Khas Industries

Amazon Fba And Advertising Details

1) What is Fulfilment by Amazon? (FBA)

FBA is basically the supplier sending a product to an Amazon fulfilment center where Amazon packs, ships and sends the product to the customer. (If you want to sell in the USA you need to send your products to a fulfilment center in USA and if you want to sell in Canada you need to send your products to a fulfilment center in Canada, same applies to EU, UK etc) (One important thing to note whilst selling in Canada is that all product labelling needs to be done in both english and in french)

2) How does it work? (What are the steps to set up an account and start listing products)

  1. Decide what you want to sell
  2. Choose a selling plan, either plan $39.99 per month (professional plan) or pay $0.99 (individual plan)per product you sell
  3.  Create an account
  4. Have following details available: Business Name and Address, Mobile or Telephone Number, Chargeable Credit Card and Bank Account, Tax Information (probably better to have a corporation setup in Canada so we can take advantage of any tax credits available to the corporation and also so that we can limit any liability to the corporation rather than to me individually).
  5.  Put in your name and then put in your address
  6. Business Display Name (Better to choose broad name like Khas Safety products so we can have more than one item under that display name)
  7.  Bank account number and Bank details
  8. Tax account details and tax interview
  9. Also need a GTIN (Global Trade Identification Number),number such as UPC, EAC or GCID (typically appears as a barcode).

3) What fees do we have to pay to sell on Amazon?

  1. Either $0.99 per product we sell or $39.99 per month
  2. Commission to Amazon for selling on their platform-15% or min $0.30 per unit sold
  3.  Refund Administration fees: If someone asks for a refund on the product and Amazon processes that refund then it is either 20% of the fees they paid or $5.00 whichever is lesser.
  4. FBA Fees: This is the fee you pay to amazon to pick, package and ship your orders: varies from $2.41 for products that are 10 oz or less to $5.26 for 3lbs
    For us likely to be 10-16 ounces ($3.28)
  5. FBA Storage Fees:
    Monthly fees- Jan-Sept: $0.69 per cubic foot
    Oct-Dec: $0.2.40 per cubic foot
    Long Term Storage Fees: (For items stored in Amazon Fulfilment center for 180 days or longer there is a fee of $6.90 per cubic foot, for items longer than 365 days incur a charge of $0.15 per unit)

4) What are the most important things that we need to do successfully in order to have sales on Amazon:

  1. Rank in the top search results for specific terms

    How does Amazon rank people:

    1. Sales (the more you sell the higher your seller rating is in Amazon)
    2.  Click through rate (depends on how many people click on your listing every time they type in specific keywords. For example: if people type in the word safety and they click on my listing 3/100 times versus someone else’s listing where they click on it 10/100 times, the person with the higher click through rate will be ranked higher. (biggest decision factor for people clicking on a particular listing seems to be images so very important that we have a good quality and relevant image that gets more people to click on our listing) (Zoomable images, size, length, measurements, cut level etc).
    3.  Conversion Rate: When someone is already on the listing what percent ends up buying the product. Here it matters that we supply all the relevant details to drive people to buy the product. Need to have a well optimized listing.
    4. Reviews: Important: People always check reviews before buying something so important that we should have a decent amount of reviews.
    5. FBA: In this case FBA is good because with FBA we have free shipping for prime so offering free shipping converts better
    6. Pricing: Ensure pricing is competitive. Not too high, not too lower.
    7. Listing details: Ensure everything is filled out correctly, ensure everything in the description is filled out appropriately- how relevant are all the details you put in
      Most important keywords in the title and your bullet points are in there.
    8. Account Health: Amazon not going to push you as much if you dont have good account ratings, answering questions. (how quickly you answer questions is also very relevant plays into the ranking algorithm)

2) Advertising on Amazon:

How this works:

CPC: Cost per click: Amazon charges you a fee for the ad you have placed every time a customer clicks on your advertisement. If you type in any keyword in the Amazon search engine anytime you see a grey sponsored button written it indicates that the particular listing is being sponsored.

For Amazon rankings whether you make a sale through Amazon advertising or through people buying a product that does not have a sponsored post, Amazon does not distinguish whether there was an ad on the sale or not. Just matters that you made the sale.
The broad strategy with ads is to basically get your product sales through ads that then drive its ranking up in the amazon algorithm for specific keywords until you get to a point where it is ranked high without any ads.

-Ranking high without any ads is also called organic ranking. This is what people mean when they say your product will be ranked high organically. Holy grail of marketing in all forms of social media, google, amazon to get high organic ranking. (means lower ad spend).

-One of the biggest challenges is to figure out what keywords (basically what people type in the search bar) people are searching for.
-If you can figure these out and rank high for each of these keywords through advertising and then following through on your sales process you can have a winning product.
-By doing PPC, you can get some data on what people are searching for as you will notice that there will be relevant keywords that people are searching for that will have higher bids from different people which will indicate that those are terms people look for.

-Amazon uses an auction-bidding system for keywords that is constantly ongoing and updating.
-Impossible to determine what the exact cost will be for each keyword that you are looking for, however you can test and look at the results to see how much each keyword cost and which keywords drove more sales or people to your store so you can spend more money on those keywords as opposed to those which did not really have an impact.
-JungleScout keyword app: (potential tool to determine the costs associated with this AdSpend)
-Cost per Click may be slightly different to the actual bid you put in
-Dont have to try and rank first on the first page can rank lower and still have people searching for you, with a lower budget can rank lower. (PPC can cost a great deal).
-Pay for PPC using travel rewards credit card
-Can get $50 in free click credits for Amazon advertising

2 Ways to Start a PPC Ad Campaign:

Method 1

  1. Create an automatic ad campaign
  2. Run the campaign for one week
  3. Generate keyword search terms report (can download from Amazon)
  4. Sort the report by the highest converting keyword terms
  5. Brainstorm long tail keywords from the best converting keywords (essentially combination of keywords that are more specific results).
  6. Create a Manual Campaign from these keywords and longtail keywords
  7. Run for 1 week
  8. Analyse search term report and optimise manual campaign bids

Method 2

  1. Generate a keyword list
  2. Create an automatic ad campaign and manual ad campaign simultaneously
  3. Run for 1 week
  4. Generate keyword search terms report (can download from Amazon)
  5. Sort the report by highest converting keyword search terms
  6. Brainstorm long tail keywords from the best keywords
  7. Optimise bids- Repeat process

What is an automatic ad campaign:

Basically you dont need any keywords at all. From the product listing that you have put up and the ad copy you have made, Amazon will analyse the search queries that will trigger your ad. You set a maximum bid price and Amazon will do the rest.

For a manual campaign:

You select the keywords, the maximum bid for each keyword and match type.

Essentially by match type- you can set what sort of search terms (what people are searching for) match to which keywords in your specifications.

By match type you can have a broad match for that keyword, a phrase match for that keyword or an exact match for that keyword.

What this means is that for e.g i say to Amazon that i want search terms matching to the keyword “safety” so broader terms relevant to safety will show up in the keyword report such as “safety supplies or safety equipment”. Phrase and exact will just be narrower in terms of which search terms show up.

-Need to be able to test and experiment. See what terms work best for you specifically. Will vary depending on products.

Next step will be to go through Ads Manager in Amazon and go through the process listed above.

  1. Generate keywords list (50-100) (Generate these as part of the product research process) (paid alternative would be to use JungleScout app)
    (long tail keywords tend to be cheaper due to lesser people searching for those terms) (if you get report from JungleScout remove irrelevant keywords)
  2. Go to campaign manager in Amazon Seller Central and click on create a campaign- Campaign name should be product name followed by campaign type (auto or manual) so for a safety glove campaign we can write “Safety Gloves Auto”
    Daily Budget is essentially how much you want to spend on the ad per day so the max amount you want to set- this can vary but typically best to start $10-$15 so for a week it would cost around ($105)
    Type ASIN number- based on your product listing in Amazon , find it and then list it in the ad.
    All you can do is set a default bid for specific keyword and then let Amazon run its course with the automatic ads.
    Then click on launch campaign and it will be launched.

Manual Campaign:

Exact Match Campaign:

In an exact match campaign the bid per keyword will be higher than in a broad match campaign since the keywords you are looking for will be more relevant to the search terms you are trying to get your ad to come up against so bidding higher means higher chance of getting your ad to rank against the keyword.
-You can use Amazon’s suggested bid per keyword initially to see which of these keywords are converting best for you and then focus your budget more on those specific keywords.

After you run campaign for one week, download the search terms report. Go on reports-advertising reports and then search terms reports in the Amazon campaign manager to get this report.

-In the search terms report- Impressions (this is how many times your ad gets seen), Clicks (how many times your ad gets clicked on), Spend (how much you spend on ad), Click through rate (what % of people looking clicked on your ad), CPC( cost per click-how much amazon charges you per click for people clicking on the ad), Orders (amount of orders people made for your product), Acos (advertising cost of sales- advertising cost/total sales made by that ad) for example 20% would mean advertising cost was 20% of the total sales that the ad made). So if I made $100 in sales with the ad, then the ad cost $20. Conversion rate- basically the number of clicks it takes to make one sale. So if 1 out of 5 people clicking bought your made conversion rate is 20%.

-From the search term report, generate the highest converting keywords:

How do we define the highest converting keywords:

-First step is to check whether a keyword is making us any sales.
-Check which keywords have high conversion rate and high number of orders.
-Any keywords that are not in the previous keyword list, add them to that list.
-One additional step you can take is to find new longer tail keywords (brainstorm and come up with those keywords).
-Keep repeating the process weekly to get better longer tail keywords which will typically end up being cheaper and consequently you can lower your advertising cost in this manner by iterating and getting to longer tail keywords which will be cheaper than original keywords you found.

-You can also keep removing the keywords that are not converting by checking their conversion rate. Ensure that there actually has been money spent on the keyword so that people have clicked on it to get an accurate estimate of whether that keyword is working or not. If no money spent on that keyword then we won’t know whether that keyword has potential to make sales or not.

-To remove those terms that are not converting well, we need to do negative matching in Amazon Campaign manager. Basically same as adding keywords but we are basically adding negative keywords meaning that if people search those specific terms our ad will not show and we wont be charged anything since we are charged on Cost per click basis and not seeing ad will mean no one will click on those ads.

-Also manually check the keyword search term reports to see if they are any keywords that are not relevant to what the people you are targeting the ad towards. Same process of adding them to the negative keyword list.

Adjust Campaign for Profitability:

ACOS<= Profit Margin (breakeven or making money)
So essentially if profit margin is 40%

And ACOS for a keyword term is 20%,we can increase the bid for that keyword to get ranked higher on the search term results page and generate more sales.
If ACOS is already higher say 60% vs our profit margin of 40% then decrease bid. (Can only change bids with the manual campaign not with the auto campaign).

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