AS: 12 The Amazon Million Dollar Question

02 Feb 2016

Today is a very, very important podcast, The Amazon Million Dollar Question – Strategic Positioning of Brand.

Do you position it as a highly premium brand and sell for higher perceived prices, or do you position it as a low cost brand, affordable to your users? No matter where you are at in your private label this question applies to you, whether you’re making a 10k a month, or 500k a month, the ability to reposition a brand is fairly easy on Amazon, so listen up!

But before we start, your amazon news flash – because I believe knowledge is power, we all build our decisions based on the knowledge we know, we weigh and measure subconsciously and consciously our decisions.

Today’s podcast is: The Amazon Million Dollar Question

I recently had this interesting debate over skype with a fellow Amazon Seller, Dale, on this subject matter. He positioned his product as a high premium product, whereas, I positioned my product, as an affordable product.

So how do I position my brand?

My current strategy is as follows. I’m positioning my brand as very affordable, yet, of the highest quality in my niche. By doing so, I attract a broader range of customers, thus higher sales velocity. As I said in my last podcast, podcast 11, in order to complete my next inventory order, which is a big one, I need to pay the other 70% of my quote, which is approximately $30,000.

Surely I can price high and increase my margins, but my strategy is to increase best seller rank. The higher my best seller rank is in my category, meaning the closer it is to 1, then the faster my units fly off the shelves, and the greater my revenue is.

In other words, by increasing my BSR, I’m increasing my revenue. By decreasing my price, I’m increasing my BSR. By decreasing my price, I’m however decreasing my profit margin. But that’s completely fine.

I’m in camp #1, where I believe achieving the highest best seller ranking, is the key to growing your business up and expanding to other products to diversify your risk. There’s a whole butt of info in that one sentence alone, so I’ll repeat –I believe the key to growing your business is moving high volumes and thus being able to expand to other products to diversify your risk.

Whys that such a big deal. Well there’s many strategic reasons. The more volume I sell; the more customers I have. Okay, yeah there’s less of a profit margin, but my audience, my feet on the ground promoting my business, sharing my business with their friends, family grows much faster. It becomes a surge. As they share, I get an organic word by mouth about my product, and more buyers going to Amazon to buy it. This is something that you can’t pay for.

Did you know that the music service, Pandora, was a completely organic word by mouth company, and as of today has more than 85 million listeners – meaning people loved what Pandora had to offer them, and they told their friends and family about it. I’m not going to lie, Amazon’s PPC is a necessary evil, and if I could save thousands of dollars a year with the help of a raving fan base on my company, yes, I choose that any day.

By selling high volume, with low margin, I can achieve a potential fan base.

Let’s also consider the fact that you can be a premium product and sell high volume, and this is camp #2. This camp is completely correct in a sense, yes you can sell a premium product at a high volume. For a high profit margin. Apple does it, so why can’t you?

Whew – I just switched that 360 degrees on you. I believe there comes a time for camp #2, and it all depends on where you’re at in your business. If you’re just starting out, you have no fans on the ground talking about your business. If you’re just starting out you have no blanketed marketing like Apple, or brand known name like Apple. You have a product, that someone with more money, could build.

That’s why I believe, it’s absolutely critical to get your product into as many hands as possible while still making enough profit to buy more units. Now is not the time to get greedy with profit margin.

So you’re probably wondering, David, you’re just saying this because you were forced to make your product cheaper to pay for the upcoming inventory shipment. Interesting you say that…. However, let me reiterate, selling lots of units is an awesome thing! More fans see your product, their friends at school, parents, see it. Fires become wild fires. And princes become Kings.

On amazon I believe people have low attention spans. No offense to anyone. I too am a consumer on Amazon. But by being one, my insights are this. I do not track the price of all the products I buy on Amazon. Which means, any of these brands, can later one-day re-position themselves to be a premium priced product. When they have an organic flow of hungry word-buy mouth hungry buyers, they can steadily increase their price, until they see that it affects their BSR.

The weird phenomenon…. OI’ve noticed two things with prices. Some users experience increased sales increasing their price. My only though here is – customers perceiving increased value over another product with higher price.

I myself, experience increased sales when I decrease. Just lately, I decreased my price by a dollar, and am noticing around a 20% increase in sales.

So to wrap it up:

The more sales you have:
-The higher your best seller rating is
-The more reviews come in organically
-The more keywords your rank for, and just rank for, but rank for better
-The more revenue comes in
-The more volume you move
-The more potential fans you have
-The more “viralness” your business gets

All by being in camp #1. How about that!
So which camp are you, camp #1, low price, high volume, increased bsr, or camp #2, high price, premium product, potentially lower BSR.

I hope you guys loved this podcast, you can throw some love back by reviewing it on iTunes. That would help me greatly get the word out. Also, if your seeking the best answers, is your one stop shop, for finally…finally…putting an end to duplicate questions, and subpar answers. See you all ther!

David Aladdin out!

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