The Million Dollar Case Study Session #16: Updates and Q&A with Greg

Gen FurukawaThe Million Dollar Case Study28 Comments

If you think back to just a few months ago, the Million Dollar Case Study was an abstract project aiming to show you the exact steps of how to launch a successful Amazon business. Well, with our Jungle Snugs listing now live on Amazon, things got real all of a sudden!

In this special session, Greg reviews the product to date, and addresses live audience questions. If you want to see the highlights of how we got to this point, check out the Million Dollar Case Study Overview page  and you can also register for future sessions if you are not already.

Here is a full recap of Session 17, where Greg offers some inspiring and insightful wisdom to help Amazon sellers push through roadblocks to continue growing and building their Amazon business:

And the slides that Greg reviewed:

 

Update: Our Professional Images Are Completed!

Thanks to the team at ProductPhotography.com for generously donating their services to the case study. The Product Photography team also helped with the Jungle Stix product images, and offers a great service. Reasonable prices, great communication, detail-oriented, and most importantly, great product images!

Here is a sample of some of the results (we will have our blue and pink towels photographed and included as well):

 

 

We will have more content on our product images in the near future. Additionally, we will have lifestyle images completed by the end of the week.

The existing listings for baby hooded towels have great images of happy babies showing how the towels are used, and more importantly, what the benefits of the towel are: soft, safe, and the catalyst for happy babies.

I am in the unique fortunate position to have a baby to actually use Jungle Snugs, though unfortunately my photography “skills” don’t do the product justice.

 

Details on the Unit Economics of Jungle Snugs

Here is a great overview of what the unit economics of Jungle Snugs look like:

 

As you can see, the costs vary dramatically depending on whether the importing method was ocean or air. The obvious benefit of importing via Air is the time saved: one week by air, as opposed to 30 days (and the accompanying paperwork) by ocean.

For the purposes of maintaining momentum with the case study, Greg opted for air shipping. However, once the flywheel is in motion and there is more time, the costs decrease for each unit sold, and consequently the profits increase.

 

What About If You Want To Start With Less Money?

If you consider the unit costs of $5.45 per unit, multiplied by the 1000 units, the costs can add up quickly.

For those who are new to selling on Amazon, or want to get started on smaller budgets, there were a few suggestions to start with a smaller budget:

  • Start with a smaller order: You don’t necessarily need to start with a 1000 unit order to start, as Greg did. ­­Alternatively, an initial order of 200 units would have cost around $1000, and would still allow for a full product launch (including giving away products to get initial reviews).
  • Start with a less expensive product: There are plenty of product opportunity ideas for products that cost a dollar or two—fidget spinners, anyone? That’s a good way to generate smaller profits per unit sold, but presumably at higher volumes overall.
  • Start with 1 variation: Jungle Snugs launched with three variations, one white, blue, and pink version. Alternatively, we could have done just one color and spent a third of the initial investment.
  • Pick the cheapest shipping option: For small, lightweight products, air may indeed be the cheapest. But for bulkier products, ocean is the most cost-efficient.

 

Regulations and Testing

With a higher-profile launch like we are doing with the Jungle Snugs, we want to make sure that every regulation and requirement is met to the fullest extent. Well, in reality we would always want to follow the rules! But this time, there are a lot of people asking about the requirements and what it entails. The details are simple: Greg contacted Asiainspection.com, specified that we wanted to meet every regulation and test necessary for baby products.

And these are the costs and tests that were conducted:

 

Next Steps

Here's what our next steps are going to look like over the coming weeks:

  • Add Lifestyle Images: Lifestyle images are going to be important to communicate the benefits of the product and ultimately bring it to life in an aspirational way. Within the next week, we will have cute baby photos, maybe a mom and dad holding a baby, and add that to the listing to ideally improve the conversion rate of people who land on our product page.
  • More design work on the images to highlight our main differentiating factors: we’ll add graphics to make it very clear that Jungle Snugs are thicker, larger, include a wash cloth, and make babies happier than the alternative products!
  • Check PPC: We currently have pay per click campaigns running—an automatic campaign and a manual campaign. We will pull the search term report and include some of the highest converting keywords and include those in our listing.
  • Email Campaigns: Our follow up email campaigns to customers who purchase Jungle Snugs have not been set up. Those will get set up ASAP so we can increase the likelihood of every sale turning into a product review.
  • Set up A/B Tests: Split testing our listing will be important to improving our keyword ranking and conversion rate. The main image and price will be the first priorities to test with Splitly.

 

Questions For Greg: Open Q&A

Now this is the fun part – questions for Greg. Through 16 sessions, there has been a lot of ground covered, and naturally a lot of questions from those following the case study.

Let’s get into it!

 

How long should a product be on Jump Send for a successful product launch?

Greg plans to keep Jungle Snugs up on Jump Send until promotional sales are no longer needed to support organic sales from coming in.

 

Can you please give the metrics for European markets when determining the depth of the niche. You said roughly 3000 sales/product for the US market but how about EU markets?

Greg suggests that the 3000 sales per product niche on Amazon US can be reduced to 1000 to 2000 sales per month for a European market.

 

Is it worth selling a product that has multiple items on the first page with less than 50 reviews but also some that have multiple hundred and even thousand reviews. I know the demand is high for this product… and even if i get on the bottom of the first page I should  make decent revenue. What are your thoughts on this?

Ideally you want to find a product that has a lot of demand, but with You want to find a product that has the most demand, with the least number of reviews. The product may be a winner, but there are a few dominant sellers already in the niche, so it may be wiser to find another opportunity where it would be easier to break into the top 10 sellers for the product.

 

My question is about applying the JS tools to validate an opportunity for a NEW private label product that doesn’t exist yet.  What rules should I apply ?

Don’t sell a product that doesn’t have existing demand on Amazon. If it’s “new” because it has better features for a product that has existing demand, then that is a different story and your product can get discovered by people searching for your product. However, if it is a completely new product category and people don’t know about it or how it works, it is much harder to be discovered on Amazon and your likelihood of success is far lower than if you sold a product with existing demand.

 

I have a 400pcs of slow moving inventory. What are your best practices in such a situation? (I don’t want to scrap the inventory yet.)

The ultimate goal here is to increase sales velocity. There are two ways that you could do this: optimize the listing with A/B tests (testing a different main image and price are a good place to start). The other way to boost sales velocity is by running promotions—set up a discount in Seller Central and put it up on a deals site like Jump Send to get sales and an improved Best Seller Rank.

 

Being such a public product launch, how has that impacted competition? Have others duplicated your efforts under their own brand for this product?

Competition is a given, especially in a marketplace like Amazon where there are many similar variations of the same product. Baby hooded towels are no different. However, it is the nature of business in general to have competition, and that should not deter you from starting a venture or selling a product. Amazon is a huge marketplace with vast demand.

 

If you were starting today would you choose a European market which is less saturated that the US?

Greg recommends starting in whichever marketplace offers the least resistance to get started. From there, you will learn how the process works, reinvest the profits into the business, and can expand to larger more active marketplaces. If for example you are in Australia without a local Amazon marketplace, you can try selling in the US where the demand is greatest, or countries like the UK or Germany which have solid demand and less competition.

 

How can you protect yourself from your supplier selling your product to your competition?  

The short answer: you can’t. However, as mentioned above, Amazon is not a zero-sum-game, and there is extensive demand where there is enough to go around. Considering that your suppliers are in the business of selling their manufactured products, it is to be expected that they will sell baby hooded towels to other sellers looking to capitalize on the opportunity. If we can focus on the fundamentals of creating a high-quality product, a robust and optimized listing, and complete produt launch, then the rest will take care of itself.

 

Once you have the hang of selling on Amazon, what’s your rule of thumb on starting again?

As soon as you have confidence in the process of finding product opportunities and doing product research, then the best way to grow an Amazon business is by adding more SKUs. Greg is an advocate of selling whatever is working, not necessarily a product that is related to the other products you are selling. On Amazon, people are just searching for what they want to purchase, so there is no competitive advantage to selling another product under the Jungle Snugs brand, for example. So to answer the question, start selling a new product as soon as you are comfortable doing so, as that is the best lever to grow an Amazon business.

 

What is your technique for pricing?

Pricing is a tricky thing, and ultimately no one has any idea of how to price from the outset. There is no certainty to determining what a customer’s willingness to pay is, but perhaps most helpful to use competitive analysis to identify a good starting price. From there, it is best to run various pricing tests (Splitly’s Profit Peak is a simple way to automate the process of finding a price point in a data-driven manner).

 

What can someone do to start selling on Amazon?

A great first step is to follow the process of the Million Dollar Case Study! All of the previous webinars, slides, and takeaways can be found here. There are no hidden tricks or shortcuts, outside of persistently moving forward, one step at a time: finding product ideas, finding suppliers, getting the product to Amazon, and running efficient marketing campaigns (email follow up campaigns, pay per click campaigns, and split tests).

 

Next Steps

In the next session, Greg is joined by Fetcher’s Shane Stinemetz, to review the most important parts of the Seller Central Dashboard. We will uncover which metrics are most important to understand the health of an Amazon business.

Seller Central can be confusing, inefficient, and downright frustrating. However, there are incredibly important business metrics buried in various parts of the reports. Understanding these can be important in identifying how to grow an Amazon business. Catch the replay where Shane highlights how to maneuver around Seller Central to analyze the true health of your Amazon business.

 

Gen Furukawa
Let's Chat

Gen Furukawa

Marketing at Jungle Scout
If dreams came true, Gen would be playing alongside Steph Curry in the NBA. He's living the best possible alternative, in San Francisco helping others use Jungle Scout to build profitable businesses.
Gen Furukawa
Let's Chat

28 Comments on “The Million Dollar Case Study Session #16: Updates and Q&A with Greg”

  1. Gen,

    Great work! My question is how you figure out FBA fees for a new product before launch?

    Without knowing FBA fees, we have no way to know projected margins.

    thank you so much,
    George

  2. How in the world are you guys able to ship your products in the packaging without them getting smashed?

    Whenever I had products shipped in the packaging they always came smashed and destroyed.

    1. Hi Alan,

      Perhaps asking your supplier to not stuff the cartons unreasonably full? it may cost a bit more in shipping, but still less than having defective products arrive at Amazon.

      Gen

  3. Great work and info so far ! Heaps of useful information. However, I’m just wondering if you should market your product on Amazon in such a way that it’s for charity, even though it factually is. Given the aim of this project is mainly for guiding would be entrepreneurs to succeed on Amazon, bulk of them would not be able to market their product in such a way and sales results might differ.

    1. Hey Evan,

      Very fair point, it perhaps is an “unfair advantage” to do so, however, I think that there is some validity to sharing the charity-component as it is a part of the product’s differentiating “benefits” and ultimately we want to set up the product to succeed as much as possible. Does that make sense?

      Gen

  4. Hello Gen and Greg,

    First, many thanks for all the great information that you published.
    Could please tell me which kind of shipping you used to import your product from China – FOB(Free on board) or DAT(Delivered at Terminal)?
    Thank you in advance.
    Kind regards,
    Cristian

    1. Hey Cristian,

      No problem, glad that you get value from this info!

      We used FOB, so the factory delivered the goods to the port and we paid for all shipping from there.

      Gen

  5. Gen,

    couple of follow up questions:

    1. when i try to use extension to get FBA fees, it asks me to get MWS API keys. i have not registered for seller central, and do not understand what is key.

    2. your web app does have “Est. fees”. is FBA fees related to dimensions and weight of the product?
    if this is the case, then even if you sell similar products which already on amazon, but if it has different dimensions and weight, the FBA fees still can be different?

    thank you for your support,
    Goerge

  6. Gen,

    another questions:

    Do you directly ship to AMAZON warehouse/fulfillment center or first ship to your office, then to AMAZON warehouse?

    thanks a lot,
    George

    1. Hey George,

      Ship directly to Amazon. Of course you can ship to yourself first if you want to do an inspection, but it can be a cumbersome depending on your order size, and there are services to offer inspections–we used asiainspection.com.

      hope this helps!

      Gen

  7. Hi Gen,

    when using your extension, I wonder how you sort the data? You suggested to use top 10. Would you show how you select the top 10 sellers? is it based on sales or something else? it is not clear to me. I saw sellers got lots of sales, but they are not on top 10?

    thanks a lot,
    George

    1. Hey George,

      You can reorder the data in the extension by clicking the headings within the extension. Generally speaking, you will want to click the estimated sales until it shows you the top 10 in decreasing order. You can do the same with rank, price, revenue and reviews.

      You can also export the data to a CSV if you need to save it for later, and then use filters and sorting in a spreadsheet.

      Hope this helps!
      Kym

  8. Hi Kym,

    1. yes. understood we can click and sort the data.

    2. the point is when Greg is doing research, it seems he wants to look the first 10 as it is.

    3. he wants first 10 show up 3,000 sales

    4. does it mean if a product showed up first 10 on the list, which means the product and its listing is very good? i am wondering why he does not sort the data according sales?

    5. then when you guys talking about organic ranking to top 10 on the list. what is the list you are looking at?

    thanks
    George

  9. Hi all,
    I ve just learned a TON of new and great info about launching a product. I have been very inspired by the collaborative launch of the junglestix and then i have decided to start selling on Amazon. It is been a great journey so far and it still going on. You guys are doing a fantastic job on this. So one question, could you share also the sheats of the session #17? That would be great,

    Thanks guys and keep going forward
    A huge fan!
    Greetings Gerco

    1. Hi Gerco,

      So glad to hear about your progress! Yes, we will drop in the sheets in the post, though it was mainly screenshares on the Jungle Snugs progress on Fetcher.

      Gen

  10. Hello Greg & Gen, could you please share your photographer contact, I really liked the photos of your baby towel, absolutely I need to invest on this service with the proper source.

    Regards!

  11. Hey Gen,

    I love the lifestyle images of Jungle Snugs. Could you mention which photographer did these images for you? It seems productphotography.com don’t usually offer lifestyle images shooting.

    Thanks,
    Tom

    1. Hey Tom,

      We used productphotography.com for some of the images, and then one of the Jungle Scout team who is a talented photographer took some extra lifestyle images for us.
      My advice would be to search for a product photographer who specializes in location based lifestyle photography (i.e. outdoors or on a set, instead of against a white background). Let us know if you find any good photographers so others can share too!

      Thanks for reading,
      Kym

  12. Hi,

    I saw that the Snugs are now selling for 17.95, which is 2.84 profit, which is 45% ROI.

    You always say that you opt for at least 100% ROI.

    Is the new pricing still worth it?

    Thanks

    1. Hey Lior,

      The pricing had to be adjusted down a bit during the launch phase, and also it is a bit more competitive than initially anticipated (due to the public nature of the launch). The profits should be bumped up when we are getting more organic sales, and once shipping costs go down (moving from air to ocean freight).

      Gen

      1. Hi Gen & Co,

        Thanks for the great case study. I hope you can provide additional detail on profit and shipping.

        Doesn’t selling it at $17.95 result in a ~$0.66 profit? $17.95 price – $9.35 unit cost with air shipping – $6.94 FBA fee (lower due to lower selling price) – $1 estimate PPC = $0.66 profit. Once you factor in other miscellaneous costs such as product photography, inspections and online subscriptions, then you are at a net loss per unit? The $0.28 profit Lior mentioned was based on ocean shipping.

        What was included in the $747 ocean shipping quote? Did it include all the additional fees like dock fee, forwarder admin fee, customs broker fees, etc?

        Thanks
        Dave

        1. Hi Dave,

          the profit margins are not as high during launch as they will be (hopefully) in the future: we intend to raise the retail price, shipping costs will go down (we used air initially for the sake of time when launching publicly), and once we have a fully optimized listings and good organic ranking, organic sales will continue to increase. we didn’t include the upfront costs of product photography, inspections, etc in the per unit cost.
          the shipping quote includes all shipping, fees, documentations, etc from port (in China) to port (in the US). hope this helps!

          Gen

  13. Hi Gen,

    Thank you for all the great information and case study.

    Please can you confirm that in order to be able to use jungle scout extension, I will need to be brand registered to get a code. And to be brand registered I need to have a website.
    Thank you in advance.

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