E213: FBA Fees, Product Targeting and PPC Updates, Amazon Photography Service and Dave on The VergeJanuary 10, 2019 in Ecom-Crew-Podcast
It’s the start of a new month and a whole new year, so Dave and I bring you some of the latest from the marketplace we all know and ‘love’.
The title is a good indicator of what we’re covering in today’s show. But there are some, like Amazon Product Targeting, that we introduced in the previous updates. You can listen to them by clicking on the links below.
Here’s a summary of the updates we covered.
- Amazon Fee Updates – the biggest (and best) change is the removal of long-term storage fees for anything under a year; storage fee for hazmat increased significantly. Read all about the new FBA fees in 2019 on this in-depth blog post.
- Amazon will be collecting sales tax for third-party sellers in two more states – Iowa and Alabama
- Results of product targeting campaigns
- PPC ads portfolio
- A win for EcomCrew’s fight against nasty tactics on Amazon – Dave was quoted in a relevant article on The Verge
- Amazon photography service – accessible by going to ‘Manage Inventory’ in Seller Central and selecting an individual image in the image column
Registration to EcomCrew Premium is closed indefinitely. But, you can still learn from us through our suite of free courses. You’ll find a total of 20 videos covering ecommerce topics like Importing from China and Building a 7-Figure Business.
Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.
If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Intro: This is Mike and welcome to episode number 213 of the EcomCrew Podcast. I hope your start of 2019 is off to a good one. It’s always like this weird feeling in the office around this time of year because you’re coming off this massive high of Christmas sales, Q4 is always like at least for us and I think most ecommerce businesses in general. But at least for us, our Q4 is double of any other quarter. And the numbers are just I don’t know, you get like on this high of seeing these numbers come in every day. And I was mentally prepared for it this year more than I was last year especially.
I realized I was borderline depressed in the first week of January and the last week of December just because you get used to seeing these numbers and aren’t necessarily prepared for the drop off. So this year, I mentally put myself in a better spot. Also this year, we went out of town between Christmas and New Year’s, which helped get my mind off of the business and just kind of relax and detox, and also got some cool trips and stuff planned here for January.
I just got back again from Washington DC to visit family at the end of December. We’re heading to Austin for over a week to do some EcomCrew stuff and do the EcommerceFuel event. So that’s something to look forward to. And then we’re going to Las Vegas over Super Bowl Weekend. So I got that stuff lined up and think about, and kind of keep my mind off of the sales kind of being down. And it’s also just like the energy in the office is infectious around the Christmas time as well just because sales are incredible. You feel like a chicken with your head cut off just trying to keep inventory in stock and keep everything from falling apart.
And then you come back in January and it’s just what is a typical month otherwise, it just doesn’t feel the same. So it’s again just been kind of managing expectations with all that and it’s been better for me this year than it has in years past. But I hope again, you guys, your 2019 is off to a good start. And today we’re going to be talking about doing our monthly Amazon updates. And I have my trusty partner in crime Dave Bryant to do that with me. So right after our brand new intro, we’re going to get into that with Dave.
Mike: Hey Dave, how is the going man?
Dave: Great. How are you Mike?
Mike: I can’t complain. It’s a decent start here to 2019. What did you think of our new intro?
Dave: Well, I was joking with you off the air that I hadn’t heard it, but apparently I have heard it but I can’t it.
Mike: I guess it wasn’t that good, I don’t know. You’ve been ridiculing me about the intro for whatever reason. My cousin did that intro and he’s a professional DJ. He actually used to be on Morning Drive in Washington DC. He is also my ex business partner, just an awesome dude. But for whatever reason, I don’t know what was the deal with that file, but it just was kind of saturated and I didn’t want to bug him and ask him to do it again for free because he never says no. So we hired a guy off of VoiceBunny which I can recommend to everyone out there.
This is not a paid endorsement by any stretch of the imagination, but I’ve used VoiceBunny for a few other things. We’ve done some promotional videos and stuff and it’s really cool. You just upload the script and you pick the voice that you like, and it was like 50 bucks or something ridiculously cheap to get done. So instead of bugging my cousin to do it, I just had an actor there do it. So hopefully, it’ll make you happy Dave that we have a new intro that sounds better and VoiceBunny was to the win.
Dave: Well, it’s funny, about three months ago I got on to Fiverr and I had another guy record the intro because I knew you were never going to replace it unless I did it kind of behind your back. So I went to Fiverr and got it recorded, but it was worse than the one that we had. And by the way, your cousin — the intro is great, just quality is not so good. Anyways [overlapping 00:04:22]. Yeah, the one I got down at Fiverr was actually even worse in terms of quality. So my big scheme to replace it behind your back never panned out. But now I think we’re sounding good and hip for 2019.
Mike: Yeah, I had some sentimental attachment to the intro, which is why I didn’t want to get rid of it. So I just appreciate my cousin doing it number one, but it also made me think back to the time when he was on the air and I used to be a young kid, go into the studio, and listen to him play classic rock songs on the air. It was a lot of fun, and he eventually ended up becoming my business partner in the poker affiliate business that we did for years. And he’s actually still doing it. He bought that business from me and still doing that years later.
Dave: Jeez, well maybe we should have had him just re-record the intro.
Mike: He would have said yes. That’s the problem. I hate asking people something where I know they won’t say no, like asking for a favor that he’s going to say yes and he’s got probably better things to be doing with his time.
Dave: Well, we’ll have him come back for cameo at some point.
Mike: Yeah, for sure. So let’s get into today’s main topic, which is our monthly Amazon review update. Not really a review, but reviewing what’s new on Amazon, I guess I should say, talking about what’s new on Amazon. And we have a list of quite a few things here. The first one is the dreaded email that comes out every year. I’ve been thinking about this like the last, I guess the last third of last year for a really big reason. As I was going through our financials like comparing your financials, when I was looking at one of our brands, our net profit margin had really gone down quite a bit looking at it year over year.
This is something our COO was helping with as we were just getting better at looking at financials and data. And our net margins had gone down a ton, and the reason was because Amazon FBA fees when they got jacked up last year, it made a tremendous impact on our business, And I was just like, oh my god, I know this email is coming and it came. And it was like the best news ever because like really they haven’t changed the fees at all or made them better in a lot of respects.
Dave: It was crazy because I’ve been tracking this through a blog post that we do every year about their year over year changes. And every year it’s like 10, 15% that the FBA fees go up. I think it was 2016, they went to be more than it was like 20%. But this year, yeah like you mentioned, they barely moved and as we’ll get to, there was actually even some really good news that came out of the FBA increase. So I don’t know, I guess Bezos was bringing Christmas a little bit posthumously for us.
Mike: Yeah, last year for whatever reason and I have to go back, it sounds like you did some research. I can’t remember exactly what happened. But there was particular products that got hurt more than others. And I think it might have been products that were either in the zero to one pound, or actually I think it was on the one to two pound range. I think it was one to two pound range if I remember correctly, that had like this disproportionate increase. And unfortunately, 90% of our stuff fits in that range. And I think that’s what really hurt us.
And also the other thing I was looking at in our net profit margin, our advertising costs have gone way up as well which has nothing to do with fees. And that’s something else that over the last several months we’ve been getting under control and trying to get our net margins back to where they were in years past. But yeah, I mean, the fee changes here definitely f you’re comparing two years past, these are what you would expect or things are just kind of like…
Mike: Yeah, exactly. So, you want to kind of start breaking them down one by one.
Dave: Sure yeah. I mean, I have kind of a summary here of the giant post that we did basically breaking down what it actually means in non Amazon language. And almost all categories are going up anywhere from, for oversized items it’s around 3% which isn’t small but I mean it’s reasonable like we talked about its inflationary. And then for standard size items, they’re ranging anywhere from zero percent for an item that’s under a pound up again to around that 3% range. So most items are being hit somewhere around zero to 3% in FBA fee increases, which like we talked about before, that’s nothing compared to years past.
Mike: Yeah, and in addition to fulfillment fees, there’s also storage fees which last year was another brutal year for fee increases plus the – one of the things that hurt us by far and away the most was them tucking one additional month for the extra increase in cost.
Dave: It’s very slick.
Mike: Yeah, it’s slick for them. Man, it was like I’m looking — we break out storage fees now on our P&L separate from Amazon fees just to be able to have a better idea of what we’re spending just on Amazon and also in our 3PL, and man, it’s one of these like catch 22s because you know if you don’t get inventory into Amazon by like late October, you’re probably too late to have everything completely through their fulfillment center and ready to sell for Black Friday. And I’m talking about things that are very high volume, things that we sell 100 plus units a day of especially during the Christmas time.
And if you don’t have that inventory in there way ahead of time and give them time to reshuffle it all through the system, you end up with that message of like will be in stock on XYZ date which hurts your conversion rate. And so, we had to absorb a whole bunch of additional storage fees. And this year, the changes were pretty minor.
Dave: Yeah, I mean, they haven’t done anything to the storage fees, those all remain the same. But the big one, the big gift that they gave to everybody is that they’ve gotten rid of long term storage fees for anything under a year. So it used to be, this was a big change that they rolled out last year for inventory in between six and 12 months, they were now charging you long term storage fees. And basically, again, they snuck that in kind of sneaky by they used to evaluate your long term storage fees every six months. So if you’re just under that threshold, you could actually basically get a year before you had long term storage fees take effect. Now they do it on a monthly basis.
So basically, it sounds like Amazon ate a little piece of humble pie and they realized, oh, crap, people are sending less inventory in here. What’s happening is our out of stock rate is going way up, so we’re going to get rid of long term storage fees for anything under a year.
Mike: Yeah, and we typically don’t have anything in there over six months anyway, so this wasn’t a big deal for us, they like forced us to be really diligent about that. But at the same time, you can be as careful as you want; you end up sometimes with stuff in here that was in there longer than six months. And it’s just like one of these things that really irked me when we had to pay the long term storage fee. So, I’m definitely happy about the change, it isn’t going to make a dramatic difference in our business. The piece that you didn’t mention that’s going to make a pretty big difference for us is they raised the cost of the hazmat fee by a lot.
Dave: Are you hit by that?
Mike: We are.
Dave: I didn’t realize that you were.
Mike: Yeah, we have one product that’s hazmat and we’re approved for hazmat. It’s kind of a long story, we don’t have an hour to go into it here on the podcast, but we have a product that probably shouldn’t be classified as hazmat, but they have because I know some people it wasn’t classified as hazmat for them but ours got grouped into it. And when we send in the MSTS, it does have some alcohol in it and the flashpoint is very low. So I think that’s why they classify as hazmat, it’s an alcohol marker. And I don’t have the — I couldn’t find it, I was trying to find the other day the difference in those hazmat fees, but it was like either 2x or 3x, the standard storage space.
So for those, we’re having to rethink the whole product, I mean, it’s that dramatic. I mean, you’re talking about probably an extra dollar per unit or whatever. So we’re…
Dave: And storage fees.
Mike: Right. So we’re either going to raise our price, we’re actually back to manufacturer, we’ve been trying to renegotiate the price a little bit as well, which we’re having actually some success with, surprisingly. But anyway, if you do have things that are considered hazmat and you’re approved for hazmat, the storage fees for that went up significantly.
Dave: Well, it’s kind of funny, I don’t know if everybody has seen this video, when was it, I guess November where a bunch of bear spray within a fulfillment center of Amazon, they all burst lose. I guess it sprayed like 100 people or something at the Amazon fulfillment center. And anyways, their 2019 fee update, now bear spray specifically has huge storage fee that’s going to take effect on it all result of that one I guess incident. So, you may have I guess been collateral damage from that.
Mike: Yeah maybe, I don’t know. But yeah it’s definitely going to be painful. But luckily for us, it’s just that one skew; it’s not going to make a dramatic blanket difference in our business. I guess the fee increase the year before was literally a six figure difference. I mean like I look at our P&L year over year and it made pretty substantial six figure difference in our business. So this year I don’t see it being anywhere near that much.
Dave: Yeah, it could have been a lot worse.
Mike: Yeah, and the other thing that changed were the referral fees. So typically you pay 15% of the sales price. There’s some exceptions to some of this but some of this stuff has changed as well and we’re getting caught up in one of the increases there which is clothing.
Dave: How do you do this Mike?
Mike: I don’t know, man. I don’t know, it’s just bad luck I guess. But it’s not on anything that’s substantial part of our business. I would expect them to do this. Like we’re going to raise referral fees on coloring books to 50% or something which by the way as a part of last year’s fee increases, the other reason why we did see such a hit to the bottom line, they actually added a final value fees, what they call the final value fee on books of I believe $1 and 80 cents. I think that was the number. So like every order, we had to pay an extra dollar and 80 cents which basically worked out to like another 10 plus percent, pretty brutal. So that was another thing that really hurt us last year. So yeah, again this year, I’m ecstatic by the changes not being anywhere near as bad.
Dave: Yeah, I mean, actually, one of the referral fee differences that they made this year is that Amazon, I don’t know if it was last year or the year before, they instituted that $1 minimum referral fee. And if you’re selling $100 item, that doesn’t matter, because you’re never going to hit that threshold, you’re always going to be above the dollar. But if you selling like a $5 item, that dollar minimum referral fee, that’s significant. That basically works out to a 20% referral fee. And Amazon has lowered that now to a 30 cent referral fee. So if you’re selling an item, I think the math is anything under $7 you’re going to win from this change.
Mike: Yeah, anything that we’re missing on fees for this year?
Dave: I’m sure there’s a bunch of fringe case examples that you’re hit by and nobody else’s, but we can skip those.
Mike: I think that a couple of categories have been — just looking at this again real quick like baby, beauty, and health, there’s going to be some changes on that category and furniture they’re lowering. If you plan to sell furniture, they’re going to be lowering the fees for that but I think everything else is staying status quo.
Dave: Yeah, well until they hit Offroading products I’m just ignoring all that.
Mike: Dave only cares about his world.
Dave: The most important person in the universe, right?
Mike: That’s right yeah.
Mike: Okay, moving on to the next thing. The next thing we have on our list is Amazon is now going to be collecting sales tax for two more states and this makes me ecstatic. I see a bunch of states moving this way. Hopefully, every state will move this way. Some states aren’t doing this. California is one of them. But as a part of Online Merchants Guild, we’re pretty in tune with this. And the new treasury secretary, I believe was her position that just got elected in California, her position is to require marketplace collection.
So I’m hoping in 2019, California makes a shift towards this as well because they also just passed a new law lowering the economic Nexus from — I think it was a half million down to 100,000 which is brutal because California being the biggest state and they’re also paying the [inaudible 00:17:01]. And I happen to be lucky that our business is based in California for this one reason that we were already dealing with it there. But nonetheless, Iowa and Alabama are now going to be collecting sales tax from all customers for FBA merchants starting January 1.
Dave: Yeah. Because we definitely had a ton of orders going through Iowa, so it’s a huge relief.
Mike: Do you sell a lot of tractor equipment or something?
Dave: Actually, surprisingly, I bet I’ve never actually broken it down by state, but I’m sure actually Iowa would probably make a significant portion of our sales relative to their population. But most people…
Mike: And Alabama.
Dave: And Alabama. Unfortunately though, for most people, Iowa and Alabama are still too relatively small states and the whole sales tax catastrophe that’s going on, the bigger heavyweights which I think people are waiting to drop are California, Texas, and New York. Those are the ones where people are going to have the biggest potential liabilities. So, Iowa or Alabama, that’s a nice kind of token, but until some of the bigger states drop, it’s…
Mike: I think that Washington is the biggest one so far, right?
Dave: Pennsylvania is on there and Minnesota too which are two fairly populous states, New Jersey, but those are definitely the three biggest.
Mike: Pennsylvania is a very big state in terms of population. That might be the biggest one, yeah.
Dave: Yeah, so some of the big guns are falling but yeah we’re still waiting hopefully in 2019 like you alluded to California to finally give in and hopefully New York and Texas.
Mike: Yep, okay so moving on to the next thing here. This one is not new for this month, but I wanted to give an update and sort of Dave the product targeting, which I believe we covered in last month’s episode because it was new then. So we’ve had time to play with this. And I’m ecstatic with product targeting. I love the granularity of it, being able to go in and bid on a product by product basis and target competitors. It feels especially good when it’s a competitor that ripped off your products and you are able to at least try to get some of those sales back.
But what we’ve done here — I’m curious how you have approached this Dave, but what we did is we went through our automatic campaigns. So, we’re looking at — and we already have a PPC episode about this, so I’ll try to keep this quick. But we basically, our goal is for our automatic campaigns to have no keywords in them. So like whenever keywords show up in our automatic campaign, we negative exact them out so they stop getting bid on in the automatic campaign and we move them over to a manual campaign and bid on them in the manual campaign so we can bid on them in a granularity rather than having them just be automatically bid all over the place and save the automatic campaigns for suggested sponsored products that are related to this product.
So when you’re on our actual product page on Amazon, down below there’s other related products, the sponsored products related to this product, and that’s where we want to see our ads showing. And what we do is go through and cherry pick off the top products that are doing well within those confines and we’ve added them into product targeting. And that’s working really well. And the other thing that you can do with product targeting that has not been working as well for us in terms of ACOS is you can also bid on a category.
So we’ve been playing with that as well. And we’re having to lower our bids a little bit there. And I think that those will come in line from an SEO’s perspective. But targeting individual products has been working incredibly well for us. They’re performing very well. So, I’m curious how that’s been going for you.
Dave: Yeah, it’s funny, so we had all our campaigns as part of AMS.amazon.com, which is basically, that was Amazon’s legacy way to basically do this product targeting. And our ads are still running on there and it seems like those ads are all superseding what’s going on now in Seller Central in terms of product targeting. So within the Seller Central, our product targeting is doing nothing, like dozens of dollars in clicks overall for the last month opposed to what you’re probably seeing, thousands of dollars. So, I’m not sure what’s going on there. I think it’s simply a fact that AMS is still overtaking our Seller Central ads and that’s why we’re not really seeing anything in Seller Central, but definitely not seeing the results that you are with product targeting at this point.
Mike: Yeah. I mean, I think that we’re seeing better results because we were doing the old AMS ads, and for whatever reason, it just kind of slipped through the cracks when we were — I was doing PPC training with our team over in the Philippines and we were doing sponsored product ads, we hadn’t got back to do doing the product, I think they call them product display ads at the time or PDAs right, over at AMS. So, this popping up on the radar again has helped us get back on top of this. And so these are products that we had not been doing that with and definitely seeing really good results in the early going.
Dave: Yeah, well, I think the vast majority of the audience probably is not using AMS so they’re going to see better results anyway. So, I think you’re probably more representative of the results that people will get instead of me.
Mike: Yep. So definitely check that out guys if you haven’t already. It does, again, it seems to be working really, really well. It’s more work, it’s going to be more tedious. I think that we’re probably heading towards a situation for us at least, where we’re going to need someone full time on PPC. There’s a lot of other changes that actually I just discovered today like I had kind of seen them by accident, but I hadn’t really investigated. And Dave and I started talking about some stuff we’re going to talk about here in a little bit, that it’s just going to make things a lot more tedious. And we’re probably going to want someone that their full time job is PPC.
I mean for us just to put things in perspective, we’re spending mid five figures a month in PPC at a very profitable ACOS. But I mean, having someone dedicated to that maybe we can move the needle 1,000 or $2,000 in our favor, it more than pays for the employee. So it seems like things are going to be more granular and just by that more tedious and more time consuming.
Dave: Yeah, I mean two thoughts on that. Number one, now it seems that every product at a minimum is going to have five different campaigns. And I’m not going to break it down here, because we’ve kind of had a couple of podcasts last month about this. But there are now a lot of variables that go into each individual product’s advertising campaign. Before when you just turned on sponsored products and set one automatic campaign, I mean, there is no need to have anybody managing that. If you were paying somebody to manage that, well, you were just burning money, really. But now because there’s so many different variables, yeah, you need somebody almost full time to deal with it.
But to that note, hiring somebody, we’re all kind of learning this on the fly and most of us are more skilled than anybody that we can hire off Upwork or Craigslist or wherever. So it’s hard to find somebody that is going to know this really effectively, and all that you can kind of rely on at that point is having some really clear SOPs. But again, because all this is new and kind of being developed month by month, none of us really have those clear SOPs at this point. So you’re kind of in that catch 22 where you need somebody else to manage it for you, but there’s nobody available to manage it for you.
Mike: Yeah, okay so the next thing is another PPC thing which is ad groups which I think we might have covered last month but I wanted to kind of give an update about this as well. I think they call them portfolios, is that the actual…
Dave: I believe that’s the snazzy wet part.
Mike: So this for me is awesome because again, we’re running hundreds and hundreds of campaigns. I mean, it’s kind of gotten a little bit out of control. Dave was actually just doing a screen share with me and it was like holy crap, you have a lot of campaigns. And anyway, we have a lot of products, we’re doing like six, $7 million a year on Amazon. So, I mean, there’s a lot of things going on in our account. And the portfolio has made it a lot easier to just see the performance on an item by item basis. So what we’ve done is we’ve created a portfolio for every skew and then we put all the different campaigns inside that. So, we’re able to look at our automatic campaign or manual campaign or product display ads and whatever all the other things that we have going on in there.
And for me, it’s made things just a lot more organized. I like being able to go here and click on an individual product, and see from an ACOS perspective how things are going. Obviously, we’re using Sellics to do all the manual bidding and our automatic bidding and changing things around, but being able to log in my account here when I want to spot check something, it’s super fast. I think they’re using like Ajax or something for the technology because if you click on it, it’s just like instantly there. So, it’s a quick way to do some spot checks on a skew by skew basis and I really like that.
Dave: Yeah, absolutely. I mean, like you mentioned, the way to organize it, just create a portfolio for every different product that you have. And then within each portfolio, you’re going to have somewhat five to 10 campaigns. If you’re properly optimized in that way, now you can see in one quick snapshot how that entire campaign for that product is going in all the campaigns opposed to trying to fumble through all these different campaigns disorganized in all over the place.
Mike: Yeah. So one of the other ads that we have that we’re launching that’s in these portfolios is what’s called display ads. And I think I just realized from talking to you before this recording, this is not available to everyone. I thought it was. But if you go create a campaign, I get three options. When you first click on create a campaign, I got sponsored, products, sponsored brands, which was formerly headline search ads, and then I have this thing called display ads which it says beta next to, which I’ll just read the description off Amazon here which is reengage shoppers off Amazon who viewed your products or similar products and drive them to your detail pages.
So, we’ve launched these ads for several of our products. And the bottom line is I would have been better using $100 bills to light my fireplace yesterday than run these ads because they are ridiculous, they’re way underperforming.
Dave: Are you getting any sales over them? Like do you have your account up right now?
Mike: Yeah, so we do get some sales, but the ACOS on average has been 200%.
Dave: Beautiful. So keep running those for the year.
Mike: Yeah, that’s one way to like drive your net profit margin way down which is everybody’s goal, right, is not the whole point of this?
Dave: Yeah, absolutely. But think of all the credit card points that you’re racking up their Mike.
Mike: I know I get three x points in all this spend, so I’m going to be able to fly to China in first class this year again, instead of having to be in coach.
Dave: Hey, beautiful. I think like you mentioned, I’m not getting access to that within our account. So I think Amazon, they only give access to this beta display ads campaign to those who they also negatively affect with their referral fees. So, if you didn’t get a big hit on referral fees coming up in 2019, then you probably don’t get access to this.
Mike: Right, you don’t have [inaudible 00:28:21] on this is basically the point here; you’re not missing out on anything. I think we’re going to — what I did right now is I just jacked the bids way down. So we put the bids way, way down to see if that has any difference over the next few weeks. And if it doesn’t, we want to stop doing these ads and reevaluate later. We have plenty of other things to do in the meantime, which was not the next thing we’re going to talk about, but it’s a good way to segue into it which was this report we just downloaded which allows you now, Amazon allows you to see a few different spots your ad is showing up whether it’s at the top of the search results, other parts of Amazon. There was four, let me look at my report here.
Dave: You got one more.
Mike: Yeah, I had the fourth; one and then product pages on Amazon. So, it’s interesting because the ACOS on this stuff is pretty widely different depending on where your ad is showing up. And if you go on to your — and this is new and we haven’t played with this yet but I did see it. If you go under one of your ads and click on placements, you can now go through and bid differently based on the different spots that things are showing up on Amazon. So let me just log in my account here and click. So if you go into any campaign, click on your campaign, click on placements, then you’ll get three different spots or placements really of the ads which is the top of search, product pages, and then rest of search.
And you can bid up or down based on where that stuff is showing up at. And both of us just ran a new report that Amazon has under advertising reports. You can look at placements now. And top of search is significantly cheaper, 50% cheaper for me than the other placements. So my initial thought is to bid more on that and less on the other sections and just focus — I mean, if we have a budget of X dollars per day on a particular keyword, just to spend all that money on the cream and stop bidding on the other stuff. So I’m not sure how long this trick will work because if everybody starts doing it, I’m sure it’ll make top of search ads more expensive for everyone. But for right now, Dave and I are both seeing consistency here that the top of search placement is significantly cheaper.
Dave: Yeah, and just to give a rundown of my account so people have some perspective, top of search, 10% ACOS, product pages on Amazon, so that’s when you see sponsored products related to this product on an actual product page, that’s 16%. And rest of search on Amazon, so everything that’s not the top of page one is 20%, and actually not the top of page one, that’s not the top of any page, that’s 20%. So anyways, the conclusion is the difference between me, and the top of a search page, or post anywhere else is almost double factors. So it’s almost twice as expensive to be on anywhere else on the page opposed to the top of the search page on Amazon.
And that kind of probably goes intuitively with what most people thought. So it’s kind of data to support this. And by no surprise Amazon is also rolling out this, what they call dynamic bidding. So now you can also up your bids because now everybody can clearly see that you can afford to pay more to bid on the top of a page. So now you can control that through dynamic bidding with your manual campaigns.
Mike: You can up your bid by as much as 100%. That’s like literally what it says. I saw that, I was like oh my God, that is Funny. It’s like a surprise they didn’t make it like 999 or something to…
Dave: I know. I think we’re going to need it like a petition.org campaign going on here to up it more.
Mike: Yeah, let me just go over my numbers real quick to compare the ones that you just said Dave, and we’ll just do them side by side for people that are in the car not following along here. My first page top of search on Amazon, which is the category here, I’m at 20% and you said 10, is that correct?
Dave: Yes. So to get less competitive products on my end, and probably a smaller margins as well.
Mike: Yeah. We bid pretty aggressively on PPC. I mean, I’m happy with a 20% ACOS, so [overlapping 00:32:39]
Dave: I’m trying it 10%.
Mike: Yeah, but anyway, so you’re just comparing apples to apples here. I’m at 20 and then my product pages on Amazon I’m at 30%. So it’s literally exactly 50% more for product pages. And what was your number?
Dave: 16% so almost again, literally 60% more.
Mike: Yeah and then the rest of search on Amazon at 28%.
Dave: And I’m at 20%.
Mike: So you’re double your 10% number. I’m at 28% which is 8% higher.
Mike: So any rate, that kind of gives you an idea of the different placements, and so obviously again, if you’re early to the party with this and we’re going to have to go through and come up with a new recipe for this. My thought process is if you’re early to the party by bidding down rest of page or rest of Amazon bidding up first page, and you’re doing it when no one else is, you’re going to see a huge advantage until everybody else catches up.
Dave: Yeah, the other interesting thing that I’ve seen from this report too is if you look at your total sales, by far the biggest root of all of our sales is actually product pages on Amazon, which again, most of us intuitively know but our sales from product pages are almost 50% more than search at least top of page search.
Mike: Yep, and something I think that this goes to what we were talking about the product display ads or whatever they call those things now but bidding on an individual ASINs and what we were just talking about. We’re seeing product pages on Amazon being such a big thing being able to bid on individual ASINs like that and that’s probably why that’s working so well for us.
Dave: Yep absolutely. And yeah, a huge opportunity there if you can kind of create those product targeting campaigns and get your ads on your competitors’ products.
Mike: Yeah. Okay, two more things left here. We’re running out of time, I didn’t realize like how much time we chewed up here. But a couple last things here pretty quick. The next one here, I’m actually really proud of Dave for, this is a major win. Dave was able to actually get mentioned in a Verge article which I think also got picked up by the Wall Street Journal. But we’ve behind the scenes been advocating and trying to get the word out about a lot of the nasty tactics that are happening on Amazon. I think that it’s from my point of view I look at it from two perspectives. I think there’s the self serving interest part of it, right? I mean, like all of us want that type of stuff to stop, but also I’m more of like a fairness and like moral and what’s right kind of guy.
And the stuff that’s going on is really dirty, really like just not right and it’s not good for anybody. So from that perspective, I’d really like to see the word get out more and that’s not necessarily to damage Amazon in any way but more to like get it on their radar so they want to do something about it. And the reality is, in corporate life, in corporate America especially, companies are going to do what’s in their best interest from a financial point of view first. And so if there’s, the court of public opinion starts to shift on Amazon or they start losing business because people are becoming more aware of some of these dirty tactics, Amazon is going to be way more likely to want to make a change and put some effort towards making their platform better, which again, from a self serving interest, that helps us as well.
So first off, Dave, congratulations on getting mentioned in that article. We’ll put that in the show notes. But do you want to just take a minute and talk about some of the things that were talked about in there?
Dave: Yeah, I mean, they were talking — the big backbone of all these reports was basically review manipulation, which we know reviews are such a critical part to getting sales on Amazon, some of the background and basically how Chinese sellers in particular are getting fake reviews, how they’re getting stolen data from Amazon employees in China, and all these other nasty things which we as Amazon sellers know is going on, but most buyers don’t know what’s going on. So, it’s really a lot of background on that and for better or worse, they threw Chinese sellers under the bus which is fair and not fair. We could debate that probably all day. But Chinese were being scapegoated which in some sense is probably not fair because there’s sellers all over the world doing this but…
Mike: I don’t think that particularly was fair. I definitely think that disproportionate like it’s happening more there but it’s not fair to say like all Chinese sellers are bad and certainly I know a lot of Americans that are doing the same thing. So, I don’t think it’s fair to say that it’s just a Chinese problem.
Dave: Yeah, but overall, it kind of feels like how Wal-Mart and Nike got a lot of flak in the 90s for basically their retail practices and their manufacturing practices. And now Amazon is kind of the new whipping boy for the media. So, I think we’re going to hear a lot more negative press about Amazon in the years coming as they become bigger and bigger. So yeah, for better or worse, this kind of seems what’s going to dominate the news feed for a while here.
Mike: Yeah so again, congrats on getting that article. We also got a back link, so if you’re an SEO guy, you know how excited we are to have a back link from whatever that’s probably like a domain rank 80 or 85 site or something crazy. So that’s pretty darn neat which will hopefully help our rankings and we’ll see how that goes over the next little bit.
Dave: Yeah, it props out too. The journalist said the Verge actually gave the back link because a lot of journalists don’t give the back link, so very much appreciated.
Mike: We’ll put the, again, the links in the show notes for this podcast. One last thing on this, I love the Wall Street Journal’s image at the top with like the Monopoly board thing.
Dave: No, I think that was the Verge [overlapping 00:38:28].
Mike: Was the Verge’s, I’m sorry, okay man that was so good. I mean they obviously put a lot of time and effort into that, and I’m a big Monopoly fan, at least I was as a kid. I haven’t played in probably 10 years or something stupid. But Monopoly was like one of my favorite games as a kid and I just like really was like looking at the at the board there like man like someone spent quite a bit of time putting that graphic together. So I thought that was cool as well.
Dave: Yeah, very well edited piece.
Mike: Yeah. All right, the last thing on our list is Amazon photography. So they have this new service, I haven’t looked into it too much other than I started reading about it. And I was like, well, that’s pretty darn neat, they’ll take photography for you. And I certainly think that it’ll help smaller companies, people without the wherewithal to be able to do the photography like we do on our end. But I stopped reading when it said that they own the images and you can’t use them anywhere else, and they control everything. And I was just like; they already have enough control over my life as it is. So I stopped reading. But if you’re a smaller company, you’re just getting started and you’re willing to give up some of that control, that might be something that you would want to look into.
Dave: Yeah, and it’s a nice feature. For us, the biggest problem isn’t actually getting like product photography on a white background. The editing is and the post production editing is really where the time and effort comes in at the cost and finding somebody to take that beautiful picture of a garlic peel on a white background and then making an infographic out of it, that’s the hard part I find. So yeah, the product photography even if you want to use it, it’s nice, but it’s probably not as effective as if you have somebody who can actually edit those images and make pretty infographics and diagrams and all those other fun things with them. So yeah, it’s nice. But again, even Amazon owning the copyrighted side, there’s probably some other limited value in it too.
Mike: Yeah. So if you want to learn more about this, I have actually a post up here. So I’ll just end with this. If you want to learn more, you can go to manage inventory, and then you select the individual image for your product with the image column and then select let us image your products on the images page. So that’s where you would do it. So manage inventory, select the individual image for your product with the image column and then select let us image your products on the image page. So that’s where you would go to find more info on that if you want to try it with like one product and just see what happens, and then you can report back to us and let us know how that went for you.
I’d be curious but again for us, I mean we’re we happen to be lucky enough that we have three full time and one intern graphic designer in the Philippines. So we’re doing this stuff nonstop and constantly trying to raise the bar with all the photography and images really that we’re doing. And I feel like we know the products better than some other third party is going to know it and we can probably produce better results. But if your baseline is like you’re using your iPhone and trying to do it yourself, maybe they can do a better job for you.
Dave: Yeah, totally agree.
Mike: Cool, that wraps up everything I had on my list Dave, do you have anything that I missed?
Dave: No, I think we covered it all and ran a little bit late, so I guess there was a lot of cutting edge Amazon news here in the New Year.
Mike: Yep. And just as I said that the guy with the leaf blower is running by, so it’s a good time to end the podcast for today.
Mike: Awesome. Thanks Dave.
Dave: Thanks. Have a good one guys.
Mike: All right guys, that is a wrap for Episode 213 of the EcomCrew Podcast. As always, you can go to EcomCrew.com/213 to get to the show notes for this episode. We have some cool links in there from some of the stuff that we talked about today. And if you want to leave a comment, please do so. Let us know what you think of what’s going on in Amazon land. That’s going to do it for this episode. Until the next one, I want to say happy selling and we’ll talk to you soon.
Michael started his first business when he was 18 and is a serial entrepreneur. He got his start in the online world way back in 2004 as an affiliate marketer. From there he grew as an SEO expert and has transitioned into ecommerce, running several sites that bring in a total of 7-figures of revenue each year.