What Not To Expect With Amazon’s FBA Business Launch
- Sellers sell, and Amazon ships is in nutshell known as Amazon FBA, Fulfillment By Amazon.
- Amazon picks and packs, and it also manages returns and refunds.
- Remember, Amazon’s business is endlessly complex.
- Do not expect to make quick money with Amazon.
In the current blog post, we will be talking about what not to expect with Amazon’s FBA business launch.
Let’s dive deep into the discussion.
Traditionally, a business takes more than two years to become a profitable entity.
But what about Amazon?
In Amazon’s FBA business, people reach the break-even point within 3-6 months after launching it successfully, but not in all cases.
As per stats, around 17% said that it took 3-6 months to reach the break-even point and 16% said it took nearly 2 years until their business turned into a profitable business.
So during the launch phase, you can expect at least 4 months until your business on Amazon turns profitable. And, in those 4 months, you can expect at least 1/3rd of your total investment to be spent on PPC and giveaways. So, now if your organic ranking is improved, you may get sales with ease.
The majority of the brands who work with “Amazon Specialist Business Builders” tend to achieve their goals within 2-3 months after launch as the Brand Builders know what strategies are required to get your first sale.
PPC and paid social media campaigns to tend to drive more sales, but the actual profit margin is what we get with organic sales. Your cost will be minimized by the time you get organic orders. In some cases where competition is too high, it might take two months to get their first organic sale. So, you may say that the first drop is more difficult than it all rains.
Most sellers fail to get their sales in the first six months because they are not doing it in a better way. Let the experts do it for you if you want quicker results. Remember, it takes time to get your desired sales. PPC ad campaigns deliver results overnight. But on average, it takes three months to deliver the best possible results. These months after launch serve as a data-providing period for your ad campaign, providing you with vital data that can trigger your ad campaign performance.
As mentioned earlier, PPC takes three months to work, and quality results start to deliver long-lasting results. Some sellers make. The first three months of a PPC campaign should focus on gathering data from your ads, which you may use to improve your keyword targeting, audience targeting, and bids.
While running PPC ad campaigns on Amazon, it checks the quality of ads against the keyword you are bidding. The quality of the bid triggers the performance of PPC, and it influences relevancy and click-through rate (CTR) significantly.
Metrics like CTR, ACoS (advertising cost of sales), and CPC can vary from category to category as Amazon gathers more data about your product and your competitors. A product with 400 clicks versus 50 clicks has more data at the backend, so a product with 400 clicks will rank higher. So, by keeping in view these all, you may expect wonderful results for your FBA launch.
You can add more data by optimizing your listings with proper keywords. More data will trigger more clicks and impressions, resulting in improved health of your listing.
When you fully understand why it takes too long to get desired results from PPC ad campaigns, you can easily explain why PPC requires a three-month investment and what makes PPC strategy a good one that is performed for months and lasts for years to come.
The following are the factors that delay the ranking of your Product on Amazon. So without considering these factors you may not expect a high volume of sales and may get distracted by negative expectations.
High ACoS
This is one of the main reasons that cause a delay in ranking a specific product in the beginning. If ACoS is high as we have to bid higher to rank our product, so the Advertising Cost of Sales will be more than 100%. For instance, if you spend $40 on PPC and generate orders worth $40, ACoS will be 100%. The reason is simple, the product is not getting enough clicks as it is new to the algorithm. In 2 -3 weeks you will see that your product will be getting more clicks and hence ACoS will be lowered, automatically.
So, we should always aim for 20-25% ACoS, and in the end, we will be at 40% by lowering our ACoS from 100%, but of course, it takes time to reduce it as Amazon takes time optimizing your listings and delivering results. It takes 3-4 weeks for Amazon to optimize and analyze as par its algorithms.
Keywords
Keywords play an important role in ranking a product. When you bid on some specific keywords, and after 2-3 weeks, you see that some keywords are underperforming, you select keywords you want to target negatively to save your costs. New keywords are added over time to increase the efficiency of PPC. If your product is not performing well against some keywords, you can choose other keywords which are higher in demand and lower in competition. It is an ongoing process, and you will need to try different keywords to rank your product in the top spots. It takes 3-6 months to reach organic rankings, and of course, it depends on your competition. When you achieve your target place, you will have to maintain your organic rankings afterward.
Credibility
A newly launched product has no reviews at all, and hence it is not considered credible in the A10 Algorithm of Amazon. When your product gets reviews, it will start ranking in the top spots. As mentioned earlier, it takes time for the Algorithm to learn that your product is credible enough. If the other products are ranking on the top pages and have 100 reviews each, you will also need to build reviews to rank your product in the top spots. Your ranking will also improve if you meet the daily sales of your competitors.
So being patient is the key to success. Expecting the other way round is not a good approach. After PPC, when you get 10-15 reviews over 2-3 weeks, your ranking will start improving. The algorithm of Amazon will mark you credible enough and safe to be ranked well. Let me add here that the products may rank well in the top 3 pages while having fewer reviews because the algorithm marks them as credible enough to be placed in the top spots. So, credibility is also an important factor in ranking the products higher.
70/30 Rule
This rule states that 70% of our orders are from PPC, while 30% are only from organic sales. Amazon lists 70% of organic listings on top spots while only 30% are sponsored products. So, you will have to compete within the 30% to get your desired rankings. Make your listings relevant enough to optimize them well. The only way you may convert your 70% PPC generated orders to 30%. It takes time to convert 70 into 30 and 30 into 70. This is not possible overnight as it takes at least 3 months to reach ACoS of 30%.
Now, If your product is relevant to the category and sub-category only then it will rank well. On the other hand, it will just be a waste of resources. For example, gloves will rank in the clothing category and not in the kitchen items. Gloves are also used in baking, to rank them in that niche, you should place them in the relevant category.
Listing Date of Birth
This is also one of the important factors. New sellers have hurdles to bid high to rank. A person who is selling for the last 6 months will have to pay less on the other hand. So, eventually, the rankings of the old seller will be higher as the algorithm will give an edge to old sellers. It proves that you need to wait to get long-lasting results. There is no magic trick that you will launch a product and sales will be on your doorstep. Amazon Business is for those who know they have to wait for the crop to yield its fruits. So, expect not to build castles overnight.
So, Amazon’s FBA business needs time and patience to be successful. We discussed the key things, which we should not expect with Amazon’s FBA business after launch. Remember if Rome was not built in a day. So hold your horses, sit back, and higher the experts to better build your Amazon’s FBA business.
