The Client

 
This client specializes in making premium leather wallets and purses that are durable, elegant, and designed for everyday use. Each item boasts quality craftsmanship, and a timeless design, and is engineered to be long-lasting. What makes these wallets extra special is that they have RFID technology that blocks radio-frequency scanners from stealing information from chip-enabled credit cards.

The Challenge

The company had cut ties with its previous agency for mismanaging its Amazon account. The agency’s advertising approach incurred significant expenditure with little regard for profitability. This led to a steady increase in the company’s non-converting ad spend and a month-on-month increase in ACoS and TACoS in their US and UK marketplaces. These metrics far exceeded the company’s targets.

• • US Marketplace’s TACoS was above 27%

The monthly ad spend in the US was alarmingly high, ranging between $50k and $73k in the four months before our intervention. Despite generating substantial gross revenue, the ACoS during November 2022, January 2023, and February 2023 hovered between 40% and 46%. What was concerning was the TACoS, which had soared above 27% and was way above the company’s ideal range of 11-13%. This prolonged inefficiency severely impacted profitability. Historical data indicated that this trend of suboptimal TACoS might have extended even longer than recorded, suggesting deep-rooted issues in ad spend efficiency and campaign effectiveness.

• • UK Marketplace’s TACoS was beyond 35%

In the months leading up to March 2023, the advertising expenditure fluctuated between £8k and £17k. The ACoS ranged from 46% to a staggering 70%, while the TACoS was above 35%. These metrics indicated little to no profitability considering additional expenditures for shipping, VAT, and operational costs. The other factors affecting the UK market were that it was smaller than the US market, had a limited product portfolio, and had stubborn inventory (slow-moving stock). The task of navigating this smaller and less profitable marketplace required a considerably more aggressive approach to scale back operations and optimize the remaining campaigns.

The Solution

Phase 1

In the US Marketplace, our team paused a significant number of campaigns that were not converting or were performing poorly. We also reviewed their keywords and product targets and disabled those that were draining the company’s resources. The negation of poorly performing search terms was necessary to refine targeting and prevent ads from appearing for irrelevant queries. We also established strict budget controls to manage ad overspend, ensuring that all money spent could be accounted for in terms of the potential return on investment.

Despite the significant amount of wasted/non-converting ad spend that needed to be cut, we had to be strategic in how we actually went about doing this. To simply enter the account, and suddenly pause a large volume of campaigns and targets that were performing poorly en masse, would only have further damaged the account. This is where Phase 2 came into play, and it actually ran in tandem with Phase 1.

Phase 2

We conducted comprehensive keyword and competitor research and reviewed the historical performance of keywords and search terms in the account. This helped us boost the company’s account with a new set of keyword and product-targeting campaigns. Instead of simply cutting ad spend where it was performing poorly, or not at all, we were able to reallocate a decent portion of what was a poorly-utilized budget to new campaigns and targets. This meant that while profitability was improving month-over-month, we were also reinvesting a portion of what was being saved in pursuit of growth. Furthermore, the reallocation of budget in this manner allowed us to minimize the initial impact/fluctuations seen to both revenue and BSR (Best Sellers Rank).

In the UK, where the challenges included not just inefficiencies but also a smaller, less forgiving market environment, we adopted a more radical approach. Our team identified products that were consistently underperforming and initiated a phased termination for these items, moving them to their end-of-life (EOL) stage. This decision was critical in reducing the drain on resources from products that no longer contributed to profitability. We then coordinated with the company for a series of promotions to get their stubborn stock moving. We strategically boosted sales to clear inventory during event days such as Prime Day and BFCM, through the implementation of Prime Exclusive Discounts (PEDs) and coupons. This collaboration helped optimize stock levels and sales during key promotional periods.

Choosing to partner with AMZ Pathfinder has proven to be one of the most impactful decisions for our business. They seamlessly integrate into our PPC operations, becoming an indispensable part of our team. Through their consistent support and strategic insights, our meetings and business decisions have gained strong positive momentum and profitable improvements in all marketplaces. On top of great results, the AMZ Pathfinder team is friendly, committed and a pleasure to work with and we are very grateful for all of that.

– Owner | Wallet Brand in US & UK Marketplace

The Results

• • US Marketplace

In the first three months, we reduced the TACoS from 27% to 12.36% by: 

1. 1. Eliminating non-converting ad spend
      
   2. Conducting extensive keyword and competitor research, and testing these new targets through budget reallocation
      
   3. Strategically expanding the campaign scope

Initially, there was a decrease in both ad spend and total revenue due to our optimization efforts and early-stage target testing. By the third month, however, we had observed visible improvements in the company’s organic positioning. We also leveraged Amazon event days such as Prime Day and BFCM and progressively closed the YoY Total Revenue gap, all while operating at an ACoS and TACoS that was within target.

In the first month of achieving YoY growth, we observed that: 

1. 1. YoY ad revenue increased by 33.59% in March 2024 compared to March 2023
   2. YoY organic revenue increased by 70.23% in March 2024 compared to March 2023
   3. YoY total revenue increased by 51.46% in March 2024 compared to March 2023

It is also important to note that during this period, while YoY ad and total revenue were initially down, we were gradually bridging this gap. Profitability improved to the extent that the company was able to invest in expanding its business from selling wallets to also launching a range of purses. This expansion and diversification were supported by increasing the TACoS threshold to 16%, allowing for more aggressive advertising to facilitate expansion.

• • UK Marketplace

In the UK, the TACoS was reduced from over 25-30% to around 12.36%, which aligned with the target range of 11-13%. This adjustment came with an increase in total revenue and year-over-year growth. Despite slower progress, the targeted ACoS and TACoS levels were eventually met, leading to enhanced profitability, even with lower total revenue figures.

This turnaround allowed the company not only to stabilize its existing product lines but also to expand into new categories such as women’s purses.