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Benjamin: Welcome back to the MarTech Podcast. This podcast is sponsored by Searchmetrics. Searchmetrics sets the standard for innovation in the content and search engine optimization industry. They support businesses who care about understanding both how to use content as a marketing channel, and how to improve their organic rankings in Google. If you're an enterprise level marketer, the Searchmetrics suite of software and services will help you optimize your existing content, help you understand what topics you need to cover next, and how to ensure that your writers produce effective content. There are billions of Google searches happening every day. Searchmetrics gets your stories to the top.
Benjamin : Today, we're going to focus our attention on a company that some people think is taking over the world, Amazon. With us today is Adam Weiler who is the founder of Sunken Stone, a performance-based Amazon management agency. They're a Amazon channel partner with over 10 years' experience helping e-commerce companies create sustainable successful growth using the Amazon platform. In this episode, Adam is going to talk us through how he became an Amazon expert, how the platform has changed over the time that he's been focused on it, and the types of companies that are finding success on the Amazon marketplace. Here's our interview with Adam Weiler from Sunken Stone.
Benjamin : Adam, welcome to the podcast.
Adam: Hey Ben, thanks for having me.
Benjamin : It's great to have you here. Let's start off. Why don’t you tell me a little bit about what your company does and what's your role at the company?
Adam: So, company is called Sunken Stone and I founded it about 10 years ago. We help companies sell on Amazon. Our tagline is we help companies sell on Amazon… better. The channel itself and the marketplace has changed a lot over the last 10 years. Really looks nothing like it once did. It's pretty difficult. It's pretty hard and there's a lot of things that go into it. Unless a company has dedicated employees and dedicate resources, it's almost impossible to do it well especially their first or second try out and we're here to help.
Benjamin : So, I want to talk to you about how the platform has changed over time, but before we get into that, tell us little bit about your career path. When did your career start and then how did you work your way into being an expert on the Amazon platform?
Adam: It started by chance. I was working at a home theater store. This was like during the housing boom. People were cashing in their home equity lines and coming in buying $50,000 stereos and TVs and systems around their house. Obviously that didn't last so when the housing bust hit, that company went out of business. I would have stayed there forever. I was like playing with gadgets all day, making good money, and I was good at it. So, that was the perfect scenario, but obviously that didn’t last. I wanted to go back and get my MBA really for just like an adult timeout. I didn’t want to go find another job. I had no idea what I was going to do.
Benjamin : The college sequel.
Adam: Exactly. So, we were selling flat-panel TVs back in the day. We were selling cables that went with them and we would make almost as much on the cable as we would on some of the TVs as far as commissions go. So, in between this break where I'd been accepted to the MBA program in San Diego State, go Aztecs! I had the summer off and I sent a bunch of emails out to sites like Global Sources and some other random websites. I got a reply back from some manufacturers to go credit card cash advance and bought 1,000 HDMI cables. I had them shipped over here. I actually had them shipped to my house in San Diego. I remember I negotiated with the factory and asked them how much shipping was. They quoted $300. Apparently that was $300 per box instead of $300 for the entire shipment. There's 10 boxes so in the whole $3,000 in addition to the cost of the cables off the bat. So, I'm like, "Oh shit!"
Benjamin : By the looks of where you're recording this interview it looks like a very nice house so I'm assuming you sold all the cables.
Adam: Yes eventually. So, I listed these cables multiple places on the internet, Overstock, eBay, and Amazon. Amazon had just rolled out there FBA program, the fulfillment by Amazon program.
Benjamin : What does that mean?
Adam: So, if you sell something on eBay, you had to ship it and pack it and print out the envelope and take it to the post office. I was doing that every day with like 100 cables in this big bag. That was kind of a pain the ass. Amazon had this program where you can send in any number of units call it 100 units in a box. They would handle, they would break it down, they would store it and then anytime someone on Amazon went and ordered something, one of their Amazon warehouse employees would go get the product, put it in a box, put the Amazon tape on it and ship it out. I didn’t have to do anything.
Benjamin : So, it looks like it's from Amazon.
Adam: Looks like it's directly from Amazon not even know to this day people think it's from Amazon.
Benjamin : Right.
Adam: The margins were a little thinner so you make less per sale, but it was so much easier, so much scalable. So, I'm playing golf with my dad one day and I had an old clunky smartphone, pull it out and like I sold 22 cables today and I don't even have to do anything. There's something here and that was the moment. So, I sold those 1,000 cables, bought 2,000. Sold those, bought 4,000. Sold those. Started bringing in containers. Some early mistakes on that was I didn't have factory putting labels on things. I didn’t have the factory shipping to a warehouse. I was literally sending a container full of cables to my own storage facility or garage in San Diego. So, that was kind of a pain in the ass.
Benjamin : Yeah. So, you're getting a pallet of cables and Amazon is just taking them with no labels, no nothing. They're just putting them in a bag and sending them off to your customers not knowing exactly what they are or any of the specs. So, you learned some hard lessons early on.
Adam: Yeah. I think I sent in a few and they were like, "Hey, what the hell are these?" Back in the day, they would actually label them for free. If you send in like an error shipment, they will email you and there must have been only a couple hundred or a couple thousand other FBA sellers unlike the two million there are today. So, that was more time and there was more attention. They were like, "By the way, these products don't have labels. What are these?" I would say, "Oh here's the UPC." or "Here's the code." Someone would go label it.
Benjamin : Okay. So, eventually you worked out some of the kinks. You're now in the cord business. What stopped you from just selling your own products as opposed to working with other people and going the agency model?
Adam: A couple different things happened. So, number one, more sellers in the marketplace were selling a commodity product. I see the price just start to erode in a week over week. So, there's competition in there, but then also at the end of the year, I'm selling these cables. I have no cash. I have a ton of inventory and I have this huge tax bill. The accountant is like, "Yeah, welcome to the physical product business." I was like, "This isn't fun. There's got to be a better way to do this."
Benjamin : So, you're running a successful business in the sense of creating a lot of revenue but you have a ton of overhead in terms of physical space and then obviously the tax implications.
Adam: Well, imagine you've got a graph and then your growth rate exceeds your profit margin so then you can never take cash out. You're always cash negative because you're always ordering more but you never have enough margin to cover that growth. That's what I learned in my San Diego State MBA program that I'm still paying some student loans off on.
Benjamin : So, you did end up going back and getting the MBA?
Adam: Yeah. It was really awesome. It was like case studies on my business. It was pretty awesome. I had a couple of years of experience of doing sales in the business world. So, it was more applicable. Yeah, the MBA program was awesome. I graduated with a 2.3 for my undergrad and I graduated with like a 3.8 in the MBA program.
Benjamin : So, you found the area that you wanted to focus on. You're running a successful business in terms of the growth. All of the sudden, you're getting great grades and you pop out of the MBA program and you go right into the agency world or how did you make the transition?
Adam: Let me take a step back. So, I am selling all these cables and we're actually putting these cables in envelopes before I'm sending them into FBA or before I'm sending them for an eBay order, an Overstock order. So, I'm like, "Hey, I did this with cables. Let me find some envelopes." So, I start sourcing these envelopes and selling them the same way and it was the same process. Then after that, my friend started coming to me like, "Hey, you're doing. Can you do this for us?" I didn't have any models worked out. I was like 28 at the time. So, did that a couple of times. Some failed, some succeeded. Didn’t really know what kind of the secret sauce was or what I was looking for in certain products. Then the biggest opportunity. I emailed someone on LinkedIn looking for their product. So, I had this kind of dog treat and my dog growled at me when I try to take it from them. I was like, "Oh this is the only time she's ever growled at me in my entire life. There's something here."
Benjamin : You found the crack for dogs.
Benjamin : You realize that there's a need for this product. It's hard to find.
Adam: Uh-hmm (affirmative) and there's opportunity. So, I cold emailed this company looking to just bulk buy their product. They responded back immediately like, "Hey we're not going to sell this to you but we want you to run our Amazon stuff."
Benjamin : Okay. That sounds fortuitous.
Adam: Yeah. I had no idea what I was doing. I don't think I had ever done a contract to that point. I don’t think I'd ever looked at numbers that big before, but it was the same process just over and over. Optimize content, run marketing, order promotions but the process were the same and took them on this trajectory. After that, they were like, "Thank you very much for your time. Here's a nice check and have a nice day."
Benjamin : So, talk to me a little bit about that process. You mentioned there's an operational content component marketing. Walk us through just sort of the foundation of setting up an Amazon store. What are the basics?
Adam: So, for basics, there's a ton of great podcasts and resources and videos that are out there. The Amazing Seller is the place to start. When people email me like, "Teach me Amazon." I'm like, "Here's the basics here." He breaks it down like, "This will be the link I would send my mom if she wants to ask me how to sell on Amazon."
Benjamin : I feel like I have to go find the Amazing Seller now and ask them to be on the podcast, ask him how he grew such a great podcast.
Adam: Totally. So, you put your credit card information in. It's like $40 a month for professional selling plan. Then you create a listing. You can either hop on an existing listing. Let's say your cousin works at like an olive oil company and it's already on Amazon but you can source it for a low price. You could sell your product on Amazon right there or you can sell that product on Amazon. You can sell it for a penny less and congratulations you make all the sales. That's one way or you can create your own products whether that's finding something that's already made and just putting your brand on it, that's called private labeling or create your own product and patent it or do a Kickstarter and then bring it to Amazon.
Benjamin : So, just to recap what you're saying, essentially there's three ways that you think people can get started on Amazon. One is looking at products that are already there, that they have access to and just copying a listing and trying to price it lower. The second is to create something that's proprietary and just publish and create a new listing. What was the third one?
Adam: I think everything else will fall underneath one of those two main headings. So, you're either hopping on an existing listing or some variation of that or you're creating a new listing.
Benjamin : Okay. So, once you have your listing and you obviously have access to the product, what happens then?
Adam: Then you want to sell it. So, obviously it's about content and it's about promotions. What makes good content? Images, people are visual buyers. So, there's 9 or 10 different spots for content on that page. Whether it's front or back end, you want a great title that's key word optimized. You want great images that are compliant which means they're not going to get flags. Amazon doesn't want to be eBay. Amazon wants a nice consistent front, for their storefront.
Adam: So, you're supposed to have a white background for all your main images. You see people with badges or number one bestseller but they're kind of weeding through that with AI and machine learning and eventually that'll go away. So, they want it nice and clean. You want great bullet points. Most people just look at the title, the pictures and the bullet points. Then there's description. There's A plus or enhanced brand content. There's reviews down below and then there's kind of that stuff on the back end as well.
Benjamin : So, you mentioned content and SEO optimization. Essentially, you're having the right keywords. How do you know which are the right keywords when you're creating a listing for Amazon?
Adam: That's like the million-dollar question, right? There's keywords that people think are important and there's keywords where people are actually buying through or searching and then buying. So, a lot of testing. When we're building listings, we're using multiple tools to do that. Tools like Helium 10. For keyword research, we use MerchantWords. We use Jungle Scout, a whole bunch of other extensions and there's some really good resources for keyword research. We're trying to optimize like when you look at a title, you want it to read natural, but you also want it to be keyword heavy. There's a good balance between those.
Benjamin : So, I have some experience. I worked at eBay for seven years. I was in the marketing team, but I've also been an eBay seller before. I've never sold anything on Amazon because most the time when I'm selling something, it's a one off and used item, used electronics. It sounds like the principles of how you're selling on Amazon are kind of what you're describing as table stakes. You need good clean imagery that makes the product look attractive. You need to use the right words that people are searching for within the company search engine to make sure that it shows up. You need it to be priced competitively. Then there has to be a reputation. You have to have some good reviews and fair terms in terms of your return policy and all the other sort of logistics of how they're going to get the product. It sounds like selling on Amazon isn't anything that's drastically different from selling on other online platforms.
Adam: Agree 100%. Now the difference is six years ago, you didn't need anything besides a listing and you could just throw it out there and that's what I do with the HDMI cables. Nice copy, good images, and they started selling because there's enough traffic. Now we're in this place where I believe the last count is over two million third-party sellers on Amazon. While the number of buyers has increased, so has the amount of competition. So, if you're selling a commodity product, it's about advertising. It's who's got the biggest budget, who can promote the best, who's got some strategies to harness off Amazon traffic as well.
Benjamin : Okay, so the platform has gotten more complicated and more competitive over time. It's not the same universe where you are able to just take a generic HDMI cord and you are one of the top sellers. Obviously, the company has scaled even beyond just e-commerce portion but we're going to focus on that for right now. So, tell me a little bit about how the platform has changed in more detail since you've been working on it.
Adam: So, we do this exercise every six months at our team offsite and we call it Bubbles. If you take a look at our website now you'll see like a very early I think it's probably 12 or 18 months ago with the bubbles image looks like and it's called Sunken Stone what we do. There is maybe 10 bubbles on there. Every six months, Amazon rolls out so many new programs and they just throw it at a wall. Like hey you log into your seller central account which is where you go to sell and you'll see a new tab and it's like promotions and coupons and lightning deals and subscribe. So, they'll literally just add a ton of new features that no one really knows how to use so we'll have to get up to speed super quick and becoming experts at it. It's awesome in the fact that they're adding so many more levers, but it is a little frustrating to a newbie seller.
Benjamin : So, it sounds like when you started working on the Amazon platform, it was really an even playing field. It was about who was able to optimize their keywords, who had good pricing and what products look the most attractive. I get the sense that now it's shifting to less of an even playing field where new sellers can get their products in front of people as easily. Is that true? Is it an even playing field and if not, why?
Adam: Great question. So, if you've got a unique product, you've got something special, you can still make some great headway. However, if you're trying to compete with the one millionth LED light bulb, you're going to need something that differentiates you. Whether that's software on the backend, different keyword tools, different promotions tools, programmatic add buying tools. So, across our software stack as far as plug-ins, we're spending roughly $2,500 to $3,000 a month on these tools that we're using. Listing, monitoring, inventory management, customer service, things that make us efficient especially as we grow our skew count.
Benjamin : So, talk me a little bit through that before you go on. There's plug-ins that you're using that are helping you make different parts of your business more efficient. Tell me how that stack is put together and are those things that you plug into your Amazon seller listing, are they Amazon plug-ins or they third-party software that you use independently of the platform?
Adam: Yeah, all third-party software. Amazon actually just created a marketplace for these plug-ins. They realized, "Hey we got two million sellers, we can make our own app store, give a little more security." Because, you're giving access to your Amazon account to these plug-ins so I've actually been hesitant to try some of the new cutting-edge ones until they get vetted by the community, but Amazon just created this app store this kind of walled garden and they're going to start to let people develop inside that. Inventory management, keyword research, listing, monitoring, customer service, buyer messaging, all these contribute to that software stack.
Benjamin : Interesting. Okay. So, there is an overhead investment for you to be able to optimize the various listings that you manage. Tell me about some of the companies that you work with, and are you specialized selling electronics, cables? What's the area that you focus or is it pretty much anything within the Amazon universe?
Adam: We have a lot in health and personal care like supplement space, but we really run the gamut from handmade to hammocks from Mexico and dog products, hat products and personal supplements. So, it's really a wide variety because what happens once you learn the system and once you know how to sell one thing on Amazon, it really is a replicable process. So, what we say internally is we've got 500 SOPs for every brand we onboard and we've got 500 SOPs for every product within that brand.
Benjamin : What's an SOP?
Adam: Standard operating procedure. So, that's someone on our team creates a screen video or screen share of them doing the process and then they're kind of narrating over it and then we send that to another person on the team to chop up into like a Google doc.
Benjamin : Got it.
Adam: That's really enabled us to just really systematize everything.
Benjamin : So, tell me a little bit about the scale for some of the customers that you're working with. When somebody is working on Amazon store, I'm sure it varies much by the product, but what is the general ROI that you see on a product and what's the volume?
Adam: Well if I could get that 100% accurate I would go be a bookie in Las Vegas or a professional gambler.
Benjamin : How about the range?
Adam: Yeah. We get asked like, "How much can you sell for me on Amazon?" So, what we say it's a rule of thumb. Whatever you're doing off Amazon, Amazon should add anywhere from 20% to 40% incrementally if it's managed correctly. So, if a brand's doing a million dollars off Amazon through their own e-commerce stores or through retail, when we pull all the levers and do what we do, we should be able to get at least 200,000 to 400,000 incremental. In fact, what we often see because we're managing it correctly, we often see their other channels increase in sales too. So, if they're doing really well on Shopify because of their ad words or because they've got a great Instagram presence or that they know Facebook or they know YouTube advertising, once we get Amazon dialed in, their Shopify goes up as well. So, it's kind of a win-win scenario.
Benjamin : Okay. I think that's a great place for us to stop today. Thanks for joining this episode of the MarTech podcast. Thanks to Adam for being our guest and then part two of our interview which we'll publish tomorrow, Adam is going to walk us through some of the best practices and strategies that he implements for his clients to maximize their ROI using the Amazon marketplace. If you can't wait until our next episode and you'd like to learn more about Adam and Sunken Stone, go to sunkenstone.com. A special thanks to Searchmetrics for sponsoring this podcast. If you're looking to grow your online presence, go to searchmetrics.com to request a free tour of their platform. If you'd like to read the transcript of this podcast, we published it on our website which is martechpod.com, M-A-R-T-E-C-H-P-O-D.com.
Benjamin : If you're a subscriber to the MarTech podcast, I just want to stop and say thank you very much. We want you to feel like you're a member of our community. So, if you ever have any questions, comments, if you'd like to reach our guest, feel free to reach out to me directly at firstname.lastname@example.org or on Twitter or handle is Ben J. Shap LLC. You can also find us on LinkedIn and Facebook. We'd love for you to leave us review in the Apple iTunes store.
Benjamin : If you haven't subscribed yet already and you want a weekly stream of marketing and technology knowledge in your podcast feed, in addition to part two of this interview with Adam Weiler, we've got some great episodes lined up for you in the next week. So, if you're interested in learning about topics like paid social advertising, growth hacking, B2B marketing, hit that subscribe button in your podcast app. Okay, that's it for today, but until next time, my advice is to just focus on keeping your customers happy.
Benjamin: Welcome back to the Martech Podcast. This podcast is sponsored by Searchmetrics. Searchmetrics sets the standard for innovation in the content and search engine optimization industry. They support businesses who care about understanding both how to use content as a marketing channel, and how to improve their organic rankings in Google. If you're an enterprise level marketer, the Searchmetrics suite of software and services will help you optimize your existing content, help you understand what topics you need to cover next, and how to ensure that your writers produce effective content. There are billions of Google searches happening every day. Searchmetrics gets your stories to the top.
Benjamin: Okay, today we're gonna hear the second part of our interview with Amazon Marketplace expert, Adam Weiler. Adam is the Founder of Sunken Stone, which is a performance based Amazon management agency. In our last episode, Adam walked us through how he became an Amazon Marketplace expert, how the platform has changed since he's been working on it, and what people can expect, in terms of additional ROI when they start working on the Amazon Marketplace. If you missed that episode, it's full of great information. We'd love for you to go back and give it a listen. That said, in this episode, Adam is gonna walk us through some of the best practices and strategies that he implements with his clients, to maximize their ROI using the Amazon Marketplace. Here's the second part of our interview with Adam.
Benjamin: So Adam, in the last episode, you and I talked a lot about sort of what the Amazon Marketplace is, and some of the software that goes into optimizing it. What I wanna do is a little mock case study. And I want you to walk me through a little bit if what your agency does to help support their customers, that they probably couldn't do on their own. So, as an example, let's say I'm selling a physical product. I am selling a iPhone charger that has a built in place for you to charge your Apple watch, and it's a relatively new product. What's the process look like for you, in terms of onboarding a new customer, and how would you think about marketing that product?
Adam: Well number one, I'm interested in buying your service, or your product. It sounds awesome.
Benjamin: Great, I don't actually have one. Do you know anybody in China that could help me manufacture this?
Adam: Definitely. I can connect you to a few people.
Adam: So what we're gonna do, as far as the onboarding goes, we're gonna ask a bunch of questions about the product. We're gonna get your assets, whether that's photos and videos. If you've got multiple different products, we're gonna have you give us your SKU sheet, which is like your UPC codes, and then we're gonna start building out the listings. So we're going to assign those to our copywriters, to build out the content, and the copywriters are going to make great title, they're gonna make great bullet points, they're gonna make great A plus content, or enhanced brain content, so we've got a content theme. And what we're doing is filling out these product demographic sheets, so this is like a great exercise.
Adam: If somebody just wants to do this on their own, they totally can. We're really looking for who's the target customer, what are they using this for, what are the key benefits, what are the pain points this product's fixing, and those are the issues that you wanna hit in your copy. No one wants a hammer, they want a nail on the wall. So what's their nail on the wall?
Benjamin: Okay, so in the example that we have, I guess that core customers for people that are technology forward, Apple fans, that have both the Apple watch and the iPhone, and they're not sure at a given time which device is going to die first. So they wanna quickly and easily be able to charge both devices at the same time, or one device on the go.
Adam: Right, that's definitely a pain point.
Adam: So, you're hitting that pain point over and over. And now, because it's a unique product, it's like a Catch-22. Like people aren't searching for it, so keywords matter a little bit less. So if we're selling just another Omega 3 fish oil, that we know what the keywords are, because we can go look at 20 other competitors, kind of scrape whatever keywords they're doing, and come up with a variation of those. Now this is a completely new product, so we're looking for more generic terms, whether it's iPhone, or iPhone charger, or Apple iWatch charger. We might not be able to rank for those, because those are really competitive niches. So we wanna find like longer tail keywords, that we might be able to rank for like iPhone iWatch charger.
Adam: So if it's a generic product, and even if it's a brand new product, you're looking for those medium to long tail keywords, that you're gonna have two to three, to even four word keywords that you're gonna be able to target in your front end and your back end, and your advertising campaigns effectively.
Benjamin: So it sounds like the mechanism you're building is an organic traffic driver right? You're figuring out what keywords so you can take advantage of what people are looking for in the platform. But if this is a product that people don't know to look for, how do you think about getting it out there?
Adam: So there's on Amazon, and there's off Amazon. I'll talk about on Amazon, because that's really what we specialize in. So, our standard operating procedures are, we wanna get the products into best deal/lightning deals, and these are, it's a different category page. This is more for the casual browser. So if you're gonna buy Omega 3 fish oil, you're gonna go to Amazon, you're gonna search Omega 3 or fish oil, and then you're gonna scroll. You might look at the first 10, you'll buy one of them, and that's it. But this, the best deal page, or the deals page, gets emailed out to, I think it's 50 million people a day. It's the second most trafficked page I believe, besides the home page, and you're getting people you wouldn't normally get.
Adam: So if someone's looking for a deal, and they go to this page, they might not have been looking for fish oil that day, but they just buy it. Just like when you're at the store, and you see something with a tag, and you're like, "Oh, this is a sale."
Benjamin: You're capturing the browsing community, not the searching community.
Benjamin: So what are the economics of getting to a deal page like that? Is that an upfront fee, is that a CPM? How does it work to get into that placement?
Adam: Well back in the day, it used to be totally free and those were the glory days. It used to be free and there weren't that many people able to do it, so that was like a huge lever. Now, everyone has access to it, or pretty much everyone has access to it. And they're charging about $150 per lightning deal, and then you have to discount the price, at least 20% off the previous trailing 30 day average.
Benjamin: So do you artificially boost your cost for 30 days to get it back to where you want it to be?
Adam: It's a trade off. It's the kind of thing where, do you wanna shoot yourself in the foot for 30 days, and get less sales for a four hour potential period, so we generally discourage that, and just say, like especially on a replenishable item, it's worth giving the 20% at the lower price. If it's a one time sale, you gotta be strategic with this.
Benjamin: What's the type of volume when somebody does one of these big daily deals? Is it a month's worth of sales, is it a days worth of sales, it is five days? How do you gauge what the value of it is?
Adam: If you get deal of the day, which there's only two or three a day, and that's like the one that's always on there, they say you're gonna do a month's worth of sales in that one day. That's not all lightning deals though, just to be very clear.
Benjamin: Yeah, that's a lot of cords coming out of grandma's garage.
Adam: I guess.
Benjamin: I mean, a lot of iPhone Watch Chargers.
Adam: Exactly, yeah. I mean if you get the right branding around that, you got something. That can move. So not every product is great for browsers, right? Dog products seem to do well. Certain health products do well, some do terrible. Like, some we wouldn't sell any on a lightning deal, and we don't even try anymore. But if it's the kind of product that does well for a Facebook feed and Instagram feed, we're scrolling by here like, "I didn't know I need that, but now I need that." That would do really well.
Benjamin: The impulse buys.
Adam: Yep, exactly.
Benjamin: All right. So just to recap, if you're looking at a product that's a new product, that people are unaware of, or something that you would consider an impulse buy, you'd wanna do some promotions primarily around the deal space, because you're catching the browsing community. Not necessarily people that already know what they're looking for and are searching.
Adam: Correct, and that's one great lever, and then the on Amazon advertising. Where I'd say lightning deals is 10-15% lever, like advertising is the big one.
Benjamin: So walk me through the Amazon advertising platform.
Adam: Yeah, it's really evolved over the last couple years. I heard some stats on here, and it's like grown 1000%. The numbers are just crazy out of this. They used to have one placement and now, if you look for something, the majority above the fold search results are advertising. Just for an example, if you go to Amazon, you type in fish oil. The first thing you're gonna see is what's called the headline ad. And this is the one with a couple different images, and a little snippet of copy. And it's all cost per click, so if no one's clicking on it, like you're not spending a ton of money which is pretty cool. I like those cost per click advertising campaigns versus cost per view. We can't really trace anything.
Adam: And then underneath that headline search ad is gonna be a sponsor product ad. Those sponsor products are cost per click as well. And then also, in that Amazon advertising ecosystem, there's what's called AMG ads, or Amazon Media Group ads, and these can actually target externals, or you could retarget people who saw your product but didn't buy, and now they're on ESPN or they're on Huffington Post, and you can actually retarget those. And Amazon's kind of doing that, but this like really targets stuff.
Benjamin: What about the like, Amazon's Choice or the best sellers? Can you buy promotions to sort of make your product look more official?
Adam: I wish. So Amazon's Choice is per keyword. So if you search for, what's the brand of your charger?
Benjamin: It is Charge Me To Go.
Adam: There's something there.
Benjamin: Hey, I'm a marketer man.
Adam: All right, well we'll handle the Amazon when you get it developed.
Benjamin: Right after you get me my manufacturer, and I have enough overhead to produce the first thousand of them.
Adam: Kickstarter, here we go.
Benjamin: Anyway, it has to already exist.
Adam: Okay, Charge Me To Go. So, you will probably get Amazon's Choice for Charge Me To Go very easily, with like two sales. And there's a couple different factors in there. It's that when someone searches for that keyword and buys that product, they're having low return rates. They're having no issues, Amazon calls it, right? Like they're not calling into customer service, they're not returning it, they're not refunding it, they're not leaving bad reviews. Those are all the factors that weigh into Amazon's Choice, plus I'm sure a million others that Amazon doesn't even say.
Adam: So for Charge To Go, it's gonna be easy because not a lot of competition for-
Benjamin: Charge Me To Go.
Adam: ... oh, Charge this, existing trademark, copy write. For iPhone charger, that's gonna be a lot harder. Now you're competing with all those other keywords. So it's on a keyword by keyword basis for Amazon Choice. There used to be some black hat hacks around it. We always have to know what's going on, just in case competitors are going against us. We're managing around 65 other brands, like we have to be safe, so we can't mess around with the black hat stuff. But we wanna know what's out there, and what people are doing in the marketplace, so people were hacking it certain ways and still kind of are trying to. But you really can't around that one. So that's Amazon's Choice.
Adam: Around best seller, so that is, if you scroll down on desktop about halfway down any Amazon product page. So if you search for fish oil, click on one of the fish oil, and then scroll about halfway down the page, you're gonna see something that says like ASINS, that's Amazon serial identification number. You're gonna see something called best seller rank, and you'll see this is ranked 2000 in health and personal care, but it is number 17 for Omega 3 fish oil. Now when you get to number one in Omega 3 fish oil, you're gonna get that best seller badge that shows up in the search results, shows up on the product page. Like talk about conversion rate bump? You want that.
Benjamin: Yeah so if you're the number one seller and that sounds like it's in terms of volume for a sub-category in Amazon, they brand it and that helps you stay in a dominant position. But in the example of our iPhone Apple Watch Charger, we're a new product so, we would have to have a fair amount of transactions to get to that point.
Adam: And pro tip on this part is, so if we try to compete in the iPhone charger sub-category, we're gonna be number 10 million, but if we compete in the iWatch Charger category, it's less competition. We might be able to get that number one spot. So choosing a less popular category, we'll be able to get that number one spot in a sub-category easier.
Benjamin: Okay, so you talked us through how to get the listing created, and how to drive some demand by using some of the promotional tools. What about the back half? What about actually getting to the sale, like is there any page optimization? And then what about the fulfillment, returns, and how do you sort of gauge your ROI and optimize?
Adam: So, as far as ongoing optimization, you've gotta look at a number of different factors, and then react accordingly, or be proactive, right? You're looking at your conversion rate, so that you're looking at the number of sessions that you're getting, which is like page views. So, if a hundred people go to the page, 25 buy, your conversion rate's 25%, right? Pretty solid. And on Amazon it's doable. We've had products converting at 75%. It's insane.
Benjamin: I'm assuming that's not fish oil.
Adam: No but similar, like a commodity product. So you wanna look at your conversion rate obviously, you wanna get that as high as possible because you're making more sales without spending any more money. And an average eCommerce, if you had your own Shopify store, that's converting at two and a half, three percent, and that's really good. More typically around one percent.
Benjamin: It actually brings up an interesting question to my mind. What I'm curious to know is, you know if the conversion rates are potentially 10 to 30% higher in some cases from traditional eCommerce, why do people continue to do traditional eCommerce as opposed to just be on Amazon? What does Amazon charge when you actually make a sale?
Adam: Good question, so let me break down the fees first, and then I'll talk about why good brands should still do it. So fees, if you're selling on seller central, which is third party seller, like selling on Amazon or selling to Amazon. If you're selling on Amazon, you're gonna pay a category fee. Most of them are 15%. If you're selling certain electronics or computers, it's lower. Certain items are lower.
Benjamin: And that's of your sale price?
Adam: Yeah, of your gross sale, so if you sell something that's $100, you're gonna pay $15 off the bat. And they're handing credit card processing, it's their buyer. So you have to think of it that way, that traffic is there. Then you're going to pay a FBA fee, and these range all the time, depending on how big the product is, but call it three dollars for something the size of a pill bottle, plus or minus a couple cents. And there's online calculators that you can use. You type in your dimensions and the weight of the product, and it tells you how much it is. Then obviously, it's the cost of the product, the cost to get it labeled and get it into Amazon's fulfillment centers, and then the cost of on Amazon advertising, or any promotions that you do.
Benjamin: So what is the typical ROI for a product?
Adam: So we don't really know the cost of goods or cogs of our brands' products, because we take a percentage of sales, not a percentage of profit, because it's so much easier to calculate, and we want them to be more profitable, because then they can put more money in advertising. So, if they get gains and efficiency in manufacturing, or in operations, and they can make 10 extra points on profit, that's great. I don't even wanna know. But what happens after all the fees and after all the marketing? Usually the brand is getting about 50 to 60% back, depending on the product. After all the fees, and after all the shipping, and after all the marketing.
Benjamin: Okay, so basically, outside of your cost of goods sold, you're retaining 60% of your revenue.
Adam: Mm-hmm (affirmative). And you ask, like if conversion rates are so high, why even have your own eCommerce store, well your eCommerce store is gonna be way more profitable. Or if you're acquiring traffic for the same amount of costs, be more profitable. Because you're paying 1.8% for that credit card processor versus 15%. Shipping, about a wash if you have a good fulfillment center. It's all about how much it costs to acquire the customer, and then once you have that customer on your eCommerce store, you can remarket to them, versus if they're on Amazon, they're Amazon's customer. You can't think of them as your customer.
Benjamin: Right, so essentially even if your conversion rates are 2% instead of 25%, you can remarket to the customer and have them become a repeat purchaser. You aren't paying 40% to Amazon to acquire the customer. So, hypothetically you're more profitable using your own website than getting an Amazon customer.
Adam: Yeah, and we preach that it's not one or the other, it's everything. A brand in 2018 needs to be on every channel, but needs to be managed well on every channel. Pricing, either the same or relatively the same across the web, so you're not like just trading dollars away. Pricing relatively the same, but being everywhere. Because Amazon's got great SEO presence, you're gonna get your product seen in more places, and people might go to Amazon to do product research, but then they might bounce to your website to buy the product and vice versa.
Benjamin: Okay, so using our hypothetical Apple Watch iPhone Charger, we now understand how to get the product listed, we talked about how to drive some traffic to it, and a little bit about how to think about our ROI and optimize it. What else is part of the service that you and your company provide?
Adam: So inventory management is a key aspect of that as well. If you don't have inventory on your own website, you can kind of back fill orders and just take the order and ship them in a couple days when you get inventory, but Amazon doesn't want that, because everything has to be Prime and they have to hit those thresholds, they want people to buy. So if you don't have inventory, or if you go out of stock, you disappear from the search results. So having inventory is super important, and you think it'll be easy, like, "If we get passed below 50, just send in more." But especially with promotions, with deals, if you're gonna get featured on a blog, or if you're gonna do a podcast for your product, like you're getting this spike, and you'll go out of stock. Or seasonality, you don't wanna send too much in because then Amazon hits you with all these other fees, like storage fees. So managing inventory correctly is a real pain point, and we've been fortunate enough to have some great talent around there to do it really well.
Benjamin: And how about customer services, dealing with returns, or complaints, or defective product?
Adam: Yeah, I know a lot of brands kind of gloss over customer service, but on Amazon, it becomes this ability to touch the customer. Because a lot of people want Amazon's customer service to deal with the customer, but that's like the worst thing for your brand, because they don't know how the stuff works. They don't really care. They've got a million people in a call center somewhere. And they're not attuned to your specific customer service FAQs. So, if you have that setting turned off in your seller central, to have Amazon manager, or to have your self manager customer service, turn it back on. Because you want to be able to, not only give that customer a great experience, but potentially prevent a negative review, or get a positive review, based on that interaction.
Adam: So, they email in, "Hey, my head phones aren't working, this sucks. These are broken," and instead of the Amazon customer service agent just being like, "Oh, here's your refund, send them back," you've got either a representative like us, or you've got your customer service agents walking them through the process. "Hey, make sure you turn the setting on, did you try this?" "Oh, yeah, that works." "Hey, were you happy? Can you go write about your experience on the product page?" And those reviews, they're super hard to get now, especially with all the stuff Amazon's cracking down on them, so any review is like literally worth its weight in gold.
Benjamin: Awesome, okay. Well I think we've sort of beaten the iWatch iPhone Charger case study to death. Tell me a little bit about how your customers find you, and who're the people that you're trying to meet?
Adam: So a ton come from referrals, just because business owners talk to other business owners, and it seems like, "Hey, what issues are you having with Amazon? Talk to our Amazon people." So a ton from referrals. We do a lot of trade shows, because our target demo, our target brand, is a brand that has budget to do some campaigns, like isn't afraid to throw some money at this for the first few months. Because in the beginning, it takes a little bit to get momentum. The days of just putting the product up and starting to sell and be profitable out of the gate, I don't think that's possible anymore.
Adam: So you need, if you're listening to this and you're gonna do this outta your spare bedroom, just have a little budget for promotions. You're gonna have to be in the negative for a couple of months, so we're looking for partner brands that are aware of that. That treat Amazon like they would any other marketing campaign. Yep, we're gonna be negative for a little bit, and hopefully, we're able to turn out of that and most of the time we are.
Benjamin: What's the level of budget that you suggest somebody plans for, relative to I guess, how much their product costs, and how long does it normally take to get an Amazon store scaled and profitable?
Adam: A bazillion dollars and one day. No.
Benjamin: One day, huh?
Adam: So we've had certain brands that weren't on Amazon at all, so just by putting them up there, we're able to generate positive returns out of the gate. Those are few and far between. Most brands are either on Amazon but they're just un-optimized, or there's not a lot of search intent. The best scenario is, I'll use that fish oil example and the charger example. So for fish oil, we'll do some research. So Jungle Scout is a tool. I think they have a free version, there's a paid version. That'll give you kind of competitive business intelligence around the keywords, so you could say like, "These guys, they're selling 200 units a day on this first page of search engine results." Like if we wanna hit this, we're gonna have to spend some serious dollars here. There's keywords that if you're bidding on, they're $25 a click, in the health and personal space.
Adam: So you're gonna dump some cash in there, in the hopes that people like the product, it's a good product, right? It's gonna get some reviews, it's gonna get low returns, it's gonna start rising in those keyword rankings. And then that's leading to organic purchasers, which are gonna buy the product, and like it and keep buying it. So as far as a percentage of budget, we're looking for brands that have ad budgets of anywhere from three to ten thousand dollars a month on Amazon, that we can deploy effectively.
Adam: And worst case scenario, we get break even, so we spend 3000 in sales, or 3000 in ad spend and we get 3000 in revenue. Best case, we're getting a two, three, four, sometimes five plus to one return on ad spend. So you spend $1000, you get 4000 in sales. And then the brand's like okay, scale this up. Off to the races.
Benjamin: How long does it take to get to the optimal spend level, generally?
Adam: I wish there was normalization around this because, so many people are jumping into the platform, and so many people are boosting up their bids that, it literally changes month over month. We have to adjust keyword bids and campaign budgets every single month, just because of the fluctuation. But, rule of thumb, four months til you can prove to Amazon. It's similar to an ad score in adwords, where you have to prove to Amazon like, "Hey this is a valid product. You should actually show it in your ad rotation."
Benjamin: Great, okay. So I ask this question to everybody. You've been working on the Amazon platform for 10 years. You obviously had a different experience before. For people that are new in their marketing career, people that are interested in starting with Amazon, what advice do you have for them?
Adam: Knowledge, obviously there's a ton of great resources. And one great bit of advice would be, you gotta do something different. Because everyone's reading all the same resources, everyone's reading the same podcasts, and everyone's kind of just focused on just the Amazon. What I would say is, you need to have something unique. Whether that's an Instagram following of a 100,000 dedicated fans that you could harness for every product release, YouTube proficiency. You know some kind of niche, sliver. We call it marketing winds that you could harness, because those are the ones that we hit it out of the park with. It's like we do all we can to optimize Amazon, and then they unleash this fire hose of like, Instagram fans that direct them at the page, and with like a promo code, and boom, off to the races. And much more profitable.
Adam: So I would say combining two different channels, like an Amazon Plus and Instagram, an Amazon Plus and YouTube, an Amazon Plus something or conversion rate optimization equals success. If you're just gonna do the Amazon without the other part, you need to partner with someone or buy it, and that's gonna get expensive. But having that expertise I think differentiates you.
Benjamin: Any other advice for young marketers, outside of just focusing on Amazon?
Adam: So I was on a tiny little wave that then turned into this eCommerce revolution. I didn't know Amazon was gonna be as big as it was today. I kind of just got lucky, and once I realized we're on this wave, I'm not getting off. We're paddling our ass off. Or, we don't wanna die here. So, I think being aware of that and asking for help, being open. You know before, I used to think it was a mindset shift has really helped me out. So before, I thought, "I know all these Amazon secrets, I'm not sharing them with anyone." And now I realize like, being in a room with five other large Amazon sellers, I won't hold anything back. I'll just share all the secrets, here's what we're doing, here's what's working, here's what's not, and I get a million times back what I've put out there in the universe. So I think that big mindset shift has been instrumental.
Benjamin: It turns out, relationship matters, and even when you're selling products on Amazon. And I think that's a good point to say, okay that wraps up this episode of the Martech Podcast. Thanks to Adam for joining us. If you're interested in learning more about Adam and Sunken Stone, or if you'd like to get some help selling on Amazon, go to sunkenstone.com. S-U-N-K-E-N-S-T-O-N-E. A special thanks to Searchmetrics for sponsoring this podcast. If you're looking to grow your online presence, go to Searchmetrics.com to request a free tour of their platform. If you'd like to read the transcript of this podcast, we've published it on martechpod.com. If you're a subscriber of the Martech Podcast, thank you very much. We want you to feel like a member of our community, so if you have any questions or comments, or if you'd like to be a guest on our show, feel free to reach out to me directly at email@example.com or on LinkedIn or Twitter. Our handle is BenJShap.LLC.
Benjamin: If you haven't subscribed yet, and you want a weekly stream of marketing and technology knowledge in your podcast feed, we've got some great episodes lined up in the next few weeks. So hit that subscribe button in your podcast app. Okay, that's it for today, but until next time, my advice is just focus on keeping your customers happy.