Because our customers are generally people who care about our business (which we very much appreciate), we periodically get questions about Outlaw Soaps on Amazon.
I personally really love Amazon and use them to shop for random stuff all the time. We even ordered a new tail light for our Element! No one can argue that they're a fully ingrained fixture in our lives.
And with Amazon Prime, why even battle my inertia and social anxiety to get outside? (more on that in another post)
Here's how it works...
We use a service Amazon provides called "Fulfillment by Amazon" (FBA).
That means all the products sold through Amazon are offered with free two-day shipping to Prime members. Many other makers are doubtful of the difference the FBA makes, but check out this chart:
(red is 2014, purple is 2015 - October drops off because it's Oct 1 and there have been no sales)
Last year, we switched to FBA in October. Yes, it coincided with Christmas, which is about 60% of our annual revenue, but this year was almost entirely FBA. The difference in sales is huge.
In fact, it's 300% huge.
This isn't free.
With the benefit of FBA, Amazon charges a subscription fee to handle our products. That's not a huge fee in the big scheme of things ($40/mo), but if you're making less than $40/mo (which we have some months), that completely burns any revenue (plus the supply cost) associated with the products we sent.
Not only that, Amazon charges a percentage of the sale price.
And we cover the cost of shipping to their various distribution centers (more on that later).
When all is said and done, we get about 50% of the full retail price of each sale, once fees and subscription cost is considered.
Some people are horrified about this, but if you check out my Pyragraph article on product pricing, you know that our retail prices are double our wholesale prices, meaning that basically Amazon is a wholesale account that has a longer pay-out period, depending on sales volume.
As long as we make the minimum amount needed to cover the subscription cost, it works out ok.
If I got a $200 wholesale order every two weeks from a single customer, I'd consider them a pretty good customer. So as long as we maintain a certain threshold and don't go below $850/mo in gross sales (that's retail sales before Amazon's chunk), we're doing ok.
Is it as good as a product sold through our website? Not really. Our website costs lots to maintain, so every sale that goes through our website helps offset that cost (and is why we charge retail prices and can't afford to do many discounts).
But is it better than not selling product? Absolutely.
Actually, sometimes it's better than selling through the website.
Filling orders takes a lot of time, money, and energy. The act of pulling and packing orders, the cost associated with boxes and burlap bags and even tiny dinosaurs, and the customer service inquiries take it out of us.
During the holidays, we even sometimes prefer that you order from Amazon because they're more reliable and can get you your products quicker than we can. We're just two people (and two useless dogs who can't even tape a dang package closed) trying to hold everything together.
But Amazon can always get it right. And even if they don't, they have the resources to make it better. Sure, they charge us for it when they have a return or have to replace a product, but I'd rather that they deal with issues when they arise.
From a logistics perspective, FBA is pretty simple:
- We individually wrap and label (with a special Amazon bar code) each product. For the last part of last year, we thought we could just send products to Amazon without a protective outer layer... imagine our surprise (and horror) when we did a removal order on some slow-moving products and all the boxes were banged up and scuffed. We had to call everything sent back from Amazon a loss. So now, each one goes in a little bag, sealed with the bar code. This ensures that our customers (wherever they purchase from) get a consistently good experience.
- We box up the products according to their specific shipping directions. Since Amazon has distribution centers all over the country, they want us to send products to their distribution centers directly. So of a shipment of 40 bars of Hair of the Dog Whiskey Soap, 20 might go to a hub in Virginia and 20 might go to a hub in Oregon.
- We pay for shipping and label the boxes, and then drive them to UPS.
- From there, Amazon handles the rest. We don't have to worry about boxing costs, the labor associated with pulling and packing orders, toner, paper... all that stuff is included in what Amazon takes care of.
- If there are slow-moving items, they charge us for storage or removal. So there's a pretty high incentive not to just send them massive boxes of stuff.
The labor overhead is pretty high, but it's less than the labor overhead of fulfilling the orders individually ourselves.
Ratings and Customers
If you're feeling altruistic and have enjoyed our products, please consider leaving a review on Amazon.
Ratings are really hugely important on Amazon. More important than anything else. I could just replace every description with a row of asterixis and we'd still get sales if the star rating was high.
As you can see, we have some ratings of our products:
How can Fire in the Hole have such a mediocre rating on Amazon but have a 4.6 star rating on our site? People on Amazon value different things than people buying soap from Outlaw Soaps directly.
This has been really hard for me to accept on a personal level. I know I shouldn't take it personally, but when someone leaves a really negative review of our soap, it is really upsetting.
If you're reading this (and if you've read this far, thank you!), you probably know what goes into our soap. We handcraft each bar carefully. Every batch is a little different because the colors and swirls are handmade. Plus, we're a very tiny operation in a sea of huge businesses.
But the general public doesn't care about if it's lovingly handmade or if it's cranked out by a factory in China. They don't care that we tie each bow of Unicorn Poop individually while we're watching TV every night.
Until we tell them.
When we get a really terrible review (and that one above was pretty bland), I respond to try to make it better:
As you can see, I turned that three star review into a five star review just by responding. People are good people, they're just used to getting soap for $2/bar. Sometimes I can make things right and sometimes I can't.
Recently, I have started including a note that thanks the buyer for getting a handmade product and to let us know personally if they were disappointed.
But reviews really do matter. For almost an entire year, the only review of Hair of the Dog was a complaint. I asked my friends who had enjoyed Hair of the Dog to leave reviews, and now the rating is four + stars. Sales have skyrocketed and I can barely keep it in stock... and now verified buyers are corroborating the reviews of friends:
So again, if you have enjoyed our soaps, please consider leaving a review on Amazon.
Competition with Wholesale Accounts
One point of concern with Amazon in general is that they're driving smaller stores out of business.
We love love love our wholesale accounts and would prefer that you buy from them rather than buying from Amazon or even buying from us.
Why? Because when they sell out, they reorder. And they reorder more each time. And that's good for business, because it gets us in front of more people physically.
Since our soap is not like most soap in the world, getting our products in front of people physically is often the best way to make a sale. It's hard for some people to envision wanting to smell like whiskey, but when they get a sniff of Hair of the Dog, they fall in love.
Also, I really do love the stores that choose to sell Outlaw Soaps (if you're reading this and considering carrying Outlaw Soaps, let me assure you, it's good for business. Here's our wholesale page). I love working with them and visiting them. I love seeing their stores. It's a good relationship.
You may notice that the products are all "on sale" from $10/bar to $8/bar. This was an experiment. For the past several months, I have kept the price at $10/bar to cover the extra FBA costs and so as not to compete with our wholesale accounts. Recently, I dropped the price to $8/bar (which is even with our website prices and still do not undercut our wholesale accounts).
I think we're going to keep the price down during the holidays, and raise it again in January. Christmas is a huge time for us and is a great subject for another post.
In summary... thank you for buying from us wherever you buy from us
We deeply appreciate your business and are grateful that you buy from us. If that means you want to enjoy the free shipping from Amazon, great! Please never let their fees stop you from getting Outlaw Soaps. Their customer service is excellent and like I said, sometimes they're better than we are at fulfilling orders.
So never hesitate to buy from them or feel like you're doing us a disservice by doing so.
Did I mention that you should go leave a review? Please do.