It was one of those days that you dread two or three days before it starts. I left the house around 4:30 in the morning. At midnight I walked back through the door. It has been very intense but satisfying. The client is a group of companies with an annual turnover of over 600 million euros. Their core business is creating products for German supermarkets like Aldi or others that apart from food from time to time launch special actions with sport, clothing, garden, etc. items. Someone has to manufacture them in China. They do it and it seems that it is not a small business.
Apart from that source of income they have been looking for something more recurrent for years. That is why they have launched several own brands and/or have acquired the license for existing ones. I have dealt yesterday with four managers of four SLs that have most of their turnover on Amazon.
They don’t know what they are earning from Amazon until the end of the month or even year.
In years past the managers only saw what they were billing on Amazon but did not have the data at hand to see the profit or rather the losses they were generating day in and day out. When they would see the final figures they were surprised that in the end they were not making any money.
What has surprised me is to see that this “phenomenon” does not happen only to small sellers that are starting out but also to companies that make millions with Amazon.
They are highly dependent on agency work
It’s funny to see the amounts of money these companies spend on agencies. The problem you have is that they have no in-house knowledge or resources to perform the tasks that need to be done. They pay very significant amounts of money. Having agency is a contact business because I know the market prices but typically large companies go with large agencies to pay well above average to then receive poor service. They “understand” that compared to other clients they have a low budget and that’s why the agency can’t serve them as well. No matter how good you are as an agency, no matter how good your price-quality ratio is, if you don’t work your network, you will have little chance of reaching large and well-known clients.
They don’t have an exhaustive control of what they spend on Ads.
Yesterday we were also talking about TACOS and ACOS extensively. At first glance it looks like they know what they are talking about. Then if you ask for details you realize that they spend thousands and thousands of euros without knowing what they are doing. They know how to read the reports and interpret it but once again the information and consequently the decision making comes late. They are not sufficiently on top of it considering the impact it has on their sales and profit.
It has been curious to see that in part these companies share similar problems to us. In many ways they are doing much worse. There was also something we will be able to copy. It is undoubtedly being an experience that is worth the work that was and will be behind.
