The Amazon Strategist Show

How to Optimize High SKU Catalogs for Maximum Profit on Amazon

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Join host John Cavendish and guest Mike Danford, Chief Strategy Officer at Adverio, on the new episode of The Amazon Strategist Show for an in-depth discussion on optimizing large SKU catalogs on Amazon. Discover actionable strategies for dynamic pricing, ad optimization, and catalog management that can significantly enhance profitability and efficiency.

In this episode, you'll discover:
-Effective Management of 1000+ SKUs: Streamlined strategies for handling extensive product catalogs.
-Dynamic Pricing: Tactical approaches to leverage pricing for profitability, especially during high-traffic events like Prime Day.
-Ad Optimization Tips: Best practices to enhance the performance and efficiency of large catalog ads.
-Tool Insights: An overview of Adverio’s profit/pulse system and its benefits for your Amazon strategy.

Whether you manage thousands of SKUs or are looking to scale your Amazon business, this episode offers valuable, real-world strategies without the fluff. Tune in to learn about the tools and techniques that can propel your Amazon business to new heights!
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Speaker 1:

Do you keep the existing campaigns and maybe run it for a couple of years, or do you create new campaigns?

Speaker 2:

Hello, I'm your host, john Cavendish, and welcome to season three of the Amazon Strategies Show. The show that's all strategy, with no hacks, no silver bullets and no magic pills, just real, practical strategies to sort your Amazon business. So today we have the pleasure of being joined by Mike Danford. Mike is chief strategy officer at Adverio, who most commonly partner with brands with over a thousand SKUs, so we'll be talking about large catalogs today, which I'm super excited about, and it's a real differentiator, for you know what we talk about on this show. So I love that.

Speaker 2:

When he's not fighting in the trenches, he is working out so that he can eat, and anyone who knows him knows that he is more than happy being surrounded by water, surfing, jet skiing, handstanding, whatever that may be. We'll get into that later as well. So awesome Welcome to the show, mike. Thanks, sean, glad to be here. Cool, well, great to have you here. I know we talked previously when we connected about your journey, but could you tell us a little bit about how you ended up where you are right now in the Amazon space?

Speaker 1:

Sure, I started back in 2014, 2015, went through the ASM an amazing selling machine, if you've been in the space for that long and launched my own product, had my own brand, and then started doing some retail arbitrage et cetera, and I realized that one of my most expensive hires was around PPC and advertising and I was like, hey, this is numbers, I like numbers. Let's go back and figure this out. So I did and then started sharing those in groups and others were like, hey, could you do it for me and we'll pay you. And obviously the rest is history from there. And then you know, kind of niched into large catalogs, having started an apparel brand, and just kind of started working with other apparel brands and the uniqueness that comes with large catalogs and have kind of stuck to it since then.

Speaker 2:

Awesome, cool. So I was also ASM. I did ASM4 back in 2014, 2015, when everyone thought it was too late and that we'd missed the boat from the 2012 people who got into ASM1 and were making loads of money back at the time Just hilarious, cool. So you got into larger catalogs and how did that morph from you being a seller to you starting a service?

Speaker 1:

Yeah. So as a seller we had a supplement brand in the beginning and then started having some graphic tees and you know funny fitness saying shirts, et cetera. I went more D to C on my own website. So for Shopify, was was popular and common right. And then I started doing retail arbitrage and, ironically, timing was reselling Nike shoes. So we'd go to their outlets and pick up hundreds to thousands of their shoes and just managing inventory out of my small home at the time was a challenge and you're learning.

Speaker 1:

Just you know how do you keep up with the inventory, how does it work, et cetera. And then I started to realize that you know the more SKUs, the more inventory, the more options you have, the less critical. If you have returns or thinner margins on a pair of shoes, or you bought the wrong style or you promoted something that didn't work and your margins weren't as favorable. If you had more and more and more products, you would have more home runs to go off of. So just understood that and then I was able to communicate with that understanding, having that background personally. And on the advertising space, you know it has definitely changed since 2012, 14. And on the back end of Amazon with ads. I have a lot more options and there are some pretty unique ways to go about high multivariant catalogs um across the board, even with catalog management, case management etc. So, um, that's been the journey I love it, that's super cool.

Speaker 2:

And then we all find our little niches, don't we? So you know, we all find a little part. You're like, yes, I like that bit, I'll do that for uh. And then it somehow it becomes like a career in whatever it may be. We'll talk about it a bit later which is how do you find experts in those specific areas? But before we get into that with large sale catalogs, how do you actually keep your finger on the pulse of what's going on across all of these skis?

Speaker 1:

Sure, that's a great choice of words there we actually developed a profit pulse system or PPS that we have, and we actually built that system. It's a free tool that we can give you a plug to at the end of the episode here and it just shows a priority. It helps you understand. You know your ABC groupings and where they are in terms of you can look at ROI, margin, ad sales, total sales. There's lots of different ways you can look at it and we brought on a brand about two or three months ago with, I think, around 15,000 SKUs and you know, of course, the Pareto, the top 250 or so kind of carry the majority of the weight of the sales and they come in and our assessment was there's probably not much more juice to squeeze from these top 250. So let's go and look at the B tier and that's what we've been pushing for the last month and a half or so and that tier is growing and that PPS, that pulse system we talked about, helps us understand that and say, hey, your advertising is a lot lower relative to your organic or total sales. So you can push here or, hey, you are dumping a lot of cash into a very mature product. Stop doing that. You don't need to. Where else can we redistribute that spend, et cetera? And you go across and you can look at conversion rate from ad conversion versus listing conversion, total listing conversion rate to understand that the ads are actually helping the listing or hurting the listing.

Speaker 1:

There's so much that you can have and it's a constant battle. You have to build AI and machine learning into it to help us not get too nearsighted or narrow. Focus on a few products. And what we've come to find out is hey, the brand has neglected these SKUs at the very bottom of their catalog and we usually can throw a little spaghetti on the wall and a few things will stick. And hey, all of a sudden we've got one going up the ranks and like hey, we haven't sold this SKU in five years. How are you selling it as like a number 10 SKU right now?

Speaker 1:

And it's just the platform changes, the chopper personas change, the market changes, et cetera. So if it didn't work five years ago, sometimes it'll work more now or better now than it did. So definitely circling back to that. And then you know it's just going through. We have a ton of scores and other metrics, from a listing quality score to how problematic is this skew and how many cases it has. Is this skew worth keeping? Because it's costing you more in time and trying to fight Amazon and they wanna keep, you know, messing up your category nodes, et cetera. So look at the case history, reviews et cetera. So it's a lot. But pulling it all together and, to your point, keeping that pulse it's always changing, always changing.

Speaker 2:

That's interesting. When you talk about SKUs that are underperforming or going up, are you looking at them just on the account because you've got so many SKUs, or are you actually pulling data from the market to figure out where they fit in the current marketplace Because it's such a high volume?

Speaker 1:

Yeah, for most brands you don't really need to get out into the market until they get into your A tier, which is where they're doing really well and they're already selling well. And is it worth, is the juice worth the squeeze to start being more and more granular and pulling in the extra competitor data, or nine times out of ten. It is more cost effective for the brand, for us, and faster to just push what you have and see what will work and get it to its natural state of you know balance, as opposed to trying to ink out an extra quarter percent of conversion rate or click through rate and just kind of get that little incremental lift. Now, once you've had that and you've kind of, you know, maybe doubled the number of ASINs from 250 to 500 that are now carrying the majority of the weight, then you can go back and do that. But most of the time it's just chasing your tail when you're doing that and it's fun.

Speaker 1:

Yes, we do optimize the top SKUs. If this is a glaring issue of hey, you've got a bunch of negative reviews, let's work on getting those removed or pulling out an old variant. That's kind of pulling down your score. Hey, your pricing. So that's another thing we've over the last six months we've really started pushing dynamic pricing optimization and that has been a lot of fun. We have SKUs that maybe a low cost SKU, you know $8 or $9 where advertising is really expensive, it's already in the top maybe 10 or 15 BSR for a subcategory node and just, you want to keep it there.

Speaker 1:

So we've started doing pricing optimization and deal optimization. I was in charge of the flat fee for the deals. It's pretty incredible. We have tons of case studies on that internally that we're working on. It's where. Hey, it's a cost per acquisition model as opposed to a cost per click model. We're seeing that with influencer marketing and affiliate marketing and everything as well. It's like you don't have to pay until you've actually sold, which is helpful as the CPC space gets a little more busy.

Speaker 2:

Yeah, totally agree on that. And with pricing optimization, are you using, like, how are you doing that Using an external tool internal tools? Is that a secret? How are you doing that Using an external tool, internal tools? Is that a secret?

Speaker 1:

How are you doing it? Yeah, there's a few, so we have two competitors. We're putting them head to head right now.

Speaker 1:

They don't know about the other, but it is what it is, and one is a lot more visibility for us as more of a managed service and the other is more I'm sorry of a self-service. And then the other is a managed service Different approaches and it's pretty impressive to be able to pull your competitor data and say, hey, if you increase your price by this much or decrease your price by this much, this is what the velocity will change and it can kind of give you your profit projections based on the last 365 days of sales. Obviously, with prom day coming up not sure when this episode will release, but around prom day you can do intraday pricing optimization based on traffic coming to it. If you're getting a lot more traffic, you can start generally push the price up. Obviously, try to see how the conversion is. If the conversion fails, then you can pull the price down so you can squeeze more and more juice in real time around high traffic events. That's just one option. There's liquidation, there's BSR protection and there's all kinds of tactics that can come in.

Speaker 2:

All right, that's super cool. I didn't realize you could do that intraday. So I mean that's awesome for profitability on Prime Day, or we could do a whole episode about that, but yeah, that's really, really cool. When it comes to your service, what do you focus on the most to increase your clients' profitability sales? What do they want to come to you? What do they want when they come to you?

Speaker 1:

Sure, it's what's different. Everyone basically comes to us generally because they want to fix a listing issue or they're advertising. They're not sure if they're advertising the correct amount in ways, et cetera, or shiny objects in the room. We're like I want DSP. We're like, hey, let's check and see if your sponsored ads are actually working and you're leveraging that as much. Uh, then you have listing optimization, update my images, update my copy, etc. And they all have this um, no one really comes to us for pricing optimizations.

Speaker 1:

That's really our uphill battle of hey, when's the last time you changed your prices? That's been two years or a year ago. You're like, okay, how many times are your times did your competitors? Will pull a competitor up and say, look at, their pricing has changed over time. When you think you're firing my sales down, look, the competitor's price is $2 lower. There's your reason. It's not your ads, it's other stuff, it's the holistic approach.

Speaker 1:

That being said, it is difficult with map pricing, especially on the channel, as we mentioned at the beginning of the episode here that you have to be careful with the following and not losing your buy box and making sure it syncs across the listings, across your platforms, etc. Especially if you're using like a Salsify or Channel Advisor or some kind of omni-channel manager, and that's definitely a challenge. But I would say that a lot of brands just need to do more of the basics. They've been in the space for 10 or 15 years. They're a nice mid-low, seven-figure brand and they're like, hey, we're not growing anymore. Why is that? And then, like I mentioned, we'll go in like let's go get some ASIN you haven't touched in a few years.

Speaker 1:

Let's also look at this, look at your product opportunity to explore, look at these other tools that are available inside of Amazon. It tells you where you're relative to your competitors and what they're saying about your competitors versus yours and what your rank is. Or why is this particular design outranking us? There's so much information Amazon is giving sellers more and more of. However, it's a lot of information. It's not the most practical, pretty. It's very complicated. Sometimes you can't even export it or you're limited inside. So we aim to every time they release something um, typically on the front end before. The api is always usually later, um. But we work to build as many google suite tools, docs sheets etc. Um, and then we give those out for free once we build them, because we know it helps us and it helps others to understand what to look, look for and use this data and visualize it. So it's a constant process, for sure, cool.

Speaker 2:

And when you talk about omnichannel tools, do a lot of your clients come to you already using omnichannel tools, or how does that usually work?

Speaker 1:

Yeah, most of them do. We'll have a few that will come in. Maybe they're doing D2C and they want to get on Amazon or one marketplace or their own Amazon. They want to get on the Walmart amazon or one marketplace or their own amazon. They want to get on the walmart um, but most of them, because they have such a large catalog, they need some kind of pin them down, multi-product or high product um management tool.

Speaker 2:

Uh, so they're already on those and it's pretty easy to distribute across other channels, just because most of them have integrations well, maybe we'll make that into the subject type of into the episode title, because I feel like you know that's a very big thing, that a lot of people you know it's a good classifier like you need to be of a certain size or a certain skew count to want to use one of those tools because, as you said, they can be a real pain, yeah, as well as a pleasure as well as a benefit.

Speaker 1:

Yeah, there's one or two that I've just mentioned there that, uh, you're spending more time fixing the issues of the, the platform that we talked about that before, as well it's like yeah, you're fighting the machine, right, so it's, it's. It's what's the lesser of two evils, right?

Speaker 2:

yeah, 100. I mean, how do you decide? Or when you were a seller and you were thinking about using service providers, like, how did you decide whether to do it in-house or to use a service provider for different parts of your business?

Speaker 1:

it's, it's it's reducing the learning curve. So it's how do you want to learn? Do you actually want to learn this? Is your team larger? Most of the brands that work with again mid to seven, mid eight figure brands they have it and they can have the talent inside, but what they come to realize is that even though if you're a Google or a Shopify or an Amazon expert, it's really hard to transfer that across to another marketplace or vertical or sales channel, et cetera. So that's one part. And then the other is you know, most people that are internal have maybe worked for one or two brands and they only see a few things, whereas an agency like us, we see hundreds and thousands of brands we get to see. Pull all that data together and you can answer questions a lot faster. Say, hey, no, don't, don't do this. We've already done that. We've already followed the shiny object. Like I mentioned, any new feature that's released or report comes from Amazon. We're on it. We're trying to understand can you leverage it? How do you leverage it? Does it make sense? A new ad type comes out. Does it make sense to do that? What's going on? We get to have that macro lens.

Speaker 1:

I do think that you do need to have typically a seven-figure seller before you pull into an agency. I think it's just really cost prohibitive to do that. I think you need to understand the brand and understand the marketplace. You need to learn that, whether it's you or just you know a right-hand man or woman to do that Before you get in. Anyone thinking you're seven figures it does help to speed up that curve. To pull in, you know an agency or a different service provider, someone that specifically has experience, typically in your vertical. That's definitely helpful as well, because what works from one vertical does not work to the other or niche, et cetera. And then what you get, you know working with an agency that's large enough is a bench right. So say, if someone goes out on vacation, like we just had, we had one of our director of operations go out last week we were able to pull another brand manager in to assist with that.

Speaker 1:

Or we have someone that's an expert in a specific type of category or vertical can come in and tap and then you know we have weekly meetings. There's three weekly meetings across the different teams. That will say hey, here's what I'm seeing on this type of account. Are you seeing this as well, or how did you do this? Or hey, we have 30 minutes every session.

Speaker 1:

You have to have a problem or an issue or a concern and you have to ask, the team chimes in and it just reduces that learning curve, for sure. And then I mean, obviously I'm biased, I want to be agency first, but I do try to be respectful of that. When we have prospects come to us and say, hey, we do, tell them you're not ready for us. One, it's not cost-effective for you and two, you need to do a few things in the back end. You need to understand a little more about what Amazon is, what the features are. It's really difficult for us to educate or train a brand up that's fairly new, because we can't talk about Product Opportunity, explorer or these catalog tools and these other things because they don't have the basic knowledge and that's just not what we're here for. So we usually point them into a direction where someone that's works more with the go-to-market brand and can give them that education or point to an education resource for sure cool.

Speaker 2:

Yeah, I'd agree with that as well. I mean, I think what we did create with seller candy is like a stepping stone. So some people do come to us when they're earlier on, because we are a more cost-effective service and you can come out and use us until you get ready for a full service solution, such as yourself or depending on what type of service you need for what area, which is where we like to be.

Speaker 1:

I fully endorse that remark too.

Speaker 2:

yes, Thank you, all right, so we have another section of the podcast that we're going to go into. We have our controversial take. That's why we call it controversial take. I think Americans would call it hot take, but yeah. So what is your most debatable, not desirable, debatable or controversial opinion related to the Amazon or the e-commerce industry in general?

Speaker 1:

Oh man, it's of the week, so we just had one I actually spoke about yesterday and there's a lot of chatter since I've been in space about with the advertising. Specifically, do you keep the existing campaigns and maybe run it for a couple of years or do you create new campaigns? And we've been with a brand for a little over four and a half years and we've done as much as we can to retain the original campaigns from four or five years ago. A few things happened. One, the old campaigns don't have the new feature, so you have to create new campaigns. Sometimes You're kind of forced to do that.

Speaker 1:

And the second is, yes, there is disruption when you take and harvest or move successful targets or whatever from one campaign to a new campaign. But we just did this across a six-figure spending brand. It takes about two weeks and then it comes right back to where it was in terms of traffic efficiency and velocity as well. So obviously you don't want to do that all at once. There are some software platforms out there, especially in the advertising space, that require all new campaigns, but I think most of them are starting to switch more to at least a campaign takeover, so you can kind of migrate and stare that out. But it is a debate. Previously I was, you know, hey, let's create new campaigns, let's just suck it up for that week or two. But now we're starting to figure out how to do more of a hybrid approach and how to reduce that disruption.

Speaker 2:

That's great. I mean one to two weeks isn't actually that bad either. I've heard in the past it taking a while to get the same kind of traction. Just clarification on that then. Would you create both campaigns running simultaneously? Do you turn one off and take a hit? How do you usually do that transfer?

Speaker 1:

That's a great question. So what we've come to find out is the best thing is just to pause the source immediately once you create it.

Speaker 1:

You're going to mirror the bidsids, you're gonna mirror all the placement settings, as many placement studies as you can, but you're gonna increase the bids about 40 to 50 percent higher than what the bid was in the existing campaign and then every few days you're gonna taper it back down to where the bid was. If you don't do that boost in the beginning, you don't get the traction. It may take three or four days before you even get subtraction, even though it has the same bid, the same everything, the same placement. That's because that campaign doesn't have that validity and that signal to Amazon. Saying this is a good term, so you do have to bid higher, does not necessarily mean that your CPC is going to be higher, but it does mean you have to bid higher to get recognition for the keyword. We found that out, so that's been our take on it and we're working harder to make it work. So we have three to four day transitions. We're trying to figure that out cool.

Speaker 2:

I love it. That's really useful, actionable information and, um, yeah, that's what I really like about this episode. We've gone into super technical stuff only only be applicable to a small amount of the audience, and you know, it's great that we do that, because they're the people that we want to add value to with higher SKU count catalogs, so it's really cool All right.

Speaker 2:

I mean, that's basically it for the episode. So if you got a lot of value out of this episode and you want to connect with Mike, Mike, what's the best way for people to reach out to you and Adverio?

Speaker 1:

Sure, yeah. So I put together a little kit for folks here Adverioio, forward slash, amazon strategist. It's our our age figure toolkit. As I mentioned multiple times, we've built a ton of tools. You have access to this. You have free access to it and we update it regularly. Any new tool that comes out will be in there. It's a live google doc link that you have access to doesn't recommend that. Obviously, you can find us on our website or linkedin, etc perfect.

Speaker 2:

so, yeah, go check out, download that toolkit. I I checked out already. Looks excellent and thank you for watching the show. So if you're watching us on whatever platform, please go like, subscribe or mainly, just click the like button, because it makes us appear higher in the rankings when people search for Amazon and Amazon show. So thanks so much for being here, mike, and talk to you again soon.

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