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95 Amazon Reviews Update – DON’T PANIC!

Unless you’ve been living on Mars, you will have gathered by now that Amazon has done a major update, basically banning “Incentivized Reviews”.

From What I’ve seen  on the Facebook groups, as usual,  in response to an Amazon shifting of goalposts, the usual panic and “The sky is falling!” mentality abound.

My advice is: Don’t Panic! There are and will be multiple ways remaining of gathering the necessary reviews.  I’ll be going into detail on that in the next couple of weeks.

More importantly, as I focus on in this episode, is to put reviews into perspective in the first place.

  1. The main purpose of giveaways as part of a launch is, and always was, to get Sales Rank by getting sales! Simple! Reviews were, apart from being a nice bonus, mainly a plausible reason for a drastic price reduction.
  2. We don’t necessarily need hundreds of reviews to compete. THis idea is, according to Kevin Kind, just “Hogwash!” In reality, I think it depends on the competition. In some markets, maybe you do need 100-150 reviews. But if you are that worried, simply avoid markets where you need 100s of reviews just to look plausible on page 1.  Go for lower competition niches, which is generally good advice anyway unless you have pots of cash.
  3. The average review (no. of stars) is way more important, in my and others’ experience, than the number of reviews. I’ve seen my conversions drop from 30% to under 10% in response to an average rating change of just 4.8 stars to 4.2. Quality not quantity!
  4. The quality of the individual reviews that FIRST display on your page is also crucial for better conversion. As Kevin King said,  you need to have a video review or two in there (it’s the only way for most of us to have videos in our listings at all). And customers’ photos are seen as way more reliable than our own, so those are very important too. You only need a few reviews to get selling anyway, so these are the ones to go for first. How? Watch this space and I’ll tell you, but for now, just know there are still multiple options open.
  5. Apart from anything else, organic reviews tend to have a flavour of authenticity (apart from not saying “given in exchange for a discount” which always looked lame anyway). SO have an email follow-up sequence in place to get them -and get selling! I’ve had around 3-5% conversion on this, so not huge. Some people have better, some worse. But it adds up. For example, if you sold say 10 units a day (300 a month) for 3 months and got 5% of those customers to leave reviews, that should give you around 45 genuine reviews. With judicious use of other methods of reviews, that gives a nice solid feel to your listing.
  6. Basics: Differentiate and make sure your product is good! That way, you will end up with high average reviews. Remember – the average review is CRUCIAL. Way more important than raw numbers.
  7. Finally, don’t forget, this update is (for now at least) only for amazon.com. SO if you sell in .co.uk or .de or any other European marketplaces, I would gather reviews while I can in the old-school way to get ahead of the game before the inevitable transfer of this new policy to Europe. Nevertheless, the quality of your first 10 reviews is still way more important than getting a ton of mediocre “in exchange for a discount” reviews. And organic reviews will ALWAYS be best.

#92 What are your Amazon Business Daily Rituals?

When you work on your own, it can be easy to fall into bad habits and drift or even go backwards.

Ideally, one key thing is to be sure you aren’t on your own too much – you need to connect to fellow entrepreneurs. Join a Facebook Group, get a mentor and or join a Mastermind group.

But there are inevitably weeks and days at a time when you’ll need to get and keep yourself going.

For me, that is simply taking a walk first thing in the morning and making phone calls to fellow entrepreneurs (nowadays I also often make a call to my business partner).

What are your rituals? Let me know in the comments below.

This episode is one of the **Summer Series** of bite-sized chunks of Amazon Strategic Goodness!

#89 Why Amazon Got Me Up Early This Morning

Part of the “Summer Episodes”

This quick episode tells you why Amazon got me up early this morning. I’m not going to tell you why here – you’ll have to listen!

This episode is one of the **Summer Series** of bite-sized chunks of Amazon Strategic Goodness!

#87 The Amazon Reviewer’s Perspective with Augustas Kligys – Part 2

Can you tell us about any products that you get asked to review that are over-saturated and there are too many of them out there?

It can depend on the season. For example, during the summer he was getting a lot of review requests for money pouches and passport holders that you would use when you travel. As we get closer to Christmas he will likely start getting a lot of requests for lights and other holiday items. Keep this in mind if you have seasonal items.

For instance, let’s say you are going to sell neck pouches for traveling. You know the summer is going to be the busy time for travel so you want to plan ahead and start getting reviews in spring or even winter. You want to get ahead of the competition.

If you wait until June, the reviews will have received several requests for similar items and may not want any more. Also, reviews may take a couple weeks for the reviewer to get around to it. If you wait until June, it might be in July when the review comes in. At that point, you have already missed a good portion of the traveling season. As a bonus, if you get your reviews early, you are prepared for customers to start looking to buy these items. Click here for more information on the European summit if you are looking for tips on breaking into the European market.

Other items he gets requested a lot include flashlights, bike lights, headphones (bluetooth and wired), LED lamps, garden lamps, solar/ battery powered lamps.

Amazon has banned the use of super URLs, have you had any issue with this?

(A super URL is the address Amazon uses when you search for items and listings get ranked higher based on the keywords people search for. There are tools that will mimic this super URL and makes Amazon think people are finding your product based on keywords that they didn’t search for and thus these products get listed higher.)

Augustas hasn’t seen much of this lately. It used to be that the requests would give instructions directing you to go to amazon.de/keyword and it will be the third item down. This would build your ranking for that keyword but it was very inconvenient for the reviewer and often Augustas would ignore the instructions and simply locate it by the ASIN. He doesn’t get these much anymore and there is even a service that will mimic that URL so you don’t need to go through all that. However, be warned that Amazon is cracking down on the tactic and has even started removing listings.

A tip from Augustas for sellers that do fulfilled by merchant rather than FBA. If you have a good relationship with a reviewer, you can use them to make sure your staff or external warehouse is doing a good job. Augustas had a seller that had his own shop and staff that packaged everything. Augustas would give him feedback on the packaging and ways to improve it or if something was missing. It’s a good way to test for quality assurance. It’s better to get private feedback from a reviewer rather than a very public negative comment from a customer.

How important do you think reviews are in general for listing conversion?

Some people may not believe a review is genuine. As a reviewer, it might be difficult to leave a bad review if you have a good relationship with the seller. So rather than giving a 4-star review, you may give 5 because of the customer service.

As a customer, Augustas will always compare reviews especially if one doesn’t seem genuine. And if he sees a short review from a customer that hasn’t left many other reviews, it will hold more weight because it’s a casual shopper that wanted to leave their experience rather than a top reviewer. He noticed on one particular item that he was giving 2 or three stars and the reason why, and he saw the rest of the reviews were all 5-star reviews from top reviewers because they were getting free stuff.

Do you think, as a shopper, that the quantity of reviews is important for conversion? Or is quality more important?

Augustas will look for 2 or 3 quality reviews. If it’s just 2 or 3 lines he will often skip it and look for someone that wrote a couple paragraphs. If he sees that the person got the product for free in exchange for a review then he will look for another one and compare. But definitely, he wants to see a few quality reviews.

Augustas was looking at another product some time back and noticed they were getting close to 50 reviews a day. However, they are said they got the product for free. This went on for a while, around 50 reviews a day and they had around 1000. About 6 months later he went back looked and found that they almost completely stopped getting reviews. They might have gotten another 50 organic reviews which showed that they might not be getting many sales. They invested a lot to get all those reviews but that didn’t translate into actual sales because they weren’t quality reviews.

As a buyer, how important is the quantity? Are you looking for 100 reviews or are you happy with 5 as long as they are long quality reviews?

A few good reviews are great. If he can get a good idea about the product from a few well-written reviews then it doesn’t matter if there are 50 more reviews.

For more info on the European Private Label Summit, click here where you can learn other tips for succeeding in the European Amazon marketplaces.

What about photos and videos? Do you think they make a big difference to the impact of a review?

Oh yes. Since sellers cannot upload their own videos they really like it when the reviewer does one. Some sellers have approached Augustas about reviewing their products because they saw the videos he did.

Now Augustas will upload about 10 photos and a video for each review he does, and as a buyer, it holds more weight than what the seller uploads because it is an actual customer’s unboxing rather that the photoshopped images the seller is putting out. Depending on the product, in his video, he will show how the product is used. This could be particularly beneficial if it can be complicated. This way buyers can watch how it’s done rather than be dissatisfied with your product.

Does it make a difference to Amazon if you have a lot of top-reviewer reviews?

Probably not. It’s unlikely that Amazon would weigh top reviews more than regular reviewers. In fact, Amazon doesn’t really like these free reviews. He did an interview with a private seller that used to work in Amazon and according to him Amazon is all about the customers, and when reviews are getting free products then they are losing the true connection between the product and the customer. It may be, that in the future, it will be more difficult for this type of reviewer to exist.

Even as sellers, we know that these reviews aren’t completely genuine. It’s different than when as a customer, you buy a product, you really like it, and decide to go and leave a review. It’s likely that Amazon will make it more difficult and in fact, in the US, they are starting to require that sellers can only give a 50% discount for reviews.

Tell us about the private label online summit

Augustas wanted to start his own private label business but it ended up not working out and he got into reviews. He noticed that people often had a lot of questions about Europe and there wasn’t one place you could go for consolidated information about getting reviews in Europe, different languages, taxes, and many other topics. Augustas decided to help out by gathering experts about all these different topics. He has about 20 speakers that will be sharing their knowledge. He has some sellers from the US so you can hear their stories and follow their paths. There is a lawyer from Germany that will discuss some of the laws and regulations you have to follow, especially in Germany where they are a bit stricter.

He decided to go with a virtual format because it’s easier to set it up, it easier for the speakers to be there, and it’s easier for the audience to be able to get all the information.

If you have had any desire to sell in Germany, this is a great resource to learn what you need to know. If you’re a UK based seller, you can still be based out of the UK and sell in Germany. Your orders will be fulfilled by the UK warehouse. If you are in the US, don’t let the language barrier stop you, it’s not that difficult to work around.

Click here for more information on the European Summit

Do you have any websites/events/places that people can learn more from you or contact you?

agustaskligys.com

European Private Label Summit

Any parting words of wisdom?

Treat you reviewers like your customers. Forget you are giving them something for free and treat them with respect. You will get more and better feedback from them.

#86 The Amazon Reviewer’s Perspective with Augustas Kligys – Part 1

Augustas’s Background

Augustas is originally from Lithuania and moved to Germany because that is where his wife is from. He has moved around a lot and is quite the digital nomad.

For access to the European Summit with special bonuses for Amazing FBA listeners, click here.

About a year ago he learned that he could get free stuff from Amazon sellers after looking into doing FBA. He never started his Amazon business, instead he got into doing reviews. He found Facebook groups for German products and decided to give it a shot. He saw one seller looking offering a hands-free bluetooth device for cars and applied for it and got it. After that he started looking for other items that he needed around the house. He began to realize how much value he was giving to the sellers after they began messaging him, thanking him for his reviews and asking him if he wanted to review another product for him. He is a top 400 reviewer in Germany, currently 320 and organizer of the European Private Label Summit!

For access to the summit, with special bonuses for Amazing FBA listeners, click here

Has it changed now that you’re more established?

Since Augustas is a top 400 reviewer, he is able to make his email public and sellers can contact him for reviews. Whereas before he would have to hunt for products to review. When he first got started he didn’t have any reviews in his profile so sellers weren’t as interested in working with him. He would started leaving reviews for any product he bought so that he could start building his profile. He would hunt for any product he could review and as he ranked higher and higher he began receiving emails to review products. Now, on average, he gets about 8 emails a day.

What kind of products turn you off?
What are the best kinds of products that attract you to review them?

Each reviewer has different things they look for. Some will end up selling the item on eBay whereas Augustas will see if he needs it around the house or if he can give them as presents. Though if it’s an expensive item, he might consider reviewing it even though he doesn’t need it with the intention of selling it.

Another thing to consider is the price. Since Augustas puts so much effort into his reviews, he reserves an hour for each one. If it’s a less expensive product, maybe €10, he is more likely to just buy the product outright. If you have a lower priced item, you might get better results from looking in reviewer clubs and Facebook pages rather than the top reviewers. However, some top reviewers will do lower priced items, so it’s always a good idea to check out their reviews to get an idea of how the operate.

What are the big turn-offs in emails?

Augustas prefers emails with direct links to the products. Also, make sure they are short. Sometimes the URL is very long and goes for several lines in the email which could get cut off or mishandled by the software. So use a shortening service if you need to. Add a picture of the product so he doesn’t have to go to the URL to see what it is.

Some sellers write longs emails talking about how they saw he was a top seller and how they saw his reviews and going on and on. Leave that off. For Augustas, receiving as many emails as he does, doesn’t read them. He will quickly scan the email, mainly looking for the link. Don’t waste your time and his by writing long emails. Make it short and sweet and have your listing make the sell to him. This goes back to making sure you have a strong listing.

What is the best email approach that you respond to?

For Augustas, it really comes down to the link. He doesn’t really read the email. Since some of the information he needs get lost in the text, he might miss it.

What he is looking for is:

  1. Title of the products
  2. A shortened link directly to the products
  3. A picture
  4. The discount information and coupon code

If you are contacting a reviewer in another country, add a sentence at the bottom of the email apologizing for you poor language skills and note that you are a native speaker. It might not always be useful, but it is for someone like Augustas. He is not a fluent German speaker who writes reviews for the German market. For him it is easier to communicate in English. So by adding the note in the email, he will know that he can contact you in English instead of both of you struggling in attempting to communicate in German, which neither party is fluent. You are more likely to find people that can speak English rather well.

Are there particular review clubs/services that you like as a reviewer?

When Augustas started out, there weren’t any well-established review clubs in Germany so he joined a Facebook group. Then one-by-one the clubs began popping up and he started joining them. The one he likes is amzreviews.co.uk or amzreviewtrader.com in the US. It’s a global platform and you can choose your market. It has a great search feature, big pictures, and it lists how much it will cost. You can apply to be a reviewer and if the seller approves you, you will get an email. Then you go back to the platform and get the coupon code, order the products, and submit the review link.

The problem with this platform is there are thousands of products, so if you know what you want it’s easy to find. However, there is a good chance that you are missing out on some great products.

What about red flags/warning signs?

The only thing Augustas really warns against is spam email. Sometimes you can get that with some of these review clubs since you are putting your email out there. Just make sure you protect yourself.

On a sidenote, Augustas made sure it was known that you need to treat the reviewers like customers. Listen to their feedback. Augustas mentioned that he was dealing with a seller who sent a product without the necessary adapter to make it work and expect him to solve the issue. On the reverse side, he was reviewing a tote bag that had a hole in it when it arrived and within hours the seller had gotten back to him and shipped a new one. As a seller, do not treat your reviewers like the first example. These people are putting a lot of effort into reviewing your product so please respect their time. Also, you run the risk getting a negative review from them.

How do you deal with Amazon ToS? Have you ever had a review removed because you got it for free?

Augustas has over 200 reviews and has never had an issue with one getting removed or any seller coming to him after the fact about a review. Augustas uses ARAT software to monitor his reviews and those of other top sellers and hasn’t noticed any issues with his reviews.

Sometimes the reviews get stuck in Amazon’s system. In the US and UK, reviews will be published within 6 hours, in Germany it’s a bit longer. So if he notices his reviews haven’t been published he has to contact Amazon or else they will never be published. He also noticed that some of his reviews weren’t listed as verified purchase. He mostly saw this when he ordered from the UK market rather than the German. But after the market was released, it showed up as verified.

Keep that in mind when working with the reviewers. Make sure to approach them respectfully if it appears they haven’t left a review because it would be a glitch in Amazon’s system. SO if they say they left a review but you don’t see it, ask them to contact Amazon directly because they may be a reason the reviews got stuck. For example, Augustas had a review get stuck because two of the pictures were too dark. Another got stuck because he showed the website address in his video.

For access to the European Summit with special bonuses for Amazing FBA listeners, click here.

#79 How to prep for Amazon UK with Greg Jones – Part 1

Greg has sold on Amazon for about 2 ½ years now so he has quite a bit of experience with selling. Greg saw an opportunity while he was selling. He hated doing the prep work. It took a lot of time and kept him away from what actually made him money, sourcing and working with suppliers. So he started FBA Prep UK almost two years ago as a solution for Amazon sellers.

Why bother with prep at all? Why not just send directly from China or supplier to Amazon?

First of all, things happen to products. It’s more common with air, there’s a lot more handling and a lot more opportunity for packaging to be damaged. From the supplier not doing what their supposed to, then sending it to the plane, loading and unloading from the plane, then to the Amazon warehouse.

Sometimes the products show up without packaging. It may have been repackaged by the shipping company because it was in such bad shape. Amazon won’t accept that. They have very high standards for what they expect and if it arrives damaged, they will not accept it. It will either be removed or destroyed.

To avoid all this, you’ll want the products to be inspected before they go to the warehouse. You can do this yourself but you will soon realize how much time and effort it takes to go through everything.

So what prep do you need to do for Amazon?

Obviously, everything will have to have a scan-able barcode, i.e. EAN or UPC work fine. Most products that come from China do so in a poly-bad or a plain white box with no identification on it. Amazon cannot accept that. They are a massive operation that cannot deviate from their processes. Prep companies, being smaller and working with you directly, have the flexibility to ensure the products are packaged correctly before Amazon gets them.

For the items that come in the poly-bag, can you repack those?

These bags are quite brittle and are too thin so they don’t meet Amazon standards. They have to be sealed or they have to have a suffocation warning label is the opening is more than 5 ½ inches. These aren’t Chinese regulations, so unless you specifiably request this, it won’t be done. Sometimes it won’t happen if you do specify it. Keep in mind that your supplier is likely not to comply with your instructions. There is very little chance of getting your money back should they mess up. Typically the only recourse is a discount on your next shipment.

If you hire an inspection company and everything checks out at the factory, what are some other things that can go wrong?

If it’s in a poly-bag, it’s pretty much ok. The problem starts if you have it in a box that gets thrown in to a shipping container. By sea is better because there is less handling. It doesn’t get handled much until it arrives gets put on a pallet.

Greg recommends contacting the supplier and having them ship extra boxes. Many times some of them will get hit by a forklift and the packaging gets messed up which will be rejected by Amazon. The products are fine but because the box is messed up it becomes unsaleable. If you don’t have extra boxes you have to contact the supplier after the fact. The supplier will likely not send you the extras until your next shipment which leaves you with 10-15% of your products sitting around until you’re ready to order again.

Greg’s standards are whether or not he would be happy to receive it. If he order an item off Amazon, would he be happy to receive it in that condition? If not, he would send it in until it gets repacked. This is also to protect you. Amazon shoppers are picky. They will rate a product low based on the packaging. Even if the product is great but the packaging was awful, they might leave a poor review. So it’s worth it to wait to send it in rather than risk a poor review.

So if you bother with prep, why use a Prep company?

It depends on your circumstances. Whether or not you have the space and means of handling them. Make sure to receive the samples at home so you have a change to inspect them before making a large purchase.

Some people don’t realize how large their orders are. So when you try to prep 100 or 150 units, you realize that you don’t want to be doing that for 500 or 1000. 1000 units, you’re probably looking at a pallet. You have to make sure you have a place to put a pallet.

Greg had a customer call him one time about 2000 piece order that was about to dock and he was told that it was going to be two maybe three pallets. He hadn’t realize how large it was going to be and was planning on fitting it in his two-bedroom flat on the 16th floor. This would not have been remotely possible to do on his own. He had to have the help of a prep company that has the means to handle such an order.

Also, this is almost required for some sellers that do it as a side gig and they have full-time jobs and they do their sourcing and dealing with suppliers in the evening. They have no time to be messing with prep work because they have their full-time job. It’s not feasible for them to do it on their own.

What are the main steps you go through to prepare for Amazon?

  • Check cartons
  • Unpack & Check boxes
  • Inspect outer cartons and items themselves
  • FNSKU barcodes
  • Have a report/structured record
  • Inbound Shipping to Amazon

What are the biggest mistakes you’ve found sellers make with freight that you’ve come across?

The story before, about the guy that didn’t know what he was going to do when it arrived. There is a scam going around where the supplier offers you shipping terms. They offer FOB prices to the port in China and CIF prices Felixstowe.

To clarify some terms, FOB is “Freight on Board”. The Chinese will pay the expenses to get your goods from their factory to the port of departure. CIF, Carriage, insurance and freight, is the exact same thing to the UK ports. So they exported the products, put it on a boat, and it will arrive at the docks in Felixstowe or South Hampton. From dockside, you have to organize onward freight and customs clearance. In Greg’s experience he got the same price for FOB in China and the CIF in the UK. It got to the UK and it seemed like it was all a part of the service, but after talking to he Freight Forwarding partner he was told it was a scam.

When it gets to the UK, the handling agents have to pay the shipping charge. It’s not free, it just gets passed on the UK agents who then pass it on to you. You then, also have to pay your normal VAT import duties, and custom clearance duty fee. He has heard figures of £600-1000 just to release the product. If you don’t pay them, you don’t get your product. They then start charging you storage fees and the costs just start rising.

What are the warning signs to look out for?

The supplier will offer you terms that look remarkably good. “If it looks too good to be true, it probably is.” Ask for prices from other freight forwarders. Even if it just to give you an indication of what the cost might be and if the Chinese guys stack up and looks about the same, you should be fine. But if it’s considerably cheaper, then at least you know what prices you can expect.

What are some basic dos and don’ts of working with a prep company?

The biggest thing is trust. At the end of the day, you’re sending a large investment, thousands of pounds worth of product, to someone you don’t know. You don’t know if they exist. As an entity, they could just be a website and an email address and you end up sending your stuff to them. Make sure your happy with them, call them up, look for social proof. Just make sure you’re real.

Keep in mind they are an extension of you, they’re not the importer on record. They don’t have importing responsibilities, they are simply a delivery point for you. You need to tell your supplier that. Greg has gotten invoices coming in with his name on them. Then DHL, or whichever shipping company will send him an invoice for the duties. He will send that on to the customer, but the invoice is in his name. So that makes it difficult for the customer to put it in their accounts.

Even if you’re out of the country, they will be your delivery point. So it will be your name, your company, at their address. So the invoice will go to the prep company who will then forward it to you. If it’s been agreed, they will pay the duties.

Tell them it coming. As ridiculous as it sounds, inform them of it’s arrival. The worst thing for Greg is to receive six pallets of products and have no idea who it belongs to. All they have is his name on the invoice.

#68 Post Brexit thoughts for Amazon Sellers

Brexit has hit UK based entrepreneurs, like everyone else in the UK.

But I think it’s time to start reflecting quietly on what this means for your Amazon business. There will be threats and issues – but also opportunities.

First and foremost: Don’t panic. Don’t despair. Respond but don’t react! Assess everything with a cool business brain. Don’t be a Polyanna; don’t be pessimistic, either. Just be aware of events and stay aware of threats and opportunities. When you spot the latter, act decisively!

Threats & Solutions

The USD/Pound rate

  1. The pound now buys you about 15% less in USD (at time of writing) than before Brexit (about 1.30 USD).
    1. So now is not the time to start selling in pounds (UK) and buying in dollars from China (nor in fact in RMB, the Chinese currency, which has more or less tracked the dollar).
    2. If you are already selling in the USA, and are having funds paid into your UK account in pounds, set up a USD account in the UK Fast (I use Metrobank simply because it was so quick and easy to set up an account; others use HSBC with success) and set up a receiving account with a decent currency exchange (I use Currencies Direct, who are the most cost effective and quickest out of all solutions I’ve tried).
    3. If you already have dollars in reserve, I would be inclined to use them to get more dollars, ie sell in the USA.
    4. Having said all of which, always analyse each individual opportunity (market research) for profitability/cash needed. There will almost certainly be some amazing opportunities in the UK, just be very careful to analyse  the unit costs from China.

The USD/Euro exchange rate

1. For now, if you’re selling in Euros (if you have inventory in the UK or other European marketplaces) and are selling into  Germany, France, Spain, or Italy, again, get yourself a Euro account in the UK and set up Currencies Direct or similar to receive your payouts from Amazon. Euros are for now worth more than before Brexit.

2. However, I would say that medium term (who knows exactly but I guesstimate within 6-18 months or so), the Euro itself will be hit by crises and thus lose against the pound (worth less to you  if reconverted) and against the Dollar, which you need to pay Chinese suppliers (to an extent it has itself been hit by Brexit).

I almost guarantee a crisis, if nothing else, because of the Greek debt situation. I’m no expert but it’s pretty obvious that if they couldn’t pay their debts last two crises,   next time (when they will have expanded), they will simply have to be written off to a degree (in a “haircut”). The markets are going to hate this and they will punish the Euro.  It will probably bounce back, I suspect, but that is way harder to predict.

3. Of course, one way to mitigate Euro currency risk is to sell in wealthy Euro countries on Amazon (eg in Germany) AND buy in Euros from lower-cost countries (eg Estonia). This is something I’ve been exploring in depth but I’ve no practical experience yet.

Opportunities:

Simply put, tough times thin out the herd. We aren’t in a recession yet, but for people converting pounds to USD, their dollar costs just rose 15%. That may drive some people out of the whole business model.

If there is too much competition for your liking on Amazon UK, or from UK sellers on Amazon, this is one way that it will get reduced. It may indeed be the right decision for you and your business to shut up shop. Assess objectively if you can. But equally, if you can ride it out, you will have less competition at the end of the process.

If you sell and buy in dollars, you are effectively outside the UK economy and outside the pound’s relationship to other currencies. Congratulations! You still have to deal with the intense competition on Amazon.com but if you can handle that, there is money to be made.

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#65 Ryan Bredemeyer of Hello Profit – Part 1 of 2

How did you come to be selling on Amazon?

Ryan was a part of ASM and that what got him started. That’s what really piqued his attention. Ryan says that when he finds something he wants to do he really pushes ahead with it until he learns how to conquer it and ASM got him started on that.

He did very well on his first product despite it being a very commonly sold product on Amazon. He cites his creative thinking and hard working attitude to his success. He was able to take this generic item and really dominate the market with it. After his initial success, he was itching to expand with it.

From there he met with a good friend, Nakisha Muhammad and discussed some of the issues he was experiencing. She then became interested in Amazon selling and they went in together on a joint venture. She started seeing those same issues with seller central and limited reporting. She, being a world-class coder, approached Ryan saying she could build a solution. Together they worked on it and came up with their dream ‘seller central’. Thus, Hello Profit, was born.

What were the problems with seller central that made you feel the need to develop software to replace it?

In seller central, you see all these revenue numbers and it is extremely difficult to see what you’re actually profiting, even with Quickbooks or Xero. Once you have more than a couple skus, everything gets clumped together. If you launch a new item, it is difficult to see which one is profitable or which variation is actually profitable and which ones are draining you.

Can you describe the 3-5 commonest problems Amazon sellers have with profit and loss numbers on Amazon?

  1. Not being able to gauge how you are profiting

As mentioned before it is difficult to see where you are profiting. However, that really isn’t Amazon’s issue. It’s not the chore to make a cohesive solution. Their focus is customer service so there no benefit to them to make this. It’s up to us to understand how our business is doing.

2. The Payout Report

If you have ever downloaded this file, it is a mess. You could have 100,000 records of every little thing and way over on one side it the ascent it’s associated with. It is not humanly possible to go through all that manually, and figure out what’s happening.

3. Tracking Promotion Giveaways

It was difficult to tell how many promotions were given away on each day, and how that affects the bottom line. They give you that widget of like the top 5 promotional items, but if you have 10 or 50, that’s pretty much useless, plus it 24 hours behind or more.

How do you deal with Amazon ads costs?

A new feature that is going to be added to Hello Profit is a wizard that is going to help optimize ads. The purpose of HP is to help you see your real profit. Now. Amazon doesn’t make it easy to see this. So, HP pulls in reports through the API, and the main one is available the morning following today’s numbers. So you can’t see what today is doing, because the day isn’t finished, but you can see any day in the past, which is sufficient to tighten up your ad spending.

So, HP pulls that number in, on the merchant dashboard it deducts that range of ad spend from that range of sales. You can view the numbers from the very top, all the way down to every variation of every product and it pulls the information from every campaign and aggregates it for every product variation.

Do you deal with the keyword side of things, or strictly with the profit?

HP will have a campaign reports so you can see how your campaigns are doing. You choose any product you wish as well as any date range, unlike Amazon which only has a few predefined ranges. You can set thresholds for you ad spend, like amber level, you might be getting out of your comfort zone or red which is like you’re bleeding out. So you can see which keywords are being profitable and which ones you might want to cut.

The biggest takeaway from any of this is that there is fat to trim. You have to look at your daily numbers and find where you’re losing profit. You might not think you have a profit issue but you almost certainly do. It is not in Amazon’s interest to be transparent in how much you’re spending in ads. Whatever tool you use, it is vital to review your numbers.

What if you can tighten things up and save 10%? That’s like launching a whole new product. It is much more efficient to find that profit in your numbers rather than going through a product launch.

What are the problems with using a spreadsheet to handle your numbers?

That’s where Ryan and Nikisha started in the beginning. It is possible to get around 80% of Hello Profit’s functionality with a spreadsheet, IF, you are a master at spreadsheets and are willing to hire a team to handle the spreadsheets, but some of it is too advanced to handle with Excel. And you will end up spending your profits on the team.

There is so much data coming from Amazon, and the reports are so bloated, that it will take a team of spreadsheet experts to go through it all. It is much better to have a tool that can automatically handle the data. If you try to do it manually, you’re probably going to miss something and be off the mark at the end of the day anyway.

You might have $10,000 in inventory and it’s irresponsible to go about it blindly. That’s why it’s important to have a tool that handles this nightmare that way you can get back to being a business owner. Launching products, and expanding your business. And it’s important to outsource tasks that take away from that. So unless you’re an expert programmer and expert in accounting, you’ll need to outsource this. You can’t do everything.

What are the biggest mistakes sellers make with Inventory stats?

Ryan brings up a related issue that HP isn’t the solution for yet, though they hope to be, is the issue of inventory. This is one area you need to be proficient in or find a tool to help you with, because running out of inventory is so damaging to promotions, sales velocity, and making the algorithm happy.

If you’re out of inventory for a week or two weeks, how much does that cost? Can you calculate the cost of running out of inventory for two weeks? Also, on the opposite end, having too much inventory and being charged by Amazon for long-term inventory fees.

You have to consider seasonality, lead times of your suppliers, how long it will take by sea or by air and the costs associated, fudge factors if Amazon decides not to put your time out nine days for whatever reason.

You also have to consider the cost of getting ranked again if you run out of inventory, or even considering how things have changed in the time you’ve been out.

Let’s say you run the same promotional strategy that you did 6 months ago, the fields changed, the algorithm has changed. There’s no guarantee that you’re going to get back to where you were. So it could be a long-term loss because you didn’t act accordingly.

You also need to consider when and how much Amazon pays you out, so you can consider how much inventory you can afford. Hello Profit does this to an extent. It will predict how much you have made so far, and using that determine what your likely payout will be. So if you’re halfway though the payout cycle, just double what your prediction is.

What do you personally do in term of projecting cash flow?

The simplest thing Ryan has found is to go for products that have a high ROI. He likes to do 150% or more. This way he will have made enough to pay it off, cover associated costs, and have enough left over to buy another 1.5x inventory. This puts in some room so that he doesn’t have to be as perfect in his math and leaves enough profit to cover unexpected costs like increase ad spend if there is an increase in competition and has to reduce his retail.

One piece of advice to anyone is to make sure your ROI is solid. If all things stay the same and your demand goes up, as we all want, you’ll be able to buy more inventory than you have ever sold, and not have to pay in again. So each product, not only covers itself, but has groth built in. So if you order 1000 unit, next time you can order 1200.

Can you touch on the differences between profit and ROI?

If you Google the FBA revenue calculator, you plug in your competitor’s products, and it calculates the FBA fees you should have as well, and there is a field to plug in you landed costs. Once you hit calculate, it will hopefully show you a green number on the bottom, which is the anticipated payout to you for one sale. You can take that number then and divide it by your costs to get you ROI.

Let’s say your anticipated payout is $10 and your total cost is $5.

(105)100%= 200% ROI

This would be a great product. Because there is a lot of room for growth, you can decrease you retail if you need to, you can do a lot of giveaways, you can do promotions and ads, and you will still be profitable and you can still grow as demand grows.

How do you find products that have a high ROI?

Ryan recommends Jungle Scout, though Hello Profit comes with many of the same features.  Ryan will go into HP and use Product Genie and search for all kinds of things and over time it aggregates all kinds of data, even things he wasn’t searching for because it happened to show up in the results as well.

It all goes into a database associated with his account, and he can search against things he didn’t know he had. He usually looks for a certain BSR. He doesn’t mess with sub-100 anymore, but if you can find one that 200-300 or the 1000 range, those are great products. If he can find one that is not too big or heavy, that he has an idea how much shipping will cost. He will take a look on Alibaba and get a rough cost estimate, then use the calculator to find his ROI. He can find out if this product is worth his time in a couple minutes.

Look at your competitor that you think has a similar business model and look in their storefront and find other product ideas for yourself. Leverage other people’s research. There are a lot of great products out there that might not have major numbers but a good ROI. Even it they only do 10-13 sales a day, launch 10 of them and you’ll make a good profit with that kind of ROI.

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#61 The Canton Fair – Lessons Learned – with Danny McMillan – Part 1 of 2

Danny – remind us of your background in 2 minutes or fewer!

Danny first got his start in the music industry selling vinyls years ago. That where he first got to work with products and marketing and all that. In 2008 he began working online with different startups which led him to Amazon last year. He was able to consolidate the knowledge he gained from those two industries and put them to use with FBA.

What is the Canton Fair and when is it?

The Canton Fair is basically a trade fair with suppliers that takes place in April and October. It takes place over three phases and is the largest fair of its kind. To put it in perspective the rough estimate is that it’s about the size of five NFL stadiums. Each phase has different product verticals and you decide with ones you want to go to depending on your categories. The Canton Fair has roughly 20,000 stands and an average of 200,000 people for each phase.

Tell us more about your recent article about the Canton Fair…

Danny wrote an article for Web Retailer which is the UK bible for online marketplaces. He wanted to do an article about a lesson learned. Danny likes the approach where he goes off and does something then reports back. With this piece, he wanted to create a guide for people that wanted to participate in the fair. It would cut down on the planning needed and allow them to cut through everything by learning from his mistakes.

Why travel all the way to Asia to find products?

Traveling to the Canton Fair gives you a competitive advantage. Many of the products won’t be on Alibaba and many of the suppliers at the fair aren’t in China. This can give you a 6-8 month advantage on your competitors that don’t go. For example, say you go on Alibaba and order spatulas. Your competitors can get the same thing, from the same factory. By attending the fair, you can find a product that isn’t on Alibaba and isn’t made in China; they could be made in Pakistan, or India, or Korea making it difficult for your competitors for follow the supply chain.

There are a massive amounts of people that are getting into selling on Amazon but only a very small portion will actually attend the Canton Fair giving you an advantage over most other sellers.

What is a rough budget needed for attending the fair?

Depending on your lifestyle you could do it for around £1800 – 2200. Danny and his business partner paid about £3500-3800 but they went out every night and ate well.  However, you can do it on a budget. There are indirect flights with Turkish Airlines for about £350. It will take you longer but you can save money. You can find 3 to 4 star hotels for £80-100.

For a two year visa, it’s about £150 and it can take around 5 weeks to get in from of the Chinese consulate. However, Danny uses an agency handle the Visas, Visa For China.  For £45 they can handle the processing and help expedite it. The important thing to remember is that this is an investment in your company. You are paying for a massive competitive advantage at a relatively affordable price.

 How much time does it take out (including travel)?

When Danny and his business partner went, they spent about 11 days there. It’s broken down into three phases with pack down time in between each phase so you need to plan around that.

Danny spent a day there during phase one, then took a train to Hong Kong where they had a meetup. Next day he had a presentation and then a HK TVC show. Then they went back to China to attend phase three for a couple days with a factory visit thrown in.

One of the biggest mistakes Danny made was only taking one pair of trainers. He had cuts all over his feet and ankles and had to cover them with band-aids. So take two or three comfortable pair of trainers and rotate them. Do research on finding good shoes. It’s more than the blisters. It’s you shins, thighs, and the backs of your logs. You should plan on walking 12.5 hours a day so you definitely want to make sure your footwear is up to par. Also consider starting a cardio regiment to get your fitness level up before hand.

There are three zones at the fair. Zones A, B, and C. To get from A to C is about a 20 – 30 minute walk.

How do you prepare for the fair and how long does it take?

In order to prepare for the trip, Danny brought on a VA to go through all the data. He trained this VA to see everything from his eyes with took awhile. Then went through all the data and all the products and picked out the best ones to pass on to Danny.

HOWEVER When they got to the fair, they didn’t use any of the research because they found better products and better quality!

Instead they diversified. Rather than focusing on products for private label, they looked into wholesaling, and direct distribution deals with the factories own products and brands for exclusivity on Amazon.

That’s not to say that you shouldn’t plan at all. For example, let’s say you are in the pets category, which is one of the biggest on Amazon, and you didn’t plan. Then you wouldn’t know that pets products don’t have much of a presence at the fair. It was in phase 2, and was only 25% of one hall. It probably would have taken an hour to walk around. So it probably isn’t worth it to travel over there for maybe an hour’s worth of fair.

How do you avoid getting overwhelmed by the massive amounts of options and product?

It’s about being disciplined. Once Danny and his partner understood and got comfortable with the way things worked, they began simply walking down every aisle. One person looking one way and the other person looking the other way. They would just skim over every item until one jumped out at them. They might go through 10-12 rows and find nothing, then get to the end and spot something really interesting.

What is the difference between sourcing online and live at the fair?

When sourcing online, you look for an item, then find 20-30 suppliers. You will message back and forth trying to get to know them, wheedle them down to 3 or 4 and get samples. Sometimes the samples aren’t good and you move on and end up paying $100-150.

At the fair you get to see them face to face and learn their body language and get to inspect their items right then. Instead of spending weeks trying to find a supplier online, you can do the same thing in minutes at the fair.

What are the key advantages for attending the Canton Fair and HK over online?

Find unique products: The opportunity to see products before anyone else. Many of the products you won’t be able to find on Alibaba because they don’t list on there. Many that are listed haven’t been updated. So you’re getting to see the product before the company has updated it for everyone else.

Connection. By going there and meeting the suppliers, you are showing that you are serious and they will take you seriously. Rather than the cold emails they get that sometimes fall through, you are able to get to know them in person. This may make them more likely to go to you for an exclusive deal.

Speed: The ability to choose products based on quality right away rather than the drawn out process of ordering samples online.

Competitive Advantage: over the 99% of sellers that don’t go to the fair.

Danny’s plan is to attend the fairs twice a year and settle all his supplier needs there. That will free up the rest of his year to actually develop and launch the products as well as be able to do the Amazon seller meetups and his speaking engagements. He plans on releasing 10 products in August, so by handling his suppliers in these two weeks a year he is able to make that goal a reality.

Some of Danny’s other focuses this year.

Monthly meetups surrounding Amazon and FBA in London. Currently they are doing one a month but getting to the point where there will be two. Go to http://www.meetup.com/TheAmazonSeller_UK/ to join the group.

He also does guest speaking gigs. He has one coming up in Hong Kong at Smart China Sourcing Summit. He’s got the sourcing summit he did back in April that he’s been asked to come back again.

He just did one in about how the music industry can utilize Amazon for Merchandise using FBA and Merch by Amazon. See the slides here

 Merch by Amazon is a print on demand service from Amazon (currently on Beta in the USA only). There is a set fee as well as 15% of the sell price. It was developed for content creators.

Danny is currently getting in on the ground floor, trying to figure it out. His goal is to be at 150 shirts by the end of the year. [This is something I’ll definitely be getting Danny back on to talk about specifically – as well as other guests.]

How can people get in touch with you or follow you?

Best place is Danny’s website, www.dannymcmillan.com.

#59 Kevin King Part 3 of 3: Expanding your business and the future of Amazon

Kevin King part 3 of 3 show notes 

What’s working best in your business now?

Kevin encourages people to focus on Amazon. It is the biggest platform for online shopping and if you focus on maximizing on Amazon first, it will pay off. People are already there with their credit cards out wanting to buy. Since Amazon is always changing things, you need to keep tweaking your listings to keep up with the changes. You can’t just post your products, sit back, and watch the money roll in. It doesn’t work like that.

Once you maximize on Amazon, what do you do to expand off Amazon?

Kevin is working on getting into some big-box retailers as well has having his own Shopify site. Kevin has also found success using JoeLister. Using this tool is Amazon items are automatically submitted to eBay. Any sales from eBay are sent to Amazon for shipping and sends the customer the tracking number. It’s all automated. It does a relatively small amount of sales, roughly $1000-2000 a month. However, since it is all automated he doesn’t require any additional time and effort to get those sales. It’s free for the first couple listings and after that it’s only $29 a month.

He also has his own branded site to go along with his Shopify site to add legitimacy to his brand. That way if first-time buyers try to look him up they will see that his are valid products. However, these are just tools that support his Amazon business. Again, the main focus should be Amazon.

Another great tool is Amazon Assistant for Firefox.   This is a plug-in for Firefox that allows you to download your reviews from Amazon as well as the video reviews. He then takes those videos and puts them on his YouTube channel and links those back to the product listing.

Kevin has found that Amazon is a great way to refine and improve your products for another stage. He is looking into getting into big-box stores like Sears or Wal-Mart and has been taking feedback from his Amazon customers to make sure his products are at the highest level. The last thing you would want is to get into a big store like Wal-Mart and have a low quality product. You are going to have a lot of returns and the stores aren’t going to want to carry your products anymore. So use the feedback you get from Amazon and tweak and improve your products.

His long-term goals is to create a strong brand in these big-box stores so that he is covered if something happens with Amazon. If you’re looking to make this a full-time job then at some point you will need to expand beyond Amazon because at anytime Amazon could decide to unlist you. Therefore, in order to survive elsewhere, it is important to build a strong brand. Kevin is looking to take his brand to $10 million a year by the end of 2018 and he is well on his way to reaching that goal.

Kevin explained that he doesn’t want to have a huge business with a lot of employees. He tries to take care of as much as he can by himself because bringing on other people will really eat into his bottom-line. So he isn’t a big fan of outsourcing too early. However, many people don’t have the same background and might need help with shipping and freight and will need to rely on outside help.

Kevin is also looking to expand his business into the UK. Once he gets his VAT number he will be ready to test the waters in Europe. Europeans have very similar cultures to that of the US and are just as willing to spend money. The UK has the highest ratio of online shopping to income in the world. That means that they spend more of their money online than anyone else. Plus there are 60-70 million people buying that have similar cultures and buy similar products, so the UK is a great opportunity for expansion.

A big advantage to selling in the UK is that it will be much easier to expand into other parts of Europe. Customers in, let’s say France or Germany, will have the opportunity to have their products shipped from the UK. When his sales reach a certain point, he will have to open accounts in each of these countries, but until that point he can base it all out of the UK.

A word of warning is that you need to make sure that your products can have a high enough margins because your costs may be higher when selling in other countries due to regulation cost, but more importantly, currency exchange rates. For Kevin, he will be buying everything in USD, but selling them in the UK with GBP. If he has a slow moving product and ships 1000 units, it may take him a year to sell through them. In the meantime the pound gets stronger against the dollar and now he’s losing money. For UK sellers, certain political events are having an effect on pricing, e.g. the Brexit.

What can listeners do if they want to get a hold of you, or find out more about you?

Kevin has considered consulting but doesn’t feel strongly about continuing that. He recently offered a free 15 minutes session and got about 30-40 hits on it from all over the world. Over a few days he worked with each of them, looked over their listings and helped them improve. He quickly realized that you can’t do both. You can’t do consulting as well as selling. For Kevin, consulting isn’t scalable. He can’t make money while sleeping unless he makes a course. At the rate Amazon is changing the course will quickly go out of date so he will focus on that. He is considering starting a mastermind group in the future where people can come in for a four hour session but that would be it.

Other than that you can find him on several of the American Amazon FBA groups on Facebook or just look him up on Facebook, Kevin King in Austin, Texas.

What do you see coming in 2016 and 2017 in the future of Amazon?

  • An increase in the cost of pay-per-clicks as more and more people and brands begin to see the value in it.
  • Amazon will likely clean up the catalogue. This has already begun with limitations on titles and bullet points. Kevin believes it will go even further by cracking down on images. You’ll probably see fewer banner ads and such and a heavier enforcement of guidelines.
  • Part of the problem is private-sellers who are both good and bad. Third-party sellers make up more than half of the sales on Amazon which means more money for Amazon. However, you have a lot of products that are the exact same thing just under different names. To address that you might see higher barrier to entry.
  • One such barrier could be a crackdown on UPCs. Rather than buying official UPCs from GS1, sellers are buying duplicates on eBay. So rather than being another seller on the same listing, they put it under a different UPC and have its own listing. So one thing you might see to combat this is to unlist the product if the UPC doesn’t match the database.
  • Another prediction from Kevin is an increase of big brands. Right now these small private sellers are able to compete because the big brands don’t have much focus on Amazon. They have some low-level employee putting generic information on the online store just so they have a presence. One change could be the brands putting more focus on Amazon and having a stronger presence. This could be an opportunity for some sellers. If things aren’t working under their own brand, they could approach these big companies with their experience and offer to handle their Amazon business.

Do you have any final words for Amazon sellers?

If you are willing to work hard, put in the time and dedication, and have a little money to play with, you will succeed. Just stay positive. take your failures as they come; learn from them and get better.