There are certain milestones in an Amazon business’s lifecycle, one of the most thrilling of which is breaking $1 million in annual Amazon sales for the first time. However, that milestone can also become a plateau. Doing the basics well has brought you here, but to climb further, the basics will no longer suffice.
What does it take to grow an Amazon business from $1 million in annual sales to $5 million, or even $50 million? In short, what does it take to scale to the next level?
Kaspien has served over 4,000 brands in our lifetime and generated over $ 1 billion in retail sales. Along the way, we’ve learned a thing or two about successfully scaling brands on Amazon. In this post, we’ll highlight some of the most common obstacles to overcoming a sales plateau on Amazon.
Common Causes of an Amazon Sales Plateau
One of the most common reasons we see a brand’s sales plateau after a certain point is that they’ve spread themselves too thin. They work with too many tools and partners, each of which works in siloes. They may work with a Creative Services agency for photography and video, an advertising agency to run their Amazon marketing, a freelancer to write copy for their website, and a software company for their inventory forecasting.
As is often the case, brands reach this point gradually and over a long period. They hired specialist agencies and freelancers as individual needs came up. This strategy was cost-effective and practical, but only to a certain point. There comes a time in a brand’s lifecycle where having many small partners becomes a constraint instead of a boon.
Here are just a few of the issues that can be created by this model:
Communication Gaps and Delays
Multiple agencies or freelancers aren’t communicating, and instead projects are relayed by internal stakeholders. As a result, too much time is wasted on bringing new stakeholders up-to-speed, clarifying misunderstandings, and passing messages back and forth.
Growth Slows or Stagnates
Because there are communication issues and teams are siloed, your business units will not be able to coordinate to the degree needed to improve efficiencies. Inventory forecasting relies on accurate sales prediction from marketing. Amazon advertising is harmed by stock-outs. Website content and voice may differ from branding on other sales channels.
These issues impede growth. Imagine a rowing team where each member works without consideration of the rower in front or behind them. They quickly fall out of sync, slowing the boat and falling behind the competition. By consolidating supportive services under one unified partner, you position your team to work in synchronization, maximizing sales velocity.
Being Spread Thin Impedes Automation
Not only do siloed freelancers and agencies slow progress on initiatives, they also make it more difficult to automate different facets of the business. Automating processes effectively across a growing organization means having a shared source of truth and interconnected systems. When each partner has their own data and processes, effectively automating your operations, which is an essential part of scaling a business, is quite challenging.
The Costs Exceed Those of a Holistic Agency
One reason that brands typically hire specialists instead of a full-service partner as they grow is because of cost. However, there comes a time when you end up paying for the sum of specialists than you would for a single partner. This time comes earlier than one might expect by simply summing the numbers.
If you consider the fact that a single partner eliminates the issue of communication gaps, siloes, and automation obstacles, the single partner can actually accelerate growth even faster, further increasing the return-on-investment to the point that working with a single partner becomes more profitable than working with many specialists earlier than expected.
Case Study: Growing Lorex’s Amazon Sales by 521%
Let’s take a look at one of our partners who chose to work with Kaspien as their full-service Amazon agency. Lorex is an electronics brand known for their high-quality security systems. They partnered with Kaspien to transition their business away from Amazon Retail and start selling their products on Amazon themselves.
As their agency, we built new listings and enhanced existing listings, created A+ Content, an Amazon Store, and launched sponsored ads on Amazon. In the years since, we’ve grown their annual Amazon sales from thousands to millions.
- 521% increase in total sales
- 13% average ACOS
- $4MM+ lifetime Amazon ad sales
Learn More About Amazon Strategy
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