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133 Will Tjernlund on Selling to Vendor Central – Part 2 of 3

What’s the process when you find an opportunity to work with a brand?

It’s just a matter of contacting the brand when you find an ugly looking Amazon listing. It takes 60 seconds to do a Google search to find their contact information and send off an offer. It doesn’t make sense when people say that they’ve been eyeballing a company for two months and can’t decide whether or not to pull the trigger. Just contact them and move on. If there is something that you need to do that is causing you anxiety, just pull the trigger and do it.

What are Vendor Central and Vendor Express? And how does that tie into the selling to Amazon conversation?

Vendor Express is for everyone, anyone can sign up. Vendor Central is invite only. They are basically the same. Instead of sending inventory to Amazon and waiting for it to sell, Amazon will place purchase orders with you. As soon as they place the order and you ship it to them, it’s already sold. For some companies, especially bigger companies, it works better with their cash flow. This way their inventory only leaves their warehouse after they’ve been paid rather than sending off $40,000 worth of inventory and waiting three months to get the money.

Plus, once you’re in Vendor Central, it says your product is shipped and sold by Amazon. You get invited to Amazon marketing services that allows you to put videos in your listing. It allows you to make your listing an A+ listing where you get images in your description.

How does the cash flow work, exactly?

Some companies have negotiated it down to 30 days, but for the most part Amazon pays you every 60 days. Some of these old-school U.S. vendors still have 60 and 90 day payment terms. So if you can get one of these vendors, you can grow on vendor central forever. You can buy $100,000 worth of product from the distributor, sell it to Amazon for $130,000, then you don’t have to pay the vendor until you get paid from Amazon.

This works well for bigger, established companies that can have unpaid accounts. But if you’re small, not getting paid for 60 days can kill you.

I have heard a lot of people say they are wary of Vendor Express because it has a lot of problems. What are some of the problems areas you have found?

Unlike Seller Central, you can’t edit your images and description whenever you want to. If it’s, something like 90 days old, you have to email them and ask them for permission to edit the listing. It’s annoying that you have to contact them to do stuff, but the plus side is that when you contact them, they are willing to do a lot more. If you’re on Vendor Central, then you’re seen as more of an established company rather than some random seller on Seller Central. They trust you more and that you’re trying to do what’s best for the company rather than trying to find loopholes.

They’ll combine duplicate listings, it’s easier to take down people that are selling bogus stuff. There was one company that had a cheap product for people to retail arbitrage. It had about 30 listings for the same product from all these different sellers. Will went to Amazon, had them combine all of them into one listing. It’s now the #1 listing in its category. It had 3,000+ reviews from all the different listings. Then they went and gated that listing, kicked off all the other sellers, and the company he’s working for is making a lot of money from this product, whereas before, they weren’t making anything.

You can make parent-child a lot easier on Vendor Central, if you have a high ranking product already. Or under one SKU, you can bundle together multiple ASINs. If you’re selling a fishing rod, and the parent-child, comes with different fishing lines. Those are two different ASINs, and they’ll actually combine those in Vendor Central. Whereas on Seller Central, you would be sitting there trying to do giveaways. Or I can take it seriously, wipe out the competition, add all the bestsellers to the number one listing, and really take this thing to the next level.

How do you deal with the cash flow issues? How do you handle it when Amazon orders just one or two units?

The one or two unit orders are just going to happen. Especially, if you have a small catalog with only one or two SKUs. If you have 1000 SKUs, then one or two units of each product isn’t that big of a deal. The main issue is price control because you don’t know what Amazon is going to sell at. With a lot of these brands, they want to know they their products are selling at the right price because they don’t want to screw over their brick-and-mortar stores. Whereas Amazon will sell it at whatever price they want, even below cost.

Another big issue Will had with a client, was that there was a hot seller in that category, and then they have Amazon basics, and they had the third best one, and Amazon quit placing purchase orders. They had someone in Vendor Central, and they had their AmazonBasics, they didn’t need another. Now that one listing, they also had on Seller Central. If Amazon doesn’t order it, then it’s not in stock. If it’s not in stock, then it can’t be prime. Then they can’t run PPC. Since it didn’t sell, Amazon wouldn’t order it. It was a vicious circle. To fix it, they had to kick-start it on Seller Central, generate some sales to remind Amazon that it actually does sell.

What’s the best way to get on Vendor Express?

The best thing is to sign up immediately. Amazon wants a lot of SKUs, they don’t really care about the price. So if you have a catalog of SKUs, like 100, then Amazon will get a lot more excited than if you had just one.

I would imagine have 50 suppliers would be a nightmare, so how do you get to the point of having a lot of SKUs to offer?

Minimum number of suppliers. Good luck having 50 SKUs, from 50 different suppliers. However, if you have one supplier that has 50 SKUs, then they add 50 more. Will’s brother added a supplier with 10,000 SKUs. He put then on Vendor Central and Amazon order one of each. He sold 10,000 units that day.

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#97 Adam Hudson on Selling on Amazon FBA Part 1 of 4

Adam Hudson

Adam Hudson

You are selling on Amazon FBA now – but  what was your start in entrepreneurship?

Adam has been an entrepreneur for over 20 years.  

Adam got started right out of high school. He knew he didn’t want a boss and was captivated by the idea of entrepreneurship. He has had several businesses but not focuses solely on Amazon. He has had online and offline businesses including a flight simulator business, hair salon, and a finance company. He has a very diverse background, to say the least. Selling on Amazon FBA came more recently. 

How did you come to be selling on Amazon FBA?

Adam got into selling on Amazon FBA part-time while he was running an animation business. He sold that business last year and moved away from service businesses in order to start a product business with Amazon. Part of the allure of products is that it gets away from the “selling your time” type job where you make more money the longer you work. With products, once you do the hard work and develop the product, you can sell it all over the world and get paid over and over.

His animation business was growing and financially successful but he had a lot of people and a lot of moving parts. With products, it so leveraged and you can get away from that. 

What made you decide to sell things on Amazon FBA specifically?

As a business guy, Adam found Amazon very impressive. It’s a phenomenal company. In terms of their growth and numbers you know they are doing it right. He really loved that you didn’t have to build a website, that you didn’t have to find the customers because they were already there and that they handle fulfillment and shipping. FBA just changed the rules of product distribution. It was appealing to sell into the biggest markets in the world from wherever you were. To get more of Adam’s thoughts on the Amazon opportunity, CLICK HERE

Do you think it’s too late to get started with selling on Amazon FBA?

It definitely isn’t according to Adam. He did an experiment this year. He started with 6 products that launched in February or March to test what it would be like for a newcomer. They are currently around a million dollar a year products at this point. So it isn’t too late. There is a lot of opportunity to those with the necessary education.

Where do you think the opportunity is? Is it still in .com in the US, or has it shifted to somewhere else? How about selling on Amazon FBA UK?

It’s interesting because right now his European business is doing about 70% of his US business. What’s truly amazing is that his cost-per-customer (CPC) in Europe  is about ⅓  of what it is in the US. Also, Europeans give more feedback than Americans. He has automated emails that go out and he gets about twice as many emails from UK residents than the US.

Are you only in the US and European markets or are you in others?

Adam is in .com and then Spain, Italy, Germany, France, and the UK.

What are the big pros and cons of the US market versus Amazon FBA UK and the other European markets?

The US is always appealing because it’s so big but because it’s so big means there is a lot more competition. Also, America is home many of the Amazon course gurus that have pumped out a lot of courses to those wanting to start an Amazon business. The challenge is that there are a lot of sellers that have been educated on the same strategy at the same time. So America is still a great opportunity if you have the right education and the right lens. You can’t beat the US market because it’s so big and broad.

However, if you live in the UK and feel more comfortable working there, Adam would recommend starting in the UK. It’s a fantastic market, much easier to access, much easier to rank, and a much more appreciative group of consumers. However, if you don’t live in the US or the UK Adam recommends starting in the US because it’s much easier to get started. The regulations for foreign sellers are a lot tougher in the UK and it’s a lot easier to get your account set up in the US.

Another issue is that not everyone is registered for VAT and many people won’t until Amazon requires it because it will add 20% to your prices and put those that register at a disadvantage.

You mentioned before how everyone was educated in the same flawed strategies for selling on Amazon. How were they flawed and what should be done differently?

One of the biggest promoters put out a course telling people to sell items for under $40 with high Best Seller Ranking. When they first launched they recommend being in the top 100 of any category. Once they began selling this idea they realized they needed to expand because they had 5000 people looking to be a top 100 in about 15 categories.

One of their flaws was the emphasis on BSR because it doesn’t really matter. That only measure who sells the most. But in business, it doesn’t matter how much you sell, rather how much margin you make. That’s the difference between turnover and leftover. Adam is looking for higher margin, less contested spaces. People don’t realize how massive Amazon is. Over 2 million sellers with hundreds of millions of products. There are a lot of unsophisticated sellers that have two images with ten reviews and are on page one. There are a lot of small sellers that looked for cheap products with high turnover where anyone can get into it. What Adam looks for is something that is difficult for people to compete and isn’t as obvious.

What are some things you would suggest in order to put a moat around things? If you have $5000, $10,000 and $20,000 to start.

Adam cover a lot of this in his course at reliable.education. His first product was $160 retail. But it was costing him $40 a unit. So there was an $80 margin which gave him options someone selling a $12 product just doesn’t have. He could spend more on advertising. Even if he spent $20 per sale he was still making $60. He was completely out of the top sellers and in his subcategory there was around 45,000 and he was nowhere near the top. He still came in and started making $15,000 a month in sales and $8,000 profit.

Differentiate your product to sell stuff on Amazon

The first thing people need to think about is that whenever you look at a market for anything, you need to think about it from a consumer’s point of view. Why will a consumer notice you? And why would a consumer buy from you and not someone else? It can’t be something they need to read about. Don’t expect them to read your copy and find some feature. Think of Amazon like Tinder. People put in a few details about what they are looking for, then go through the pictures and start dismissing them. You need to have good photographs, but you also need something good in the photograph. So try to get something that is visually different. Some key detail or feature that will grab the buyer’s attention.

For example, if you look up desktop calculators on Amazon, they are all black or grey except for one that is green. Now if you look at car covers, they are all black or grey or blue. But if someone came with a car cover that had a cool saying, or was bright pink, it’s going to stand out. The question is, how can you innovate, visually, at the core design level. It’s not about the best title or description, anyone can do that. The big thing is to think like a customer. Just follow Jeff Bezos advice, “Be in business for the customer.” In the end, the best products are going to win.

To get more advice or free training from Adam, just go to reliable.education

#109 Oriana Marcolongo of Currencies Direct Part 3

Mannan Shah, the senior account manager – 6 years’ experience as Trader/dealer

What 3-5 factors are most important to consider to help predict future relationships between currencies?

The main determination for currency movement is the key interest rate for that particular country. For the US, if the Federal Reserve says there will be a major hike in interest rate by December 2016, it will struggle against other currencies. The expectation of the interest rate is the main factor.

The second thing is economic outlook and future growth expectation in that particular country. The US regularly release a jobs report that will give you insight into where the economy is heading. Manufacturing, retail sales, and inflation can weight a lot on the currency movement.

The third thing is political balance and uncertainty in that particular country. The GBP has dropped 28% since Brexit. Even though the UK is still currently within the EU, the uncertainty of the situation has had an effect. In the next couple days, the US election will play a major role in the deciding the USD movement as well.

What particular 2-3 factors are you looking at to help you predict the Pound to USD relationship over the next two months (Nov/Dec 2016)?

The biggest factor will be the election. Donald Trump is causing major volatility in the stock market. Depending on how the elections turnout 8 November, we could see a lot of volatility. In Mannan’s opinion, if Donald Trump gets elected, we could see the sterling spike to upwards of £1.30 per dollar overnight because Trump himself, is unpredictable.

Another factor that could affect it would be that in December 2016, the Fed plans to raise interest rates. According the Mannan, the election will determine what the Fed will do in December.

The euro and the dollar relationship is quite important for UK sellers since they often sell in Euro to the rest of the Eurozone but buy their products in dollars from Chinese suppliers. What’s your prediction on the future of the Euro vs. the dollar?

The euro and the dollar have been trading in a tight range for about a year and a half. It has been trading between €1.08 and €1.14 range. Going forward, he doesn’t see that changing much. The main expectation is on the US side now; looking into 2017 and seeing what the Fed does. Recently, the euro dipped to €1.08 but has bounced back to €1.11. If the Fed decides to raise rates in 2017, we could see the euro drop to €1.05 and possible €1.03 for every dollar.

The euro will remain much more stable against the dollar than the sterling because of Brexit. Brexit will continue to drag the value down for another year or two if not more, as everyone waits to see what deals the UK makes with other countries once they are out of the EU in 2019 or whenever that happens.

When you have speculation in the news all the time, that reflects in the currency markets with volatility so the rates keep shifting. Is that correct?

Yeah. Generally, the way the currency market moves, it looks for what is coming next rather that what has already happened. What is usually on Bloomberg or other news sources is what has already happened. So the big article will be that the Fed says this, but the market has already moved based on expectation. If the outcome isn’t what the market expected and there is a big shock, then the market moves dramatically. Much like what we had when the Brexit vote came in. Just before the results were announced, it was believed that the people would vote to remain in the EU, but 4 hours later the market dropped 1100 points.

To sum that up, if something is expected, that has already been priced into the market. It’s the unexpected events that causes weird volatility. For example, if the markets expect the UK to leave the EU with almost no rights to access it, such as no passports for the city of London, and so forth, then that will already be priced into the currency exchange. But if May comes out of the meeting and actually, the EU will be generous to Britain, and they have done something special, you could see the pound suddenly get much stronger.

Exactly, as long as the expected happens, you won’t see much movement. For example, in the US election, Clinton is expected to win. If Trump comes out as the winner, that would be a shock to the market and you might see the S&P drop 5-7%.

What can we, as small businesses, do to help mitigate those risks in a practical sort of way over the next couple months? Taking into account the US elections, Federal interest rates, and the UK politics surrounding Brexit.

Take advantage of forward contracts to lock in currents exchange rates and avoid any uncertainty. If your feel that your margins are good enough, you can make sure that, regardless of what happens, you will have that same rate. Then you can work your pricing on the product.

Can you share your best practices?

The first thing you should do is get yourself set up with a free e-tailer collection account. This will help avoid expensive conversion costs.

When you are buying stock from your suppliers, don’t use banks for supplier payments, use Currencies Direct. This will save you money on currency exchange, which lowers your cost and improves your margin. Not only do banks tend to hit you with extra charges, they sometimes take three or four days to send currency whereas currency exchange specialists will generally send it within 24-48 hours.

Take advantage of your account manager. They can help you set up forward contracts if needed, as well as contact you if there is a notable movement in exchange rates and you can set up notifications so that you are always up to date with what’s going on.

#98 Adam Hudson of Reliable Education on Amazon Basics Pt. 2

Get Adam’s Latest thoughts HERE

So, the first thing is to have a great product, what’s the next thing?

The next thing is to have great photography. Not good photos, not the best you can do, but great photography.

The best that you can possibly get. If you look at AirBnB for example, one of the decisions they made early on was to send professional photographers to the homes to take photos. In the beginning, people weren’t booking because the photos weren’t good enough. As soon as they started offering that to the AirBnB hosts, their business took off.

Another flaw in the course gurus is that they sold Amazon short. They said you can come in with $1000 and be making $30,000 a month in six months and that’s just not true. What Adam tells people is that is you can start with $5,000 and in the first year you can rotate that money at 30% margin in a year, that’s a win.

CLICK HERE for more details on Adam’s approach to Amazon on his “Reliable Education” site.

Warren Buffett is the greatest investor in the world and one of the richest men in the world. If you look at his record he is trading at 20% a year. If you’re doing it at 30% then you’re doing better than Warren Buffett. As you get better you’ll be able to rotate that twice in a year then you’re doing 60%.

If you sit down with a compounding calculator and do the math on if you start with $5,000 or $10,000 you can see that you have an amazing vehicle at your disposal.

However, a lot of these “gurus” are telling people they’re failures if you’re not making $20,000 or $30,000 a month in your first year.

You mentioned that you started with 6 products and turned that into a million dollars a year, so I would assume that you put substantial capital into that.

In fact, it’s at $1,000,000 a year “run rate”, ie, it now turns over about $83,000 a month.

Adam figures that he started that business with about $60,000. This was a different company. He has a completely different brand that he’s been running for about three years and he started that one with $20,000. At this point, he hasn’t taken any money from it. Except for a $20,000 loan from Amazon that he accepted just to see what it was about, he has been compounding that initial capital. Right now he has hundreds of thousands of dollars in inventory paid for in distribution center around the world.

The only other person I’ve talked to about compounding your money is Will Tjernlund. If you took that $60,000 and after a year turned it into $80,000 a month that clearly is a tremendous success. How on earth did you manage that?

Adam is experienced at this point, with his numerous business adventures, and experience comes from activity and time and anybody can learn to do that if you stick with it (learn more from Adam here at Reliable Education)

The difference, according to Adam, is that Will farms a product. He’ll throw 20 or 30 products out there and two or three will be a hit. He clears the rest out and starts over.

Adam wanted to build a brand with a small number of products. He currently has six products with an average cost of $8 and retails for $40 with one about $129. Adam’s strategy is to build his brand around a few products and get them to page one and keep them there. Last time he checked, Will had around 1700 SKUs. He didn’t want to think about what that was like, to wake up and have to monitor 1700 SKUs.

How do you find potential products?

To be successful, it’s about paying attention to the details and being objective. If you look at AirBnB and everything that makes it successful, then reverse engineer that and unpack it to find every component, that kinda what you have to do with Amazon. For example, AirBnB hired pro photographers to go every single place listed on the site!

Too many sellers go in with the wrong mentality. They go in think they need to make this product in this price range and that’s all wrong because you’re building a product around your limitations and needs rather than the wants and the desires of the customer.

Adam as two or three products that are on page one for the biggest term they’re on. Now, the top couple spots are taken up by his products and he sells them two in a box while his competitors sell it four or six to a box. His product is $40, the next person is $20, and everyone else is cheaper than that. He is at least twice as much as his competitors and is selling half as many.

For more details, CLICK HERE

This almost mirrors Kevin King in regards to the ideas behind the photos and going against conventional wisdom. How did you find these products in the first place?

Some people will misunderstand what he is saying, and you can find out more in his course at reliable.education. They think they just need to charge more. However, you must have a clear reason that a customer will give you more money. It’s more than headlines or you saying it’s better.

Many of these products are bought as a gift. The person is intending to gift the item to someone. Like with a ring from Tiffany’s, you paying for the box as much as you are the ring. So every aspect needs to be thought about. Don’t get on Fiverr and pay someone $15 for a logo. His philosophy is pay once for the best.

Write amazing briefs for everything from accounts to designers. Articulate exactly what you expect from them. If you hire a designer, the work is only going to be as good as the brief you give them. If you spend a little extra on the packaging, you can really impress your customers and all this goes to building a brand.
Sellers make the wrong assumption that no one has money and are looking for the cheapest product and that’s just incorrect. Now, this doesn’t apply to all products, not all products need to go to the extent, but at least make sure your logo is top notch.

(To get more training from Adam, go to reliable.education )

#94 The Seven Steps of an Amazing Amazon Business Launch

  • Amazon Overall Startup Process – 2.5- 6 months
    • 1. Product selection – 4-12 Weeks / Many Hours a week!
    • 2. Business setup – 2-4 weeks/ A few hours only
    • 3. Sourcing – 3-12 Weeks or More! / Many Hours a week!
    • 4. From Port to Live – 1-3 weeks/ A few hours
    • 5. Product Listing – 1-2 days/ A few hours
    • 6. Product launch – 1-2 weeks/ A few -many hours
    • 7. Stabilise – Ongoing/ 2-3 hours a week, then say a day a week

Which of these areas is your biggest block to progress? Let me know at http://www.amazingfba.com/fb !

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#55 Amazon Private Label Strategies: Kevin King Interview Part 1 of 3

**WARNING: Contains a bit of swearing &  A Lot of Truth!**  

How did you come to be selling on Amazon?

Entrepreneur since age 4 when resold bubble gum to friends! Not had a job as an employee since age 17.  Direct marketing background not SEO. Sells calendars directly to consumers, also wholesale.

Been selling on Amazon since late 1990s – e.g. old CDs, DVDs etc.

Also in calendar business signed up for Amazon Advantage – media only e.g. CDs, DVDs

In Q4 gets purchase orders. Start of season 3-4 a week; end of season say 1000 a week.

That alone pulls in six figures – and everything else on top of Amazon orders is 100% profit.

So Kevin has seen the power of Amazon grow.

2 years ago he looked into the PL model but didn’t jump on it, which he regrets.

Started doing it May last year – doing some Retail Arbitrage – see how shipping and systems work. He realised RA is too much work and not scaleable. Race to the bottom.

Why do PL?

Calendars are seasonal. He had pay-per-view TV revenue stream but the internet had killed that off. Plus Kevin’s Background matched all the skills needed, including:

developing packaging, product development, online marketing -plus sourcing from China and Korea. So he went for it.

Kevin’s philosophy is to prove a product on Amazon then take them into retail on other channels.

Amazon is the bulk of his revenue. This is problematic long term because they could in theory shut your account down or suspend your best selling product at any point.

Recent example: Amazon wrote to Kevin saying they’re suspending his best selling product because of an image violation. They didn’t even tell Kevin what the violation was!

Kevin worked out it could be cartoons or extra elements in the images that he had put in. So he was able to deal with the issue. But it was a reminder that you’re vulnerable to some robots or some employee doing things by the book.

Where would you get started as a newbie with Product Selection?

How much money do you need to start in Amazon PL?

Product selection depends on how much money you have to start with.

Even Scott Voelker and other people say unrealistic things about how much you need to start. Kevin says you need a lot of money. There are stories of someone who started with $300 and made a lot of money. Some of the stories are untrue, some are true. But what’s missing: five days later that person took a loan from the uncle for $10,000 & 10 days later put $20,000 on the credit card. etc.

It paints a false picture. Some people get lucky, but it’s very rare. It takes a lot of work and a lot of money. If you just want a bit of extra holiday money you could do one of two products. But to make a living demands serious money, determination and hard work. Even Kevin didn’t realise how much money it takes even with his product.

Do you believe in staying in one Amazon category and building a brand? Or do you pick each product on its own merits/just follow the numbers?

In Kevin’s case, he started five brands because he came from a product background so he was a aware  one might not work. So he wanted to increase odds of success.

Launching second product won’t double sales unless it’s just an add-on or extremely complementary. So he’s not so worried about potential complementary sales.

However, if you can, do get them. An example is that Kevin started in the makeup category. The problem was  massive competition because it was easy to get into. Now for example he sells makeup tools instead of makeup itself, and many of those are complementary [cross sales potential].

How do you go about picking products? If you had $5000 to start out but potentially use credit card later?

If it’s capital intensive, what’s your approach to finance?

Kevin will make use of available credits. For example at bankrate.com you can get find credit cards listed. Like City and Chase which will give you know percent balance transfer and also wash purchases for about 15 months

If you have good credit and some good history, there’re other places like a deal struck on deck etc. If you have a pro seller account for a year and the metrics look good, Amazon will offer you a decent rate on loans as well.

How do you differentiate your products on the competition?

In some cases, Kevin sources products that are straight up private label from Ali Baba. But he makes a few changes. Every product has retail packaging.

A lot of people will take the brown box that is given by manufacturer, but customers care about the look of packaging.

Kevin doesn’t do an initial order under 1000 units – if he doesn’t have confidence in the product he won’t buy it. He believes he can sell out over time if it was a dud product. It may take a year and tie up cash but you can sell anything on Amazon in time. So the risk is not that great.

Kevin picked his first product in May 2015 it took two months to get products out but that was okay because he used for long photo shoots and made a really beautiful products and packaging.

Three Product Examples.

Example 1: Product for dogs, just wanted to do it, the research tool said no but Kevin wants to do it anyway. It’s doing well because it’s a great positioning and marketing.

He went to www.upwork.com for CAD design in Argentina which he had sketched on paper.

He went to one factory that messed it up; 2nd factory  however made new moulds.

Kevin rarely has a hijacker because they are original. The only time that ever happens to him is when you sell the products for $0.99 to people who have accounts on review groups. So they probably have 10 accounts and they basically use it today bit of retail arbitrage..

Example 2: Kevin spent $30,000 dollars on creating a mould and tooling. But where the best seller is selling a product for $10, Kevin is doing it for $100. BSR doesn’t matter to Kevin for that reason.

The competitor is making only $1 a sale, Kevin is making $20-$30. Because Kevin has differentiation against the high end to compete, BSR does not matter to him, also at the high end of product quality and price there is less competition.

Example 3: Kevin recently launched another product in the dog space. He did use tools like: ASIN Inspector, Jungle Scout, other tools including Merchant Words and UberSuggest. However, all these tools are just guesses. The only numbers you can totally trust are Amazon ads results.

Again, most of the competition were playing at the low end. They were the equivalent of McDonald’s, whereas he wanted to create a product that was equivalent of the best steak house in town/French chef. It’s a smaller market but enough to make it work.  They were using cheap packaging, where is Kevin created a  kind of cigar box type packaging.

Kevin’s product is twice as expensive as the main competition, and has half the number of products e.g. five treats instead of 20. On Friday it was put up with no promotion. He had 3 sales with no reviews. He started PPC (one sale) but it is already selling at a high price point without it.

Differentiation and going for the High End

Kevin makes sure to be different and go for the high end of the market [less crowded/more profit].

Kevin may sometimes go to Alibaba and source an existing product. However he will add pieces to it change things so it is different.That might be thought of as bundling, but Kevin things it’s bigger than that.  It is about changing things so it is different from the existing products.

He does not go into the model of getting it in fast and then get it shipped. He is in for the long haul, not “get rich quick”. People preach that model but Kevin doesn’t buy that.

Differentiation and building a brand is an end to end process. It is no good skimping on the product or if you have issues, even if the packaging is good, it will still go wrong!

Building on email list from your Amazon customers

If you use a manage by stats, they will take your Amazon customer’s postal address is match them up email addresses. This is not perfect, but 30 to 40% should match up. 

Testing your market and their views on products

Kevin recently send out an email to 100 people on his email list. He had 20 responses and he email he sent out 20 units from his competitors, In plain packaging.

He got great feedback on the pros and cons of different models. He also got the sales copy for his bullet and title. And he knew what was a good product.

Those who raved, he went back to and asked them for reviews. He had up a dead listing for the product said that it could have reviews on. So it actually had eight reviews on it before the product went live.

Reviews – numbers and discounts

It is a myth that you need 50 or hundred or 500 reviews. However, now you really need verified reviews. If you sell it out over 50% discount, it won’t be a “verified” review. Customers are also getting savvy.

Kevin now sorts by verified reviews when he is searching on Amazon, and other Amazon customers are probably starting to do the same.

An example of this is that Kevin got a product that got five stars reviews across the board from giveaways. But after it was used for real, the real reviews went down fast.

How to maximize positive reviews – Email followup tip

Kevin has the first email which does not even offer anything, it contains tips and suggestions and checks. For example if it is a potentially dangerous product, it tells the consumer to be careful when opening it.

The timing of this email is crucial. Assuming that most customers use Prime, they will receive the product two days after ordering. So Kevin times this email to arrive one day off to the order. In other words it is after the order but before they receive the actual product.

He puts the question in the PS: “Why did you choose us?” And offers a free gift if they onto this question. Always put something in the PS if you want someone to read it.

This gives an important psychological insight before they have a product in their hands. From this he can change the listing, bullet points etc. and he gets a lot of verified reviews. About 10% respond. It gives great insight into why they hit the buy button. The product itself can negatively or positively influence them.

You start to see patterns here.

Optimising listing

What are your main points? Photos? Title? Bullet points?

The title is really important. The reviews the second most important thing including a video on page 20 possible. Images are also very important. If somebody’s shopping for a well-known brand, the images not so important. But for private label, they are crucial.

Packaging is also very very important. If you have great packaging, it can help you make sales with the photo of the packaging itself.

An example of improving packaging:  Kevin started with a $1 box. The new box cost $2.20 but he was able to raise the price to $40- $50, his customers didn’t feel ripped off, they felt they were getting a good deal. This is what to aim for.

If you look at high-end products like Apple Samsung, the packaging is absolutely critical especially somewhere as competitive as Amazon. It gives the customer confidence even if it’s not fancy, it can be a couple bucks but the spelling must be good and it must look like something they can get in a retail store. In a retail store if you think about the people by based on packaging anyway.

You can use great packaging in your photos to catch the eye and differentiate your product.

Careful who you listen to

The figure of “ 50% of full price figure to get verified reviews” comes from Kevin’s own testing and people who know what they are saying. 

Kevin warns that some people don’t have a clue are giving advice, in Facebook groups and even some podcasters. Some give great value but a lot of the podcasters don’t have a lot of experience selling. It varies a lot. It’s best to trust the guests are doing the numbers.

[Michael does not claim to be an expert in doing big numbers, which is why these days he focuses more on more on getting in guests who are doing big numbers, and focusing on what they have to say]

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right away.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

#46 Will Tjerlund on Suppliers & Amazon Future Part 2 of 2

Episode #46  Will Tjernlund Interview Part 2 of 2

Suppliers

Many people worry about getting ripped off by a Chinese supplier but it doesn’t make business sense – there is a lot more money to be made selling repeat orders!

What are your main tips for beginners on finding suppliers?

You can find them on Alibaba or via a China Sourcing Agent.
On Alibaba, just make sure they’re a gold supplier and so forth.
If you need peace of mind, Asia Inspection will do a factory inspection for $100.

Have them send pictures of the packaging and product while they are being produced.

Any main dos and don’ts for working with suppliers?

Choose a product that is as simple as possible – that way, it’s hard to mess up making it! A hunk of rubber, wood, plastic. So: very few moving parts, no electronics, hard to break, etc.

Keep it simple! That’s how Will is able to travel the world with a laptop!  Don’t follow weird passions like Robotic toys! Many people overcomplicate Amazon. Don’t try to make it as hard as possible; make it as easy as possible!

How do we make it as simple as possible?

Think of everything that can go wrong. If you can’t think of anything, that’s a good product choice!

Will likes to sell (mostly) to Needs not Wants, e.g., Polka Dot underwear vs. a bolt.

It’s not just about price.  If you sell a 10 inch bolt for $8 instead of $12, most people will buy it because all bolts look the same. They’re not saying “Some day I’m going to buy this 10 inch bolt”!

Also if you need to liquidate such a product, there’s a clear market for it, to reduce your risk.

How can you build profit into that for yourself?
Email the supplier and ask how much would it be for 1000 units of this product?

If they say, $1 a unit landed cost, do some quick math[s]: If selling for $8, paying $3.60 or $4.50 in  fees, so still making $3 each. So for every one dollar invested, he’s getting $3 back.

Do you have a minimum or max selling price?

No it’s more like a timespan to profit ratio. Also it’s about time you’re spending for what return. If you’re spending all day on something with a 15% return, that’s not  as good as something with a 33% return where you simply reorder every 3 months.   


So it comes back to cashflow?
If I gave you £10 million now, could you make $2 m back in a year? Yes! 
If I gave you $500K, could you? No. [But if you returned 20% every 2 months on it, you’d end up with $1.492 million – Michael]

So it’s all about getting cash back as fast as possible.

Compounding interest is the 8th wonder of the world, so you need to take advantage of it!

How do you deal with increasing competition in Amazon Private Label?

As competition grows in a niche, Will sends his products directly to Amazon, and Amazon gets nearly 100% of the Buy Box. The margins are lower but Will gets the sale nearly all the time.

Vendor Express (where you can apply) and Vendor Central (invitation only) are the places that Amazon will do that.

If you have some kind of sales history, Just go to Vendor Express, tell Amazon “I want to sell these items directly to you”, you offer a price, they tell you if they accept that or not-they often will. If they accept, they will start placing Purchase Orders and you sell directly to them.

You’ll have to keep some inventory to hand, [and you’ll have to accept getting paid 59 days in arrears!-Michael]. But if it’s a Private Label product, Amazon will outrank all others for the product for that keyword.

Is that open to everyone?

Vendor Express is – just google it and sign up!

Is that what you do when PL is not viable for profit any more?

It’s not normally a price war – it’s usually if someone else optimises their listing etc. (Private Label sellers) and does giveaways. Will has too many SKU’s to watch any individual listing.

How do you manage 2000 listings?

It’s manageable because Will has only about 20 suppliers. He uses software like Stitch Labs and Restock pro, which will alert him when (according to his presets like lead time) a product line needs restocking. When he has built up a big enough order of products from one supplier, he’ll go to the supplier. Will has good knowledge in his mind of  which suppliers have short or long lead times

Are you literally keeping it all in your head Like a chess game?

Often it’s triggered by writing a cheque. Or you can just go down a checklist by supplier. It doesn’t take long.

If you’re ordering 100 SKUs from one supplier, you can just order say 50 units of each and still fill a container.  So Will gets economies of scale but doesn’t risk much in any individual SKU. Also you’re turning that cash around quickly.  “Cashflow is everything”.

Where do you see the relationship between Amazon and Private Label sellers going over the next year or two?

Competition is growing but a lot of the time the competition are doing the same dumb things! So over the next 2 years, there will still be profit to be made.

Within 5-10 years, for anything that is a semi-commodity, China is just going to sell directly to Amazon. Amazon is opening training centres in China. So you’ll need to stay in low-competition niches and fly below the radar.

What sort of commodity products would that be?

Everything in the top 100 BSR that is not a real US brand name. Shopping on needs will be taken over by Amazon: eg silicon spatula – if Amazon can source it and sell it profitably for $2.99 and PL sellers have to sell at $9.99 to break even, Amazon will win the sale every time and therefore build massive numbers of listings. Amazon Basics is only going to get bigger and bigger.

How do you see yourself dealing with this increasing competition?

Will partly depends on the US brands to keep growing their businesses with their own marketing, product research and sourcing.

If you have 4 SKUs total and one gets de-ranked because a bunch of Chinese sellers come in, you’ve lost 25% of revenue.  Will has his risk much more diversified. Also he can see trends coming from a long way off via his many SKUs. He will be able to pivot at this point if needed.

Will follows the investment principles: Diversify and get cashflow.

How can  people who are starting out take advantage of this?

It’s not one size fits all! That’s why so many courses out there don’t make sense.

If you have $500 [£342] to invest, flip stuff from AliExpress, drop ship or get a second job and save more cash. Will suggests find a successful Amazon seller and work for them for $15 an hour and learn how it works.

$5000 [£3422] to invest is on the border. Will says it’s hard to order just $2500 of stuff from China (you’ll need to keep $2500 in cash). Maybe you can find a small retailer or do some Retail Arbitrage or find a wholesaler who will allow you to drop ship their larger products – eg, a fireplace manufacturer (big, bulky stuff). It’s not quite enough to start a business! 

If you can go to AliExpress, lead times are so much quicker [than on Alibaba] -you can have a  product in your hands within 10 days. If you find something profitable on Alibaba, see if you can air freight it and still make a profit.

If you can invest say $3000 [£2,053] to make $700 back after a month or so, that is a very good start [23%return-Michael].

As you order more, the profit margins will only get bigger over time. The rich get richer on Amazon. The more you sell, the better you rank; the more you sell, the more you can buy, so the price you buy at gets lower and your profit margin gets bigger. As you grow, it gets easier.

$10,000 [£6843] to invest is enough to order from China [by sea]- a $5000 order will get you somewhere – you could Private Label or find a Mom and Pop shop that does say $10m a year in revenue or less (spend half of inventory and keep the cash back).

if you have $50K [£3,4216] to invest, you can just call up wholesalers off the bat and say you have £10K to invest.

Once you get bigger and bigger, it becomes ever more important to save money.  For example, if Will can increase profit by 1% by saving money, when turning over $10m a year, that’s $100,000 extra profit.

At a 20% margin, that would be extra sales of $500K a year to make that profit number up. So it’s a lot easier to make more profit by saving money than extra sales.    

Try to just sell as much as possible as the beginning, but at some point you will need to lower your costs. 

How can people find out more about you, Will?

Email: williamtjernlund@gmail.com

Twitter: @wtjern

Website: www.amzhelp.com

Facebook: www.facebook.com/tjernlund

What is your parting advice for someone wanting to get started?

Don’t go after your passion, go where the cash is. Don’t be afraid of making a mistake, more times than not you can liquidate and get your money back. Keep moving forward! 

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on yt sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

#22 Money Clarity for Amazon Business Owners Part 2 of 2

This Episode, #22 ,  is the second  of 2 that deals with the area of money basics and accounting. This episode is about basic principles  – the next will be much more specific to Amazon businesses.

Understanding and dealing with finances can be both intimidating and boring! Not a great combo! Sadly, this is one area of business you really cannot afford total ignorance of. However, once you gain clarity in the basic principles, it is easier to automate, outsource or even eliminate certain processes or records, meaning you get a more stable, safe business while costing yourself less money, less time and less worry.

I hope this episode helps you. However, I am not an accountant, and I really do have to recommend you get advice before you get far into this capital -intensive and complex business. I recommend Penny Lowe, who has had the ASM Amazon training and understands the needs of Amazon business specifically.

SHOW NOTES FOR EPISODE #22 -Money Clarity Part 2 of 

    1. Amazon Business specifics -Cost of Goods Sold (COGS)
      1. Landed costs
        1. unit manufacture
        2. box
        3. freight (see this episode for details)
        4. duty and VAT
        5. customs broker
      2. Other pre-Amazon costs
        1. China inspection
        2. UK/US inspection
        3. Other added items e.g., Batteries
        4. Cost of inserting added items
        5. inserts printing (e.g. “Join ourReview Club”)
        6. insertion of inserts
        7. Amazon inbound shipping
      3. Amazon costs
        1. sales commission (normally 15% of sales price)
        2. pick and pack/order handling ($2 a unit)
        3. weight handling (USA)
    2. Amazon Business specifics – Ad costs!
      1. Monitor daily or at least weekly
      2. Monitor Amazon stats:
        1. ACoS (Advertising Cost of Sales)
          1. by product
          2. by campaign
          3. by keyword
        2. Absolute spend & sales ($ or £)
          1. by campaign
          2. by product
          3. by keyword
      3. Product- based by week
        1. compare your sales for last week with ad spend for last week.
        2. What is your overall ACoS by product?
        3. What is overall ad spend
      4. Then look at the “True” profits
    3. Accounting software
      1. spreadsheet
      2. Xero (online)
        1. advantages
          1. can give pro advisor ie accountant or book-keeper access
          2. can deal with multiple currencies (costs £5/mo more)
          3. can use “A2X” to import amazon costs and income ($19 a month)
        2. disadvantages
          1. not cheap
            1. £20/month standard
            2. £25/month premium (includes multi currency)
            3. BUT there is an offer till 31 Dec. 50% off for six months!
          2. complex
          3. can’t deal with tracking inventory easily
      3. Waveapps (online)
        1. advantages
          1. free!
          2. easy to set up
        2. disadvantages
          1. not designed for inventory based businesses
          2. Not so easy to integrate with Amazon
      4. Quickbooks (According to my accountant)
        1. advantages
          1. very standard
          2. more forgiving than Xero (According to my accountant)
          3. about £10.50 a month for “Essentials” (price held for next 12 months) or £15 including stock control
            1. (I haven’t used this so can’t say how well it works or how easily)
        2. disadvantages
          1. more expensive than Waveapps
          2. I can’t recommend based on experience
    4. Using professionals
      1. financial consultant – get advice before starting to expand on a big scale – Wellington Consulting (Penny Lowe again!)
      2. accountant – Penny Lowe
      3. book-keeper

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on your iDevice.

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.”  Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

1

#21 Money Clarity for Amazon Business Owners – Part 1 of 2

This Episode, #21 ,  is the first of 2 that will deal with the area of money basics and accounting. This episode is about basic principles  – the next will be much more specific to Amazon businesses.

Understanding and dealing with finances can be both intimidating and boring! Not a great combo! Sadly, this is one area of business you really cannot afford total ignorance of. However, once you gain clarity in the basic principles, it is easier to automate, outsource or even eliminate certain processes or records, meaning you get a more stable, safe business while costing yourself less money, less time and less worry.

SHOW NOTES FOR EPISODE #21 -Money Clarity Part 1 of 2

  • Basics of accounting:
  • Books:  Phil Stone: Understanding Small Business Accounting  (Amazon link)
  • Penny Lowe:  (Penny is my accountant and advisor) Understanding your accounts (Amazon link)
    1. Balance sheet
      1. assets
        1. Current assets
          1. cash in hand
          2. bank accounts
          3. INVENTORY!
        2. Fixed assets
      2. liabilities
        1. Equity
        2. Debt
    2. P & L
      1. meaning- change in value of equity
      2. includes value of inventory!
    3. Cashflow
      1. Cashflow vs. profit
  • Types of Accounts:
    1. annual
    2. management
    3. projected
  • Capital requirements
    1. Sources of Capital
    2. Equity
        1. Your money
        2. investors
    3.  Debt
      1. bank
      2. loan from family etc.

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on your iDevice.

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.”  Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.