In this issue of the Amazon FBA deep-dive, we are analyzing Yellow Mountain Imports, an FBA brand in the board game category.
While it has a strong position in the category, there are signs of neglect and there are multiple easy wins to increase revenue.
The estimated monthly revenue for this brand is $197,145/month. We anticipate it can be increased by 20-25% through the easy wins below.
This is what we cover in this deep dive:
- Business Summary
- 3 Easy Wins to increase revenue
- What is the exit valuation of this brand?
- Actionable takeaways
Let’s get into it!
Yellow Mountain Imports Brand Overview
The first listing for Yellow Mountain Imports went live on Amazon in November 2010 and their product catalog has blossomed since then. Now they sell over 161 different products on Amazon – all relating to the board game category and accessories for board games.
The number one listing for Yellow Mountain Imports is the Mahjong game set which is estimated to bring in $52,023/month in revenue (approximately 25% of overall revenue).
Overall the brand is doing $197,145 in revenue on Amazon across their entire product catalog.
- Diversified revenue across product portfolio (top product only accounts for 25% of revenue)
- Strong review structure (almost every product is rated 4.5 stars or above)
- Simple products – no batteries, easy to ship, not breakable
- Generic products without good differentiation
- Large product catalog makes inventory management difficult
3 Easy Ways to Grow Yellow Mountain Imports by 20%
There are opportunities to significantly grow and differentiate this brand. We break down the following wins:
- Use Bundles to cross sell accessories
- Experiment with price to raise margins
- Increase advertising spend
Let’s get into it!
➡️ Win #1: Use bundles to cross sell accessories
Whenever you have an established listing on Amazon, you should immediately look at how to use it to launch more products. Yellow Mountain Imports has an extremely successful mahjong game set listing.
Because of that, they also sell mahjong tile pushers, mahjong tile sets, and other board game accessories.
Looking at their core listing (shown above), we can see customers purchase multiple items from them for their mahjong set.
In that case, it makes perfect sense to make a virtual bundle. Instead what they are doing is advertising on their own listing (and paying for this), instead of using the free virtual bundle tool that Amazon provides.
➡️ Win #2: Experiment with price to increase organic rankings or raise net margins
Many Amazon FBA business owners do not experiment with price enough. They have a price in mind (say $19.99) and once they hit it, that’s it.
Price can be one of the best levers on Amazon in order to increase overall sales and organic ranking.
And I’m not just talking about raising the price either. As we see below, Yellow Mountain Imports dropped the price of their mahjong set 10% over the past couple of months – and have seen increased sales as a result.
When testing your price on Amazon FBA, you want to track 3 metrics
- Best Sellers Ranking – this will tell you how your sales fare compared to the competition
- Net Profit – At the end of the day, this is the end goal. If you’re selling less but making more money, keep the price high
- Organic Rankings on Key terms – often lowering the price will increase sales velocity increasing organic ranking
I like to do price point tests over the course of at least 2-3 weeks to see the full impact.
➡️ Win #3: Increase advertising spend
I used Helium10 to analyze Yellow Mountain Import’s advertising strategy and discovered something interesting. For the main listing, they are only advertising on 144 keywords out of 1,481 keywords that they are currently ranking for.
Ideally, they would be advertising on 3-4x that number in order to drive additional traffic to their listing. Looking through the competition, some of their competitors rank for 3,713 keywords (more than 2x more than Yellow Mountain Imports).
How Much is Yellow Mountain Imports Worth?
Yellow Mountain Imports has a long history of selling on Amazon and owns 3 of the top selling listings in the mahjong games category on Amazon.
Each of it’s listing has strong review structures and high product ratings.
Yellow Mountain Imports is estimated to be doing $197,145/month which equates to $2,365,740 per year in revenue. Given the niche and the price testing going on, I’ll assume a net margin of 18% (somewhere between 15-20% would be reasonable). That gives you an annual profit of $425,833.
2 Actionable Takeaways
Here are actionable takeaways that you can apply to your business today:
- When was the last time you changed the price on your top sellers? Experiment with different price levels over the next few months to determine what leads to the highest net profit and marketshare.
- Compare and contrast competitor advertising strategies with your own. Is there space to expand your advertising spend? Or are you spending too much? Use tools like Helium10 to compare.