Episode 500: Why Spending Too Much on Amazon Ads Could be KILLING Your Organic Results + Tariff Strategy for Amazon Sellers | AKNF

Release Date: April 18, 2025
Hosts: Eric Dick and Robin Clifford
Guests: Brandon from Montana Knife Co.

In this landmark 500th episode of the DTC Podcast, hosts Eric Dick and Robin Clifford delve deep into two critical issues affecting Amazon sellers: the intricate balance between ad spend and organic rankings, and the evolving landscape of tariffs impacting direct-to-consumer (DTC) brands. The discussion is enriched with real-world examples, strategic insights, and actionable advice for Amazon sellers navigating these challenges.

1. Understanding the Impact of Tariffs on Amazon Sellers

Robin Clifford initiates the conversation by addressing the nuanced effects of tariffs on DTC brands selling on Amazon. He emphasizes that raising prices on Amazon can inadvertently harm a brand's organic ranking due to the platform's algorithms.

"If your price goes up, you're typically hurting your ranking and you're likely pricing higher than your competition." [00:00]

Eric Dick expands on this by categorizing brands based on their manufacturing and sourcing strategies:

• U.S.-Manufactured Brands: These brands are relatively insulated from tariffs affecting imports.
• Mixed Manufacturing Brands: Brands sourcing components or packaging from China but manufacturing in the U.S. face partial impact.
• China-Manufactured Brands: These are the most affected, dealing directly with increased costs due to tariffs.

"There's a whole suite of tariff-based podcasts coming out soon, but let's start with thoughts from the Amazon team about what we're hearing from some of our clients." [00:53]

2. Strategic Inventory Management Amidst Tariff Uncertainty

The hosts discuss the importance of inventory management as a strategic response to tariff fluctuations. Robin Clifford highlights success stories like Brandon from Montana Knife Co., who exclusively manufactures in the U.S., effectively bypassing tariff impacts.

"We don't need to talk about those folks as much. But let's maybe go through case by case." [02:02]

Eric Dick shares insights from other brands, noting that those with substantial inventory reserves are better positioned to weather tariff-induced disruptions. He mentions a brand with a year's worth of inventory, humorously dubbing it a "2026 problem."

"I talked to a brand today who's like, got a year's worth of inventory. So this is a 2026 problem. If it's still around." [05:07]

3. Navigating Amazon's Marketplace Dynamics

The conversation pivots to the unique challenges of operating within Amazon's vast marketplace. Robin Clifford warns against price hikes on Amazon due to the platform's competitive pricing algorithms, which can penalize brands in search rankings.

"If you're a DTC brand and you raise your price, I don't think a lot of people really know you raised your price, but you're beside all your competition on Amazon and you're inside Amazon's ranking algorithm as well." [00:00]

They also discuss the competitive tactics employed by Chinese sellers on Amazon, including potential customs fraud and the exploitation of loopholes to avoid tariffs.

"There's a lot of customs cheating that will be going on from Chinese sellers where they'll be lying on declared value forms." [09:30]

4. De Minimis Threshold Changes and Their Implications

A significant portion of the episode is dedicated to De Minimis, a policy that exempts low-value shipments from tariffs. Robin Clifford explains how changes to these thresholds are disrupting the operations of many Amazon sellers, especially those relying on drop shipping.

"De minimis now would just be subject to whatever tariffs are subject to the country, whereas before they would have been exempt." [14:46]

The hosts highlight the logistical and financial challenges posed by the removal of De Minimis exemptions, including increased customs fees and processing backlogs.

"A billion individual packages hit the US every year that are de minimis exempt. So all those ones that are coming from China are now not de minimis exempt." [13:00]

5. Balancing Ad Spend with Organic Ranking

One of the central themes of this episode is the delicate equilibrium between advertising expenditures and maintaining strong organic rankings on Amazon. Robin Clifford introduces the concept that excessive ad spend can adversely affect a product's organic ranking.

"A higher level of spend is actually harming organic rank to the extent that removing spend on a term actually one is an Amazon's Choice badge." [15:52]

The hosts explore the theory that investing heavily in ads might target a less-converting audience, thereby lowering overall conversion rates and hurting organic rankings. Conversely, reducing ad spend can enhance organic performance by focusing on high-converting customers.

"The conversion rate and click-through rate... maximize the positivity of the metrics you're showing Amazon." [17:10]

Eric Dick shares practical strategies, such as adjusting ad budgets on specific search terms and leveraging other products in a catalog to dominate search results collectively, thereby protecting the organic ranking of key products.

"If you have a catalog of products that apply to that term, you can own some of those search spots with other products." [21:57]

6. Future Outlook and Strategic Recommendations

Wrapping up the discussions on tariffs and ad spend, the hosts emphasize the importance of adaptability and strategic planning. They advise brands to:

• Stockpile Inventory: Prepare for tariff changes by maintaining sufficient inventory levels.
• Optimize Ad Spend: Carefully balance advertising investments to support organic growth without undermining it.
• Monitor Competitors: Stay informed about competitors' pricing and promotional strategies to remain competitive.
• Leverage Amazon Tools: Utilize Amazon's brand registry and other tools to combat counterfeit sellers and protect brand integrity.

7. Closing Remarks

In the concluding segments, the hosts briefly touch upon Amazon Prime's evolving strategies, such as extending Prime Day and introducing ad tiers on Prime Video. While these topics stray slightly from the main content, they underscore the ever-changing nature of Amazon's ecosystem.

Notable Quotes:

• "If your price goes up, you're typically hurting your ranking and you're likely pricing higher than your competition." — Robin Clifford [00:00]

• "De minimis now would just be subject to whatever tariffs are subject to the country, whereas before they would have been exempt." — Robin Clifford [14:46]

• "A higher level of spend is actually harming organic rank to the extent that removing spend on a term actually one is an Amazon's Choice badge." — Robin Clifford [15:52]

Conclusion

Episode 500 of the DTC Podcast offers invaluable insights into the complex interplay between tariffs and advertising strategies on Amazon. Hosts Eric Dick and Robin Clifford provide a comprehensive analysis backed by real-world examples, empowering Amazon sellers to make informed decisions in a volatile market. Whether you're grappling with tariff implications or striving to optimize your ad spend without sacrificing organic growth, this episode is a must-listen for any serious DTC brand aiming to scale successfully on Amazon.

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