The CPC of some categories on Amazon is as high as 8-10 US dollars? In the era of high-cost operation, should we choose high-priced products or low-priced products? How can we maximize profits?

Lost Uncle

"Wonderful Reply"

Zhang Heng

Agree from: mason1968reznov, 零零1111, 木sjfx1, 社社人儿, innnee More »

What the uncle is talking about is a specific methodology at the practical level. Most of the comments are about theories related to product selection. It’s not that they are wrong, but they are off topic.

In addition to the influence of indicators such as warehousing and returns, the main influencing point of product profit is aacos (advertising expenditure share, just different names), which can be further broken down into two indicators: acos (=cpc/(average order value*cvr)) and advertising order share.

When the product acos is relatively low, the proportion of advertising orders is not particularly important, because the overall profit is expected to be good; when the acos is relatively high, a certain proportion of organic orders is required to achieve break-even (proportion: pricing profit margin/actual acos, break-even), and then a higher proportion of organic orders is required to achieve maximum profit (the organic order proportion at this time is set to R, then the expected profit margin at this time = pricing profit-R*actual acos)

In other words: the higher the product's estimated ACOs, the lower the possibility of the product achieving profitability, the higher the operational capabilities and resources required (the higher the ACOs, unless the market is very large, otherwise 80% will be losses), and the longer the profit cycle (but these indicators are difficult to predict, and the traditional way of predicting profits is too ridiculous. It is best to further subdivide the indicators based on your own experience in promoting products in a specific category, rather than directly filling in the monthly order volume, organic order ratio, ACOs, etc. according to the template for a product. The more you believe in breaking the template, the greater the loss. Now is not the stage where you can make money by just launching a product)

The indicators at the ACOs level are: expected product CPC, conversion rate, and average order value (average order value will affect conversion rate). So from the perspective of profit feedback, the most important indicators are actually average order value, CPC, and expected CVR.

This is one of the methodologies for reverse product selection (improving products, moving products) from the perspective of advertising practice. I personally have multiple successful cases. As long as you can control other variables, it is quite reliable, especially suitable for individual entrepreneurs.

(I personally think that what operations can do is: under the existing operation system and resources, combined with the market and competitors, based on personal experience and products, to develop a general promotion idea, and then make adjustments based on actual data. In product selection: the most important thing is to understand what products the company's operation system is suitable for, what resources are needed to make specific products, what kind of market you are going to enter, the real advantages and disadvantages of you and your competitors, and your actual competitiveness, and what you can achieve by understanding and applying the basic logic of advertising)

Talking about it on paper is useless (you treat me as a fart). Reading some materials is just to let you understand. Only when you are truly successful can you say that your system (theory + practice) is reliable.

Lost Uncle • Shenzhen • 2024-08-12 11:17

After reading so many comments, I feel that our understanding is the same. In fact, it is reverse product selection through advertising analysis, but many friends have reported that they don’t understand it.

Anonymous user

Agree from: greats, greedy piggy

Product selection has always been about pursuing profits, how to use the least amount of money to maximize profits, so this kind of product is acceptable to our small company.

We first entered this sub-category, and after successfully creating the product, we started to develop a product matrix with different materials and functions, and expanded the products from low unit price, medium unit price, to high unit price, so as to obtain greater profits.

Product selection is more based on one's entire capital investment, including operational capabilities. If you blindly pursue high-priced products with a price of more than one hundred dollars or several hundred dollars, then you can ask yourself whether you can afford the advertising bidding of only a few dollars or more than ten dollars.

Just like what that buddy said, others have prepared two million to put up one listing, and you have prepared two hundred thousand to put up several listings, how are you going to do it?

A small company of five people

greats • Guangdong • 2024-08-03 19:03

That's right, brother. Our Amazon store is run by only two people. The boss is responsible for opening the products, and I am responsible for everything. We mainly sell differentiated products above $20. Now we can get 100,000 yuan in return every month, but it will be difficult to go further. It's still a question of strength. Other companies have off-site, testing, and community. How can you win if you are a pure white hat?

alittle123 • Shenzhen • 2024-08-03 21:49

@greats: Differentiation depends on what aspect. If you simply differentiate your products by appearance, packaging, etc., these are still small funds. I think some companies with insufficient funds will directly innovate and change their products, which will have the highest failure rate.

Xiaobai Yaya • Shenzhen • 2024-08-05 14:47

@greats: Matrix your previous products. For example, color, size, and the same product on different brands.

Chopper123 • Shenzhen • 2024-08-05 17:19

I would like to ask, how can a small company manage tax issues? I have always declared zero tax, but now I am receiving more and more money. Is there any risk in collecting money personally?

Ye Gucheng w - Diligence makes you proficient, playfulness makes you waste, and thinking makes you fail.

Agree with: Kriseyang, ak520110, JosephGan, Morven, Xiaoma Xiaoma More »

Why bother with the price? It's like choosing between eating steak at a five-star hotel or eating barbecue at a street stall. The key is your wallet and appetite, right?

I think if it is a small company, the secret to product selection is to be bold, careful and thick-skinned. To be honest, for high-priced products, the advertising costs will make you nervous, and there will be so many competitors that you will doubt your life. You think you are going hunting, but you find yourself becoming the prey. You know how it feels.

For low-priced products, the click-through rate is more likely to increase. But don’t forget that as the conversion rate increases, the inventory pressure also increases. At this time, copywriting optimization, advertising debugging, and customer group analysis are all put into action to make it possible to carve out a path in this red ocean.

Therefore, no matter whether you are doing high-price or low-price business, you have to go through it with a "trial and error" mentality. If you lose today, you will earn tomorrow. You should practice day and night. Who will laugh last depends on your wisdom and luck.

Don’t be confused by CPC and ACOS. The ultimate secret of product selection is to find the balance point that “can make you money and let you sleep well”. It sounds simple but it is difficult to do, but this is our daily operation on Amazon.

Anonymous user

For small companies on Amazon, should we choose high-priced products or low-priced products as our main focus?

1. Of course, you should first look at how much money the company can invest and the success rate of promoting the product.
If you know the expenses you can afford and the success rate of previous companies, don’t you know the risks of promoting one high-priced product and several low-priced products? Besides, the sales volume of high-priced products is far lower than that of low-priced products. The size of the wallet and the audience is not on the same level.

2. Moreover, the history of product development is ignored here. A mature supply chain + product scale can greatly reduce the cost of products. As long as the profit is high and the audience is large, they will go through this process sooner or later.
The price of the product will eventually affect the supply chain. Running a company is not static.

Able1234 - Former home furnishing industry trader, now a fraudster in the clothing industry

Agree with: lpgliqinger 、 Ansonic 、 Schwarzzz 、 zzzfanren 、 Jessie90418 More »

I don't know what you are analyzing. Take CPC for example. There are high-priced products with low CPC and low-priced products with high CPC. You need to estimate it in the product selection stage. The main pain point of high-priced products and low-priced products is cost. Under the same quantity, high price means greater financial pressure. There is no problem as long as the expected investment ratio is reasonable. Only the last sentence in the whole article is correct, that is, to do conversion rate, but it is just a correct nonsense.

Anonymous user

Agree with: Pigs also have ideals, Morven

Are you off topic? The main text and your title don't seem to be very relevant. Secondly, the main content of your article is about ACOS. Does this indicator play such an important role in your product selection? Instead of pursuing ACOS, it is better to pursue tacos, which can better reflect the role of advertising and your overall profit situation.

Greedy little pig - oh this is

Agree from: biki2018, fineyishun

The starting point of this logic is wrong. You should first find a category where you can make a profit, even if it is a category with less competition, and then expand to adjacent categories. Otherwise, if you make a lot of products and all of them lose money, your gold and silver mountains will be empty.

Zhang Heng • Shenzhen • 2024-08-05 11:34

He was wrong to start? Then you haven't started yet.

Lost Uncle • Shenzhen • 2024-08-12 11:19

@张heng: Thank you for your support. But my original intention is to help you increase the success rate of product selection from the perspective of profit (through advertising). It doesn't matter if you don't understand it, as long as the right person gets it.

happy520 -The harder you work, the luckier you will be. . .

In fact, it doesn't matter which direction you go. It depends on whether it suits your own operating model. If you are doing a blockbuster model, don't try to learn the boutique model, and if you are doing a boutique model, don't try to learn the blockbuster model. Each of you should be Amazon within your own circle of competence.

Low-key small e-commerce • Chongqing • 2024-08-03 17:48

I have some doubts. My understanding is that the boutique model is the explosive model. Is there any difference between them?

There is evil in the world • Guangzhou • 2024-08-03 18:19

@低调小电商: My personal understanding of the explosive model is that the initial investment is high, and there may be a lot of off-site promotions, flash sales, etc., which usually explode the number of orders (through RMB) in a short period of time and accumulate a certain amount of comments and weight. This model generally chooses products with large market volume so that they can make profits through natural means in the later stage. The boutique model is to select products in the early stage, improve the listing pictures, and offer a small discount. The goal is to spend as little money as possible to achieve the purpose of profitability, which is a white hat approach.

alittle123 • Shenzhen • 2024-08-03 21:53

@低调小电商: To put it simply: boutiques are basically centered around product selection and testing, and the product that is promoted will be the main product. The boutique model also varies from company to company. Some companies are strong and have the funds to open private models. Small companies generally choose existing products on the market or make differentiation. Slightly change the style

Zhang Heng • Shenzhen • 2024-08-05 12:22

@低调小电商: You can understand it any way you want, as long as your logic is systematic and not fragmented. Just read some training materials and memorize them. For example: operating models can be divided into: boutique, fine shop, and wholesale, and the so-called explosive model is just a term you have sorted out. According to his logic, you can also add: non-explosive model: mainly product line, pursuing profit maximization with existing funds. You can also add some other terms, such as the company's operating system (development stage, employee level, sales and profit), the company's product selection model (creating new products, improving products, transportation), the market and products entered, etc., and you can create other terms and models

Anonymous user

Agree from: Lost Uncle

There are very few natural positions with high customer unit prices, so you have to keep advertising. The proportion of advertising is high. Products with low customer unit prices are easy to increase in volume and have high sales. It will be easier later. It depends on personal choice. Which method to choose?

Lost Uncle • Shenzhen • 2024-08-12 11:45

That makes sense. Do you have any specific cases? We do have some cases, but the evidence is not sufficient.

BENNY2023

Agree from: 131782**, as112233, Daidai eating watermelon, Holshet, It's a little monster More »

The essence of product selection and sales is profit. It is too one-sided to discuss product selection based solely on unit price or ACOS. More attention should be paid to gross profit, competitiveness, capital allocation, etc.