EP5: How to Sell with Wayfair Sponsored Products + Best Sponsor Ad Practices | Host Luke Peters, President & CEO of Retail Band

Welcome to Page 1:

Marketing programs are a necessity when it comes to selling on online retail platforms. Without them, the competition is too fierce and your products run a higher risk of falling by the wayside.

However, if you’re hesitant to use these programs then look at the success NewAir had thanks to the Wayfair Sponsored Product program.

What you’ll learn:

In today’s episode, Host Luke Peters shares his personal experience using the Wayfair Sponsored Product (WSP) program and gives listeners tactical ways to increase important sales metrics, such as ROI, ACOS, and ROAS.


About your host:

Luke Peters, President and CEO of Retail Band, has 17 years of sales and product development experience in the home appliance space. A self-made entrepreneur and founder of 5 companies, Luke is skilled at taking a product from concept and bringing it to high-volume sales at Home Depot, Lowes, Walmart, and Amazon. Retail Band, Luke’s new venture, is a rCommerce agency that works with brands to manage and accelerate online business through retailer platforms. He is also your host of the Page One Podcast, a twice-weekly Podcast featuring interviews with thought leaders on topics ranging from channel strategy, tariffs, influencer marketing, product launches, and eCommerce growth on big-box retail sites.


Key takeaways from this episode:

  • What is a Sponsored Product? – 1:59
  • History of advertising platforms – 2:53
  • What makes WSP unique? – 3:51
  • Tips on how to manage your WSP’s – 7:19
  • How WSP will benefit your business – 8:02
  • Best WSP practices – 8:55

Podcast Transcription

Welcome to the The Page One Podcast. A twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call our commerce. Now here’s your host Luke Peters.

My name is Luke Peters, your host for The Page One Podcast. I have 17 years of online experience in sales and product development. And my goal in this podcast series is to dive deep into really tactical areas where you can improve your business. So today we’re going to be talking about Wayfair sponsored products. And it’s an interesting thing because back in the day there was Google, of course, that’s where everybody started. And then Amazon came out with their AMS advertising platform. And the first thing I think a lot of people thought was they’re just pulling more margin from our products. Hopefully, you know the smart brands out there had to bake some margin into their product margins to kind of catch up with what ends up being probably at least a 3% margin dilution and can even go to 10% for your Amazon listings or even higher. If you’re looking at the tacos the total spend instead of just the A cost.

So in this episode we’re going to talk about how Wayfair has kind of jumped into the arena there with their version of way for sponsored products, how it’s different than Google, how it’s different than AMS. And then I’m going to talk a little bit further on how more retailers are going to probably join. I mean, I’ll give you my guests and if as we finish up this quick podcast, but why don’t we just kind of start back at the beginning. Sponsored products, why would somebody want to do a sponsored product? What even is a sponsor product? So we’ll get really basic here. When you’re launching a product, I guess before a lot of thought was put into it, you might launch a product and let the market react to it and it could take a long time before the product got reviews and the product got sales and then it got velocity and most ranking algorithms, whether it’s Home Depot, Wayfair, Lowe’s, Target, whatever. They’re all going to be based in some part on sales velocity, sales margin.

I mean there’s even got to be other things like returns are going to be built into it, but there’s a formula and algorithm that they’re all using and that’s helping your product rank. And if you’re just putting a product out there in the world and not doing anything, it’s going to take a lot to get up in the rankings. And if you’re not on Page One, you’re not going to be found. And thus the reason for the name of this podcast, Page One Podcast. So talking about the different ways that this has happened in the past, obviously people would use ad words and that was the Google and still is used on Google with text based advertisements. And then that kind of went over to product listing ads. And I think a lot of things started happening at the same time. You could advertise in different social mediums and YouTube even in Facebook and hopefully everybody kind of has some experience in that area.

And then Amazon brought out Amazon sponsored listings and they had a different program I think for vendor central and seller central. And there’s different ways that you could advertise. And then even below that you can go deeper and do all kinds of special deals within Amazon or different promotions. But the idea was this gives you control over where and how your product show up. And if you smartly, you can then drive your products to the top of the organic search results. Okay. So that was the philosophy that the smart marketers were using. And now Wayfair has come into the game with a Wayfair sponsored products. Now Wayfair, incredible company to work with, the nicest people on earth. Hopefully you guys all get a chance to meet them in person out there in beautiful Boston and their program is a little bit different. A couple things that stand out to me having experience with pretty much all of these different platforms is that Wayfair’s platform, I guess in a nutshell I would say it’s new and it’s really simple in a good way.

It’s simple and from my understanding they try to make it as fair as possible. Meaning that just because you’re outbid, your advertisements are still going to cycle through and you can get a slice of that advertising pie at least. And because what they want to do is I think they want to prevent one company from dominating the whole category. And so I think on a macro level that’s a key differentiation that Wayfair has. The other thing about Wayfair sponsored products is, and just starting at the base here, you set up categories, you put products into those categories, you create daily caps, you have start and end dates. And one thing I noticed is at the end dates, at least in the versions I’ve seen are like really quick like a month.

So make sure you extend out your end dates because the last thing you want to do is set it, forget it and then stop advertising after a month when you’re not looking at it. But you know you put in your bid and then it’s going to give you all of the standardized outputs that you’re going to get from any other program or most other programs. You’re going to get your row as your click through rates. You’ll know what your cost per click was, you’ll know what your revenue was from this program. And I can tell you it’s one of the best platforms right now to be advertising with. And the reason is because it’s new and all of the other platforms, just like when AMS came out, it was incredible. You could get a cost well under 10% that was driving your products to the top.

But now it’s gotten a lot more competitive. Advertising is taking a large share of the margin now and Amazon, everybody knows that and feels it, but it hasn’t happened yet with Wayfair. I’m sure that’s part of the plan over there, but it hasn’t happened yet. So for the next year or so I expect this to be like an amazing platform. I mean I can just tell you that our ROAS is over 1500%. That’s an incredible place to be and you can be very specific down to the sku level like I mentioned. So one important thing to think about with Wayfair sponsored products is that they look a lot more organic. The way that they’re placed in the Wayfair page I think they’ve done that really tastefully and you guys will have to just kind of judge for yourself. But I think from a consumer facing standpoint it really helps your brand because it looks great.

It’s not off putting. And when you’re getting those sales, like I said, pretty much all of the backend algorithms are going to be driven by sales philosophy along with a few other components. So that’s a definite reason to jump into this. Another thing is that it’s part of the Wayfair scorecard. I mean Wayfair is so transparent about this, they want to help all of us brands succeed on their platform and it’s a key component I think to be successful and your category managers probably talking to you about it. So when you hear all of those, when you hear them talking about it and the way that I’m explaining it and you put two and two together, it’s an obvious decision to jump into it. Okay. Now diving deeper into the platform, you definitely have to keep an eye on it. Wayfair’s changing it quite often.

I think one of the recent changes is that products can be disabled if certain parameters are not met. Maybe a damage rate is too high or something like that. And I know on AMS you’re going to have a similar type of situation where maybe margins are too low, so you’re not able to, especially on the vendor side, you’re not able to advertise in a product that Amazon is going to be losing money on. So Wayfair is going to have those similar protections built into their plan. And you’re going to want to know all of them and there’s a lot of detail that I could get into, but I wanted to kind of give you an overview and then strategically how to think about and why to use Wayfair sponsored products. Okay. And the next thing I wanted to talk about is your cost per click.

So the cost per click from what I’ve seen on the Wayfair sponsored product listing is going to be lower than a corresponding CPC for say, a PLA or an AMS, AMG, whatever Amazon’s calling it these days. It’s going to be proportionately lower on Wayfair. And that might sound good. It’s actually even better because I think your conversion rates and click through rates are going to be a little bit higher. The Wayfair pages are cleaner than a lot of the competition. And since the competition hasn’t all jumped into the sponsored products yet your results are going to be better. And that’s how you’re able to achieve these extraordinary ROAS numbers and they’re not going to be there forever. And that’s kind of the reason why it’s so important here in August of 2019 to jump into this program. So now that I’ve kind of explained the program, why don’t talk about like a very obvious way on kind of how one might use it.

So let’s say you’re selling 100 skus on Wayfair. There’s a lot of different ways you could think about how you want to apply sponsor products. It’s done at the product level, you could apply it to every sku. I tend to want to apply it to the skus that are most important to our partnership and new sku launches. I think if you apply it to every sku then in the background Wayfair is going to have to figure out which sku to serve to the consumer on the consumer level. And if you have so many skus, they’re going to kind of rotate through that process. So what makes more sense to me is to choose a product where you and your partner, in this case, us and Wayfair are both going to have strong margins where it’s going to be something that’s going to strengthen the partnership and also be an important sale for new air. And that way you focus your intensity on less skus rather than distributing it over all of the skus for the brand.

So we start there. You go through, let’s say you have your 100 skus. You break them into categories. Let’s assume five categories, 20 skus per category, and of course you’re not going to put all 20 in. So you might put in five skus into the five categories and then you’re going to apply your cost per click per sku at the sku level or the category level. And then what’s going to happen is after these run, Wayfair’s going to give you all of the data that we talked about earlier, the ROAS, the click through rate, the CPC. The interesting thing about this though that you’re going to have to think about on the brand side is hopefully you’re running a customer P&L. so in this case that would mean all of your inputs and costs and cogs and all of the expenses on your end that might go in castle gate.

Everything that’s going to go into the Wayfair business to make sure that it’s a profitable business for you. And one thing is that the payments for Wayfair sponsored products are coming out of a credit card, not out of the remittance. Meaning you just got to make sure that your accounting department is tying these into that P&L. So everything is accounted for and you really understand your true margin. So you know how hard you’re able to push on your Wayfair sponsored products. And I highly suggest that for everybody, for every customer that they have. And probably a topic for a later podcast.

Okay. And so just to finish up the process, so you’ve got your top skus, that’s column and you’re often running. And then now you have a new sku launch. And this is a great area to introduce Wayfair sponsored product ads on that new sku.

And maybe you pull back a couple of your other skus because you want to get more focused on this new sku, but it’s going to give it prominence. It’s going to help you get it ranked properly. And then of course there’s other things you could do with your account manager that you can also probably lift your product rankings. And again we can talk about that and the relationships you should be building in a later podcast. But from start to finish, it’s about focus. It’s about selecting your key products, making sure that the images are beautiful, the copy’s beautiful. Spending the money proportionately in a way where you’re still getting a good ROAS. Tracking your results, launching new skus the same way and making sure that you give them that rocket lift where you’re getting sales and reviews within a month instead of waiting months and months and months like it was before you kind of had a hand in this.

And that’s how I see a successful use of Wayfair sponsored products. And hopefully this has been helpful for you. So thanks again for listening. Again, Page One Podcast is brought to you by retailband.com. We’re not an agency, we’re not a distributor, we’re just awesomeness. Basically got to go to the website to find out how we can help you, but we can help you in… We can essentially become your sales and marketing arm. All the things that I talked about today are just a small part of what we do, and if you’d like to learn more, we’d love to hear from you. Thanks for listening.

Thanks for listening to The Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about our commerce, check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.


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Want more information? Related post: 2 Reasons Why Wayfair Sponsored Products Is The Best Advertising Platform