In this post, we interview 3 Amazon experts – some are sellers themselves, others are former Amazon employees who got in the trenches and learned the laws of the land. All of them are willing to lend their expert advice to you, so that you can successfully grow your small online business into an empire. Here are your 3 Amazon experts:
Pat Petriello is a Senior Marketplace Strategist at CPC Strategy, former professional seller on Amazon.com, Amazon.co.uk, eBay, Buy.com and former member of Amazon Seller Service Team. His time working for Amazon allowed him to see behind the curtain and learn more intimately how the behemoth of online shopping operates. Pat’s background as both an Amazon seller and service provider for these sellers is what makes him an invaluable resource for ecommerce retailers. He sold, saw, and conquered – and now he’s sharing what he learned with us.
John Lawson is the CEO of online clothing retailer 3rd Power Outlet, the Chief Consultant at ColderICE Media, author of “Kick Ass Social Commerce for ePrenuers” and a Coach and Trainer for his ICE eCommerce Bootcamps. He’s also a speaker, self-proclaimed “Social Commerce evangelist” and an absolute wealth of knowledge on all things eRetail and marketing strategy. He was also kind enough to let us pick his brain and get the scoop on how small ecommerce businesses can market their stores successfully. The catch? We were looking for tips that would fit a small business budget. As a seller himself that began his ecommerce journey in the midst of near bankruptcy, John knows all too well how to make something out of nothing. He’s done it himself, and he empowers others to do it as well. Here is what we learned from sitting down with John.
Eric Mindel is the founder behind Peppy Parents and current president of ecommerce consultancy ReturnItUp, dropped by our offices today and gave us a few minutes of his time to talk through his ideas about vision, omnichannel selling, and how to build a path to success. Learn more about how Eric can help your business at ReturnItUp.
… and here’s the Amazon experts’ sage advice.
Could you please share a little about your background as an online seller?
Pat: He’s a a former professional seller in the wireless accessories space across multiple marketplaces including Amazon.com, Amazon.co.uk, eBay, and Rakuten (formerly Buy.com). He has personally gone through the experience of building each marketplace channel from the ground up through self-teaching, so he feels he can relate closely to many sellers dealing with the challenges of selling on Amazon.
Over time, he was fortunate enough to be able to build a multi-million dollar revenue stream while leveraging FBA, Brand Registry, Sponsored Products, and other tools within the Amazon ecosystem. Getting in the weeds, diving deep, and truly understanding the interplay between the levers (inputs) and the performance (sales) of the Amazon Marketplace is what allowed him to consistently drive incremental growth.
John: He began selling on eBay in 2001. He was about to claim bankruptcy after a property he invested in was not going to flip as he’d hoped.
To earn some quick money, he started selling everything he could find. He began by selling some used books on eBay, and was surprised by how fast the turnaround was.
Inspired by this success, John dove into retail arbitrage, buying goods at local stores and selling them online.
By now, John had a fulfilling career at Accenture, and was previously working for IBM. Though he enjoyed these jobs, he had tasted the excitement and adventure being an online entrepreneur could bring – and he wanted more. He left his position at Accenture in 2004 to pursue an ecommerce career full time. He read everything he could get his hands on about marketing, and taught himself how to build an ecommerce empire.
Eric: I had an ecommerce model that sold premium juvenile products like strollers and car seats. My strategy was to target the mid-to-upper income new parents who were willing to spend for the more innovative, trendy, and perceived safest gear.
I focused on MAP protected product lines to help level the playing field against competitors. My focus was always long-term building of relationships with vendors, which paid off when there were new opportunities or limited stock of hot items.
Because the retail business I started is still operating, now in the hands of new owners, I’m not able to disclose many specifics in strategies.
What is your number one rule for Amazon sellers who want to improve sales?
Pat: The number one rule for an Amazon seller wanting to improve sales is to recognize that long-term success is the product of a comprehensive strategy, and there is no silver bullet or Amazon hack.
There are sellers looking for an absolute key in the form of title structure, review generation, off-Amazon traffic generation, and so forth.
The reality is that there is a tremendous amount of opportunity to be harnessed on Amazon by offering quality products at competitive prices, building a brand, taking advantage of FBA and Amazon’s suite of advertising tools (Sponsored Products, AMS, AMG), and offering high quality customer service.
They should also to optimize their listings. Put themselves in the shoes of a shopper and make certain to use channel specific strategies.
What I mean by having a channel specific strategy is that while it might be convenient to re-purpose product titles, search terms, or descriptions from your ecommerce site and use it on Amazon, that content is not necessarily optimized for Amazon.
On Amazon, titles, search terms, and bullet points are all indexed by Amazon for search when a shopper enters in search terms and should be tailored accordingly. From a conversion standpoint, they’ll want to have multiple, high resolution, zoom-able images in addition to rich product content so a shopper can have the confidence they are getting what they want.
John: “Social media.”
John suggests spending 4-5 hours a week working on targeted campaigns to find an audience of buyers. You’re not just advertising to anyone – you have to be more strategic than that.
“Don’t do push marketing,” John said. “Do pull marketing.”
What’s pull marketing?
It’s when you market to people who are interested in your product and ready to buy, whereas push marketing is just sending out content to anyone. For pull marketing, you need to create content that an audience of buyers would be interested in.
You should not just spam them with product ads.
To illustrate this, John used an example of a hypothetical retailer who sold wedding accessories. Instead of creating a post that said, “These are my products, they’re awesome, you need them for your wedding,”
John would instead put together a blog titled “These Are the Hottest Trends for June Weddings.”
His suggested blog is far less promotional, and is content a bride-to-be would genuinely be interested in reading.
By developing content your audience actually wants to read and see, you create trust and establish your brand as an expert in your industry. Then, when your audience is ready to buy, they will think of your company and likely purchase from you.
Always produce great content, and keep from being too self-promotional.
Pat: There has to be a plan that differentiates from competitors, that is adaptable as needed, and that has promise of success with persistence and good execution.
I’ve talked with many business owners who look at better sales figures from a couple years ago, and they try to do the same thing as two years ago to recreate the success. This is a losing proposition.
I ask sellers, “Why would I buy this from you and not Amazon or a competitor?”
There has to be an immediate, compelling answer to that. If there is no strong answer, there is a lack of vision on where the company is going and why customers will be loyal. Getting to this answer does not cost any cash.
What’s your top rule for Amazon sellers who want to avoid an unexpected and accidental suspension?
Pat: This is a great question, especially when a lengthy suspension could mean significant lost revenue.
In my experience, most sellers are suspended not because of intentional malicious behavior, but because they aren’t able to meet Amazon’s thresholds for seller performance.
A consistently poor order defect rate, cancellation rate, late shipment rate, on-time delivery rate, or customer response time can put a Seller’s account in danger of being suspended. Sellers need to keep a close eye on these metrics and make sure they are within Amazon’s thresholds.
So how can Amazon sellers market or advertise their stores, while abiding by Amazon policies (which prohibit directing traffic away from Amazon)?
Pat: Driving traffic to your Amazon storefront doesn’t add a tremendous amount of value, as the vast majority of product visibility on Amazon is a result of customer searches.
As for advertising your products, Sponsored Products and AMS ads (Headline Search Ads and Product Display Ads) are very powerful tools to drive incremental sessions to your product detail pages.
John: Something John stressed is that when you’re on Amazon’s platform, you play by Amazon’s rules.
Don’t do anything illegal that directs traffic away from Amazon and to your own website.
To keep customers shopping from your Amazon store specifically, you need to brand the buying experience. Create custom labels and packing slips, hang tags, and instructional inserts (which are a great way to let people know about your support if there is an issue).
John has even followed up with customers on the phone to make sure service was spectacular. He also recommends taking advantage of Amazon’s internal ad network. John believes the sponsored product ads are awesome, and are an opportunity not to be missed.
Even though you are selling online, John firmly believes face-to-face networking is a great way to market your store. Meet Ups, networking events, business mixers and conferences are all opportunities not only to sell, but to learn from others, regardless of industry.
John has said that for every convention he’s been to, even if it doesn’t directly relate to his niche, he’s been able to learn something new he can apply to his business.
How does Amazon open up opportunities for sellers? In what ways does it threaten sellers?
Pat: For any retailers not selling truly unique products, they definitely need an Amazon strategy. The strategy may have some variation from seller to seller.
For consumer goods products not covered under a MAP (minimum advertised price) policy and offered by multiple sellers, the nature of the Amazon marketplace is that pricing will quickly be a race to the bottom among third-party sellers. In my experience, it’s often the case that the lowest price offer does not offer enough margin to have a sustainable plan to compete against it.
For products under MAP, there’s a bit more protection of reasonable margin on Amazon, though there are often sellers who violate the MAP policy by cents or dollars in attempt to win the Buy Box or gain a competitive edge for sales. While this doesn’t necessarily erode margin all that much, it reduces opportunity for sales.
I see many Amazon opportunities for sellers of consumer goods, here are a few that come to mind:
- Use Amazon to help guide product selection based upon a product’s selling rank and market price at retail. For sellers wanting to build out their product categories or introduce new categories, it’s an invaluable resource for quickly narrowing down a list of promising SKUs based upon demand and what a reasonable retail selling price will be.
- Use Amazon to clear out of stale inventory. Tens of millions of daily visitors coupled with bargain prices to get some cash back out of inventory that has been sitting unmoved for months means quick liquidation of the product.
- For products that already perform fairly well on Amazon, do the analysis on how FBA (Fulfillment by Amazon) may bolster performance on these items. Even if a seller has its own warehouse or 3PL provider, keeping 2-weeks’ turn of a SKU in FBA adds free Prime shipping for customers; which may prove to be a winning strategy. Repeat with more and more SKUs; whichever ones pay off with on-going analysis.
- Use Amazon to help build a brand and customer base. If a seller controls distribution of its brand (i.e., not much competition for the same exact item); and there is breadth of product selection that builds long-term customer loyalty, Amazon could be a valuable customer acquisition funnel. A product sold on Amazon could be a break-even or loss leader to gain new customers; as marketing peripherals inserted into the package would provide compelling incentive for the customer to visit the company’s own ecommerce website for future orders. Compare a “break even” on an Amazon sale to acquire that customer to what Google Adwords would cost, and it could be a no brainer.
What social channels should all small business sellers be required to have?
“It has the most robust paid advertising options, and is a good place for businesses to begin their advertising on,” John said.
Pinterest is another great option for retailers who cater to a mostly female audience. Like Facebook, Pinterest is visually driven and has been proven to convert (PS: the average order value of a sale that came from Pinterest is $58.95).
Likewise, Instagram has an ideal combination of pictures and text that sells very well. Just bear in mind that 90% of their audience is under 35, so your target market may not be active on Instagram.
What are your favorite tools you recommend to Amazon sellers?
Pat: Within the Amazon ecosystem, FBA will have a significant impact on a seller’s sales velocity and allows a seller to get in front of the Prime audience. Brand Registry will grant brand owners and manufacturers greater control of content on their detail pages, while the aforementioned Sponsored Products and AMS are powerful methods for increasing the rate at which a seller’s products will be found.
As for external tools, I’ve seen great results with Feedback Genius for messaging buyers to get feedback, and JungleScout for product scouting. There are also some powerful tools out on the market for organic rank tracking.
John: YouTube. “YouTube ads are still very cheap,” John said, “and give you free ad play for up to 5 seconds.” So if viewers skip your video before the 5 seconds is up, you don’t get charged. This means you’ll only pay for the times your ad was in front of interested parties that want to watch your video past 5 seconds. Make sure your ad is targeted and captivating, right from the beginning.
What do you feel was the smartest business move you made while selling on Amazon?
Pat: While selling on Amazon, the smartest move I made was a hybrid approach of FBM (fulfillment by Merchant) and FBA (fulfillment by Amazon). By making my most important and attractive products available through FBA, I was able to double the revenue of the Amazon channel.
John: Back in the early 2000’s, John’s business 3rd Power Outlet sold bandanas. He would get a lot of questions from interested buyers wondering if he could teach them how to fold their bandana to look like Tupac.
Instead of answering the question over and over again, John created a YouTube video tutorial on how to fold a bandana like Tupac.
Whenever he got the question again, he would send them a link to the video. John laughed when he shared this with me, because even though he filmed the video on a 1mg pixel camera and wasn’t wearing shoes, that video now has over 300,000 views.
That video put 3rd Power Outlet on the map, and it’s still on the first page of YouTube search results. From this, John learned about the engagement that comes as a result of creating content his audience wants.
What is one thing you wished you did differently?
Pat: One thing I wish I had done differently was being more aggressive with Sponsored Products when it had been originally released a few years ago and before there were many advertisers leveraging it.
John: Looking back, John wishes he would have built his brand the entire time. He didn’t work on establishing his brand until late in the game. As a result, he was very dependent on marketplaces for revenue.
When selling on marketplaces (even popular ones like Amazon and eBay), you can only do so much to control traffic to your store. Amazon changes daily, and it’s a constant game of keeping up with the latest algorithm so that your products appear in the top of search results.
As John put it, “what you are doing on Amazon today won’t work tomorrow.”
On your own website, you don’t have to worry about these constant changes – no one can touch your site. Building a brand that sustains website sales also protects you for a rainy day when a suspension comes.
If you have invested all of your business into Amazon and get booted from the site, you’re up the creek without a paddle. Make sure you build your brand as you go, so that your website can provide a steady stream of revenue too.
Pat: Pat’s goal is to make sure that Amazon sellers don’t just sell more, but are more profitable in the process. His company, CPC Strategy, works with sellers that are just launching on Amazon to those that are generating over $20MM on the Amazon Marketplace to make sure they are getting most out of the channel.
John: “Read, read, read.” Study marketing, and not just how it works for your industry. See what other ecommerce companies are doing, and take notes. John has read a multitude of books (and even wrote his own), and says it has helped him implicitly. Studying the latest marketing tactics, even those outside of your niche, will help you better market your business, period.
Pat: The brutal reality is that most small retailers struggle with cash to invest in new website functionality, marketing campaigns, or other strategies that can help build new revenues. And, the brutal reality is that if there is limited resources, many small retailers trust a vendor that doesn’t deliver on the promised positive impact; a painful outcome.
So, I go back to the vision. With a vision, a small retailer is less likely to chase the latest shiny gizmo in social media, advertising, or other internet marketing tactic. A vision helps guide the steps needed to achieve it.
Having that vision helps a team rise above funk. Without the vision, funk is waiting around for every bad sales day or sales month. But saying, “We’ll get there in 6 months because we know where we’re headed” helps enthusiasm and morale.
Most businesses are going to have an ebb and flow. Suffering through the ebb is what produces perseverance; perseverance builds character; and character build hope. So that’s not all bad on a personal level!
We’d like to thank everyone for taking the time to share their knowledge with us. We’re grateful for the opportunity to pick their brains and learn more about how to run a successful Amazon shop. With the holidays quickly approaching, maintaining stellar performance across all areas of operations, including amazon inventory management will be crucial to winning as many sales as possible.