underestimated the power of social media when it comes to branding and selling products.
This is another area that I have only been focusing on the past week or so but, I think being active on social media and interacting with your customers will pay off in the long run. Right now, it is too early to report any sort of results from this since I have been active only a week.
I am thinking about putting together a post here soon where I will discuss all of the strategies I have used to grow my website, my email list and my social media accounts. I’m obviously going to have to test what works and what doesn’t so this post may not be ready for a while but, I wanted to let you all know what I will be focusing on during the next couple of weeks/months.
Bringing it to a Close
That is gonna do it for the 16th update in my Amazon journey! The first 3 months have been a success and I have been able to turn a profit of around $1,500. I am expecting a lot more to come in the upcoming months with my second shipment coming in and me being able to go back to aggressively selling my product.
This past month in a half have been me focusing on slowing down sales and making my inventory last. I am looking forward to not having to worry about that anymore once my shipment arrives 🙂
I have just finished finals and I now have around 3 weeks off! I am planning on taking advantage of this time to put out a lot of content for you guys, so be on the lookout!
Thank you all for reading, before you go make sure to join our Amazon FBA Facebook Group and sign up for my newsletter below.