Hey everyone, in a chat between Cody and Jordan Seefeldt, they explored the world of selling consumable products on Amazon and how brands can truly make the most of this platform. Jordan shared some really insightful tips and tricks to help businesses succeed on Amazon, from understanding the algorithm to crafting smart ad strategies. Let’s dive into the key points they covered.
Key Takeaways
- Amazon is not just another sales channel; it’s a powerful platform to build strong customer relationships, especially for consumable products.
- Many brands misunderstand Amazon, often seeing it as competition for their direct-to-consumer (D2C) channels, when it’s actually a huge opportunity.
- Inventory management is crucial for organic ranking on Amazon. Maintaining consistent stock helps improve visibility.
- Optimizing product listings with high-quality images, videos, and A+ content is essential to engage customers and improve search rankings.
- Understanding the different types of Amazon ads—Sponsored Products, Sponsored Brands, and Sponsored Display—and using them strategically is key to effective advertising.
- Brands should avoid spending on branded search terms and focus on acquiring new customers through broader targeting and off-platform awareness campaigns.
- Amazon provides valuable data, like search query performance and fulfillment reports, that brands should leverage to understand customer behavior and optimize their strategies.
Why Amazon is a Must for Consumable Brands
Jordan explained that if you sell consumable products with repeat purchases and strong customer lifetime value, Amazon is essential. A significant portion of Amazon orders come from customers reordering from their order history, making it incredibly convenient for repeat business. For brands with products people use regularly, being easily accessible on Amazon is a major advantage.
Bridging the Gap: D2C Brands and Amazon
Many D2C brands view Amazon as a black box or a channel that takes away from their core business. However, Jordan emphasizes that Amazon should be seen as an opportunity to meet customers where they are. If customers are searching for your brand or product on Amazon because they saw you on TikTok or elsewhere, you need to be there to capture that demand. Ignoring Amazon means missing out on potential sales and customer connections.
Common Mistakes Brands Make on Amazon
One of the biggest mistakes brands make is not integrating Amazon into their overall marketing strategy. Brands often see Amazon as separate from their D2C efforts instead of understanding how off-platform marketing (like on TikTok, Facebook, or Instagram) can drive branded searches and sales on Amazon. Jordan pointed out that spending money on ads off Amazon can actually boost your presence on Amazon, and vice versa, it’s all interconnected.
ROAS vs. ACOS: Understanding Ad Performance
Jordan clarified the advertising metrics on Amazon. While ‘ROAS’ (Return on Ad Spend) is common, Amazon also uses ‘ACOS’ (Advertising Cost of Sales). For consumable goods, a healthy ACOS or ROAS on Amazon can be between 2 to 3, depending on profit margins. However, it’s important to note that ad costs per click (CPCs) on Amazon have been increasing, making it more competitive. To counter this, Jordan suggested using off-platform channels to drive traffic to Amazon and reduce reliance on expensive on-platform clicks.
Consumable vs. Non-Consumable Products on Amazon
Jordan highlighted that consumable products are ideally suited for Amazon. These are everyday items like deodorant, shampoo, or disposable goods that customers repurchase frequently. Amazon’s algorithm and features like “Subscribe and Save” favor consumable items, boosting their visibility and repeat purchase rates. Commodity-like consumables tend to perform best because Amazon is seen as a reliable place for everyday needs, similar to a retail store, rather than a place for luxury or infrequent purchases like jewelry.
Pricing Sweet Spots on Amazon
According to Jordan, there are key price points on Amazon that can influence conversion rates, especially for consumables. The prices of $14.99 and $24.99 are particularly effective. Interestingly, sometimes a slightly higher price of $24.99 can convert better than a price slightly below it, like $22.59. This could be related to Amazon’s free one-day shipping for orders over $25, encouraging customers to reach that threshold.
Unlocking Organic Rank with Microcredits
Jordan introduced the concept of “microcredits,” which are factors Amazon tracks to rank product listings. These fall into three categories: reliability, content quality, and customer engagement. Reliability microcredits include inventory levels; maintaining at least 75 days of stock is beneficial. Content microcredits relate to high-quality images and enhanced brand content. Engagement microcredits include time spent on page. Optimizing these microcredits improves both organic and paid visibility on Amazon.
Inventory is Key to Reliability
Jordan emphasized inventory management as a major reliability microcredit. Consistently maintaining sufficient stock (75+ days) signals to Amazon that a product is reliable and available for customers. This positive inventory position improves ranking. Conversely, frequent out-of-stock situations negatively impact rankings as Amazon tracks bounce rates and aims to provide a seamless shopping experience.
Optimizing Your Amazon Profile
Jordan stressed the importance of profile optimization, starting with Brand Registry. Registering your brand unlocks features like Brand Stores, Brand Stories, A+ Content, and the ability to add video to listings. These enhanced creative tools differentiate your brand from competitors, improve SEO, and increase organic visibility. They also offer opportunities to cross-sell and engage customers more deeply. High-quality images (3000×3000 PNG) also contribute to a better user experience and ranking.
Amazon’s Advertising Options: A Full Funnel Approach
Jordan outlined the three main ad types on Amazon: Sponsored Products, Sponsored Brands, and Sponsored Display. Sponsored Products are standard search result ads, ideal for conversions. Sponsored Brands, including video ads, boost awareness at the top of search results. Sponsored Display ads appear in various placements, offering broader reach. A full-funnel approach using all three ad types can maximize visibility and reach different customer segments.
Smart Ad Strategies: Beyond Branded Search
Jordan cautioned against paying for branded search terms. While it may seem important to capture these searches, Jordan argued that customers searching for your brand are already likely to purchase, whether you advertise or not. Investing in branded search often leads to non-incremental sales and inflates advertising metrics. Instead, focus on using ads to acquire new customers and drive incremental growth.
Leveraging Amazon Data for Off-Platform Success
Jordan highlighted the power of Amazon Marketing Cloud (AMC) data, especially for brands using Display ads. AMC provides insights into new-to-brand purchases, conversion paths, and even geographic data down to the ZIP code level. This data can be incredibly valuable for targeting off-platform campaigns. For example, identifying ZIP codes with high purchase rates on Amazon and then running targeted ads on platforms like Meta in those regions, with location-specific creatives, can be highly effective.
Tactical Advertising Tips and Data to Utilize
Jordan shared a tactical tip for reducing CPCs: targeting keywords with slight variations (e.g., “pants for,” “the pants”) can lower costs without sacrificing search result relevance. He also recommended utilizing Amazon’s Search Query Performance report to understand actual purchase behavior versus just search volume. This report shows conversion metrics for specific search terms, helping brands identify high-demand, high-conversion keywords and market share. Fulfillment reports can be used to calculate repeat purchase rates and customer lifetime value, even though Amazon’s built-in repeat purchase data is limited.
Conclusion
In conclusion, Jordan emphasized that success on Amazon requires a deep understanding of the platform, a strategic approach to advertising, and a data-driven mindset. By focusing on consumable products, optimizing listings, strategically using various ad types, and leveraging Amazon’s rich data sources, brands can unlock significant growth and build strong customer relationships on this powerful e-commerce channel. Jordan encouraged brands to dig into Amazon’s data and not be afraid to experiment with creative strategies to outsmart the competition and make Amazon a profitable part of their business.
Business Opportunity Rating: 8/10
Starting a business like this can be medium difficult.
Why it’s a good opportunity (8/10):
- Lots of repeat customers: People buy consumable things again and again, which means you can get loyal customers on Amazon.
- Amazon is where people shop: Many people already use Amazon for these types of products, so you’re going where the customers are.
- Amazon helps with selling: They have tools and features that are good for selling things people buy regularly.
- You can use ads to get seen: Amazon has ads to help people find your products.
- Data helps you improve: Amazon gives you information to understand what’s working and what’s not.
Why it might be difficult (Medium Difficulty):
- Need to know Amazon well: You have to learn how Amazon works, like their rules for ranking products and ads.
- Managing stock is important: You must keep enough products in stock, which can be tricky.
- Competition is high: Many other brands are also selling consumable products on Amazon.
- Ads cost money: You need to spend money on ads to get noticed, and these ads can be expensive.
- Need good product pages: You need to make your product pages look good with pictures and videos.
- Understanding data: You need to be able to look at the data Amazon gives you and understand what it means to improve.
In short: Selling consumables on Amazon is a good chance to build a business because of repeat customers and Amazon’s reach. But, it’s not super easy because you need to learn the platform, manage stock, and compete with other sellers. It takes work and learning, but can be worth it.
Making money from selling consumables on Amazon isn’t instant.
While the opportunity is good long-term due to repeat customers, expect a period of learning and investment before seeing profits.
You’ll need to invest time in understanding Amazon’s platform, managing inventory, creating effective product listings, and potentially spending on ads to stand out from competition.
Therefore, it will likely take some months of consistent effort and learning before you can expect to see consistent profit from this venture.
