Here we have a Wireless Charging Stand 3 in 1 like this one. In this case are 2 SKUs. The same product, but the first one is sold at the beginning of the month, and the second one for the rest of the month.
The product price was $59,99.
We have $14 097,65 sales, 222 orders, and 235 units sold here.
The first SKU was sold 119 times, and its total sales were $7 138,81. The second one was sold 116 times, and its total sales were $6 954,84.
Here we have 22 refunds. Total refund costs is $1 335,89 and refund rate is 9,38%. Actually, it's a high refund rate.
If we look at SKUs details, we'll find that the first SKU has 10 refunds. Its total cost is $607,22, and the refund rate is 8.40%. The second SKU has 12 refunds. Its total cost is $728,67, and the refund rate is 10.34%.
So, at the half part of the month refund rate was increased.
Cost of Goods:
On 1688 you may find the same product for $12-18.
Here, we have a cost of goods of $28 per item in this case. It looks expensive, but it includes good quality product, quality control, shipment, and other services before the product went to Amazon.
So, here we have total COGs of $6 580.
Here we have 165 units sold via advertising and 70 units sold organically. Total ad spend is $7 328,17, and real ACOS is 51,98%. Actually, it isn't a good ACOS. It's too high. You may read about what ACOS is here.
So, if we look at SKUs details, we'll find that the first SKU has $7 138,81 in total sales. Its ad spend is $4 370,46, and real ACOS 61,22%. It's really too high, but it's because of the beginning of sales and marketing investments.
Later, when the sales process had been already starting, the ACOS for the second SKU promotion was 42,50%. So, during the month, ACOS had been decreasing, and there were opportunities to get even less ACOS later.
Unfortunately, this case is about the unprofitable experience. It's generated $5 004,05 net losses. Its margin is -35,50%, and its ROI is -76.05%.
So, if we look at SKUs details, we'll find that the first SKU has generated 2 786.47 net loss. Its margin is -41.22%, and ROI -84.26%. The critical role here played the investments in marketing and high ACOS.
The second SKU has generated 2 194, 47 net loss. Its margin is -31,53% and ROI -67,56%. Despite the increased ACOS, it has generated large losses.
In this case, sales were stopped after fixing the net loss.
- Here is a niche with opportunities to generate a good amount of sales.
- At the same time, it looks like the cost of goods may be cheap. But, in real life, we see here the expensive cost of goods and the high refund rate even for a good quality product. If you had bought a cheaper product, the refund rate probably would be higher.
- At the same time, you need investments in marketing and patience to invest and reach the low ACOS.
If you are ready, just find the right business model!