$20k/m Amazon FBA Business
Focusing On Building a Brand
How to Find killer Products
Tips on Getting Started
Pitfalls to Avoid
Podcast Transcription Summary
- Extra Valuable Info is Highlighted in Green
- Mateen (Interviewer): Bold and Italic Text
- Matt: Normal Text
Hey Matt thanks for being on the show!
You’re welcome. Happy to be here.
Amazon has been around for such a long time even when I got started a few years ago, I know it’s been out there but for some reason I never really looked it that much. So when did you get into amazon?
I got in September 2015, so a little over a year now.
Is amazon fba like pretty much the main thing that everyone gets into? Fba pretty much means that you’re fulfilling using the amazon fulfillment center right?
Let’s talk about what amazon fba really is. Fba stands for fulfillment by amazon like you just said, so they have a bunch of fulfillment centers around the country that can store your product. So you can fulfill orders on amazon or any other outlet that you have and I just found it to be a river of money. 80% of my sales right now I just started to diversify.
That’s coming from the amazon fulfillment centers?
So can you sell on different platforms but use amazon’s fulfillment center to supply that product? Like if I have a shopify store, could I sell off my shopify store and get amazon to fulfill it, does that work?
Yeah exactly, they’ve really positioned themselves to be platform that you can work off of. So say you have a wordpress site or a shopify site, you can fulfill the orders from your seller central account right there.
Let’s rewind a bit before all that. Were you always an entrepreneur at school and stuff like that, did you kind of fall into the whole entrepreneurship thing after college ended?
I always knew that it was something that I wanted to do, in high school I was always doing these side hustles. End of college I knew I didn’t really want to get a job, if I could work towards something and I had a vision, so that’s exactly what I did. I just discovered amazon and I researched the hell out of it and few months later I had my first product and here I am now. It’s been about two years and I’m learning all sorts of different skill sets and developing myself along the way.
This is a stupid question but in Australia we have high school that finishes at year 12 and after that we got University which is whatever degree you want to do. So college in America is that year 12 or is that university?
High school is up to grade 12 and university and college it’s the same word basically.
So you finished college which is whatever you chose to study or further studies, did you find a job in your field or did you pretty much jump straight in to amazon?
I had job offers but it was nothing that I really loved because by then I was already kind of diving into amazon and just really wasn’t looking for that type of career.
It’s a pretty big move.
It’s like the pivot point where you decide whether you gonna go with whatever education you’ve done for the last 4-5 years plus, obviously with school involved as well or just completely start with this whole entrepreneurship thing.
Did you get scared when you were choosing the entrepreneurship route or did you already have some stuff happening?
I already had some stuff happening, I was just sure of myself and I knew that I could get a side job or go back to it if I really wanted to but this is what I wanted new. It’s like you don’t take second place.
Let’s talk about your side hustles, did you do anything outside ecom, did you do like phone apps or just buying and selling stuff at school?
I have a wood working background so I literally manufactured things before by myself. I have a table saw and things like that so that’s all like a different field, I’m very much product oriented and learning my own way into the tech while others are using the tech. But I’ve always been on the physical route as far products; playing cards what have you and the ebay game.
A lot of people that are good at making things, the part where they kind of go wrong is that they don’t know how to market or get the word out there that their product exists. So was that a problem for you when you were doing it or did you always have that kind of sorted out? What did you do once you made the product?
In my area there’s a lot of small stores that I went out to. At one point I had products in 12 different stores in the area, really it wasn’t difficult as a young person to be approachable and friendly and everybody you try to help you out there. And it just kind of evolved, you learn how to market yourself as you just put time into things.
So you really have given trying to find distribution?
Really cool. Not many people do that, a lot of people make something then they go on a website and they’re like what do I do now. Like you see a lot of entrepreneurs come to shark tank and they’ll pitch their product and the sharks will be like “when did you create it?” “5 years ago” and you just know they’re gonna eat into.
Yeah, what have you been doing, where’s your momentum?
So how did you get in to stores, did you just call them up and pitch your products?
I’m in upper New York so a lot of the stores weren’t chained places so I just went and talk to the owners. I mean everybody likes talking to young kids who are enthusiastic about things like that and then from there it’s just developing yourself and then you don’t need to be that young kid anymore, at least from where I was.
That’s really good. So let’s talk about amazon. You were in college and you were experimenting with amazon, how long did it take you to get your first product on amazon and what was the research process behind choosing that first product? Was it your first product that kind of started making you money or did you have to go through a few to start to find that gold mine?
My first product failed pretty miserably. I sold watermelon slicers if anybody know what those are. It is a very interesting tool, it’s like tongs and you slice the watermelon right out of the rind. It was a very hot product, I was being a total novice in the amazon game and everybody did the same thing, they went on alibaba, they found the watermelon slicers and they sold them. They saw how much revenue was in that market place but because you had all those sellers suddenly prices dropped like crazy and something that I thought I could sell for $20 I ended up liquidating at $5.
So I guess if you’re selling the same thing everyone else is then is that what happens?
Exactly. Everybody sees the type of money that’s going around and everybody has the same tools, that’s just kind of the game. That was a great learning moment and I’ve transitioned. I released that product April, so I was doing research from September and the whole learning process. I would think I was risk adverse at least and new as far as talking to manufacturers on alibaba. So that was such long time there.
Do you find that it was easy to communicate with them or it took them some time to kind of get back to you? Was there any communication issues?
No, not really at all. They speak basic english though I’ll use whatsapp and start talking to them at 9 or 10 pm. They just want to work with you and they’ll help you along, just act professionally.
Do you make sure you choose reputed suppliers or it doesn’t really matter?
Yeah so let’s talk about alibaba, there’s all sorts of suppliers, there’s gold suppliers, they have those that have been inspected so there’s all ways to check. You have the alibaba trade insurance which alibaba ensures the product will be up to the standards. You have quality inspection, make sure you have a quality inspection, I use trigo it’s a $100 to inspect your product and they’ll do it all for you.
Is that $100 per shipment?
Yeah so every order that I have you literally have two people go out to your factory and inspect the product before you have it in the States and you can’t rectify it.
So they send you pictures and things like that?
Oh yeah, it’s like a 25 page book, it’s amazing what your value is.
You find a lot of people trying to skip that. You want to spend money on the right things to make sure you get your quality, you make sure you get your product. Because even if something goes wrong in between you end up losing a lot of money just by skipping these small things.
Obviously you’re trying to invest as much money towards in to the inventory coz that’s what actually creates the profit but you got to invest in to having those things lined up correctly or else you just gonna skip things that can really screw with you.
Yeah definitely. My background is a lot of driving facebook traffic to individual products on my shopify store, the thing is with the model that I have I don’t hold any inventory myself. When the sale occurs, I’ll go to aliexpress and fulfill that order by buying an individual product and shipping it to the customer. With amazon you can’t really do that, you got to invest in a set of inventory right. How do you manage that part of the risk or is it a risk you just have to take?
It’s very calculated, choosing a product is probably the most important decision that you can make in the business. And that’s what I did, from what I started researching was picking a product and there’s a learning curve to it. But certainly you just kind of find the right niche that where you think you can improve the product, where you think there’s not a lot of competition for the market place that you have those margins where you can create some sort of value, whether it’s a better product listing, and improvement to the product.
Like an extra feature or something?
Exactly. So improvement to the use of the product itself. You can’t just go to alibaba and order something and send it to amazon and assume that you’re gonna become rich. That’s a dream. It takes work, it’s a business like any other businesses. Of course you’re gonna have to put some investment in up front, but with some of the products you can have a crazy ROI that you just have to put in the work to make sure that it’s the right product for you to do that. Whether it’s between the cost, your shipping method, are you gonna be able to do an air shipment or you’re gonna have to do a container which takes about 30 days to get to the US versus the air shipping.
Is it mostly the cost that dictates whether you do shipping by air or by sea?
Yeah. So if it’s small and light weight then you can easily ship it by air but if it weighs 6-10 pounds, if it’s large you’re not gonna be able to ship it by air of course coz that would just be ludicrous as far as pricing.
In China the pricing for the products is pretty much only dictated by the weight of the product right?
So by air it’s by weight and they don’t necessarily care as much about the size but by sea it’s all about the size of how much can you fit in the container.
You mentioned that the research process is really important. How do you go about picking a product? Give me an example of what it means to kind of change a feature of seeing an opportunity as anything that you’ve seen in the past. Obviously not one of your working products at the moment, but something that you’ve seen that this would apply where you can make that change and make it a completely new product.
So you’re doing the research process, you want to find a product that has the type of revenue that it’s worth investing in, in the market place. So to start of, I would just be going around, I’d have a list, thinking of things that I use in my day to day that I have a value for that people also buy. Then I look it up on amazon and I look at the market place and so I just work on that list and then jungle scout chrome extension is totally worth its wait coz it shows you the psr, the estimated revenue, the estimated math and all those other variables that you’d be interested in, so that’s the first stops.
What do they base the estimated revenue on, just current sales with that product?
Yeah. Looking at it with my products it’s fairly accurate, it can be slightly inaccurate but it gives you a great picture that you wouldn’t have otherwise.
Gives you a number to work on, I guess.
Yeah exactly and from there if you see that the market has an opportunity as far as you can create better listings. From there I’ll actually look at whether I can create a better product. That totally depends what the product is necessarily, but a lot of the time you can go on to alibaba, find the product as it is right now then from there make your improvement to it, whether be a new mold piece or a completely new mold with that manufacturer.
So that supplier would allow you to make a change like that? Do they normally have access to the manufacturer that would create a new mold or whatever?
Yeah, and it totally depends on what your product is made out of. But I’ve had new mold parts for like a $100. There’s no reason why you wouldn’t do that to create your own variation of a product. And so it could be just, if something has a handle and to make it more ergonomic and if something is plastic and really should be metal, things like that. If you just had to put yourself in the consumer mindset, at the end of the day amazon lets you on to their platform because you’re creating value to their customers. So that’s the way that you do it is coz you’re making the innovation on amazon market place, and if you don’t actually create value well then you’re not gonna be ranked as highly necessarily.
So you got to kind of see it in a way where you’re creating something that someone needs to want, you’re not just creating something because of it, like you got to really think about the use of it, the value, proposition and all that good stuff.
Is that what private labeling is, just pretty much creating a new product or does it also involve branding it?
So there’s the white labeling which is finding the product on alibaba, having the manufacturer put your logo on it and then selling it, and that’s private labeling in its simplest form. Going from alibaba to amazon. I use alibaba because it’s near impossible to manufacture with the United States as far as order volumes and it’s just a central platform to find manufacturers and work with them.
So what you do is not just the white labeling stuff right? You’re pretty much checking out to see which products may need to feature and then you go ahead and create the product and then you test run, send it to amazon, see if it sells.
Yeah so what I’m doing is I’m establishing a brand. I’m not just a seller on amazon, I’m creating a wood working company, I’m creating a yoga company and really what does that entail, you have a product line that you’re developing, you have a brand essence. You’re not just like, here is a product and here it sells and there’s a whole lot more to it. And the more you invest in to a company like the more that you’re gonna see in return.
Well, that’s right. So, do you think amazon is good for creating a brand or because at the end of the day don’t they own the customer e-mails and things like that? Do they give you access to it? Say you have any product line on you, a product that you created, how do you market that to your common customer base? Is there any form of common customer base that you have access to on amazon?
No. They protect the e-mails and I completely understand why. But it’s a great launch platform to see a market, you know, and experiment cause you can have a product from thought to selling on amazon in a matter of 4-5 days if you can ship it by air and that’s incredible to have access to billions of dollars in a market place. Otherwise, you’d have to develop your own site and all these other frictions, but you could just list the product up, lower the price, and see if it sells. There’s nothing else like it online at this moment.
Yeah, definitely. I know being in Australia, because amazon isn’t here, it’s not really talked about that much. But in the States, when you think about buying something online, is amazon the first thing that comes in to your mind or is it like e-bay?
Well, I’m fully invested into the amazon so it’s the first place for me easily. As far as e-commerce, I think for every $2 spent online, $1 is spent on amazon. I’m not sure where I found that figure, but it’s just amazon’s a behemoth in the bottom line region.
They keep launching new things, don’t they? I keep seeing ads for different types of services that they’re gonna be launching. They have some kind of card that you can just hold on to when you walk in to shops, buy whatever you want, walk out, and be like automatically charged, something like that. Crazy.
They’re changing the store, that’s for sure. I just read a Jeff Bezos everything store. It started off he sold you a book on how to kayak, then he’s gonna sell you the kayak, then he’s gonna sell you the kayak lessons. So, he’s branching out in so many ways and there’ a lot of innovation as far as the fulfillment centers. The goal eventually is gonna be 24 hours shipping and having some fulfillment centers outside of every city. You just gotta find your place on that as far as an amazon seller.
Do you just sell in the States, or do you send to fulfillment centers in UK
They do sell in Canada. They do have a Canadian website, but the market places there’s nothing like the US. I know there’s sellers that have the same good sales in other market places, but as far as figuring out the logistics of all that is not worth it at where I am right now. It’s better to just develop new products.
I know amazon will open a fulfillment center in Australia for the first time, sometime in June or mid-year. It’ll be interesting to see how Australia responds to the whole amazon thing.
Is it important to inspect the product yourself, like do you ship the product to yourself and check it out and do another shipment to amazon?
Always on the first order at least and then you can go by air, I mean I do. It’s my life load right now is to make sure that I have great product that I have great customer service, I don’t want my customers to receive something broken and then leave me negative reviews. Easily worth the time investment to go over the order in a day.
Let’s talk about seo and the review process; so you got your product, you’ve put it on amazon, how important is it to get reviews and make sure the seo and the description’s alright?
I always have professional copy done from my listings. It’s easily a investment worth doing. I’m not a professional copy writer and they know the words to draw in the customer, the key phrases they use. You have to have to professional photography done, whether that’s done by you or another professional.
Now you have all these keywords on your listing and then I like to set up an automatic campaign so it’s a pay per click, I set $15 dollar budget, 50 cents per bid and just let it go for a week, and from there amazon actually does that for you so it puts out keywords that it thinks will work for you.
And then I do reverse says and keywords so I can look at what my competitors keywords, what they’re ranking for and I can put that in to a manual campaign and I can take the keywords that are really working on my automatic campaign and put that in to a manual campaign. And that’ll feeds into higher sales volume which puts you in a better rank, better visibility for more sales because you’ve gotten sales for these keywords so you’ll naturally rank higher for those keywords coz amazon thinks that when customer search that, they’re searching for you.
So the more you can convert for specific keywords, I guess that signals amazon these products are the better products so it ranks you higher.
So you’re getting sales, is it also important to be getting the reviews as well or does sales itself boost you up quite a bit?
So reviews, when’s the last time you bought something with no reviews, I mean it happens but necessarily you wan to find something that has some amount of reviews on it. So my general strategy is keep the price lower than normal, at least until I get that review count where I’m in 15 reviews + then I’ll start adding to where I really want my price to be.
Coz if you want to make a lot of money right of the bat and you put your product price up to a big margin then it’s gonna be a slow process, getting those reviews.
Exactly. I mean I do the email follow up and all that but even then, at most I’m getting a 5% percent review rate and that’s fairly high as far as you can expect maybe anywhere between 1-5% so it’s really at that point, it’s a numbers game, how many sales can you do to boost up your review count.
Do you think that now you’ve been with amazon for a while, for someone new coming into the game if they launch the exact same product with the exact same description, does amazon favor you as a seller in terms of where your product stands on their platform in terms of the rankings because you’ve been there for a while or does everyone kind of have the same start then they add the algorithm?
As far as private labeling, I have no reason to believe that. I know if you’re a seller and there’s multiple people in the buy box so there’s multiple people selling that product. So I think then, that might come into play but I don’t have experience there. I don’t think it’s a big deal, I think you obviously want to have your positive seller feedback because of the health of your account but beyond that I don’t think it’s important.
So I guess everyone has the same chance of getting in. That’s really cool.
What do you think has changed over the years with amazon that you could probably have done few years ago but you can’t now? Is there anything that amazon has stopped previous sellers from doing of what they can few years ago?
So there’s a big thing as far as that, one thing that I actually participated in and I saw that happen while I was selling. Amazon used to allow you to do giveaways in exchange for a review, I don’t know if anybody who’s listening has seen the reviews that said “I received this for a discount in exchange for a review” while that discredited amazon’s profile as far as the ecommerce base where you can’t trust the reviews anymore. Amazon’s life bud is that you trust them to get you the products. So they had to change that, you can’t do a giveaway anymore like that. One of my products that succeeded I initially gave away 75 units in exchange for reviews and I got those reviews deleted coz they said those things they didn’t want on their site.
So the 75 that you sold you had the review system set up for it and they took that away?
But also, they removed those reviews or did they just change the rules?
They removed those reviews and they changed the rules. It happened over a few months of going over the product listings and deleting reviews. I ended up having half of my reviews at the end of the day, one amazon got around to that product listing. It stopped the ability for you to start selling one week and then have 120 reviews, a thousand reviews if you’re in the vitamin market. So you can’t just launch then next week be making bank, there’s a lot more of process to it now.
If you go at it right, it doesn’t have to hurt you, you just have to play the long game now. I actually had just launched a new product and in the last 30 days I did 120 sales within the first 30 days with that product. So for the first month that’s a success right there, so it doesn’t mean that you can’t launch new products so you just have to find the right markets for you to attack, you gotta look at the niche places where you can add more value that it doesn’t fit the guru status of a small lightweight fame that you can airship and buy for 2$ and sell for 20$. You got to diversify yourself, this is a business treat it like one.
Do you focus on specific niches or if you find a product in some plastic cup that you think might have difference if you try that and then you’ll try a different color or do you kind of stay on a line of product?
I have brands, I have llc’s, I have trademarks, I’m developing companies and so I’m developing the product wise. I’m not selling kitchen ware and then putting a yoga mat in with my catalog. And plus you can actually see your sales increase when customers see the other things that you’re selling, you’re creating a much different presence than just somebody who has a weird assortment of things in their seller account.
Definitely, specificity is a big thing if you can stand out being the main guy, the main store to go for a set of product. I can definitely see that making a difference.
Does amazon allow you to market your own store? I’m assuming the answer is no. Let’s say you got a shopify store for your brand, how do you get that word out?
So basically as selling on amazon, I am both the manufacturer and the retailer at the same time, so I’m doing two parts right there so there’s no reason that you can’t ask the manufacturer, include like a warranty card that brings somebody back to your site for warranty instead of signing up into your email list. But as a seller, they don’t want you to do that because they don’t want some job load and start putting cards and stickers all over nike products.
Obviously you have to diversify the amazon games, get yourself in to different avenues. But that doesn’t mean that you can’t do that and bring some people off of amazon. Amazon definitely protects their customer details, as far as their emails and their numbers and it’s prohibited from you to call them, but that doesn’t mean that you don’t have avenues of reaching them or diversifying yourself out if you can create that brand presence.
Right. Coz I think a lot of people that sell on amazon, they do look for other ways to distribute their product right? Obviously once you’re creating your brand you do want to have some sort of control on your customers because if you got your customer emails and you can put them through funnels, you can send them new giveaway promotions and things like that, you can do a lot more with it.
Is it the normal thing once you have a good amazon store you try and make your own shopify store as well, is that the natural progression of amazon sellers?
That’s certainly something like amazon’s your launch pad and from there you can go from place to place like set up your shopify store to actually take sales instead of just being this sort of front. And then diversifying yourself as far as other ecommerce platforms that might take your business or smaller retail shops that started getting into. This is something you can do months after your amazon launch, I think amazon’s gonna be a more strategic move if you’re launching a product to go on and then from there diversify.
That makes sense. How do you manage your cashflow? I know with having your own store, the money from each sale goes straight to you paypal or straight to your bank account. With amazon, is there a set period they send you your money? Like every once amount they pay you your part of the product sales or with every sale?
Amazon does bi-weekly payments and they take about 3 days to get in to your bank account once they’ve been processed. And they already deduct your ad spent from that, you have your bi-weekly payments and then I would say you got 3 major payments other than that you have to deal with. You have to deal with your 30% deposit for your inventory order from your manufacturer. You have to pay that at the beginning of your order and then you have a 70% for the final balance to pay the manufacturer for the goods and that’s about 30-45 days after the beginning of manufacturing, they’ll be done and you’ll have all your products and that’s when you have to pay them for that. So you can kind of judge how much capital you’ll have from your bank account from the amazon payments and then from there you’ll have to pay for the shipping. That might be something that you just have your manufacturer do for you as an air shipment and door to door. So to actually have the boxes end up at your doorstep and you just have to pay that 30 and that 70% and that includes everything.
Or you can actually go through a freight forwarder and so they would actually charge you as far as dealing with the containers. You have to pay 15 days in to the shipping, so it’s in the middle of the sea that’s when you’re gonna pay. So if you’re looking at the timeline of that, that’s 30% deposit in the beginning and 45 days later I have that 70% so let’s talk about the order of being 10,000$ I’m gonna have to pay 3,000$ up front then I have to pay the rest at the end of that 45 day mark. And then if I’m doing less than container load it’s maybe 2,000$.
I just paid over the holidays, that’s a big as far as price spike, I had a full container and that’s $6,000 for everything that did for me. But prices like that fluctuate like you can pay half that, around now coz the market is totally flat and down after the holidays. You could expect to pay around $3,000 for shipping at full container, so that’s $13,000 for this hypothetical order that I have and so from there, I just got to make sure that my break even point.
It’s running a business, you have to have good accounting as far as where is your money going and then knowing at what prices you will be able to cover the amazon fees, being able to cover the pay per click advertising. All this is things that you want to think about when you’re looking at a product; I’ll definitely find a product, reach out to alibaba, see what the manufacturer’s prices look like, know what type of orders I’ll have to do, type of shipping I’ll have to do and does that make sense. You might go through a few products that you just go so close to ordering but not order because at the end of the day it doesn’t make sense to you do it because there’s other fish to catch.
Is there any products that you’d avoid? Like is there any industries or something maybe have higher return rates, like if you’re selling electronic products there’s lot of issues and usually get lots of returns like clothes as well?
Yes, so I like to keep it simple as far as the products that I go into, you can certainly go into something with electric but that just really complicates things as far as the manufacturer that you’re dealing with. Clothing that gets a high return rate, cellphone cases is crazy competitive, vitamins are crazily competitive. You want to find that niche that doesn’t necessarily have to be sexy for you to make a lot of money and the goal is to make a lot of money. There’s no hard rules, I just like simple products coz it’s one less thing to worry about, I don’t have that engineering background necessarily.
I think whatever niche you kind of get into even if it’s something really small or umbrella down a bit, I think still you’d have a decent amount of population that would search for the product and you can make sales. You don’t really have to go really broad, like you can go really specific and you should be able to find opportunity, say like you’re selling products to people that keep snakes as pets.
I don’t know where you found that specific topic but it’s things like that where’s it’s just we have these niches that necessarily aren’t in high demand, aren’t seen everywhere, they’re not gonna be in stores and that’s when you can come in coz you’re a smaller player and you can develop something and not have that type of competition. Of course you want to find something that moves on amazon, that has sales, so that’s where having your chrome extensions come in to play as far as knowing the type of volume.
But let’s not do something that was ok 3 years ago like yoga mats and fitness clubs, we got to move on from there and find niche product that we can innovate and from there have seller marketing, materials on your page and just great customer service from there and then you should see yourself move up as far as sales and revenue and that’s the important thing, the profit.
So what type of volume metrics do you look for when you find your product? What’s a good indicator of something you would go for and what dictates that?
If I’m on amazon and I’m looking at the listings, I wanna see something that where the star counts really aren’t there. You’re not gonna be able to compete if everybody has 5 stars and hundreds of reviews but if you see that they’re at 3 1/2, so they have 3, 4 stars maybe they don’t have a lot of reviews, maybe the pictures are really bad.
There’s another product that I want to get into right now where my only major competition has 2 pictures like I know I can do better than that.
Pictures make a big difference don’t they?
Oh everybody loves looking at pictures.
Doesn’t amazon have a thing where you can only do it on a white background or you can put in any picture you want?
There’s certain rules to it, like you’re first picture has to have a white background and it’s a one to one frame, but you put lifestyle photos in there, you can do all sorts of words on the following pictures to boost the sales. There’s a lot of ins and outs to just create a better listing if you do your research into it.
You can innovate on something that’s already been innovated to the extreme, if there’s really no position for you in the market like if there’s one seller and he’s not really making that much money don’t think that you’re gonna be able create something and people will come. There’s volume, there’s demand and if it’s not converting, that’s something that’s kind of risky. You want to find something that already has a lot of volume as far as search and have that market where the products aren’t really up to par and then from there you can say what can I do to improve it. There’s all sorts of things you can do and get creative especially to those who are new to it. There’s so much material online to read, to learn about this type of market place.
So I guess it’s a lot of just searching through amazon market place and looking to see whether there’s pockets of opportunity, there’s no really easy way to do it.
Yeah especially when starting out it would take forever to figure out the right type of product. But now I would say you can spend 4 hours that one product that’s a killer or you could just hit them off and just find a string of them. It’s really not difficult once you know what you’re looking for potential products and then you go down the list of things that you need, hit the check marks.
Yeah and I think later on it just becomes intuition after a couple of years, you naturally can see where the opportunities are without looking at too many metrics. I guess the longer time you spend on a specific niche, you start to learn what they want or don’t want.
Exactly. You develop an understanding for what the consumer. A lot of the products, I have them around the house and I try to use them. At the end of the day you’re gonna create innovations on yourself and around your brand. Say you have something that started to not be electric and maybe you move to something that is electric of that version or maybe making it bigger, things like that.
How stable do you think an amazon business is? Because different platforms require you to get the traffic on your own so you do your facebook or instagram advertising. Their a hard game coz you got to always look for opportunity to be in traffic and you always have to be active in doing that. With amazon because the traffic’s already there, I would assume that it’s more of a stable business. Can you expect like making a similar amount every month or the money increasing month by month or do you have to continuously put in the work for each product to make sure you’re at the top, getting your reviews right and everything’s being ticked off to make sure you’re getting the same amount of income or it’s growing?
So que one is definitely slow and que 4 is crazy, it’s the holiday season. As far as stability, it’s really a slow growth and then you have good sale season through the summer and then it just kicks off like crazy once you hit September. And then once you get to November-December your sales’ multiple is 2-3x than normal, it’s ridiculous.
So you really want to position yourself for that Christmas season?
Oh yeah! Amazon, it’ll be there but (53:56) is the question coz there’s always new competition, people who are coming to the floor. And so that’s why you really want to go out strong, you want to build up your asset which is your product page, you know if you’re private labeling you’re the only person that’s supposed to be on that page. So you got to get your reviews up, you got to get good reviews, you got to get your ranking up so you have to figure out how to get it if that means cutting the price a little bit early on and then building yourself back up to where you wanted to be. There’s lot of things to do and position yourself on the top of the page. At the end of the day for the number one keyword you want to get yourself up as high as you can. For my niches I want to be number one for that niche, so I think that should be the goal, you’re not just selling on amazon, you’re being number one at what you do. If you can do that then you’ll have a really hard time being any place on amazon; don’t put all your eggs in one basket, obviously diversify as far as your own ecommerce store, others ecommerce avenues, they might be worthwhile to get on eventually.
As far as stability it’s definitely a great income stream, there’s no reason to leave it if you have a good thing going for you.
I think that’s one of the biggest point with amazon is that comparatively with other business models that are online especially in the ecommerce world, the income seems to be quite stable and you need that stability especially if you’re working on your own and you don’t have a job. If you’re working for yourself, if you don’t have stability even if you have a good business it just stops you from making those decisions like buying a house or a car coz you just never know when you’ll have months of just zeroes or negatives.
Let’s talk about the costs involved with amazon. Say you got your product costs and then you got your shipping fees etc. is there any additional costs that people don’t really account for? Say you a buy a product for $5 from your supplier, how much do you have to add to that to account for the base cost before adding your margin?
So if you get a ship to, which I would highly suggest for your first order, it’s gonna be 50 cents a dollar for every product to send it to amazon’s warehouses. There’s gonna be, if you have the professional account, which eventually if you’re taking this seriously, you’ll have that 39.99 a month. If you’re gonna get a brand registered, you’re gonna want to have your own site, so that’s hosting, wordpress at least. You have a business email that’s another $5 a month, and then if you’re gonna use email follow up sequence, that’s another software, that’s gonna be another $30 right there. There’s a lot of small things, $30 here $30 there, there’s gonna be refunds so people are gonna refund so you got to eat a little of cost there as far as returning the product. I budget about $1.50 for each product that I sell to account for my ad spent.
Do you spend on ads for each of your products, is that something you always do?
Yeah, I mean it just makes sense if you can make a profit off of it.
So how do you know you’re gonna make a profit out of it, or is that something you know once you start doing the ppc campaigns and you get results?
So you can run different campaigns and your campaign will have average cost of sale and then within that campaign you can look up actual keywords and get rid of some and actually lower that average cost of sale just to see where you are at as far as your cost overall for your product. If it costs you more than you get in return then obviously who wants to lose money but a lot of people don’t see these little parts but they just think that they’re gonna be making money, so you really got to investigate the whole business as far as what you’re doing and that’s where the time comes in.
Do you see a direct return on the time you invest on amazon? For example for the first year that you spent with amazon how did you go with income? Is it increasing every month, do you see the amount of work you’re putting in directly affecting your sales numbers?
Oh yeah, easily. What I’m doing as far as my time is I’m adding more product and what I’m looking for each of my products are gonna be adding revenue, gonna be adding good margin line. And so they’re just gonna keep on expanding the business growth as they compound on each other. I’ll deal with some cash flow issues by buying more inventory like that but everything is growing as far as the reviews which leads to more conversions which leads to more sales and then more sales boosts your ranking for more keywords, on to different things. So you gotta keep the engine going, I’m sure you can put something up and get lucky but it’s your business, you got to put your money where your mouth is and work on it, you can’t just assume that you’re gonna make something, it’s not that easy.
I think a lot of people that want to do business, they get into it, they put in a bit of effort and once they fail the first time that’s kind of where they give up. I don’t think a lot of people actually understand how much actual effort goes into building something of value and then maintaining it and sustaining that income, it is a lot of work. And I don’t if it’s just been sold to them that business is kind of freedom type lifestyle.
Do you find some people have it and some people don’t, like do you find that entrepreneurship, you got to think in a certain way or you can train that into yourself?
I think that some people just sort of have it, that this is what they’re focused on and this is what they’re gonna do. Other people are like don’t really commit to it, and if you’re not committed there’s just way too much to do and to learn that you just don’t get in the classroom or wherever you learn. You just have to be the type of person who’s gonna instead of having fun on the weekend, maybe you’re working on your side business. So I think you’ll definitely see the type of personalities of people who dive into these type of things as far as where their businesses go.
A lot of people they get really excited, really into it, they find a new business idea, they’ll give it like 6-7 hours for the weekend but then once it goes down then they’re back to doing nothing about for the next 3-4 months. So I think, to a certain level you have to be a little obsessed with making money because for me it is an obsession to a certain degree, it’s something that I enjoy doing a lot. Whether or not I’m making money like there’s so much interest in seeing if this method or opportunity or product, I think you need to have that, it’s kind of a healthy obsession I guess.
Oh yeah, you get so much fulfillment out of it when it succeeds and you just get addicted to that. Telling me that I’ll be able to sell so many things on the internet like this is just bonkers.
It comes down to the personality, are you gonna be disciplined enough to keep yourself to it and then those few people that do they see the results.
I think when you get results it kind of self motivates you to keep going which is a really cool thing I guess with amazon. Because you can see the progress like if you’re doing it right, you can see your ranking getting better you can see your sales volume increasing, it only motivates you to keep going at it.
I’m gonna end with this question. What’s your current plan and future plan for the business? Did you want to stay on amazon or do you want to create your own platform, where do you want to take this, do you want to take it really big, maybe pitch it one day on shark tank?
Ha ha! The goal has always been self employment and I would love to grow this as large as I can. Definitely in ownership of the business and be able to travel and love life and be a businessman, see what happens. There’s no set boundaries, this is just a great opportunity who knows what’s gonna happen a few years from now. But I’ll hope to just learn a whole lot and pursue other things that come to me.
Alright Matt, thanks for being in the show.
There’s a lot of valuable information there.