AS 57: Forth Quarter Strategies Selling on Amazon – I am the real Santa Clause
21 Sep 2016
It’s been a crazy ride so far, and it’s just the beginning. Christmas, Black Friday, Halloween, Cyber Monday, Hanukkah, Thanksgiving, New Years they’re all coming. War is here.
But in all honesty, think about it. As a kid we grew up wondering how Santa Clause delivered gifts to everyone’s chimney on Christmas Day. How he had his elves working non-stop over at the North Pole. In reality, it’s businesses preparing as soon as January, maybe May, for the big 4th quarter that is coming.
For the non-american’s listening to this podcast, you probably think us Americans are absolutely crazy, with our 6+ holidays sequenced in a row, not including birthdays, and seasonal changes. Some sellers absolutely just focus on Halloween, the one holiday that most sellers don’t target, and some sellers hit extremes and target it with thousands of variations of costumes, masks, fake blood, you name it, they sell it.
My fourth quarter preparation began in May. I started doing projections based on a previous years numbers, which wasn’t all too much data. My brand’s journey started in August, and I was going into a quarter with 1 SKU at the time. This time around there’s about 18 SKU’s.
My order was placed in early July, in order to beat the orders of some competition, but ultimately just ensure that I be able to fil all potential demand. July, August, and most of September has passed by and the order is nearing it’s completion. It feels all to last minute honestly, BUT I am glad I put in the order that early.
Shipping wise, since I ordered such a significant amount of inventory, I am having my first go at Ocean freight. In fact, I’m doing a double swing at it. I’ve calculated the current velocity at which I’m selling at, and for now I’ve doubled that number for each SKU, and I’m sending that amount of units by air.
As for the rest of the units, which equates to about half of my total shipment, I am sending that by ocean.
Numbers wise, air freight is very expensive. It will cost me 3-5x more via air than ocean freight. And I give my ocean freight an allowable 12 weeks to travel across the ocean, arrive at a local warehouse, and then forward into Amazon.
The golden nugget here is I’ve noticed that I’m in a transition phase. I need some units via air to support the demand. I spend more to go by air because if I run out of stock, I’ll lose a lot in marketing, ppc, and BSR.
But in part of the transition, I’m starting to send via ocean. A longer term game, which requires a significant amount of capital to perfect. Roughly speaking it only costs 3000 dollars to go from China to Amazon with a 20 foot container. This includes all the costs that pertain to ocean freight: you have origin manifest charges, fuel charges for delivery and pickup, chassis, pickup and delivery, handling, pier pass, import customs clearance, insurance. Because it’s FOB, freight on board, the cost to get from the manufacturer to the ocean docks, is covered by the manufacturer.
Whew. Okay. So 3000 dollars. The significant amount of capital is what I like to call working goods. Let’s say your ocean freight shipment is $40,000 dollars. That $40,000 now sits for 12 weeks in this transfer phase. And then you have another $40,000 in manufacturing. And lastly, you have another $40,000 in actual inventory, inside of Amazon, or a fulfillment center. This is all to keep the vicious cycle of staying in stock work well. This is why the physical product business is so expensive to be in. For just 1 SKU, to be fully in stock, sell at a fast volume, and be supplied properly, end to finish, can cost a 120,000. And this just an example, of a complete logistics chain for 1 product.
Eventually, I want to have every shipment be via the ocean shipping. There is massive cost savings to be done here, and about $3-5 per unit profit I’m missing out on.
Okay enough of shipping talk. After all, shipping is just one part of being santa clause.
In terms of prepping for 4th quarter.
I’m experimenting with a lot of cool new strategies. I’ve just recently got 5 influencers on board, with at least 100,000 uniques coming to their websites, or if they have at least 100,000 subscribers on YouTube.
These influencers can be found directly, or using a service such as famebit, or tomoson. Each influencer in my case, charged me $100-150. What I’m trying to see is how well these influencers can spread the word out about my products. How much of a difference can they do. With each influencer I not only give them a direct link to the Amazon product, but if they had a website, which some of them did, I requested that they post a link, aka a back link to my website.
Backlinks will from various, high quality websites, will improve your brands page rank in Google’s eyes. The better your page rank, the better chance your articles will rank in Google. This is a long term ploy.
Recently, there was a lot of controversy from Episode 54 – where I went into detail on how website sales hurt Amazon sales…LONG story short, they mentioned if that’s true, why do you have a site David, if your just redirecting traffic to Amazon.
So, as it turns out, my website strategy is starting to become eextremely effective. I reported 3 months ago how each article that was being written over there, was getting about 300 guests. Each article served the product line by describing features, as well as comparing it to other products, and how it was better.
Today, each article is getting about 700-1000 views, each view equating to a potential conversion of a customer. You can kind of see where I’m going with this. The more high quality articles about your products, the more organic traffic will come to your site. Now it just becomes a game of numbers, where hundreds to thousands of articles equates to millions of visitiors coming to your site yearly. That’s free traffic, and more traffic to your e-commerce store, or amazon listing, you choose. With your website, you have full control over where you can send that traffic to…and even earn an affiliate commission for products out of your brand. Win Win.
Today’s Amazon news flash:
So what does this mean David:
Amazon is strategically figuring out ways for it’s prime members to buy more. So even if they sold the Echo at a loss, they would make it back via sales on their website in the long run. It’s been a known fact that Customers buy more when they are prime member. But this just one-ups their brand. Now the goal for Amazon, is how can we get an ECHO to every prime member. I expect the Amazon Echo to go down in price further to further support the Amazon brand. This also goes back to a strategic point for sellers. Since there is no “interface” to browse through products, Amazon created Amazon Choice – where Amazon picks the best products per category of item, so when users request it via Echo, it’s the Amazon choice that gets selected by default. So for example, lets say, “Alexa, please order me a pencil…” I believe the “Amazon choice” is the default go-to for that. We need to be the Amazon choice, and that’s by creating the most superior products of their kind.
David Aladdin Out,
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