Bowtied Amazon's Q/A Round Up!
Welcome to Bowtied Amazon’s Q/A round up. We are going to be covering the most common questions from the past 4-6 weeks that have been posted in the comments, DM’d on twitter or send along via email.
If you are looking to have a question answered in our next monthly round up, you can either send a question to bowtiedamazon@gmail.com or DM me on twitter @bowtiedamazon.
New to BowtiedAmazon? Here a few of our recent posts to get you acquainted.
Question #1
Do organic rankings even matter anymore?
Marketplace Pulse recently published an analysis showing what all sellers have noticed over the past few months — Amazon is continuing to monetize search at what seems like an increasing rate. These changes are happening without much regard for the impact on sellers or for the underly changes in customer experience. Seems like a odd move for the world’s “Most Customer Obsessed Company”, but I guess they have $31B reasons to keep monetizing the shopping experience.
“Of the first twenty products a shopper sees when searching on Amazon, only four are organic results. There is little space left for organic results at the top of the page, the real estate that drives most sales. Few purchases happen beyond the first page of search results. And not many shoppers scroll to the bottom of even the first page.” - Marketplace Pulse, Amazon Is Burying Organic Search Results
What does this mean for sellers? In the short term sellers have little recourse other than to either accept lower sales volume or increase their PPC budgets and live with lower EBITDA (profit) margins. In the long term, sellers have a few options to help manage through this issue.
Not all categories are created equally. Sellers can shift their assortment and enter less competitive markets. A lower level of competition will mean less overall monetization and lower ad costs making it easier to compete on a cost-effective basis, at least for a while.
Change the strategy from advertising on Amazon to off of Amazon. I’ve written about this at length so I won’t go into detail, but look to external channels (Facebook still works *really* well) and make your owned-channels work harder for you.
Build your off-Amazon presence, TLDR - build your email and SMS lists by any means necessary.
Question #2
I’m getting crushed with Amazon’s new FBA fees. The increase is way more than the 5.2% Amazon quoted. Do I have any options or is this a new normal?
The good news it that you are far from out of luck. In the short term, your best bet from a unit economics perspective is to shift away from FBA and move your shipping model to FBM or Fulfilled by Merchant. This model enables you to ship product directly to customers and has a number of benefits.
No FBA or Storage Fees
Able to capture customer data (against Terms of Service)
Pick your own service providers (USP, Fedex, etc.) and ship over a longer time period which should reduce your costs
The downside to this approach is that you will lose the prime badge. In my experience that means a 20-30% reduction in sales, but it might be worth it if you can make more money from each shipment.
Over a longer timeline, you can get really creative. Get to work on optimizing your packing which can significantly lower your fulfillment costs. H/T to @CameronWalkerSZ who gave me the idea — in his example below he will be lowering his fees by $24K a year….all by adjusting the size of his components!
The last thing you can do to offset your fulfillment costs is increase your prices. This one sucks, and Amazon might fight you on it (by removing your offer from the Buy Box) where they can, but remember you are in the business of making a profit, not top-line sales. At this point, customers are expecting to see price increases so you might as well do it now while it blends in with everyone else’s.
Question #3
What is vCPM bidding for sponsored display? I thought it was all based on a CPC model?
Sponsored Display is Amazon’s solution for sellers who want to engage in display advertising, but either do not have access or the desire to use Amazon’s DSP. Amazon’s DSP or Demand Side Platform is an ad networks that allows you to programmatically buy ads to reach new and existing audiences on and off Amazon. Display is typically used a way to drive awareness for a product or brand with messaging and creative segmented against specific audiences1. Sponsored display gives you *most* of the functionally found within DSP, but with much less of a headache.
Historically, sponsored display has been built on a CPC based model and where an advertiser is charged whenever a user clicks your ad and all associated efficiency (ROAS) metrics are based on those clicks.
vCPM based bidding is a much different model. From Amazon…
Now the fun part - why does this matter? If you move to a view based model, your attribution (i.e. ROAS) will be based on users who have viewed (or better said, were served) and ad, regardless if the ad unit was clicked or not. This will function to significantly improve your ad-attributed ROAS or ACoS performance, but you will need to judge the *incremental value* of the performance. Would the customer have purchased they weren’t served a banner ad, well maybe.
My advice is to not trust the reporting and do some testing yourself. See what happens to total sales whenever you change the bidding strategy and view this as a pre/post analysis. If you have questions about attribution models, you should start here and follow @bowtiedopossum2 on twitter to get smart on the topic in a hurry.
Question #4
Is A+ content worth the time and effort? I see a lot of top selling ASINs that aren’t doing any don’t want to waste my time or resources creating something that won’t move the needle.
Short answer - Yes! If you have the opportunity to improve the experience for you customers you do it 100 times out of 100. That said, if you are going to do it, make sure that it’s *really* good. Don't skimp of creative or imagery and ensure that you content is telling a showing the item in a way that is culturally relevant. You can’t have this be an instance where the creative detracts from the brand.
A better move than simply loaded some content is to come up with two variations and test them! You can do this through the ‘Manage My Experiments’ section of seller central and really understand the value of the content and develop a strategy towards future optimizations.
Note: The sellers who are dominating without A+ content are doing one of two things. 1 - they are an established brand that is credible and relevant in the space on and off of Amazon. 2 - They are cheating. Ranking bots, rebates and fake reviews are driving performance rarely the quality of the product itself.
Wrapping Up
Thanks for reading the Q/A round up and keep the questions coming. If you like what you read, share with a friend!
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The message for someone net/new to the brand is much different than that to someone who has already been to your product detail page
He built the framework for my attribution and pre/post models