Using product bundling to increase Amazon profit and crush competition

Here’s a way to make more Amazon profit WHILE standing out from competitors.

I call it “genetically modifying the bundle”.

For example…

Say we’re competing in the “pottery wheel” niche on Amazon.com (the US marketplace).

90% of sellers are going to enter like this:

– I want to compete here. The niche seems good

– I’m going to source one that’s bigger/better/has a new feature (and private label it)

– I’m going to price competitively (not too high, not too low)

But, there’s a problem with this:

If we sell a pottery wheel (no matter how different) it’s still going to be “our wheel versus theirs”. Consumers will then look at price and reviews, and make their decision (often in favor of our competitors, who have more reviews than us because they’ve been around longer).

Here’s what “genetically modifying the bundle” would look like:

– I’m not going to launch a pottery wheel, but rather a pottery wheel kit

– I’m going to provide a complete experience to shoppers (not a commoditized product). So, it’s no longer an “apples to apples” comparison

– in terms of pricing, I’m going to be more expensive on purpose

Let’s zoom in on the pricing.

It’s the “secret sauce”:

In terms of pricing, you need a 4x markup on landed COGS + a 20% premium for customer acquisition cost (CAC). In other words, if it costs $25 to manufacture/brand/ship product to FBA, we need to sell it for at least $100 (4x our cost). And in addition to that, we want to charge 20% more so that we BUILD IN our cost to acquire a new customer. Final sale price: $120.

20% is a reasonable assumption (Amazon PPC ads can very often spend $0.20 and get $1.00 back in revenue).

So now:

– we’re differentiated (because it’s kit)

– we’re profitable on every unit (because of our 4x markup)

– we’re getting customers FOR FREE (because of the 20% premium we’ve pre-allocated for ad spend). Most sellers let ad spend cut into their margins. They don’t plan for it, even though Amazon Ads is a must these days

And boom.

A profitable business.

Some will say: “if it’s more expensive, won’t we sell fewer units”?

Yes, probably.

The goal was never to see more units than our competitors.

It’s to make money — i.e. actual bottom line profit! And to do this, we need healthy profit margins.

We can only really scratch the surface of what we call our “profitable scaling playbook” here in this email. There is a LOT more that my team and I need to show you.

So, if you’re serious about taming these Amazon fees, crazy ad spend, and competitive pressures, we’d like to invite you to a private, 1-on-1 Zoom call where we’ll share our entire strategy with you. From there, you can decide if you want to implement it in your business, or not (it’s not going to be for everyone).

You can go ahead and schedule your free, private 1-to-1 Amazon Ads consultation here. I’ll see you on the other side: https://calendly.com/asteroidx-chat/eval

https://calendly.com/asteroidx-chat/eval?from=slack