In Amazon’s second financial quarter of 2018, sales for beauty products totaled an impressive $950 million, this number up 26% from 2017. The main reason for this? In the summer of 2017, Amazon ungated it’s beauty category, meaning sellers no longer have to go through an application process to list their products on Amazon’s beauty catalogue. With the barrier of entry removed, the beauty category exploded with new sellers swarming the market, and sales did too.
For brands looking to set their beauty products apart, Amazon created three sub-categories: Professional Beauty, Luxury Beauty and Indie Beauty. This opened an opportunity for recognized brands to list their products on Amazon and get access to its 101 million Amazon Prime subscribers. Subscribers who statically spend $1,400 a year on average. Suddenly exclusivity didn’t seem to be a selling point any longer. The Luxury Beauty category, which consists of high-end, recognizable brands and beauty houses that Amazon had courted for decades, more than doubled its sales. In Q2 of 2018 the Luxury Beauty category alone reached $250 million in sales.
Use PPC to Make Your Product Discoverable
Amazon list more than 3 billion products in its catalogue consisting of 11 marketplaces. In order to make any sales at all, you need your private label skin care product to be discoverable. If customers can’t find it, they can’t buy it.
Use Amazon ads to boost your discoverability and get your listing to rank on Amazon’s search algorithm. To rank for specific keywords (or show up in the results when a specific keyword is entered), you will need to bid on keywords so that your listing can be indexed for those keywords. With Amazon’s PPC (Pay-Per-Click) ads you will bid against other sellers on selected keywords, the higher the bid, the more prominently your ad will be displayed.
If you’re going to spend money on PPC, don’t bid too low, it is a waste of your money. Trying to advertise for cheap won’t help you index for the keywords you want to rank for organically. You’ll be paying to have your product show up as a sponsored ad on page 5 or 6. Try and bid a few cents higher than the average bid, and more aggressive if you can afford it.
Optimize Your Listing
Once you’ve succeeded in getting more traffic to your listing and eyes on your product, you need to increase your conversion rate, or basically convince the shopper to buy. You’ve made yourself discoverable, now you should be desirable enough so that the shopper converts into a buyer.
Now that you’ve used PPC campaigns to bid aggressively on keywords relevant to you listing, use the information from your campaign to improve your listing. PPC campaigns are the only way you can get accurate search volume data from Amazon. Third party tools don’t have access to Amazon’s API and their keyword tools usually give you data from Google, Duck Duck Go and other popular search engines.
Change out the keywords in your listing with keywords that ranked high according to your PPC results. Don’t make too many changes at once, since you won’t know which of the changes you made is working best and won’t achieve the optimum results. To make this easier, develop a PPC strategy for how and when you optimize your bids and make changes to your listing. Carefully watch your PPC results so that you can implement more effective keywords and have your listing show up organically for those.
Manage Your Inventory Levels
When you start getting multiple organic sales a day, you know your PPC strategy has worked and your listing is now ranking organically. It’s not advised to stop your PPC campaign immediately, since you’ll see an immediate drop in sales and in your BSR (Best Sellers Rank). Adjust your PPC strategy gradually so that your ACOS (Advertising Cost of Sale) decreases and you start making more profit.
Once you have a healthy profit margin, pay special attention to your stock levels. Calculate your average sales per day to determine when you need to reorder from your manufacturer so that you don’t run out of stock. Make sure to give your manufacturer enough lead time in your calculation, give yourself a cushion for unforeseen events.
Like any business, there will be drops and spikes in sales. Luckily this is fairly manageable with ecommerce since you can use sales history data to prepare for spikes in the market. For example, ensure that you have additional stock on hand during Amazon’s Q4, which is when sales increase drastically in preparation for the holiday season. Additionally, you should take advantage of days like Prime Day and Cyber Monday to enjoy a boost in sales.