Greg is by no means a lawyer and you should speak with an attorney about any specifics when doing Amazon product research. The information shared here should not be considered legal advice. But Greg has a lot of experience dealing with these types of things.
When doing product research, the first thing is patents. These offer protection for inventors. No one can use their idea for the length of the patent. If you do, the patent owner can sue you.
The expensive way to find out if something is patented is to hire a lawyer to do a full patent search. It’s expensive, takes a lot of time, and is full of headaches. However, you can be sure that you won’t have to worry.
Greg will look for red flags. If it’s a unique item that he’s never seen before or has a unique feature, that would be a red flag. Another would be if they’re the only one selling that type of product. Whereas if there are 8 people selling the same thing, it’s probably not patented because the patent owner would have come after them. An easy way, is many patent owner will put that in the description, or on the owner’s website. A lot of times you can just Google the item plus patent.
If at that point, you still think there might be a chance it’s patented, then it’s best to just drop the project.
Greg avoids selling products where there is strong brand loyalty. People buying running shoes, wants Nike or one of these big brands. That’s an item to stay away from. Whereas, does anyone really care who makes their alarm clocks? Apparel is another category with brand loyalty, also electronics. People care who makes their TVs and computers.
Do people care if their mixer is made by Kitchenaid? Or would they be ok with a private label? To determine this, you need to figure out how well the Kitchenaid is selling vs the private label. If the kitchenaid is selling 3000 units a month and the private label is selling 100, that’s a red flag. If Kitchenaid is selling 1000 a month and the private label is selling 600, that tells me people are willing to buy a private label.
We have Greg Mercer on the show again. You can listen to our previous interview on product research, as well as one on supplier negotiations. Greg studied civil engineering at university and had a corporate job that he hated. He began selling on Amazon as a break from his day job. He managed to quit his day job and just do FBA full-time. He did that for about two years when he was frustrated by trying to find products to add. The best way to scale your Amazon business is by adding more products. Greg didn’t have a lot of capital to throw around so he wanted to find ones. Out of this need, Jungle Scout was born. Now he joins us to help us find the best products to sell on Amazon.
Today, Greg is still selling on Amazon. He has released a few products in the last few months. He’s been working on Jungle Scout, and that has expanded into a quite a tool for Amazon sellers. There is Jungle Scout, which a research tool. Jump Send is a deal site to get you additional sales, as well as a follow-up sequence. Splitly is an AB testing tool for Amazon sellers. Fetcher, which is profit analytics. It calculates what you’re really making after refunds, promos, etc. All the numbers Amazon likes to hide from you.
That’s a common issue. Everyone knows how good of an opportunity Amazon is, but it’s finding products to sell that is a struggle. The best products to sell on Amazon are ones that have existing demand, that means Amazon customers are already searching for it. You want products that have low competition and that have good margins. Those are the main things. Other things you may want to consider are whether they may infringe on any patents, and they don’t need to be licensed. Think of liability; if a person can hurt themselves with it, you may want to steer clear. Lighter, smaller items are generally less complicated. They are easy to ship and you don’t have to worry about oversize storage limits.
Jungle Scout was created to solve that issue, but you can look on the Amazon’s best sellers page. You can get ideas from Pinterest, look at what people pin a lot. You can hang out in big cities where trends start first. Once you do that, make a list of product ideas and go to Amazon. There is actually a free way to find out how well a product sells. You can click on a listing, then look at the best sellers rank under the product description. Then you can go to junglescout.com/estimator. It’s a totally free tool, you don’t even have to put in your email. You put in that sales rank and it will give you an estimated amount of units that product sells on a monthly basis and see what the demand is.
For demand, you want to look for products that are already selling on Amazon. A beginner mistake is that people “know” that a product will do well if it gets on Amazon. A small percentage of the time, that might be true, but more often than not people are wrong. It’s much safer and less risky to go with something that is already selling.
I want to see 2000 units a month, being sold on Amazon. Let’s use a coffee cup as an example. If you search “coffee cup” on Amazon. Then take the top 10 listings, or however many are relevant. Let’s say 8 are selling coffee cups. Then click on each of the listings, get the best sellers rank. This is helpful because it tell us how well this product is selling. This number, by itself, is very difficult to interpret. However, at Jungle Scout, they have come up with an algorithm that can estimate how many units are sold based on that number. It changes on a daily basis and they have a full-time data scientist that is always updating this. So, get that number for each listing, find the units sold on Jungle Scout and add them up. If it’s more than about 2000, then the demand is there.
The first thing is to look out how they drive these algorithms to estimate the sales. Depending on the category, they collect between 200,000 and 500,000 data points every month for that category. This is the relationship between the unit sales and the ranking number for that day. Then they run a regression analysis and they come up with a line of best fit to estimate the sales based on the rank.
The best sellers rank changes on an hourly basis. The way they estimate sales is that if a product continues to sell as well or as poorly as it has for the past few days, this is how many units will sell in a month. If, last week, your product was selling 10 units a day, but this week is selling 1 unit a day, Jungle Scout will estimate based on the 1 unit per day. So you’re sales might be 60 units that month, but Jungle Scout will only estimate 30. It’s the best they can do with the limited data Amazon gives out.
Some people will get on there and see their products are 10% more than Jungle Scout’s estimate and will conclude that you need to add 10%. That’s not true. If you look at the regression analysis, there are some points that run above the line, and some below. They’re taking the average of hundreds of thousands of products in a particular category. So, your 1 product may not fall on that line, but if you average the whole category, it will be on that line.
Exactly. People get caught up, too much, in the tools. Keep in mind this is still just an estimate. You’re using this tool to determine a ballpark range on a product’s sales. Jungle Scout may estimate that a product does 900 units a month. In reality, it might be 800 a month, or 1000 a month, but you know it’s in that range. It helps with forecast and it help determine if there is good demand in there.
This is difficult. One tool that helps is Google Trends. This tool allow you to see how a search term has trended over the years and seasons. This is a fairly good gauge of how items will sell on Amazon. As many people know, Greg has done public case study selling bamboo marshmallow sticks called Jungle Sticks. Based on Google Trends, you can see how the sales have changed based on the seasons. January to February are the slowest times. July and August were the highest times. And if you look at the sales, you can see that matches up. So can look on Google Trends to determine if this is a high season or a low.
The reason I like to use the 2000 or 3000 units, is because people like to answer “It depends”. It’s too arbitrary if you’re a beginner. At the end of the day you’re looking for the item with the biggest spread between demand and competition.
If I was a complete beginner looking to sell my first product on Amazon, I wouldn’t worry about that. That’s more higher level strategy. Focus on getting your first product up on Amazon and learn the rest later.
If you’re already have your products on Amazon, and you’re trying to figure out forecasting, that is a good idea. Two good resources are Google Trends, and Keepa. Keepa has a really nice, free database of how sales rank has trended. A lot of products have two years or so of data. You can look at the and see how the sales rank has trended over the months and seasons. You can try to start estimating how well your product is going to sell.
Some products you can tell by common sense. If you’re selling lawn products, then the summer months are going to be the best. Other products, like the marshmallow sticks, it’s not as clear when they’ll sell well and Google Trends can help with that. If Google Trends shows there is twice as much searching for marshmallow sticks in the summer months, then you know to order a little extra inventory.
Reviews are a great indicator of competition. That’s probably the biggest thing to look at. On top of that, the quality of your competitors listings. If they have a poor listing, like one picture, a really crappy title, than that is someone that would be much easier to outrank. As opposed to someone with a really good listing.
The first thing to look for is how many reviews they have. Older, more mature products that have been selling consistently well, are harder to outrank.One way to tell how mature a product is, is how many reviews it has. An older product that sells well, is going to have more reviews. A product with 1000 reviews is going to be much harder to outrank than one with 15. A rule of thumb is to look for something, where 3 or 4 of the top reviews have under 50 reviews. That signifies that it’s probably a young niche.
One thing to understand is how Amazon ranks the listing. They use keyword relevance. The sales velocity probably makes up about 50% of the algorithm. That would be the number of sales per day. Another factor is the conversion rate of your product. Now the sales velocity and the conversion rate depends on a number of factors. Those including the quality of your pictures, the price, the social proof, the average star rating. If you competing against other listings that have a lower rating, then you’re probably have better conversions and more social proof. People would much rather buy a product with a higher average rating than one with more reviews.
Yeah. Visually, if you have a 4.9 average,Amazon displays 5 stars. But a 4.7, they show 4 and a half stars.
Today, we have one of the giants in Amazon, Will Tjernlund. He’s a man that is always ahead of the curve and is always willing to help the rest of us catch up. This isn’t Will’s first time on the show, you can find his last interview in episode 45, and episode 46.
The big trend coming to 2017 will be selling to Amazon directly using Vendor Express, Vendor Seller, AMS, and all these other buzzwords we have to learn now.
Will says that it’s inevitable. Eventually, Amazon does want to source and sell themselves. If you can get ahead of the curve and get on their side early, it will only help you in the future. It’s one of those things that you know you’re going to do it three years from now, and you’re going to ramp up three years from now, why not go ahead and do it today. Will’s of the mindset that if you’re going to have to do it in three years, then do it now and be the expert in three years when everyone has to do it.
Because it’s their game plan. If you read The Everything Store, Jeff Bezos’ biography, he talks about it being the game plan to make it easier for third-party sellers to sell on their marketplace, take care of the annoying aspects like fulfillment, customer service, storage, and marketing.
Then, all they need is us third party sellers, essentially, glorified sourcing agents, to find the best SKUs and see what sells the best. Then they start from the top and decide if this product is easy enough to manufacture that they just want to come out with their own Amazon Basics version of it, or if they want to work with the biggest brands in that category and source their products directly.
So, if you’re not selling directly to Amazon, eventually they are just going to try to squeeze you out.
Third-party sales are becoming a bigger part of Amazon, something like 50% of sales were from third-party sellers this past Christmas season, but from the different advantages Vendor Seller gives you and the heads up if gives you, and also that it works better with Amazon’s business model, it’s for sure, the way of the future.
Right. Just think of a general catalogue, think of kitchen knives. Like a block with 10 knives in it for $29.99. Amazon can come out with that knife block for $29.99 and then there will be, like German manufacturers with brand names.
The customer has to decide if they want to get those cheap Amazon knives, do they want to get the expensive German knives, or something in between. That’s were you, as a third-party seller, has the advantage. You can offer that middle product that better than Amazon’s version, but not as expensive as the German brand. You make sure it’s good quality and all your packaging looks good, and Amazon buys directly from you because you’re filling a gap in the market.
It’s different for every category. For that category, that may be the best route taken. Also, think of it this way, when you jump on Vendor Express and get upgraded to Vendor Central in six months and you’re selling directly to Amazon, then everyone else who is selling those mid-level knives will get blown out of the water because yours are going to be shipped and sold by Amazon.
Two or three years down the line you’re going to have a lot more reviews than everyone because you’re shipped and sold by Amazon. They do different sales and they do different marketing things to push your products. Then, when these other mid-level sellers try to jump on Vendor Central, Amazon doesn’t want to work with them because you’ve got them covered.
Will’s been taking a roundabout way by looking for big brand names that have terrible accounts and I go and consult with those companies. He will offer to run their Amazon accounts. He will then optimize their listings, fix violations, and get everything back in stock. From their, he’s been using these big brand companies as his private label arm. He will suggest new products. If they’re selling a bunch of kitchen accessories, he will suggest another one, which is smart for them since they own their own factories. They then will fly to China to get samples, and then buy every product on the first page of Amazon as comparison.
Right now, Will is looking for niches of these companies that he is already consulting for, let them handle the research and development, and he looks for products that are within their wheelhouse, but not being manufactured yet.
Let’s say they sell 40 different types of ladles, he will suggest a slotted spoon. He’ll look up that product on Jungle Scout, and find their review-to-revenue ratio. Check the revenue to review ratio: Let’s say slotted spoons have 10,000 reviews and $100,000 revenue a month, so $100 revenue to review ratio is good. He takes that information to the company and shows them that there isn’t much competition, it has proven sales, and it’s in the category they are already selling in.
Will uses the review-to-revenue ratio as a way to quickly gauge the lifecycle of a product and it’s maturity. Determine if it’s easy to ship. If every listing on the first page is being sold by Amazon, then you’re probably too late. From there you look at every facet and see if will work, and if you can’t find anything wrong with it, it’s worth a shot.
Will likes to find products that you have to explain what it is. It’s that niched down.
It wouldn’t be unusual within the niche. For example, a little tool that is only used for cutting fly fishing rod lines. Yeah, it’s a weird product. It’s a small piece of metal with a blade. It’s costs $.50 to make and the guy is buying it for $10. Not much by the way of sales, but there’s no competition and it’s $8 profit.
It also has to have a very specific keyword that the customer searches for. A woman recently came up to Will talking about her product that was a wireless bluetooth headset that you can sleep in. When asked how a customer would search for that, she replied with “bluetooth sleeping headphones that are wireless.” The problem with that is it’s too specific, no one will search for that, and you can’t rank with “bluetooth headphones” or with “wireless headphones” as as that’s too general/generic. Since she didn’t have a keyword in mind, she could even do a revenue-to-review ratio because she did know where to start.
Exactly. Will recently started climbing and there is a tool called a grigri. Now, no ones knows what a grigri is, but if you’re in mountain climbing, everyone know what it is. Plus, how easy is it to rank for this very specific word, grigri? No one else is going for it. Anyone who searches for it, knows what it is and wants to buy, and if someone doesn’t know what it is, they wouldn’t need it anyway. Also, if no one know to search for it, then there isn’t any private labelers nipping at my ankles, looking it up on Jungle Scout.
Yep, and it works really well with US brands. Will contacts these climbing brands that have been in the niche for years, and they’re selling these harnesses for $140 when they sell them wholesale for $40 because they have this established brand. So, no one knows who Black Diamond Climbing is, but every mountain climber knows who they are. So when someone searches for them on Amazon, they are astounded that they can get the entire cataloge because no one else carries as much. From Will’s perspective, it’s amazing. There is high demand, he doesn’t have to do any research and development, and he can still make huge margins, and he only has to place an order once a month with a U.S. based distributor.
Many of these distributors have very small minimum-order quantities. One particular company said their average yearly order volume from one of their distributors is $2500.
Will finds them by searching through Amazon. As he’s looking for climbing stuff, he notices that these major brands have three of the five bullet points filled out, their out of stock, or they have one of the five images. All sorts of these red flags exist and they tell you that these Amazon accounts are being managed poorly and they don’t understand the Amazon ecosystem.
It’s easy enough to contact these companies, become a distributor, and send them a message. Tell them who you are and that you were looking to buy one of their products on Amazon and saw that it was a mess. Let them know about the issues you found and that you can help them get their account in order. Ask them to make you the only distributor on Amazon, you won’t screw over the brick-and-mortar store by selling their product too low, you’ll pay up front, and keep their product in stock. All the things you can promise them that their distributors can’t promise them. These other sellers are only using them and not adding any value whereas you can actually add value to their company. You can be this A+ consultant, but you’re paying them instead of them paying you.
Another selling point is that it’s in their best interest to work exclusively with you. You can make sure to keep their listing looking good and their prices at the right level. They wouldn’t let big-box stores carry their products if they didn’t know who was selling it, at what price, or what the packaging looked like.
Imagine you’re a big mountain climbing company that specializes in making the best carabiner. You have been in business since 1975, you have 10 people working in manufacturing, 1 person in accounting, 1 person in HR, and 5 people in sales. Each salesperson has their region in the U.S. and they call up local shops asking if they want to place an order. Their whole job is to get as many accounts under their belt as possible. Then, all of these distributors start selling out the backdoor, and now they have 40 people selling on Amazon. This puts the company in a tough situation. They told these stores that they can only sell in the store. They can’t cut them off because they have been doing business for 40 years and they want as many accounts as possible. However, the Amazon market is hurting their brand.
These old-school companies will gladly sell to you because they still have the mentality of “sell to everyone,” but some will question the sale if you are selling it on Amazon because of this issue.
A lot of these companies don’t know the first thing about Amazon. They will contact seller support and demand they stop sellers from selling their products.
There are some gated brands like Nike or Louis Vuitton, and there is no way you can sell their stuff on Amazon. You can go onto Amazon and gate your brand. If you explain that customers are getting hurt by counterfeits, then they will likely approve it. Make sure to put in the customer first mentality and use the word counterfeit and you’ll have a better chance.
It depends on the company. When Will calls up these companies, he just feels them out on how they want to go about it. They might just want him to be a distributor, that’s fine. Or they might want him to be a distributor only if he can keep the price high, that’s a different conversation. Or they might want him to run their Amazon account, but it’s all going to be under their brand. Each time a company will ask for something different, and usually he will say yes because they are simple things. You just have to feel the company out.
If they’re making $20 million in sales on Amazon, then they’re making enough money to go and hire a whole team. Until they get to that point, it’s better to hire a someone like Will to handle it. It’s not worth it to take six months to hire and train a team when they don’t even know what to train them on.
Exactly. Amazon is like this big scary monster in retail. Instead of them trying to deal with it, Will is like the band-aid on the wound. They are sick of dealing with it, it’s not working with their business model. Just hand over that part of the business to an expert that will take care of everything. All they have to do is deposit a check.
Today we are continuing with our giving-up list. What are you going to give up in 2017? Before you start doing something, you need to stop doing something else. You must free up your time, money, and mental focus. Today we will be discussing sponsored ads, or Amazon ads. Amazon calls them sponsored ads. Broadly speaking, they are one of a few ways you can that drive traffic that is moderately guaranteed to work.
If you have a product with terrible conversion rates and a decent amount of reviews and that’s not shifting over time, and you’re driving traffic with pay-per-click, then you have a problem with your product or listing. But if you have decent sales and the conversion rate isn’t terrible, not below 10%, then what is going to determine your profit will be the balance between the sales price and the cost of goods sold. A big percentage of that is your Amazon ads.
If you increase your price you could negatively affect your sales, however, if you reduce your cost, by reducing money spent on Amazon ads, then you will increase your profit while maintaining your sales. Which is obviously a big win for you.
It is very important to use negative keywords if you’re using auto-campaign. I always suggest using auto-campaign to start with because you can gather a lot of data and tune the algorithm to your listing. But after a while (say 1-2 weeks usually) you shouldn’t be spending a large bid-per-click on that.
Go through your search term report, and anything you’re spending a lot of money on, that doesn’t bring you sales, is something you want to put in negative keywords fairly soon.
How soon? Well, if you are really serious about your products, you have signs of good success on your hands, and deep pockets, you might want to run a loss on that campaign for a rather long time in order to gather data.
If you have 50 clicks on a keyword and no sales, that pretty certain that it’s not working. You’ll want to make sure that’s a negative match keyword. However, to get 50 clicks, you likely spent a lot of money and you might want to have a cutoff at 5, 10, or 20 clicks.
The next thing you want to look at is the keywords that are making sales. These are probably going to be a small percentage of all the keywords you’re using. Over time, you’ll start gathering your long-tail keywords, but starting out, it’ll likely be around 10-15. That all depends on how much you’re willing to spend before you make sales.
Unless you want to be really harsh, after two to three weeks you’ll have your 10-15 keywords that are making you sales. You’ll want to look at those and reduce the bids on those which are costing you too high of advertising cost of sales.
One caveat, don’t allow advertising costs of sales to be your main guiding point. When you launching products, you’ll be raising your prices over time. For example, if you’re spending $10 on advertising on a product you’re selling for $10. That’s 100% ACoS (Advertising Cost of Sales). Over time, you might raise the price to $15 which change that ACoS dramatically. So I wouldn’t recommend using that as a metric. It can be misleading until you land at a stable price.
What I would recommend looking at is the overall spend on advertising divided by the overall sales. A very simple, robust metric that you should monitor weekly at least.
This isn’t something Amazon will give you because they want you to spend money on advertising.
It’s very simple to calculate. Get the same time period for both; you can get your advertising costs from the seller central “Advertising” tab, and you add up how much you spent. Then you go back to your business reports, and add up the sales you made in the same exact period period. Then just take your advertising costs and divide them by your sales.
The main thing is that it’s not about the advertising cost of sales, it about profit. If my profit margin on an item, before advertising, is $3, then I can spend $3 on advertising before it becomes a loss.
Another thing to consider, is that, if you have a decent selling product, you may be willing to run at 100% ACoS. That is, you’re running a loss on those sales from ads. You will still rank organically because of the ads, and you can make your money from organic sales.
I wouldn’t recommend it if you’re not being aggressive and really looking to grow your sales volume. I prefer to keep my ACoS where it is break-even. Let’s say I am selling a widget for $10, and my total cost before Amazon ads, including Amazon fees and fulfillment costs etc, is $7. That means, before ads, my profit margin is $3. I would not want to spend more than $3 per sale averaged over all my ads. That means that all sales gained via Amazon Ads are at breakeven or better, and that all organic sales represent profit.
I know this is complicated and it’s not really meant to be an instruction guide for pay-per-click ads. If it’s the sort of thing you need help with and you want to get in touch with me, I do offer a one-off call with you through Clarity FM. It’s $2/minute so it’s an expensive way of working with me. You’d be better off joining my mentorship program if you want ongoing help. Although I’m pretty strict about who I work with, I do have room for one or two more people. If you’re interested, still apply, and don’t assume I won’t work with you. Just read the guidelines and FAQs first though.
Another, inexpensive, way to work with me, as well of several others, is to become a part of the mastermind group. The London mastermind is in full swing and we’ve had meetups with about 6-10 people, which is perfect. We have dates set from January to June if you’re interested in working with me and up to 10 other people.
One last word on pay-per-click, I am trying out some software called PPC Entourage which they claim will help you manage your pay-per-click very quickly and easily. I haven’t had a chance to really dive into it but I will give it a test run and report back to you. If you want to try it, you can get a copy at http://ppcentourage.com/.
Need more personalised input on issues like this? Live in the UK in or near the South-East? You might want to consider joining us for monthly meetings where we can thrash out all the issues like this one for YOUR business. Check it out here.
Welcome to part 2 of what I’m not going to do in 2017, my stop-doing list or my giving-up list, if you will.
The next thing on my list after giving up products that aren’t profitable or don’t sell, is to think about the marketplaces that you might stop selling in as well. Certain marketplaces will be better suited for certain products. For example, if you wanted to sell barbecue equipment in the UK right now, while it’s in the middle of January and it’s freezing cold, you won’t do well. You might get a few hardened people (like me!) that walk around in shirts while it is 5° C, but not many. Certain products aren’t going to work out in certain marketplaces at certain times.
It may be that you sell a product in one marketplace and it does really well, then you try to sell it in another and it does poorly. You have to make sure to do the right things. You have to dial in your pay-per-click and your keyword research needs to be specific to each marketplace. Don’t be lazy and transfer over what you already have because it can work quite differently. Especially if you’re a UK seller trying to sell in the US marketplace or vice-versa. Don’t assume the keywords are the same, they often aren’t.
Let’s say, even once you’ve done that, and done your pay-per-click properly, and did a proper launch, your product isn’t taking off. I wouldn’t say to kill it, but maybe pause that listing and let your inventory sell off. This isn’t a product you’d want to re-order.
Classic example, I had a generic product in the US marketplace, we’ll call it a blue widget, sold great, but only at a certain price point which wasn’t profitable. If I raised the price, it would drop to page five and sales would disappear. Now a niched-down version of that product, call it a stainless steel blue widget , did much better. I sold 1200 units in six weeks at a 25-30% margin.
With those same products in the UK, it was a different story. The generic blue widget version did a few sales a day at a profit. However, the niched-down version, the one that sold 1200 units in a few weeks in the USA, was very disappointing. It, maybe, sold one or two units a day, even though it was still on page one, albeit at the bottom. For me, that’s not worth the time and effort to keep doing that. I was then able to reallocate my money and focus into something else.
This isn’t so much giving up an Amazon marketplace as such, but rather, giving up a certain product in a certain marketplace. I encourage you to look at your numbers. Make decisions based on the data rather than what you wish was the situation. Just because you invested a lot of time, money, and effort into something, doesn’t mean you have to stick to it. You have to be willing to walk away if the data shows that it’s not working. It’s called a sunk cost and it’s an incredibly important discipline for all business people.
Need more personalised input on issues like this? Live in the UK in or near the South-East? You might want to consider joining us for monthly meetings where we can thrash out all the issues like this one for YOUR business. Check it out here.
I am back after a much needed break. It was nice to get away and spend time with my family and reflect rather than constantly being in action.
I’m going to be doing a mini-series focused on the idea of New Year’s resolutions. I will be changing things up this year and I’m going to resolve to not do things rather than the usual resolutions to do something; I’m going to take away instead of adding.
Resolutions tend to revolve around exercising more, going running, learning to cook, starting a business. Just stop. Where are these resources coming from? Where are you going to get the time? The money? The mental focus? Where is this going to come from to accomplish these new things?
My philosophy is: you have to stop some habits first. There is still 24 hours in a day. Your bank account still holds the same amount of money. Your anxieties, your stress, your reservation don’t magically reset with the new year. Whilst it is important to have a plan, I think it’s more important to make the space for these new plans. You have to make time, money, and above all, mental focus. While, for many people, mental focus seems less important than time or money, it’s not. Trust me. I’ve been at this game for a couple years now and your mental focus is your most important asset. All the money in the world won’t make you successful if you don’t have the mental focus.
The first thing I want to stop doing, is trying to pursue too many business models at once. At the moment, I am solely focusing on private label, and I’m basically going to stay with that. I’m trying to do various different things in my life and it’s time to give them up. The most important thing I have given up, is the last of my piano students. I wasn’t enjoying it and it was adding quite a bit of stress. While it’s important to have off-Amazon income, it was taking too much of my focus.
What can you give up from your daily/weekly schedule that will clear up time and mental focus? It might only be a few hours a week, but those few hours can be spent on better pursuits. For me, it means more time helping you out with the podcast, helping my mentees, or focusing on the mastermind group.
I am giving up products that are a disaster. While that may seems obvious, it’s easy to fall into the sunk cost fallacy
. Launching a new product takes a lot out of you. It’s takes time, energy, and money. Once you put so much into it, you become attached to it and it seems like everything is wasted if you walk away from it. So you keep sinking more and more into trying to force it to work rather than cutting your losses and walking away. You have to take into account what the market will bear. The market being your consumers and competitors and the law of supply and demand.
I tried to make one product work and it nearly put my entire business at risk. It was getting many negative feedbacks (NOT reviews!) which could have led to my account being suspended. That would have put other products at risk that were actually performing well.
I have probably spent several thousand dollars on that product over that course of a year and a half. I put time and effort into it, spent some money and time with a designer, hired a photographer. None of that matters because the market has spoken!
Another product I eliminated sold quite well around Christmas 2015. However, when I ran the numbers it just about broken even. I realized that if it’s not going to make a profit at Christmas, then it’s not worth the effort I’m putting into it.
Consequently, this year I had a niched-down version of that product and it sold even better. I sold around 1095 units during the Christmas season, and I only have a few left. I turned my cash over in a about three months. From the time I put the first deposit down until now. It was about 25% margin which, while not exciting, is definitely worth renewing. None of that would have been possible if I tied all my money up in that other product that sold, but didn’t turn a profit.
By giving something up now, you can re-purpose those resources into something more valuable. My suggestion is to be hard-hearted about your products. If they don’t sell, cause problems for your account, or don’t turn a profit when you run the numbers, cut them loose. If you haven’t ran the numbers to find out whether you have been profitable, January is a great time to do it.
Need more personalised input on issues like this? Live in the UK in or near the South-East? You might want to consider joining us for monthly meetings where we can thrash out all the issues like this one for YOUR business. Check it out here.
I am going to be talking about something that, I think, doesn’t get talked about enough. That is the reality of what you’re dealing with in an Amazon business. I don’t want to be negative, this is a reality check and reality is not a negative thing if you deal with it in the right way. This can lead to a long-term, genuine, sustainable business. The key to that is dealing with reality and not a fantasy of what you would like to have.
The first thing I want to mention is that it’s positive to be realistic. Some Amazon coaching can cast being realistic in a bad light. They are a little to happy, happy for my taste. Not that being positive, confident, and optimistic is a bad thing. Rather, it is important to face reality head on.
Caveats aside, Amazon is treating me well right now. I have several products doing well and I’ve sold almost 800 units in that past few weeks at a decent profit margin. I say that, because what I’m about to tell you may shock some people because they aren’t thinking clearly about what they’re doing. This has become clear to me after working in great detail with mentoring clients. I usually have about 6 – 8 clients and many of them are just starting out. Also, if that interests you, please take a look at my mentoring program. Many of these clients are well-experienced yet have some delusions about how Amazon works.. A couple have doctorates, some have been selling online for years, and some are in financial industries. Even they, don’t really get the nature of Amazon.
Any investment and/or business is to get some kind of return. Whether you invest capital or your time, you are looking for a return on your investment. There is some sort of ratio between the return you expect and the risk you’re prepared to run. If you want low risk, low reward, you might look into government bonds. If you want a greater return, but are willingly to have more risk, the stock market is where you turn. Or you may decided to be a venture capitalist and invest in startups. These are very high risk investments, but if you do it right, it has very high rewards.
Now your Amazon business, a business that primarily depends on Amazon’s sales and marketing channel; how would you rate that in terms of risk/reward? Just because you’re building a business doesn’t mean you shouldn’t think of it as an invest-able asset. Likewise, for any investment you should treat it as a business and look at the underlying assets. If you are wanting to invest it Coca Cola, look at their business. Look at their competition. Consider legislation that is fighting against them, and any potential expansion possibilities.
If a venture capitalist were to look at an Amazon business, one that has a proven market traction, they would see it as a very high risk, but a very high potential reward investment. Having a business with only one sales channel where Amazon is pretty fussy and can shut your account down over small things, is a very high risk thing. The rewards are very high, as I am seeing for myself, and they are real; just like the risks.
This has profound ramifications for how you deal with Amazon. For example: is running your own Amazon business a viable replacement for your full-time job? If you’re tired of your corporate job and want to strike out as an entrepreneur and spend more time with your family, is Amazon a good replacement for a paycheck? Often times it is advertised as such. My answer: NO.
A paycheck, from a full-time job is relatively secure. It’s not completely secure, which is good to understand, since you can lose your job or whatnot. But I would never recommend trading a secure form of income for one as tumultuous and uncertain as Amazon. I don’t think you should ever replace your day job with just Amazon. I still do some music coaching and I make no apologies for have an off-line and off-Amazon income that is solely under my control. It is a good strategy for risk diversification. I also make money from mentoring as well as the podcast. Even though these are very closely linked to Amazon, they are not the same thing. I also have some property. If you want to give up your paycheck for Amazon, make sure you have other sources of income.
At the very least, you will need to have an income source to pay for inventory. Even if it only costs you $1 per widget, you still need to have enough inventory to cover sales, if you are doing private label. An alternative is retail arbitrage, which was exclusively covered in my mastermind group. Also, if you want access to exclusive content like that, join the London Mastermind.
This may sound like doom and gloom, but I don’t think it is. You have to understand that Amazon is an amazing place to grow your capital, but it can’t be a swift replacement of your income. I don’t think Amazon should be the sole replacement of your income.
Once you understand the risk of your Amazon business, rather than burying your head in the sand, you can mitigate risk. You can increase your reward while reducing your risk. With Amazon, what are the biggest risks?
Therefore take care of things that can affect your account. You have to play within the rules. Years ago, some of use sellers pushed the rules quite hard and Amazon gave us a slap on the wrist. Now, they are suspending accounts. For example, if you are using incentivised reviews, take care not to look like you’re buying reviews. Another example is Amazon’s crazy policy around “defect” rate. What Amazon rates as defects are too many returns, refunds, or 1 star feedbacks. Once you’re suspended, it is a long and difficult process to regain access to your account.
I was facing an issue recently in regards to the feedback rating. Long story short, the buyer had left a product review under feedback rather than an actual review. This was an account that didn’t have much in the way of sales and only had 58 reviews. Since there were so few feedback reviews, that was a high rate of 1 star feedbacks and Amazon did not like that and I got a message saying account at risk.
For me, it was simple. The buyer had left a product review as a feedback which goes against Amazon’s policies, so we were able to get it squared away. What that told me was that I need to be more cautious about how I get feedback. Not as a way to increase reward, but as a way to reduce risk. Like an insurance policy, it’s not very sexy, but you will be happy you have it if you ever need it.
What I started doing is having a follow-up sequence in my email asking for feedback. A lot of which will be product review which I will ask them to do a traditional product review. This also encourages feedback from customers, more so than you would get otherwise. Which is a great way to improve your service, but also, you can then ask them to submit that as feedback on Amazon. This will allow you to build up a cushion of positive feedback and help you take care of issue away from Amazon. This way, if you ever have a 1 star feedback, not product review, you will have a large amount of positive feedback to outweigh the negative.
There is a lot here, too much to go into great detail. If you are serious about getting started, I recommend getting into the mastermind and really exploring these opportunities.
Today, I want to talk to you about focus and your use of your time. Everyone in this business seems to go through this same things: overwhelm. I did a whole series on this that you can find here:
However, today I want to talk about the biggest time-suck in your life, which is email. Email is one of those things that seems like a productive use of your time, and if you worked in a corporate environment, or still do, you can relate to this. Email is one of the most common things in everybody’s life. For many people it’s the first thing you do in the morning. You go through your email with your coffee when you wake up. If this is you, STOP.
If the first thing that you do in the morning is work on emails, whose agenda are you following for your time? Not yours. I’d say it’s being set by the people that have emailed you which could be anyone.
If you think that your boss or your clients won’t be understanding, then maybe, you can prioritise them and only them by filtering your inbox. Though, I’m not entirely convinced that you have to respond to them by 9 am. However, if you do, them schedule a time for that rather than react to the email coming in.
Chances are though, you could get away with answering emails twice a day. 11 am is usually early enough for most emails; then again at 4 pm. If this makes you uncomfortable and you’re worried you may miss something important, put it in your signature. Let them know that you don’t read emails often and offer an alternative way of contacting you if it can’t wait. Let them know that they can contact you on your mobile. Now, don’t put your mobile number in the email. The people that will need to contact you via mobile with have it. You don’t want to get a bunch of random calls throughout your day. That would defeat the purpose.
The purpose is to take control of your time. By limiting your time spent on email and limiting who has access to your attention, you are able to plan your day as you see fit rather than being bombarded by random conversations that make it impossible to focus.
Another thing that people do is check Facebook obsessively. Personally, despite have a lot of Facebook friends because of the podcast, I don’t get on Facebook much. Giving credit to Tim Ferriss of the 4-Hour-Workweek, we don’t increase productivity by adding things but rather by removing them.
The number one productivity killer is email. If you are letting it take over your life, stop right there. If you are looking for a specific email, say from a supplier, that will help move your business forward, then order your inbox by the “From” field rather than “Date”. That way you can look for a specific person rather than being saturated with all the emails you have received recently.
Another time-trap with email is when you are trying to compose a message to go out. Obviously, you have to go into an email system to do this and then get sucked into your inbox. What I have begun to do is draft the email outside of the system. I will go into notes or notepad and compose it there.
If you are going to be sending similar emails to different people then make sure you are using templates. This does two things. It creates a standardized process so your are simply doing copy, paste, send, rather than typing it up every time. It also keeps you off the email system. So you pull up the template, then dump it into the email system rather than spending too much time in your email.
Some people use their inbox as a to-do. Their messages are a list of task to be done. If that’s you, don’t feel bad, we’ve all been there. Instead, make a separate list. During your scheduled email time, make a list of what needs to be done. Use the previous day’s emails to create your to-do list for today.
Schedule time to check your email and never make it the first thing you do. Have your own set of priorities that you need to work on that will move your business forward.
I have one space left if you are looking for a mentor and are serious about building a business. Go to http://amazingfba.com/mentoring if you’re interested.
I wasn’t planning on recording any podcast for a few days but I just had an experience as an Amazon buyer that is very important for Amazon sellers to understand.
Psychology is very fascinating to me and it should be to you as well. There are different parts to the Amazon supply chain and psychology plays a major role in many of these. The aspects that I am most fluent in are negotiations and selling/marketing. What makes consumers buy and what makes consumers attracted to your projects?
Recently we talked about message to market match and that if someone is looking to buy a red dog bowl and you are specifically selling a red dog bowl then they are much more likely to buy your product. This is a very powerful concept. This can be the basis for an incredible business. The other thing we talked about was Know, Like, and Trust.
The other day, I was going to print some music from my Brother printer and I was getting an error telling me to change my toner. I didn’t want to deal with this but I knew I had to take care of it and not be lazy. Notice, I’m reacting to a problem. I’m not thinking this through like a business transaction. It’s a consumer purchase, I’m not a print shop, I’m just a musician that occasionally prints some stuff. I didn’t plan it, I didn’t know about it and I didn’t want to do it but it’s a necessity. I was motivated by urgency.
That’s often the case with consumers on Amazon with all types a products. From things as mundane as a printer cartridge or as urgent as forgetting to get a birthday gift for your spouse. If I had more time I would go down to the shop and buy the cartridge or item I needed. However, I just so busy, I need to buy it quickly on Amazon and get on with my day.
In my urgency and need to be done with this quickly, I almost missed the mental processes that took place. So, I get on Amazon, search for the printer cartridge I need and scroll through the listings. I got to about the fourth one down and immediately decided that’s the one I want, almost missing what was going on in my head.
The first listing was £9 and it looked like a compatible item, but I scrolled past it until the fourth or fifth which really caught my attention. It was such an intuitive process that I had to slow it down and ask myself, “why am I about to but this?” First off, I’m not in a price comparing mood. It was way cheaper than I was expecting. I was expecting £40 or £50 for an actual Brother cartridge and the listings were in the £9 to £15 range. My price resistance was way down because I was prepared to pay almost 5 times that amount and move on. Since it was so much cheaper, I wasn’t going to sit there and compare prices.
What set the listings apart, and what won it for me, was the one offered a two-pack. If I were to reverse engineer my buying thought process, the first thing that got me was that it was a two-pack and bundling brings out the value thinking. The price compared to the top listing. I could see that it was a value to get the two-pack over the one pack. The my frustration of running out. Since I didn’t want to be in this situation, I would want to buy the two-pack so I wouldn’t have to go through this. This is true for a lot of stuff. If you are selling anything renewable, bundling them brings value to the buyer because they don’t want to run out in a month or two.
The next thing thing that won me over was that it specifically said it was for a Brother printer. The listing said exactly what I wanting to see rather than almost what I wanted to see. That helped push me over the edge and buy it.
Even as an Amazon seller, I was almost taken unaware with the way selling works. If I didn’t spend my life working on Amazon and teaching others how to sell on Amazon, I would have completely missed how the psychology of this process works. It came down to three things.
The last thing I noticed that influenced my decision want the ratings. The top listing had 39 reviews and 4.5 stars. It was that little bit of imperfection. Whereas the one I bought had 16 reviews and a 5 star average. If I were being objective, I would calculate it. The one listing had many more reviews and likely had just as good overall satisfaction. Some buyers will do this, so it is a very important aspect to be aware of. However, in these urgent situations, consumers tend to be irrational and see 4.5 stars compared to 5.
Today I am bringing you another episode on marketing fundamentals: KLT. Know, Like, Trust. Once again, this isn’t a mindset for you, but that of your consumer which is really important to understand. Stepping back, the most important thing to understand is what marketing means. Marketing isn’t about creating a widget and figuring out how to sell a lot of it. It may look like that, but marketing is really understanding markets. Simply put, supply and demand.
If you start by understanding the markets, and find what people are looking for, then create a product that fulfills that need, that it truly smart marketing. To take a pre-existing product, and then try to sell it is much more primitive and difficult to do.
Last episode, we talked about message to market match. If you are the only person selling red dog bowls, even though a lot of people are selling dog bowls, you win. The caveat to that is credibility. I gave the example of trying to sell the world’s best dog food to cat owners and how you won’t find success with that.
Now, imagine you have that same dog food in a room full of dog owners, except that you are trying to give this amazing dog food away for free. That puts the questions in people’s minds. Why in the world would someone be willing to give away this great product for free? How can this dog food do everything it claims?
There is a simple marketing principle of KLT. Know. Like. Trust. These are the elements we need to have in place before people will buy from you. Amazon puts a spin on this that you should be aware of.
If people have never heard of you then it’s going to be harder to get people to buy from you. This is difficult to do when you only have a listing to do this with. If you are the only person selling a red dog bowl, it’s less important. However, you won’t likely remain the only one. If there is any sort of competition, you will need to work on your brand marketing off Amazon. You will need to have a website. You need a social media presence and you will want to get YouTube videos up.
The next step is getting people to like your product. It is possible to accomplish this entirely on Amazon. You must have great looking pictures and amazing packaging. No longer can you get away with putting dreadful products on Amazon and sell it. You really must make sure that you have a good quality product.
The last element is trust. If you’re going to sell dog food, and make some big claim that it’s going to make your dog live five years longer, then you need to back that up. Be careful on how to try to backup these claims. Amazon supplement sellers were leveraging the trust people had in Dr. Oz after he claimed vitamin c serum was the next big miracle drug. Soon these sellers started getting cease and desist letters from his lawyers. If you’re going to reference an expert, be sure you have their permission to do so. A long-term strategy might involve referencing celebrities and big names in your industry and paying them for permission to use them.
Let’s bring it back to the simplest stick: how to I make my listing more likely to convert? KLT. The know part is a long-term strategy. If you are around for a long time, keep showing up in Amazon results, dominate a niche, then you gradually become known to people and they start searching for your brand name. That is when you know that you’re starting to build a brand. When you’re sticking in people’s minds to the point they search you out specifically.
To get people to like you, you have to have a remarkable product. Since you, likely, aren’t well-known, your images and packaging have to look simply stunning.
Trust is much harder to build, but you are leveraging Amazon’s trust. Which isn’t the same as your consumers trusting you or your brand. If it’s on Amazon, and it has good reviews, you are leveraging the trust generated by other consumers in their reviews, and the general trust people have in the Amazon platform.
This principle of marketing is harder to implement on Amazon, but it is vital to understand it you are wanting to build a business and if you are planning to sell that business. The more of a brand value it has, the more differentiation it has from any rivals, the greater multiples you can get when you go to sell. That could be the difference between selling your business for 2x your profits versus 3x. This is when you get the payoff for all the hard work you put in now.
I want to emphasize that this is not an instant win situation. You will get quick wins with higher conversion, the real payout shows itself long-term with a strong independent business. There are plenty of tricks you can use to circumvent the system, but Amazon is quick to fix that and then you are left with nothing. What I am teaching you today is a tried and true marketing principle that has stood the test of time.
If you are serious about moving your business forward, there are still spaces left for the December meeting of the Amazing FBA mastermind in London. In January I will be expanding to include a high-level mastermind for those that are serious about creating a strong business.