Ep 264 Decoding Amazon Sales for Profit and Growth

Does Amazon feel like a huge behemoth that cannot be tamed? We've got good news for you! Luke from Waypoint Growth Partners joins Stephanie to break down what it actually takes to be profitable on Amazon. The look at unit economics, ROAS, ACOS, TACOS, and why racing to the bottom on price is a losing game. Luke also shares a real story of a brand that was failing, but once they fixed their margins and actually raised their prices, they became a category leader.

To learn more about Luke and Waypoint Growth Partners or to get your free Amazon audit go to https://www.growwithwaypoint.com/, or go ahead and email Luke directly at Luke@growwithwaypoint.com

Finally! Decode The CPG Industry - Get the 5 Clarifying Steps to Navigating CPG with Stephanie Robbins. Live on August 20 - free to attend → https://www.foodbizsuccess.com/events

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Transcript

SPEAKER_01 0:00

Hi everyone. Have you ever wondered how to be profitable on Amazon? Today is a show for you. I sat down with Luke Tyranny from Waypoint about winning on Amazon. And no, you don't have to race to the bottom on price to do it. We're going to break down the acronym Soup ROAS, ACOS, Tacos. And don't worry, tacos can never be wrong, right? And we're going to get into what they actually mean for your bottom line and how to use them to work for you. And it's not that intimidating. Luke makes it really simple. He shares a real world story about a brand that was selling like crazy but barely making money until they fix their margins and yes, raise their prices. So if you've ever felt like Amazon just kind of feels like that behemoth that you just can't get your arms around, this episode is going to decode that and it's going to help you so you can actually put a numbers-driven plan in place and be successful on Amazon. Now let's get into it. Welcome to Food Business Success. This is the podcast for early stage entrepreneurs in the packaged goods industry ready to turn that delicious idea into a real business. I'm your host, Stephanie Robins, and for nearly 30 years, I've been building and growing brands. Now, as a coach and mentor, I help founders sidestep the most common and avoidable mistakes. This podcast is about helping you see those pitfalls before you fall into them. And each episode will bring you practical advice, information, and industry experts who focus specifically on early stage brands. So you're getting what you need for where you are today. Now, let's jump in. Hey everyone, I am so excited for my conversation today with Luke Tierney. We're going to talk about selling on Amazon. And for most emerging brands, Amazon can be pretty scary. But the truth is that, armed with the right knowledge, it shouldn't be. When I had my snack brand, Amazon was our most profitable channel. But of course, the world of consumer packaged goods is littered with stories of small brands that have been devastated on Amazon. The good news is that once you understand the how it works, once you have a system, once you have a who for your how, it can be really profitable. It's a really great channel to grow your sales and grow your brand presence. And again, as with everything in food business success, find that who for your how. So let me introduce Luke Tierney. In addition to teaching the selling on Amazon course in our Launch and Grow program, Luke is the founder and CEO of Waypoint Growth Partners, an Amazon growth agency built specifically for natural and better for you CPG brands. He's a former teacher turn marketer. He takes a profit-first, math-driven approach to helping founders determine whether Amazon can be actually can actually make them money. And which I have to say I just love because it's really thoughtful. And you can always go on his website. We're going to give the website, should be in the notes. We'll we'll give you more on uh Waypoint Partners website, but you can go on there and get a free assessment. And Waypoint donates 5% of top line revenue to high impact global health and environmental nonprofits. So, Luke, it's so great to have you on the podcast. Welcome.

SPEAKER_00 3:38

Thank you for having me.

SPEAKER_01 3:39

Yeah. And tell me, how did you get started in what you're doing over at Waypoint?

SPEAKER_00 3:45

So uh Waypoint is not my first business. It is uh I've I'd had ventures before this, um, and I always ended up as the marketing founder, uh specializing in digital. I cut my teeth in a couple of uh, you know, a couple of startups before this. And at the time, uh and this is this is getting back to circa 20, 2017, 2018, before even, um, I started to get involved, you know, on the on the side, helping out some friends who were selling on Amazon. And I was just really curious about this platform. It's kind of the end of the heyday of like the Amazon like lifestyle business. Like it was, you know, the professional uh professional teams and and and bigger brands were getting were getting much more interested in the platform uh because a lot of people were making a killing on it back in the day. Um and you know, that that involvement turned into, well, why don't we use this platform that's got this interesting opportunity on it, the infinite shelf. Like Stephanie, you and I could go and invent a product and then we can go and test it out and see how valid our assumptions were in terms of you know product market fit and and everything else. Uh, we can do that fairly easily compared to what we would have had to do, say like 20, 30 years ago. Um, and I thought, well, why don't we just do this for better for you, better for planet products, healthier products, environmentally, you know, more responsible products. And you know, over the course of uh of eight years, you know, that's that's what well, we started to do that, you know, uh towards the end of the 20 teens and fast forward all this time later, and that's what we're still doing.

SPEAKER_01 5:31

I love that. I love the focus on the better for you brands as well. Um, I'm a big believer that the startup world is where we find the solutions to a lot of the issues that we face uh with with more sustainably developed products. And so helping them grow and sell and and bring that to the bigger brands is really exciting. What are some of the things that these early stage founders you really find these early stage founders should be thinking about? That they often they often miss, you know, like I was saying, the world of consumer package goods is littered with brands that have been devastated on Amazon, which is really upsetting because they don't need to be. What where do you how do you see that, you know, for these found for our founders who are listening that could be uh a better plan forward for them?

SPEAKER_00 6:31

So, like an awful lot of what we see in CBG is a category. A lot of it starts with unit economics. There's a couple different factors here, but that's that's a good starting point. Um, you know, a lot of a lot of brands lose specifically, you know, about 60k to $100,000 or more, learning Amazon the hard way. And learning Amazon the hard way is trying to, you know, sort of uh wing it them themselves, or they bring on maybe a marketing partner that is thinking about what great marketing metrics are, but don't know how to or they're they're uncomfortable with a marketing plan that is responsible to a PL, as opposed to, you know, uh just uh getting getting excited by you know revenue growth, despite what the underlying, you know, um financials might be. So the the place to start is always with making sure what uh that your unit economics are healthy. That's an easy thing to say, but what does that mean for Amazon specifically? And I can give you a couple numbers here that I don't hear often out in the market. Um so after there's there's a couple numbers that we look at really, really carefully here. Um, one of them that I do a lot of talking about is pre-ads gross margin, which sounds complicated, but very simply it's your what's it's it's the percentage of what is left over after your landed cogs and after your Amazon fees. And if you're not sure your Amazon fees are, what they would be. Um, if you're not an Amazon, there's a calculator that you can use for this. You can just Google Amazon uh profitability calculator. There's several out there. Amazon has one itself. Um and you can you can run through a calculation and see exactly how much is left over. I want to see before before any marketing spends, before ads, uh, before you invest in uh an agency partner like us or a higher you know, help internally, I want to see uh for CPG, I want to see a uh a floor of 30% that is still left. Ideally, it's higher. And for durable goods, idea that number needs to be even higher than that. Ideally, it's 40 to 50 percent. Um one of the traps that brands get into is they see how competitors are priced on Amazon and they get into this race to the bottom. Uh, we take the opposite approach. We work with brands that have um that have good margin and can defend it. Uh, and if they do not have good margin um and are having trouble defending it, then that's one of the things we help them out with. But I'll I'll pull out of the rabbit hole for for a moment. I know that's some very specific math right out the gate, but to to put a bow on it, I want to see your margins. One of the things that we do with brands before we even sign them, we take a look at what their uh at what their cogs are for their best sellers, because we need to know to know this is gonna make sense, you know, uh that even if we get that we need to know what our we need to know the the framework that we're operating in, because if you have a 10% margin, even if I'm getting you a five to one return on ads, you are losing money.

SPEAKER_01 9:53

Right.

SPEAKER_00 9:54

So we have to know what we have to work with here too, other or you know, we risk having a very angry conversation with a CFO or a founder, you know, further down the line, even if we've done our job well. So the the step number one is just to make sure that the numbers work and we can see how much money you have to reinvest back into growth here, um before we uh before we start delving further.

SPEAKER_01 10:21

I love that. Um for me, what I'm hearing is, and this is something we teach in our launch and grow program, is it's really um the your you guys take the basic fundamentals that people should know when running a business, which is what does it cost, what does it cost in general to make my product, and then what does it cost in the channel? And so you take those fundamentals, you apply Amazon specific numbers and environmental, you know, realities, and and it really is a replication of that, of the same concept that you have in any, you should have in any channel, which is what does it cost to get there? And do we have enough profit, gross profit, to be able to now promote? And so I love that, I love that, and because I think that is what trips people up, right? Is they don't realize what the costs within Amazon are. So whether they're and we'll get into some of these acronyms, whether they're FBA or FBM, whether they're, you know, what the referral fee is and all those costs, which are published. And that's something every founder should think about for any channel they go into. But for some reason, even though it's all published, I feel like sometimes Amazon feels opaque to people. So I I feel like that deciphering is just that's the tool people need. But once they decipher, so once so now you've got a brand, they're like great. Uh we're gonna do FBM. So I'm just gonna explain for a quick second. FBM is fulfilled by Amazon. That means you're gonna ship Amazon, your products, they're gonna integrate it into their warehouses and they're gonna ship it for you. Personally, yeah.

SPEAKER_00 12:16

Did you say FBA or FBM?

SPEAKER_01 12:18

That's FBM.

SPEAKER_00 12:19

FBA is fulfilled by Amazon. I'm sorry, FBA is fulfilled by merchant.

SPEAKER_01 12:22

No, you're right. I did say yes, FBA. Sorry about that. That is right. The A in FBA is Amazon, filled by Amazon. Uh and what personally, if you have um a a especially for consumer packaged goods, if you have a small enough product, light enough product, um, ambient, so it doesn't need refrigeration. Um FBA is really nice. You get better algorithm delivery, you get, you get, you know, prime is easier to manage. Uh, you get uh it's easier to get into subscribe and save. You can still do those things when you're FBM, and that's fulfilled by manufacturer, which so hopefully everyone got that if I said that wrong initially. FBA filled by fulfilled by Amazon, FBM fulfilled by manufacturer. The other word I want to, the other acronym is we're talking about COGS. Those are your cost of goods sold. So for anyone who's new to business, anyone who's just starting out, that is a word you should absolutely know. So, okay, so Luke, I'm a brand. Uh my once everything's landed at Amazon, I've got we'll say a let's say a 50% gross profit margin. So something healthy, right? Something desirable, something healthy. Then what do we do?

SPEAKER_00 14:28

So there's it's gonna depend on a couple, um it's gonna depend on a couple of things. So well let me let me ask this back to you. Is this a brand that is starting from scratch? Is this a brand that already has some other sales channels working for them? Like how, like what what stage in the brand journey are we here?

SPEAKER_01 14:47

Yeah, this is a brand, let's say we're we've we're doing some direct to consumer through our website and we're doing farmers markets. So we've got a little bit of a little bit of runway, a little bit of income happening.

SPEAKER_00 14:59

Got it. So there's gonna be two main directions that you can go at this point. Um, and let's say uh I'm gonna I'm gonna I'm gonna sort of summarize a couple of steps here. Um, like let's say you've you've got great unit economics, you've shipped into Amazon. I'm gonna assume that your uh product detail pages are looking world-class, they're fantastic. You've you know you have infographics, you uh you've uh optimized for both SEO and AI discoverability. You know, you've you've done all of you're taking advantage of all the visual assets, you're through brand registry, like all of these aspects of making sure that your listings look amazing. Um, let's just assume for the sake uh of argument that that is done, you're you're in Amazon, like what do you do next? The there's a lot of a lot of marketers are going to then insist that you invest in ads immediately. And depending on your goals, that might actually be prudent. But if you are at the stage that you just mentioned, Stephanie, you're just getting out of the farmer's market. You are um like you've you've got some website sales going. Uh you are you are effectively still testing and iterating your product your product market fit at that at that stage. And maybe you're really confident that you figured it out. We've seen a lot of brands, you know, as they reach different stages and get on to different sales channels, take those learnings and re, you know, reiterate different pack sizes, different flavors, like maybe go back to the drawing board like entirely. There's a lot of things that happen within the first couple years of a CPG company, especially. So, how can you set yourself up for success to get those learnings on Amazon without really breaking the bank? Um, again, it turns into a math equation. So, in terms of, you know, the the real power of Amazon is that it is the number one search engine for products in the United States.

SPEAKER_01 17:06

Yeah.

SPEAKER_00 17:07

So this is where investors are looking. This is where retailers that you're trying to get into, like they're gonna pull up your Amazon listing, they're gonna see what your reviews are, they're gonna see, you know, uh how many reviews you have, they're gonna see how good your listings look. Customers discover you in brick and mortar. Um, 30% of us around 30% are in the grocery aisle, like looking at our phones when we discover a new brand.

SPEAKER_01 17:30

Um and usually looking at Amazon specifically.

SPEAKER_00 17:34

It's your number one online storefront. Yeah, and and and just to just to really try to drive you know that point home, Google uh Google has a a relatively low percentage of product search queries online. Um, Amazon for many years has had you know upwards of 50 and 60 percent.

SPEAKER_01 17:56

Yeah.

SPEAKER_00 17:57

So this is you know, people go to Google to ask a question, people go to Amazon to ask, you know, what product, like what are the best products within any given niche? Once I've decided, like, you know, I'll go to Google to ask about like paleo versus um uh keto cookies, you know, like what do I need to know about paleo versus keto lifestyles? I'll go to Amazon to then try to look up and find what the best products and deals are for products within those, you know, those respective categories.

SPEAKER_01 18:27

Yeah.

SPEAKER_00 18:28

Um, and then AI search, which is you know starting to enter in, is going to be hyper specific. And uh it's we can we can touch on that in a moment if if you like, Stephanie, because I think it uh the same rules for optimizing fit on Amazon are gonna be the same for your website and anywhere else. It's just important for people to know. Um, but you know, hyper-specificity and having a lot of context is what's going to be important for uh uh for those engines. Um so if to get back to the math, uh to get back to the math equation now that we have that context of like, okay, so no matter where people are finding you, they're searching for you on Amazon. Um if you put if you publish your listings on Amazon and publish them well and you have healthy margin, it means that as people discover you in these other places, then they're going to be looking up on Amazon and you are going to get sales there. Yeah. So as an Amazon marketer, I get really excited when I see that brands that we're with get into a key retailer. Or if they start, you know, if if Facebook ads are really working for their website, or if Google ads are really working for their website, it means that we're going to uh or they start to get, you know, really great PR. It means that we're going they they they get a big uh uh influencer or uh or PR moment, it means that we're going to see a surge in sales in Amazon. Like our brands that have gone into Shark Tank, it explodes. Um they it's if that turns into an exercise of can the brand like keep up and stay in stock while like the demand is that high. So considering all of that, you can launch Amazon in the same way that you would launch a website. And as people discover you organically or through other means, your sales will increase on Amazon. Or you can start with paid right away. Paid's going to get you answers faster, it's going to scale your sales faster. Um, but any good uh any decent marketer out there who's looking out for your bottom line, once they know your margins, should be able to tell you what the break-even point is, depending on what their fees are and what your ad spend is and what their performance is. Um, you know, we have uh we have our own internal calculator that we will use when we're talking with brands to show them, like, okay, you know, if you have between 30 and 40 percent, and you know, you're getting charged uh, you know, 2500 a month, 3,000 a month. If you're an early stage brand, I really don't recommend you consider going over that. Um, at least in this point in 2026, like that's a fairly standard starting place for a lot of marketing providers. Um we can get into pricing models for agencies and and freelancers as well here, but let's just let's just throw that out there as a pin, um, you know, somewhere to make this math easier. You know, if you once you do the math on what a healthy uh healthy ads performance at that kind of retainer, spoiler alert, like your breakeven point is probably going to be close to it's it's gonna be uh approaching ten thousand dollars probably a month.

SPEAKER_01 21:48

Right. And and and and translating that for people, that means you need to sell ten thousand dollars a month. Are you saying that your gross profit to afford this? No, you'd have to sell because 2,500 of that is coming from that gross profit. So I mean top line. Yeah, so exactly. So I don't want to confuse everyone. So your break-even is ten thousand. That means you have to sell ten thousand dollars worth of product to cover all those costs, your cogs, your Amazon fees, and this uh agency that you've brought on. And and that doesn't include your advertising yet. So the question then in my mind, if I if I for my brand, I'm thinking, well, maybe what I do is as you've already mentioned, so I set up all my A plus content, I set up my store, I have all my graphics and infographics and and information and points, and you can you Can easily look at competitors that are doing well on Amazon and sort of emulate, don't copy, but emulate the way they've structured a lot of their information. You can look at a lot of brands. I would I would recommend looking at several brands within and outside of your category that do well. You can emulate how they create that content. And then get a little, it, I mean, it sounds like you know, get a little organic sales moving. Just get a baseline because once you have a baseline, then you could go say, then I call Waypoint and say, hey, Luke, all right, we have a baseline. We're selling about $3,500 a month. We're not doing any advertising. Now we can look and go, okay, well, well, you know, your return on ad spend should be about X percent. And obviously this is where I'm going with my next question. Uh, which means if we invest this much, here's your break-even, but here's what we think we can earn. So help unpack what ROAS is for people and how they might use that to grow their brand. So they're not so afraid of the big number, but then they can also, they have to you have to manage to it, right? In in a brand, that's the part of the fundamentals is managing to those numbers. So then you can actually plan your business and plan your growth.

SPEAKER_00 24:04

So ROAS, return on ad spends. Um, there's there's two there's two acronyms I'm gonna give here because one of them is used more commonly in Amazon marketing. So return on ad spend is uh, you know, if I if I spend a dollar, how much do I make back? So if a row is a row as of two is I spent a dollar, I made two dollars. This is before you get into any of your own costs. Um a ROAS of three, I spent a dollar to make three dollars. Um, there's another acronym here called ACOS, advertising cost of sales. The specific meaning of each of these, you know, of the acronym doesn't really matter. You just need to know that ROAS, um, you know, the higher a ROAS goes, the better. ACOS is a way of measuring the same thing, it's but the lower you go, the better the number. So a ROAS of two um is an A cost of 50%. So it's like saying you spend 50 cents to make a dollar.

SPEAKER_01 25:05

Yeah.

SPEAKER_00 25:05

An A cost of 30% is better because it means that I spent 30 cents to make that dollar.

SPEAKER_01 25:10

And and does the A cost that is actually the profit that you make on that sale? So am I understanding that correctly? So we're we're we're taking the cost of that sale, but we're subtracting out uh your your your ad and your cogs and your ad spend and all of that. So it's the actual profit.

SPEAKER_00 25:34

Uh you you don't subtract cogs out of it. It's simply it's simply your ad uh your ad sales as compared to your um your ad spend.

SPEAKER_01 25:46

So a row as of a roas of two means I I spend a dollar, I make two, and that would be an A cost of 50 cent of half. 50%. Okay, I'm I'm tracking with that. That makes sense.

SPEAKER_00 26:01

And an A cost of 20% is a ROAS of five. Um Yeah. And remember, this is this is before this is before margins, right? So uh and there's all this these numbers become part of an equation um where you can set uh a really healthy efficiency metric. So once once we understand a brand's margins, um, especially using numbers like ACOS or and sorry to throw another uh acronym out there, tacos, which is total advertising cost of sales, that's your ad spend versus the like versus all the sales you get in an account, organic and paid, you know, we can start to get at a ratio, we can start to get we can start to get at a number that you know we know if we go above a certain percent in your in your tacos, especially or in your ACOS, if we're just looking at ads, we know when we are profitable and when we are not in terms of that sale. And so the uh as brands are out there and they're wondering, like, what on earth is good Amazon performance? What I would recommend is measuring performance against your margin. Um, and to work with a marketer that can really help you break down what percentage uh what percent tacos is is probably the most common in the industry at this point. What percent tacos, if you go over it, given the volume of sales, you are like you're you're too far over your skis, and maybe you want to pull back. Um, you know, there are brands that go through periods in which maybe they want to, you know, uh in uh they want to uh invest more aggressively. There, there you can lean into things like like there are complexities you can add here. You can lean into your repeat customer rate once you have that. You can lean into that LTV. Um, maybe you're trying to defend your market position from you know someone who's coming in and you know trying to trying to take that market share away from you. There's different reasons that people will have for growing their ads budget. Um, as long as that's done from a solid, a rock solid floor understanding of what your actual margins are on a per unit basis, then you can really make you can you can at least make that decision informed instead of just gunning for a top line number blindly.

SPEAKER_01 28:28

I love that. I love the uh I it is so important for early well, it's so important for all brands, but especially for early stage brands to have numbers that they can use as benchmarks to track, to understand. To me, it's always about signals versus noise. So they can actually see the signal, hard numbers. This is this is what you're spending and what you're getting versus the noise of, oh look, we're selling so much, but are you actually making money? And that's always an issue for a small brand. And so all of the these numbers, which you know, once as a as a brand, once you set that up, you can it's not hard to just keep up with that. It just takes a few minutes to pull those off of Amazon. You get a lot of data with Amazon, and then uh, although most of that you can do yourself. We spent this, we sold this, it cost us this. There's a formula. Um so I I I love that. And you have a you have a story, um you probably have a few stories of, but I know for sure you you've got a story of a brand that you were working with that was working with another marketer, and they were selling a lot, but they weren't making money, and the marketer was, as you were saying earlier, doing the race to the bottom. And and you know, that's just really all about lowering your price to try to move more units, but you're eating away at your margin. And you ended up working with this brand, and I almost want to say decommoditizing it, right? So when when we start to lower our price, our product becomes what's called a commodity instead of something special or premium. And you guys were able to come in. You want to tell that story? I think it was, I think it was sorghum flour.

SPEAKER_00 30:20

Um it's a it's a flower alternative uh brand, sp or you know, specialized in ingredient brand. We'll we'll keep it anonymous here. But the uh this this is something that is really common for us. Um, so this this brand was working with uh they're they're working with another agency. Um brands words, they were acting as if there weren't any cog to speak of. They would say, like, oh, like there's a positive return here. And it's like, well, we haven't subtract, like, you're not including any of our other costs there. Uh the brand owner called them, you know, total cowboys uh when they were talking with us because they were they were lowering the price intentionally to try to drive more velocity and therefore make more on commission. Um this is more common than people think. The the trouble with this kind of thinking is there's there's a couple things. First of all, if you if if you only look at we we have what we call an Amazon profit system, you know, there's a there's some things that you really have to have in place in order to make Amazon work. If you are only measuring rope at ROAS as a as your like main KPI, um, it's a good way to lose money. Um, you need to have really, really tight operations, you need to be positioned extremely well. Um, your unique selling props need to really get across. Uh, this Amazon is not great as a Me Too platform um in terms of products anymore. Like you really want to have uh you need differentiators and show them, um, along with you know, aligning yourself with what terms are actually getting search volume, you know, answer questions. There's there's some complexity there, but uh solid unit economics as we've been over, solid positioning, um and a PL responsible um marketing program, and then really, really great operations to back it up. So this this other agency was really playing quite loose with a lot of these things. Um, when we brought this brand on, we raised their prices. And you know, where one of the stances that that we have against a common, I would say, misconception in the industry is that you really don't, and I've alluded to this already, but you don't want to get into the race to the bottom.

SPEAKER_01 32:36

Right.

SPEAKER_00 32:37

Um there are going to be brands that are willing to spend more than you out there that will be willing to lose money on Amazon in order to try to defend their market share or to drive your uh your advertising costs up um to compete. That's that's a part of the game. I would rather you make you actually make money from the platform and get fewer sales than get a whole bunch of unprofitable sales. If I had to choose between the two, like nine times out of ten. Um there's only very specific scenarios, I think, in which um the the reverse might be might be called for. Um especially like for early stage brands, I really can't emphasize that enough. Um so we we started working with this specialty ingredient brand. We we raised their prices, we uh re-optimized their listings, you know, new images, new copy, etc. We implemented an advertising program that was more responsible to their bottom line. We own the top three out of five spots organically and paid for that category, despite the fact that there are lower price competitors that are constantly trying to nip at our heels. So all that's to say, like you really don't have to, you really don't have to to sacrifice in order to be on this channel. You can be you can sell on Amazon uh in a more sound way from a business perspective.

SPEAKER_01 34:13

I love I love that as a takeaway for early stage brand. So anyone who's watching or listening the podcast, you know, we've we've thrown a lot of numbers out and a lot of ideas, which you know, don't don't get overwhelmed by it because what all that is is tools. It all goes back to fundamentals. And what I what I love is when they're put together well, um you know, the the to me I love that story because when it's all put together well, it means you should be able to be able to compete at a price point that makes sense for you. Um, obviously within your category, but I, you know, being able to be at the top of competitive for your category as an early stage brand is often very important to make sure you can be profitable, especially before you've really built large economies of scale. Um, and so I just love that because that the takeaway for everyone is that Amazon can be profitable and you don't need to be lowering your price. Now there's a lot, I think there's a lot in there too, around, you know, pricing strategies, um, launch strategies, growth strategies. For an emerging brand, though, you gotta make money with your sale. I mean, that's just that's just imperative. I I know a lot of founders want to, they want to give away a lot of product early on. They want to sell at a low price just to get it in people's hands early on. But if you're not finding that path to profitability early on, you can actually kill your brand and run out of runway in ways that you didn't realize. Um, not that I'm saying don't give away samples, not that I'm saying don't. I mean, I love the whole unboxing process and adding freebies in there. You know, that stuff is great. Um, but for uh using Amazon as a channel that can be profitable, that can also grow your brand, I think that's to me, that's a great takeaway that that that you should be able to to do that on there. So before we go, I would love to hear if you have any other great stories you want to share or uh anything else you think that an early stage brand should really be thinking about as they're evaluating Amazon.

SPEAKER_00 36:40

Yeah, there's there's a couple of things I want to stay on theme with, uh with mathing it up. Um so to come back to that, you know, we we said we said previously that you can launch on Amazon as almost as if you're launching a website. You can't ex you can't expect to launch a website and people will come running, but as you do gain uh as you do gain visibility, you will have people coming to find you there. That's the slow organic route. Um you know, if you are if you're partnering with if you're partnering with a marketer, uh, which I would recommend to to launch your listings and launch them professionally, um, as long as you know what your margins are, you can do a pretty you can do a pretty uh good calculation of, okay, if I'm selling this product at 35% margin, for instance, how many orders do I need to make in order to recoup that launch cost? Um, this is a this is something that we break down when we're pitching a brand. Uh depending on what the the price and the margin is, it's usually within a couple hundred orders. You're going to, you're gonna re you're gonna remake your uh like you're you're gonna recoup your investment. And then after that, obviously, um you're you're making money. Um on the if you're going the you know, full uh a partner for four full channel management, you know, running ads, like the whole kit and caboodle. Um, what I would recommend is getting an understanding of, you know, besides sales, like what answers like marketing should be getting you answers. Sales is only one of those answers. So you will get answers faster if you are investing in ads um right out the gate. You're gonna gain visibility immediately, you're gonna take advantage of this early quote unquote golden period that Amazon will give you to rank higher easier. But you're validating a product, um, a product market fit, and you're validating a channel. So it's I would I would highly recommend asking whoever you're considering working with what else you will be learning in addition to whether or not you made money that month, um, or how quickly you made it.

SPEAKER_01 38:57

I love that.

SPEAKER_00 38:58

So um both both paths are valid. Um if you want to get a handle on uh and if you if you want to have us take a look at it for you, we have a free audit offer. We're more than happy to look over what you're doing. If you already have an Amazon account, great. We can do a you know a health assessment, you know, give you a roadmap, and then you can take that and run with it. Um, or you know, use it to beat your current marketing provider over the head with to go get going in a good direction, or if things are if it does look like a good fit, obviously there's that conversation. Um but at uh at bare minimum, what I would recommend is you know taking a refreshed look at the numbers. Amazon did raise fees again, it was uh earlier this year. Uh it was a lighter lift than it has been in previous years, but um, you know, just just make sure that your numbers are that your numbers are accurate. Make sure that your marketing plan is setting you up for success. Um and then, you know, once you actually have some data, and that's where there's this interesting area between that launch and that like $10,000 a month, as you your traffic, your conversion rates, your sale, what keywords you're actually showing up for. We've launched brands to go the organic route. And then as they gain traction and as they iterate, then they've come back to us to then uh invest to grow further. Um, we've done that many times. Uh, we've also partnered with brands that wanted to, you know, learn and uh grow or uh you know have have those that important feedback to then iterate on their product, you know, more early on, and they'll do ads early uh faster. But I would say knowing that if if you can do two things, if you can uh really get your numbers down early on, and if you can make sure that you're gonna have enough inventory to support the channel early on, that's the other common thing we haven't mentioned yet that really throws a wrench in Amazon, uh any channel's growth, really. But um, we'll stick with Amazon here. If you have a lot, if if you have both of those two things or organized, then you are many steps ahead of a lot of startup brands out there. It sounds simple, but you would be floored at how often uh early stage brands are are struggling to get those two numbers together. So we're more than helpy, we're more than happy to help. Um brands that want to, you know, get a professional eye on what they're doing, but anybody who's listening, I would those are the my recommended places to start.

SPEAKER_01 41:55

Yeah, and I really appreciate the ethics of your company too, where I know you and I have talked, and if if a brand doesn't have the gross profit margin, the those fundamentals to be successful, that you really aren't going to work with them because you don't want to set up that failure. And I think that there's a lot of a lot of agencies don't look at things that way. But I I love that because it sets that brand up to then go back to the their numbers and understand what do they need to fix. You know, if you're not hitting that profit, if you're not hitting that profit margin for Amazon, you're not hitting that profit margin in any channel. You're not where you need to be. You know, this is something we talk about and teach at every every layer of launch and grow in every channel, understanding margin stacking, which we're not going to get into here, but for ease in our conversation around Amazon, that is you're selling your product with your margin, and then you've got the fees from Amazon that you have to add on. That's a simplistic way of thinking of that. Making sure that those brands are set up for success because that's fundamental again. And at this stage, they're still in a place where they can go back and fix that in some way.

SPEAKER_00 43:15

Yeah. And you know, we're we're in it for the long term with our partners. You know, we definitely prefer long-term partnerships over short ones. And if the brand isn't set up for success, it will be a short one. Um, but there's it's it's it's in it's inconvenient for marketers to hold themselves responsible to a PL. And there's I've I've spoken with marketers that just view it as that's that's outside their job. You know, they need to be, they want to be given the parameters to operate in and then uh do as well as they can within that. Um, especially with CPG, you know, it's we we are of the strong opinion that we need to verify some of these things. If a brand is at 20% or below, for example, like that's that's the threshold, Stephanie, you know, that you're referencing, where we will help a brand get from 20%, either through, you know, price increases, different pack sizes, you're probably not gonna sell in the same pack size on Amazon that you are in retail or even your website. Yeah, having Amazon unique SKUs helps a number of things that are beyond what we've what we've touched on here today. Um, but if we we have had instances in which a brand is insistent that, you know, no, this is what I'm selling, no, this is gonna be the price point. We're like, well, that's at 15% pre address margin. Um, this is not a good fit.

SPEAKER_01 44:36

Yeah, it it's not gonna be successful. And I I love that I find it fascinating to hear that marketers don't want to be behold into the P L. I've I've always worked for brands, so I've not been personally on the agency side but as the head of marketing for several brands I was always beholden to the PL. That was that to me is so integrated into how decision making happens. So but I get that that an agency could come in and just be like, oh you know I don't have to be and and maybe that's why they did that. But I I think that's irresponsible as a marketer, you know.

SPEAKER_00 45:15

Yeah I I I see I think it's uh for for us it's easy to see why things go in that direction. You know Amazon is a complicated platform. Sometimes it's just nice to have somebody else take care of it. Even if it's running at you know a a break even or loss um there's there's a lot that can be worth the brand's time to simply offload onto somebody else. That's another value that um yeah that that we provide. But uh at the end of the day, you know there's there's just a lot of conventional um you know ways of thinking that are along the lines of like well you have to gain the like you have to gain the velocities in order to climb in the ranking and then you'll make money. Or you know you'll invest in Amazon and it will lose money for a year. And then you'll make money. Like it can turn into this like endless game of like oh we're just gonna keep iterating and trying even though we don't really have signs of life here necessarily and uh or the business just keeps getting hit by you know like unexpected event by unexpected event and that turns into this you know endless chase. So our our promise is that you know uh working with brands we we will launch brands responsibly um and help them position responsibly so if they ever need to pull back they know they can make money here.

SPEAKER_01 46:41

Yeah. Well I just love that I I think this has been just an amazing learning. I always love when I get to learn things which I got a lot out of this. I want to thank you so much for coming on the podcast today. Give us your website we're gonna put the website in the notes but for anyone who's I often listen to podcasts when I'm driving. So for anyone who's listening if I wanted to learn more and uh maybe connect with you guys for I know on your website you've got the offer for the free assessment where do we go for that uh we can find uh you can find our company at growwithwaypoint.com and you can find me at Luke at grow with waypoint dot com feel free to reach out we're always happy to help I love that well thank you so much Luke I hope this is uh helpful for everyone I like I said I personally love this uh Amazon decoded you don't have to lose at Amazon you should be able to win at Amazon and uh again that's growithwaypoint.com and for everyone out there have an amazing week one of the smartest things you can do as an entrepreneur is invest in a who to help you with the how to speed up your journey and help you skip the line. When you're ready for more support and accountability to finally get this done you can work with us in two ways get a coach all to yourself with one-on-one business coaching or join the food business success community which includes membership inside fuel a community of food business founders that includes monthly live group coaching calls and still much it's one of my favorite places to hang out and I would love to see you there. Go to foodbusccess.com to start your journey toward your own food business success