On Track to do $250k in 2017!
Tips on How to Select a Good Product
Avoiding common Newbie Pitfalls
Taking a $500 Initial Loss and Why to Keep on Going
$250k in 2017 Days | Amazon FBA Success Story | Noah Deligio Podcast Summary
- Mateen (Interviewer): Bold and Italic Text
- Noah: Normal Text
How are you Noah?
I’m doing well, thanks for having me.
Let’s talk about your background, what did you do at school? How did you get into the whole online thing?
I got into online sales with ebay probably at least 10 years ago. It was early on in college, I started selling random things online.
I feel like that’s a place everyone starts, ebay.
Yeah, I feel like it was kind of the first mainstream way of selling things online and I feel like it was much bigger back then too in the early 2000’s. I would use this website called whiskey militia, it was like skateboarding clothing type of stuff and I was into that. They would have this huge discounts like a daily deal site. They would let you buy up to three things, and I would usually buy three and I’d sell two on ebay and keep one for myself and basically pay it off. I was 19 years old in college and it’s just a good way to make extra money or get some clothes or some skateboard stuff.
I realized at that point that it would work to sell things on ebay and I kind of scaled it up and went to the parent site of whiskey militia which is backcountry.com, it’s a pretty common site here in the States. I found some really good deals in there, I have borrowed some money from my parents at the time and maxed out their credit card.
You’re pretty into it.
Yeah, coz I already saw that it was working, I’ve been doing it for a few months and I knew it was gonna work. I did that over a summer, I bought a bunch of hats and those just sold like crazy and it’s kinda of to the races from there. That was when I was at University of Oregon.
What did you study at the university?
I studied political science with an emphasis on political economy, I was mostly interested in economics but I didn’t really have the math background to support that major so I finished with political science and I went into insurance after college.
How long did you work in insurance?
I did that for a few years, insurance is not really something that is easy to be passionate about, at least for me. So I was always looking for something I can do online on the side. And I was always kinda selling things here and there if I saw a good deal I might buy it.
I was actually listening to a podcast while I was at work, it was Scott Voelker, the amazing seller podcast which most amazon sellers have heard of. That just got me all pumped about it and so I just burned through his podcast and started trying some products and it just went from there.
For those who don’t know him, what is his podcast about? The whole amazon FBA business?
Yeah it’s really all about amazon fba; if you go back to the beginning you can see his progression too, he’s been doing it for a few years now. At first it was really kind of the basics, and I mean he’s still pretty good at covering the basics but it’s pretty comprehensive as far as what he provides. But it’s a really easy way, for someone who has never really thought about selling on amazon it’s a good sort of introduction. I have a lot of friends that would ask me how did I manage to do this, and so I often tell them to start with that podcast if they’re actually interested and kinda fill them in from there.
Interesting. So for those that don’t know amazon fba, what actually is it? How does it work for a newbie?
It’s simple really, there’s kind of two different path that most people would take. There’s the retail arbitrage path which is essentially just finding a product that already exists and a lot of people would go find them like a walmart or any big box store. Basically they find a really good deal on them like a close out or something and they buy, ideally, all of them in the store and then you can ship all that product to the amazon fulfillment warehouses and you basically just tag along on the existing listing on amazon for that product. Then amazon will handle all the fulfillment and you’re basically creating margin by finding a low cost product and being able to sell it for more in amazon. So a lot of people kind of start there.
Seems like an easy way to do, similar to ebay.
Yeah it’s a lot like ebay, the huge thing and benefit of amazon is that they handle all the fulfillment, so you don’t have to get stuck packaging, labeling and mailing things everyday. And amazon can do it better than you can really, they’re way more efficient, they ship faster.
Do they take a lot of money to do the prep stuff and the fulfillment for you?
It kinda depends on what you think, to me it doesn’t seem like a lot because for my scale, I’m selling anywhere between 50-100 units a day and the idea of trying to ship that much product, that would take my whole day. They take I think somewhere on 30-40% of the sale price.
That’s including the commission as well right, like a platform?
Yeah, that’s their commission, that’s their shipping cost, everything is in there. But to me that’s a good deal, I’ll take that. And also of course that comes with the visibility that you get on amazon, there’s no other marketplace that has that many customers. So to be able to scale a business that fast and have them essentially all the hard labor. I’m not doing any of the stuff that I don’t want to be doing, I think it’s a good model and I think it’s fair in my eyes.
That’s pretty cool, I guess you can control how much of the business model you want to be involved in. Like the automated fulfillment part and even the prep stuff. It’s a pretty cool thing to do, I can guess in terms of the scalability you can take it anywhere coz you’re only doing the finance stuff.
Yeah there’s really no limit to it. I’m not there yet but I know of people that are like a one-man shop doing seven figure businesses just because you’re able to do that on amazon because they handle all the scalings. I think it’s a good business model and it works.
So you were kinda working while you figured this out right, take us to the first few attempts at the business, like how did you actually start and how did you start doing it?
So I got started like I said I listened to the podcast and that was a couple of months probably of thinking about it, trying to get ideas and listening to podcasts and getting more information. I went a different route than the retail arbitrage, the other path is private labeling. So creating your own product with your own branding.
Yeah to me it was. Like I said I’ve done a lot of the retail arbitrage without really even realizing that’s what I was doing as a younger guy I was just like this is a good way to make money. I’d kind of done already some of that on ebay. I felt like, to make an actual business out of it that was gonna be sustainable, I needed to have my own products and control my relationship with my manufacturers and that sort of things.
There’s a certain set of criteria that Scott Voelker kind of offers in terms of finding a niche that has enough competition, doesn’t have too many sellers already and has demand for it. I sort of went with some of his guidelines but mainly I just tested it out on my own. And having sold things online I kind of knew what sells and what doesn’t sell. That being said I did try a couple of products in the beginning that did not work.
When you say that it didn’t work, you mean it didn’t sell?
There’s two that I consider kind of failures I guess. One of them actually made money so it’s not that bad. The other one was my very first product; I never imported from China before, so this is all new to me. So I saw this gap in the market that seemed like for stainless steel lunch boxes, it was kinda like a random thing but it looked like a good market.
So this are just plain lunch boxes that you order from alibaba, this is not private labeling?
So this was not really private labeling, I was gonna sell it under my own brand but it was essentially just a blank lunch box. I think what I was planning on doing was getting a custom sticker made to put on it basically, so it’s like the lowest level of private labeling if you could call it that. But it was really just to kind of get my feet wet.
I think it was a hundred units and it cost me about $500. To get into it it wasn’t too bad and I really didn’t want to lose money so I was like I think this is gonna be good, I’ll just put $500 in. So I put the order in and they showed up in my house probably a month later, it’s a hundred steel lunch boxes and they’re just wrapped in bubble wraps, no box, nothing. So I was like that’s not good. So I open them up and every single one of them was damaged, whether it was just a little bit dented or scratched,one of them had a whole in it, they were completely unsellable.
They just shipped you off the waste boxes.
Yeah it basically was. I took them straight to the recycle bin, there’s nothing I can do with these. And it was almost worse, it’s kind of like a blow to your confidence more so than losing that couple of hundred bucks but it was like, I’ve put so much effort in to this, I thought this was the right market, I’ve gone to the whole process of getting it here and stuff and it kind of just set me back.
The annoying thing is you couldn’t even test it.
There was nothing I can do, it was basically scrap metal. The tough part I wasn’t able to get money back either. So I was a little down about it.
I thought they would be pretty good to get your money back.
I think it would’ve worked out too as I didn’t initiate the return request quick enough. I forgot what I’ve done but I didn’t say that there was a problem with the order until 5 days after I got it and there was a 3 day window.
That’s all they gave you, a few days?
That’s all they gave me, this was actually on aliexpress which is kind of like an amazon style site for alibaba.
How much did you pay for each lunch box?
It was a little under 5 dollars, I was gonna try and sell them for somewhere between 15-20 I think was kind of the target. But I didn’t even try again, I didn’t wanna go and ask them the box and all that, I just didn’t want to deal with it at that point.
The next one I did, I still think this is maybe my coolest product. It’s like a slim wallet but it’s made out of cork bark so it’s really thin, really light weight and it floats. I had a custom logo design and everything, this one had my own packaging and all that. I got it here, I got it into amazon, everything looked good and then there was just way too much competition, even though mine was unique. It just didn’t work out, people couldn’t find it, I couldn’t get my listing up to the top.
What keywords did you go for? Did people even know about this kind of product?
Probably not and that’s a really good point. Because I was going with the same keywords as your leather slim wallet, you know there’s thousands of them on amazon and it was just buried in with all those. I was going after things like cork, but that’s not really something people are searching for. So I kind of tried to go with the angle of the vegan thing, or so it’s like no animals were hurt by this, the organic kind of thing. Maybe there’s just not a big enough market for that, in the end it did sell, it sold like one a day. So eventually I got rid of all the inventory and I priced it pretty low to get rid of it so I was making a dollar or two in each sale, in the end I made money. So it was fine and I learned something from it.
So did create this product from scratch, or was it a product that you found and you just put your label on it or was it kind of something you designed?
This one, there’s so many styles that are pretty similar and the manufacturer had an idea how to make it and then I changed the size of it coz I wanted it to be lightweight and slim. So we made it small, and we added ID protection sleeve within it so you could keep your cards protected and that sort of thing and add the custom logo.
How do you communicate that with your manufacturer, you have to be specific in designing it on photoshop or something?
Yeah the best way is to give them an image and show each side with how long and thick it should be. They’re pretty receptive, I think there’s a lot of people doing this these days. I never had a problem with a manufacturer as far as creating custom products or making changes, and for the most part it’s pretty affordable to add a logo or an extra label or change something.
So that was your second attempt at the whole thing. I feel like any product at the end of the day if you can get it on amazon, then eventually would it be right to say that you would get your money back eventually coz it’s just a matter of the volume it sells per day right?
I think for the most part yes, I’d be hesitant to say you could put anything on there and you’ll make your money back at least. But I think as long as you did your planning and your product research, I think for the most part you could at least to make your money back, it might take a while and you might have to lower your price. But yeah to me it’s a pretty safe bet just because there’s so many customers on amazon, I think eventually your product will sell if it’s at least a half decent product.
Let’s visit the wallet one again, where do you think that failed?
If I was looking at it now, I think would’ve been able to identify kinda like what you pointed out the keyword issue being that my keywords, I couldn’t really differentiate them from all the other thousands of slim wallets on amazon. I think right there I would’ve just stopped at that point, and that’s kind of the thing, the money is made on amazon in your product research. It’s pretty uncommon for me to find the product that will actually meet all of my criteria in terms of having demand, being low competition and the keyword issue. Looking back I probably would’ve noticed that early on before I placed my order and backed out a bit.
Is there any tools that you use to kind of sort the competition or keyword research or stuff like that.
So I use unicorn smasher, it’s a chrome extension, it’s free one. It’s got a weird name, I don’t know where they came up with that. But basically you can just type anything on the amazon search and it’ll show you, it’ll come up with the first page of results and you click the chrome extension for unicorn smasher and it’ll show you estimated sales data, sales number, sales volume, number of reviews. It’s pretty basic information but that’s really all about that I need at this point, having done this for a while I can pretty much take it from there, that’s really all I use. Some people use jungle scout, that’s a popular one and that’s kind of a more comprehensive thing where you can really type in exactly what you’re looking for in terms of numbers and it’ll spit out a bunch of products that might work for you.
My main approach may be a little more old fashioned, at this point I don’t want to spend my time looking through and using a new system I just look at sales data. I use google trends as well to see kind of search data and that sort of thing, it’s pretty basic stuff.
How much is unicorn smasher?
It’s free, so I just add it on to my chrome and pretty much ready to go, so is google trends.
How does it work with trendy products? Because I do a lot of facebook advertising, I do a lot of facebook research into what’s selling and what’s kinda hot. I guess if it’s a new product and it’s kinda hot, there were this fidget cubes, and they sell like hot cakes. Say you come across that on facebook and just say that there’s no such product like that before, would it be an idea to run with, making some kind of variation to that putting it on amazon. Would there be a sudden spike of search volume at that stage?
I think there would be, and for something like that, anything that’s really trendy. For me it’s something that I would pursue because I’m looking for things that are a little bit more long term than that, I don’t necessarily see my current business lasting forever but I don’t necessarily want to put it on something that’s maybe gonna be here for six months and everyone’s gonna forget about it. That being said, there’s a place for it and I don’t necessarily think it’s a bad thing, you can probably do a ton of volume. It’s just a matter of getting to market first I think. As soon as people see things on facebook, to me at least in the United States the first thing that you would do is jump over to amazon if you want to buy it, coz everyone trusts amazon and it’s an easy way to buy things.
I think if you can get say the fidget cube and get that on amazon before thousands or hundreds of other people then you might be in good shape, and if you get more reviews first and you’re like the number one fidget cube guy on amazon, I think you’ll probably clean up. It would probably be a great cash, assuming you can stay in stock. But long term I just wouldn’t pursue it.
Going back to the wallet, did you run any ppc to it?
I did. I ran the ppc and that problem with that, it’s such a competitive niche, those wallets. I think I have my bid price, might have been as high as 3 dollars a click at one point. And even then I would type in my keywords and I wasn’t showing up on page one, I would show up on page four or five. It got to a point where I realized it wasn’t really going to be profitable to try to run that. That I didn’t see myself getting high enough up in the search ranking in like the organic search to make it worth my while. There was point where I was just gonna back off, I think I just bought like 750 units on that on my first order so it wasn’t a massive order to begin with, which was good.
How much did that one cost?
I think that was somewhere around $2 a unit and I airship it so that usually adds $500-1000 for that size of order.
Air shipping is pretty expensive. It leaves the warehouse in China and it’s here in my doorstep in 3-5 days. That’s great when you need inventory. That’s actually kind of the next thing on my business, I’m going to need to switch to sea shipping pretty soon, I probably should’ve done it before just because of the volume of units that I’m sending over. It’s a whole another step to take.
So that was your second product, I believe your third one you did well on and that’s your main one that’s selling at the moment?
Third one it did well on. That was the third and the fourth, I have another line of products that’s really taken over as the big business here. Like most amazon sellers I kind of don’t talk about those successful products.
Oh yeah of course. I just wanna know the process of what differentiated that in terms of research, did you know it was gonna be a hit or is still something you had to test?
I still tested it, for any product, new product I would be more and more confident bringing new products to market now but I still want to start with a small order just to kind of test the market. I guess you could say you never know, I really do feel pretty confident, I just launched a new product last week and I have another one launching next week. I’m pretty confident, the one last week is already selling pretty well and the one that will be launching pretty soon I think is gonna sell well and I’m pretty confident in them but I still like to start with the smaller order just to make sure I can test the market.
What skills do you think you need to get into that amazon think. Is it skills that you can develop or do you think there are some core skills that you need?
That’s a funny question, I kinda go back and forth on that because, I left my full time job six months ago or last summer. And since then, I have a lot friends that are maybe not so happy with their job and they see what I’m doing that I can essentially do whatever I want and they get interested. The thing is, I’ve had plenty of lunch meetings and sit downs with friends to try to explain the business and try to get them into it. And at this point I don’t have any, nobody’s done it. To me, that kind of makes me wonder if it’s something you just kinda born with, I was kinda born with that hustler mentality. That part of it I think being willing to just keep trying and trying and be willing to take some risks, I don’t know if you can teach that or not. I think if you really want it you probably could build to that. Other than that it’s mostly just sort of an internet savvy mindset, it’s not particularly hard it’s just being willing to learn each new step as it comes up. And I think there’s so many steps when you’re starting with anything, but with amazon fba for me there’s so many things you have to learn to get your product from China to here or even just finding the product. And each step there I think is an option or an opportunity for someone to give up and that’s kind of what I see happening to a lot of people. If you’re willing to keep learning then I don’t see why you can’t do it.
It’s really just how much you want it at the end of the day.
Yeah I think so, and to be honest I really didn’t like working in my full time job, I was unhappy getting up and commuting about 45 mins to an hour each way everyday. I felt like I was losing my life, I’m about to turn 30 and that’s really not what I want.
So that was your motivation just being dissatisfied with the whole work thing?
Yeah pretty much.
I think that was for me too, I remember I was working for two and in the second year of my career I was like there’s no way I’m gonna do this for the rest of my life.
I feel like it’s just not for some people and you and I are probably in that same thing, we had to find a way out.
I think it’s a very interesting point that you brought up saying that you have to be somewhat entrepreneurial minded. I was in the same position as you as well because when I was doing my business and making an alright money at the same time and I got a lot of my friends and people asking me what am I doing, having coffee meeting or lunch meetings. It’s actually one of the reasons why I made my blog. I put a bunch of video tutorials on it and every time someone asks me I’ll just say go into my blog, everything’s in there.
I got to start my own blog, I’m way behind now. It seems like it’s almost everyday, anybody you talk to, new people you meet, everybody wants in on it.
I think you’re the same type as me like you’d love to help them and give them all these information but it does take a lot of your time, you have this lunch meetings like 2-4 hours and most of the time they ended up not doing anything about it anyway. In fact out of probably the 20 or 30 friends that I’ve told only one person have actually done something about it.
You’re better off than me, I have none yet.
I do experience that a lot, even though they know what to do, it’s just actually putting in the work and making it happen. And there’s so many barriers like every step of the way there’s an opportunity to give up like you mentioned before. I think to really push it right through to get to the point where you’re happy to fail and then you go to the next one. A lot of people would’ve stopped at the first attempt that they had and a lot of people hate losing money. But for you it’s just part of the game right?
Yeah it is and I think of myself as being extremely averse to risk, I don’t want to lose money either. I have a fiance now and she kinda hates that I sort of horde money and I just want as much as I can, I don’t want to let it go. But I believed in the business model and I’d seen that it worked for other people, I did a lot of research, I wasn’t just guessing in this thing. I lost the 500 and I was upset about it but I knew I could make that back I knew could turn it into a business so I just kept sticking with it.
I think I’m very similar to you as well with the whole saving thing because I like saving money, that’s a priority for me like every time I get money I make sure that I got a good bank balance and keep it growing but obviously you need to spend on your business you need to reinvest, is there a balance between the saving thing and also the spending on your business, how do you balance that?
I think there definitely is; this business is just been about a year now for me. And so definitely early on that $500 seemed like a big loss to me and as I’ve gone on and seen how much money the business can pump out if you actually put money into it, make sure you’re in stock and do all the right things. That’s definitely allowed me to take bigger risks on bigger orders and have a little bit more confidence in pushing products and spending that money, coz now I know if I spend money I can make 10 times more. As long as it’s on the business I’m a little bit more willing to spend more money, I’m still stingy in my personal life.
I guess the one thing I’m starting to spend money on is travel, my fiance loves to travel. Other than that I don’t really have a whole lot of big ticket items that I spend money on in my personal life.
It’s kinda good to be like that because at the end of the day, you do need to save. So if you’re spending a lot of money in your personal life and reinvesting in your business, it’s tough because I feel like you need to have a heavy cash flow to just be confident enough to be spending on your own business.
For both of us, we’re kind of at a point where you have enough to play around with and maybe take a few new risks. That’s just something you kind of have to build to I think and once you get there it really gives you the flexibility and the freedom to really step your business up and really grow it at that point.
I remember when I started business as well, I was very adamant on not spending money. That’s what the whole seo websites I was trying on ebay but then you grow into buying an ebook or you try some advertising. If you really want to make money on business then you have to spend money.
I think you’re a hundred percent on that. That’s something that I still struggle with everyday just trying to allow myself to spend that money on the business to grow it because that is the ultimate goal and eventually sell them or just make them successful business. It’s kind of a balancing act and I think I made some progress but there’s a long way to go I’m sure.
It’s just a progressive thing that happens like overtime I guess, you can’t suddenly wake up and be happy to spend all this cash everywhere.
It’s actually kind of funny the way you and I met was because I was actually on upwork and you wanted me to write an article and I liked doing that for you because I’m writing about something that I’m actually interested in so that’s something that I enjoy. But I eventually got away from that just because it didn’t seem a good use of my time.
What do you think is a cost effective way to get started, I know a lot of people turn to alibaba but sometimes I feel that because you have to do that minimum order thing you just have to spend too much, would that be correct?
Yeah I think that’s fair to say and really I felt like I’ve solved this problem, just use aliexpress. Because aliexpress.com it’s the same company as alibaba and so you will get most of the same products and there’s so easy to buy and you can buy as little as one and as many as thousands, you can contact the suppliers and they’ll give you discounts. So that’s a great way if you want to test the market especially if you want to test 10-20 different products just to start and you can list them on amazon once you get them.
If you don’t want to spend a lot of money I think aliexpress is the way to go. And for me if I find something on aliexpress and I send it over to amazon, basically if something is selling without any reviews on amazon at that point I’ll reorder immediately and get a big order. Reviews are everything so if it’s already selling even one or two a day you know it’s probably gonna sell you could get it easily to ten plus a day. Just any products.