Pay-per-click advertising is a great way to drive traffic to your website, but it can also have a downside. If not used carefully, PPC can cannibalize your organic traffic, resulting in higher costs and lower sales. To avoid this, it’s important to understand how PPC works and how it can impact your organic traffic. In this episode, we have Liran Hirschkorn, to present case studies that show how paid advertising may negatively affect profit margins if left unchecked, and tips to prevent this. By taking these steps, you can ensure that your PPC campaigns are complementary to your organic SEO efforts instead of cannibalizing them.
Topics Covered in This Episode
- About Liran Hirschkorn
- Case 1: From 30% ad sales & 70% organic sales to 70% ad sales & 30% organic
- Case 2: Understanding if you are cannibalizing your organic sales, and things to evaluate
- The Good Ratio for Organic and Advertising Sales
- Double Attribution and Amazon Marketing Cloud
- Merchant Processing & Fulfillment on Shopify and Amazon
- Question & Answer
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[00:00:00] Do you want your product seen by more buyers on Amazon, Etsy and other marketplaces? Do you want to get more traffic, make more sales and scale your brand? Welcome to the Signalytics Podcast – Signal Code Unlocked, where we discuss what signals are needed to send to your customers, to the algorithms, to the ad platforms in order to get your product seen, converting and profiting fast. With your host, former top 50 seller on all of Amazon, the Professor Howard Thai, this is the Signalytics Podcast – Signal Code Unlocked.
[00:00:38] All right. Hello, and assalamu alaikum everyone. And welcome to today’s podcast. And we have Liran here today. Thank you so much Liran for joining us today. Thank you. Thanks for having me on. Awesome. Thank you, Robert. This my, my pleasure. This is my, this is our podcast. Of course I have to be here. great. Awesome. So Lauren, we would love to have a little bit your introduction first, and then we will move on to topic.
[00:01:08] Okay. Sure. So I started selling an Amazon in 2014, built some of my own brands today. I still partner on one brand. And the last few years, I focused on helping brands scale on Amazon with Incrementum Digital. Primarily we help brands with Amazon advertising, DSP listing optimization, influencer, external traffic.
[00:01:32] And, you know, we’re managing millions of dollars a month in, in ad spend across many brands. So we get to, you know, we get to have certain insights, you know, into accounts that could be helpful. All right. Awesome. So like let’s move to today’s topic because it is interesting for everyone who is watching. So please let us know what you have today for us.
[00:01:58] Well, I think I sent you like several things that you know, that we can, we can talk about. I think one of the things that you highlighted here was the, you know, PPC cannibalizing Organic sales. So I’ll share a couple of interesting stories. About one about cannibalization and then you know, how to, how, how to look at it.
[00:02:19] One interesting story is like we, we audit a lot of, a lot of accounts typically. Almost always before working some with someone will audit their ads account and we audited an account. And one thing that I saw was really interesting. One of the things that we look at is 12 months of history. And we look at the percentage of sales of advertising and percentage of sales of organic.
[00:02:43] And what was very interesting about this account was that in 2021, they had about 60 to 70% of their sales coming organic and about, you know, 30 to 40 coming from ads. And then as we look at this year, most of the months, they had 60 to 70% of sales coming from ads and about 30% coming from organic. And we just had a meeting with this client maybe it’s a few weeks ago
[00:03:10] We audited the, we audited their account when we weren’t working with them. Now, they started working with us and I said to them what happened in January. Because something must have happened like your sales shifted from, you know, a lot of sales on organic to a lot of sales on ads. As a result, your TACos is higher, you know, and you have less profitability in the business.
[00:03:32] And he said, that’s a good question. In January, we decided to take one of our, like their top product, which is mainly driving all the sales. And instead of having eight different listings. They merged all the designs into one, so into one listing. So basically they, the product they sell is like, like an alarm clock for kids and they had different designs.
[00:03:56] Right? So imagine one is a puppy and one is a bear and one is a whatever Mickey mouse or whatever, right. Different designs. So, this is not one of those things where it’s clear cut that you should have separate listings or variations. You can kind of go either way. It’s not like size or color that I would say should generally be variations.
[00:04:16] And you can kind of go either way with it, kind of like somebody selling Walmart, you know, you’re gonna have people have different designs on one listing or they have separate listings. So they combined all the listings and they ended up, you know, the reason they did it is to consolidate all the reviews and they ended up having about 5,000.
[00:04:32] But I think one of the unintended consequences that happened is that they started to lose a lot of real estate on the page, especially this brand too, because they have, they’re ranking well organically among those listings and they had a good amount of branded searches. So if you think about your branded search, what happens when you lose real estate?
[00:04:56] So now when somebody’s searching the brand name, instead of seeing, let’s say, four spots at the top with their paid ads and then another eight spots with organic and taking up a good percentage of the top of the page. Now they’re seeing one paid, paid post, and they’re seeing one organic because when you have variations, you cannot, Amazon will not show more than one variation organically, or, and they won’t show more than one variation on paid.
[00:05:29] So the most you can have is, you know, maybe the top sponsored brand spot, top sponsored product spot and maybe a top organic, but now you have a lot of competitors. And if you’re getting branded searches and you have a lot of, you know, competitors selling similar products at a lower price, this is like the brand.
[00:05:47] And then there’s a lot of lower cost competitors from, from, from China and elsewhere. And so people are searching for it. They see something, they might not even realize that it’s a different brand. Because, it looks kind of the same, you know, and there are other brands with good reviews and they just lost, you know, a lot of, a lot of organic sales and more sales went to their, went to their, you know, PPC because the people that were looking for the brand, I guess, saw the brand at the top spot and clicked on it.
[00:06:15] But maybe didn’t see it in the rest of the page. And so this is definitely one. That you know, I’m not saying that you should not consolidate listings for the purpose of review, but you should understand what is your current ranking across the ASINs. If you have some ASINs that don’t rank well at all right, that may not be bad to take in combined, but if you have some ASINs that are ranking really well, you may not wanna lose that real estate.
[00:06:41] So my advice to them was what you should do now is start to separate all them and kind of see what, where you are. For example, they have four and a half stars plus, but if you have now, some of them that end up separating and they have less than four and a half stars, well that you may want to combine with something else to bring it to four and a half.
[00:07:04] If you have some that have lower view count that you may wanna combine. But if you have some that are ranking really well, you wanna leave them. And so the end result, what I told ’em to do is they need to test and maybe the end result will be not separating it back to eight listings, but maybe they’ll have four or five listings.
[00:07:21] And you know, one or two will have, you know, a couple variations they’ll end up taking more real estate and maybe benefiting from the ones that had low, low review count. So this is one case and I’ll share one other with you. This is one case where you wanna think about what are the consequences. It’s not always a no brainer
[00:07:39] To combine listings. And it’s also not always a no brainer to separate the listings because once you separate, you have to see what you’re, if you lost any sales due to conversion rate, if you lost reviews by separating listings and you got more real estate, did you also lose conversion rate? I think in their case, a lot of their variations already had like a thousand or close reviews.
[00:08:00] So I don’t think they gained a lot in terms of the conversion. And a lot of people only saw one design, especially when the product is a design kind of thing, you want more of them to show up? I, I was just having a conversation yesterday with a brand that’s launching innovative product and actually the, the product that they’re launching, they have patent on.
[00:08:19] It’s kind of cool. They’re launching a wall art, right. Like you see a lot of these wall arts, but they’re they’re design. They have a Bluetooth speaker on it. Okay. So you can hang it on your wall. And it has a Bluetooth speaker. They have a patent and they have 54 designs. And one of the things we’re talking about is launch and launch budgets.
[00:08:40] And should you launch on one listing with all 54 designs and should you launch separate and there’s no clear cut answer. I think you need more budget for sure. If you’re gonna, if you’re gonna launch it with separate listings. But one thing for sure is it’s a design based thing. And when somebody searches, if they don’t see a design, they like in the search results, they’re not gonna click and they’re not gonna see the other designs.
[00:09:00] And so this is something you really need to think through. And I, I think our answer initially because of budget will be to launch one listing, but the goal will be to overtime, to, you know, to separate them because I think the only reason to do it is because of budget and consolidating reviews, but it’s not the best approach.
[00:09:17] If I had the budget, actually, if they had the budget, I would launch maybe launch it by size or by, by something like, you know, that maybe have six or seven listings instead of, instead of one, at least, and maybe eventually 54. So that’s one case. I’ll share another case with you where you wanna understand if you are cannibalizing your
[00:09:39] Organic sales from PPC and what are some of the things you wanna evaluate? So the first thing is I would say that there’s a good chance that if you’re not like at the top of search for both ads and organic, let’s say you’re, you know, top two positions for ads. The reason why I say two is because mobile only shows the top two positions, and then maybe you’re on the top three
[00:10:06] for organic, you’re probably not cannibalizing your sales with ads from organic, but if you are in the top paid spot and you’re also among the top two or three, organic spots, you might be cannibalizing sales, right? You might have just given Amazon more money towards sales instead of organically. And these are some of the things we want to test.
[00:10:26] So we have a client that came to us and when they came to us, they weren’t, they were a supplement brand. Somebody, somebody, uh, new owner bought. Brand’s doing about 2 million a month in sales and doing very well. And they’re not spending a lot on, weren’t spending a lot of ads on all the products. And one of the products had a very low TACos and they said, okay, you can get a little more aggressive.
[00:10:47] Let’s kind of test it. So we took this one keyword that was the main keyword. And previously they weren’t at top of search and we got more aggressive on it and we drove more sales. And what we, what we wanted to understand is are we, you know, cannibalizing sales? So we drove more sales. So we knew we’re not cannibalizing a hundred percent of the sales because sales were higher, but also understanding what is the cost.
[00:11:12] So in their case, what we did was we looked at brand analytics. So one of the benefits you have is if you are at the top and you’re at the top three, most clicked, you can use brand analytics to understand what’s happening. What are the changes? So before we, before we did this. They were getting about 20% of the conversions on the page by being in the top spot, number one spot organically.
[00:11:33] And after we did this, they were getting about 40% of the conversions on page one. We still maybe had cannibalization, but they were getting, we saw that they were getting incremental sales, right. And that the sales were growing. The next thing they wanted to analyze though. And what they did was we ran this for a month and they compared it to the month, month before, and they analyzed it and they said, yes, we are getting more sales, but we are not as profitable.
[00:11:59] We’re not as profitable. Even though we’re getting more sales, the cost to get those sales is too much. And the ACOS was pretty good. The, ACOS was like thirty, which were, supplements really good, but they, they. One of the things they had was overwhelmingly more reviews than the competitors.
[00:12:14] Okay. And that may be a factor too, because you know, let’s say you’re gonna go for the top of search. They had 3000 reviews and the other four, there had one had like a thousand, then the other two had like 600 and 500. Okay. And then they’re in the number one spot organically. So people are generally gonna scroll.
[00:12:32] And if they see in the top four spots, 500 reviews, 600, 700. And then the first organic is 3000. They’re gonna click. But if they see in the sponsored somebody else who has 5,000, right? You may lose them to that one. So one of the other factors and things you wanna monitor is who are your competitors? So what we did was we looked at the before and after they did drive more sales, perhaps some was cannibalized, but at the end of the day, they looked at their overall profitability on that product and the profitability, even though they had more sales, the profit went down because of the increased spend on advertising.
[00:13:03] And so what we did. We said, okay, what we’re gonna do is we’re going to lower the bid intentionally on this keyboard, and we’re gonna make sure that we are still on page one with the ad, but not at the top of search. So we’re further down the page. And now the only time somebody should be clicking on the sponsored is if they already passed the organic position, right.
[00:13:24] And it’s really only incremental sales and we’re spending less money on the, on the ads. So you can use basically brand analytics. And you can test. Right. And ultimately it depends on several factors. Like we said, what are the reviews of the top competitors? Are you in those top two spots paid? Because those are the ones that kind of show up on top, on, on mobile, the top four on desktop and the top two on mobile.
[00:13:48] And what is your goal? Is it growth or is it profitability in their case? If the goal was growth, I mean, they were still making a good profit and we were growing sales, but they were already the. They don’t need to be extremely aggressive to go after other people. They already had a couple thousand more reviews than the next competitor.
[00:14:09] So they didn’t, they were more concerned with the profit. And so you have to understand, answer the question and then kind of make a decision and through testing, you can, you can kind of see if you are cannibalizing. So I think you want. Look at your sponsored rank and keyword and organic rank positions and understand, you know, if you’re cannibalizing and then decide what your goal is.
[00:14:33] And then also if you’re gonna AB test, run something and check them before and after, and test overall profitability of the account and, and what, you know, what you got out of it. So this is one example. The other example was you made some kind of change in the business. You didn’t pay attention until six months later when we pointed out to you
[00:14:53] Why your, uh, why PVC sell 70%? Right? So when you make a change, monitor the results after, monitor the metrics, the TACos, the PPC sales, the organic sales, and then you’ll see that the change you made could have had in effect. And again, you, you may want to test the other the other way around. So these are, these are a couple examples of, you know, things that sellers do and sometimes are not necessarily paying attention.
[00:15:19] We’ve definitely seen cases where people get more aggressive and their top line sales don’t grow as much, but they’re just moving money from organic to paid, right. Because there’s so many paid spots. So you wanna make sure you’re paying attention to that and you’re not just giving Amazon money and making your business less, you know, profitable.
[00:15:39] So understanding the metrics and what your goals are, are really important. All right. Great. So this is a great info and guys, please, if you have any questions, please put down on the comment section and we’ll be taking care at the end of this podcast. So Liran like, what is like your take on, what is the good ratio between organic and advertising sales?
[00:16:04] It’s a good question. And it’s a question that is evolving. And the reason why I say that is if you would’ve asked me two or three years ago, I would’ve given a different answer than I’m giving today because Amazon is, definitely prioritizing advertising and there’s just more ad spots, more, more placements.
[00:16:25] So In the past, I would’ve said probably shouldn’t have more than 50% of your sales coming from ads. But today I can say more and more of accounts that we see have 60% of sales coming, coming from ads. And so I don’t think it’s necessarily in all cases, the seller’s fault. I think it’s, Amazon’s intentional.
[00:16:48] This is Amazon’s goal, you know, more, more pay to play. We do see some very strong brands. Ha still have 30% of their sales. With, with organic too. And actually, I wouldn’t say that’s always the best goal, because what if you can go to 35%, drive a lot more sales and generate more profit. It’s also possible.
[00:17:07] So you need to find the right balance. But I would say that, you know, if you’re over 70%, you probably have problems in your business with TACos and profitability and that’s, you know, probably not, not healthy. I would say ideally you know, 50 to 60% is what you have for paid and organic should be, you know, 40 to 50% if it’s better.
[00:17:33] Good, but it’s gotten harder. So, you know, I don’t want somebody watching this to look and say, Hey, I have 65% sales in PPC in my business, like what’s wrong. Amazon has made it. Amazon has made it a lot more challenging if you have a low ACos, which means you probably have a lower TACos, like. Potentially fine.
[00:17:54] But if your cost to acquire customer is high and you don’t have like repeat purchase, then you’re probably gonna have some, you’re probably gonna have some margin issues in, in the business. So, you know, it’s getting, getting get, it’s getting more challenging for sure to bring down, you know, that number.
[00:18:13] All right. This is where this is also where if you are in that position, testing is definitely important. What happens if you do decrease your spend by 10%, right? What happens if you, you know, what, what are, what are the impacts and some of the best time to do that? For example, if the summer is a slower period for your Brand, that’s pretty good time to test without, you know, necessarily a lot of, a lot of risk, right?
[00:18:38] So you shouldn’t, you should kind of be testing, especially if your TACos is, you know, 20% plus, and again, you don’t have like a repeat purchase in the business. You know, you wanna see how you can bring that down. I guess, I, I kinda want to see your take on this TACos. What is the TACos? Everyone used to say like 10% TACos.
[00:18:59] Yeah. What would you, what would you agree? Would, would that be nowadays? I mean, yeah, so it’s kind of the same thing. Like in the past, I would’ve said 10% TACos and today I’m seeing a lot more people have a TACos, so our average, I’m gonna try to look at it, try to look at it. Now I talk to you, but I think our average across all our clients is about
[00:19:19] 13 to 14% is the, I’m just looking at the last month across all our clients, which is, which is a pretty high, like our client sales in the last month are 68 million dollars with the TACos of 13.4. So just as an example, right? But that, that crosses many categories, some less competitive, some more competitive, I would say, you know, I’m seeing a lot of people on the 15 to 20% range and that’s become more normal today.
[00:19:49] So again, I would say if you’re over 20 and you’re, and you’re not in high growth mode, right? Like you should, you should analyze it on a product basis because if you’re launching a lot of new products, those are gonna have 40, 50, 60% TACos in, in the beginning, in the first month. So I would make sure you’re looking at it on a product level and on a product level, more mature products.
[00:20:09] Generally today, I would say 10 to 20. And I, I see, we see a lot between 15 and 20. Again, our average is 13, across across all our, all our accounts. So if, if you have mature products, I would say definitely want it to be under 20%. yeah, like before, like you could actually see a lot of organic positioning on your PDP product detail page.
[00:20:33] like now it’s like, I can’t even find anything anywhere that we can find organic anymore. Right. So, you know, I don’t see where else can we, that’s why you probably see the TACos or us going up or more and more because you know, there’s nowhere else. You can put our, our listing without having to pay.
[00:20:50] And like, you, top of search, what is on top of search? It’s only like display your ads, your brand display ads, and also the, the, the top four, three sponsored ads. Right. So, yeah, it’s definitely getting more challenging and I don’t think it’s going away. You know, I think Amazon, you know, Amazon wants to have more,
[00:21:13] More advertising, you know, maybe buy with prime is another avenue to get more data and run more outside traffic. Like Amazon is doing a lot to increase their ad revenue. One other thing I wanted to add was that another place you could be cannibalizing sales from organic to BBC is on sponsor display, especially if you’re using NDSP, especially if you’re using VCPM campaigns that are impression based.
[00:21:37] So if you’re doing retargeting, let’s say, and it’s impression based. You are scrolling, you see a product, maybe you add it to cart or you see it. You get distracted. You’re on a website, whatever you, or back to Amazon, you see a you’re on another listing. It displays on displays on top is the product you saw before, two hours later, you come back, you didn’t click it two hours later, you come back and you buy the product since you’ve viewed.
[00:22:07] That goes, that that attribution will go to sponsor display or DSP, not organic. Now the question is, did viewing that ad influence you to buy the product? Sometimes yes. Sometimes no. Right. So there is some cannibalization going on. If you do DSP, you can minimize that by negating retargeting for 24 hours or 48 hours.
[00:22:34] From the time somebody viewed the listing in sponsored display, you cannot do. So if you’re using sponsor display, VCPM, there’s probably some, or a lot of, for retargeting, I would say, not necessarily, you know, I, I would not use VCPM so much for like, I would not use it for product targeting or, or anything like that, but for retargeting, that’s the only option.
[00:22:57] And again, there’s some level of cannibalization. Now, if you’re seeing amazing RoAS, if you’re seeing a 10 X RoAS it’s good, because let’s just say is cannibalized. You’re still getting a five X return, but if the raw eyes is not that strong, I would say test, pause it and see if you increase your top line sales at all.
[00:23:20] Right. And if you’re not increasing your top line sales, then you know, it’s probably a lot of cannibalization going on. So that’s another area that can be moving sales just from, from organic to, to paid. That should, should really be organic
[00:23:38] I see, you know, how like DSP and PPC back in the days there, there were this thing called, you know, attribution was kind of like of getting double attribution for both. Do you see that still? So there’s no double attribution meaning today. You can only, there could only be attribution to one, one or the other.
[00:23:58] Amazon is trying to solve that with the Amazon marketing cloud, which supposed to show you the, the full yeah. Yeah. You’re you hear me? Yeah. I could hear you now. Yeah. I’m muted today. Amazon has this Amazon marketing cloud, which it’s only if you’re using like, really effect, really helpful if you’re, if you’re doing like OTT or online video ads or very top of funnel things, but essentially today you don’t have necessarily, always the full story, meaning it doesn’t get double attributed.
[00:24:30] So let’s say. Somebody searches some, let’s say you’re doing some audience targeting in DSP. Somebody reviews your ad. They then go to Amazon and they search your brand name. They click on your sponsored ad. The attribution goes to sponsored ads, but you won’t necessarily know that that person started with an audience targeting DSP ad.
[00:24:51] And what happens is if they go to Amazon, find a listing organically. And then they get, then, then it will get attributed to, to DSP. However, if they go to Amazon, find the listing organically, then they get retargeted with a bottom of funnel retargeting ad and buy the attribution will go to the bottom of the funnel retargeting and not to the top of the funnel where they started.
[00:25:15] So that, that means that when you’re doing this top of funnel advertising audience targeting online video ads, you should not look. The metric that you should be looking at is not RoAS. it is people look at, for example, estimated cost per detail, page view. And we see basically somewhere between 50 cents to $2 for a detail page view from top of funnel, or that’s kind of a, that’s a good range to, to be in.
[00:25:41] It’s kind of like cost per click, right? That’s, that’s a decent range depending on your niche to be in. So you should be looking at more of how much does it cost me to get somebody that’s looking at this to actually view my page, not RoAS because the RoAS Attribution will often go to retargeting or sponsored products and not necessarily to, you know, to the top of the funnel.
[00:26:02] I think as the Amazon marketing cloud develops more and more, it will come more widely available and you’ll be able to see that that person started with, you know, top of funnel. So that’s kind of what Amazon is rolling out. This Amazon marketing cloud that you may have kind of heard about to, and essentially the goal.
[00:26:19] Why is Amazon doing it? They want you to spend more money on top of funnel DSP, but if you don’t understand the full journey, you may not realize that that person started with, you know, viewing this ad and, and ended up buying the product and attribution goes somewhere. So, but you know, to kind of add to that, I would say that top of funnel advertising is more for people who are very focused on growth on top line revenue and brand awareness and not so much RoAS focused.
[00:26:45] So for example, we have a client that is funded by venture capital they’re in the pet supplement. And they’re spending money on top of funnel now in pet supplements to be acquired, actually, they don’t look at your, I mean, they look, but you can be acquired in a pet supplement brand just with revenue and EBITDA is the secondary measure.
[00:27:07] The, the valuations are more based on revenue than, than EBITDA. So they’re really focused on acquiring customers. And also they’re getting that brand visibility they’re in Target. They’re in, in they’re in some other they’re in some other stores they’re, selling on DTC. So they’re, they’re, they’re kind of, kind of this overall goal goal of brand awareness.
[00:27:29] And one interesting thing with DTC is that you can also drive traffic from Amazon audiences to your website and kind of what’s cool with the buy with prime is that, you know, now you can get access to buy with prime. You can actually target Amazon audiences, send them to your landing page on your website with buy with prime.
[00:27:49] And you’re targeting Amazon customers to buy on your DTC website. And you’re sending them to that page and you can put a pixel on your site too, and then you can retarget those people as well. So it’s gonna get pretty cool. You could always do that, but now with buy with prime, you can actually send Amazon customers to a buy with prime page and that, and that’s pretty cool.
[00:28:05] I think I I’m sure brands will, are gonna start sort of testing that and you can use that Amazon audience shopper data, which is the best data anybody has on shopper behavior, better than Facebook, better than Google is, is Amazon. They know everything you buy, they have your history. They know if you just had a baby, cuz you started buying formula or right.
[00:28:26] They know everything about you and they know what you watch on prime. Right? Like they, they know so much about you. They probably listen to your Alexa at home. Right. So, you know, doing this I think is gonna get interesting with, with DTC and buy with prime, you know, together. So again, Amazon. Taking more, more of the pie of not just, you know, Amazon shopping, but overall e-commerce shopping.
[00:28:51] So, so maybe you can kind of like, uh, explain to your audience, your last post recently was regarding like a marketplace pulse about Shopify and Amazon. Maybe. Yeah. Maybe some of our listeners haven’t heard it yet. So maybe you could talk about it. Yeah. So some interesting things have happened right. In the last let’s say six months.
[00:29:08] So one of the big ways that Shopify makes their money is from merchant processing. Okay. They’re charging, you know, I mean, they don’t get all this, right, cuz money goes to visa, MasterCard, and people in between. But you know, every time somebody shops on the site, there’s like two point between two and a half and 2.9% fee plus 30 cents or something per transaction that is charged.
[00:29:33] Shopify gets part of that money. And a lot of the way, a lot of the money they make comes from that merchant processing and then Shopify also bought Deliver this year. So one of the things they wanna monetize is fulfillment and making money off storage and fulfillment and giving access to more Shopify sellers to, you know, fast shipping, right through deliver, fast fulfillment.
[00:29:58] So Amazon in the meanwhile goes and launches, buy with prime. What is buy with prime? You could take this. Put it on your website and, you know, you can always do multi-channel fulfillment and ship from your Amazon inventory. But now if it’s a prime customer, they can see buy with prime, click a button, check out, and then Amazon will and check out with Amazon pay.
[00:30:20] And Amazon will fulfill that order in one to two days. So what’s essentially happening here. Number one, Amazon just took merchant processing away from Shopify and took, took it away. Right? The merchant processing now gets done by Amazon. Number two, Amazon just took away fulfillment from, from Shopify, from deliver.
[00:30:37] And now they’re doing the fulfillment and number three, Amazon is taking fees for this. They take a fulfillment fee, they take the, they’re doing the merchant processing and they’re also taking a small percentage of the sale. I can’t say exactly cuz it’s under NDA, but if, if you message me and we talk about it, we, we can talk about it, but Amazon’s also taking a small percentage of the sale.
[00:30:57] So Amazon now is going to take a piece of all of eCommerce. And they’re taking away that revenue source for Shopify, for merchant processing and fulfillment, and they’re taking a piece of, you know, they wanna take a piece of the whole pie. They don’t wanna just be, you know, Amazon now another theory I had Paul Rafelson, an attorney who’s fought Amazon for on a lot of things in court, like the sales tax and, and when they go after people for price gouging and stuff.
[00:31:25] And one of the things he said, which I asked Amazon about, and the guy said, well, probably is true, is that he said, one of the things, one of the reasons Amazon opened up this buy with prime to merchants online is that essentially with the regulators on top of Amazon, it’s like Amazon owns the railroad. Okay.
[00:31:44] If you think about like, you know, years ago in, in the US, and you had these oligarchs, uh, a few people that owned kind of oil and railroads, and it was, it was monopolies, right. They own own the railroad. So Amazon kind of own operations and fulfillment really are eCommerce, right? They, they developed the entire infrastructure and the government could make the case that says, you know what?
[00:32:08] You can’t own the railroad. You need to, we need to break this up and you, and you need, you need to make this widely available to everybody. So now essentially it’s a little bit of like getting the regulators off our back, look prime – it’s available to everybody. Now, anybody can use prime. Our fulfillment’s available to anyone.
[00:32:24] If Macy’s wants to compete with us and wants to use our fulfillment centers and get one to two day shifting well, Macy’s can do that. We’ve we’ve opened it up. So it’s another kind of, part of the strategy and it’s really going against Shopify. So Shopify, now we we’re starting to see them make some moves.
[00:32:40] Like almost like they’re they’ve said in the past, they will never become a marketplace. All the moves that they’re making are heading in that direction. Okay. They they’re trying to the, what that marketplace post article was about is Shopify is starting to brand Shopify, which in the past, they were always in that underneath, behind the scenes.
[00:33:01] Right. They’re like just the platform, consumers don’t really know Shopify, only the merchants do. And they just think they’re on a website, right? They don’t, they don’t know that behind everything is, this is this platform. Now what they’re doing is you know, they’re gonna give incentives to customers. If you use shop, you know, if you use the app that to, to, you know, to, if you use the app to, to buy stuff and discover stuff, the consumers are gonna get more benefits and they’re gonna, they can feature your store and everything else.
[00:33:29] One thing they’re doing too, is they’re launching something called Shopify audiences. So Shopify audiences, again, they said, they’re always gonna be behind the scenes. They’re not in the advertising business, but now they’re basically going to let you take advantage, especially because I think a lot of Shopify sellers lost a lot when Facebook made these privacy changes with iOS, iOS made these changes.
[00:33:52] So now there’s Shopify audiences where Shopify says, we understand the behavior of the consumer that are shopping on Shopify. We know that these people are, you know, they’d buy baby stuff or they buy this, right. Just like Amazon has that data. They’re gonna like take that data and then upload it, connect with, with Facebook, let’s say, or TikTok and be able to target those, those audiences.
[00:34:15] But a lot of the moves that they’re making, they’re trying to highlight sellers in the shop, in the shop app for consumers that have one to two day shipping and give them like a badge and, and all this stuff, because they, they want sellers to start to adopt Deliver, and all these things are. Like, I feel like before it’s too late, right before, like all these people implement, buy with prime and Amazon kind of takes a lot of market share and the merchant processing and the, and the fulfillment, it’s kind of, it’s kind of a battle right now is kind of the way, the way I see it.
[00:34:49] And I wouldn’t be surprised if two or three years from now Shopify has a marketplace. Somebody, somebody commented. I think it was Steve Simonson, on LinkedIn. Who’s coming out with the course of how to rank on Shopify. Right, because it seems, it seems like, like, like, like things are evolving there where they’re doing more and more to make Shopify brands and maybe, yeah.
[00:35:15] Maybe have some kind of advertising, right. Top of search on the Shopify app or whatever for searches and things like that, where there will be some kind of ranking and ads and those things. And they really get to go up against Amazon. Right. If they, you know, if, if they do that. So I think, I think things will be getting.
[00:35:32] I think things will be getting interesting, interesting. There, I saw one thing you posted too, was about NFTs and, and products. Well, Shopify already allows you to sell NFTs through their platform. And I posted there a friend of mine, David Ghiyam, who is co-founder of Mary Ruth organics, who just had Gary Vee come on his board.
[00:35:51] And now there’s I posted a link there on your, on your post. Now, Gary Vee on their site, there’s a page Vee friend plus Mary Ruth organic. She like signed a bunch of bottles and like yeah, 10 bottles. Yeah. And, and if you get one of the bottles with like a signature, you also get an NFT from Gary Vee with it or whatever.
[00:36:11] So like, you know, it’s using really like a case of using NFTs to drive, you know, to drive sales and Shopify already has some of these capabilities. I can see that, you know, that side of things adopting already there faster than Amazon. Right. So I think things are gonna get interesting over, over the next couple years between.
[00:36:29] Between Shopify and Amazon. I mean, for Shopify, you know, they probably brand themselves as not being a marketplace so that they can probably eventually do like, have like, like the government office, their back for a while for monopoly and stuff as well. So you, you know, that’s why, probably reason why Shopify letting them, letting Amazon, do the buy with prime well, I don’t, I’m not even sure if Shopify can control it.
[00:36:56] But, you know, Shopify also risks, losing merchants, like big commerce, you know, allows it. So, you know, if they try to block it. And the other thing is that, you know, Shopify has always said, we’re not a marketplace because they’re kind of the anti Amazon, right. They, they always said they don’t wanna be a marketplace, but a lot of the steps they’re taking indicate that at some point they may pivot, but imagine if you could be in a marketplace and own the costumer, Right.
[00:37:24] Like, what if it becomes a better version of Amazon where, okay, it’s a marketplace, but we don’t suspend you. We, you know, like you still get the customer email, you know, and Shopify creates this brand where through Delivery, you can get one in one in two day shipping like Amazon and you get to keep the customer data.
[00:37:44] I don’t know, could, could, could get, could get interesting. So, you know, we’ll see what happens. They, Shopify has said several times, they don’t want to become a marketplace. But they keep taking steps that indicate that, you know, starting to brand themselves to consumers indicates to me they wanna send consumers more to, to the Shopify app and to things where there is, you know, component of, of marketplace.
[00:38:09] Zeeshan. Do you have any questions? I don’t want to take up all the questions here on our side. No, no. I think like we have 15 minutes left and let’s take some audience questions. So Liran. So can you read the question so that, yeah. What about products with limited keywords? 80% of the sale comes from one keyword and I’m ranked in the top five.
[00:38:32] I have to run ads against top research. If, if I don’t, I lose sales and if I do, I lose profits, what, what is, what does he recommend? I mean, look, I think, I think products with limited keywords in general is a. You know, it’s obviously now it’s late cuz you already have the product, but is this, I, I would also ask you, is this a keyword that has like a ton of traffic or is this a very limited product?
[00:38:57] But so, let me just give you [00:39:00] a background. What is happening here in Pakistan? Yeah. So you can have a better idea on it. Like people over here are launching like low price products, like six, seven, $8 price point products and they do, they do have, no one is no one is already shaking his. Yeah, and they have limited, like they have limited keywords and the, the keywords on which the top, like one or two has the most search volume.
[00:39:27] And on top of that, the another problem is the profitability in terms of dollars is really low. Like the PPC is very challenging on very little low products. Yeah, exactly. Like the profitability is $1 and the PPC, like PPC of the keyword is like $3, two and half, even $5. I would say in this case, I would say just focus on profits.
[00:39:51] I mean, doesn’t make sense to, you know, unless again, unless you’re trying to grow still like the reviews and you know, everything else, but if you already have that, just focus on, you know, not being in the top of search for, for ads, if it’s too expensive, pull back and, you know, see if you maintain your, maintain your ranking, you know, and, and focus, focus on, on profits. Because you kind of said, you know, unless the profits are good enough, if you are still on top of search, but if you’re losing money or making a very, very small margin at top of search, then I would say, you have to pull back from that.
[00:40:29] But, you know, maybe product targeting is, is another, is another option here, here, as I’m just thinking out loud, if there’s limited keywords, but there’s competitors, there’s a lot of competitors. Let’s say the keyword has a lot of search drawing. Then I would try product targeting. It could be cheaper, sponsored display, product, targeting, sponsored product, uh, you know, product targeting and see if that’s a cheaper way to, you know, to get sales.
[00:40:51] But in general, I don’t think this is a good model, launching products with the low price. Agree. It’s very, very difficult. And you’re gonna be up against a lot more Chinese sellers. Anybody can enter your market at any time because you know, with a thousand bucks I can source a bunch of inventory. So it’s not a, I, I don’t think it’s a good, it’s maybe good to get your feet wet, not put a lot of risk in the beginning and learn, but after that, you should get out of that of markets like that.
[00:41:19] It’s not, you wanna follow what other successful sellers are doing and successful sellers are not launching $7 products. Yeah. So I have been like pitching this for quite a long time here in Pakistan. I understand why, because you know, you know, the, the, the incomes are not as high in Pakistan and, you know, hard to, hard to go source a product where it costs you $10 or $7, five to $7, and you need a thousand units.
[00:41:48] So people are launching what they can. I understand it. I would say you want to really focus on differentiating bundles. You know, don’t launch don’t launch what’s easy for somebody else to launch. I have a question how to target and optimize rest of page conversion. Why is product getting more conversion on product pages and not on main keyword, top of search?
[00:42:10] So that’s a good question. I think it really depends on who your competitors are at top of search and also the type of product it is. One of the things you can look at in brand analytics is look at the top three most clicked. Are they at the top of the page? Are they further down? Is this a niche where people are more scrolling and browsing?
[00:42:27] For example, if you’re in clothing, right? People are more looking at different designs. They’re not, you won’t see the top three generally, unless everyone’s the same, but you generally won’t see the top three getting like all the market share because there’s different designs. With product pages, you can specifically focus and target on products where you have an advantage.
[00:42:49] Price reviews quality. So maybe that could be a reason why it’s it’s converting, but I’ll be one of the things I would look at is what is the, what, what is, what does brand analytics look like? And also make sure that, you know, for everybody else, cause it sounds like you’re doing it. If you’re targeting keywords or if you’re targeting ASINs, look at your placements and, and, and look at the results your placement are getting because it, sometimes you’re targeting ASINs.
[00:43:18] And Amazon is just showing you on keywords anyway. And you’re gonna see when you look at your placement that you’re still getting clicks from search. So it’s not always the case that when you’re some people tell us, you know, I’m targeting products, I’m getting such awesome results. And then we go into the placement.
[00:43:34] We see that it’s mostly keywords. So you need to understand actually where the are. It sounds like you’re, you’re looking at it, but I would say could be, could be the niche or it could be how you are a positioned next to the other competitors on top of search. And if you’re not positioned well, price or view wise, then you’re not getting the conversion.
[00:43:54] You can’t like, if I launched, fish oil, right. And I would put that on top of search, I’m going, gonna get my launch in. Right. Because I can’t compete with the other people on, on top. And so my conversion’s gonna be really low. So you kind of have to see who else is there and can you. Okay. My launch market is UK.
[00:44:13] It’s been nine months. Sales are good, but organic order ratio is 35% only while PPC is 65. Again, something I said pretty common. Although ACos is less than 22, which is not bad, but profits very less. We are not ranked on some high search volume keyword. So to rank on it, we have to spend on PPC extra thus.
[00:44:29] Our PPC would be more high. What should be the solution in this case? So in this case, we generally try to break up the goals into three categories, launch rank, and. Or grow and maintain. Okay. Launch is basically your very aggressive, very targeted initially with your keywords exact match. And the goal is just to rank organically profit is, you know, not really counted and it’s like a first, first month strategy, scale and rank, cuz you really want to grow your top line sales and that’s your, the focus and grow and maintain is like, I kind of wanna keep my ACos the same, but I, I still wanna grow and I still wanna maintain.
[00:45:03] So I would say choose. You know, some keyword, maybe these are not the highest search volu,e, but choose some keywords that you’re gonna go after with top of search that you can get more aggressive on that won’t impact your overall numbers too much. And then the, the rest of the keyword don’t focus on top of search.
[00:45:22] If you’re not getting the, ACos or the, or the conversion, that’s good enough to have that ACos. I mean, I would say overall, your results are not bad and you’re nine months into a product, which is not that long. You also sounds like maybe at, or maybe you, if you were in it to the last Q4, it was more of a newer product.
[00:45:42] This Q4 should probably do a lot better and you can make up some of those profits in Q4. You could probably raise price. You’ll have a better conversion rate, but I would say focus on a few keywords where you can go top of search and then the rest. So don’t do it across, you know, all the keywords so that it doesn’t overall impact your numbers, you know, too much, but 65 35, again.
[00:46:04] Not uncommon, especially the product is not it’s nine months old, so it has some maturity, but depends on how many reviews you have and your ACos is, is good at 22%. So he didn’t mention what his TACos is, but I would say your numbers overall are, are not bad. All right. So I guess that’s it from the audience questions.
[00:46:23] So we have like seven minutes left and then we have, like, at the end, we always ask our guest speaker] to tell about, to tell about what is the funniest thing happened in your Amazon journey? Hmm, wow. I I’ve probably had, I mean, I’ve had, I’ve had a lot of interesting experiences in my Amazon journey, I would say.
[00:46:45] One, it is pretty funny and was also a lesson and it’s easier to laugh about it in hindsight than it is at the time. But in 2018, my myself and the two other guys, we launched, launched a product pool floats. And this was like not, it was a great time like to launch this, to launch this product. And we even made some changes to the product.
[00:47:08] Like we added in an electric like pump to blow it. A lot of them didn’t come with it and you had to buy it separately. And we added it in, we had this like amazing photo shoot of the product in Vegas with like, you know, models and stuff and, and a pool on it. And we did a, we, we ordered the product, we did an inspection, inspection came out
[00:47:27] Okay. And the product comes in. We, we put it up on Amazon. We, we had a few people that we knew kind of leave, leave reviews just to get a few reviews going. And then man sales started to like, come in and like take off. We, we were getting a lot of sales, a lot of, And this was like, probably we probably launched it.
[00:47:46] Like, I don’t know. It was maybe like April or so mMy we had to make a pretty quick decision. Like, are we gonna order more? Because if we still want to get in the season for summer, like we have to order more. Like now it was like maybe March, April. So the season was just starting and we had to make that decision.
[00:48:02] So we said, okay, let’s let’s order more. We put in 30% deposit, about two weeks later, the reviews start coming. So we had a Swan. Okay. And the reviews start coming in with great product, but my Swan is dead and it was basically like a dead deflated Swan laying next to the pool. And people will put these, these reviews.
[00:48:26] And what happened with the product is that people blew it up, for a day or two, it was good. And then it blew up. And we started these, all these reviews came in with pictures of dead swans on, on the listing, which was pretty funny, but basically killed the product. And the lesson that we learned there was that it’s important to understand how to do an inspection the right way.
[00:48:51] So for this product, basically the way to do a proper inspection would probably be to blow up the product somewhere, blow up 10 of them, come back, leave it, come back 48 hours later. And see that’s still alive. Test it, make sure it didn’t leak air, but we didn’t have the, we didn’t have the experience in launching a product like this before.
[00:49:12] And overall, the market had like three, three and a half stars because of like issues like this. But we just started getting like one star review after another and we learned a lesson. It was pretty funny. And we, we had to give up that 30% deposit because we already paid deposit and couldn’t do anything to get, to get it back.
[00:49:29] We actually filed try to file dispute with Alibaba, but we didn’t, we didn’t get our money back. And the inspection that we did initially pass too, you know? So we couldn’t even say like the inspection failed to dispute it. Was it those big, big, huge swans that you sit on, like is like two or three times a human size.
[00:49:46] Yes. Yeah. Big, big swans. I’ve seen those. Yeah. Yeah. Yeah. And they’re, I mean, they’re really popular at the time. There was a brand Kangaroo, which was mostly, probably still, still there dominating, you know, a lot of the niche. But it was, you know, it was, it was basically a lesson on understanding inspections and product quality, you know, better.
[00:50:07] And then we, we never re we never relaunched a product. We, we lost a season and we never relaunch a product. And, you know, also understanding certain niches are, are tougher in terms of product quality, because the overall reviews in the niche were mostly three to three and a half stars. You’ll see that with like balloons and other, other products like that, that, you know, have certain product quality issues that are hard to avoid.
[00:50:27] That was pretty funny. There’s probably, you know, I, I had another, you know, I had another story where I went to, I went to, there was like one of my first experiences going to a factory in China, you know, so I get to the factory and I think, you know, gonna get a tour of the factory and see the employees and stuff, and I get to the factory and okay.
[00:50:47] We get there, okay. Come to the office, we come to the office and they’re pouring everyone tea and we’re drinking tea and they’re, and every time I finish a tea, they pour me more. And more tea were sitting there. And then we, they said, okay, let’s go around. We’ll show you the different machinery. They go around.
[00:51:03] They take us to different machinery, bring us back to the office, more tea, pouring, more tea, more tea. Then they take us to meet the employees. And they had that day, they had a little ceremony that they’re giving certificates, like the best employees of the month. Go back to the office, drinking more tea, more tea, you know, then they take us, take me to lunch.
[00:51:23] When we came back for lunch, bring me back to the office. They’re drinking tea and smoking, you know, which I found pretty funny. And you know, this entire day was basically going between places and back, back to the office, having tea. And then I kind of learned also that the factories will generally try to monopolize your entire day until nighttime until they they’ll take, they took us out at night to some, you know, dinner place I had like, like singing and stuff.
[00:51:45] And I learned that, you know, they don’t want you to visit other factories. So they’ll generally try to monopolize your entire. But they treat you very well. So this is, I guess, let’s go back to the tea part because usually the, did you
[00:52:00] do that two finger thing? Like gimme more and more, or, or I don’t know, but you know, I think I, it was these small cups, you know, Every time I drank the tea, they just, they just poured me more tea. Because in the Chinese culture, if you, if they, you drank it and then they don’t have any more tea on there, then they think that, you know, they’re not, they’re hospitable as, as they should.
[00:52:21] Right. And then later on, they, they also want you to be having fun. So then at the, at nighttime, right, they wanna take you out to, to, to, to drink and stuff. Usually it’s about drinking. They wanna get you drunk. And see usually for like big sellers, bigger sellers or something that, or bigger opportunity they wanna get you drunk so that they can kind of understand what kind of person you are.
[00:52:40] And in case, in terms wise, you know? Yeah, you trustworthy are you gonna be get drunk and you’re because when you get drunk, your real personality should come out. Right. So they wouldn’t understand what, who you are. Yes. Yeah. And I remember they, you know, they brought out in several places, they brought out special cold beers because they drank the beer like room, room temperature, I guess, for, for health reasons, not supposed to be as good to drink, to drink cold.
[00:53:05] So yes, it was like a special treat, you know, to, to have a cold beer. But yeah, we did, we did go out drinking. Yeah. Like the younger crowd nowadays, they drink cold beer, but the older crowd, like maybe the thirties high end thirties, they, they drink the warm beer still, right. Something with the chemistry. It takes energy for your body to die, to cool down, warm down the beer or something.
[00:53:28] I think in Chinese medicine, generally cold is not considered healthier or yeah. Something to that effect, but yeah. Had a lot of good, good and fun experiences in, in, in China. All right. All right. So Howard, you wanna, Well, let’s just really do a serious question. but we won’t have much time left, but what do you think about this thing called relevancy with PPC and also organic?
[00:53:56] What do you think of them? Are they two different things or one one thing like one is for PPC relevance, and that you see with you’re lowering your, your, your bids or your. For, forbid as well as, or organic relevancy specifically, specifically what meaning for ranking wise for, I mean, lowering your price.
[00:54:20] I, I think we know that price is a factor in the Amazon algorithm, so I think it helps. I think it helps you with ranking lower price in general. I also think Amazon vendor gets some favorability in, in rankings too. Amazon is a seller. In terms of PPC relevancy, you do get better cost per click when you have a better clickthrough rate and conversion rate, because ultimately Amazon wants.
[00:54:46] The best product to show up for the customer, right? So if you have a better click through rate and conversion rate, you could be right next to somebody else. You could be in the number one position and paying less than the person in the number two position, because you get a better clickthrough rate and conversion rate.
[00:55:02] And at times we’ve seen a difficult sometimes to even get there. If there’s some people there that have really good results, it takes us more time in terms of bidding, aggressively. Until we can replace somebody and get tested for the spot because there could be some people there that are, we’ve seen this with sponsored brands that have a really strong position and it takes time before Amazon will show our show, our, our ad there.
[00:55:26] So that’s, I guess what I can say as far as like, you know, relevancy, I mean, organic, organic, obviously the same, right? Better conversion rates, better sales through keyword, better conversion rates will, will lead to better. Zeeshan wanna close up? Yeah, yeah. Yeah. We are like running out of time. We have actually lost over time.
[00:55:47] So thank you so much, everyone for joining us today and thank you so much, Liran, for, for coming and sharing the awesome, awesome, like information with us today. Thank you. Thank you so much for, for having me on. I really, I really enjoyed it and yeah. Looking forward to listening to the other, to the others.
[00:56:06] All right. Awesome. Thank you. Thank you. Thanks. Thank you. Thanks everyone. Bye. Do you want your product seen by more buyers on Amazon, Etsy and other marketplaces? Do you want to get more traffic, make more sales and scale your brand? Welcome to the Signalytics Podcast – Signal Code Unlocked, where we discuss what signals are needed to send to your customers, to the algorithms, to the ad platforms in order to get your product seen, converting and profiting fast. With your host, former top 50 seller on all of Amazon, the Professor Howard Thai, this is the Signalytics Podcast – Signal Code Unlocked.