As an Amazon-centric agency, these aren't the words to open an article with. But its the truth.
I (Paul Walsh) have sold on Amazon for 17 years, in some format. Employee, Manager, Employer, Business Owner, Consultant. 6 years ago we as an agency launched 2 brands so that we could take the NEXT BIG STEP. How could we talk the talk, if we couldn't walk the walk? We needed skin in the game. I had a point to prove to myself. This was it - the moment, the test!
£30k cash is what it took. (4 years of savings as a part-time Consultant). The £30k was split 2 ways:
£20k to fill a container bound for our Irish address full of products to sell on amazon.co.uk + £10k making up 4 pallets of higher value per sq.m stock bound for the US and amazon.com's FBA fulfilment centres.
The US £10k started well. I think we placed our next order within 3 months and topped up the stock. This brand was starting to break through. However 18 months in - when we ran the numbers, we had done nothing but break even - the odd cost here and the odd cost here had taken the last out of the margin that we had squeezed out. The revenue had lifted my spirits but the truth was, we had no margin and no plan on how to get it without sinking this scaling £150k/year brand. I learnt an important lesson - 'Ego is Vanity // Profit is Sanity' but I had ticked a box in my curious nature - I had started and scaled my brand on Amazon without a loan.
The UK £20k was a total flop. We were out of the country and some friends had to empty the container. I got home 8 weeks later to 4 rooms full of massive boxes. They were live on Amazon UK but I hadn't sold a thing. We had 2 newborns at the time - I was distracted and didn't think of it but 6-9 months later I still had all this stock and I realised I was stuck. Then Covid-19 began and after 2 weeks of people figuring themselves out, sales took off. From selling 0 units - Easter weekend was 3 weeks into Covid and that weekend we sold 214 units. I had to pack the whole way through the night, outside in the moderate warmth which that Easter brought. I had to ring DPD to send a lorry for the pickup. I was ecstatic. Our second brand had broken through & made it. But only because the market exploded and demand outstripped supply. I learnt another important lesson - 'The market is everything // either its there or its not and that will control your sales more than your individual actions'
Fast forward a little and its 2020, in the middle of Covid. We sold £580k across the 2 brands. Amazon + eBay only. I emptied 14 containers that year. 3 in the 1 weekend. I couldn't believe it. The £30k drop of cash and this pipedream had worked. I had a £20k UK Covid-loan to support cash flow and there were still no other borrowings.
Jump forward again to 2021 and Covid was coming to an end. 2 things happened which brought us from £580k to £200k/year. The market dried up as customers returned to normal life and supply had taken back over demand. Everyone was overstocked. Somewhere along the way I had realised that without profit, this wouldn't go anywhere and I moved from making almost nothing to trying to make (into the bank, after all charges) around 20% of the Revenue we earned.
These 2 things above wiped out 2/3 of our Brand's Revenue. £580k went to £200k in about 6 months.
Our brands are still sitting at £200k/year. They are stuck, in a rut
where they can't get more of the market WITHOUT going into the red
in a way in which I can't calculate whether or not we will get back
out of it.
I spent a long part of 2021 and 2022 thinking about what had
happened us. This failure was the key moment in shaping us as
Consultants. Nobody who succeeds, spends 2 years looking back
on how they got there. That is a solemn corridor, reserved
exclusively for those who have totally failed.
From this failure, we worked out the pillars of Amazon and where we missed it. We have spun this into the foundations we lay when we work with clients and that is the service we now offer. We take only 1 in every 6 pieces of work which comes our way but we work with the talented, the brave and the brands who CAN pull off what we couldn't.
This is where the story could end - but I have read too many great
stories and its always about the message you are left with at the
end......
The Pillars of Amazon:
- You can't beat the clock. Everything takes time. It takes 3 years to scale to £1m per year // for normal people
- Revenue comes from 2 places - 'Reviews + Ranking Search Terms'
- 'Ranking Search Terms' are accessible for whole categories on Amazon. Capture all these+ you know exactly where you sit. They can direct every step you take. DISCLAIMER - We offer this as a service
- Amazon is a Tale of 2 Parts - Search & Conversion. You should spend 5x more time thinking about Search, than Conversion.
- Summary Pillar - Revenue comes from Reviews + Ranking Search Terms. Reviews take time & Ranking Search Terms take a lot of work and a lot of knowledge. Therefore Revenue takes time & if you don't allow it time then it will cost you so dearly and you might not make it at all.
We failed our 2 Brands doing £580k because I didn't know these pillars back then. But I am grateful for the knowledge that came from the failure and we have built a really strong agency on this rock bottom foundation that was failure. And I have fun every day, learning from our 2 Brands doing £200k but which are financially sound and built to last.