Aggressive Amazon Launch, gross profit in 3 weeks!
Product: Electronic device for homeowners. Average selling price is $50-$60, while the cost of goods is around $20/unit. Competitive niche but the product is in high demand.
Challenge: Launch a new product and reach profitability within 1 month having no previous knowledge or experience of the product niche.
Even experienced FBA sellers feel nervous launching a new product for their brand. They spend months doing research, then getting their products manufactured, labeled, and shipped to Amazon, only to await the moment of truth…
One of our clients faced with such situation launching a new electronic device for homeowners. They had already bought 1000’s of units $20 each to be manufactured and shipped. What is even more, they’d invested heavily in their listing with high-quality photos and a professional video.
While this made a product launch more likely to succeed, it also increased the financial risk of failure. The client had no previous experience launching products within the home improvement niche. In the light of these risks, they decided to outsource the launch to aNavigator’s ‘done for you’ service.
✔ Reach profitability within 1 month of launch
✔ Hit total sales of 100 units/day
Note: As the product was brand new, it took almost a month to collect some initial reviews, before we started the ‘real launch’ on October 8th.
Working backward of CVP method, our initial aim was simply to test that the product listing could convert viewers into buyers.
To ensure success, we followed our ‘CVP method’ (which stands for conversions, volume, profit). The logic is as follows:
1. The ultimate goal for the product is to make a large amount of profit.
2. To make a large amount of profit, you need to sell a high volume of organic units (PPC sales aren’t as profitable due to the cost of advertising).
3. To sell a high volume of organic units, you need to rank high in the search results for your main keywords.
4. To rank high and conquer the organic positions for your main keywords, you need to sell a high volume of units (based on those keywords).
5. To sell a high volume of units, you need to run PPC campaigns on those keywords and generate PPC sales. (At least until your organic sales rise as your organic positions are cemented).
6. To generate PPC sales without wasting money, you need to ensure your listing is optimized for conversions.
Was my research right? Will it sell? What if I spend $1000’s on PPC and don’t rank for my main keywords?
$1,400/day of gross profit just in 3 weeks. Reach organic rankings with main keywords within 1 month with an organic conversion rate of ~28% (7-day average).
On October 8th, we launched a small PPC auto campaign to test conversions and see which ad types would perform best in the niche. We set initial daily budget of $200, and bid aggressively, while adding negative keywords on a daily basis.
Big moment! With all the PPC data we had gathered, we were confident that could cement our position at the top of the organic search results if we increased the PPC budget. As the graph shows, we decided to increase it to $2,000/day and kept it like this for 3 weeks.
From October 20th to October 25th, the product was losing money –in terms of PPC profit and overall profit. We expected this. In order to gain organic positions, it was needed to spend money on the right PPC tools and keywords as per our ‘CVP method’. Only after we gained organic positions would we eventually reach the sweet profit from organic sales that awaited us.
Before October 25th, organic sales were stuck at approximately 20 units/day. As product’s organic rankings increased due to the high volume of PPC sales focussed on the right keywords, organic sales trebled to 50-60 units/day. This meant that even while spending $2000/day on PPC in early November, the product was still managing to make around $1,000/day of gross profit overall.
As the PPC campaigns had achieved our goal of conquering the organic search rankings, and the client was struggling to deliver enough stock to meet continued demand, we decided to dial down the PPC budget from November 9th. Step-by-step, as we gained organic rankings, organic sales saw a dramatic increase.
Results in 1 month
- The product was still making a gross profit of approximately $1,400/day – even with the PPC campaigns dialed down from November 9th.
- We’d hit a peak of 140 units sold in a single day.
- Organic sales had trebled to 50-60 units/day.
- As the chart below shows, throughout the month we managed to slowly increase the selling price to $65/unit – while maintaining organic sales.
- The organic conversion rate (7-day average) of the listing hit 28%
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