AS 85: These CEOs are disrupting Amazon PPC by Fully Automating it – Prestozon
27 Apr 2017
Forget excel sheets! Ben, Chris, and Dana are Amazon sellers from San Francisco who got frustrated managing PPC by hand and set out to automate the whole process with Prestozon. The founders met at our last company which was a supply chain finance and einvoicing company targeting large enterprises. As the company grew we decided we wanted to be on a smaller team again and set out to sell on Amazon and use our software and data backgrounds to automate the process where possible. We launched our first product ASAP (and made a bunch of mistakes) so we wrote software to help us find a better product to launch. Once we started doing PPC for our products we were amazed nobody had a good solution for handling it, so we set out to write Prestozon to automate the whole process. We did this while Dana and I were traveling in Asia (China, Sri Lanka, Bali, and Thailand) and Europe and we’re 100% bootstrapped.
What you’ll learn:
- How Prestozon was founded
- Why they started Prestozon
- How to optimize your Amazon PPC
- How to decrease Amazon ACOS
- How to increase ad spend and profits
- How to tweak product advertising settings
- Techniques to improve your Amazon advertisements
- Negative keywords and how they affect Amazon ppc
And much more. Show notes coming shortly.
Get in touch with Dana,Ben and Chris and learn more:
DAVID: Great to have you on the show, guys.
CHRIS: Thanks. Good to be here.
DAVID: Can you guys take us in the beginning before Amazon, where did each of your journeys start?
BEN: We actually all met at the same company building Enterprise Finance Software and we wanted to do another kind of smaller thing and we all decided to get into Amazon FBA.
DANA: Yeah, we’ve all worked in software for most of our careers. All that you…
DANA: And we started in Amazon and then we then realized that Amazon software space is… there’s a lot of tools that weren’t available yet, so were like, all right, sound great. Like, we need these tools as sellers and we love building software so it’s kind of natural fit.
CHRIS: Actually, we started from a different perspective first, so in FBA. We actually have this idea, like we want to start it automating from the scratch, so we actually built a market analyzer to figure out like if we start like what would be the best products to go with and that was kind of like our first attempt. But then, pretty soon, after we’ve figured out that there are a lot of other steps in between too that have gaps in how the tools work right now over this availability to make it easier for you as a seller. So we basically just started working our way through that.
DAVID: At this enterprise companies, I’m guessing it was a corporate sell company. How many employees were, was in that company?
BEN: Actually it was a start up. We… I joined when there were 60 people.
CHRIS: I joined when there were 30, but when we left it was…
CHRIS: … 250 or more?
BEN: Yes. It was still a small company but…
DANA: The Company’s name was Taulia and it’s enterprise because we built software for the largest companies in the world. So, Coca-Cola, like Home Depot, I don’t know.
DANA: Pfizer. So we built software to handle their financial electronic invoicing. Payment. We handled like massive, massive data and they’re like really secure conditions so that set us up well to deal security with Amazon data.
DAVID: And was that like your guys’ first gig right out of college or just, you just went right into it?
DANA: Oh no.
CHRIS: No. I actually started working for a software company in Asia first. I’m originally from Germany as you can probably tell from my accent. And I started in a start up in Taiwan, building software security products so as to automatically analyze source codes to figure if there are any security vulnerabilities in verifications, and then eventually moved to San Francisco and then joined the Taulia the enterprise finance company. And I worked in both of those for over five years. So, five years and…
DANA: Each. Yeah.
CHRIS: In each, yeah. So, that’s definitely not my first gig right after college.
DAVID: Oh, wow.
DANA: For me, I say that when I got in college so I went into finance. For about a year right out of college, then I just, I really wanted to get more into tech, so, actually I went traveling a bit and then I moved up to San Francisco and joined a couple of smaller start ups and then moved to Taulia and I was there for about three years.
BEN: Yeah. And then I was doing software or data analysis for a video game company. And…
BEN: Yeah, I was pretty cool.
DANA: It was a race car.
BEN: Yes, it was a racing simulator video game so I really love race cars. That was for my background is that I used to built race cars and so then I got into data analysis and then it was kind of same skill set to do a financial data analysis just because there’s a lot of working with big data and Tolin was not really a good fit, so I worked there for three years.
DAVID: Were you in San Francisco before that too or…
BEN: Yeah. I was in the Bay Area for…
DAVID: So why did you guys moved to San Francisco? It seems kind of like a big jump from Germany to San Francisco?
CHRIS: Yeah, well, for me it was more like an organic live your own journey, so after—when I was in college, I did an internship in Taiwan actually for two months in the summer. It’s like a summer program. And I would, that was my first time in Asia, I mean I traveled a lot in like the US and Europe. But I was really fascinated with Chinese as a language specifically if you do computer science since you give it like language processing.
You have to deal with like how would you certainly process 6000 characters and alphabets in software, that was actually very fascinating and so I wanted to go back and after I finished college, I actually did a year of studying abroad where I learned Chinese in China and then join a startup company there because you know after you just spent a year learning a language why do you just go back and okay. It would have been a waste of time so I wanted to stick around a little bit. And then that company actually opened an office in San Francisco and sent me over there and that’s how I kind of like got sent here and then I met my wife and got stuck here now and so.
DANA: It’s not such a bad place.
CHRIS: It’s not a, it’s a great place to live. Yes. So I’m not, you know, its not a burden to carry. Yeah.
DAVID: So what insights did you guys have, from Taulia, did I pronounce that company right? Taulia?
DAVID: From Talia. And then what instances did you guys have to go into Amazon, it seems like its, they’re both data driven but they’re kind of different, you know.
BEN: Yeah. I mean I think, from my perspective there’s, the core of it is we want to find out how to make more money using the data. And the kind of, the skills that what you look for and the way you process the data, it’s pretty similar across a bunch of different applications. Hence, I mean, it was really useful because the skills I learned there, I’d just used to start automating our own PPC, and then we’re like, oh, hey, if we’re going to write some software automator on our own, we might as well just write-software automator for everybody’s
BEN: So, yeah I think there’re a lot of similarities.
DANA: Yeah. Like once you know the space building software is a transferable skill so like… You’re the data scientist. For me, I do of more of a product design and user experience. And key, those are skills that apply whether you’re working on an enterprise financial software, or Amazon seller software, because we are Amazon sellers as well. So it’s, I know how it’s like to be one and so I can, it’s a process of like thinking hard about what the user might want to do when they come to a page and how to make the page clear for them. So that’s actually transferrable.
DANA: The skill.
CHRIS: And then I mean, I’m a software engineer so I think the, maybe one of the takeaways there was the sheer size of the data volume, so if you’re processing hundreds of millions of invoices for large enterprises, then it’s also, it’s good to say now, for example, in Prestozon right now, we have like over 200 Million data points on PPC reports and supports. So that’s also a lot of data that we need to crunch and you need to like have some techniques to make sure that is hand working at a reasonable speed and security and support.
CHRIS: That’s basically what I took out there to make sure that everything is meeting, maybe even a little bit higher percentage range of security but it’s scalable and secured for some time.
DANA: But though, you know, there was this article in Bloomberg or something, where there, I don’t know what source it was. There was some third party Amazon software services that…
DANA: Got hacked. The customers’ data was stolen.
DAVID: I actually…
DANA: We still think about that. Do you know who it was?
DAVID: No. But it’s like every time, you know a third party services, I’m always a little resistant because I know my sensitive data is going into them so you always have to know who’s behind each software platform before you just… You don’t know what type of security they have set up..
DANA: It’s true.
DANA: I mean it’s easy to just grant access into your AWS account but I mean, Seller account, Amazon Seller Account. But it’s kind of risky. You know you have to…
DANA: … look into it.
DAVID: For sure. And you know its, there’s a lot of sensitive data would, depends on what type of data you guys pull, and I think from, I was looking at your guys’ website, you guys pull the advertizing reports specifically.
DAVID: So, it is limited in that sense.
DAVID: So you guys have 200 Million data points. There’s probably more than that, I don’t know. But how do you manage, I mean, like I have trouble figuring out all the data that is coming into me and you guys have way more data. How you guys managing that data?
CHRIS: Right. I need to make sure that the data is entering the system and is available but then basically available for Ben so that he can optimize the algorithms and then figure out what actually is happening to the data and what we do with it.
BEN: You know, from my perspective it’s actually easier, given that Chris does a great job of making that data available. It’s the data that we actually get from the advertising API, is broken down at a lower level than you get from Seller Central. So in Seller Central you get the search end report which is a two month aggregate, where you get campaign performance report which gives you performance per campaign per day. But we get per campaign, per aggregate, per search term, per keyword. So we can tell you exactly.
DANA: Per day.
BEN: Yeah, per day, so, I can go in and say, I only want to look at this really specific date range for this specific search term and that’s really powerful. So it actually makes the job of optimizing your campaigns a lot easier.
DANA: You can make better decisions.
BEN: You can make better decisions.
DANA: More per se
DANA: But also from, I think a question I’ll threw back to me, because we present the data like you said, it can be hard to know what all the data, just for your campaign, what metrics do you look at? What timeframes you look at? What keywords are important? That’s kind of; one of our driving models to process on is like focus. To help people focus and make sense of all of the different metrics that are out there.
DAVID: Very cool.
DANA: Actually it’s what we look for you.
CHRIS: Yeah. So you don’t have to look at it in the end.
BEN: I’m sure the biggest pain point that we see is that people just don’t want to touch their ads.
BEN: The most people, the people who sell in Amazon are really guys selling on Amazon and sponsored projects are just an actual burden for them and so…
DANA: It takes a lot of time.
BEN: It does take a lot of time.
CHRIS: That’s basically why got to be here in the first place, right? Because we spent all of this time finding a product and working with a supplier and getting it right and dealing with the samples and inspections, blah, blah and it’s finally on Amazon. And then we suddenly realized we need to show this to people you know, like people are not looking forward to it, they’re looking forward in planning it so suddenly like at this perfect product that I’d think would sell well but how do I create it in front of people, right?
CHRIS: So that’s basically like this additional thing that you didn’t really expect or that might just be an [inaudible] and so that’s going to be a problem that we want to solve like you shouldn’t have to worry about this. Focus on your product, focus on customer service making sure that your customers are happy with the product and leave the nitty gritty data optimization of what search terms to use when and so and so forth to a machine because they can actually do it best.
CHRIS: That’s a lot of insight especially since we have to search terms and support like how do you analyze what do you advertise for? But basically, once you get the data back off like, you know what plays well, then, there…
DANA: It’s indeed the nitty gritty, as well of the computer.
DANA: We actually have a lot of PPC consultants using our software, because you kind of do often need a human. Maybe doing hard decisions, doing certain structuring of campaigns but the nitty gritty can be automated. So that’s why we have a lot of consultants that work with us.
CHRIS: Yeah. Or you can segregate it where you could basically say, I have some really high spent key words that basically drive from, I don’t know, like 80% of my sales, because it’s one key word, I want to really make sure that nobody messes with that, but then I have a good long tale of 20% which spread over, I don’t know, like a couple of thousand other key words and I don’t really want to deal with those. And for that I can just have an algorithm to make sure that I’m not spending too much money there and focus really just some things that are important which comes back to the focus that you’ve mentioned previously.
DAVID: What? Do you guys mind? How much are you guys spending per day on an Amazon PPC?
CHRIS: Do you mean time or money?
DANA: Do you mean personally for our products?
DAVID: Yeah. For your private labeler, your brand on Amazon.
DANA: Do you mean money or time?
DAVID: No. Money. Moneywise like, because it sounds like you’ve guys got your campaigns optimized in certain point and then you just scale up the budgets. Have you guys scaled it up really high?
CHRIS: We’re not.
DANA: We’re not. We’re not focusing on our own physical products. We are focusing on software. We have . . . .
CHRIS: Two and a half, yeah.
DANA: Account with variation of them. But they are not like our main focus, but we use them to make sure we understand the software statement to make us some money. I mean it didn’t make us spare a lot of money but they’re not like, we’re not really driving forward to make those go…
DAVID: Almost some say
DANA: Where focusing on software.
BEN: Yeah. And once we run experiments on our own products…
BEN: Just like figure out how things, how the PPC works and so…
DANA: We don’t want to run experiments like five times a week.
CHRIS: Yeah. So, that’s actually what I was thinking I was saying, we Amazon sellers are selling ourselves and we sit here making money out of it but to be honest, I kind of see it more like a testing grounds so, when we roll up in the near future when we check our own data, we know these products and we know like if we, for whatever reason something would go wrong and we missed like a day or two then that’s okay, you know we’re not like…
DANA: One thing important to mention here, we are also PPC consultants. We have like a number of clients that we use our own automation algorithms to operate their campaign so…
CHRIS: For, yeah.
DANA: We spend a lot of money with them, less with our own products.
DAVID: How automated have you guys gotten in your PPC software to become like, when you say automated, is it like you just turn it on and it starts changing values instead of…
DAVID: Is that how you use it?
DANA: I have these products set up in auto campaign… like it walks through the steps. So, it was not a campaign, it will automatically harvest good key words, put them in a manual, phrase match you know, yeah, it’s pretty much… and it’s not in the end for software, I should clarify it. Internally it’s in the end we’re building the software that give that to other people. Make that available.
CHRIS: Yes. So the version that we have online right now that you can basically send out for is lacking a couple of steps behind of our internal tools, but it’s kind of like we’re having our internal test beds so to speak and once that has mature we can push that into the public available version. But internally we’re at the point where you basically flip the switch and automatically does all of that for you but yeah they are still… At some point you need to as I’ve said we want to focus on focus, to make sure that you know you don’t have too many distractions that are going on. But in every step in automation there are some decisions that you have to make.
CHRIS: So we are trying to figure out like how do we trim those down to the minimum to not like the empty use of like 50,000 options that they can choose from to configure that automation and at that point they like, I don’t want to deal with that.
CHRIS: Like even if it would run automatically afterwards like need me to only push one button and so that’s actually very iterative process to get to the point where you can say, okay, give me your account, tell me your target, push a button and you’re done. That’s kind of like what we’re honing in right now.
DAVID: What like…I guess one of the concerns I would have is, what if someone was selling the same pencil as I was. Would it configure it similarly to my competitors sponsored campaigns?
BEN: Yes. Yeah. We’re very careful about that. We don’t actually use any…like we don’t look at the key words.
DAVID: I see.
BEN: The automation doesn’t really care about the keywords, I should say. So we’re not using your competitors’ data, against your data against yourself. It just focuses on your listing, your product, to make sure that those keywords are performing for you, reading your targets and I mean, that’s pretty much at work. We’re planning on doing some benchmarking like saying in this kind of, in this category these are the kind of the values like on call market, we’re seeing CPC’s, Rise, kind of stuff like that but nothing like, okay, you’re bidding on blue pencil and this guy is bidding on blue pencil. He just increased his [inaudible] page and…
BEN: No, no, no.
CHRIS: And this is weird. We said in the beginning there’s something’s you can automate and you should automate.
CHRIS: But other things you need consultant or humans.
CHRIS: We’re not looking, yeah, there’s no sense in trying to look at your listing and automatically try to determine, oh, you’re missing this one keyword, right? There’s a lot of empathy, and knowledge, and gut feeling…
CHRIS: And other things that got into this.
DANA: And some people wouldn’t want to automate yet.
DANA: Some people like right now, Prestozon, you go in and we give you bid suggestions for all your keywords. The most important one’s are on top. So once you spend the most time that’s what we think are important because where you spend the most you have the most impact on your ACoS. But yeah, we give you like a bid suggestion and then you just click that button, take that discussion or you can edit it yourself and so I think that gives you a fair amount of control if you want that.
DAVID: Let’s say if you wanted to do a lot of manual stuff, how would you, like what are the strategies to bring our ACoS’ down.
BEN: Yeah. I mean, I think negative key words are pretty good one. I would say I prefer harvesting all of the possibly profitable key words first and making sure those are all managed independently and then managing the bids for each one those. So, once you have a bunch of key words, you can manage the bid down to the point where it’s meeting your ACoS target. And at some point generally there’s a switch tip flips and you’ll go below a bid and it won’t get many impressions and that’s when you know why I hit the limit, I tried to make this bid as low as possible to bring it into my target and it just doesn’t work like I can’t make it that profitable. That’s really, that really depends on two things, like the market to that key word. Key word markets are always changing, and so cost per click is changing, and like the number of competitors, so the number of impressions you get. Sometimes they’re seasonality. So key words are hotter at different points of the year. But then also the price of your product I mean it’s really easy to hit 2% ACoS for a product that cost $200. But if you’re selling a $15 item in a really competitive space then you might just like, your ACos just might be high.
BEN: And so managing that big down to the point where that threshold is, where you’re just not getting impressions, you know that you’ve maxed out your potential there.
DANA: Well, like it’s… I would just like to clarify. When you say it managed the bid independently, you mean moved them from out of a campaign into a manual [inaudible].
BEN: Right. Yes. You want to harvest as many search terms as possible. So I set up everything in auto campaign, a bunch of like broad key words and then, I’m going in there I’m looking for any search terms that get clicks and then putting those in as their own key words and then managing the bid independently on each one of those key words. So there’s…
DANA: Managing mean like one manual campaign all together or separate manual campaigns?
BEN: Yeah. I mean, you want to split it up as much as you can. Amazon… one of the things that I don’t like about sponsored products is that they can only manage the budget at the campaign level. And so if you find, like sometimes certain skews do much better than other ones even though like variations on the same product like red might sell a lot better than pink. And you can’t really predict that so you put them all in different campaigns and then you can manage the budget for each one of those or that’s actually probably a good tip for managing ACoS.
Like some skews just don’t perform on that, but Amazon will still get them impressions, will still get clicks, and so if you just find out which key words those are and don’t advertise those thing you can increase even decrease your ACoS for the month you do sell.
DANA: That’s an idiot keyword, when you say don’t advertise it, that means make it into a negative keyword.
BEN: Well just make sure that’s a keyword is not an @.
CHRIS: Actually you take it fully out.
BEN: It takes that out.
DANA: Out. Yeah.
DANA: Yeah. But it could also mean that a huge way to bring your ACoS down is to make sure you’re using negative keyword.
DANA: Some people would put negative keywords for a few top obvious ones. But if you really as tediously go through and find the keywords that are getting clicks and so you’re paying for them but they’re not making any sales. And this is where also being a human comes in. Like, okay, I sell plastic water herb, mineral water bottle and this is a totally unrelated keyword that’s also not getting any sales. Make that into another keyword. Even if you’re only spending $2-$5 a day, that adds up. So if you are kind of religious about doing that every couple of days or maybe every week, you can really, really, really bring down your ACoS down pretty far because in the end of the day your ACoS is just the amount you spend on ads divided by the amount you get from your sales. So if you can reduce and like shave, continually shave off the top of that numerator.
DANA: You can really bring your ACoS down.
DAVID: I love how you guys like going back and forth trying to figure out, no this is how you bring your ACoS down.
DANA: There’s so many steps here.
BEN: I can’t…
DANA: How we’re overwhelming people but that’s probably… Everything are all for them.
DAVID: It’s good.
DANA: So you got the most benefits on.
BEN: I mean another good thing to, another point to make is that you have to wait the right amount of time. I see a lot of people, especially in some place per groups you will see people who were like, okay, I’ve been running my ads for a week and the ACoS is at 60%, and I’m really sad. How do I get this down. I’m thinking like these ads are just not going to work for this time. No, no, no. Wait. We can make this profitable. You just have to give us some time. So these things, week after week, if you just keep going back, and if you’re consistent, then after a few months something that started off really bad can come out and be a really profitable campaign.
DANA: Consistent in making changes.
BEN: Yeah. That’s right! So like keep making your…
CHRIS: Make changes, yeah.
BEN: Yeah. Keep making your negative keywords. And…
CHRIS: And also just give Amazon time because there’s definitely something like ramp ups.
BEN: Oh, yeah.
CHRIS: So if you just put something out there, you actually see like graphs that over time, it seems like Amazon is giving it more and more exposure, and like exact same keywords that just like a couple of tricks and just a couple of impressions. Like in the beginning of the week looks much better at the end of the week. And there are a lot of other factors like for business or it could be just more people are out shopping on Friday than those on a Monday, but of all if you’d record it like an aggregate, it’s definitely clear that there’s a ramp up time also…
CHRIS: With how Amazon treats…
CHRIS: Treats your ads.
DANA: Per impressions and also per click you rate.
DANA: The people that Amazon shows your ads to improve, as Amazon learns.
CHRIS: Because Amazon also wants you to sell. It’s not like you’re playing against the dealer here, right? They have vested interest to show your ads in the most profitable way because they also get a cut when you make a sale.
DANA: They cut.
CHRIS: So they also try to learn and see how they can optimize the whole thing.
DAVID: I find it crazy that like in the first place that we have to pay to show our ads on their website. It’s such a weird concept and you’d never imagine it until it starts making you a lot of money. That’s why we do it.
DAVID: It’s just.
DANA: What was it? What was the number, like the amount sent on Amazon, as we see?
BEN: Ah, say yes. Billion dollars or something.
DANA: It’s like, and it’s doubling every year.
DANA: It’s insane.
DANA: Like Amazon is just cleaning up.
DANA: And we’re all just trying to get a tiny piece of the…
CHRIS: Piece of the cake.
DAVID: Yeah they are mentioning something about pillars of Amazon’s business and PPC like becoming one of the main pillars of their business.
BEN: It is. Yeah.
BEN: Especially since everybody should be as unaware last year. Yeah, that was…
CHRIS: That was a big impact.
BEN: The PPC’s a lot more, I mean we’ve seen double the interest in PPC since then. People are just, say okay, well I need to push my product and…
DANA: It can’t launch product, though.
BEN: Yeah, it’s pretty difficult.
DANA: Unless you already have a huge established following from somewhere else.
CHRIS: Some other traffic drivers that…
DANA: Which I think will do.
BEN: We had a pretty good success of that, last year we launched a product in the beginning of December and I think that was after in celebration for…
BEN: These slots.
BEN: So it was into a fairly competitive market in the middle of the hot season I mean like it was December 10th or something.
DANA: Yeah, I love December.
CHRIS: I know.
BEN: Or something like that. And we just went with in with a super aggressive PPC strategy and we ranked on page 2.
BEN: For the keyword that we won, the ranked one.
DANA: Like a week later.
BEN: Like a week later.
BEN: We had like, we sold, I don’t know $50,000 of that item.
DANA: This is also a summer product, too.
BEN: This is also a summer product. Yes, it was.
CHRIS: It was unexpected. Unexpected success. We didn’t expect it to be easy at all.
DANA: But we hoped that that strategy would work
BEN: Yeah, and it was really good to see that it did.
DANA: Hot tip.
DAVID: When, so let’s for that hot product, let’s say it run out of stock. Do you guys keep your PPC campaigns on to keep Amazon just to alert that you’re going to bring it back and stock her or is it good to turn them off?
BEN: Well, I mean it won’t run anything if you don’t have the byproducts.
DANA: I’m not sure if it matters. We leave them on just because we’re lazy, but nothing gets shown, you don’t spend any money.
CHRIS: Yeah. If you are at a store and Amazon is just not showing you ads so you are not really, you know.
DANA: I’ve heard different things like going out of stocks and whether it hurts you. We just had a huge headache were…
CHRIS: Oh, yeah.
DANA: Oh, my gosh. We saw this home, it’s a kitchen good and Amazon, we think Amazon was recycling. There was like a few broken ones. We think Amazon keeps sending broken ones out to customers, and so we were like, I don’t, this practice does not create things we are getting tons of broken returns and…
DANA: We didn’t know how to fix it, but Amazon basically shot that listing down. We had to take all of our inventory back out, send it to a warehouse, we had to check every single one of them. We ended up being like 9 broken one’s or something, and send them all back to Amazon. It was a huge headache but I guess my point is we didn’t, we did lose some sale volume, but we’re picking back up quickly.
BEN: I mean, Amazon remembers that people did like your product and then as soon as it back in stock, I’ve heard of people bouncing back to like their exact same organic ranking for a bunch of keywords within like a week.
DAVID: Yeah. I’ve actually have… you say hate running out of stock now I like, I don’t mind it because I used to over order based on running out.
DAVID: Before it just hold a lot of cash flow.
DAVID: Do you mind if we go back just one step and…
DAVID: You mentioned you sent your inventory to a warehouse, right?
DAVID: I actually had an issue and I sent it back to my house, probably one of the worst decisions I’ve made.
DAVID: There’s too much stuff.
CHRIS: We did that too.
BEN: We did that too.
DANA: Oh my god!
BEN: I have a bunch of inventory sitting in my bedroom right now because it’s like always remove orders. Some of them are still okay products and it’s such a headache. Now we use a Reverse Source Logistics.
BEN: And now, I think they’re really good.
DANA: They do everything, prices are reasonable, they create responses.
DAVID: What the…
BEN: Super fast.
CHRIS: Yeah, we definitely went to a lot of learning along the way so that’s something where we feel like we actually giving back to the community is an interesting… crazy, but eventually we went through a lot of steps that sellers went through and we had a lot of headache and we did a lot of hard lessons that we learned and so.
DANA: One hard lesson, yeah, and to pay that forward, is be happy with your sample.
CHRIS: Yeah. Absolutely. That was our first mistake.
CHRIS: We were trying to figure out our first product and had a couple of samples send back and we liked it. There was like, it seems a little bit greasy.
CHRIS: It was a good product and it seems like a little bit greasy but other than that it was fine. And we assumed oh, it’s probably just going to dry off in a couple of weeks, right? So it was not a problem. But…
BEN: And we were trying to rush this product through before Chinese New Year.
BEN: Which is our main driver, and so he assured us that, yes, it’s fixed. We had to rush out because you guys are in a rush.
DANA: It won’t be greasy.
BEN: Yeah. It won’t be oily and then we get a thousand units of this thing and they’re all oily.
CHRIS: Basically, the oil seeps out of the packaging basically, right?
BEN: Oh, my God.
DANA: Oh, my God.
CHRIS: We can’t sell these.
DANA: We did sell them. We had to go through this whole like mini fabric process.
BEN: We sell them in a refurbished kind of way.
CHRIS: Yeah. We, we… Yeah.
BEN: Oh, men.
CHRIS: Every single one of them.
DANA: Yeah. So the moral of the story, be happy with the sample even it delays you. It’s worth it.
DAVID: I see…
BEN: The one you target and projected.
DAVID: You don’t rush it out.
DAVID: At least you guys were able to fill your car up with gas.
DANA: Yeah. Right.
DAVID: Wait, all right, so…
DANA: Just about.
DAVID: So, when you guys sent the stuff back, you sent it to this warehouse and they took care of taking it out of all the boxes. They got it.
DAVID: They cartonized it or packaged them all up?
BEN: [inaudible] or something.
BEN: Yeah. So…
DANA: Yeah. To go out, we asked them, like hey, can you make sure nothing’s broken. You have the two pieces that’s broken. And they have sufficient bubble wrap and plastic wrappings and the boxes aren’t smashed. Any of them that don’t meet these criteria, please dispose of them. They dispose of them for free. And the ones that were good, which was almost all of them, they just repackage, and sent back to Amazon for us. It was reasonable, in a few hundreds of dollars for all that, so it’s pretty reasonable.
DAVID: For those tuning in, it’s not, it doesn’t sound like it’s a big deal when you have to recall inventory. But at some point you’re going to have to recall maybe, a hundred units or a thousand or ten thousand units and it turns out…
DAVID: To be a lot of work. When it shows up…
DAVID: At your doorstep.
BEN: Yeah. I think you have to, I mean, you have to look at it from the plans or perspective, which is…
BEN: My time is worth money. If this is going to take me a week of work to get through these five hundred units, is that the best way to spend my time? And it was pretty clear to us that it wasn’t, so we, plus it’s just so much stress, I mean…
BEN: You know…
DAVID: So much stress.
BEN: If you don’t, you’re not set up to receiving five hundred units.
DANA: What are you going to do with the pallet?
CHRIS: Yeah. That was one of the things that we’re actually, we we’re so like, the kitchen item nightmare, like Amazon also messed up in a way. Where they actually send it to the wrong address and suddenly we get these calls, well, there’s supposed to be this pallet that’s going to be dropped off your place.
BEN: I know.
CHRIS: What are we suppose to do with the pallets?
BEN: I’m on the 34th and I don’t have this… an elevator in here.
BEN: I can’t do this.
CHRIS: Yeah. And in some situation if you have lots of items or your items are rather bulky, there is no way you can have it shipped to your house. Or, unless your neighbors are very relaxed with you propping up with a crate of pallets of whatever, but…
DANA: But even if you do…
BEN: Yeah, just don’t do it. Just find a third party to take care of it.
DANA: The myth of branding, like time is money. And there you spend three days going through this. You can make so much more money finding the next product, or…
DANA: Working on your PPC, or whatever.
DAVID: The funny thing is even though we say this, everyone goes to the lazy ones that, ah, I can do it.
BEN: It do.
DANA: You’re right. We did it anyway. Twice.
CHRIS: Because it is maybe just like this psychological barrier were like I’m going to pay somebody money to open boxes, I can do that myself, right?
CHRIS: Until you see the boxes sitting in your living room and you’re like.
CHRIS: That was a very bad idea.
DAVID: Well, the other issue is when they do send you the inventory it’s like two units in a big box.
DAVID: So then you’ll multiply the boxes by a hundred. Even if it’s two hundred units…
DAVID: It turns out to be a lot.
DANA: Yeah. It’s kind of we call the different distributions centers, yeah.
BEN: There was another thing about this, the whole fiasco is that, I think all of the broken ones were from one…
BEN: Performance center.
BEN: So it’s just like, I don’t know, it’s a good…
DAVID: Was it…
BEN: To keep track of… what?
DAVID: Oh, what?
BEN: It was a good idea to keep track of your… like what’s happening with each… We can actually find, we actually found in the reports that people have returned broken items and then Amazon had returned it to the fulfillment inventory. So Amazon is putting these back into bins that were getting send off to our customers which is… and there’s no button you can check that says, yeah, if somebody returns it, no matter what, even if it’s good…
CHRIS: Just discard it. Yeah.
BEN: Just discard it, or send it back to me. They put it back and so. Usually they put it back in unfulfilable and you can get those returned to you.
DANA: But there’s so much on it.
BEN: But sometimes they put it in fulfilable and so I think that was what’s happening with us was, these same units were getting send out and then returned by a customer and put back in fulfilable and then send out again.
CHRIS: Send out again.
BEN: And yeah.
CHRIS: Surprise, surprise! The second guy also didn’t like it broken.
CHRIS: Item, so he send it back as well.
DANA: But you can tell it’s kind of a hassle, but if you know which distribution center tend to break things, you can actually send your goods to a specific distribution center. I think you have to, what is that called you to pay a certain…
CHRIS: It’s more expensive. Yeah.
DANA: Extra fee per unit, but…
DANA: It would be worth it.
BEN: It would keep your listing from going down.
DANA: You kind of problem. Yeah.
DAVID: Do you guys know which warehouse breaks all the units because I have the same issues as well? Turner? I don’t remember the specific.
DAVID: I know Texas is pretty good.
DANA: So Texas is good, you said?
DANA: It wasn’t. I want to say maybe Kentucky?
DAVID: That might be right.
BEN: Yeah. I don’t want to like.
CHRIS: Yes, yes. It’s too, like… We actually really remember from this issue when you look on line there were several people complaining…
CHRIS: … about that. But we don’t want to contribute to.
DANA: Yeah. That’s for sure.
BEN: We just keep an eye on it.
BEN: You go into reports and fulfillment reports and get all this.
BEN: There’s so many to go through and it’s good to keep an eye on it.
DAVID: So what are the strategies to bring down our ACoS? I know you guys are holding back secrets.
DANA: Yeah sure. We could go more about our secrets.
BEN: Oh men, I, yeah.
DANA: One thing we actually recently just announce is, when I say we I mean Ben. Ben has an analysis on click through rate, whether you should use that metric or not, I think a lot of people out there recommend using click through rate, maybe you should say what you’re trying to do..
BEN: Yeah. There’s not really a relationship at all between click through rate and ACoS. And so it’s tempting to give up on a keyword if it has a really well click through rate. But I would say it’s pretty important to wait until you have enough clicks to get a sale. If your stay here on an average thing like a 5% or 10% convergent rate per orders per click. You should wait until 20 clicks before you decided it’s a bad keyword. You can also change that threshold based on your CPC and the price of your item because obviously you don’t want to wait for 20 clicks if its a 2 dollar CPC and you’re selling a $10 item. But we see a ton of really profitable keywords even like 21% CTR which is interesting because you can see the graphs in our website and…
DANA: Our blog.
BEN: Yeah, our blog. And it’s wild because it’s like this shotgun and there’s a whole bunch of keywords that are centered around this 0.3% click through rate, 30% ACoS and then everything else they just all… There are tons all around.
CHRIS: Like a big cloud that surrounds the area.
DANA: Let’s just to clarify that there is no relationship between ACoS and CTR. It’s just yeah, a big cloud.
BEN: Yeah. So I would say, don’t give up too early on keywords because…
DANA: If they are low click through.
BEN: If they are… don’t like, it’s tempting to get rid of them, but, you know.
CHRIS: Wait, there might have be a direct strategy to reduce your ACoS, but it might be like a red herring that you, don’t try to optimize prematurely.
CHRIS: Don’t try to cut off potentially profitable something.
BEN: Because the other probably not causes increase ACoS but also increase in sale.
BEN: And if you gave up on keywords too soon, then you might lose out on some sales.
DAVID: Do you guys think, have you guys messed around with the enhanced product listing versus a regular product listing in which if it converts better in terms of ACoS. When you’re launching this PPC campaigns?
CHRIS: Well, the thing with product listings is that at that point, so if you’re very datagram, right? And the product listings, there’s a lot of…
BEN: Yeah. There are a lot of variables where it comes to like what pictures are you using? What wording are you using? And a lot of that is also very subjective, so that’s not, like at least, we haven’t really focus on that yet in terms of optimizing your individual listing and the text in your listing because there’s also not a lot of data that you get back from Amazon to actually judge that, right?
CHRIS: You came into Seller Central and see sessions or how many people look at stuff but it’s not fine grade enough for you to actually one successful experiment so it was like statistics speaking.
CHRIS: It’s going to be little bit more washy.
CHRIS: Not really…
DANA: Then we totally have heard that when you upgrade to an enhanced listing, you have better conversion. But that’s not something we directly experimented yet.
DAVID: Yeah, I have been, sorry. I have two enhanced listings and then the rest. The reason why it takes awhile to not only submit an enhanced listing but to get approved as well, they’ve been increasing it. But, I haven’t found I haven’t found that… It actually increases my ACoS that much or at all, you know.
DANA: Increasing it or improve it?
David Aladdin: Yeah, it doesn’t decrease. My bad.
DAVID: The average cost of conversion.
DANA: That is interesting. Maybe it depends on the product.
DAVID: Yeah. So, I guess it’s just something I got to keep messing around with.
DANA: Yeah, that’s the thing.
BEN: I mean, I think… Yeah. In general, every product is unique and every market is unique and so keeps experimenting. I mean, I think everybody should be, always be testing. Test new keywords, test different bids, test different listing text. Go through your keywords and see what’s working or what’s not and then make sure that those are any of listing in your back end keywords.
DANA: That’s a really important point.
CHRIS: But like in a nugget, never be static. So, even if you find like you honed everything to really not, you know like your ACoS, something nice so much, I mean in sense you’re doing… Keep going back and checking because there might be new suggestions that are popping up because it could be your competitors or timing is everything. Like if you launch on right season or suddenly, you know a new season comes along and there’s some new interest or some TV star just mentions, continue meme that has nothing to do with your product but initially…
CHRIS: But then suddenly.
CHRIS: People connected with it. So there’s a lot of things that always influx that are worth keeping an eye on.
BEN: Yeah, and I think that it touched on important point is that, you know Amazon is changing extremely quickly and you know FBA is only been around for a decade or so it is… And the last five years it just been the whirlwind. So to think that you could like set up a listing or set up a campaign and just let it run, you know you’re probably going to lose out on some sales. So, always come back. Even if it’s not daily, if it’s weekly or if it’s monthly, come back, check on things, see what you can improve. If you’re keeping, if you keep on improving, improving, improving and your competitors aren’t, you’re going to get ahead of them.
DAVID: That’s good advice. Let’s just end at that. We’ve got about 10 minutes left. Let us talk about you guys, like how do you guys start your morning day? What’s your routine look like?
BEN: I think you probably… You have definitely…
CHRIS: I have this… So as a software engineer I’m somewhere on the spectrum of OCD. I have a rather strictly planned all day usually that I try follow with it. If I don’t get follow it, I got like very nervous or less happy. I usually get up in the morning, too early according to my wife, because she gets… yeah, probably wake her up and go running on the lake. So there’s like a lake around here.
CHRIS: That I just do morning run, go to the gym, come back then eat breakfast then able to stand up and then it’s basically just working through the day with like predefined lunch break and then whatever the evening holds.
BEN: Yeah. I think that… Actually I want to expound on that point a little bit. The most important thing that we’ve done as a team.
DANA: I was just going to define stand up.
CHRIS: Oh. Sorry. Yeah, I just mention that, but yeah.
BEN: Yeah. So stand up is just like ideally you would be standing up and there will be a really short meeting just like tell, talk about where you’re at and where are your blockers are so that we can keep…
DANA: With the team.
BEN: Before with the whole team. And ours usually end up being like half an hour or an hour because we talk about all, you know all the business.
CHRIS: But it is like the one meeting we have besides…
BEN: That’s super important. Dana and I spend a lot of time travelling last year and we were in Italy for awhile and we are in Asia for awhile and that time zone difference? Really hard to have any face to face time and our team dynamic wasn’t very good because everybody was held up by everybody else and it was just…
DANA: Face to face communication was magical.
BEN: Yeah, it is magical.
DANA: And it only works when the team who does listening. You probably already know this but it’s just really helpful to have FaceTime, in person is the best, but it’s not that just Skype or something.
CHRIS: Yeah, it’s just the Skype even… it’s much better than phone call even you call each other…
DAVID: So true.
CHRIS: On a phone without seeing each other, it’s less quality then.
DANA: Like there’s so much communication that is none verbal.
BEN: So yeah we use Slack all the time which is just like an instant messaging servicing.
BEN: When you’re just basically texting each other all day, even if you thrown a bunch of Emojis like you know sarcasms gets missed or peoples’ true emotions gets mixed and so things can escalate where is you just jump on a call and it’s like “Oh okay, well I don’t actually hate you, you don’t actually hate me”.
BEN: We can work this out. That’s probably the most important part of our whole day.
BEN: Is that we all jump on this call at 11 AM and then we talk about what’s going on with the business and what each person needs.
DANA: Yeah. But in terms of other morning routines, neither of us, I think is regimented or like.
DANA: I don’t know.
CHRIS: An SOCD?
DANA: Well, no, it’s like I wish I was. So, have that sort of have it but I’ll usually get up and do some yoga and stretching, just kind of like get awake and then drink lots of water. This is something I started doing a few years ago and made huge difference to save me a time when you get up, you really dehydrated when you wake up.
DANA: And you did breathing all night and you lose a lot of water surprisingly. So it is really simple, it’s a simple thing but drinking like probably 2 full cups of water, 2 full glasses is really helps clear your head of that kind of like morning…
CHRIS: Grogginess or…
DANA: This is from a great author that I love. He calls it frozen lettuce in the morning.
DANA: Where your brain is like frozen lettuce and you’re kind of like it’s all sort of sticky and foggy and I just love that metaphor. But anyway, then I like to meditate usually. Sometimes I feel like I don’t have time which is totally just a terrible excuse but yeah, meditating for me even just like focusing on my breath for like 5 minutes or 10 minutes helps like it calms your limbic system down and you can just do much better, I can be much better for more focused work throughout the rest of the day if I just start the day like that so.
DAVID: It sounded like Tim Ferriss for a second. He’s just like pulls out these big words out of nowhere. “It calms your limbic system.”
DANA: Yeah. Tim Ferriss. I said about… Well so.
DAVID: And before we cut out, can you guys recreate that time when you guys all decided to create Prestozon and FBA business. How did that look like? Were you guys just like… How did that look like?
BEN: Well. So.
BEN: I was like I want to… like I want to start something that like basically I just want to buy my free time back so that I could be more flexible folks and other stuff and we worked on that together.
DANA: Yeah. Well… that’s why we started the Amazon products.
CHRIS: Right. So that’s when we start the Amazon products and yeah, so that was…
DANA: And then we notice that PPC was just really terrible and if we’re not really in a good school about them. So Christian is our friend from work, I called him and we were like, “Hey Chris, want to come join our company and build this?”
CHRIS: Yeah, I was in some may say, I seem to be in the cycle of about 5 years, so 5 years in my first company and then 5 years in this one and it was like, okay, I build what I kind of had set out that is all the infrastructure is in place, so what is the next thing? And then that sounded very enticing and so we like, why, yeah, sure. Let’s try this out. I don’t know anything about FBA yet but that can change and so… and we learned a lot along the way. I think that was very interesting. If I go back to that time, I think that was most interesting part of experiences.
CHRIS: There was a lot of like hard learning, things that you’ve never envisioned yourself to be like this. There’s thing where we actually went to a Sellers Fair in Hongkong, and we were like we are pushing Dana around in a wheel chair because she had just broken her foot just before we went on the trip.
DAVID: Oh geez, that’s the worst.
CHRIS: Which was unfortunately.
DANA: The worst.
CHRIS: Like in this giant exhibition hall in Hongkong and you know you have to figure out where do we get a wheelchair that was and then push her on. It was great because we were memorable. Like all the sellers remembered, “Oh yeah.”
CHRIS: “You were like this blond woman in the wheelchair. Yeah, we remember you. Yeah. Come here”. It’s a…
DANA: Yeah, we made lots of friends.
DANA: Of course, I mean Chris speak fluent in Mandarin which always help when you’re in China.
CHRIS: Not fluent but yeah, it’s easier to communicate in person.
CHRIS: We actually went to see one of our sellers, that was important too like just make… they learning about that relationships are just must better again if you meet in person, if you just bring a present and I can talk.
DANA: Especially in China, like it’s just all about the relationship.
DANA: And they’re like really happy to host you. They took us after this like really nice lunch which is just like 10 courses and lots of beer.
DANA: I never really lost any meal.
BEN: But I think like through all of this our goal has been to reclaim some of our time. We love working for ourselves, you know making our own hours and our own… flexibility is good, I get a lot of my best work done from like midnight to 2 AM and so you know having that instead of like having to like force all of my work to happen 9 to 5 or you know whatever the standard is like.
DANA: Like we’re working way more hour than when we were around like normal “Job” but…
BEN: You can go on a bike ride even all of the day.
BEN: Yeah, and then you can work late at night and it just all works out.
DANA: Yeah, the flexibility is really nice.
DAVID: Guess, you don’t have the boss like asking, you know you guys are the boss. You’re not under anybody’s control in that regard, too.
CHRIS: Yeah, which is… there are two sides of that coin like on the one end side, yeah, you don’t have anybody telling you what to do but then you don’t have anybody telling you what to do and you need to figure that out to yourself.
CHRIS: So, in areas where you’re secured, that’s great, like we all have like our area of specialties where nobody will tell us how things work and we just do that. But then for example, none of us is really great in marketing and so that’s something where you’re spending there “Well, okay. So, similar to our A products” like we need to put Prestozon front of people and like “How do you do that?” you know.
DANA: I was wonder one of our biggest like surprises or challenges with Prestozon is actually we kind of thought that if we built this off of software, people would come and like it and in fact it’s actually just hard to get in front of balls nowadays, you know just so many services really aggressively marketing as well.
DANA: And so not like Chris that none of us from our career is… that’s been a learning.
CHRIS: And there is also like you have this hesitation like everybody hates marketing image, right, like when you open your inbox in the morning and there like 15 more “Oh he signed up for this” and blah, blah, blah, and then he’s like “I don’t want to be the person that sent this out” but then again he’s like “Well” but if you don’t, how would anybody know about it.
DAVID: Don’t be that dude.
CHRIS: It is like 5 in out. Yeah.
DAVID: That is funny.
DAVID: Alright. So, how can get people reach out you, how do they contact you?
DANA: Well, Prestozon.com is our website. You can also email us at firstname.lastname@example.org. You can also find us on Twitter and Facebook, Prestozon is presto like magic, P-R-E-S-T-O and Z-O-N like Amazon Z-O-N, that’s where the name comes from. We want to make your…
CHRIS: Amazon experience magical.
DANA: Yeah, so that is probably the best places to reach us.
BEN: Yeah and like Team Prestozon goes directly to the three of us, we all see that so.
DANA: Yeah. And if there is anyone in San Francisco, we love meeting…
BEN: Oh, yeah. That’s something.
DANA: All our users. We’ve have meet a couple of them and we’d love to meet more.
CHRIS: Yeah, just reach out.
CHRIS: And we’re happy to show you the best coffee shops.
DANA: We’re friendly. Yeah
CHRIS: In San Francisco, yeah.
DANA: On pastry shops.
DAVID: Thanks for coming on you guys. Ben, Dana, and Chris. Dave Aladdin, out.
CHRIS: Thanks for inviting us.
DANA: Thank you.
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