In this issue of the Amazon FBA deep-dive, we are analyzing a popular brand in the supplement category on Amazon. With 21 products currently on Amazon and an estimated $152,000 in monthly revenue, the brand has a strong position in a growing sub category of supplements.
However, we estimate there is room to grow up to 40% more through the easy wins below.
This is what we cover in this deep dive:
- Business Summary
- Highlights
- Setbacks
- 3 Easy Wins to increase revenue
- What is the exit valuation of this brand?
- Actionable takeaways
Let’s get into it!
The Good Patch Supplement Brand Overview
The Good Patch started as a Shopify brand in 2017 supplying a variety of plant and hemp based patches to consumers. Their product selection includes patches to increase energy, help you fall asleep, increase relaxation, and hangover cures.
They expanded to Amazon in 2019 with a limited product selection and gradually brought on more and more of their catalog. Today, they are estimated to be doing $152,530 in monthly revenue across 21 different parent products.
✅ Highlights
- Diversified revenue on Amazon. Top listing only accounts for 15% of revenue and most products are doing $7,000 – $13,000/month in revenue
- High net margins – with a high price point, low cost of goods sold, and low shipping weight, net margins should be 25-30%+
- Increasing brand traffic over last 6 and 12 months (3,700 brand searches/month)
❌ Setbacks
- Average review structure – most products are 4 star rated. Obtaining a 4.5 star rating would increase conversion rate significantly.
3 Easy Wins To Grow The Good Patch By 40%
There are opportunities to significantly grow this brand. We break down the following easy wins:
- Change the main images to increase click through rate
- Add virtual bundles to cross sell other products
- Use Amazon advertising to advertise on more keywords and increase traffic to the listing
Let’s get into it!
➡️ Win #1: Change the main images to increase click through rate
On Amazon, your main image is the difference between somebody glossing over your listing in search results and clicking through to discover more. As competition increases in Amazon search results, standing out through an unique and eye-popping main image is becoming more and more important.
A DTC brand like The Good Patch wants to maintain their brand identity on Amazon which is why they typically default to traditional product packaging.
However, there are multiple ways to spice up the main image. Let’s analyze the following results for the keyword “b12 patch”.
The Vita Sciences listing shown above stands out the most out of all of the search results. It has all of the elements of a great main image
- fully fills the frame
- bright/vibrant colors draw the eye
- Angled packaging gives it the appearance of depth
- has the keyword prominently listed on packaging (increases click through rate)
In comparison, The Good Patch listing is set back, doesn’t fill the frame, and appears smaller next to it’s competitors.
➡️ Win #2: Create Virtual Bundles to increase Cross Selling
The Good Patch has done a good job of bundling more of the same product together by selling packs of 2 and packs of 6 of their more popular patches. They also have a 4 pack as a separate listing (shown below).
This could be an existing variation of their B12 Awake Patch but in this case, they are deliberately separating it in order to increase their owned real estate on Amazon search results.
However, they don’t use any virtual bundles to increase cross selling of their products. They should be using these virtual bundles to increase sales of their other products and raise their average order value.
We’ve mentioned this tip before and for good reason – virtual bundles are easy to implement, take up space on your listing, and cost you nothing to create.
They can be created in as little as 15-20 minutes if you have the necessary images. If you don’t have virtual bundles set up, go set up them today (don’t wait.
➡️ Win #3: Increase Amazon Advertising presence
The Good Patch B12 Awake Patch currently ranks for 1,382 keywords and advertised on 107 keywords.
In comparison, their top competitor (Veru Wellness) ranks for 3,641 keywords and advertised against 420 keywords.
Increasing revenue on Amazon comes down to increasing traffic or increasing conversion rate. One way you can increase traffic is to advertise on more keywords.
I would analyze the differences in advertised keywords using a tool like Helium10. Then I would introduce 10-15 of the most relevant terms into the advertising strategy slowly. The PPC bids in this niche are likely expensive at $2-$3/click on a $15-$20 item.
Be prepared to spend more than usual as you test out this keywords. As they become profitable though, you’ll see traffic and revenue increase.
How Much is The Good Patch Worth?
This analysis will only focus on the Amazon side of this business. Shopify revenue is most likely greater than the Amazon side.
With an estimated monthly revenue on Amazon of $152,000, the annual revenue rate on Amazon equates to $1,824,000.
Supplement brands are known for having high net margins. Assuming a net profit margin of 25% giving us an annual profit of $456,000.
Patch supplement brands are a growing category filled with high profile exits (Hero Cosmetics – creator of The Mighty Patch – sold for 630 million).
2 Actionable Takeaways
Here are actionable takeaways that you can apply to your business today:
- Once a month, search your main keywords and evaluate the competition. Does your main image stand out against the rest of the competition? Could your title be improved to improve click through rate?
- Analyze your top competitiors by revenue and look at what keywords they are advertising on. Are there any keywords that would be relevant to your product as well? Incorporate those into your advertising strategy today to increase traffic to your listing.
