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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

#100 Adam Hudson on Amazon Basics Pt. 4

To find out more of Adam’s own strategies and tactics, CLICK HERE

Reviews are a major part of any strategy and you mentioned earlier that you want enough reviews to seem viable. Is that correct and could you expand on that?

Yes. It hard to seem credible if you have five reviews and everyone else has 100, so you have to work for those reviews.

How much is enough? And what do you do now that incentivised reviews have been removed?

How many depends on the product. It depends on what page one looks like for you products’ search terms. There is still opportunity out there. There are a lot of products with low reviews that are still dominating. Adam would use ilovetoreview.com, which he also owns, to get 25 reviews for products in the UK and 50 in the US.

Find out more of Adam’s latest thinking HERE

It’s only in the US that incentivised reviews are gone and it’s only compulsory reviews. There are other services that never guarantee the review but would push out your products at a discounted rate or for free. It’s not clear how it works, but it seem that after you get around 25 or 30 sales in a day then you products get a jump start and the sales keep rolling in. So even if you’re not getting a guaranteed review, there is still value in pushing your products out at a discounted rate.

Adam can only speak to his community at ilovetoreview.com, but the reviewers have been doing this for three years where they use the coupon, get the product, and write the review. So, they will probably continue to do so even though it can no longer be required.

Companies will continue to do this even if the review rate drops in half. Adam’s company has a review rate of 87% meaning 87% of products that were pushed out came back as a review. With these new rules, that will likely drop. And if it drops in half that means you will just have to send out twice as many products. This is a one-time investment for something that can generate income for life.

Another tip from Adam is to follow up with you customers via email. Especially in the UK, they are very responsive to this. Zonguru (which Adam also own) has this automation built in.

Every time you make a sale it can send an email when it ships, six days later following up with any issues,and 14 days later asking for a review.

Not only will this help in getting reviews, but it allows you to get ahead of any issues with the product, say if the box was damaged or the product wasn’t right, allowing you to take care of the issue without before going through Amazon’s return system.

Adam tries to casual in his style in his emails. Just a quick “Hey, how are you doing? Just wanted to make sure everything is good with the product.” He doesn’t try to sound like a big company with huge copy in the email, just a quick message like you would send to an acquaintance. 

The bogeyman in all this, as Adam puts it, is that Amazon can change this against this type of thing. They have already sued a bunch a review companies last year. All they have to do is make a change in the algorithm that scrutinizes those reviews that have reviewed an above average amount of products, and out of those, how many used a coupon and just wipe out those reviews. They can just remove reviews of people who are just reviewers.

No one knows how things will work out, but sellers will just have to adjust. They will still have to do product launches, just like every company in the world when they launch a new product. You just have to follow up and encourage your customers to leave a review. You only need 25 – 50 –  if you need more than that you’ve gone into the wrong niche.

As you say-  Amazon has the ability to wipe out these reviews if it chooses. It just drives the point, that at the end of the day it comes down to organic reviews and organic sales.

Yes. Just make great products that people like. It’s that simple. And don’t be impatient. Adam likes the way this is because it knocks out all the people that think they can get rich quick on terrible products. It’s about putting in the work. Putting in the effort. That gives him the freedom to sit around all day, and look at his seller account and see that he made $3,000 in  a day.

You mentioned earlier that you teach this stuff. How do you do that? Is it live webinars, live courses, group training?

He has a company called Reliable Education. The aim is to give people a realistic expectation going in and tell them the truth.

On the website, you can enroll in a free training program that is four videos where he shows you his home and drives you around where he lives in Australia.

He educates you on what the Amazon opportunity is, how to find products and his criteria for that. He teaches you about “Velicity Retailing” which is how to compound your capital over time.

All this leads to a paid programme which is an online course where you get access to about 90 videos that show you Chinese factories and how a 3D printer is made and a lot of very cool stuff.

It includes a private Facebook community and will link you with a mastermind group that they cap at seven people. Everyone signs a NDA so they can freely talk about what their companies are doing and talk on Google Hangouts or in person, and they’re all trained with the same philosophy of not being opportunistic, not get rich quick. They are solid people that want to build solid businesses.

They also have 12 coaching webinars with each member of the course. They have an onboarding program for every new member. There are two guys whose job it is to call every new member and talk to them and get a feel for them. They also have a program where they loan money to a 3rd-world entrepreneur, interest-free, and gets paid back over time. People seem to find a lot of value since their refund rate is less than 5%.

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

Just at reliable.education. Adam doesn’t really use Twitter etc. so you can’t catch him there – sounds like he’s more likely to be on his boat!

#99 Adam Hudson on Amazon Basics Pt. 3

So you mentioned you started with $20,000 when you started your first company and I often tell people that you need at least $5,000 to start, which is a manageable figure for many people, but is that a viable number for people to start out with?

It is. You just need to do a lot of research. Adam uses Zonguru, which he owns, which is similar to AMZ Tracker and Jungle Scout if they had Feedback Genius built in. You need to track something like 100 – 200 products.

Spend hours tracking products and going to Amazon and Alibaba.com Use Pinterest, that is a great resource. If you want to sell coffee cups, just do a search for cool coffee cups, and people have built boards with all these designs they like. They are literally giving you the products they want to buy.

Adam isn’t interested in tracking the number 1 product. He’s is looking at the number 4 or 5 listing and he sometimes goes to the second page. He doesn’t like tracking products with a lot of reviews. He prefers niche products where if you were to count all the reviews for every product on page one, he wants the average to be below 60 or 70.

You can LOOK HERE For more detailed training from Adam. 

In the UK, you would probably adjust those numbers down. Simply put, it’s not worth it to go into the huge niches with a lot of competition and products are doing $20,000 or $30,000 a month. He is more interested in a smaller portfolio of products where each product is doing $5,000 or $10,000 a month. He’s happy having ten products doing $3,000 a month. A more stable business with lower, but consistent sales day in and day out.

Some sellers in the US have found their products have a life cycle of about three to six months. Have you found similar results? And how do you defend against competitors coming in, driving the prices down and advertising costs up?

Adam hasn’t found that in his experience. Most people want quick success and they aren’t willing to do the labour that he does. He will labour over a logo and package design and he will take a month to get another sample and other people just aren’t willing to put in that kind of work.

One unique thing he does when he gets a quote from a supplier is to offer them more money. If they tell him that it’ll be $4 if will ask if they can do it for $5 and explain that he wants the best possible product. The best quality control and the best possible outcome. No cutting corners. Taking that extra step to make the product the best it can possibly be.

The response he gets is remarkable because that extra dollar could double their margin and it’s only a dollar that he has to get back on the retail end, and he could get $10 because of the superior quality.

One thing you have to be wary of with these gurus is their ability to misrepresent their earnings. They could talk about how much of a margin they’re making but leave out the cost of acquiring new customers. Sometimes they may be losing money whenever the get a sale from an ad because the ad costs are so high.

Find out more about how Adam gets these results.

In the US many sellers aren’t making any money from sales that come from ads, and it seems like the only money they’re making is coming from their organic sales. So, tell us about what needs to be measured, and once you measure it, how do you deal with it?

The first step, with any business, is to write down what kind of life you want to have. You may want to make as much money as you can. But that means you will be working as much as you can.

Adam made his decision early on that he didn’t want hundreds of products because it’s too much stress. He also didn’t want hundreds of keywords that he was bidding on in PPC because he didn’t want to spend his day going through PPC reports and optimizing his keywords. For his products, he bids on 10 words, exact match. He doesn’t do any broad match advertising.

He is aware that he is missing sales but he doesn’t care because it will be eating into why he got into the business. Because of that, his ACoS is really low he hardly spends anything. Be sure to read Adam’s blog post about how advertising costs can eat into your margin.

You cut off everything that doesn’t make a profit, so how do you drive sales volume? How do you drive traffic to your listing?
Amazon does it. He has twice the conversion as everyone else because he only does exact match keywords, so if someone sees his listing they are looking for that exact product. Lke he mentioned before, he is charging twice as much as he next competitor. Therefore, it is better for Amazon to drive traffic to him because they can send have the amount of customers and get the same conversion and make the same amount of  money per sale. It all comes back to having the best product.

(More of Adam’s insights are at reliable.education)

#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 )