This week on the Digital Velocity Podcast, Ryan Flannagan of Nuanced Media joins Erik and Tim to discuss important strategies that will boost success on Amazon.
Amazon is the world’s largest Ecommerce marketplace and brands need to seriously consider their marketing presence there. Based on Ryan’s experience, he says, “Now, what we see just for kind of a market breakdown for our clients is depending on the product and the category, and pricing and competitiveness and all those type of things. It's either 30% of your business is on Amazon and 70% is on your website. Or 70% of your business is on Amazon and 30% is on your website. And depending on some factors, you kinda fall in the middle somewhere. But just think about that. If you're not playing there, you're missing 30% of your business right now.”
A majority of US consumers begin their product search on Amazon, so if businesses are not selling there it could hurt sales. Ryan explains, “…if you're not playing on Amazon, you're not doing yourself justice because you're already driving all these sales here, and with a little bit of paid marketing on Amazon, you could actually get more sales and start ranking organically. Particularly if you're doing the right strategies around that.”
One of the positive things about selling on Amazon is that Amazon supports sustainable sales strategies. Ryan says, “And what Amazon's about is evergreen marketing if you will. It's about continuous sales month over month. It's not a drop that we're going do it, and then we're going to take it down, and it's only exclusive. It's only there for a month. This is about long-term sales and building that out and having consistency.”
Listen to this week’s episode to learn more about how to increase sales on Amazon.
About the Guest:
Ryan is the Founder and CEO of Nuanced Media, an Ecommerce Marketing Agency that specializes in multi-channel retail marketing. Ryan has more than fifteen years of eCommerce, multi-channel digital marketing, and third-party marketing places such as Amazon, Walmart, and Target. He has worked with hundreds of companies to establish best practices, focusing on the 20 percent that produces 80 percent of the revenue.
Ryan is a passionate thought leader in the eCommerce industry. He has been interviewed and quoted by Buzz Feed, Modern Retail as well as many other news outlets. He is a professional speaker, blogger and has contributed articles to 20+ 3rd party publications.
He is passionate about thought leadership, experience sharing and collaboration in the digital space. He utilizes his in-depth market analysis capabilities and understanding of complex technologies to provide optimum service.
He is well-known in the community for strong involvement, candor and leadership, as well as for his commitment to generously contributing in-kind services to nonprofits.
Tim Curtis: [00:00:00] Hello, and welcome to this edition of the Digital Velocity Podcast. I'm Tim Curtis CohereOne.
Erik Martinez: And I'm Erik Martinez from Blue Tangerine.
Tim Curtis: Joining us today is Ryan Flannagan, CEO, and founder of Nuanced Media, an international Ecommerce marketing agency. Ryan's an expert in growth-driven advertising, and he helps top brands stay ahead of the curve when selling on Amazon. With so many products available, it's easy to get lost in the noise. Ryan helps brands stand out and accelerate revenue. Welcome, Ryan to the show.
Ryan Flannagan: Thanks for having me. I appreciate it.
Tim Curtis: It's good to have you on. We like to kind of start off[00:01:00] talking about a little background to give some flavor of who you are and maybe tell us a little bit about your journey and Nuanced Media and founding that.
Ryan Flannagan: Sure. So, started Nuanced Media in 2010 after I had graduated with my master's in business, and I had started kind of some ventures in the social media field which were ultimately not very effective. Social media is really rough to make money in, and when MySpace was around, I thought that was a pretty good area to go into, but ultimately it turned out to not be the best thing.
So, started Nuanced about 2010. Worked with a number of different clients for a year, kind of the lifetime journey of Nuanced, and in 2017 we made a client about 18 and a half million dollars in a little over a month on Amazon. From zero to hero overnight, and we really said, Well, there's something to this. Maybe we look at that a little bit more. Ever since then, we've been drinking the Kool-Aid, working with a number of brands that you guys all have heard of. I can't really speak to all the brands that we work with. Really [00:02:00] just trying to do it better on Amazon, and have real conversations with our people.
So, that's our thing. End of the day, I kind of developed out Nuanced Media so we could set up win-win relationships for us, our partners, our employees, everybody we work with. If you kind of set expectations and have real conversations upfront you end up normally winning. If you don't that's when you get burned, so.
Tim Curtis: So, yeah. Part of the nuance of Nuanced Media is you also have a long history in more of the traditional web and pay-per-click activity and managing. So, you have as I like to say, it's that broad visibility to what's happening in the digital ecosystem. So, it'll be really interesting to get some of that perspective, because you know, as we all know, customers are on both your website, as well as on Amazon, but they behave very differently on those sites. So, it'll be interesting to get a little bit of your perspective on that. Why don't you start by telling us a little bit about some of the latest marketing and selling opportunities that are availing themselves on Amazon? I know that platform just [00:03:00] continues to iterate. It's amazing how quickly it's doing.
Ryan Flannagan: Yeah, it's nice. They're actually starting to give us some data after years and years of asking for it too. So, that's really nice as well. So, I kind of wanna take a step back here quickly. Amazon is really changing in some pretty phenomenal ways. Three, four years ago, you could basically throw up a listing image and a little bit of content and start making sales and do very well overnight. Amazon was growing a hundred percent year over year, all these type of things. And with the recession and some other things going on, it's gotten a little bit more competitive on those things.
Now with that, some of the things, Tim, that they've introduced is pretty interesting because they've introduced split testing and increased conversion rate. You can do that on the main image, and I got some stats and some experiments we've run and some of the results that we've gotten out of that too. You can split test the main title image and you can split test the A plus content as well. So, those are the main things that are kind of going on right [00:04:00] now, brand analytics, some other things. But what we're really seeing in the industry is that it's getting a little bit more competitive.
The reason that we've coined this term growth driven advertising is looking at Amazon from a holistic level, not just on what's happening on Amazon, but what is happening with your Shopify website, what's happening in your retail stores, what's happening everywhere, and how it really plays into that overall ecosystem, and then how do you grow sales organically in Amazon, but also in your other channels too?
Tim Curtis: Well, it's getting more complicated.
Ryan Flannagan: Alluding back to the traditional things that you were talking about. You know, how many times did we deal with a client or a partner that we were working with back in the day and they'd say, Hey, I want to drive the ads to this landing page, and you go to the landing page and it'd take three seconds a load or five seconds a load. Then they're asking you why you're not making sales. Right?
Tim Curtis: Right.
Ryan Flannagan: With Amazon, particularly with the split testing capabilities now, you can really go in and take your time to look at Amazon, do the split testing, [00:05:00] have tests on there, and really get better results.
So, for example, you know, we have a beauty client of ours that we increased her click-through rate. It was a 64% increase in sales on their account by changing the main image. And that went from just a lip liner being there compared to applying the lip liner, and showing up organically in search. And because that click-through rate increased, Amazon queued the A9 algorithm and the conversion rate increased and you did the testing on that. And then we interjected more keywords based on what was selling on Amazon and the keyword harvesting data. So, you ranked organically and you kind of get this whole ecosystem and really triggering the flywheel.
Another client that's a toy sword. They're like the most expensive toy sword on the market. It's like $50 for a toy sword. Really great toy sword, by the way, Formidable Toys. If you got a kid and they like toy swords, check them out. But we increased their click-through rate by 102% by basically playing an image of [00:06:00] a hand holding the sword compared to just the sword.
So, there's some really interesting things going on with that. Few people have touched the split testing capability, and even fewer agencies that I'm aware of or internal teams, are actually taking the data that they're identifying that they're working with, and then the keywords that they're getting in sales on reinjecting into the listing itself, so you actually rank organically from a SEO perspective and kind of continue to build that flywheel.
And then the other thing, and this isn't actually within the Amazon platform, but it's something we really like to look at, is tracking yourself against the market. So, Amazon, for good or bad, has a ton of data. Like it's 48% of sales and Ecommerce in the United States. It's 49% in search and they pretty much make all that data available and you can use third parties to kind of harvest that data.
So, what we do is we basically set a baseline by looking at their top hundred competitors. So, we can [00:07:00] say, Hey, we're up 20% in sales, but the market's up 40% in sales. Collective, Oh crap kind of conversation. But before looking at that data, you'd be like, Hey, I'm up 20% in sales. Like, life's great. We're killing it. But if you're not tracking compared to the trends and your market share, then you're only seeing half the picture. Those are some of the things that are really evolving, not even including Amazon demand-side platform or DSP or these things.
So, I can geek out for it for an hour. You guide me where you want me to go. But those are just some of the kind of quick things that we're seeing over there. And then I do think that there's a bigger conversation to be had about Amazon moving away from being a department store to more of a mall. It's focusing a lot more on the brand aspect. It's doing brand referral program where you can get up to 10% back if you're directing traffic from your social media campaigns or offsite campaigns directly to Amazon. So, instead of that 15% referral fee, you're only taking a 5% referral fee. So there's [00:08:00] some other major pivots going on that way as well.
Erik Martinez: Those are really cool things, and I think one of the key things for our listening audience to understand is we can't do some of those things. Like Google's a black box to a certain extent. We can't see that data, and you can see it in the Amazon platform. Whether that persists over the long haul or they start adopting some strategies to obscure some of that data, who knows, as the platform continues to evolve.
You know, we used to be able to see a lot of that data, similar types of data in Google, way, way back when, and to keep moving it off of our plate, so to speak, because well, they're moving more and more towards automation. It's just interesting to watch the philosophical differences between the Amazon platform and a platform like Google and what's going on in the interplay there.
Ryan Flannagan: Well, and Erik, on top of that, something that's pretty compelling is because you have all that data, you can do very strong competitor conquesting on Amazon while it's a lot harder to do [00:09:00] on Google. Like you can run the search ads, do some of those type of things, but I can go out and directly target my competitor, so I'm showing up on their listing when people are purchasing when they're buying in their cart.
But also, through Amazon DSP, you get some lifestyle trends. Who's searching for products in the last 30 days? Who's bought products in the last 30 days? So, you can get like a lot more targeted with some of those behavioral things that we had called on the Google platform, but you can actually do in the Amazon platform for that. And then with DSP, you can actually leverage that into connected TV or display ads on other networks, and then track the sales that happen on your website. It's getting very interesting from the advertising side of things too.
Erik Martinez: Let's dive into this Amazon advertising business. There's multiple components, but one place I'd be very interested to talk about is the idea of using Amazon advertising services to drive traffic to your own website. Can you [00:10:00] dive into that a little bit?
Ryan Flannagan: So Amazon, within TOS, unless it's a pay, there's ways around it, but it basically has to be a page that doesn't have a add to cart or you're selling anything. So, it's very hard within Amazon own and operated or through their com square 250 or the Google side of things to drive to a website. Amazon likes to keep it close and drive you to Amazon.
But what we do see is essentially this kind of halo effect anytime you're doing things, right? So, if you're spending $10,000 a month on social media campaigns and all those things, if you're not playing on Amazon, you're not doing yourself justice because you're already driving all these sales here, and with a little bit of paid marketing on Amazon, you could actually get more sales and start ranking organically. Particularly if you're doing the right strategies around that.
But the same thing happens on Amazon. If you're spending a ton of money on Amazon doing those things, you're going to make sales on your website. A, because they don't like [00:11:00] Amazon. B, cause they want to check that out in the buyer journey. Collectively where I look at this, the direct-to-consumer ecosystem that you're looking at is Amazon, your website for just online sellers, and then that includes the different funnels that you build into that being social media, Google ads, YouTube, and those things. But then for other companies too, it's brick and mortar. How are you doing in retail stores?
And what we see all the time is, particularly items that have a little bit more, you know, it's not a $10 item, so you really don't care. You're like $10, I can risk it. But if it's a $50 plus item, I'm gonna look on Amazon first and see how the reviews are before my three-year-old daughter's upset with me because I bought a toy that broke after two days. That's the journey that we're kind of getting in with everything.
So, what we've found to be the most effective is to focus on litmusy test on Amazon. Get that up. There's some programs we can talk about at aggregate reviews. Then take all that developed content that [00:12:00] you've spent all the time developing, good images, videos, and all that stuff. Import into your website. Take the reviews from Amazon, cite that. I'm not a lawyer, so talk to your lawyer about this cause there's this copyright site that's coming from Amazon, right? But then you have 30 reviews plus on your Google page or your Shopify website. So, you pass the litmusy test there.
Do your marketing and search for it and then litomusy check of testing at Amazon. You look good in both places, right? So that's where we're kind of find this ecosystem go. It's compelling because Google's about 35% of product search out there. And I said before, Amazon's about 49%. So, if you do both of those really well from an inbound perspective, you got roughly 85% of the market, so.
Erik Martinez: Let's talk about this halo effect. Just to interplay between brand websites and Amazon websites. I have this conversation with one of my clients. They're very deep into Amazon. Blue Tangerine doesn't play in that space at the moment. Maybe never because there's a [00:13:00] lot of people well ahead of us. But one of my clients deep into Amazon, deep into Walmart, If there's a marketplace, they're probably on it. And one of the things that we've been seeing over the last few months with them is when the pandemic hit and sales took off, Amazon took their foot off the gas in terms of spending paid dollars to drive traffic. Because they had more business than they could handle for quite some time, right?
Ryan Flannagan: Yep.
Erik Martinez: There was a small logistical issue going on that nobody here knows about. Then over the last few months, you know, and I know that they've been doing it all year, but we've really seen since the summer that they stepped back into the market in a big way.
Two things have happened to this particular client. The number of Google searches that we were getting impressions on has decreased about 20 percent. And then you throw Amazon into the picture, and our friends, [00:14:00] Wayfair came into the picture. And all of a sudden we see our impression share just drops to the bottom of the ocean. The debate within the company, you know, we are working with them on their company website and I'm saying, Whoa. You're wondering why your sales are falling, but here's one of the reasons.
I've got two things going on. I've got less search volume coming in on the Google ads, and I've got Amazon and Wayfair at the very same time, increasingly expending more money and grabbing more and more market share. It's just what's happening. So, when that situation happens with your clients, what's your advice to them?
Ryan Flannagan: Yeah. First test, because we see this in the Google marketplace, is it just seems like no one has Google shopping ads set up, and they're not syndicating reviews, and they're not requesting reviews, and they're not doing those things right. So, the first test of this is, are your systems set up right? Are you showing reviews?
You know, anybody out there, I highly suggest you just go on Google and you search for your main [00:15:00] product and see if shopping ads are coming up and that's on the top and they kinda have the cart thing, and if there are reviews in there, right? Because the majority of people aren't doing that well. There's huge brands that are not doing that well. So, that's a place that Amazon typically can't play with review syndication, at least. You can still get the kind of thing up there, but they typically don't syndicate reviews there. So, that's a different area that you can really target out with that.
The other question that you have to have as a brand is a real conversation of where am I selling and what are the rules and regulations about where I'm selling. So, you sell at a Wayfair, for example, and what's the terms of service with that? Can they go against you in Google and that means you're selling wholesale and they're coming at you directly, and maybe people trust their brand more? Or maybe they're actually going to come up and start selling on Amazon as well. So, now you basically outsourced your wholesale business, your direct-to-consumer business to a provider based on those things. So, those are the first things is to look at your service agreements.
First is make sure you're running [00:16:00] marketing well, and you got the review syndication going on. Second thing is, who are your distributors and what's the terms and services around the distributors? And then the real question is, where do you want to play on this? Do you want to own all your customer datas, or are you okay doing the wholesale market? Because you can do vendor on Amazon. You can do Wayfair. You can set up affiliate marketing. You can do all these type of things where you're like, cool I'm phoning it in. I don't mind paying a 15% acquisition cost or whatever that is for that, and I'm great with my margins.
Or you can say, I really want to own this because I have new products coming out, and the more data I have, the easier it is to launch new products or a number of other reasons. And if you own that, then you should invest time in A, producing the best listings possible. Conversion is king, and you have to have good lifestyle images. You have to have good video, UCGs, all those type of things. But what you do is you create that once for your best images. What we see on Amazon is, it's the [00:17:00] Pareto principle on steroids. Pareto principle being 20% makes 80% of your sales on Amazon. We see 2% makes 98%.
Amazon, that's different than Google. The more you sell on Amazon, the higher you rank organically. On Google, you have to build backlinks, you have to produce content, you have to do this stuff. Google doesn't care if you're selling 50 million units a day or one. It's all about the backlinks. Amazon cares about your sales philosophy cause they get it cut. So, you want to take your time. You want to do it well. Work closest to the wallet out and then when you update it on Amazon, update on the website too and update in all those other channels.
This varies based on companies, but we really like Shopify because Shopify, there's a battle right now that people don't know about, and the battle for this is, you know, there can only be one marketplace to rule them all. And Facebook's quite into this, even though they don't really do things, but Amazon's definitely in this. What Shopify is doing is they're developing out all these integrations to Etsy. Like you can [00:18:00] launch your products on Etsy in like three clicks of a button to get into a new marketplace.
They have Shopify Pay, which is another marketplace, which enables you to buy through that and cross-sell and do those type of things. But Shopify essentially is making it very easy to be the hub. And I don't even think of Shopify as a website anymore, I think of it as your distribution hub to everywhere you're going.
I'd love to give you a cookie-cutter answer, but it depends on who you are, what you're doing, how big your catalog is, and then where we typically advise people is start closest to the wallet and work your way out because that's how we engage for a long time is if I can turn this and quadruple your sales in three months because we're doing it right, then we're gonna have a long-term relationship. If it's three months later and we haven't done anything for you it's not gonna be a very long relationship, and that's not why I started the company.
Tim Curtis: I still feel like here we are 2022, going into 2023. There still seems to be a general lack of awareness among [00:19:00] brands in terms of their performance and their performance on both channels, their direct Ecommerce channel or their Amazon channel. And what I mean by that is they haven't really figured out a strategy. What are we trying to solve for with Amazon and how do we solve for that with our direct Ecommerce site? Before the show, we were talking about lifetime value. You know lifetime value is typically stronger on your Ecommerce site. Cost of acquisition though conversely is also higher.
But there's that element of maintaining the client relationship or the customer relationship and those are important things long term. We've all heard the horror stories. I've talked to CEOs myself who have gotten in with Amazon and either through a competitive challenge or through Amazon's own research wanting to copy their product, they've had cease and desist letters, or open up the kimono, tell me your supply chain. But in general, brands need to understand that they have to develop a strategy for both their traditional Ecommerce [00:20:00] site and their Amazon site. How do you consult with brands and what do you tell them in terms of how to play both those channels?
Ryan Flannagan: Yeah, so again, it depends on where they are. Sometimes we work with a brand that resellers have been up there, and it's kind of like the old social media conversation that we had about 15 years ago where people are really hesitant to get on Facebook or Twitter or any of these things. And you're like, the conversation's happening with or without you. So, the first thing is, do they have a whole bunch up there of resellers doing that, that have like crappy images of their products and is just doing this and not checking reviews and not doing any reputation management, not representing the brand well?
So, that's something that you need to look at. Or maybe they're doing it and they're representing themselves on Amazon, but they're not doing any ad spend. So, anybody who hears about them organically. Let's say the Dollar Shave Club. They get Wilmer's Shave Club, come talk to us. So, it really depends on where you are with your brand and what you're doing and your [00:21:00] journey, or you're not on Amazon at all.
So, with that level, what we look at and Tim kind of voice what you were just speaking of is we see that the customer acquisition cost is lower on Amazon. Amazon typically has 5X the conversion that your website has. Just standard because they've honed it out. People trust Amazon, they have a good return policy, all of those things. They're looking at the app on their phone. That's why images are important cause you have to have good images because no one reads anymore. We're American and we don't anymore.
You know, how do you take that lifetime value to how do you get that data from making a sale into your website? So, you can do that and you can remarket, or you can cross-sell, or you can upsell, or you can do product launches or those things. So, in that case, what we really advise doing is if you have a warranty that somebody can get if you have a good offer that they can get something else off the website. Things that are within TOS, and we always recommend looking at Amazon's TOS on those things. You know, [00:22:00] make that sale and then give an offer for a warranty or whatever on the website, right? Because then you can grab that thing because it's a typical 30 days on Amazon and you have to get a refund in that time.
But if you get a year warranty by filling this out, Well, heck, I'll fill out the year warranty, and then you can start off that kickoff email and all those things that we normally do off of purchase. So, how do you leverage the Amazon model, customer acquisition model to go to the website and start growing that way as well?
Erik Martinez: And build some first-party data.
Ryan Flannagan: Yep.
A hundred percent.
Tim Curtis: That's what it's about. You know, it's interesting, when I'm asked questions about, Hey what about Amazon? Historically this was, should we be getting serious about Amazon? You talked about the conversation that's happening, whether or not you're there. My answer to that has always been posing the scenario to them that what's happening on Amazon is defining their brand, whether or not they're invested in telling that story, or they're allowing their competitors or subpar retailers to position them.
And I [00:23:00] remind them that the most important element of any exit strategy is the strength of your brand. If you are not cognizant of that and you're not paying attention to that, the absence of Amazon does not mean the absence of Amazon. It just means you are not shaping your presence on Amazon and you're not shaping your brand. You've turned it over to people who don't have a vested interest in your brand.
So, it is a big deal, and we are at a place now where I think brands really have to have another engaging conversation internally if they have not leaned into Amazon, at least as some form of a strategy.
Ryan Flannagan: I could not agree more, and I liken it to is I kind of like these holistic metaphors, right? So, if you're working out every day, but you're eating pizza all day long, you're not the best version of you.
Tim Curtis: Yeah. That's me. I'm raising my hand.
Erik Martinez: Yeah. I third that response.
Ryan Flannagan: Yeah. Yeah. I may be a little heavier on the pizza side, but anyway. Those are the things, particularly when you're looking at exit. You are a product of your multiplier. Your [00:24:00] multiplier goes up significantly once you get to the 10 million plus mark, and then it goes up even higher the higher you get, right? So, you're losing 48% of Ecommerce by not focusing on that area, right? Think about that. That's half of the business.
Now, what we see just for kind of a market breakdown for our clients is depending on the product and the category, and pricing and competitiveness and all those type of things. It's either 30% of your business is on Amazon and 70% is on your website. Or 70% of your business is on Amazon and 30% is on your website. And depending on some factors, you kinda fall in the middle somewhere. But just think about that. If you're not playing there, you're missing 30% of your business right now.
More importantly, by all the marketing you're doing and all those things, you're basically paying for people to come in and acquire your customers. Cause they're gonna search on Amazon. If you're not playing there, they're gonna buy the nearest competitor to you, cause that's their preferred buy-in channel, and you're [00:25:00] out on that too.
Tim Curtis: At least half and we'll see the interesting stats after holiday, but at least half of all searches begin on Amazon. At least.
Erik Martinez: I was just doing some research for a presentation that I just gave and something like 70% of all consumers start on a marketplace. Doesn't have to be Amazon. Amazon's the biggest. Sixty-five to 70% of all consumers start on a marketplace. By the way, that does not matter what industry they're in.
As many of our listeners know, Blue Tangerine works in the home building space. That is also true there. Who's the Amazon of the home building space? Zillow. Same story. Exact same conversation that we're having right now about Amazon.
So, if someone in our listing audience is like, I could do some business in Amazon, but it seems really complicated and scary. Let's face it, 15 years ago, it wasn't all that complicated, right? You listed some [00:26:00] products, you paid a little bit of a commission. If you were just getting started, what are the one or two or three key things that they need to do, day one, to get it right? Set that foundation for success in the future.
Ryan Flannagan: Yeah. So, one thing that we do at Nuanced is we always do an Amazon action plan, right? Because everybody's different. So, before we work with anybody, we always go through this two-week discovery. We look at your existing account if you have it, low-hanging fruit. Or if you're looking to get into Amazon, should you do that?
Because last thing I wanna do is have the conversation once somebody is $50,000 in and it costs like $50,000 to launch a product and have good ads spend and really give it the go on those things. But you don't want to have that conversation at the end of that compared to the beginning of that. And it's not just 50, it could be 30 to 50. It can vary obviously, depending on the cost per click and other factors. It's why we do this analysis.
The first thing we say is look at the [00:27:00] unit economics. This is the bait and switch of so many different marketing agencies, right? It is, we sold 5 million last year on this and we made 1%, or we lost 5%. You don't look at the unit economics. So, those are things that you really have to assess, particularly for established retailers. You have to look at, well, what's shipping cost? That's something I've never had to deal with before. And what's the Amazon referral fee? And then once all that's done, how much is left for me? And now I need to run ad spend out of that. And what does that look like? So, there are all those different key levels.
Our easiest home run and out of the park is to take established brands that haven't optimized their listings, that have good reviews and have a good product, and you just need to go in there and start tweaking things and spending money. You see the sales go through the roof. It happens every time, right? Because you actually take the time to nurture and invest on them.
Now, what you wanna look at with this is A, what are your unit economics, but then, search what you would search for [00:28:00] Amazon on your product. How many reviews do the competitors have? Is the price competitive? Are all these things going on? Now you will find like tools are kinda like this, some different sectors that like people aren't playing well on it, and you can go in and dominate the space pretty quickly on it, right? But those are the quick litmusy tests that I would recommend before you spend a dime, buy anything from China or do anything like that, is to go do some basic searches on Amazon, see how many reviews, do the calculations for how much it'll cost to search and all that, and then go from there.
Erik Martinez: That makes perfect sense. I mean, I've got, again, a couple of clients who are deep into Amazon and they do a pretty detailed analysis of the profitability of their products and the unit costs. The one place that they actually fail though, in my mind, is they don't allocate costs within their business correctly. So, Tim and I had a conversation with Kiri Masters a while back and she was talking about being [00:29:00] able to align your PNLs when you're running a marketplace business.
And one of the things that we see is when they're looking at the warehouse costs, they are not attributing as much of their warehousing costs and shipping costs to the Amazon or the marketplace operations as they should. They're burdening the traditional business in a way that's relatively unfair, that's carrying a much larger share because they've had to increase the amount of complexity in their operations that they didn't have before because these marketplace businesses and the way Amazon handles fulfillment and all that good stuff actually costs a decent amount of money.
Ryan Flannagan: Yeah. Well, I mean, there's a major pivot. It used to be that you sold wholesale to Home Depot, and Home Depot would buy it for $1 and sell it for $2, right? That was kinda the standard process. And now you're like, well, I'm selling it for $2 cause I have MAP and I have [00:30:00] MSRP and I have all these things, and now I need to figure out if that dollar that I was doing before covers shipping, the fees, and all these things.
And then on top of it, Erik, Amazon's getting into multi-channel fulfillment. So, with MCF, you can ship everything to Amazon and they'll take care of everything for you. So, there's a whole like, logistics play behind this as well. The thing that was interesting, that's what made companies millions or lost them millions during COVID when that whole thing happened because basically, Amazon shut down. And they said, unless your emergency goods, you're not selling right now cause we need to get masks up here and everything else. But everybody who had those warehouses that you were just referring to and could do fulfilled by merchant stayed up when all the FBA sellers went away fulfilled by Amazon.
So there's companies that made millions and other companies that went under because they were too reliant on one supply chain or one logistical operation and then have redundancy going on.
Erik Martinez: And it's a critical component to what you [00:31:00] do today. You have to have good warehouse operations and when you get into this business, you really need to understand how that interplay is gonna work. What are you gonna stock at your facility? What are you gonna stock? Are you gonna stock in both? How much? And if Amazon's doing direct buys, that creates a slightly different animal.
I have a client who is a great example of Amazon gets first allocation. But dude, I have thousands of units on backorder. That shipment just came in and Amazon just took the whole shipment and I still have thousands of units on backorder. That's a problem.
Ryan Flannagan: It's all about sales, rank, and velocity, right? As soon as you lose inventory, Amazon says, well, you're not relevant. I'm gonna drop you to page five of stuff, and you lose all that organic rank and all that. So, that's what you find is everybody attributing their first inventory to Amazon. The worst thing you can do is spend all this time and all this money to get up there.
Erik Martinez: And be outta stock.
Ryan Flannagan: Yeah. You know, for our clients we see, like with a good established brand, we [00:32:00] see a 20 to one ROAS, like total ROAS on the account, all the time. So, every dollar you spend, you make $20 top-line revenue. That's obviously before margins and all those things, but that's the type of power if you do it well, where you can get and really build too. Now, if you have a good multi-channel strategy and you're doing the warranty level, then you can use as customer acquisition and then you can launch products and it all works together that way.
Erik Martinez: So, if you don't mind me pivoting to a different question. I have this question about catalog size, cause you said something very interesting earlier, and I don't want it to be lost. You said, and I've been reading about this a little bit lately too, 2% make 80% of the sales.
Ryan Flannagan: 98% of the sales.
Erik Martinez: Or 98% of sales. That's crazy. The 80/20 rule applies to everything else in the world that we deal with, 2%. So, if you have somebody with a reasonably large catalog, let's just say 300 to a couple of thousand items.
Ryan Flannagan: Yep.
Erik Martinez: [00:33:00] Should they enlist all those items on Amazon?
Ryan Flannagan: Uh, long story short, no. That's, that's the thing. So, what we like to do on this, and this typically comes to somebody who already has resellers or there's already products on Amazon, is we work closest to the vest out. Normally, when we do our initial Amazon action plan, we dive in, we do a catalog analysis, we come back with Hey, we're seeing that these three listings are making 80% of your revenue. So, why don't we start there? And we'll run pay-per-click on all the other type of things, but these are the things that we should do. And by the way, did you know if you put the two different color shoes in the same product family, then we'll aggregate reviews? If one has 200, the green shoe and the red shoe has 500 reviews, if you put them in the same product family, then you have 700 reviews.
So, there's some basic things like that you can really go in and make a pretty impactful level on that. We have a company that we onboarded in early October. Barely [00:34:00] gotten some optimization in, but their Christmas sales are up 25% because we did just the product family integration and took some of their things from a hundred reviews for this toy and 300 reviews for this toy. But we combined them all together and now their toy family has 7,000 reviews and they're just killing it. Those are things that you need to look at and process and do those things.
But overall, when you're doing the massive optimization, you do the best ones first. So, when you have a larger catalog of things, that's what I was talking about earlier, Erik, if you're kind of new to Amazon, we basically say, well, what are your best sellers that you normally have? What's making the most sales out of your catalog? Let's take a deep dive into those segments and see which gives the best opportunity and what could be some reasonable returns based on this. Because you don't wanna put the full catalog out. It doesn't work.
Erik Martinez: Is that also true for brands who are more established and have long history within Amazon? Do you feel that that's the same [00:35:00] truth? If I've got 2000 items and I know I'm selling 40 of them, and that makes 98% of my sales. Do I dump the other 1960?
Ryan Flannagan: Yeah. I don't necessarily say dump it. I just say let's not put our focus there. Because it comes to a time and day in there and really where can I get the biggest bang for my buck and where can I get my return on investment? So, let's go and try to take that product that's already doing $200,000 a month, and let's try to make it a million dollars a month.
Cause we're already going in good sales velocity. We're doing that, and I want to be number one for that search term anytime somebody searches on it for 48% of the people in the United States. Because that's the story I want to tell. And that's what's gonna make all your sales to streamline that.
Now, we work with other brands that are like, that's such a huge catalog. Half of it's not selling. I have $400,000 of inventory. Why do I have this inventory? I just wanna get rid of it. Trying to liquidate on Amazon is not the best play either. Don't do that. You don't build listings to try to liquidate on Amazon. We've had people approach this about that way. [00:36:00] There's better ways to do that.
Erik Martinez: That's a good tip.
Tim Curtis: Yeah. Cause that was a chief strategy just a few years ago, was liquidation.
Ryan Flannagan: Well, and they have internal liquidation capabilities, but it's pennies on the dollar. It's doing those things. But if you're building a good listing, doing all these type of things, spending the time. And what Amazon's about is evergreen marketing, if you will. It's about continuous sales month over month. It's not a drop that we're going do it, and then we're going to take it down, and it's only exclusive. It's only there for a month. This is about long-term sales and building that out and having consistency. Yes.
Erik Martinez: Sustainable, repeatable.
Ryan Flannagan: Hundred percent. And the longer you do it without lack of inventory, in doing that, you'll rank higher and it's great when you're on top, cause then you're just banking money.
Tim Curtis: Kinda wanna pivot to a last question as we close up here, but one of the things that we enjoy broad visibility on is market trends. We're able to look across multiple verticals and see the impact [00:37:00] that is occurring right now as a result of some of the inflation and the recession and those types of elements. Why don't you give us a little bit of a flavor of what you're seeing on the Amazon side in terms of the impact that the inflation, the recession those things are having?
Ryan Flannagan: Well, so the first thing I'm not a Amazon evangelist. I think there's better ways. There is the good with the bad. So, we're gonna talk about some of the good. The nice thing is we can really see the data. So, some areas are still going crazy and growing at a hundred percent year over year and doing that.
We're doing a Amazon action plan for a client right now and they're markets growing at 160% year over year right now. Great. But then you see on the kind of standard what's happened is everything's kind of flattened out a little bit. While it used to be a hundred percent growth year over year based on anything, everything's a little bit more flat on this area compared to where it used to be.
Some markets and some categories are down, but that's the beauty is I can talk about shoes [00:38:00] that are brown and look at the brown shoe market on Amazon directly compared to saying apparel, kind of these broad tools. So, that's the really valuable thing that I like to speak about with that.
Amazon, in some other areas, is growing even more, right? Like particularly if you looked at lower price products. Because people are trying to save more money. The typical Amazon consumer is very price elastic, right? They will go to something that's $2 less expensive as long as they're similar reviews and basically does the same things cause they're gonna save $2 or get a coupon, right?
So, there is a somewhat of a race to the bottom. Now, with that being said, if you are a premium product and a brand, there's other strategies to leverage Amazon to still make sales and still be profitable and not play that game. You just have to look better, you have to have better storytelling. You have to do these type of things.
So, that's what we're seeing. So we are seeing, and this has been true forever, so I don't know if this is necessarily related to Amazon itself, but the 25 [00:39:00] under is still going pretty strong on that level because it's priced low enough that people can purchase and grow that way. Up above a hundred is slowing down on that level. And then the middle, it depends on the category and where you're playing.
Tim Curtis: With Amazon's luxury stores concept, you know, everything from Giuseppe Zanotti to Alexander McQueen. It really does now bring in the opportunity for Amazon to be represented at a much higher level and a level which has not been impacted anywhere near to the degree by the inflation or the recession is that higher end. It's just really interesting to see what their strategy's gonna begin as this sort of plays out.
Ryan Flannagan: You know, between you, me, and all the listeners, I think their massive play is they wanna be the one-stop shop for everything Ecomm. As I kind of alluded to earlier with the brand referral program, you know, you basically put up your own affiliate link and then you can drive your traffic to Amazon. If you do that, drive to your storefront, don't [00:40:00] drive to your listing. Basically make a landing page on your storefront and drive there cause then you don't have competitors ads, you'll have a higher conversion rate and all those things. Just kind of a tip between us.
But their concept here is, well, if you drive me the traffic, it's only 5%, and then you're like, wow, only 5%. That's pretty good for 5X the conversion rate on this thing. And then they're rolling out being able to email customers a little bit more and being able to do Amazon Lives and followers and these things. So, they're slowly letting us get a little bit more customer data without it being customer data, having us have a little bit more conversations because the overall goal is to own the space.
Tim Curtis: Well, they're doing a fantastic job of that. The Amazon Lives are dangerous. They have taken all the friction out of that Ecommerce experience. It's the convenience of Amazon shopping meets QVC Home Shopping Network and boom, boom, boom, boom, boom. I mean, it's just, touch of a thumb and you've got what they're showing. It [00:41:00] really is a case study in how you develop a near-perfect ecosystem. It's something to marvel at.
Ryan Flannagan: Well, and you need to be the right brand for that too. We have a brand, I'm not gonna mention their name, but weren't on Amazon. They have two different products, that are in the same product family very expensive for their category. They did Amazon Live and sold over $80,000 worth of goods in two days.
Tim Curtis: Yeah.
Erik Martinez: That's amazing.
Tim Curtis: You watch the influencers who are pivoting from the social channels and they're putting their Ecommerce element into Amazon and now they're doing the Amazon Lives. You're just watching the evolution of the new social commerce. And Amazon is right in the center.
Ryan Flannagan: Yep. And it's growing every day. So, very interesting.
Erik Martinez: Lots of great things to think about. It's such a complex and interesting and fascinating environment. Again, we don't advertise or market in there, but I'm a consumer and the Amazon truck is in my driveway [00:42:00] three times a day.
Tim Curtis: Too often.
Erik Martinez: You know, and you gotta think about the logistical side of this and go, I've got Amazon, I live out in the country. Okay. So, the last mile is really expensive to where I live, and I see an Amazon vehicle in my driveway three times a day this time of year. And that's not including UPS and FedEx and the USPS that are also delivering. So, Brian, thank you so much. Is there any last words of advice you would like to leave our audience?
Ryan Flannagan: So, if you're looking at Amazon, or if you're already on Amazon and sellers are doing it, or if you're already doing it and you're doing it in-house and you wanna learn more, I always say, measure twice, cut once. Even if it's going and gain a professional's advice on what the opportunities are on and all that stuff. It doesn't have to be Nuanced Media, it can be anyone. Just go talk to somebody with that and do that.
Just because we have preconceived notions doesn't mean those preconceived notions are right. And I would just really take a look at it. If you have hesitation, I get it. People don't [00:43:00] like Amazon, those things, but you may be missing out on a pretty big opportunity with that.
Split test. Treat your products and your brand as holistic compared to fractional. It's never just one thing. Look at the whole picture and what you're doing and driving sales on that. And if you do wanna learn more about Amazon growth-driven advertising or any of those things, we have a downloadable guide for 2023 on our site. If you go on nuancedmedia.com, you can go there. It'll pop up after three seconds and just read about that and how everything's changing. Kind of walks about through the paradigm shifts and all those things.
Finally, know your unit economics. Know your unit economics. You don't wanna make a million dollars to find out you spent 2 million on that side.
Erik Martinez: Yeah. That, that's usually important.
Tim Curtis: Exactly.
Erik Martinez: Recipe for disaster. Ryan, we could talk about this topic all day long. It's been fantastic. If somebody wants to reach out to you, what's the best way?
Ryan Flannagan: Yeah, so I'm on LinkedIn, Twitter, Facebook, all this stuff. My last name is, you can look in the show notes on this, but it has a particular spelling of Flannagan. There's three [00:44:00] N's and no I's.
Erik Martinez: I've spelled it wrong 5,000 times already in preparation.
Ryan Flannagan: Yeah, yeah. When my folk came over on a boat somewhere, they, you know, as an r and just kind of did it, you know.
Erik Martinez: We'll make sure the correct spelling is on the website.
Tim Curtis: In the show notes. Yeah.
Erik Martinez: Yeah. In the show notes.
Tim Curtis: And then anybody who goes through the Amazon action plan I typically meet with and are kind of part of that process too. We do have a number of strategists in those things, but I'm a pretty hands-on type of guy with those things. So, if you contact Nuanced Media, are interested in the Amazon action plan we'll probably meet at some point too, so.
Erik Martinez: Very cool. Well, thanks a lot, Ryan. We really appreciate all your insights and valuable tips today. Well, that's it for today's episode of the Digital Velocity Podcast. I'm Erik Martinez.
Tim Curtis: And I'm Tim Curtis.
Erik Martinez: All right, y'all have a great day [00:45:00]