Drive and Convert

[00:00:00] You're listening to Drive and Convert, a podcast about helping online brands to build a better e commerce growth engine with Jon McDonald and Ryan Garrow.

[00:00:15] Jon: Ryan, I am pretty sure both of us are sporting a lighter bank account balance this week because last week was, as we all know, Amazon Prime Day. Your notes tell me that let me know how small of a part my family [00:00:30] played in the grand scheme of Prime Day spending, but I had proof. I bought some AirPods max that were.

[00:00:35] Jon: Super cheap. So at least comparatively, I guess for headphones are still expensive, but when your wife works close enough, you could high five her half the week. You need something to cancel out the noise. So,

[00:00:48] Ryan: yes, you'll have to let me know what you think of those. Cause I've, I've been debating for a while, the AirPods max.
[00:00:53] Ryan: The Bose or the, I think a Sony.

[00:00:56] Jon: Yeah. The Sonos has new ones too. So that's right.

[00:00:59] Ryan: Sonos [00:01:00] came out with new ones.

[00:01:00] Jon: I will say I did some research and for the price, they're the same as most of the other ones. Now I'm an Apple ecosystem person. So it made sense for me. If I wasn't in the Apple ecosystem, I may not care.

[00:01:11] Jon: But they have been amazing so far and they drowned out zoom talking. Let's call it that. So good to go. But I am assuming the world spent more this year than last year on Amazon prime day. Should we call it days? I know they call it prime day, but I know, I don't know why it hasn't gotten to the

[00:01:27] Ryan: plural yet.
[00:01:28] Ryan: Like, in fact,

[00:01:29] Jon: it's the [00:01:30] following week. And I saw ads this morning for people like actually for AirPods, I got kind of upset about it, but they had AirPods for like, you know, 25 less than what I paid on Prime Day, but only the pink color, which made me think probably it was safe. It wasn't going to buy enough

[00:01:46] Ryan: pink ones.

[00:01:47] Jon: There you go.

[00:01:48] Ryan: Prime days, day, days. It is all kind of interesting, especially when the reporting we can get out of Amazon is Amazon telling us. Like, okay, [00:02:00] Amazon, I mean, it's, we'll probably never hear about a prime day that is down year over year just because Amazon gets to tell us whatever they want, because it doesn't even matter in the grand scheme of their things.

[00:02:09] Jon: But

[00:02:10] Ryan: it was a big day. They said it was up something like 200 million things were purchased on Amazon, which in two days seems astronomical.

[00:02:21] Jon: That's what I,

[00:02:21] Ryan: yeah, that's what my, my mind first went to like the logistics behind that seems crazy, especially because my wife and I each have an app on our [00:02:30] phone.

[00:02:30] Ryan: We each buy things without telling the other and it's not even the shared like, and so it all gets delivered individually over like, like five deliveries a day. It's like,

[00:02:37] Jon: yeah,

[00:02:37] Ryan: wow. I mean, I feel sorry for logistics people at Amazon, specifically for my house. Like, I'm sorry you guys couldn't just deliver one box, but so it goes.

[00:02:45] Jon: I tell people all the time that Amazon is not an e commerce site. They are a logistics company that happens to fulfill your orders. And the reality is they are now a delivery company. They are a back office like [00:03:00] systems company. They're doing great things in robotics. For warehouses, not to mention that they run most of the internet or a good portion of it.

[00:03:08] Jon: Let's just say half of their servers. Yes, exactly. So, you know, Amazon, yeah, they, they can fulfill your orders, but they're not, they're not an income company. They are able to do that at home. Margin and at scale, and that's where the benefit is.

[00:03:22] Ryan: Yeah. And so, I mean, I can't wait till I can still get, like, see drones flying.

[00:03:26] Ryan: And I think that's going to be cool, whether it works or not. Until one

[00:03:29] Jon: [00:03:30] drops on your house. Yeah, until it

[00:03:31] Ryan: drops on my house, or it drops my package from a hundred feet. Yeah.

[00:03:34] Jon: Yeah, let's not talk about that. Gonna be

[00:03:36] Ryan: issues, for sure. But the punchline is, Amazon has been handedly make it more exciting in the middle of summer for e commerce brands and sellers.

[00:03:47] Ryan: With Prime Days, because it's not just an Amazon event anymore. People are willing and able to open up their wallet when previously this was just like, all right, people are on vacation. They're not going to buy anything. So let's all go on vacation as well. It's taking [00:04:00] away the slow months in my world.

[00:04:01] Jon: Yeah. No, no surprise there. Especially because every DTC brand now thinks that. Well, it's prime day. I got to do something on my site as well. As I already mentioned, I found things on sale that I wanted where the deals better this year. I've heard a lot of people complaining that. Prices were up, meaning that a week, two weeks before Prime Day brands raised their prices and then dropped them back to the normal price for Prime Day, which is kind of shady, but I get it to [00:04:30] a certain degree.

[00:04:30] Jon: If you have no margins already, how are you going to discount?

[00:04:33] Ryan: Well, it also shows to a degree how dumb some of us are. We think we're getting a deal. So we just clicked buy without actually doing more research, um, because I am in e com all day, every day. I trained myself. My wife now follows suit a little bit where you got to figure out what you're going to buy before prime day comes around.

[00:04:49] Ryan: Like if you're going to prime day to find what you're going to buy, you're probably in trouble. And so we'll talk through it and say, okay, what do we need for back to school for birthdays coming up or [00:05:00] things my wife and I'd like, Hey, we'd love this, but if it's on a deal, it makes sense if it doesn't don't do it and things go in the cart.

[00:05:06] Ryan: Usually one to two weeks beforehand so that we can see oh did this actually go on sale or did it go from 100 to 130 to come back to 105 then it's not a deal so be smarter about it people a lot of a lot of us and a lot of you out there listening probably weren't well

[00:05:24] Jon: I was not but you know that made me just think Amazon does the homework for you because when you put [00:05:30] something in your cart and you go back to your cart later, it will tell you if the price has been adjusted.

[00:05:35] Jon: It has a little summary at the top of your cart and says, so and so went up in price, it's now X. And that can be really helpful for me because I watch stuff all the time and I'm like, okay, I mean, my stuff always has, is in my, sitting in my cart on Amazon. You know, I'm, I'm definitely. Raising their abandoned cart rate.

[00:05:53] Jon: But I do it because of that ,

[00:05:54] Ryan: you're hurting their conversion rates. I'm hoping that Trying to get yourself a job.

[00:05:57] Jon: Yeah, I was gonna say, I'm hoping that just my [00:06:00] little abandoned cart will help them to see the light and higher the good, but yes,

[00:06:04] Ryan: yes. Well, and I do have, you know, because I'm in Amazon all the time, I do have plugins that show price changes over time.

[00:06:09] Ryan: Mm-Hmm. . So there's some tools you can get that maybe most of you out there listening don't have, which is fine, but it, it does seem that. Amazon, I felt anyway, and the stuff we were looking at, the deals were not as good. Like, the prices, obviously, up year over year. I needed to buy a new speaker for playing golf, because I like music when I'm golfing, because I'm one of those [00:06:30] guys on the internet, or out on the golf course.

[00:06:32] Ryan: And we did know the price of them, so I found a hundred dollar one that was discounted to 75 and that was actually a good deal. So that got my tech purchase But we did see a lot of things that actually went up in price And in fact, one of the more surprising things that came out of the data I've been looking at is there's this aero garden So if you're a fan of growing your own herbs, if you bought the aero garden during prime days you You likely paid almost [00:07:00] 40 more than you would have paid two weeks before.

[00:07:02] Ryan: And it's not like 40 on a 500 product. This was, it went from on average on Amazon, 82 to 120.

[00:07:10] Jon: So went up a third. It

[00:07:12] Ryan: went, yeah, but a 50 percent increase on what its price was before and the sales rank went up, their sales volume. Almost quintupled. So, the question is, is

[00:07:21] Jon: AeroGarden ever going to drop their price now?
[00:07:24] Jon: I don't see why they would.

[00:07:25] Ryan: I don't either. Like, and so, I don't know if you were, I mean, I just don't know how [00:07:30] that worked. Like, there was, I don't know if you had a bunch of influencers that were pumping it, so you had external traffic that said, Hey. If people haven't shopped this before, we're hitting a bunch of new influencer audiences driving the traffic to Amazon.

[00:07:40] Ryan: They're just going to buy it, or if you deflated the price on Amazon to do something to compete with a sale on your site. I don't know, because Amazon doesn't allow you to price something higher on Amazon than your other channels. If you were running some deals through Walmart or Target the week before, you had to match that.

[00:07:57] Ryan: That deal's done. Everything's back up to retail price. That can be [00:08:00] some of it as well. But I thought that that was surprising considering that's a decently well known brand. I think they have 21, 000 reviews on Amazon, which means they've sold a good amount. And volume quintupled with a 50 percent price jump.

[00:08:13] Ryan: That is insane to me.

[00:08:14] Jon: Yeah, definitely. We would always be running that sale. That's for sure.

[00:08:18] Ryan: Oh yeah. And so overall though, what was tracked that we have access to, it does appear that sales were more aggressive this year. So that means the retailers and sellers were [00:08:30] pricing things at a higher discount this year than they did last year.

[00:08:33] Ryan: It was led by televisions this year. Last year, it wasn't the biggest discount was on televisions and it went from 5 percent off last year. During prime to 16 percent this year, as far as the biggest increase in discounts, I'll say that. And so that tells me that I didn't

[00:08:49] Jon: need a television.

[00:08:50] Ryan: Yeah. It tells me that evidently there's been enough of a slowdown in television that they're getting a little scared.

[00:08:56] Ryan: The main thing during

[00:08:57] Jon: COVID everyone bought a television because [00:09:00] they were sitting around. They're like, I got to watch this in 4k if I'm going to watch this much TV. So yeah, that was just a few years ago. Most people don't need a new TV by now. So that definitely makes sense.

[00:09:10] Ryan: It does. And I think there's not been a massive enough update in television technology to dictate that I need to have this.

[00:09:17] Ryan: Like for us, we got frame TVs when we moved into our new house. Like there's new frame TVs that have better glare protection, but then like, is it that big of a deal? Like when it's sunny out, I'm usually working. So there's not a [00:09:30] lot of need for me to watch TV without glare, but electronics overall, like you saw with the, with the Apple AirPods, AirPods Max.

[00:09:38] Ryan: That's where the biggest discounts across the board were. In fact, it was up to 23 percent off this year across the board on electronics. Up from 14 percent last year. So, as a percentage of discount, much higher. So, people are looking to And again, those are probably higher margin products many of the time as well.

[00:09:54] Ryan: So, you can offer the more aggressive discounts. What I find interesting in these discounts though, You [00:10:00] can't just get into Prime Day and get more aggressive as you see the competition getting aggressive. So most of these deals are two months or more before the event decided. So right now, Amazon is now telling everybody about the fall Prime Days, which is usually in October.

[00:10:17] Ryan: You have to have your deal locked in by August 6th. Oh. So. Okay. We just finished one. Now you've got to set your deal for the next month. And you, I mean, that's a decent ways in the future. You've got to set your discount now.

[00:10:28] Jon: So,

[00:10:29] Ryan: tell me. Do

[00:10:29] Jon: you think, [00:10:30] maybe this is an obvious question, but do you think they do that to prevent sellers from gaming the system?

[00:10:35] Ryan: I just think it's such a high volume time and such a strain on servers with shopping, you can't keep pushing new deals through in real time in the system and have it work. I think it's too many opportunities for things to break and register prime deals with what's on sale now. How many units are there going to be like, it just so many moving pieces that if you could get in there and be like, Oh, I see, you know, Bob's herb garden just got a [00:11:00] 40 percent off discount.

[00:11:00] Ryan: I got to jump it to 45%. Like I, I would imagine. Amazon gets there at some point. It's just, they're just not quite there as far as handling that. I mean, and actually Amazon's campaign manager went down on prime day. So the first day, so there's struggles there. Well, there's proof. Yeah. So this tells me that even two months, three months ago, and you had to lock in your deal, retailers and sellers were, were feeling some pain and knew they needed to discount things more to get to the top [00:11:30] of the heap to be able to sell more stuff.

[00:11:31] Ryan: Yeah. Or an AeroGardens pie, you just, who cares? I'm going to raise the price and I'm going to sell a ton more just because of their name and branding. So lots going on, lots off Amazon, actually. In fact, there was over 14 billion sold off Amazon. I was going to ask

[00:11:45] Jon: what sellers benefited outside of Amazon this year?

[00:11:48] Jon: Because. You already mentioned there's, there's gotta be a spillover effect.

You're listening to drive and convert a podcast focused on e commerce growth. Your hosts are Jon McDonald, founder of the good, a [00:12:00] conversion rate optimization agency that works with e commerce brands to help convert more of their visitors into buyers and Ryan Garrow of logical position, a digital marketing agency offering pay per click management, search engine optimization, and website design services to brands of all sizes.

If you find this podcast. Please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

[00:12:26] Ryan: Yeah, people just get in the mood to buy. And we [00:12:30] saw in the week before you had Walmart and Target both doing their version of Prime Day. So trying to trump Amazon and take all of their money before, it doesn't really work because not enough people search those or sell them.

[00:12:42] Ryan: But I think the people that were pulled and things I saw, 35 percent of them shopped the Walmart days beforehand and 34 percent shopped the Target circle thing before. And I can only speak to my household. We didn't care about either one of those. I actually looked at, because I'm curious and always searching him.

[00:12:59] Ryan: I looked at the [00:13:00] target stuff 'cause I was looking for headphones. My wife has the Bose ones. Mm-Hmm. of yours. And so I've tested those just to see. 'cause they came out and said, oh, the, I think it was the, were they looking for the AirPod? Oh yeah, it was AirPod Max. They had this great deal and they sent it to me as an exclusive before because I, we have the circle card or whatever their target card is and the discounted price.

[00:13:21] Ryan: What they did, the inflate the price, then discount price thing. And it was the same price everywhere. Like I could have got it from Apple directly for the same price as Target, and they were sending it to me like I was [00:13:30] special. So I think there were issues there with how they executed their sale to compete with Amazon.

[00:13:36] Jon: So, okay. So TVs, electronics, but were those the two biggest verticals people were buying or were there others?

[00:13:43] Ryan: I mean, people are just spending money. I think those were probably the biggest. Spending verticals. I don't know if I saw the overall spends but beauty Crazy amounts year over year. In fact, it was by Salesforce who's obviously not Amazon But they're just tracking all their sellers and combining that with some [00:14:00] adobe data beauty was up dramatically over a year It looks like makeup was up 30 year over year as far as makeup sales and deals So that surprised me a lot and it also tells me because there was this big pull out pullback in beauty specifically makeup You During covid.

[00:14:17] Ryan: And so I think we're getting back to probably a more normal time and people going out and seeing people in person. So makeup is coming back and it It also feels to me that there's a feeling this is not real data, but it feels like there's [00:14:30] a lot of beauty brands that have come out just in the last couple of years.

[00:14:33] Jon: Yeah.

[00:14:33] Ryan: So I don't know if

[00:14:34] Jon: There's been a lot more influencer makeup brands that you hear about, right? From social, et cetera. Yeah. I think the Tik

[00:14:41] Ryan: Tok ads have done quite a bit for beauty brands. I mean, getting people to discover new, I think the algorithm on Meta is better now for helping people discover new brands.

[00:14:53] Ryan: Cause I'm probably not super weird when it comes to how I consume media through Meta, but I, I [00:15:00] am not there to post about myself or my family or like anything like that. Or really to connect with people, like I've got other avenues that I connect with people. And so meta and Instagram have become more of an entertainment for me.

[00:15:11] Ryan: And so scrolling in most of them is entertainment that I don't follow. It's just, Hey, they knew I liked this. So they put something in front of me and I'll, you know, maybe there's 15 minutes before bed that I'll go laugh at comedians or just find something dumb to relax my brain. And that process of discovery means that I'm not [00:15:30] Averse to seeing content that I'm not following and it, and their, their algorithm is pretty good at figuring out what I like and keeping that flowing through the feed as I scroll.

[00:15:38] Ryan: So I think that a beauty brands in particular have benefited from that in getting new products. And well, I'll say that the discoverability of your video, even though if you're not promoting it is. can be high because it's being pushed into feeds that you're not even trying to get into because TikTok, Instagram, Facebook want people to stay in the platform so they'll put it in front of them if it's an entertaining video.

[00:15:58] Jon: So

[00:15:59] Ryan: not [00:16:00] surprising to me that category.

[00:16:01] Jon: Not surprising, but were there any surprises besides that AeroGarden that you mentioned?

[00:16:06] Ryan: It's always surprising to me the amount of volume increase. I know we're heading into difficult economic times if we're not already there. We've been in an inflation and the jobs reports are not great.

[00:16:16] Ryan: So I can see the data saying. Where is all this money coming from that's being spent like it's not just the 1 percent spending a lot more on stuff It's everybody is spending money during this random week in July [00:16:30] Yeah, and so that just constantly surprised me 200 million things were bought like that is just a big number I wouldn't think that should be done in this economy or where we're at now, you know But speaking on the other side of the arrow garden Fitbit did a heavy discount.

[00:16:43] Ryan: In fact, what was the Fitbit discount on there? Fitbit went from before So Amazon or before prime days, 151 average price point on a few days or a week leading up to prime days. And then they went just under a hundred. So that's a key price point. They went to 99, 95, which [00:17:00] is a good price point for technology.

[00:17:02] Ryan: And they moved from pre prime day rate about a hundred in the sporting goods category to number one on the day their deal was going and their volume of units sold went from, um, I think it was averaging somewhere, let's say. Between 600, 700 units a day to almost 6, 000 units sold in one day on Amazon at the discounted price point.

[00:17:25] Ryan: And then there's this halo effect, which I don't think a lot of [00:17:30] sellers think about when they're setting a deal. But on Amazon, if you're able to get number one on all sporting goods on Amazon, that has a cascading effect on your Amazon's choice across all these categories and searches that are being done.

[00:17:44] Ryan: And it's like the SEO. Um, moving to number one is massive because it's, it's likely, and we don't do anything for Fitbit, so I'm not, I don't have a horse in this game, but it's likely they didn't go into their Fitbit listing and do a bunch of quote unquote keyword stuffing and [00:18:00] SEO work leading up to this,

[00:18:01] Jon: right?

[00:18:01] Ryan: Amazon, it was dependent on sales velocity. How much money are you making Amazon? The more money you make Amazon, the higher you rank. It's not complicated. And the days after the sale, their volume stayed up extremely high. So there's something to be said about juicing your volume with a deal to rank higher on the important categories to increase how many, how much people are buying from you.

[00:18:25] Ryan: And so that's an example. Opposite of AeroGarden where they were saying, Hey, we're going to juice [00:18:30] this with some sales and then price is going to go back up. But our rank is high enough and most people are not paying attention to historical prices. So they're going to think, Oh, people are paying 150 bucks for this.

[00:18:41] Ryan: So I'm going to go buy it. Cause it's worth it.

[00:18:43] Jon: Must be good. So yeah. Okay. To me, this all sounds like big numbers, but what does this mean for the rest of the year? You mentioned on one hand, large sales increases, uh, not a lot of discounts, you know, true discounts, I'll say lots of money being spent, but also economic [00:19:00] times, inflation, et cetera, which I would tend to agree with based on our client base.

[00:19:04] Jon: We're seeing quite a bit right now. What do you think this means for the rest of the year?

[00:19:08] Ryan: I mean, I, I somewhat probably, I think I sound like a broken record sometimes I'm talking about, Hey, the holiday is going to start earlier, blah, blah, blah. Like, I think the normal things you've heard about holiday prep is going to be valid this year, but seeing the rate of increase in discounts tells me there's a lot of brands getting aggressive, trying [00:19:30] to get market share or just get sales to stay afloat.

[00:19:33] Ryan: So if you already had a bunch of inventory in Amazon. You're paying warehousing fees, holding costs on that inventory, like until you sell it, you can't go buy more stuff or buy the next model or upgrade that stuff. So if you're sitting on old inventory, you're just going to try to dump it and get out of it so you can buy new stuff again, or you need cash to pay employees.

[00:19:52] Ryan: So I think we're going to see some pretty heavy discounts locked in for the Prime Day and then also for the Turkey [00:20:00] Five. And so I would, as a seller, not want to be holding inventory, uh, heading into December. Like if you've got stuff December 10th this year you're trying to sell, I mean, you'd better have a physical storefront to sell those in because you're not going to get a lot of people online, I don't think.

[00:20:15] Ryan: Interesting. So prepare to sell. And I would, my advice to advertisers for I think 10 years in a row has been your discount during holiday should make you a little bit uncomfortable. I think there will be a lot of people that undercut you. And so you've [00:20:30] got to have strategies for how am I going to get traffic if I'm not the lowest price on google Which in the past maybe your aggressive discount was able to get you that you know and paying attention to traffic from Off Amazon to Amazon if Amazon is your main sales channel You need to be paying attention to sales rank and how you're getting sales without using just Amazon ads because it It it is getting a lot more expensive On Amazon, as you'd expect that ROAS decreased, ACOST increased.

[00:20:58] Jon: It's getting everywhere. It's getting, getting tight. [00:21:00] One term you said that stuck out to me because I've been in e com for a decade plus, I've never heard the term Turkey Five, but it makes sense.

[00:21:08] Ryan: Yeah. What are the Turkey Five?

[00:21:10] Jon: It's Thanksgiving, what was traditionally Black Friday. Okay. So sales

[00:21:15] Ryan: no longer are exclusively on Black Friday now.

[00:21:18] Ryan: So Thanksgiving's got sales, so you got to include that day. And then you'll have Black Friday sales extended over the weekend every time. And then Cyber Monday kicks off and that's the turkey five, but then you'll have an overlap [00:21:30] on Cyber Week because almost every brand has a surprise. The demand dictates that we keep our sale on all week.

[00:21:37] Ryan: You've got Cyber Monday pricing like it's not a surprise anymore. Just like, right. I know you're going to be on sale. So it's just targeting and I think you're going to probably need to figure out how to get more creative and this is, you know, it goes back to a lot of things you've talked about a lot of times, like you can always, you can always increase your conversion rate by dropping your price, right?

[00:21:56] Ryan: Like it's not, that's not a complicated thing to do and it doesn't take [00:22:00] Jon's brain or Ryan's brain to win when you're just going to race to the bottom, have fun. I think the brands that are going to survive are figuring out how do you do what AeroGarden did. Increase your price 40 percent and sell five times the amount of units.

[00:22:14] Ryan: That's the, that's the power of a good brand. You know, I don't own that cause I have nine acres, so I don't need to grow my herbs inside cause I got them outside. But a vast majority of the planet needs that if they're going to grow their own. So focus on the brand, make sure your brand is strong and you have a reason [00:22:30] to get people that, that will be willing to pay a premium for that product and your email lists, your loyalty programs, you have VIP customers, if you've been segmenting your data right, get them the value.

[00:22:42] Ryan: You know, you might not need to discount as heavily if they've already bought from you in the past and already like it. Give them first access, early access. They just, again, go listen to Jon's examples in the previous hundred. So episodes where we were talking about how do you get people to buy your stuff without discounting?

[00:22:56] Ryan: So if you have to discount to win customers, it's, it's, [00:23:00] uh, foresee difficult times ahead and lots of competition.

[00:23:05] Jon: Agreed. Wow. This is a lot to take in. I think that Amazon prime day is. You know, they're doing it more than once a year now and every time it spurs a lot of sales, but I never feel like I'm getting a big discount.

[00:23:17] Jon: I think you kind of confirmed that for me today. So I appreciate you saving me some money here because otherwise I would just go by because I saw a discount. So I'm going to do your trick. I learned today, which is to fill up my cart with [00:23:30] everything I want and stick to those items and track the prices beforehand.

[00:23:34] Jon: So I'm on it. Yes.

[00:23:35] Ryan: Don't trust just because it says it's 25 percent off. It is

[00:23:39] Jon: because

[00:23:39] Ryan: it

[00:23:39] Jon: might

[00:23:40] Ryan: be a 40 percent increase in price first.

[00:23:42] Jon: Love it. All right, Ryan. Well, I appreciate it. We will chat again soon.

[00:23:46] Ryan: Thanks, Jon. Appreciate it.

Thanks for listening to drive and convert with Jon McDonald and Ryan Garrow. To keep up to date with new episodes, you [00:24:00] can subscribe at driveandconvert. com.