#481 – How to Stay Profitable on Amazon in 2026
Audio version above. Video version below
Amazon profitability in 2026 is going to reward sellers who run their business like a finance department and a marketing department at the same time. In this episode, Carrie Miller and Leo Sgovio bring on experienced sellers to talk through what’s actually moving the needle right now: pricing discipline, smarter PPC decisions, inventory/storage awareness, and operational tweaks that protect margin when costs keep rising.
Ryan Cramer shares how Gen-Y Hitch stays profitable by controlling what they can control: manufacturing in the US, negotiating in bulk, keeping prices consistent across Amazon/Walmart/other channels, and forecasting 6–12 months out so unprofitable SKUs get sunset instead of quietly bleeding margin. Leo adds a practical angle from the games category: when competitors aren’t racing to the bottom on price, the real leverage becomes perceived value. Sharona Ozeri brings the apparel perspective, where price pressure is brutal, and explains how she’s leaning harder into brand positioning, using a mix of lower-margin “traffic drivers” and higher-margin specialty products to stay afloat. She also breaks down her CM1/CM2/CM3 contribution margin method to pinpoint whether the real issue is price, Amazon fees/returns, or PPC spend, so decisions stay math-based, not emotional.
Then the conversation turns into “found money”: reimbursements. If Amazon loses inventory (and it happens), leaving reimbursements unclaimed is like accepting a lower profit margin on purpose. Ryan explains why Helium 10’s MRS Managed Refund Service stands out (hands-on support + smart automation), how documentation like BOLs matters, and how their team recovered six figures in reimbursements, money that went straight back to the bottom line. Carrie also highlights a limited-time incentive: if you activate Helium 10’s MRS inside your dashboard, the fee is 10% through February 28, 2026, making it an easy win compared to services charging 15–20%+.
In episode 481 of the AM/PM Podcast, Carrie, Leo, Ryan, and Sharona discuss:
- 00:00 – Introduction
- 01:19 – Ryan Cramer: Forecasting and Cost Control
- 05:03 – Leo Sgovio: Pricing and Perceived Value
- 07:11 – Sharona: Competing in Apparel by Branding up
- 10:39 – CM1/CM2/CM3 and FBA vs FBM Strategies
- 12:40 – Amazon PPC for Profitability Basics
- 21:19 – Amazon Reimbursement Policy Change
- 23:33 – Helium 10 Managed Refund Service
- 25:46 – MRS promo: 10% fee until Feb 28, 2026
- 40:20 – Deals, Rufus Price History, and Price Wars
Transcript
Carrie Miller:
Today, we are talking about how to stay profitable on Amazon in 2026, and how one of our guests got reimbursed $100,000 this past year. Hello, everybody, and welcome to the AM/PM podcast. My name is Carrie Miller, and I’ll be your host. And this is the show where we discuss all things Amazon, TikTok shop and Walmart private label, and how to generate recurring revenue streams 24 hours a day during the AM and the PM. Hence the name of the show, get it? AM/PM podcast. And as a matter of fact, this last weekend, I was playing pickleball and had a few Christmas parties. And even though I wasn’t working in the e-commerce, I was making money. How cool is that? Pretty cool, I think.
Carrie Miller:
My name is Carrie, and I’m here with Leo Sgovio. So today, we’re going to be talking about profitability and just some ways that we can be more profitable on Amazon or just e-commerce in general. It’s been kind of a challenging year with some more, you know, price increases and things like that. So, we’re really excited because we’ve got some guests coming on that are sellers that are going to share some of their strategies that they’re working on to maintain profitability. We’ll also give you some more just ways to help with profitability just on our own perspectives as well. The first person, though, I’m going to bring on is actually Ryan Cramer. So, I’m going to go ahead and bring Ryan on. Hey, welcome, Ryan.
Ryan:
Hello, everyone. Thanks, Keri. Thanks, Leo.
Carrie Miller:
So a little bit about Ryan. He’s actually been in the industry for a while because you started out working at Viral Launch, correct? A long time ago?
Ryan:
Yeah, back in 2019. Yeah. Feels like forever.
Carrie Miller:
Yeah. So yeah, now you’ve been selling. Can you tell us a little bit about what you’re doing right now?
Ryan:
Yeah. So, for the last year, I’ve been working exclusively with this brand called Gen-Y Hitch. They are an automotive hitch manufacturer, an RV hitch manufacturing company in Indiana. So we actually manufacture all of our products here in the United States for anyone who’s looking into or looking to do that and exploding on Amazon even more so than years past when they were passively just throwing stuff up there. And we’re excited for the growth opportunity on not just Amazon, but Walmart and beyond.
Carrie Miller:
Awesome. I guess my first question for you is going to be, it’s 2025. This year’s almost over.
What’s been the biggest challenge for you in staying profitable this year?
Ryan:
It’s a great question. I think we are constantly… We’re lucky enough to be able to manufacture and distribute all of our products here in the United States. So we do have a lot of control over our manufacturing costs. Sourcing our materials here in the United States is also super important. So, with the consistency across the board with our pricing, we try to make sure that even we might have a lower margin on one of our SKUs, we want to make sure it’s consistent on Amazon, on Walmart, and all of our channels. So, customers can trust our brand and make sure that wherever they want our products and can find us in retail or online, that they know they’re going to get the best price out there. So quality is super important, but also making sure that we are negotiating in bulk because we do such a large volume of business. We’re able to negotiate in bulk and make sure that our pricing strategy stays across the board.
Ryan:
And communication is key, right? So, if promotions are going on for certain products, we’re making sure that our sales team knows if it’s in retail or online, and no one’s just kind of going rogue. So that’s kind of our strategy. The constant communication, making sure that we’re looking and forecasting 6 to 12 months down the road, new product launches, and then sunsetting ones that are not profitable. And then, yeah, those are the main focuses that we’re working on 2025 and moving forward.
Carrie Miller:
I think that’s pretty awesome that you are manufacturing in the US. I think that’s a huge benefit because you’re avoiding all the tariff drama that we’ve had this year. So, I think that’s been a big challenge for a lot of us this year was dealing with tariffs, especially at the beginning of the year when they were like, what, 160% or something crazy like that.
Ryan:
There was a lot. Yeah. And unfortunately, that’s a business opportunity. It could be for other businesses to increase costs potentially, but it’s always important to… But since we’ve manufactured it all, it’s good to know how fast our turnaround times are. It’s not on a boat or it gets delayed. And like you said, if something is coming on a boat or if it’s coming on rail or however it’s getting into a marketplace, we have a shorter window that we can get it out the door into a fulfillment center or just manufacturing and fulfilling it directly from our warehouse in Indiana. So that’s a really nice thing about a brand. If you’re able to do that and able to control all those different variables, it’s definitely a nice thing to keep in your back pocket and build a business around.
Carrie Miller:
How about you, Leo? What have you been focused on this year for profitability?
Leo Sgovio:
Well, overall, we sell card games. Well, games in general. It used to be mainly cards. This year, we launched another game. It’s more like one of those challenge games with a lot of accessories you play with large groups. So, we are kind of lucky because the niches that we try and find have been fairly stable. And we see that even this year with us going into the new kind of market, our competitors tend to not compete on price. And so even though some have a higher number of reviews, some have less reviews, we try to keep the prices. At some point, I even took a screenshot because all of us were selling for $29.99, the same product. And so we really play with obviously the listing, the images, and things like that. And I think we try to be really good at the perceived value, especially considering that on Amazon, people buy images, right? And so the image is anyway what sells first. And so we have been trying to focus a lot on that, a lot of pricing strategy. My business partner just mentioned to me, yes, it’s like, hey, this year we killed it. And I think it’s because of the pricing strategy.
Leo Sgovio:
We tried not to discount too much and leveraging a lot of the best deals, lightning deals, all of that, that can increase the conversion rate and click-through rates on our listing. So that’s primarily what we have been focusing on. Like we can go into more details later on, like the PPC stuff. But that has been mainly what I’ve seen. And again, I’m speaking like it’s probably not the best use case here because I don’t have a lot of Chinese competitors that are just driving the prices down. But ultimately, people want, it’s always the same thing, quality products.
Carrie Miller:
That’s actually really encouraging because I think a lot of people have been kind of pessimistic about Amazon. They’re like, oh, the fees are going up. It’s just they’re struggling with the opportunity. But there’s still a reasonable opportunity on Amazon. There’s still a lot of opportunity, actually. And you can still be profitable. You just have to kind of maneuver some things around, maybe change your pricing. So, I’m going to go ahead and bring on Sharona now. Sharona is another seller. Hi, Sharona.
Sharona:
Hi.
Carrie Miller:
So Sharona has been in our Elite group for many, many years. And so we’ve had lots of roundtable discussions. And we’ve talked a lot about things going up and down. So can you tell us a little bit about yourself and just your background in selling on Amazon, Sharona/?
Sharona:
I’ve been selling on Amazon since 2016, seriously. I actually was 2015, but I didn’t know what I’m doing. I’m in a category of clothing. So it’s a little bit, it’s a tough category. It’s not an easy one. I’ve been doing it since, I mean, all those years. The first few years was up to, I believe, like 2022. It was kind of easy. But from 2023 or 2022 and on, a lot, a lot of competition. So it’s very, very challenging right now. Yeah.
Carrie Miller:
What kinds of things have you done this last year or maybe challenges that you’ve had, that you’ve tried to overcome to stay profitable on Amazon?
Sharona:
We lost the market share in 2024. We used to be organically in position 1 to 10 in quite many keywords, but we lost it for competitors that produce direct. I mean, it’s actually manufacturers that are selling directly on Amazon. We cannot compete on the price. It’s very, very difficult. You know, we can’t. So we’re trying to position ourselves more as a brand. We try to position ourselves in a higher quality and it’s not always easy because we are similar. Our competitors are becoming more and more clever, you know, and I’m meeting those qualities issue as well. I have something that I learned from when I used to do the street fair. You have a product that you make a very good, you have a product that sell a lot, but the profit margin is low. But then you have product that is more expensive.
The profit margin is much higher, but you sell less. So, I still have the product that I sell a lot with lower margin. But I also, because it’s bring, it’s called in French like the produit d’appel.
So, they bring the customers, but then if they like my brand, they’re looking for other stuff. So, I always keep the things that are higher margin and they’re more special. Other competitor cannot really compete. So that’s kind of balance. So I have like, and I have a lot in apparel. You have a lot of ASIN. It’s not just five or 10 ASIN. It’s thousands of ASIN. So that’s helped me somehow to balance. It’s not always easy. It’s a struggle, but yeah, it’s definitely helped me.
Carrie Miller:
Yeah, that’s definitely.
Leo Sgovio:
I have a follow up question to you though. Sharon, like you said, you have some inventory. Well, I’m assuming that you have some inventory, then it moves fast. And then something moves slower, but you have more like higher profit margin. So, I wonder how that, you know, how the economics work. You know, you have this inventory sitting in the Amazon FBA warehouses, I’m assuming. And so if the units are moving slower, do you calculate the profitability, like the microeconomics, I would say there so that, you know, at the end of the day, if you’re still profitable, considering that Amazon might be charging you long term storage fees or incurring to that type of cost.
Sharona:
That’s a great question, actually. And this is something that we were struggling and we’re trying to fix. So my advantage is that I really, we are, we have our own warehouse and we’re doing, we, I have a whole, I mean, I have a team who helped me here and we’re doing FBM.
Okay. So I, what I’m doing is like, I’m sending to Amazon very small amount. Okay. I don’t send a lot. And then if I’m missing something in Amazon, they can always, they’re going to send, if there is a zero inventory in FBA, Amazon is going to send it to FBM. So, you know, you have to have FBA and FBM to do this strategy.
Carrie Miller:
That’s really good.
Sharona:
Another advice that I would give is like, I look at my, I use the system of accounting, the CM1, CM2, CM3. And I don’t know if everybody’s familiar with this, but this is really great. Once I got introduced to this, I really like it because I can see very clearly where is issue. So, if I see that my CM1 is not like, let’s say you have a threshold. If my CM1, my contribution margin is less than 70%, I know that the problem is my price. I need either to increase my price or lower my supply, my cost of good, which is not so easy most of the time, but increase the price. CM2 is going to tell me like, if I have a high return or if I have issue like high fees from Amazon or, so it’s like each stage of the, of the finance of it is showing me where is my problem. CM3 is like, I will see like if, if let’s say my CM3 is less than 20%, this is a problem, you know? So I would check where is it? And most likely it will be the PPCI spending too much money.
Leo Sgovio:
I love that.
Carrie Miller:
Yeah. So, you’re not making emotional decisions like, oh, I’ll just maybe increase it a dollar or whatever it is. You actually have a calculation then it sounds like.
Sharona:
Yeah. Yeah.
Carrie Miller:
Very good. Yeah. That’s very, very helpful. All right. Let’s go back because I think the next thing is, I know you said market share was lost, but I want to ask this to anyone who has an answer to this about PPC. So how has everyone stayed profitable with PPC? I know for myself, I also lost market share. So we had to kind of balance the growth with the TACOS not going out of control. So any, any kind of strategies or thoughts about PPC for anyone that you’ve done to help with profitability?
Ryan:
I think it’s a, it’s a balance that when you’re looking at holistically starting out like the structures that Helium 10 talks about, starting with auto seeing what are your most, you know, profitable keywords that are converting the highest. You want to look at conversion rate versus like overall spend. So there’s a lot of formulaic things to consider for a brand that’s a little bit more mature, I would say. But we look at conversion rates compared to our market share and also what our competitor’s conversion rate is. So, if you’re looking at, if we’re looking at, for example, if we’re at a 5% for a certain SKU and then our competitors are at a 6%, well, we know that there is either a higher spend that we need to operate at. Or if we are outpacing conversion rate, we can maybe keep that spin for that keyword, if you will. So we look at it on a conversion rate basis compared to our market share. But then also, we’re looking at different parts of not just SKU level, but on a holistic level for branded versus non-branded. So branded, you obviously, if someone’s searching for your brand, which we’ve done an excellent job for our team on direct-to-consumer or in retail stores, if they’re searching for our brand, you want to have the ACoS as low as possible.
Ryan:
Some people like to say like, hey, I would like to spend higher to make sure I have a brand around my brand. But in all reality, if they’re searching for your product in a phrase match or an exact match for your brand, you want to make sure that that bid is competitive but not spending as much. So I think that’s a lot of the things that we take a look at is a lot of our spend was on our branded side of search. And it was kind of on its head a little bit. We’re spending so much on branded search that have an excessive amount of moat. And we’re spending so much on our conversions. They look so great on our branded searches. But for maybe a broad match term for some of our product categories, weren’t as great. So we were finding more of those long tail keywords where we can start to get market share, boost that up a little bit more, spend more on those ones that are converting higher.
And even though the branded search is wonderful, it looks great on your Amazon ad console to have such a high conversion rate on your branded terms. Typically, you don’t want to just pull out all of your spend on those, but you want to make sure you dial it back a little bit so that’s still profitable in that regards.
Carrie Miller:
Yeah, that’s a good point. People are looking for your brand, they’re going to look for your brand and buy your brand. Even if they didn’t find it on Amazon, they’ll probably go to a website if that’s the brand that they’re looking for. So that’s a really good point.
Ryan:
Yeah. And we shoot for like 10%. Obviously, the lower, the better. But 10% ACoS on that, just if people are new to the Amazon space. If they’re searching for it, 10% is a pretty good one that we’re searching for in that regards. But yeah, profitability is going to vary on keyword and then conversion rate. So because we have a higher dollar item, we look at the strategy we go off of is clicks to conversion. So how many clicks it takes to convert a product. And because we look at how many, you know, the conversion rate of that based upon how many searches are and how many clicks and then the conversion. Our products are anywhere from, it could be $15 to $2,000 products. So the higher price point items, you can have more clicks and your ACoS can be a little bit higher because once it converts, there’s $2,000 in pocket. So, the spin is going to vary based upon the price point. A lot of people keep it, you know, similar. We have a varying degree of price points, which is a fun formulaic problem to have on our advertising strategy.
Carrie Miller:
Storage fees, you know, if you’re leaving your inventory in storage for a long period of time, you’re going to have a lot of fees there too. So, you know, I think people kind of ignore that sometimes. So, making sure that that is, you know, something you look at as well and not just let that accumulate in the background. We’ve actually had some people in our Elite group who’ve had some challenges with storage fees, sending too much inventory in at once. So kind of balancing that is another way to increase profitability. Any thoughts, Leo?
Leo Sgovio:
No, one thing we did actually this year, which played obviously at scale in our business was renegotiating with our supplier the costs, right? Actually, we changed supplier. We were able to find another supplier which was able to charge us almost $1 less than the previous one. And, you know, when you’re selling a product that where the cost is $3, $4 to manufacture, you’re saving a dollar. It’s like 25% saving just there. It goes straight in your pocket or you can, you know, obviously use it for like PPC and trying to compete. So, I think that alone was a big, big, obviously improvement for our business this year in general. So, I would say that’s definitely something that I will do if you haven’t done it yet. And when it comes to PPC, your question earlier, like we were so like trying to be kind of meticulous about every single thing and looking at all the different keywords and the campaigns and trying to drive always these campaigns are like obviously a profit. But the truth is that it’s not easy. It’s very challenging to do that. So, we stopped kind of like over-engineering and as long as our campaigns drive profitable or even a break-even, right now I take it all day long.
Leo Sgovio:
Like obviously we do look at the like true contribution margin, right, per the unit. So, this way we look at pretty much everything after the sale happens, like what the cost even for like if we pay affiliates careers like the PPC, the FBA, storage fee. So as long as at the end of the day, our campaigns are helping us keep the rankings high because you have to keep that in mind. Like the most recent product we launched, we did not do any giveaways. It was just purely PPC. With PPC, I think we have about 30% like I would say gross margin on the product. But I was very happy to spend 30, 35% just on PPC and lose some money because if we put that money into giveaways, it’s going to cost you a lot more. There are some companies right now that charge you just $10, $8 just per unit. So that’s that plus your cost of goods. Plus, obviously, if you are trying to get some feedback, stuff like that, we don’t want to get into these details, but it ends up being quite expensive. Just PPC alone helped us rank higher. We did a very good Q4. And so I think, you know, there are ways to play these. But PPC for us is another vehicle to make sure that we are always visible. We keep visibility on Amazon. And yeah, so we don’t stress anymore too much about that, unless you have very tiny profit margins.
Carrie Miller:
Just a side note for anyone who’s maybe struggling with PPC. I actually just did a series with Destaney with Sean about, it’s called Outsource to Optimize, where I kind of took over my own ads because I had some big struggles this year with ads. We had to basically take ads back from an agency that kind of tanked our sales. So we kind of went through a lot of this stuff, and it’s in our Ads Academy. When you log into Helium 10, you can actually see this series. It’s towards the end of PPC Academy, but it’s called Outsource to Optimize. She gives a lot of really good advice, too, about PPC and just growth versus profitability, especially because I had lost a lot of organic rank, too. So, I had to kind of regain that. And that’s kind of an investment. And then, you know, you also want to not overdo it. So, there’s some balance there. Definitely check that series out if you need some help with PPC. But I want to go ahead and get into another thing that happens with Amazon, and that’s with Amazon. Sometimes they lose your inventory or things happen, and Amazon has to reimburse you. Basically, just wanted to see, Ryan, what has your experience been with getting reimbursements and just managed refund services?
Ryan:
When we had… There’s plenty of agencies and technologies out there that will claim that it’s automation, and it’s really not. There’s a lot of, I think it was at the beginning of this year, or maybe it was at the beginning of Q3 when Amazon changed their policy. When it was, hey, we’re going to reimburse you for the cost of goods instead of the retail of your product, which is really big for a lot of sellers. It used to be, hey, if I had a $100 item, they would reimburse me for $100. Now for your cost of goods, if it’s not input to Amazon, you are getting the… I guess they’re guessing what your cost of goods is, and you can change it, but you have to provide proof. If I’m sending 25 units to Amazon because of big bulky items, and they lose five of those, that’s a lot of potential loss and margins that we are getting. Plus, you have to reship new products there. Amazon has an automated solution, but when we use managed refund services, it was taking over from an agency who was charging, I want to say anywhere from 15% to 20% of anything they recovered, which is really high in that regard.
Ryan:
What I took over and heard that Helium 10 actually was doing a managed refund service, it was something where it has a hands-on approach, but also there’s an automation to it, which is pretty easy. I’m in it constantly every couple of weeks trying to make sure that, hey, if there’s some uploads of shipping invoices or anything that are needed, it’s uploaded, it’s really easy. And then the team actually, since there’s discrepancies on inbound placements or just lost items, they cross-reference our inbound shipments to what Amazon receives. If there’s a discrepancy or a less than, they file right away a case to Amazon. So, if Amazon misses it, which they’re bound to at some point, the team at managed refund services and Helium 10, they actually have helped us recover six figures this year.
Carrie Miller:
Oh, wow.
Ryan:
Yeah. I don’t know how many other people in that category, but we’ve recovered quite a bit of funds. This is the difference in margin of anywhere from 3% to 5% to 7% of our overall revenue for the year. If you don’t think that it’s not worth your time, I would rather have that in our balance sheet than it’s just lost inventory. You’re not getting a recovery and whatever the fee is to have a service like that, it’s definitely worthwhile. So at the end of the day, it’s putting that money back to our bottom line. And you could spend more on advertising, you’d spend more on product development. You can take those funds at a scale and really do some really fun things with it. Invest in your team, expand to a different market. But that’s just lost money that’s back in our pocket. And it’s nice to see that balance sheet. But Amazon owes us more money if they lose a product or not. It’s great to sell it, obviously. But when something is mismanaged on their end, it’s their fault. They take full responsibility. We get proof of, hey, this is how much we sent. Our delivery was sent there and it’s on them. That’s huge for a lot of sellers who are maybe going shipment to shipment or month to month, whatever their profitability looks like. But if you can put that to your bottom line, it’s certainly nice.
Carrie Miller:
That’s amazing. Six figures. That probably would have been more if they were reimbursing the full retail price. A lot more.
Ryan:
It’s a little sad, yeah. The numbers do drop off after August. But it’s consistent, right? So, if it’s a couple thousand dollars every month that we’re getting back, that’s certainly nice on our end to know that you’re within that wiggle room and it’s going to your bottom line instead of just lost to the ethers.
Carrie Miller:
That’s amazing. Yeah, I like what you said about just having visibility and kind of more control of that whole process, seeing it in your dashboard with Helium 10. So, something I wanted to mention is there actually is a really cool deal right now with Helium 10’s Managed Refund Service if you haven’t done this. And if you aren’t doing this, you definitely are leaving a lot of money on the table. You’re losing money really because you’re not getting reimbursed for things that are lost. But if you sign up for Helium 10’s or basically you just activate Helium 10’s Managed Refund Services in your Helium 10 dashboard, it’ll be only a 10% fee through February 28th of 2026. So you get basically a pretty good discount on the fees for doing that Managed Refund Service. It is a manual process and there are people who are working on that for you on the back end. So, it’s definitely a really good service to take part in. So, if you haven’t, you’re definitely missing out. Again, just go ahead and go to your dashboard and just basically activate your managed refund services. And then you’ll get that lower 10% rate, which is an amazing deal. Like he was saying, a lot of people are taking like 20% or higher. So definitely a great, great deal there. All righty.
Carrie Miller:
I wanted to just ask another question too. Said when it comes to increasing retail pricing, is there a specific formula or should I rely on competitor analysis? That’s a really good question. I know everyone has different strategies. So, any advice you guys have for Stephen?
Ryan:
If you’re going to increase pricing and you’re on different channels, increase Amazon last. They’re very finicky and there’s a lot more marketplaces that Amazon is scraping to see if you are the featured offer. So we have this happen all the time. A lot of companies, if they do it at year end or whenever they decide to increase pricing, there’s a strategy if it’s an API or whatever your company is sending out to people. You want to make sure that if Amazon targets and sees that the price is higher on Amazon versus in our case, it could be a Walmart, it could be anything like that. We actually had an issue where we were opted in automatically for pricing, automatic pricing strategy for Walmart. And it was seeing the price on Amazon, it was dropping it by 3% to 5% or something of that sort. And all of a sudden we were losing featured offered status on our own listings on Amazon. And we were just fighting ourselves. So it was back and forth of, well, Amazon’s matching it, Walmart’s matching that, and it fights itself. So I would say, if you can, try to do both Walmart and Amazon at the same time. If not, Amazon’s your last changeover and the pricing updates in 15 minutes. So make sure that’s your strategy there.
Ryan:
But in terms of competitor analysis, I think it’s important when we launch new products to look and see what’s our average… Helium 10 does a good job too when the Chrome extensions, if you’re looking at a category, says like average sales price for this search term, or for these products in this page one or two. We look at that and it actually informs us, hey, what we should price are some of our new products in that space. We might be needing to price it a few dollars higher just to gain some margin in that capacity. But we’re not always racing to the bottom. You want to have that wiggle room, especially if you want to drop it for promotions. That’s really the biggest strategy is, what’s that buffer that you are going to 100% play with later on. And if we need to drop it or have a strikethrough or promotion, then we’re not hurting ourselves based upon our velocities there. So certainly look at the average, try to be as competitive as possible. The things are going to say your part is probably your creatives, your main image, and basically the product listing itself. So once you get that click, the conversion comes with how you stand apart from the rest of your competitors. Price should be also competitive, but it’s a formulaic process for us in there.
Carrie Miller:
Sharona, I know you have more calculations, I guess you could say.
Sharona:
I don’t know if it’s calculation, but I don’t have a formula. I know for sure now that I’m less afraid to… I mean, actually, let’s start with this. Between my competitors from China and me, there’s a big gap of price. I’m talking about like $10 gap. It’s big, right, for similar item.
So I’m trying to… And I’m not afraid anymore to raise my prices because, hey, I’m here to make a profit. I’m not here to lose. So not necessarily… Like the customer is not necessarily going by the cheaper price. We have to remember this, you know. So I’m trying to be a middle price, you know. And I’m even above the middle price. So I don’t have any formula.
I’m doing it… I’m not… I can’t look at what my competitor from China doing because I cannot compete with them. But I’m trying, obviously, as I mentioned before, to position myself in a higher level. But what I keep hearing from different people, don’t be afraid to raise your price. Don’t be afraid to raise your price, which I was. So once I did it, I, you know, it was okay. I still have sales.
Sharona:
Now, the only issue is that yesterday or two days ago, I saw something with Rufus. I’m trying to learn as much as possible Rufus. Rufus actually recommend by price, which is not good for us. No, yeah. So I noticed like why they don’t recommend me. And I realized the pattern of the people that the customer… That the sellers that they recommend, it’s similar price, you know. Very little of the competitor that higher price, you know. So that’s something that I need to learn more. Because the Rufus changing the game right now, you know.
Leo Sgovio:
One thing I would say, first of all, is when you try to increase your price, if you are planning on obviously doing that, is to be very careful with the way you do it. Because the Amazon algorithm is very, very kind of like judgmental when it comes to increasing prices. And the way it happens there is that if you have, you know, historically sold for $19.99, Amazon knows that your conversion rate and expected sales from your product, that conversion rate is this much. The moment you increase your price, there is no historical data that Amazon can rely on to understand how much money they can make from your product. And Amazon is obviously algorithm is trained to make money, right? And so when you do increase your price very quickly, then you tend to lose ranking almost immediately. Because Amazon doesn’t know where to position you in order to maximize profitability from your product. But if you do this slowly, backed by PPC, and so you can just, you know, play the game until when they have at least seven days of data, then you might make it through. You can break through that kind of like a relearning phase. And I think that’s also why Rufus is probably recommending products within that price range, because it knows that, you know, this is the expected conversion rate from this group of products. And so when you are off that range for the same type of product in the same category, under the same leaf node, you might not be getting the same, obviously, attention because Rufus expects a lower conversion rate from you.
Leo Sgovio:
And so you either get placed in a totally different category, maybe more together with luxury brands or something that is around that price range. But if you’re trying to compete with this low-priced product, I think it’s going to be a hard battle to fight. Unless you’re really good at, like you become a doctor or surgeon almost, you go and look at all the back ends and what they’re doing. And if there’s something that is maybe different, that is helping Rufus, you know, recommend your product. But I think I shared this last week on our early training. Use Rufus also as your assistant. Ask Rufus, why do people buy this product? What kind of questions people ask before buying this product for your competitors in order to understand what makes the decision? What’s helping Rufus drive the decision? Because if you understand the psychology or the data that goes behind it, then you can probably improve your listing so that you can get featured too. So that’s what I would recommend doing.
Sharona:
Yeah, absolutely. And I did it actually yesterday.
Carrie Miller:
Oh.
Sharona:
Yeah, I asked questions and it’s telling me like, yeah, you have to make, you have to position yourself like as a higher quality because to justify the price. And you talked about how, and to raise the price, obviously we have to do it like slowly, slowly. You don’t jump. You have to do it like 50 cents at a time or, you know, slowly, slowly.
Carrie Miller:
That’s what I’m doing currently as well. We’re very slowly raising the price. I want to go back to this question. Brittni asks, is there a path of escalation that you usually take when Amazon denies losing or receiving inventory, although you have provided all the documents? The cool thing about the Helium 10 Managed Refund Service is that they do it all for you. So otherwise you are going back and forth and it’s a lot of time taking away from you focusing on your business. That’s why I’ve used the Managed Refund Service as well because it’s time that I don’t want to spend going back and forth. I don’t know if that’s your experience, Ryan. Is that how you’re thinking about it as well?
Ryan:
Yeah, anytime I cannot be in my cases, that’s time back I can use to increase our listings or doing something else that is more of a fire. Again, a lot of it is Amazon saying, hey, we’re still researching this. It’s a lot of candor back and forth. But when they do, it’s so quick and easy to just upload my bill of lading, which is the BOL that’s needed for Amazon. That’s your proof by the carrier that, hey, you shipped out this many units on that end. And then the trucking company or whoever is moving your freight, they also have that proof too. So they’re on their end providing those documentations. And so if it’s leaving and it’s signed by them, all of that is on either the shipping company or Amazon. So yeah, they look at all that.
And if I had to do back and forth and provide more documentation and search for it all and upload and download a bunch of documentation, I would go crazy. So, my team has been awesome. It’s a training to your shipping department to make sure that you have all those resources. Not always the case when we used to, getting them scanned in, having it organized, and having those bills of lading. And because ours are big and bulky, we shouldn’t send pallets at a time. Not full truckload, but LTL. And any sort of documentation that you don’t have is an excuse to not get money back. So over document in the beginning if you’re just launching or make sure that your warehouse team has this on file. Making sure that everything’s consistent across the board. Any shipments you’re doing to FBA, FBM, obviously it’s completely different, but lost inventory is a bane of everyone’s existence.
Carrie Miller:
Definitely. And that’s not something I want to spend time doing for sure.
Ryan:
No.
Carrie Miller:
I think we’ll take another question here. And this is about PPC. And I think this is, again, going back to that question of growth versus kind of reducing, keeping your TACOS down.
Jason asked, what is more important at the current moment, prioritizing sales to help with conversion or teaching Amazon’s PPC algorithm to learn, stabilize, and improve for the long term? So, any thoughts, anyone?
Sharona:
Well, it depends on what position you are, where you’re starting. Like if you’re an established seller, yeah, you have to, you know, obviously looking at, for me, at the TACOS, you know, because I have already like a lot of reviews and I have a good position. But if you’re just starting out, you definitely need to spend more money on prioritizing sales, prioritizing ranking. So, you’re not going to make money in the beginning.
Ryan:
To Leo’s point, conversion rate, if Amazon is being trained that you’re converting at a certain percentage and you’re outpacing your competition, Amazon will move you organically up its ranking. So it wants the positions one through 10 to 12. It wants the highest conversion possible. I saw there was another question on there of, do you increase, do you run coupons on the algorithm? I think it’s, I look at it this way, when you’re launching at 100% conversion, whether it be like giveaways or you’re doing coupons or whatever the strategy is, if you’re starting at such a high conversion rate and then all of a sudden you decide to like abandon the coupon or abandon, you know, drop in price, Amazon’s going to red flag that too, right? So if you go from 100% to let’s say 75%, that’s still a drop of 25% of conversion.
So, it’s best to stay as consistent as possible with your base, if you can, price point, and then any sort of drop is going to be the exception, not the rule. So I’d rather have the highest conversion rate possible with my baseline price and incrementally and slowly increase it over time if needed. Then have constantly a coupon going or some sort of promotion where it’s an arbitrary up and down. And especially with the look back window, now that Rufus is showing what 30 days and 90-day pricing history, it’s training the consumer to be smarter about pricing and when it drops, whether it be your list price or just via coupon or promotion. So that’s another thing to consider.
Leo Sgovio:
I think it’s like you made a good point there, Ryan, but I think in your niche, it’s a little bit easier to play that game because you don’t have probably a lot of competition, especially like on the eye ticket items. But if you look at who’s winning on average on Amazon today, like probably 70% or maybe more, I don’t know, but it’s Chinese sellers that are playing a totally different game. And if you use the Helium 10 extension or even like Keepa, you can see that they’re running lightning deals every week. Every week, that’s the whole game they play. And the reason why that works is because you have obviously a higher click-through rate on your listings when there is a badge that shows whether it’s a lightning deal, whether it’s a discount, price discount, whether it’s the best deal or the coupon. But when you have something on the search results page that your competitors don’t have, or if you have, the first click is going to go to you. And if you have a good listing, if you have a decent review rating, if your listing is built to convert, designed to convert, you’re going to get a sale. So that’s basically what we decide to play this year. This year I had, since September, all the way until now, I’m running lightning deals, best deals, pretty much every week. And because of a very consistent pricing strategy, I haven’t discounted my product too much. We’re talking about cents week over week. So that’s how I kept my preferability high this year without going.
Leo Sgovio:
Last year, I sold on average during this period, a product normally was up for $24.99. It was anywhere between $15 and $19. That was the price range. We sold very well, but from a preferability perspective, we made probably a couple of dollars per unit.
This year, we sold on average at $24.99 with lightning deals, with best deals. Why? Because we were able to increase the average list price. And so we either showed always a strike two price. So the customers always had the perceived value that they were getting a deal. They were buying the product on sale. Now with Rufus, obviously they click on price history. They can see that historically, we’ve been selling pretty much around the same. But how many really are going to check that? And so I think it’s a totally different strategy to play. You’re really going to master that, but it’s probably the best way long-term to win in the space where you have a lot of Chinese sellers that are doing the exact same thing. Does that make sense?
Carrie Miller:
Yeah. And Rufus, I noticed they are actually recommending the deals before the regular price products too. So that is maybe something else to look at.
Sharona:
Yeah. But lightning, I mean, they’re giving you the price that they want you to sell, right? In the lightning deals. I usually don’t do this because they’re giving me such a low price. I cannot make a profit.
Leo Sgovio:
Yeah. It’s because your lowest 30-day price has been historically low, right? And so in order for you to run a lightning deal, they say, oh, you have to discount for at least like 30%, whatever that is, right? The recommended price. It’s because of your lowest 30-day. And right now, to Ryan’s point, if you add coupons or anything else, it does affect your lowest price, your lowest 30-day price. Before, coupons wouldn’t affect that. So if you add the least price, and let’s say $40 with a $10 coupon, Amazon will still consider the sale at $40, right? But today it’s actually 30. So everything today that you can run as a promotion affects your lowest 30-day price. And so that’s what the mistake that most sellers make that don’t understand how the pricing strategy or structure works in the back end. And so you end up basically running this engine, it’s like running a car always on reserve, right? It’s not, from a cashflow perspective, liquidity perspective, it’s not healthy. It’s not healthy for your engine. And so that’s what I think people should focus more in order to figure out the profitability in the back end.
Carrie Miller:
Alrighty. I think that’s all we have for everyone today. I know it’s been a lot of discussion, but I just want to say thank you to Leo, Sharona, and Ryan for joining this call just to share your own experience with profitability and just ways that people can maintain profitability.
It’s really challenging and definitely doable and still a very good business. So, I just want to make sure everyone understands that. But thank you guys for all your advice and for being willing to come on and share all of that. And we will see you all again on the next webinar. Bye, everyone.
Leo Sgovio:
Thanks, guys. Hope you have a good one.
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