George's Blog

Feb 23, 2023 12:00AM

What content do you want more of ➡️ SURVEY

Feb 07, 2023 12:00AM

New Benchmark for Brands in 2023: Drive a Profitable Portfolio Mix on Amazon. Don't run costly price promotions in 2023, but instead, opt for SnS promotions to retain customers. Focus on promoting slow-moving items and divert investments to Amazon Advertising. Drive a profitable portfolio mix to become the new benchmark for brands in 2023. Thanks, Martin.

Martin Heubel

➡️ Post | Profile

Should #Amazon vendors focus on price promotions in 2023?

Deals are an effective lever to grow revenue on Amazon. But the margin requirements can quickly drain the bottom line of participating brands.

So should you even run price promotions this year?

Here's my take:

𝗩𝗲𝗻𝗱𝗼𝗿𝘀 𝘄𝗶𝘁𝗵 𝘀𝗲𝘃𝗲𝗿𝗲 𝗺𝗮𝗿𝗴𝗶𝗻 𝗽𝗿𝗲𝘀𝘀𝘂𝗿𝗲 𝘀𝗵𝗼𝘂𝗹𝗱:

» Avoid costly price promotions like Top Deals
» Instead, run SnS promotions to retain customers
» Divert the promotional focus to slow-moving items
» Shift investments to Amazon Advertising

So yes, driving a profitable portfolio mix will become the new benchmark for brands in 2023.

𝗧𝗗𝗟𝗥;
High margin & low price elasticity: avoid discounts ❌
High margin & high price elasticity: ideal for deals 🍾
Low margin & low price elasticity: discount overstock / EOL items✋
Low margin & high price elasticity: discount to activate listings 🎯

--
👉 What's your take on price promotions this year? Let me know in the comments.

#amazonvendor #amazonstrategy

0 0

Feb 07, 2023 12:00AM

Is Amazon CRaPing itself out? Amazon is struggling with "CRaP" (can't realize a profit) items, low-cost items that are expensive to ship. With consumer trading down, Walmart lowering prices, and Amazon's fulfillment costs rising, Amazon is facing pressure on its cost structure and more products falling into the CRaP realm. Walmart, however, has structural advantages, such as its ability to lower costs, grow advertising and third-party businesses, and optimize the last mile of fulfillment. Expect vendors to be hit with their sharpest pricing ever and for Amazon to continue efforts to increase traffic volume to recover profitability. Thanks, Rick.

Rick Watson

➡️ Post | Profile

Has All Of Amazon CRaPed Itself Out?

Amazon has used the term - internally at first, and then externally - called CRaP -- meaning "can't realize a profit" on certain first-party vendor items

Generally, these types of products are:
* Low cost (like less than $15 historically, but that number keeps rising)

* Expensive to ship

After listening to the earnings call, you wonder if inflation is not tamed in the consumer's mind, that Amazon is in somewhat of a perfect storm.

* Consumers trading down and reprioritizing
* Walmart continues to drop prices
* Amazon's fulfillment costs going up.

This environment benefits a strong 1P business, which Amazon has never been particularly good at managing -- even Jeff Bezos is famously quoted as saying, "Third-party sellers kick our first-party butt."

All this would be normal if Amazon hadn't just doubled its fulfillment infrastructure.

* Even on the earnings call, Amazon admitted that it would have to learn to operate this new network, which is fundamentally different with double the nodes.

* More nodes give Amazon more flexibility, more storage, and (potentially) faster performance [if staffing and automation is right] but at much higher costs.

These higher fulfillment costs put pressure on Amazon's cost structure. Essentially, due to no changes on the vendor's end, more products fall in the CRaP realm.

Not to mention Amazon's first-party vendors are trying to recover costs too, and Amazon has less pricing power than Walmart.

In the meantime, Walmart has a few structural advantages in an uncertain market:

* Walmart has understood how to lower costs and reduce prices since 1962. It was a founding principle.

* Walmart is starting to grow its advertising and third-party businesses, which are beginning to contribute to margin materially.

* Walmart is starting to invest more in micro-fulfillment with its Alert Innovation purchase in 2022 which should reduce costs further over time.

* The last mile is approximately half of your fulfillment costs, and Walmart is better positioned to optimize this last mile because it can use its Stores as fulfillment, and improve the sales productivity per square foot in its real estate, similar to how Target has done in the last ten years.

What Does This Mean?

* Expect Vendors to Get Hit for their Sharpest Pricing Ever

In some cases, expect this not to be enough. Even Andy Jassy recognized on the earnings call that it will need to sharpen its prices on items consumers want.

Seems like a reverse flywheel: Amazon fulfillment costs go up, Amazon price matches Walmart on a like item, Amazon loses more money per unit.

At this point, Amazon only has two responses: Amazon selection could decline (CRaP itself out), or Amazon loses more money. Sounds like a lose, lose.

The true fix is harder: Amazon needs traffic volume, and fast, to recover its structural profitability. Expect Amazon to continue strong efforts to greatly increase its traffic.

#Amazon

0 0

Feb 06, 2023 12:00AM

Amazon Reports Q4 Earnings. Is Amazon Really a Money Laundering Operation? Kidding, but the numbers are breathtaking: $513 billion in net sales, negative $2.7 billion in operating income. The article highlights disturbing trends such as AWS profitability dropping, subscription services (Prime) growth stagnating, and the elimination of HR teams and stores. The author raises questions about the future of Amazon Prime and the company's plan to regain the pre-pandemic cost structure. However, highlights include the biggest Cyber Week ever, advertising growth, increased same-day speed, and a strong AWS customer pipeline. Thanks, Rick.

Rick Watson

➡️ Post | Profile

Amazon Reports Q4 Earnings: Is Amazon Really a Money Laundering Operation?

I’m kidding of course, but the numbers are breathtaking in how much money comes in the top of the business that does not come out the bottom.

Follow me here for 2022.
* $513 billion in net sales.
* Negative $2.7 billion in operating income.

If I saw these numbers on the screen during an episode of the TV show Breaking Bad, I would say “Another great business model setup by Saul Goodman!”

Witness a few of these disturbing trends:

* Amazon pretty much refused to forecast anything beyond Q1 2023, making investors nervous.

* AWS getting less profitable as investments continue, server utilization drops as customers rationalize their IT spend.

* Revenue from Amazon Sellers grew 24%! However Amazon’s net sales grew only 2%. That’s not a trend that can continue very long…. Fees sellers are paying growing 20x faster than net sales growth.

Aye carumba.

* Subscription Services (Prime) grew 17% year over year on a quarterly basis. This sounds good until you realize they increased prices earlier this year by ….. (drumroll) 17% last year.

* Eliminated HR teams, Stores + Devices, over 18k people.

* CFO says Amazon is looking to “regain” it’s pre-pandemic cost structure. No clear timeline given other than it could take all of 2023 and into 2024. [Personal note: I really need to use that line with my family: “I’m not spending too much, I’m just regaining my cost structure.”]

An important question I have is did Prime membership do a lot of running in place last year? Lord of the Rings and NFL Thursday Night not sounding terribly sticky at least to this outsider. They don’t release Prime subscriber numbers often, but I can’t imagine things are looking great for 2022.

* Not planning to expand Amazon Fresh significantly in 2023 because they have not yet found product/market fit at the right economics. (this came from Andy Jassy himself).

And a couple of highlights:

* Biggest Cyber Week ever. Really there is not much else to write home about. Launch of Buy With Prime.

* Advertising grew 23% year over year on a quarterly basis.

* Increased same day speed in major cities.

* 3P sales 59% of total units in Q4.

* AWS customer pipeline projected strong. Meaning as economy recovers next year, this could reaccelerate growth. 90% global IT spend still on-premises.

As far as the numerical results:

In Q4 2022, Net sales increased 9% y/y, with North America coming in at 14%, weighed down by an international drop of 8% y/y. AWS operating income down 10% y/y from $5.3B to $5.2B.

Full year 2022, Net sales increased 9%, led by North America at 13% growth. AWS segment sales increased 29% y/y.

0 0

Feb 06, 2023 12:00AM

7 years after founding Simple Modern. The company sells more drinkware than Yeti and Hydro Flask on Amazon. 21 unexpected learnings from the founders of Simple Modern, including the importance of having passionate employees, optimizing for repeat customers, valuing your brand, and using your unfair advantages. The article highlights the importance of focus, relationships, transparency, and customer trust in building a successful business. Thanks, Bryan.

Bryan Porter

➡️ Post | Profile

7 years after founding, Simple Modern sells more drinkware than Yeti & Hydro Flask on Amazon.

21 unexpected learnings:

1. Privately-owned brands with no intent to sell are set best up to win long term.

2. Hire missionaries, not mercenaries. Employees passionate about your company's mission.

3. Bootstrapped businesses handle cash better. When cash is precious, it’s invested well.

4. Optimize for the second purchase. Lasting brands are built on loyal and repeat customers.

5. Disrupt yourself. It's better than being disrupted by a competitor.

6. Amazing imagery isn’t just to inform customers. It also signals quality.

7. Bias toward action helps when the company is small. However, it can hurt when the company grows in size.

8. Compounding is real. Focus on what propels the flywheel. The results over time can be amazing.

9. To reach national brand awareness, units sold AND impressions must be at scale.

10. View mistakes as tuition. They might be expensive, but they can provide invaluable learning.

11. Your brand is your biggest asset. You must value your brand first before others perceive it as valuable.

12. Generosity is reciprocated. It earns favor and loyalty.

13. The best products are rarely new inventions. They're generally improved versions of an existing product.

14. Great businesses are built on delayed gratification.

15. Strong relationships between a company’s founders/owners create a foundation for a healthy corporate culture.

16. Customer trust is earned in drops, and lost in buckets.

17. Understand incrementality. It’s easy to double down on what’s working, but it is often cannibalistic.

18. Talent density is the best remedy for increased complexity.

19. Outstanding culture is like a garden. Everyone must pick weeds to help the garden grow.

20. Transparency is the #1 quality that people look for in leaders. Be transparent, and people will follow.

21. Know your unfair advantages and use them.

For more thoughts, check out my conversation with Alex Lieberman:

https://lnkd.in/g2BNu9xB

Building a business is hard. These learnings have made us stronger.

If you found this helpful, follow Bryan Porter & Mike Beckham for more.

Comment with your learnings from growing a business.

0 0

Feb 06, 2023 12:00AM

Amazon Q4 earnings show sales growth surprises. But operating income continues to decline. AWS and Third-Party Seller Services growth surprised, while Advertising returned solid growth. Net sales increased 9% YoY to $514.0bn, while operating income decreased to $12.2bn / -51% YoY. To improve profitability, Amazon will focus on automation, 3PL services, and streamlining operations. Thanks, Martin.

Martin Heubel

➡️ Post | Profile

#Amazon Q4 Earnings: Sales growth surprises, while operating income continues to decline. Here is the full analysis:

𝗧𝗗𝗟𝗥;
AWS and Third-Party Seller Services growth surprised in the fourth quarter, while Advertising returned solid growth. Retail up +2%.

But an unfavourable mix of rising costs and slowing demand continues to hit the online retailer's operating income across divisions:

🔸 Net sales grew by +9% YoY, from $149.2 bn in Q4 2021 to $137.4 bn in Q4 2022.

🔻 Operating income continued its decline and is down -$0.8bn / -22.8% YoY.

🟢 Advertising delivered solid growth, posting an increase of +23% YoY, up +1.8bn vs the fourth quarter in 2021.

--
FY-2022:
Net Sales increased +9% YoY to $514.0bn, compared with $469.8bn in 2021.

Operating income decreased to $12.2bn / -51% vs. $24.9bn in 2021.
--

Q1 guidance:
🔸 Net Sales predicted to reach $121bn-$126bn (+4% to +8% YoY).

𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀
It's no secret that Amazon is in crisis mode right now. The recent round of layoffs, Amazon Smile's closure, and Prime membership fees increase reveal Andy Jassy's attempt to right-size the business across divisions.

While AWS and Advertising have proven to be reliable growth drivers in the past, recession fears and lower household spending have slowed Amazon's growth performance significantly.

But what about profitability? 📉

Rising fuel, labour, and operations costs continue to pressure Amazon's operating income. While AWS and Advertising soften the impact, they can't fully offset it.

The result?

Amazon needs to refocus on its bottom line, through:

✔️𝗔𝘂𝘁𝗼𝗺𝗮𝘁𝗶𝗼𝗻 & 𝗖𝗼𝗻𝘀𝗼𝗹𝗶𝗱𝗮𝘁𝗶𝗼𝗻
Amazon will increase automation efforts in its less profitable retail division. Suppliers will see the removal of account managers, shifting responsibility for business-critical tasks from Amazon to brands.

Large enterprise suppliers will continue to see a consolidation of programmes and trade alignments at regional (pan-EU) level.

✔️𝟯𝗣𝗟 𝗘𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻
Amazon will increase its focus on service offerings beyond its marketplace, targeting 3PL providers and competitors like Shopify.

Buy with Prime is expected to be one of Amazon's biggest bets in 2023. Paired with the recently launched Amazon Warehousing & Distribution (AWD) service and FBA capacity management system, Amazon intends to monetise its existing fulfilment capabilities.

This is a low-hanging fruit for the online retailer that could quickly become one of its most profitable business divisions.

✔️𝗥𝗲𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗙𝘂𝘁𝘂𝗿𝗲 𝗕𝗶𝗴 𝗕𝗲𝘁𝘀
We can expect Amazon to continue streamlining operations and cutting headcount in divisions with a low probability of high margins. This mainly affects its Fresh and Devices divisions. Expect Amazon to either monetise or reduce its existing service offering in 2023.

What do you think? Comment below!

#amazonearnings #retail #ecommerce

You can read more about it here.

0 0

Feb 03, 2023 12:00AM

5 ways to Boost Conversion with A+ Content in Under 60 Minutes. Chris Rawlings shares tips for Amazon sellers to improve their listings. From showing and enlarging text size to shortening content, accessing premium A+ content, and adding a future pacing module, these tips can help increase conversion rates. Thanks, Arqam.

Arqam Cheema

➡️ Post | Profile

Five ways to Increase Conversion with A+ Content in Under 60 Minutes

👇

Recently I came across a session of Orange Klik, in which Chris Rawlings shares 5 of the top changes sellers can make to their A+ content in under an hour to improve listing conversions.

Those who haven't watched this great piece of content YET can read this QUICK summary:

1. SHOW

Something that you’re telling but not showing.

Audit your listing and figure out what you're telling but not showing. Then figure out how to show it.

Visual Communication is the critical key aspect to every single thing you want to communicate in your listing. Decide which aspect of your listing needs more visual attention but isn't being shown visually.

2. ENLARGE THE TEXT SIZE

Enlarge the text size on an image. At least 7/10 make the mistake of not doing this.
This is the most common mistake that crushes the conversion.

Images with text on them are a key component of A+ content.

Small Text + Powerful Image = Strong Communication

3. SHORTEN CONTENT

Shorten any written component longer than 1 sentence.

When EBC content is overflowing with text, it creates noise instead of communicating. It’s eventually hurting your conversion rate.

Visual Repetition = Good

You can show a core idea about the product in multiple ways using visuals.

Text Repetition = Bad

The most common way to shorten your content is to see if there’s text repetition.
You can shorten the text by using ChatGPT. There are several hacks present that you can use.

4. ACCESS PREMIUM A+ CONTENT

Here’s a hack to access premium A+ content:
- Add Brand Story to all listings, open or close
- Duplicate or Reupload A+ Content 15 Times

It may take a little time to get access, you may even have to request seller central.

But as long as you tell that you fill both criteria as stated in the Amazon terms and conditions.

It has insane benefits and much better options for your content.

5. ADD

Future pacing module to your A+

Future pacing is handling the fear of the unknown and uncertainty that a shopper feels about what’s going to happen when they get the product or when they try to use the product.

It is a sales term that is used for telling the prospect what’s going to happen when they buy.

Top 3 Objections in Customer’s Head:

- What’s it gonna be packed in
- What settings they’re allowed to use it in
- How to set it up, or how to put it together

All of these are uncertainties in the shopper’s head that will keep them from making a purchase or converting their decision to buy.

Future Pacing can be:

- Unboxing
- Step-By-Step Guide
- Instructional
- How to put together a guide

Breakout with steps regarding where the parts go if there are multiple parts

Link to the complete session: https://lnkd.in/dyifscG6

Keep Learning, Keep Hustling

Captens

#captens #amazon #amazonads #amazonlisting #amazonadvertising #amazonppc #amazoncopy #amazonsales

0 0

1 0

0 0

Jan 31, 2023 12:00AM

Data reveals key metrics for Amazon ads in Q4 of 2022. Click-Through Rate, Conversion Rate, Average Order Value, Cost Per Click, and Advertising Return. Top of Search ads won in click-through rate. SD Audience targeting had the highest conversion rate. Sponsored Brands had the highest average sales per order. Sponsored Display Product Page was the most expensive in cost per click. Sponsored Brands Top of Search had the best ACoS and ROAS. Thanks, Joe.

Joe Shelerud

➡️ Post | Profile

Curious how the key metrics compare between the different ad types?

This data set included almost 3 billion impressions and over 10 million clicks from Q4 of 2022.

The goal with sharing this aggregate data is to provide some benchmarks that I hope will be helpful. As always, there is a large mix of products in many categories where performance can vary significantly so keep that in mind when comparing to your own performance.

➡️ Click Through Rate:
Top of Search ads took the win here for click through rate as usual. Sponsored Products TOS click through rates are significantly higher than any other ad type followed by Sponsored Brands TOS.

➡️ Conversion Rate:
SD Audience targeting had the highest reported conversion rate but take that with a grain of salt. SD Audience targeting made up a small portion of our overall spend since we tend to run most audience targeting campaigns through Amazon DSP.   When we do use this ad type, it’s typically lower funnel retargeting which uses view-based attribution so it’s not a direct comparison to click based conversion rates.

The next two highest performing placements were Sponsored Products Top of Search followed by Sponsored Display Product Page ads.

➡️ Average Order Value:
The average sales per order were highest in Sponsored Brands campaigns followed by Sponsored Display. This makes sense since we tend to have a higher weighting of Sponsored Brands campaigns for higher priced products since they have a longer consideration period and require more mid-funnel advertising to drive conversions.

➡️ Cost Per Click:
Sponsored Display Product Page placements where actually a bit more expensive than Sponsored Products Top of Search in Q4. SD Audience Targeting was next highest on a cost per click basis followed by Sponsored Brands Video ads.

➡️ Advertising Return:
For the click-based attribution placements, Sponsored Brands Top of Search had the best ACoS and ROAS of any ad placement. This was followed by Sponsored Display Product Page placements and then Sponsored Products Top of Search.

There is a lot to unpack here so I’ll follow up with another post (and a podcast episode!) on our key takeaways and action items on how you can use this data.

Anything that surprised you?

0 0

1 0

0 0