A Digest of Best Practices for Amazon Sellers

SPONSORED BY: Prosper Connect held a Think Tank—an interactive breakout room exercise via Zoom on April 21, 2021. This conversational forum was ideal for meaningful knowledge exchange through the sharing of best practices and solutions among Amazon sellers. During this 90-minute digital event, sellers discussed the latest trends and challenges and shared their collective best practices. Participants of this event were sellers only and were grouped according to their company’s annual revenue. The three topic areas of focus included:

This document is a record of the best practices that were shared.

The next opportunity to participate in a Think Tank will be at the in-person Prosper Show on July 15. For more information on Prosper Show 2021, happening safely, this July 13-15 in Las Vegas, click here. Registration is now open. Register with code CONNECT21 for an additional 15% discount. We hope to see you this summer at the leading conference and trade show for top Amazon sellers.

A Digest of Best Practices for Amazon Sellers 2 MEETING DEMAND In a year where demand outpaced anyone’s wildest expectations, we asked sellers what Inventory Forecasting, hurdles they had seen and foresee for the coming sales cycle. From receiving delays to material shortages and managing inventory dashboards, sellers had plenty of issues to Inventory Logistics and wrestle with this year, and a lot of solutions to get them through. Shipping Management BIGGEST CHALLENGES

• Keeping the right inventory in stock • Tax Nexus (physical & economic) Moderators • Lost/damaged/destroyed inventory Anton von Rueden, President • Receiving delays – unplanned, unexpected & COO, Boosted Commerce • Right-sizing – operate two different businesses • KBG Amazon Program – Amazon will print workbooks for them and they have been Matt Snyder, Senior Director a big competition for them of Amazon, Vari; Former • Random consumer products – inventory demand planning has been difficult after covid Amazon Insider • Making sure discontinued product are moved out – and how to gauge forecasting without a lot of sales history Recorders • Raw material shortage (most suppliers increased 5-7%) Leilani Gastelum, Product • Full truck load – quicker receiving time Owner, Sifted • FBA problems to receive shipments: can take 4 weeks to be received • Needed to change manufacturing to the U.S. Courtnie Clemens, Director of • Material shortage issues (industry has been slowing down) Brand Management, Boosted • Amazon has limitation on storage; receiving is a lot slower • Improving IPI – Sending inventory and IPI keeps going down; several SKUs that Commerce need to replenish (mark other SKUs as not replenishable), need to lower # of skus so that your IPI will go up • Manage FBA inventory • Inventory dashboard: will show you which product you want to restock, but how is that matrix calculated?

BEST PRACTICES

Inventory Forecasting – The Magic Wand! • Twice daily checks • NetSuite Inventory forecasting system • Build in a 30-day cushion to account for unexpected receiving delays • Review monthly sales trends • Amazon replenishment reports • Forecasted SKU by SKU basis, out a full year PRO TIP: • New Product Launching Forecasting BEST PRACTICES • Trial run (3-month supply) Build in a 30-day • Competitive analysis (keyword and niche) • PPC cushion to account for • 90-day sales velocity unexpected receiving Inventory Logistics – The Secret Sauce! • Regular small parcel to FBA replenishment shipments, daily into FBA • LTL shipments every 2 weeks • 60 to 90 days of cover • Reliable partners

Shipping Management – The Hidden Journey! • Mostly FBA • Get good software • ERP software • Recovery • Shipping management

A Digest of Best Practices for Amazon Sellers 3 DRIVING SALES Unlocking the secret to sales conversions is all about focusing in on the customer and Advertising on Amazon and maximizing efficiencies. Learn how sellers are overcoming obstacles, grappling with advertising options and optimizing their listings in an extremely competitive landscape. Listing Optimization BIGGEST CHALLENGES

Limitations of Amazon Moderators • No longer can comment back to customer’s feedback • No control of customer reviews if given for a product that is not yours and no way Joe Kiernan, Vice President of to have it removed Growth, Perch • Product details page changes, corrections or updates are difficult if you can update at all Jason Boyce, Founder & CEO, Avenue7Media Threats • Competition from Chinese sellers Recorders • Counterfeiting and black hat actors Nathan Sieminski, Marketing Costs Manager, Perch • Maxed out PPC...overspending • Capital + content – high interest rates which make margins tough Julie Glogowkski, Client Services Manager Industry Challenges Avenue7Media • For mature sellers, growth is difficult • Low barrier to entry in some categories limits exposure

Amazon Fees and Payments • Amazon fees are becoming more and more expensive • Payout distribution is less than expected • No way for sellers to complain or resolve when Amazon holds payments for verification of seller

Inventory • Forecasting and managing inventory (especially with products that have expiration dates) • Keeping the right inventory in stock • Large SKU count makes forecasting difficult. Slim margins as a reseller makes it hard to compete on price BEST PRACTICES

PRO TIP: Overview • Ramp up Amazon ad spend to drive profits up – easiest way to track ad spend Focus majority of spend on • Focus majority of spend on new products, spend less on higher-ranked products new products, spend less • DSP, sponsored ads, sponsored display • Vine Program on higher-ranked products • Categorize your negative reviews into themes to see if there is something you can change and if changed you can add a New and Improved (value add) to your listing • Infographics – are important for customers when viewing listings, to call out benefits (including with mobile view) • Use videos to increase revenue

A/B Testing • Manage your experience or marketing experiments o Improve click-through rates and generate more revenue o A+ details, main images and keywords/titles can also be tested PPC Strategy? • Target A costs. Two budget approach. Stretch budget based on hitting a 15% budget, and then a 20% budget • Return on ad spend varies on a month by month basis • When it’s working, increase the budget dramatically

A Digest of Best Practices for Amazon Sellers 4 Amazon’s Ad/Marketing Death Spiral • People get stuck having to advertise if they’re down the page • Try to avoid advertising if possible. Organic from an outside source can really help your listing to go up. Use money to reduce the price because once you’re on top, it’s easier to stay there • Split tested strategy. Doesn’t work for every product, but it can be highly successful. Might take longer. Sustainable, ad-free campaign • 80% A costs on advertising on new product launch. Price elasticity testing to see what it takes. Counts that discount on the target retail as the price differential

New Product Launches • 100-150% A costs for the first few months, after 3 months it needs to be 10-30% A costs. Can stay there for a year or two. It depends on the product. Crunching the numbers monthly and make changes QoQ

Listing Optimization • Hire an art student for the summer • Hard to justify a full-time graphic designer/photographer • Students who will do great work with the right direction • May become employees or contractors. For engineering of legacy products, but also videographer

Defensive or offensive strategies with target costs to auto set bids • Find balance of overspending or underspending (“Half of ad spend is wasted, but you never know which half”) • Both at times. Times to pull back based on seasonality but experimenting with continuing to spend. PPC will take as much money as you’re willing to give it • Budget is unlimited if you can get the return. Sell until you run out of product • Careful not to advertise yourself out of stock • Best seller lists - it can feed organic

Vendors • Performance is relatively similar across vendors but fee structure varies (e.g. retainer, percentage, flat fee) • Add keywords for the listing with those in PPC campaigns – bidding on specific keywords for products that are branded • Automate according to scale • Huge advantage for offloading PPC vendors. If they’re big enough, they can see insights in the aggregate and move more fluidly. It’s hard to train people to manage PPC and keep them around.

Pricing and Overbidding/Under Bidding • Difficulties with dynamic pricing due to 1P. Hybrid vendor problem • A/B testing? Splitly does sliding pricing testing • If people are coming to Amazon with your brand in mind, then you can command a price premium • Push it as high as you can, but as soon as it’s above what the market expects, PRO TIP: then it drops waaay off • Product maximization curve. You need so much data and high volumes. Way If people are coming to beyond 20, 30 or even 40 products a day Amazon with your brand Going Premium in mind, then you can • It’s an evolution of customer expectations. Product images, then banners, command a price premium product sales slide, quality has gone up • Watch evolution and stay up to date. Pay attention to widgets. Video is preferred. Great for mobile = it can be the second image you see • Product demos + videos. Differentiate yourself from black hatters • Amazon support program SAS Core. It can be underwhelming, but they can accelerate issues. Depends on the size of the brand. $2,000 a month • Elementary ideas. No access to beta programs • Lightning deals once a week, and they waved the cost, but it’s not worth the cost

Content • Understand your customer and develop content targeted at them • Imagining like they didn’t even have a brand in place. How can we frame ourselves as a brand off of Amazon?

A Digest of Best Practices for Amazon Sellers 5 CUTTING COSTS With costs often on the rise and out of seller control, cutting spend can often be a Staffing Systems, daunting task. We asked sellers how they are addressing their cost-related concerns with Partnership Model, innovative solutions. SOPs and Negotiations BIGGEST CHALLENGES

• So many costs are fixed • Shipping inconsistency • Proper staff training

Moderators Increasing costs Rob Bell, Chief Growth • Tariffs • Shipping increases Officer, Elevate Brands • Amazon fees • COGS and shipping from suppliers in China Alex Champagne, Director of • Limits on restocking was an issue (FBA), now it’s more of an issue of how much Sales, Empire Flippers product we can get to FBA • Creating a shipping plan to keep up with stock/inventory at FBA Recorders • Listing suppression because of EPA regulations/registration John Tillery, Business • Product stickering/labeling & packaging issues • Matching 2020 sales after COVID ecommerce increase Development Associate, Elevate Brands Keeping up with Amazon’s changes • IPI scoring updates Branden Schmidt, Content • Amazon regulations. Example: New rules on children’s pajamas required Specialist, Empire Flippers inflammatory testing, lead/small parts certification. • Inconsistency with the Amazon compliance team • Seller Fulfilled Prime - difficult to use because of cost of 2-day shipping and cost of storage; struggle to fulfill within the local state • Supply chain limitations in 2020 • Shipping costs going up from suppliers in China

BEST PRACTICES

PRO TIP: • Ensure sponsored ads targeting/re-targeting the right product(s) (optimizing ad spend) • Every 90 days, do a search for your top-selling products to ensure sponsored ads are targeting correctly Use multiple third parties • Have all compliance docs ready and on standby to provide to Amazon when their to do an audit to identify compliance team changes rules possible cost savings in • Have manufacturers ship directly to FBA to cut down on cost • Generate systems to make packaging/labeling more efficient multiple areas (i.e. refund • Adding videos to Amazon listings to optimize search results companies) • Put 10% of revenue into advertising spend (need to build in that margin-FBA) • Work with USPS and FedEx for shipping and using their API for cost averages and data points (ecommerce) • Understand inventory management/projections going into FBA • Multichannel fulfillment • Do a regular audit of your catalog to ensure FBA fees are set up correctly (dimensions, weight) • Redesigned product to shave off fulfillment costs • Use multiple third parties to do an audit to identify possible cost savings in multiple areas (i.e. refund companies) • Track your lost inbound revenue • Have a trade attorney review classifications for tariffs and advise you on categorizing products differently or shipping differently...immense cost savings o Differentiate your product offering, especially when prices are increasing o Look for wasted software spend every so often o Use VAs where possible/practical

A Digest of Best Practices for Amazon Sellers 6 MODERATORS

Rob Bell, Chief Growth Officer, Elevate Meet Rob Bell, Elevate Brands’ Chief Growth Officer. Rob has significant experience in international commodity trading, investment banking and principal investing. From Melbourne, originally, he now calls Austin, Texas home. He is passionate about ecommerce and loves developing unique and innovative ways to strategically collaborate with other stakeholders in the Amazon ecosystem.

Ami Bensman, Chief Marketing Officer / Amazon Business General Manager, Sifted Ami Bensman is the Chief Marketing Officer for Sifted, the #1 logistics intelligence platform empowering shippers to make smart, data-powered business decisions. As Sifted’s first CMO, Ami is focused on innovation and leads brand marketing, demand generation and sales operations. She has nearly 20 years of experience leading creative marketing strategies for respected retail, CPG and technology brands including Under Armour, Red Bull and Chipotle. Prior to Sifted, Bensman led marketing for Balance Innovations, a leader in cash management software for retailers. Ami holds a B.S. in business administration with an emphasis on marketing from Kansas State University.

Alex Champagne, Director of Sales, Empire Flippers Alex is a seasoned entrepreneur who likes solving problems and learning new things. After founding a web design & marketing company, he has successfully consulted companies ranging from startups to billion dollar oil and gas companies on how they can grow revenue online. Since then he has founded multiple other ventures. At Empire Flippers, he uses his experience to help buyers find and acquire on- line assets that best fit their goals. As the Director of Sales, he’s responsible for overseeing all deals done between buyers and sellers at Empire Flippers. Alex is from Houston, Texas and refuses to stop talking about just how great he thinks it is.

Joe Kiernan, Vice President of Growth Technology & Category Management, Perch Joe Kiernan is VP of Growth Technology and Category Management at Perch, a technology-driven commerce company that acquires and operates top Amazon FBA businesses. Prior to Perch, Joe was a Senior Manager at Bain & Company advising Fortune 500 brands on M&A and growth strategy. Joe also has experience at startups such as Riot Games and Harry’s. He received his MBA from Harvard Business School.

Anton von Rueden, President & COO, Boosted Commerce Anton von Rueden is Boosted Commerce’s President & COO. In his role, he oversees all of Marketing and Business Operations for Boosted’s portfolio of brands. He began his career in his native in 1999, joining a small startup that would become eBay Germany. At eBay, Anton managed marketing, built eBay’s European Customer Center, and then, as Managing Director, established eBay’s business teams in and Switzerland.

In 2006 Anton joined Spreadshirt, where he led Global Operations. In 2012 he co-founded Carfrogger and led the company as CEO until the successful completion of a merger in 2014. Anton subsequently joined TechStyle Fashion Group as General Manager of Global Customer Service before relocating from Berlin to El Segundo to serve as Chief Operating Officer, overseeing all Global Operations. Anton also serves on the Advisory Boards of the Los Angeles Kings and Sondors Network.

A Digest of Best Practices for Amazon Sellers 7 SPONSORS

Boosted Commerce buys, builds, and grows high quality commerce brands. Boosted has acquired over 30 brands, which boast category- leading products distributed across Amazon, Walmart, and other retail channels along with a competitive D2C presence. Founded by seasoned entrepreneurs, the team at Boosted are ecommerce experts, helping the portfolio to scale globally. Boosted Commerce has raised $137M in capital and its portfolio brands include Simplified Skin, Tub Cubby, and Asterwood Naturals. For more information, visit https:// boostedcommerce.com/.

Elevate Brands is building the future of CPG, today! We acquire consumer leading Amazon brands and then we elevate them to their full potential! We believe firmly in treating sellers fairly and with utmost professionalism. We like to say “sharks belong in the ocean, not in the deal room!” We are a cash buyer of Amazon FBA businesses backed by strong investors. Please contact us to receive an offer/LOI within 24 hours. We pride ourselves on our streamlined underwriting process and typically close deals within 30 days! We have a lucrative referral program for introductions that lead to the successful acquisition of an Amazon FBA business. Elevate is always on the lookout exceptional individuals to join our superstar team. We strive for excellence in everything that we do and hire driven, self-starters who thrive in a fast-paced, highly collaborative environment.

Empire Flippers is an INC 500 company and the #1 curated marketplace for buying and selling established and profitable online businesses.

Perch is a technology-driven commerce company that acquires and operates Amazon FBA businesses at scale. Perch has acquired over 30 brands, raised over $130M, and is known for its operational excellence and fair and transparent deals and diligence process.

Sifted is the leading logistics data-science platform that helps shippers save money by optimizing business decisions. Though originally founded in 2005, 2020 kicked off a new era as Sifted and VeriShip merged. The combination created a new model for managing transportation spend — one that brought together the power of self-service technology and transportation data science to help shippers navigate an increasingly complex shipping environment. Every day, our team works to uncover new ways to help shippers feel empowered and save money. We’re on a mission. And we’re just getting started.

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