Amazon Full-Funnel Conversion Rate Webinar

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On May 19th, 2018 our own Jay Goldberg sat down with Chad Rubin, the CEO of Skubana to talk about the funnel on Amazon, focusing on traffic, and then driving that traffic to the listing.


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Chad Rubin: Hi, so to open it up, we're going to start with introductions. This is Jay's first webinar, but we've done a lot of collaborations in the past. Jay, just please go into your background a little bit. Explain what you've been up to, and your experience.

Jay Goldberg: Yeah. My name is Jay Goldberg. Welcome everyone. I am the founder and CEO at Seller's Choice. Founder and president at Home Revolution. Home Revolution is a wholesale business online. Seller's Choice is a 360 degree cohesive digital marketing company. Full service.

Jay Goldberg: And I also happen to be the advisory board member for Skubana, one of several. And most of my career has been spent for at least 25 years in the supply chain world for manufacturing through wholesale into retail, and now into digital wholesale, and now into marketing services.

Jay Goldberg: It's been the full spectrum of supply chain, bridging into marketing. I've seen a lot.

Chad Rubin: Cool. Yeah, you've been really helpful on the Skubana end. For those that aren't aware of myself. Chad Rubin, founder of Skubana. Co-founder of Skubana, and CEO. Also been in the Amazon world. I'm a first generation Amazon seller for the past decade. So I'm like an [inaudible 00:01:38] Game Boy, to those that have perhaps been able to play with a PlayStation 3 or 4. And also wrote a book, Cheaper Easier Direct - Of Course It's On Amazon, which is really my blueprint of how I've scale my private label business and how I find product. And just want to give a shout out to [Tao 00:01:55] for joining us, I see he just joined. Thanks for joining Tao.

Chad Rubin: All right, let's move on. We're going to have at the end here a Lightning Round where you can ask us some questions. We're going to have some game changing downloads for you to download at the end. Some really cool offers to kick around. Stick around for that.

Chad Rubin: So, why don't you lead with this one, Jay? You know you're in the right place if you're ready to improve your Amazon conversion rate. Looking to improve your enhanced brand content. EBC is what we call that. Wanting to analyze your listing sessions and conversions. Curious about how to improve your Amazon funnel. And if you are just flat out awesome, which we have no doubt each of you are.

Chad Rubin: Nice. I think we're going to go to some new stuff today, too, so there's some stuff that probably you already know. But there's definitely some new stuff and things that we're seeing very large sellers using at the moment to enhance their strategies on Amazon. And we're going to get right into those. Every tool and every tactic, so you're going to want to stick around.

Chad Rubin: So the main area where we're going to be focusing on today is going to be the meat, the center of the funnel on Amazon. So really focusing on traffic, and then driving that traffic to the listing. So there's really two ways to drive traffic. There's either paid traffic or organic traffic on Amazon. I think we're going to touch on both today. And then of course, bringing people to the listing, focusing on some listing optimization techniques to optimize your listing so that you can bring people to the buy box, until that converts into a sale.

Chad Rubin: Jay, I want this to be interactive-

Jay Goldberg: So ... yeah, so sponsored product and headline ads. These are the two key ways that Amazon sellers are ... what they're utilizing to be able to take their well earned dollars and redeploy it to market forward through PPC on Amazon. That's what we're going to be diving into today.

Chad Rubin: Yeah, I think the real nature of this is that Amazon has evolved tremendously. It used to be a lot easier back in the day to scale an Amazon, because there wasn't all these other tactics you needed and all these other strategies that you needed to help you make more money and be visible, and be seen and drive traffic. So, the game has changed a lot, and we're going to go into some tools that we're using to change the game and evolve it so it becomes a defensive position.

Chad Rubin: The key really is how you can be using data. Data is like a warm blanket on a cold night. And it can be leveraged to your advantage if you know how to use it. So we'll be getting into that as we progress through this webinar. So the way that I'm looking at ACOS these days is you either want maximize your profits, or maximize your sales.

Chad Rubin: I think a lot of sellers on Amazon right now, they just want to spend, spend, spend and they're in business to perhaps increase their BSR, or decrease your BSR technically, right? You want to get into a better organic placement in Amazon's discovery engine, on the A9. I think that's a really important thing to note because i think I was doing the same thing a couple of months ago, and I changed my entire strategy to maximize profits.

Chad Rubin: I actually used a different ACOS strategy for when i launch a product versus when I actually release a product into the wild and maintain. So it's a really good thing to know is number one, are you in business to maximize your sales? Perhaps you don't really care about the bottom line at any given time? So it may be you just look into break even ACOS. Or to maximize your profits, you want to target a specific ACOS. We're going to get into that as I go into these slides.

Chad Rubin: If there's any questions, again I want this to be interactive so if anybody has anything to add, they want to talk about, you can throw it into the chat box.

Chad Rubin: One of the things a lot of sellers are doing is looking into their margin profiles. So if you look at your QuickBooks or your Zero file or your income statement, your going to see breakout of exactly your operating structure. That's on average that you're seeing over the course of the past year.

Chad Rubin: So I would suggest maybe looking at 2017, or looking at the first quarter of 2018. So understanding like, hey this is the percentage of fees that are going to Amazon, this is what our cogs are, our cost of goods sold. This is what our overhead is, and this is where our profit is, before PPC is spent.

Chad Rubin: And when you can actually look at your company on that operating structure, you can actually decide on, okay, profit before PPC spent, that's 30%, that's our break even ACOS. Now ACOS as whole, we start actually breaking that up into individual tiered ACOS' per SKU. And you're going to see how we didn't that a little bit later. But essentially we look at the overall ACOS, what we can spend company wide, and then we spliced that up across individual ACOS'.

Jay Goldberg: We spend a lot of time at Seller's Choice and myself individually, whether it's advisory for Amazon sellers, for businesses in general or when it comes to PPC and onboarding new clients, we spend a lot of time talking about what their margins are. It's pretty much the first and the last question that we ask, when we're doing an initial interview to determine if there's a fit for the types of services that the client's looking for that we're recommending. And knowing your profit is key to your business, not only about transacting always, you also have to building your balance sheet. You have to be building your asset. Your brand is important, you know, and being able to redeploy your profits into turn brand, as well as into your PPC. It's a very important balance to maintain.

Chad Rubin: If you want to perhaps make some money, and you don't want to just target break even ACOS, right, you can actually allocate a 10% ACOS so you know that 20% is left for profit at the end of the day. So just knowing the numbers gives you a competitive advantage, 'cause I'm telling you right now, a lot of Amazon sellers aren't doing the hard work I'm about to show you.

Chad Rubin: Knowing your numbers, right. I talked about this earlier. A lot of sellers I talked to on a daily basis don't know their numbers, knowing what is going to move the needle for their business. So here's an example of something. So I blinded the company out. And you can see here, based on that operating structure, if you actually break out what your Amazon's revenues is, a percent of the total, and your total income. The percentage of the cogs, of your cost of goods sold.

Chad Rubin: Then you break out what your sponsored product percentages are, as it relates to entire revenue. You can create this sensitivity analysis. And we'll say, okay, at a certain spend, say 10%, we know exactly what we're going to net. So at a 10% sensitivity, for the second half of 2017, you know that 10% will directly impact your bottom line at $532, 000. And you know any slight change ... so a 2.5% change to that percentage in the ACOS, it decreases to $450,000. Those are massive swings for small changes.

Chad Rubin: So being able to develop these sensitivity analysis and look at your numbers on a whole, based on what you should be spending, and it's going to make you the most profit, is probably the first exercise we would suggest people do. Knowing the numbers are extremely ... not just give you trust but they're comforting because you know exactly what you're going to spend, to what you're going to make.

Jay Goldberg: As the old adage goes, if you can't measure it, you can't manage it.

Chad Rubin: I like that. I haven't heard that before.

Jay Goldberg: Okay. It's now a new adage. Good stuff.

Chad Rubin: So, this is a really extremely great in-depth analysis that I think a lot of big sellers are doing that smaller
sellers perhaps don't have the awareness to do. Perhaps maybe they don't have the time to do it, but I highly ... it's a great exercise to implement in your business.

Chad Rubin: On top of that, like I said earlier, these Amazon sellers ... Now, some of these Amazon sellers started from nothing. They were operating FBA businesses out of their barn. I'm not joking. And so when you are competing with somebody that's operating their business out of their barn, they can have extremely low overhead costs, but data becomes a competitive advantage.

Chad Rubin: Most of these sellers don't have the intuition or the insight to know what their data is, and to know what the fees are. They know what Amazon's dropping as a settlement fee in their business. But they don't know what they're keeping. They know what they're making, but they don't know what they're keeping.

Chad Rubin: So if you look here, the FBA pick fee, the pack fee, the prep fee, the return fee, the removal fee, the destroy fee, the commission fee, the short-term/long-term storage fees on top of your Amazon PPC sponsored ad fees per work. Sellers aren't looking at an aggregate as a whole. And so ... oh, did you have something to add to that?

Jay Goldberg: Yeah, there's one more thing. There's one more fee that's not here, which is the hidden fee of your opportunity costs. And that's something, I know it's more high level, but you always have to be asking, "Is this an item? Is this a SKUs? Is this something that is really going to return over time?" If I'm going to end up going into a break even for a while, what's your opportunity costs? How do value yourself when you enter the equation?

Chad Rubin: So, give an example to the opportunity costs. So, if they're spending ...

Jay Goldberg: Well, so if you're spending a month, 30 days, going on break even, 60 days going on break even, and you're wondering when it's actually going turn the corner, right, you have to be asking yourself is this a product that you should be putting more money into? Is it a wash? Is it something that you should just be taking a wash on and moving on to the next product. Right? Even the next product you're going to go into, learn your lessons forward from the products that you had before, that had certain characteristics or had certain competitive aspects to it, that didn't work, so you can keep moving it forward with taking your learning, and being able to get into more profitable products, faster.

Chad Rubin: I think that's a good point. I think Babe Ruth, his home run record, is anywhere from 8% to 11% depending on what stat you read online. 8% to 11%. So as sellers, I think that we should be trying to aim ... I know there's a lot of sellers that have better home run records than Babe Ruth does, when it comes to launching product, but you need to essentially at least say that that average that Babe Ruth was hitting is at least where you want to aim too with product launches.

Chad Rubin: The other thing you want to do, especially, is target different ACOS', and we tier them. So we have so many SKUs, so many private label SKUS, that we started our ACOS based on a margin and based on the ACOS we want to hit for each and every one of those SKUS. And of course, if you have 1000 SKUS, we have an automatic and a manual campaign for each of those.
Chad Rubin: So knowing your fees is important. For me, I'm representing Skubana, as a co-founder and CEO, Skubana not only runs and automates her entire business, I have one employee running a seven figure business across 20 different channels, but on top of that, at the end you get the analytics that show you the breakdown of every product with every fee, from every marketplace across your entire business, giving you that insight that I think a lot of sellers don't have right now.

Chad Rubin: So you can see your storage fees, the refund fees, the principal fees, the FBA fees, the commission fees, et cetera, on every single SKU, so you can actually double down on those winners that Jay was talking about.
Chad Rubin: So here's another tool that I think a lot of sellers are not doing. I actually have not seen this done by anybody in our space, which is doing a correlation between what you spend to what you're making on Amazon with [inaudible 00:14:02].

Chad Rubin: So interestingly enough this is a correlation that I did with an R [inaudible 00:14:10] for those that didn't do well on statistics, including yours truly ... So the numbers don't lie here, right? So the correlation here is 0.19 correlation, R coefficient, meaning there's actually not a relationship between what we're spending to what's producing the sale on Amazon. So this is February 2018, and your seeing just no correlation really whatsoever.

Chad Rubin: When you're actually doing your PPC correctly, you want to get as close to a one as possible. So this is 19% correlation really, if you take it into percentages. And so if we go to the next slide here, this is a 0.62 R coefficient, so we're getting much deeper. And if you look at the difference between the two, you see those dots sporadic across different areas here? So this is the correlation by the way on a SKU by SKU basis.

Chad Rubin: When we did this analysis again, you'll see the correlation gets a lot deeper. The blue lines get a lot tighter, the blue dots get a lot tighter around the red line. That's when you know that you're actually spending money that's efficiently
being spent.

Jay Goldberg: This is very, very important data that I actually hadn't seen before today, the way that it's approached. And again, it goes back to measurement. Measurement, measurement, measurement. Your business is your baby, you want to make sure that it's always healthy on every level, macro, micro, across the board.

Chad Rubin: Yeah, so really we had a problem, right? When we were doing our ad spend, we were just spending money because we were like, "Hey, I just want to dominate." Just want to dominate our category but that's not really the way to build a true scalable business. And so we became laser focused on the problem. The problem of what are we spending, and what are we making for that spend. And let's try to see are we being efficient with it?

Chad Rubin: and so we expect this number to increase over time. This is just really the beginning of it. But the other idea that you want to minimize risk with doing these analysis. Minimize risk, whether it's your time or whether it's your money spent, or whether maybe you should be finding others to actually do the management for you, like Seller's Choice.

Jay Goldberg: Right. And it's also important, as Chad has taught me through the years, not to get emotionally attached to your products. Very, very important point.

Chad Rubin: Exactly. Well, it's not just about the idea, it's about the execution on the idea, that's important.

Jay Goldberg: That's right.

Chad Rubin: And I can tell you, I've gotten emotionally attached to the products before and sometimes you just got to let go, if it's a dog, you got to let the dog go.

Chad Rubin: Also I think setting targets for yourself and knowing where you want to aim is crucial. So here's just a small little skinny of March, April of revenue, orders, your dollar per order, your costs, your return on ad spend, your ACOS, and your number of ads that you have. And so you'll see here the month over month change. Anything green is conditionally positive. And then you have your target of what you're targeting.

Chad Rubin: So in this case, you see here the target for ACOS is between 15% and 20% and we are right now 18.7%. So we're right in the middle of the target, beautiful. But having that target number that you want to hit, and keeping the company that's managing your ads accountable is very, very important. You have to tell them what you want. The more data that you give them to run a business, the more you can actually get in return for that data.

Jay Goldberg: Absolutely.

Chad Rubin: Knowing what your return on ad spend should be. So in this case, we're getting 5X. And that was our goal. We wanted to get a 5X or above on our ad spend. Knowing what your dollar value per order, maybe you want to actually use sponsored ads to get people to buy more at a given time, which does boost your presence on Amazon, when your unit session percentage increases.

Chad Rubin: These are things that we're tracking, we're trying to increase our average order value, and having people bundle more items in [inaudible 00:18:24] to the other because Amazon values that. So we're giving Amazon and our customer what they value.

Chad Rubin: I'm just looking at some of the questions here. I see John Paul Jones has joined. Why can't Jason [Kazarian 00:18:44] hear us? Okay, people advised him. Got it. DKB Household, "Is this by campaign or product?" I'm not sure what the question was in relation to. I missed the question, I was just looking at the slides, so maybe you can just let me know which slide you're referring to?

Jay Goldberg: And then there was [Stel 00:19:08]. "What are you changing to get the [inaudible 00:19:11] to improve?" ... which we spoke about a little bit.

Chad Rubin: Yeah, we'll adjust ACOS to get the correlation to improve. We're looking at correlation, not just on spends, but on click-through rate, spend ... there's a few other data points that we're looking at ... impression data, to make sure that we're on point and spending the right amount. And of course you can expect a higher correlation for impressions, 'cause you're spending money to get those impressions on Amazon, than actually spend versus sales. Hopefully that helps.

Chad Rubin: Hey Jay, why don't you grab that slide?

Jay Goldberg: Okay, so ... we're talking about store fronts now. Store fronts are becoming very popular, very effective. Basically I view storefronts and that highlighting of them by Amazon really a play to compete with companies like Shopify, to keep you in their ecosystem but to make you, give you a good sense that you are having your own site on Amazon.

Jay Goldberg: So we talk about pushing to your storefront. Let's see, from off Amazon, there's a lot of talk right now about whether or not traffic should be pushed from off Amazon. There are ways to push traffic from off Amazon directly to our store front, through custom URL, which is something that we can forward here ... I believe ... So, creation of custom URLs is now allowed. And you could go right to them. You could also create what's called source tags. So you can be able to attract analytics, if it's coming from Facebook ads, if it's coming from AdWords. And it gives you a better view of how effective that ad spend is, straight to Amazon.

Chad Rubin: Yeah, this was something I was actually pretty shocked about, the store front analytics. I didn't know that Amazon gives you this on the storefront. With not just Amazon organize traffic but letting you know that there's other sources and tags.
Chad Rubin: So this is me. I need to explore. This is my first time seeing this, and you bet your bippy I'm going to checking this out after the webinar.

Jay Goldberg: I'm betting your bippy ...

Chad Rubin: So these are some tools that I'm using, so we're talking about traffic right? So you have all these things in your toolbox. Yeah, you can use Amazon's sponsored ads. There's also ways that you can just one up your competitors who do things that you're not doing. So there are-

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