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This post is the latest in my Amazon Private Label Journey series, sharing everything we’ve been up to (and learnt) this month as we look to scale our business and escape the 9-5.
For a long time now, I’ve dreamt of a financially-free lifestyle with complete location dependence – and a whole lot more ‘life’ than ‘work’ when it comes to that work-life balance.
That four-hour work week dream sure has got me!
With that in mind, I’ve spent a looong time exploring various different businesses, to see what best resonated. I tried social media management, eBay reselling, wholesale and hiring out garden games (to name a few), but I realised I needed to find something that could make me relatively passive income once particular processes were in place.
This realisation led me into the arms of Amazon FBA, where you’ll currently find me.
It’s now been three months since I launched my first private label brand on Amazon, and I’m so excited to share my latest update with you.
This monthly check-in is to share my highs and lows with you, to show the true reality and challenges that come with selling on Amazon/launching your own brand, and to also one day be able to look back on to see how far we’ve come, when we’re sunning ourselves in Bali working a few hours a week.
But before we get stuck in with how January was for us, you can find my first two Amazon private label journey updates here:
So incase you’re new here, let’s take it back a step:
What is Amazon private label?
Private label is the process of finding a third-party manufacturer and supplier (often through the likes of Alibaba) who you purchase products from to create a brand around.
As the private label brand owner, you create the branding, the overall product offering, the packaging, and any tweaks you might like to be made to the manufacturer’s samples to differentiate from competitors.
It’s not reinventing the wheel, and you don’t even need to create a brand new product – all you need is some strong product research to identify a product with potential, a little bit of cash to inject in your new business, and the creativity to stand out from the current offering.
As far as growth potential goes, there really is no other business model like it (at least, in my opinion).
How do you find a product to sell on Amazon in the first place?
I recently shared a blog post on just this topic, which shows you How to Do Amazon FBA Private Label Product Research.
In this post, I explored a variety of different strategies you can use, but my research tool of choice is Helium 10, which I would recommend to anybody embarking on an Amazon Private Label journey.
From helping you with product research, to allowing you to delve into your competitors’ listings, identify keywords you should be including in your product listing to maximise sales, and then helping you with your advertising campaigns, it really is an all-encompassing bit of software that is crucial to your success when selling on Amazon.
In addition, Helium 10 has its own training course included within their membership, TONS of useful content on their website, Youtube channel and podcasts, and have 24/7 support available if you need anything else.
To make things even better, Helium 10 are also offering Funding Her Freedom readers huge discounts if you sign up using one of the below codes. Click through the image, enter in the code for the deal you want, and start your private label journey today.
So what happened for us in month three of our Amazon private label journey?
Well, it’s been a rollercoaster – that’s for sure.
Let’s start with the negative, to get it out of the way.
In my last update, you’ll recall I mentioned how our reorder of our first product was currently missing in a courier’s warehouse, but I had been promised it would reach us by the end of December.
Well, at the time of writing this (31st January), guess who still has yet to receive their reorder (which had been guaranteed to arrive by the 27th November, and had been considerably more expensive as we’d opted for air freight rather than the cheaper sea-shipping?)
Yep, that would be me.
And guess who had to turn off PPC advertising towards the middle of the month to slow down sales to ensure we didn’t go out of stock?
And guess who’s anxious to get it sorted ASAP to avoid yet further hold-ups when the factories close for Chinese New Year?
Yep, still me.
It has been STRESSFUL! Our supplier consistently tells us every Monday that it will arrive by the Friday of that week, and we are consistently being let down.
You can bet once (if!) they eventually arrive, we’ll be asking for at least a partial refund due to excessive delays (apparently caused by our address labels falling off the boxes).
But rant over – let’s get to the good news:
WE HIT OVER £1000 OF SALES IN JANUARY!
By the 9th January, we’d already reached our monthly sales for both November and December!
Now, many people will be doing considerably more with their product, but as we chose to launch a brand that is searched for on Amazon less than 200 times a month (oops! This is always a key metric you should be looking at when using Helium 10, and we failed to – don’t repeat our mistake!) I’m thrilled with this amount!
Our sales rate picked up so much (even achieving a BSR or Best Sellers Rank of 2100 at one point!) we had to switch off pay-per-click advertising to ensure we would have enough stock available to last us until we get our reorder – whenever that might be.
Now, I need to caveat this with the fact that this isn’t all profit.
Before pay per click (PPC) costs, our profit margins stand at 27.5%, meaning we made £276.93 of profit.
However, this month we spent £282.35 on PPC advertising, so we actually spent all our profit (and an additional fiver) on being a ‘Sponsored’ listing.
As we’re still in the launch phase, and trying to build traction, this is very much to be expected – it’s not uncommon to be spending your profits on advertising as you fight to secure first page positioning organically (that is, without having to spend on advertising).
Another achievement for us this month, is actually spending less on PPC and getting more organic sales (sales that weren’t via one of our ‘Sponsored’ listings).
In total we sold 84 units this month, with 30 of these being organic compared to December’s total sales of 28 – all of which were via PPC and none were organic.
Meanwhile elsewhere, our second product has also been shipped out, and we’re due to have it with us in mid-March. Apparently there are still considerable shipping delays currently, hence the longer courier times – but I’m so excited to get this product released.
To recap, our first product is a branded product, and is something we’d like to develop further with future product lines once we have more cashflow.
Our second product is a generic product (that is, no branding) that is searched for over 22,000 times each month on Amazon – which is where we’re hoping to build our cashflow up from.
What have we learned in January on our Private Label Journey?
Despite sending out review requests to those who have bought from us, reviews are still incredibly slow.
With this in mind, we’ve been looking into enrolling in the Vine programme, which would require us to give out thirty free products to ‘Amazon Voices’ – particular Amazon customers who have received an invitation to be a ‘Voice’.
Thirty of our products would get sent out to thirty Amazon Voices, and in return, they would be encouraged to leave a review for us.
We need to look into it a little more, but right now, it seems like a good option for us to gain more reviews, so I’ll be sure to report back on this.
We were also super surprised (and maybe a little flattered!) to find our product being dropshipped on eBay.
Right now, whilst we don’t sell on eBay, it’s not really a problem as we’re still getting a sale as and when somebody purchases it via eBay – we’re just charging considerably less for our product than our dropshipping counterpart.
As and when (and if!) we decide to start selling on eBay, we would of course need to nip it in the bud, but for now, we’re happy to let whoever it is on eBay continue selling our product.
Finally, January was a huge month for us in terms of realising you really have to be led by the data for PPC as much as you are during the product research phase. It would be so easy to keep an ‘Automatic’ PPC campaign running in the background, but when we dived deep into the data, it just wouldn’t have been viable for us.
Instead, we worked out which keywords were converting for us, reduced our advertising spend, focused on ‘Exact’ and ‘Broad Match’ campaigns, switched off our ‘Automatic’ campaign, and had our best month yet – with the most organic sales yet.
It’s essentially cost us roughly the price of 100 units for us to learn how to make the product profitable – and we’re looking forward to growing and scaling over the next few months.
This is what you’re all here for isn’t it? Let’s delve deep into the numbers for month three of our Amazon private label journey:
Total (gross) sales this month: £1007
Total profit from sales: £276.93
Total units sold this month: 84
Total units sold organically (without using advertising): 30
Total units sold through advertising (PPC): 54
Amount spent on advertising (PPC) this month: £282.35
Overall profit including advertising spend, cost of product, shipping and Amazon fees: -£5.42
Return on Advertising Spend (RoAS): 2.38
(This refers to the return we got on our PPC campaign, and doesn’t take into account our organic sales. This means that for every £1 we spent on advertising, we generated £2.38 in sales. In future, we’d really like to get this to 1:4 as a minimum).
Advertising Cost of Sale (ACoS): 42.05%
(Again, this is only through sales generated via advertising, and doesn’t include our organic sales. This is the same as RoAs but in a percentage format).
Reviews: 11 (+3 in the last month)
What are our Amazon private label goals for February?
Looking ahead to the upcoming month, we’re really excited to build on our new PPC strategy, and to keep these campaigns as solely ‘Exact Match’ and ‘Broad Match’ – no more ‘Automatic’ campaigns for us this month!
When you first launch a new product, it’s strongly advised you run an ‘Automatic’ campaign to give you a better idea of the keywords being searched for, and converting into sales for you, but once you have this data, you can cherry pick the top keywords and put them into ‘Exact Match’ and ‘Broad Match’ campaigns instead – saving you money in the long run.
Once our second product arrives, we’ll need to go back to an ‘Automatic’ campaign for at least a fortnight, but whilst our first product builds momentum, we’re happy to turn this off.
We’re also looking forward to lowering our ACoS, so that we start turning a profit, and we need to look further into the Vine program and how we might be able to increase the amount of reviews we currently have.
Oh, and maybe, just maybe, we’ll finally receive the reorder of our first product…