Amazon has been pretty awesome lately but then when it comes to online arbitrage, there are competitors in the marketplace. It is crazy that 50% or more of items sold on Amazon are from the marketplace or third-party vendors.
So in order for me to compete and move inventory, I have tried Amazon PPC to make sure I can move the inventory.
I think it is worth moving the inventory at an ROI than paying the fees from Amazon. Doing Amazon online arbitrage can be a competitive market. You are competing for the buy box all the time and sometimes, when your items reach Amazon, someone is already there with a lower price than what you expected it to sell at.
So now what? You can wait and get monthly storage fees, which isn’t that bad but sometimes inventory sits. Sitting means fees, so I would rather move the inventory than get consistent fees.
Here is a quick snapshot of my ad spend for last month. These are just standard results but the numbers are all about what I bought the product at, my ad cost, and then the actual profit.
I thought to myself, so I spent $75 – I made $146 in sales but at a .20 CPC. I kinda messed up on the CPC. I wanted to be on top as I wanted to see how Amazon PPC reacts and if it reacts to similar ad campaigns I run in the past.
The most interesting part here is that I didn’t choose any keywords. Amazon Sponsored products just recommended the products to sell and I also added inventory to the campaign that needed more visibility.
I wonder if I create a separate campaign with keywords for my own private label, when I do, then I think I can choose the keywords. Right now, I think Amazon just figures out when to show my listing ID. I will have to read up more and check on it.
I will update you on what I find.
In any case, Amazon PPC is definitely different. I should have lowered the CPC but I wanted to see if I can move the old inventory as fast as possible. I had several slow-moving ASINs and they have been sitting for more than 3 months.
Here is a quick breakdown day by day.
All in all these graphs look cool and interesting but it boils down to the numbers. Here are my numbers which include the online arbitrage price I bought at, ad spends, Amazon FBA fees, etc.
As you can see the campaign in itself didn’t do that well for my first campaign. I also had to lower my buy price to compete with the product marketplace. Since I am not the only seller on these products, I have to win the buy price in order for these ads to create impressions.
If I do not win the buy box, then the ads are technically not showing. Amazon still wants to make sure to create a marketplace with competitive pricing. They are Amazon’s customers.
So for me, I had to make sure that in order to advertise, I had to be competitive and win that buy box. In my thought process, I just wanted to get rid of the inventory that I bought because they, in my opinion, became bad buys.
Now, that I know how it works, I know how to properly attack Amazon PPC for online arbitrage. I have now created a new Google sheet on what I should spend max to break even at least. So this will be fun as the market is getting closer to the holidays.
Sometimes, you think you got a winning product to resell and then it becomes a dud because there are so many that are competing with you and start to create price wars in the market.
In the end, it was a good learning experience. Besides this, I also created a Facebook a campaign to sell other products and see if I can get users to buy a product at a higher price than what Amazon competitive marketplace states.
I will do another case study or post on that as well. Gotta get that experience in to be an expert, especially since I started Amazon this year.