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Start selling on amazon? – why NOT to start with private label! (Episode #206)

How to start selling on amazon?

Want to start selling on Amazon?  Where to start?

The standard answer for a few years has been – by plunging straight into private label.

As that’s how I started myself – and eventually succeeded, until recently I taught that myself.

I’m no longer convinced

But after 18 months of mentoring people trying to start selling on amazon, and a year of masterminds mostly focussed on those, I’ve seen the struggles up close. I’ve seen inside too many businesses and too many minds. It’s a hard way to start.

All business has challenges starting. That’s a given. You need a tough mindset. I just happen to think that in late 2017, the old model just isn’t cutting for those who are trying to start selling on Amazon now.

Are you still focussed on Private Label?

Yes I am. I believe private label on Amazon is still a big opportunity.  I have many friends making loads more money than me to back that up. It’s not theory.

So I believe that Private label – and even better, developing unique products -works on Amazon.

However, when it comes to how to start selling on Amazon, that’s a different kettle of fish.

I think the irony is that by prematurely plunging into private label, many sellers actually miss out on properly executed private label. How can that be true?

It’s simple really. They  blow their budget on the first budget. They  bust their confidence in the business model, and indeed in themselves. And then they quit too early – and miss out on $10s or even hundreds of thousands of dollars of revenue per month

I’m not talking about what the overall goal is – rather,  it’s about how we GET there!

Start selling on amazon upwards graph on 3 gold bars

Whatever Works is good

Also I’m increasingly happy with whatever WORKS rather than being puritanical about business models.

As I’ve talked over the past two years to many Amazon experts, it’s clear from the sharper people (especially the master himself, Will Tjernlund )  that there are several models that can work. And you don’t have to start with private label.

Focus is good and learning a particular set of skills-  but so is PROGRESSION:

from simple to advanced; from low-risk to higher risk; from quick wins to projects that take months to come to fruition.

There is  a natural progression in terms of risk in the various business models available to ecommerce sellers in general, and ways to start selling on Amazon in particular.

chimp scratching head- Start selling on amazon

Real learning versus the the Art of Aping…

It’s like my old job of piano teaching.

Sure, I can teach little Johnny to seem like an accomplished pianist by teaching him or her three specific pieces and about 10 scales. You get a certificate, you look good, the parents are happy. 


Trouble is, he doesn’t know his way round a piano, he can’t read the music, he can’t play by ear, he doesn’t understand what he’s playing or why…in short, he’s not becoming any kind of real musician. Or any kind of real pianist. 

He’s aping the real thing. But he’s basically little more than a trained monkey.
Put him in any situation that demands real understanding of music, or real control of a piano, and he is finished.

My experience with Amazon sellers who try to learn  how to start selling on Amazon with Private label is remarkably similar.

Indeed, it mirrors my own journey as an Amazon seller myself. And it also mirrors my journey as a piano student/musician to a frighteningly similar degree too.

Vested interests trump real learning

That’s not surprising. There are a lot of vested interests in trying to “pre-package” business building skills and mindset. Same as there were in pretending you can become a pianist, with 20 minutes’ practice a day and three pieces at a time, with some bullshit “grades” scale.

(By the way, I have 7 years’ higher education in classical music, I’m engaged to a pianist – so this is not the ranting of an amateur. On the contrary. It’s the ranting of an ex-professional).

Both things, I’m afraid, while much better than doing nothing in terms of progressing, are basically based on a totally false premise. The false premise being that you can learn the piano by aping much better pianists’ external results – or by aping the actions of advanced Amazon sellers.

Instead, what I’ve seen overwhelmingly is that all of us entrepreneurs need to develop the right mindset and skills. And those come from experience.

Start selling on amazon

Experience is the best teacher (no surprise there)

The truth is that there is no substitute for learning overall business strategies and tactics. Nor is a substitute for learning by experience.

You need to learn to understand what you see in the data; to READ the data. You need to learn the landscape of a marketplace. Everyone has to learn how the mechanics of production, freight and amazon work. You need to get familiar with Amazon’s internal processes.

All this takes time and practice. It doesn’t need however to be a painful, high-risk, uncertain gain experience, like that of the big private label approach.

Practice makes you better. Planning for months, selling nothing, then sending half your life savings across the world suddenly…well, that is NOT such a great way to practise becoming a better online seller. Nor to start selling on Amazon specifically.

15 reasons  to start selling on amazon with something other than private label

BIG RISKS -AT THE TIME OF LOWEST COMPETENCE! 

  1. when you start out, you know little and have little experience. That’s fine. That’s also not the time to take big risks!

    MOQs and freight costs from China –

  2. these nearly always make for a rather unpalatable large upfront order. It’s all relative of course. If you have £10-20K to invest, you might get away with a budget of £2-3K per order plus some giveaway money. Not for any serious product in the USA, though. And for most people, that’s about half their money for Amazon, in my experience.

    Cashflow

  3. It usually takes months to get a decent private label product off the ground. The fastest I’ve personally done it was four months, with a business partner – so we had a combined 4 years of Amazon experience at the time and access to some very experienced people. It’s still challenging enough.
  4. That means no money coming in at all for months.
  5. AND a large lump sum out a few months in.

    TIME TILL YOU START SELLING

  6. It takes months to get a PL product off the ground.
  7. Meanwhile you’re not learning from the marketplace directly – you’re an outsider attempting to learn from the rather minimal data Amazon releases. Data which the rest of the planet is also trying to learn from. This is a huge downside.
  8. You’re not learning to ship in products or deal with Amazon systems. That’s a large learning curve. The sooner you can start the better
  9. You’re not getting access to Amazon business reports with more insider information like conversion percentages
  10. You’re not getting access to the Search Term Reports which I believe are the real value you’ll get from Amazon ads. That’s where you find out keyword-level conversion percentages which is VERY powerful info.
  11. you’re also not earning! See the cashflow issue above.

    The percentage of successes is so low!

  12. This is the real kicker, I’m afraid. I do know several people who started with private labelling and are still at it today and making great money. Maybe 10-15 people. Maybe 20 max.
  13. However, I must have known hundreds people (vaguely known of at any rate) who started around the same time as me, or have drifted into (and out of) the Amazing FBA Facebook group . Most have apparently drifted away without achieving anything. Or worse, they are fantasising about making money for 2 or 3 years – and wasting those years (that was me for years, by the way – which is why I try my best to stop anybody else wasting their life in the same way)
  14. True, most people who start anything don’t follow through. And that is perhaps even more true for online businesses.
  15. Still, it would be nice to see a little more consistency if it really  is going to be advertised as a potential replacement for the day job (by the way, I’m super cautious about what I say to any potential mentoring client or member of a my London masterminds about replacing day jobs. In most cases, I say give it a minimum of a year – and that’s short)

 

Start selling on amazon

Conclusions on Private label as a way to start selling on Amazon

Am I saying private label is dead then? Is it true that nobody should start a private label business on Amazon? Is private label only for the rich or the super-experienced online maverick?

No, no and no.

That is NOT what I’m saying. I want to be super clear. I think the opportunities to make a ton of cash and have the satisfaction of becoming a real entrepreneur (and mastering a tricky but addictive craft) are very real with private label. And even better with original tweaks to a product.

But both models take serious investment of money, time and energy into each product line. 

That is fine, even very important at the right point in your development as an Amazon seller, or as an entrepreneur.

Start selling on amazon - the himalayas

Don’t start with Mount Everest

But you don’t have to START learning to mountain climb by training in a gym for 3 months, studying maps and theory incredibly hard, then attempting the Himalayas as your first set of mountains.

Sure it’s been done – I read about exactly that in the news a while ago.

There’s a clue here. It’s news – because it’s the exception to the rule!

You don’t have to START selling on Amazon by scaling a private label mountain either.

Again, yes there are exceptions. Again, we read about them and the buzz goes around. Because it is NEWS. Because -I’m sad to say, after trying this way for so long with newcomers –  it’s unusual to succeed that way.

There are alternatives

So is this a reason to be depressed and quit?

Maybe – if you are the sort of person who quits easily. In which case, please don’t attempt to become an entrepreneur.

Most people shouldn’t scale the Himalayas and most people probably shouldn’t be entrepreneurs either. And that is absolutely fine. 

Most people don’t have the mindset, stamina or sheer hunger of an entrepreneur, and there is nothing wrong with that. I’m not a rugby player – despite being forced to play it (very badly) at school. Yes, I admire good players – but I don’t feel a failure because it doesn’t suit me (my sports teachers at school had a go of course…)

Most people who are a right for a profession build skill, fitness and experience one hill, one mountain at a time. If they get on well,  they move to the next natural level.

start selling on Amazon - business post-its

Amazon is still business as usual

Business is no different – and Amazon is no different to business. Just because Amazon has built the world’s most amazing traffic and conversion machine shouldn’t blind us to the fact that normal business rules still apply.

The economics and business principles are the usual:

Supply and demand. Risk-reward ratios. Opportunity cost.

The mindset and skills needed are the usual ones too:
The skills of assessing the supply and demand balance in a market; assessing risk vs reward; weighing up opportunity cost (if you go for one opportunity, you tie up the money and time that could go into another);

The mindset of a blend of vision and opportunism; pragmatism with some theory and imagination; discipline with flair and improvisation……and so on…

Go for it – but lower risk and increase learning!

I personally think anyone wants to have a serious crack at building a business and becoming an entrepreneur has never had such opportunity at their feet. And if you want to go for it, I think you should go for it.

There is no reason for anyone to exclude themselves from becoming an entrepreneur.

But wait – isn’t that against everything I’ve been saying in this post?

No again.

I want you to have the maximum chance of success, not to exclude you from the club.

What I am saying is that starting an Amazon business with private label does not maximise your chances of succeeding.

Instead, what you should do is read my next post and consider a much lower-risk way to learn your craft as an Amazon seller!

(Now there’s a cliff-hanger…!)

Thanks for reading.

(By the way – well done for reading to the end. Now there’s a hint that you have some stamina. You’ve passed the first test, oh Jedi. If you’re British, Click here – I think you may have what it takes to join the real business builders.)

(Sorry, I couldn’t resist putting a little teaser at the end too! I’ve got to have fun too, you know…)

Happy hunting.

 

An Amazon mastermind: Why You need one- part 2 (episode 205)

“So are you suggesting I just set my own Amazon mastermind group up?”

Absolutely, you can. I’ve set up my own Amazon mastermind myself, as I mentioned earlier.
Here’s the thing – it’s really hard work. If I were just selling on Amazon, rather than also running a podcast and coaching, I simply wouldn’t do it all again. I’d just plug into an existing group.

But, if you want to create something from scratch, I can give you a ton of reality checks form from personal experience:

Finding new Amazon seller peers for your Amazon mastermind

Firstly, and most importantly, you’ve got to gather together a set of people who are worth being peers with in an Amazon group in the first place.

When I first started out on Amazon, and formed my own peer group of Amazon sellers, I looked through the Facebook group of a course that I was in, and searched for people who lived in or near me (in London). I then tried to check out what they had been posting, to see how active they were, whether they were moving forward with the process, etc.

That took a lot of time and effort. Trouble is, that was just a beginning!

Think about it.

Amazon mastermind hurdle 1- Facebook Monkeys

Facebook Groups aka “The tyre kickers’ Club”

There are a lot of people out on the Facebook groups, even within paid courses, who don’t have enough money, don’t have enough time, and don’t have the right attitude.

They hope they can make some money on Amazon. They’ve often been pitched into the idea that they can easily replace the day job within 3 months (if that’s you.

Sure, it happens- but it’s pretty rare. Sorry to burst your balloon. It’s not a business-like attitude. It’s based on hope. Which, as we all know, is not a strategy…).

What I’ve just described sounds, in fact, like a typical Facebook group of Amazon wannapreneurs.

Which is why my first effort to create a little Amazon mastermind faltered. I had found a bunch of would-be Amazon sellers who lived in London and posted a bit online. Not surprisingly, most of them proved to be very much non-action-takers, and the meetings ended up being people fantasising about starting a business, instead of doing it!

Filtering out the tyre-kickers

What you need is a filtering system. And, guess what, that takes time and effort to build. What I do these days for the masterminds for Amazon sellers that I run (through Amazing FBA) is have an application process for each Amazon mastermind.

I ask every single applicant to fill in a form with questions that I’ve honed over a year of working this process. Then in some cases (all cases, for applicants to my $10K Collective Amazon mastermind ), I have a 20-30 minute interview in which I ask detailed questions.

Why bother? Well, see above. What happens to you if you create (with some effort) a peer group of  under-capitalized, time-poor un-focussed people? Oh yeah…

Finding people to put through your filter

Of course, if you are going to filter people out, you need a way of finding possible people in the first place. If you’re going to manually do that, you need to be going to a lot of physical meet ups and other big groups.

That’s great, but there aren’t a whole lot of good ones in the UK. There’s a fantastic Amazon meetup in London once a month, run by the excellent Andy Geldman of Webretailer. Then there are various other meet up groups, some of which might be good, but many of which, I suspect, are run by wannabes not business owners.

Amazon mastermind meeting venue

Finding an Amazon mastermind meeting venue

Once you’ve gathered your troops, you’ve got to find a suitable venue for your Amazon meet up.

Firstly, it needs to be reasonably accessible for your members. So the geography and transport links matter. Then it needs to be affordable (money is whole other issue we’ll discuss). This all takes quite a bit of time and effort. Even in London, I found it took hours, and we have a ton of business meeting venues in this place.

You need a space that enables you all to think clearly. You could use your own house, of course, if you have the space- and the headspace. But do you really want  the kids -or your husband/wife-interrupting a crucial business point? How conducive to clear thinking is that? It’s cheap but brings its own issues.

You could use a local pub but I’ve found (having been in an Amazon mastermind in the past who met in one) that the noise seriously disrupts your ability to hear crucial bits of information. So I can’t recommend that.

A quiet cafe is better – but although I find that works great for one-to-one meetings, it’s not really the right way for a group of people to work, as they have to basically take over the room to do it. And there’s always a screaming infant somewhere (and why should there not be? it’s a cafe!)

 Venue resources

You need decent wifi of course (although I think it’s less important than most people make it. But you shouldn’t spend your whole time online. You need to think clearly. Online is not the place for that).

I think a whiteboard or an easel with a flipchart is very, very helpful for brainstorming strategies, or capturing key resources (eg websites or online tools) for the group.

Coffee on tap is great -free, good coffee even better! Easily available toilets are a mundane but crucial part of a good venue. And finally, you ideally want somewhere easy for new members to find, not a cramped room hidden upstairs behind a noisy pub!

Why choose an existing Amazon mastermind

Conclusions – a reality-check on creating your own Amazon mastermind

I hope that the above experiences save you wasting months of hard work. Frankly, now I know from experience what I know, if I were just selling on Amazon, rather than also running a podcast and coaching, I simply wouldn’t do it all again. I’d just plug into an existing group. As indeed I did myself about 18 months ago!

The only reason I go to all the trouble it takes to create and run a Amazon mastermind (which I detailed just some of above), is that it’s part of my mission at Amazing FBA.

That mission is to help Amazon sellers and those in the process of establishing their own Amazon businesses to achieve REAL goals. Not just fantasies. And not to take 12 months on something that you could achieve in 3 months (or even 2) with some guidance from experience.

Even then, I couldn’t justify the time it takes away from my Amazon business if I didn’t charge a certain amount for all the efforts. The cost is pretty modest, by the way, if you compare it to the literally £thousands I’ve seen some Amazon trainers charge.

Often they turn out to be not true small group masterminds, but actually groups of 30-60 people. There’s nothing wrong with paying £10s of thousands if you get value in the £100s of thousands, but I’m pretty suspicious of the value most of those so-called “Amazon masterminds” can really deliver.

The “Amazing FBA” Amazon Mastermind

So, I guess that brings me fairly unavoidably to mention the Amazon masterminds that I run for Amazing FBA. Again, I don’t want to be self-serving, but it would be a bit strange for me not to mention them in the context of Amazon masterminds and  masterminds as a whole.

I try to practise what I preach, basically. I said at the start of this article that I believe that a mastermind needs to be interactive; needs to be focussed; and needs to lead its members to action, which leads to their progress.

The secret sauce to a successful Amazon mastermind

From the (sometimes painful) experience of trying many approaches in Amazon masterminds (both as a member and group leader), I’ve found the formula to combine all those good things. Like a lot of good formulas, it’s pretty simple. In fact, that’s partly why it’s so effective.

The secret sauce that I’ve found to combine all those outcomes, is the “Hot Seat”.

I’ve found that to be so effective that we’ve made it the overwhelming focus of each Amazon mastermind meeting.

Amazon mastermind hot seat

The Hot Seat Secret

Here’s how it works:

Each participant gets minimum 30 minutes to focus on their own business. Specifically, to focus on ONE thing. Even more exactly, the ONE roadblock that when they break through it, it will really move the needle. Will really move their business on -substantially. 

So it’s very focussed. That’s one secret. It’s also interactive. Because once the member in the hot seat has outlined their issue, all other members are there to bring their experience and thoughts to the issue.

Of course, it’s very helpful if the other members who don’t have anything valuable to bring can keep schtum. That way,  others who do bring value can help.

But it is excellent business training to encounter business problems and brainstorm solutions. That is the real training we all need as business builders. Not an obsession with the latest trick or grey hat technique (useful as they are, of course). But business thinking and mindset.

There is a huge bonus of having a genuine peer group in an Amazon mastermind. A lot of the people in the group share the same set of problems. So by listening to solutions to another person’s problem, you’re hearing the solutions to many problems of your own.

Win-win. 

Implementation is the ultimate test of any Amazon mastermind

SO, the group members can almost not fail to move their business forward. Provided the participants go away and implement this stuff (another crucial word), they Job done! Isn’t it?

Well, almost. The implementation piece has proved to be a real challenge for many Amazon mastermind members. Which is why I’ve recently added in a simple extra process to make sure people are held to account. In other words, to use peer pressure in a very positive way. To get you to do what you said you were going to do!

KLT

Ensuring members do what they say they will!

We’ve simply added in a quick video call check in once a month. The aim? Simple. To make sure people are implementing what they’ve said they would.

It’s early days, but the results already look promising.

It’s fairly obvious where I’m going with this, so I’ll just come out and say it:

-if you’re convinced of the value of being in an Amazon mastermind

-if you’re not wanting to go through the pain, time & effort of creating your own Amazon mastermind,

-AND if you live near London (or can get there)

then obviously I think you should consider the Amazing FBA masterminds!

I’m not going to make a huge pitch for them here; if you want to check them out, there are now two levels:

The Zero to Hero Mastermind, which is geared to those who have not yet launched, and to those doing just a few thousand $ a month (or equivalent) on Amazon (we may form a separate mastermind for the latter as it grows)

The $10K Collective, which is for those doing at least $10K a month on Amazon.

Conclusions about any Amazon mastermind – done properly

The thing is this. Now, you have a process that means you focus on the biggest win in your business right now. You can get the collective mind to break through blocks and find the actions to get that win. You  have a means to hold you to do that action. 

Now you have a really powerful driver to move you forward.

Like I said,  that may be why nearly all the successful Amazon entrepreneurs I know are part of one.

Wherever you live in the world, I’d encourage you to look for a face-to-face mastermind you can regularly commit to.

The word commit is a key one here too. If you put little in, you get little out.Your peer group will massively impact your wealth and well-being. So Choose wisely who you associate with.  

But once you’ve chosen well, commit to your Amazon mastermind. The more you sweat to rearrange your schedule to get to meetings; spend money on trains or planes to get there; in short, the more you put in- the more you get out.


I can give you a promise from my experiences as an Amazon seller and from running groups. The rewards of a really quality Amazon mastermind are truly many times greater than the effort. And the ROI (for the right group) many times greater than the cost. 

To find out more about the regular monthly masterminds for Amazon sellers led by Michael, click here

Amazon masterminds: Why You need one (episode 204)

Amazon masterminds

Why Amazon Masterminds?

Want to double your revenue? Find the latest tactics and stay ahead of the curve?

These sound like a pitch for the latest high-tech software, right?

Well you’d be wrong. I’m talking about good old-fashioned face-to-face, interactive Amazon masterminds here.

Through Amazon masterminds, I’ve personally found an amazing Amazon business partner, learnt many tactics that have made me $1000s extra, and been offered deals worth $100K+ a month of revenue.

But let me you how I got here…

My background with Amazon masterminds

First, I should give some background and confess. I’ve been a member of a private Amazon mastermind of my peers (Amazon sellers) for about 18 months now.

I also set up and ran (free) peer-group Amazon mastermind meetings myself about 2 ½  years ago, which ran for a while. That sputtered out because the people weren’t really committed. And I was wanting to focus on selling on Amazon, not running a mastermind for uncommitted people.

I took the learnings from both Amazon masterminds and created something better.

 So I’ve been running a successful (modestly) paid Amazon mastermind meetings for about a year via Amazing FBA (I recently set up a new  Amazon mastermind for new sellers, i.e., those who haven’t launched yet)

The reality of Amazon masterminds

First thing: yes, of course I’m going to mention my own masterminds, at least in passing . I run two Amazon masterminds each month. I’m writing an article about how important masterminds/masterminds are. It’s bound to come up! But I’m here to share my experiences of masterminds, not to pitch my own (if you do want to read the pitch for my masterminds/masterminds, of course, click here!)

Second thing: there’s a reason why I run an Amazon  mastermind each month. Because I believe it’s one of the most powerful ways I can truly help Amazon entrepreneurs.

Third thing: from everything I can observe of truly successful Amazon entrepreneurs – it’s (still) true that every one of them is a member of some kind of Amazon mastermind or mastermind!

I guess as a person who needs interaction and inspiration, I’m biased. But…

Coincidence? I don’t think so. 

My own wins from Amazon masterminds

I personally have got so many results directly from being in masterminds. I’ve found an amazing Amazon  business partner; sold thousands from secret techniques shared within the closed walls of a mastermind; and been invited into strategic partnerships to do deals involving $100s of thousands in revenue.

These results are not chance. But they equally would never have come about simply from networking on the superficial level(valuable as that is) at Amazon conferences.

Amazon Masterminds meeting

“What do you mean by ‘Amazon masterminds’?”

First, let’s start of by defining our terms.

‘Amazon’ as a business opportunity can be exploited by a huge variety of business models.  There could be around 14 business models, according to some authorities. That sounds about right. Certainly common ones include Retail Arbitrage; Online Arbitrage; Drop-Shipping; Wholesaling.

When I say “Amazon”, my particular focus here (and that of the podcast/blog and coaching programmes) is selling Private Label products via Amazon FBA.

Secondly, what are we talking about with a ‘mastermind’?

When so-called “Amazon masterminds” are not really a masterminds

I think it’s almost easier to say what masterminds are not. They are NOT, as far as I’m concerned, a mass meeting of 100 people where someone from the front discusses or teaches a lesson.

Don’t get me wrong. Big meetings can be very valuable -and by the way, Andy Geldman of Webretailer runs an excellent London Amazon meet up most months, where they have really helpful speakers. I’ve spoken there recently and was very impressed with the setup. It’s a great place to learn new strategies and tactics, and to network. But to my mind, it’s not a mastermind (and nor does Andy claim it is, just to be clear!)

Andy charges about a fiver to enter his meetings and, while I think that is super-cheap (and he could arguably charge up to £50 or so), he’s not charging hundreds, which I think is appropriate.

I think there are various aspects of Amazon masterminds that make them unique.

Firstly, to be really powerful, they need to be very interactive. So all participants have to think hard and engage their brains in a very active way. It develops their business thinking on a deeper level.

Secondly, they need to be focussed. Generalised excitement has its place, but I would argue that place is at a larger conference-type meeting.

Thirdly, they need to move the participants on in their business. How many times have you been to a large group meeting which inspired you to feel excited about business… and when you got home you did…er…absolutely nothing except talk about how exciting it was (it’s embarrassing but we may as well  be honest with each other – I did that for decades).

I don’t believe that really serves anyone long-term. I think the success of a Amazon masterminds is measured in how much action their participants produce and therefore how much progress they make towards their goals.

Which brings me to another question I’ve been asked a few times recently:

“What extra value does this offer compared to online research? Why bother being in Amazon masterminds?”

I love this question because it so clearly illustrates a number of things. This is a really important question.   

My simple answers: Time; Certainty; Motivation; Action; Progress

Amazon masterminds save time

Amazon masterminds value your TIME

Of course, since the invention of Google (and in more recent years, Facebook groups), in theory you can piece together all the knowledge you need to do anything.
The problem is- reinventing the wheel takes a lot of time.


Let’s say you are researching Product Research methods. Let’s say you manage to gather all the information you would get in a 30-minute hot seat at one Amazon  mastermind meeting by taking a week of Google research.

Great. So you saved yourself £49 (or £97 or whatever the mastermind costs). Let’s say you multiply that over 4 different areas of business.
You just spent 4 weeks doing something that could have taken you 4 days (in fact, more like 20 hours – including travel time!).


If your future Amazon business is going to generate say $10,000 a month in profit in a few months, you’ve just incurred an opportunity cost of $10,000.
For the sake of saving £49 (or £97 etc.) 

“Penny wise, pound foolish” is I believe what they used to call that!

If you don’t value your time, you won’t make serious money. Period. 

Amazon masterminds give you certainty

Amazon masterminds give CERTAINTY

Here’s a simple one: how do you know, out of thousands of Facebook posts, which ones are from a solid source, and which aren’t? The answer is that it’s hard to know! And doing much research on that would take even more hours. 


In an Amazon mastermind, you know who you are dealing with; because of non-disclosure and non-compete clauses, you can find out super quickly who to really follow. 

Assuming you’re smart enough to make sure there are NDAs and NCA’s of course (I really, really  would check this. There’s obviously a lot to be gained for an unscrupulous member to exploit others’ product ideas. Make sure there’s quality control about who the members are, and make sure that someone is responsible for policing this stuff).

More importantly, you can judge over time who is being successful and actually implementing stuff, and who is just spouting theory they “read somewhere” or from some guru. There is some value in the latter; but the former is WAY more valuable. The ability to really be able to differentiate between the two is really one of the high values you get from small groups where you can really get to know each other properly.

Amazon group

Masterminds give MOTIVATION

Be honest – how long have you been  “researching” the Amazon private label opportunity? After a couple of months without even buying a small amount of inventory, I’m afraid that “research” is cover for “fear/being lost”. That’s okay, honesty is useful – but why stay lost?

If you’ve been selling but way below what you know you’ve targetted, again, that’s just called being human. But if you do nothing new about it, nothing changes.

Being with human beings is hardwired into us. We’re group animals.  It should therefore be no surprise that your peer group (who you hang out with most of the time and compare yourself to) has a massive impact on everything about you. Your attitude. Your health. And, of course, your wealth.

Getting yourself a peer group and stay actually excited instead of being isolated behind your laptop is simply following fundamental principles of human (indeed, primate) social psychology. We violate those principles at our risk. Why fight nature? It’s so much more powerful to go with our instincts than to delude ourselves that we can ignore them…and frankly, to stagnate.

Build Amazon businessBuild Amazon business

Amazon masterminds promote action

Masterminds create ACTION

This is the kicker. If you’ve been “researching” for over 3 months without buying something, that isn’t going to change unless you change something.

I’ve lost count of the conversations I’ve had with people who are painfully obviously using the word “research” as a fig-leaf for “Fear”. There. I’ve said the four-letter word.

Fear is FINE. It’s nature’s way of flagging up risk. Awareness of risk –  contrary to the happy-clappy, “everything is gold” school of Amazon thinking (which is just BS, apologies for being blunt) is actually GOOD for business. What’s not good is going in circles, or not assessing the risk objectively.

If you don’t have proven strategies (and the latest Amazon hack is NOT a strategy, it’s a tactic. And that’s fine. But knowing the difference is everything).

You need people to inspire you by showing you what’s possible, and hold you accountable. If you’ve not done it till now, why will that change?

Some people seem able to work in isolation and still succeed with Amazon. I can think of about two people who were really doing that on a big scale. Guess what? They are now collaborating with other Amazon sellers to get to the next level.

Amazing FBA Amazon Masterminds

The “Amazing FBA” Amazon Masterminds

So, I guess that brings me fairly unavoidably to mention the Amazon masterminds that I run for Amazing FBA. Again, I don’t want to be self-serving, but it would be a bit strange for me not to mention them in the context of Amazon masterminds and  masterminds as a whole.

I try to practise what I preach, basically. I said at the start of this article that I believe that a mastermind needs to be interactive; needs to focus members; and needs to lead its members to action, which leads to their progress.

It’s fairly obvious where I’m going with this, so I’ll just come out and say it:

-if you know the value of being in one of the Amazon masterminds

-if you’re not wanting to go through the pain, time & effort of creating your own Amazon mastermind,

-AND if you live near London (or can get there)

then obviously I think you should consider the Amazing FBA Amazon masterminds!

I’m not going to make a huge pitch for them here; if you want to check them out, there are now two levels:

The Zero to Hero Mastermind, which is geared to those who have not yet launched, and to those doing just a few thousand $ a month (or equivalent) on Amazon (we may form a separate mastermind for the latter as it grows)

The $10K Collective, which is for those doing at least $10K a month on Amazon.

To find out more about the regular monthly masterminds for Amazon sellers led by Michael, click here

122 Big Business Vision- St Paul’s Cathedral, London

Have you got a vision for you business?

I have to confess. I have spent way too long, jumping from product to product, trying to make a buck, which is fine. However, after a couple of years, I stop and think, “What’s it all about?” This is a very important question you must ask yourself, and it’s something that will change over time.

When I first started, my vision was to make a lot of money quickly and put it back into my life, into other projects that were important to me. While that is still a part of my vision, it has grown. Now my big picture is to build a business that I can sell for a decent amount of money, and be proud to own because it is producing really beautiful products; rather than before when I would grab any product that looked like it might sell.

If you take the St. Paul’s Cathedral, the full vision of the architect was never realized. As beautiful and amazing as it is, there plans were much bigger.

The first thing is, you have to start with a plan

You may not be working with stone and mortar, but it is still very similar. The financial aspects are similar. You have to work within a budget. Maybe you have more than you expected, maybe less.

In your business, you have to worry about competition

There are many other people that are selling the same or similar products to the same customers. You need to plan ahead to combat that.

  • Your plan needs to be fluid

You need to make your plan with the understanding that it will change. Amazon is always changing things, moving the goalposts. You need to have a plan that can adjust to change with it.

  • Be Realistic

You can’t go in with £5000 and expect to turn in into £500,000 by the end of the year. Big visions are great, but you need to make realistic goals. You can’t invest peanuts and expect to turn it into a mint overnight.

While this has always been the location of the St. Paul’s Cathedral, the original burned down, along with a lot of the city, in The Great Fire in 1666. You need to be able to handle setbacks and recover. Sometimes we make a bad product, sometimes we get close to bankruptcy, sometimes we have business partnerships that go bad.

Out of that makes room for something bigger. A lesson to learn from the cathedral is the chance for renewal. When thing go wrong, that can open the door to create something much bigger, much better, and a much stronger vision. You can take lessons from before. Figure out what worked, and recreate those things, and figure out your mistakes and avoid them.

It’s good to make sure you have the right mindset but, I believe, success follows hard work. So e sure to go back, if you haven’t listened already, to episodes 115 to 120, for an overview of how to increase your profits by increasing sales, and reducing costs.

Think big. Act Big. If you are in London or come down to London, consider being a part of the AmazingFBA Mastermind group. My goal is to have two levels, one for those getting started and another for those that are much further along. All that is coming up so stay on the lookout.

113 Know Where You’re Going with your Amazon Business

There is a triple metaphor here. Simple stuff but still true:

  1. Know where your business is heading. And where it is right now. If you don’t have goals, you won’t know where it’s heading. And if you don’t measure your position accurately (eg cash, cashflow, P & L etc), you won’t even know where you are now.

2. Know where you are going. How does your business fit into your life? How does it serve your goals?

3. When you are literally having  goods transported from one side of the globe to another, check  all the details twice. Where is it going from? Where to? Exactly? Have you got the commercial invoice, purchase order etc. all sorted?

Freight is one area where just doing it needs to be tempered with double checking all the details!

#101 Finding a Killer Amazon Product Part 1 of 5: Generate Great Ideas

Generating Product Ideas

Generating Product Ideas

The first step to finding a Killer Amazon Private Label Product is generating good ideas.

I think there are basically two ways to do this:

Option 1: Organic Ideas

  • Brainstorm – I use a tool called Workflowy but a Google doc (especially good if you’ll be sharing with a partner or VA) or Word or Pages (Mac) document would do. Or even a notebook!
  • Go to Argos, Tiger and similar shops – maybe Tesco for UK if you’re after clothes or Walmart in the States
  • Look at physical catalogues like Argos etc
  • Sign up for specialist magazines or catalogues eg for Cookware
  • Look around eg your kitchen, friends’ kitchens, etc.

Option 2: Use research tools to generate ideas

  • One tool I’ve used is the Product Database from Jungle Scout (affiliate link). I personally tend to start from ideas but if you’re more numbers driven, this tool can be great. I have a couple of my mentees who love starting this way.
  • If you do it this way, you’ll need to start off with some criteria. I’ll talk more about this at the next stage, but I would avoid cheap, light products. The $20-40 selling price range is where everyone else is; I suggest going much higher. You can do interesting things like only looking for products above 5 lbs weight etc. Have a play and see what comes out.

Either way – we just gather ideas at this stage, we don’t want to rule out too much. First we gather, then we whittle down ideas.

 

#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 !

#85 What the sea can teach Amazon entrepreneurs about time management

#85 The sea…and Natural Rhythms

It’s funny how interacting personally with basic natural forces reminds you of some Business basics for Amazon. Here are a couple of thoughts that have struck me while swimming in the sea off the South-East coast of England:

There is a natural rhythm to everything in business. Just like the ebb and flow of the tide, it’s almost like a force of nature. If we learn to recognise hear or see those rhythms, we can work with them not against them.

Examples of natural rhythms include:

  • The economy of a country which has an Amazon marketplace: consumer spending ebbs and flows with the economy, which tends to follow the Business Cycle of around 11 years.
  • The seasonal ebb and flow of product demand in retail – especially on Amazon! Late November and December are normally epic demand for most products; January is often quite dead. BBQs sell better in the summer, and so on. Plan accordingly
  • So you need a marketing calendar: Feb: Valentine’s Day; Mother’s Day; Independence Day (USA) or Bastille Day (France)
  • You need to reverse engineer from this to your procurement (buying/sourcing) calendar: when do you need to place an order for products in order to get a product launched and ranked for Christmas sales?
  • Your own business will have natural rhythms to growth process – at what point do you need to outsource prep? (so you don’t have a living room or garage full of boxes!) When do you take on a VA?
  • Your own personal rhythms are also important: when are you at your most productive? When do you need to build exercise into your day and/or your week?

If you can schedule things in these various levels of business in a way that works with the natural rhythms rather than against them, you’ll find you are riding the waves rather than fighting against the tide!

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

#78 Selling an ecommerce business with Coran Woodmass – Part 2

Who would buy my business?

Typically, from about $20k to $2.5mil, you’re looking at individual investors. Above that, from $2.5 to $5 million there is a bit of a black hole because individual investors don’t have that kind of capital. Some do, but it’s rare. Above that $5 million mark your are looking at private equity firms and larger businesses.

Let’s talk about the $20k to $2.5 million. These individual investors’  primary driver is fear of loss. They don’t want to lose their investment. So they are looking for an ROI better that what they would get if they left it in a bank or mutual fund. Within this groups of investors, you have a few different types.

Retirees

Many of the buyers Coran worked with early this year, didn’t know anything about Amazon. They were former business people that have retired and got bored with brick-and-mortar businesses so they started buying up FBA businesses. This type of buyer has business experience, but may not be tech-savvy or have and understanding of online business. They will typically look for a business that have been around longer.

You may need to educate them on how easy it is to run an FBA business compared to something with staff, overhead, or property. You can offer support and virtual hand-holding until they can run the business themselves. You will also want to upfront about everything, good and bad, about your business because if they find something down the road, they will bolt faster than other types of investors. Like we said, they have that fear of loss.


Another thing you’ll want to do is create procedures. Write them out as if it’s for your grandmother. Stuff like writing out how to log in to seller central. If you have staff or contractors that can transfer to the new owners, that would be awesome. Also, if there is opportunity for discounts from your suppliers for larger purchases, have that as well.

Executives

You also have high-paid executives make $100-200k a year and are looking to replace their income so they can live a life of leisure.

Online Entrepreneurs

Another is actual online entrepreneurs and other FBA businesses that may have rolled other businesses for profit. They have a large pool of capital and are looking for a competitive advantage. They will be looking for ways to boost the business’ profit. Not only are they looking to get a better return than the bank, but are also looking to add value.

Should you have an idea of what kind of buyer you want when you start the business?

Keep the buyer types in mind, but don’t build your business around it. You would limit your buyer pool to one particular type. However, it would be very difficult to build your business so narrow as to limit it to one buyer type unless you built a massive business to appeal to private equity.

What are the main things that you would need across all buyers?

Writing procedures will always be a big help. Have your spouse of a friend, that doesn’t know anything about selling on Amazon, follow your procedure and see if they can do it. Get your staff to write procedures about what their doing.

Let’s say you have a business that’s a year old and you need to sell it, what is the best way to go about it? Should you sell to another Amazon business?

We discussed the gold standard before and how you need to have so many products, be defensible, diverse traffic, and age. As you fall short in different categories, that narrows the pool of buyers as well as lowers the value of your business.

As far as selling to another Amazon business, Coran hasn’t done that yet but it’s an interesting idea. Typically a strategic buyer will be willing to pay a premium because they will be looking to apply their expertise to the business and add value. However, most of the FBA businesses Coran deals with tend to struggle with cash-flow and have a hard time keeping up with inventory. So an Amazon business will have to be fairly large in order to have the capital need to make that purchase.

Also, if you open your business up to your competitors, it will give them an inside look into your business with could hurt you in the long-run.

How do you build a sensible barrier so you don’t give inside information to a competitor?

Coran only works with a handful of qualified buyers and sellers at a time. The buyers are legitimate. They have the cash and have typically bought before and if he brings them the right business then he knows they are buying.

The next level down depends on how you advertise your business. If you’re using a broker, you’ll need to talk to them. For Coran, if that initial buyer pool isn’t interested, but it’s still a good business, he go wider and tap into his network of classified sites and other brokers that may have buyers. In that case, they will talk among themselves trying to find buyers for that business. They keep the information out of the public space as much as possible.

How do you make a product more defensible?

One thing that’s helpful is to add more products to a packet. A recent sale he did was where they had twice the amount of items to package, their packaging was great. If you don’t skimp on the packaging and your brand is strong, it adds a layer of protection that someone will have to get past if they want to compete.

Is brand strength important when trying to sell a business?

Absolutely. Unless you can build out 50 or 100 products, which would take a ton of capital, you’ll need every advantage you can get.

Is intellectual property valuable when trying to sell?

Yes. Brand registry on Amazon is great. Having a patent or registered trademarks is very good. A patent is good because while expensive, and won’t increase the multiple that an investor is willing to go for, it will make it more attractive compared to other businesses. If a buyer is looking at three or four businesses they are trying to decide between, this may give you an edge to sway them towards your business.

Pro tip:

Research existing patents on your private label items. Coran spoke of someone that is looking to expand their product line but is now caught up in a patent lawsuit over a very basic item. If you sell your business, the buyer will be liable for the history of every item so they will definitely be looking into any patent infringements prior to buying. Also, if there is a lawsuit while your selling, any possible sales will be over. If is shortly after a sale and there is an earn-out deal, it will complicate things.

Earn-out deal:

When your selling a business with ongoing income, the multiple they paid is linked to that income. Often, to reduce the risk for the buyer, they will offer you 70% or 80% of the purchase price upfront. Then there will be an earn-out, which could mean different things. It might include 90 days of support, in which you help them run the business until they get a handle on it. Sometimes it will be linked to income, which is something Coran tries to avoid. He has seen earn-outs of up to 12 months. They might leave 10% to you in equity in order to keep you involved in running it.

Since you are, potentially, legally involved in the company for 3 to 12 months following the sale, you don’t want to sell something that violates patent laws.

What are the best ways to protect yourself and avoid having patent issues?

Considering the complexity of patents, and patent laws, the best thing you can do would be to hire an attorney that specializes in patents. It will cost money, but when it’s time to sell your business this is the best way to do it.

As an ongoing business there are some tools that can help you do a quick patent search, but noting can compare to hiring an expert.

How do I find a buyer?

The important thing, if you find a buyer, hire a lawyer. You’ll want to protect yourself from any issues.

You can use services like escrow.com. It’s a very popular service when dealing with these types of transactions.

Flippa.com – The downside is that all transactions are public. So you don’t want to use this with an indefensible private label business. Definitely not recommended. They do have a service called deal flow, which is semi-brokerage. The listings can be confidential and you have access to more buyers.

Empireflippers.com – Coran has worked with them in the past and is highly recommended.

There are individual brokers out there. There are websites that have websites listings, but only if you have a lot of time to invest in it.

Coran, admits he may be biased, but he says the best way to go is with a broker. The deal structures can get complicated and you want someone who is going to be personally vested in achieving a successful sale.

Let’s say I have a business that is doing $5000 in EBITDA profit, it’s got 5 customized products but not original design, and had been in business for two years. What kind of multiple will that get?

As far as any FBA sales is concerned, they range from 1-3x EBITDA. With this situation, err on the lower side of things. Probably expect 2x, and you can move up or down from there. Let’s say the products are equal in revenue and you’re getting sales from somewhere other than Amazon. In this scenario you’re looking at 2-2.5x EBITDA; that would translate to about $120,000 – $150,000. In this. we’re talking about USD since most buyers use the US dollar.

How does it work when selling a UK based company to someone in the US?

We only deal in asset sales. So the company is on top of that and what we’re selling is everything underneath that. That would be your products, your brand, you website, your actual inventory, the central seller account, etc.

A sidenote about the seller central account, you can’t sell it outright. What you can do is transfer it to a new owner. Amazon doesn’t like it if you claim to be selling the account. So you just transfer business information, addresses, in the US it would be the EIN etc.

Things can get difficult if it’s a UK seller. Many in the US will be out automatically so it’s easier to just sell it to a buyer in the UK. However, since it’s an asset sell, you can definitely sell to someone in the US. The one thing that can be affected by selling to someone in another country are your suppliers and contractors. You will need to make sure they are comfortable working with someone in a different country. Some may have terms, like 60-90 day terms that might not be transferable. So you will need to work that out with your supplier. This is can be avoided if your selling within the same country. If your supplier is in China or other parts of Asian, they’re used to dealing with foreign companies.

Since it’s more difficult to sell a UK based company, is it viable to build up a UK based business?

Coran is currently speculating in the UK, he’s trying to build connections with buyers in the UK. In his experience, it is very limited since most buyers are in the US. If you want to build a UK business to sell, it will be difficult.

If you have a business that sells in the US and the UK, can you sell all of it or would you need to split it and sell the US business to a US buyer and hang on to the UK wing?

If you have a foothold in the US, even if it’s not the bulk of your sales, it will attract more US buyers so you would want to sell it all together.

What’s working well right now with Amazon businesses that are selling well?

Coran refers back to the gold standard. Being more defensible, have more products that are unique. People are becoming more familiar with the business model and are looking for where you are beyond Amazon.

How do listeners get hold of you or find out more about you?

thefbabroker.com

Make sure to get the toolbox Coran set up exclusively for Amazing FBA listeners at thefbabroker.com/amazing. Also, take advantage of his off to have a one-on-one chat that is only available via this link.

Do you have any parting words of advice for anyone who is considering selling their Amazon business or building one to sell?

Read The Snowball. It’s about Warren Buffet and talks about business and who’s buying and how to be defensible.