In the bustling world of e-commerce, the 80/20 rule, also known as the Pareto principle, holds a profound sway over sales dynamics. For most brands on Amazon, this rule is not just a guideline but a strategic imperative, often leaning towards a more pronounced 90/10 ratio. Understanding and leveraging this principle can be a game-changer, particularly during the holiday season.
The 80/20 Rule :
The essence of the 80/20 rule lies in the idea that a significant chunk of your business—typically 80%—emanates from a mere 20% of your SKUs. On Amazon, this ratio can even tilt more drastically, with 90% of sales emerging from a select 10%. Ignoring this reality can lead brands into three common traps:
- Ad Spend Allocation Oversight: Neglecting to allocate ad spend at an ASIN level can result in inadequate investment in top-performing ASINs and excessive spending on others.
- Premature Content Optimisation: Attempting to optimise all content simultaneously without first ensuring that top-selling ASINs are perfected is a pitfall many brands must work on.
- Inventory Mismanagement: Failing to prioritise inventory for top sellers over other ASINs can lead to missed opportunities and dissatisfied customers.
The Right way forward:
Rectifying these issues is more straightforward. To significantly boost revenue and profitability, the focus should shift towards prioritising what customers are eager to buy. Here’s how you can kickstart this process:
- Data Dive: Download your business reports or retail analytics and sort by revenue for the last year. Identify the top 10% and 20% of products contributing to the lion’s revenue share.
- Optimisation Priority: Ensure listing images, infographics, and copy/SEO are fully optimised for these high-performing products. This is where your initial focus and energy should be directed.
- Keyword Strategy: Identify keywords where your products are on page 2 or the bottom of page 1. Leverage top-of-search campaigns to boost organic rank on these keywords, strategically increasing your products’ visibility.
- Ad Spend Alignment: Allocate sufficient ad spend to amplify the reach of your top-selling products, further enhancing their visibility and desirability.
Remember, the emphasis here is not on neglecting the remaining 80% or 90%, but on establishing priorities, especially during peak selling seasons like the holidays. By aligning your efforts with the 80/20 rule, you position your brand for a more impactful and lucrative festive season on Amazon.