Imagine your Amazon store flooded with orders and your profit curve soaring upward—a scenario every seller dreams of. However, blindly pursuing sales growth may lead to inventory shortages and negative reviews, ultimately resulting in losses. So how can sellers accurately evaluate their growth potential at the advertising level while avoiding unnecessary risks?
Two Core Prerequisites for Growth Assessment
Before launching any expansion plan, sellers must thoroughly evaluate these two fundamental prerequisites to ensure their store has the necessary capabilities:
Prerequisite 1: Advertising Profitability
Advertising serves as a crucial engine for driving sales growth, but if campaigns aren't profitable, increasing ad spend will only accelerate losses. Therefore, before considering expansion, sellers must confirm their advertising activities are profitable and can maintain healthy cash flow.
How to evaluate advertising profitability:
- Calculate ACOS (Advertising Cost of Sale): This key metric is calculated as (ad spend/ad sales)*100%. Generally, lower ACOS indicates stronger profitability. Sellers should set reasonable ACOS targets based on product margins and operational costs.
- Monitor cash flow: Even with good ACOS performance, cash flow issues can derail expansion plans. Sellers must closely track cash flow to ensure sufficient funds for advertising and inventory turnover.
Prerequisite 2: Sales Stability
New products typically require concentrated promotion efforts to quickly boost visibility and sales. Therefore, extensive keyword expansion isn't recommended during the launch phase, as it may dilute effective traffic and impact conversion rates.
How to assess product stability:
- Sales trends: Consistent growth or stable sales volume indicates sustainable market demand and competitiveness.
- Customer reviews: Positive feedback demonstrates product quality and user satisfaction, which supports higher conversion and repeat purchase rates—essential foundations for growth.
Growth Strategies: Measured Expansion
For stores meeting both prerequisites, these strategies can help achieve sales growth while maintaining stable ACOS:
Strategy Evaluation
Use Amazon's bulk sheets to analyze advertising strategies, campaign types, and performance data. Calculate CPA (cost per acquisition), CVR (conversion rate), and ACOS for each keyword and ASIN to identify the most efficient combinations.
High-Potential Keyword Identification
Leverage Amazon's impression share reports to discover keywords with strong conversion rates but low impression share—these represent significant growth opportunities.
Strategic Combinations
Combine the most efficient advertising strategies with high-potential keywords to create synergistic effects. For example, pairing the campaign type with lowest CPA with keywords showing highest conversion rates.
Advertising Structure Optimization
Analyze bulk sheets to identify gaps in current advertising architecture. Consider expanding into additional campaign types like Sponsored Display (SD) with ASIN targeting or category targeting if currently only running Sponsored Brands (SB).
Amazon advertising growth requires methodical planning and continuous optimization. By thoroughly evaluating both advertising profitability and product stability—while systematically refining strategies and keywords—sellers can achieve sustainable sales growth while maintaining healthy profit margins.