Amazon's Misconceptions about Hot Products and Its Road to Transformation

My dears👋, today let’s talk about Amazon’s idea of ​​making products that are popular. It may not be as good as you think😣.

Hot sale trap

Amazon's Q1 2024 data shows that among the nearly 400 million products on the platform, only 0.01% of them have monthly sales of more than 100,000 US dollars. The average initial cost of creating a hit product is 150,000 to 200,000 US dollars, and the risk and probability of failure are extremely high. For example, seller David invested 80,000 US dollars in PPC advertising, 30,000 US dollars in promotional traffic, and prepared 20,000 pieces of goods for home storage products. As a result, the product response was average, and finally the inventory was cleared at a low price, with a loss of 120,000 US dollars. Now it is difficult to break through by burning money to create a hit product 😖.

Refined Operation

Instead of pursuing hits, it is better to manage the product life cycle in detail. Although the sales volume of long-tail products is not high, it is stable, and the accumulated profits are considerable. For example, my friend Sarah focuses on the kitchen gadget category, operates a combination of 20 SKUs, and has an average monthly profit of 30,000 US dollars and is growing steadily. She uses the strategy of "small batch testing, data-driven, and continuous optimization" to prepare 500 pieces for the first time, optimize listings through A/B testing, and accurately place advertisements. The profit margin exceeds 20%, avoiding the risk of inventory backlogs and having a healthy cash flow💪.

Trends and opportunities

There are new ideas for the transformation to high-quality and branded products in 2024. The average profit margin of sellers with independent brands is 30% higher than that of OEM sellers. To break through, the product strategy should be changed from "pursuing hot products" to "building a matrix", the operation focus should be changed from "short-term momentum" to "long-term value", and the investment direction should be changed from "focusing on marketing" to "focusing on product strength". Practical suggestions: The first batch of new products should be within 1,000 pieces, the advertising daily budget should not exceed US$20 and the ACOS should be less than 25%, and 3-5 differentiated products should be deployed in the same category✨.

Today I will share with you the three steps of cold start for new products - research on cold start for home life advertisers