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IBRAHIM ON INFLUENCERS

8-Pages Of Deep Dive On Amazon 101 🛒 🚀

When to Launch

You should aim to launch on Amazon AFTER you have figured out some of the fundamental things that you need to succeed via DTC. You want to launch on Amazon once you have a proven product with proven creative, messaging, and reviews that’s in market generating at least $10K, or more, through your own DTC website.

$20-$30K/month in revenue means that you have struck a chord with some initial consumers and people want what you are selling. You’ve likely iterated your way to figuring out some of the foundational pieces of your funnel that you need to succeed (on Amazon, or otherwise). You’ve developed a strong offer, you have a good product, you’ve A/B tested and found working ad creative, you have refined your copy and positioning to a point where it converts, and from reviews and customer feedback, you feel like you have a pretty strong sense of why consumers are buying from you.

At $30K+/month, you also likely have the capital and time to make the investment into expanding to a new channel like Amazon—which can take a few months to set up and go live.

Please note: I know brands that started as an Amazon first brand and then expanded onto the DTC vertical, and have been successful, but either way, you wanna start with 1 channel at a time so you don’t spread yourself too thin, especially when you don’t have access to huge capital.

You pick one channel, get the fundamentals right, get the momentum going, and you only shift to a new channel when you don’t have to focus as much on the previous channel, and have enough capital for the new one.

Why Launch on Amazon

The Why to launch on Amazon is pretty obvious. Amazon built the biggest digital mall in the world, with hundreds of millions of wealthy consumers excited and purchasing every second of every day. To give you some context (and there are different reported metrics elsewhere), but Amazon controls roughly 49.5% of all eCommerce sales in the US. According to SimilarWeb, Amazon saw 2.6 billion visits in November of 2023 and regularly gets over 2 billion visits per month. They did $514 billion in net sales revenue in 2022 and 31% of U.S. adults now spend between $50-$100 per month on Amazon purchases. It’s literally the world’s biggest digital mall.

It’s obvious that if you have big growth ambitions, you are likely going to want to be on Amazon at some point in your eCommerce journey. The goal is to launch and kickstart the viral loop of getting recommended by their algorithm which in turn sparks a flywheel of reviews and new sales.

People use Google and social to learn. People use Amazon to buy. It’s by far the most powerful individual channel for eCommerce today.

How to Launch on Amazon

According to Brian (and I fully agree), it takes about 3 months to successfully launch a new product on Amazon the right way. Obviously, it all depends on how prepared you are as a brand and how many SKUs you want to launch with, but it does take some effort to do well and go live.

To make it super simple, here are the general steps:

Step 1: Amazon Account Setup

• First, you have to register for an Amazon Seller account

• Next, you have to choose the right seller plan (Individual or Professional). (Note: anyone with a brand will be a professional seller)

• From there, you will set up your account details, including tax info, and your business bank account, etc.

Step 2: Product Listing/Catalog Creation

• The next step is creating and refining your product catalog

• For every product you want to list, you will need to add a product title, detailed description, and then bullet points to describe it

• In general, you should start with your top selling SKUs

• If you have dozens of products, start with your 1-5 top performers and expand from there

• For the copy, you need to think about your positioning alongside the SEO

• You want to use relevant keywords that will help you rank better via Amazon search

• You have to create and upload product photos and videos that adhere to Amazon's guidelines (These aren’t the same as ads)

  The guidelines are:

  • The product should fill 85% or more of the image frame

  • You can only show the product being sold without any props, sets, or any extra accessories

  • You can’t use graphic designs or illustrations. It has to be real photos of the product you sell

Step 3: Inventory and Fulfillment

• Once you have your product pages created, you need to decide whether you will fulfill orders yourself (FBM) or through Amazon (FBA)

• For context, nearly half of US Amazon sellers use FBA to pick, pack, and ship their orders

• There have also been studies that show—using FBA increases total sales

• If you choose FBA, you then have to decide on how many units you would like to start with, and create palettes to send your inventory to Amazon's fulfillment centers

• You’ll also want to have some kind of ERP for managing stock levels and reordering

• If you sell out on Amazon, it can really hurt your momentum and sales, because unlike Shopify, you can’t just email customers telling them that the product will be back in stock soon

• On Amazon, if your product is sold out, it will immediately recommend 25 other competitor products that will steal your sale. Your potential customer will just bounce and choose an alternative, unless you’re selling a product that no one else is selling!

Step 4: Getting reviews and the Vine Program

• As many people know, reviews on Amazon basically make or break a product, and unlike with other platforms, you can’t quickly hide or remove negative reviews

• To get started with generating authentic reviews, Amazon created the Vine program to connect merchants with pre-vetted reviewers who will leave unbiased reviews before you start spending money on Amazon ads to promote your product on the storefront

Here’s how it works:

• Merchants enroll their products into the Vine program, typically before the product is launched or when it needs more reviews

• Amazon invites trusted reviewers, called Vine Voices—to select and review products based on their historical reviews and area of interest

• Vine Voices members receive free products from you as the merchant, and are required to publish a review within a specified timeframe

This program is obviously super helpful to brands just getting started on Amazon, but fair warning, the reviews might not go in your favor. If you sell a subpar product, vine voices will let you know!

Step 5: Launch and Promote

• Once you have everything else set up from the checklist above, it’s time to launch and promote

• The best way to do this is to use Amazon's internal ad tools, which I’ll talk more about in a second

• You’ll also want to co-ordinate your other channels on paid search, paid social, email, and SMS to drive awareness to the page

• From here, you’re going to need to prove your value to the market, stack positive reviews and sales, and increase your product’s authority—all while competing with millions of other products on the Amazon platform. It’s not easy, but it can be an incredible channel for growth if you get it right!

What are the fees when selling on Amazon?

The other thing to know is that selling on Amazon isn’t cheap. They have a wide variety of fees that all sellers must pay. I’ll mention the big ones below that you should know about.

For professional seller accounts:

• The right to sell: Creating a professional seller account costs $39.99/month. This is the basic cost of entry to start listing products on Amazon

• Referral fees: Amazon takes a referral fee for every sale on the platform. The percentage varies widely depending on the product category. It typically ranges between 6% to 45%, with most categories falling between 8% to 15% of the total sale

• Fulfilled by Amazon fees: This set of fees are related to FBA. This depends on the size and weight of the items you are shipping, but it’s typically 18-35% of the total sale price of each item sold

• Ads:

  • The best way to kickstart distribution on Amazon is to use their internal ad tools

  • Brian had a great metric that he calls “TACOS” or “Total Ad Cost of Sales.” As a ballpark, this could be anywhere from 10-30% depending on what you sell

  • There are also other fees for returns, monthly inventory storage fees, long-term storage fees, etc.

  • I think this makes sense. Merchants should know that Amazon can’t become the 5th largest company in the world without taking some serious fees for themselves. It’s expensive, but for good products, it can also be an absolute game-changer for their growth

  • The goal with selling on Amazon is that you will make up for what you lose in margin by selling in volume with the biggest eCommerce retailer in the world

The power of Amazon Ads & the data you get

One of the common misconceptions is that you don’t get much valuable data from Amazon—that’s true as it relates to your orders, but the Amazon Ads platform gives you enough to properly optimize and continue scaling spend.

From the ads platform, you get a bunch of valuable and familiar data about the performance of your campaigns. For example, you can see all of these metrics and more including:

• Impressions:  The number of times your ad was displayed to potential customers. i.e., total reach

• Clicks: The number of times customers clicked on your ad

• Click-Through Rate (CTR): The percentage of impressions that resulted in a click

• Cost-Per-Click (CPC): The average cost you pay each time someone clicks on your ad

• Total Spend: The total amount of money spent on a particular campaign or ad group

• Sales: The total product sales generated from ad clicks within a certain period

• Advertising Cost of Sales (ACoS): The percentage of direct sales generated from the campaign compared to the spending on that campaign. This is the most important metric for understanding the efficiency and profitability of your ad spend here

• Return on Ad Spend (RoAS): The total revenue generated for every dollar spent on advertising

• Conversion Rate: The percentage of clicks that result in a sale. This helps you understand how effectively your ads are driving actual purchases

• Detailed Page Views: Data on how customers interacted with your product's detail page after clicking the ad

• Keyword and Search Term Data: Insights into which keywords and customer search terms are driving impressions and sales

• Comparative data: i.e., showing how different campaigns or ad groups are performing against each other

Sure, it’s not as good as Meta, and you don’t have as much control over your placements, or the ad creative, or the targeting, but there is still a lot of helpful data that you can get about the performance of your campaigns.

What you don’t get is the first party data from the customer side that you own. The reality is that Amazon basically only provides you with a hashed email and a zip code for each customer. Put side by side against Shopify, where you will get their full name, email, phone, address, all past purchase info, demographic data from Meta, heatmaps about session data etc., you have to remember—your goal here is volume and convenience for the customer.

You can also use tools like BRIJ with packages that go out as Amazon shipments, to bridge that gap between the CRM you’ve built with Shopify and the orders coming in from Amazon, or any retailer.

It’s probably the single biggest tradeoff that brands make when entering this channel. First party data capture from the selling platform vs volume, and having your own store in the world’s largest online mall—remember, volume and convenience.

What to expect when launching on Amazon

• If you have a strong product that consumers like and you have taken the proper time to launch correctly, Amazon can be an enormous growth channel for your brand.

• Brian says that it typically takes another few months to get the flywheel really going where eventually you can start getting favored in their algorithm and generate a bunch more organic sales

• Tentpole DTC brands that have crushed it via their own channels often find that they can add multiple 8 figures in top line revenue in a way that’s fairly straightforward by expanding to Amazon

• The truth is, nearly half of all online purchases in the US are made on Amazon, and if you are at scale and your brand isn’t there, you are likely leaving money on the table

• Amazon clearly isn’t slowing down and will continue to provide a phenomenal experience for customers

• It may not always feel like that for brands, but customers have to come first, and if you want to make money, it’s a good idea to meet them where they already are

• I’m personally a fan of having a diversified omni-channel approach to sales that includes selling via DTC, retail, brick and mortar, marketplaces, affiliate stores, etc.

• Each channel has the potential to add more and new customers alongside incremental contribution profit to scale your company, but that obviously depends on what stage you’re at, and what channel should you be focusing on at this point

As a business owner or CMO, you just have to remember that Amazon is just a tool. It’s up to you to decide if it’s the right tool and path to achieve the growth ambitions that you have for your brand.

Alright folks, that’s it for today.

I hope that was helpful. I’ve spent close to 8 hours to write today’s issue, so if you have any questions regarding any of this or if you could leave a feedback on how my email issues have been here, I’d totally appreciate it!

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🗣 Running a B2B and want to reach 33,441 DTC Brands? Start here…