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#42 Amazon Product Research with Greg Mercer of Jungle Scout Part 1 of 2 [REPOST}

Episode #42: Greg Mercer of Jungle Scout Interview (Product Research – PART ONE)

(Note: all links to Jungle Scouts are affiliate links).

How did you come to be selling on Amazon? & Why Private Label?

Greg started with a day job as a civil engineer. About 3 years ago, he started buying items wholesale and sold them on Amazon. As that got more competitive, he switched to Private Label products.

What is difference between Private Label vs. Wholesale model? 

Wholesale: buy welk known brands from wholesaler, then sell on existing listings and rotate through the buy box, which is normally about the lowest price. 3 years ago that was okay, but it became very competitive.

With PL, you own the listing;  since it is your product, you can justify work getting reviews, nice photos etc. Greg never did the Retail Arbitrage (RA) model because it is not scalable. Greg was looking for a system, not exchanging hours for dollars

Why develop Jungle Scout?

The biggest bottle neck in Greg’s business was finding more products. At one point he had a team of 8 VAs in the Philippines who would look at ideas, fill out a spreadsheet. This is when he created the Jungle Scout Chrome extension is the same as the VAs – instead of 30 minutes, it takes 2 seconds.

Greg was trying to scale fast, so with a list of 200 keywords, one person (VA) could only get through 20 a day.

What is Jungle Scout and how do you use it?

Two tools: Chrome extension and Web App. (Chrome is a free browser you can download)

Extension integrates into browser – look on Amazon, click on JS button – pop gives you the relevant data to make decisions on products or sales. Data like price, how much you nett after fees.

Web App: Web based software that runs on the Jungle Scout website. It has several features – the most popular is the product Dat abase. It’s a rebuild of Amazon’s catalogue  for Sellers, rather than buyers (which is what Amazon.com is designed for), with filters  with your criteria -for example:

Sales: over 300 a month; and under 50 reviews; priced over $20, under 1 lb weight” .

What are your criteria for product selection?

This is for the USA store but a variation would work in UK etc. For example for keyword “Glass cups”-

Demand: 3000 units a month of demand [on page 1 of search results]. If doing manually, add up all the sales of “glass cups” (eliminate irrelevant results).

 That is a good number if you are aiming to sell 10 a day yourself (300 a month) – which is 10% of the total market. That’s easy to find but we want lower competition. 

Competition: 1 or 2 sellers in top 5 listings with under 50 reviews.  And in top 10 sellers, 3 or 4 listings with under 50 reviews.  This tells you it’s not too mature a niche. IF competition has hundreds of reviews, you’ll find it hard to compete.

Big picture: it’s a small %age of all listings on Amazon – but there are 100s of Millions of products on Amazon so that’s a lot of items!

Price: $20 or more. The smaller the simpler the better- easier for storage etc.

These are just rules of thumb – it can be good if it’s a bit less demand but a bit Less competition.

Every time I found a product I liked using the Product tracker, it looked hyper competitive.  How can I use the Chrome extension to find lower competition products?

The best tool is actually not the Extension, it’s best to use the Product Database on the Web App.

You can put in your criteria for products with under 50 reviews and min 3000 units sold a month.

You can do this with the Chrome Extension. Once you HAVE an idea, the Extension is the best tool to have.

But if you don’t already have product/ Keyword ideas, it’s not the best tool . 

In every category it looks like it’s good to PL. What are the other criteria for selection?

If every opportunity looks good, your criteria for competition is too lax. There are tons of opportunities with high demand but they have a lot of competition. Look for something with under 50 reviews in some of those top spots – easy to do with the Extension.

Only add up the demand for relevant listing results. Eliminate irrelevant searches.

What are the costs of the Chrome Extension  and Web App?

The Extension is for $90 or $150 (more features) one off costs

The Web App at the monthly $40 level is good for most people but goes up to $100 a month.  There is a free trial – and you can find lots of products.

Are there plans to make the Web App available in the UK?

The Extension already works in the UK.  The Web App will be built for UK in the near future.

But UK or Germany based sellers still use the Web App for the USA to get product ideas – you could then search in the UK store and verify that. A lot of the times you’ll find a good opportunity in the USA and it will be in the UK.

“There seem to be three schools of thought with product selection – 1. find & build a niche brand of related products so you can sell over and over to the same customers, 2. hunt for single superstars / hidden gems, 3. gut instinct. perhaps you find/invent a product you think would do great, or it’s selling in another venue and has no rep/history on amazon to give informed decisions.

Jungle Scout and tools like it seem to be targeted at product selection style 2 [Superstars], how can it best be used to help with styles 1[Niche] & 3 [Instinct], or indeed does Greg believe in these styles or have a different view entirely?”

For Greg, gut instinct is out because it’s risky- he likes to use the data. It might work for some people!

GM has about 3 dozen items – When Greg first started, he was advised to create a whole line of products to get better sales [cross sales]. Greg didn’t find that to be true. He did it start with but didn’t see increase in sales.

When people shop on Amazon, they are not looking for particular brand, they just want the best reviews at the best price. So now Greg just finds opportunities and sells them.

However, If you wanted to find products similar to your existing products, in the Web App, you could select the product category.

The marketplace has given feedback that “finding gems” has worked better than Niche market approach. Maybe in certain categories, brand Is more important; just not in Greg’s market.

People are searching for the item and then getting one of the top 3 depending on reviews and price.

How do you deal with the competition? Especially how do you avoid a price war?

Greg never competes on price – he always works on pictures, the listing; improvements to product. If his competitor lowers price, he doesn’t. When launching new products, get into area that isn’t too competitive. Then by the time competition comes in, secure the top spot with lots of reviews.

Lots of people think they are too late to the party. Not true. It’s still a great opportunity. Greg is still launching new products. BUT You just have to be good with product research. If you pick an item that’s in a very competitive niche, it’s very hard to get anywhere.

You can’t fix a product at the marketing stage if the product selection is wrong!

If sales volume is dropping, Instead of lowering your price, do some giveaways and keep sales rank and overall, it will make you more money.

BUT Product selection is so important that lots of people get hung up on it. How do get round the selection deadlock (Paralysis analysis)?

Use the criteria that Greg gave – it’s proven, including a case study 

Once you’ve done lots of research, you will have a better feel for a particular market.

If in doubt, if you’re worried and just beginning, just choose even lower competition product even if you just sell say 5 a day. And or place an order for fewer units.

I know the Pro Extension will give extra info like FBA Fees, FBA Fulfillment category (eg oversize), net price after fees and so on. Is this available for Amazon UK? 

Yes, it is!

How about .de (Germany) or other European marketplaces?

Not yet, but this summer (2016), it should be available.

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.

#43: Amazon Supplier Negotiation & The Future of Amazon with Greg Mercer – PART 2 of 2)

Episode #43: Greg Mercer of Jungle Scout Interview  (Suppliers & Predictions – PART TWO)

Suppliers

Does negotiating on price ever work much with suppliers or do you have to increase the numbers to get the discount or try to add in extras to get lower prices per unit?

Greg doesn’t worry so much about this now. 10 cents off doesn’t add much to your profit.

But if you keep asking for lower price, the Chinese person at the other end feels more inclined to cut corners, e.g., use worse materials, leading to Quality issues. Or it will get put to back of the queue etc. etc.  If you get moved back to the back of the line so you’re out of stock for several weeks, you could be losing $100 a day in lost profit! This doesn’t compare to 10 cents a unit!

Don’t get hung up on low price if it’s profitable. If there’s something left in it for the factory, they’ll be more inclined to be helpful.  (This ties in with Peter Zapf’s advice – Global Sources).

Actually factories do have rising costs. Going out there has given Greg a perspective.  Your suppliers are a crucial part of your business so treat them well. 

Apart from Chinese new year are there any other times of the year that slow down the manufacturing rate such as the Canton Fair?

Gearing up to 4th quarter in Sept, Oct means longer queues. Seasonal items like patio products would be even worse because that involves Chinese New Year.

Just say to your supplier, I’m planning the year out (and they will like this!) so can you let me know when you will need longer to manufacture? This actually sends great signals: a. you’re organised b. you are planning to order regularly.

Is there any way of ensuring that once you have differentiated a product from a supplier (by colour or design) that the supplier won’t then send your differentiated product out to other customers as samples and then they will just order the same differentiated product (just with their logo on it)?

Short answer: not really! You can try to work with your supplier on this – you can try to get them to sign something which could possibly work. But if you tore them apart about saving 6 cents on something, they probably won’t do it! Talk to them about it. You have the most negotiating power BEFORE you place your first order. Or first large order.

However, even if your factory does that, there are probably 7 other factories making the same product. Don’t get too hung up on that.

So how do you build a defensive wall around your products?

It’s almost impossible to do fully with a private Label product. But if you go into a newish market or you are the first into a market with a modification, you can use the time that buys you (say 3-6 months) to build reviews and sales rank to get a solid head start on the competition.

 An example from Greg: first person to sell a product with metal instead of plastic buckles. For 6 months he was the only one; now there are 15 others doing it.  even though there is tons of competition, he has top rank, 400 reviews, the best pictures etc. So he hasn’t really seen sales decrease.

When I looked on Aliexpress at getting just a few items of the product I was interested in, they seemed quite expensive (like the same amount as similar products were selling for on amazon) and I would be making quite a big loss once I included import duties and FBA fees.

Do people just take this loss to test if a product sells or is there any negotiating on price on aliexpress rather than alibaba?

Greg has never used AliExpress – but it is bound to more expensive because there are no economies of scale! Just treat it is as a market and supplier test. Or to be more cost effective,  you could just place an order for say 100 units with an Alibaba supplier. 

Would Greg recommend going the route of getting an agent to source products from different suppliers, rather than contacting different suppliers individually through something like Alibaba?  If so what is the best way of finding a trustworthy Agent?

Greg for the first year or so just went direct to suppliers. He found an agent as someone he already worked with at a factory. Everyone Greg knows who uses an agent met them through an established relationship. [Same is true for Michael]. In China it’s all about relationships anyway.

There are small advantages to having an agent, such as factories not on Alibaba,  but you do have to pay them a cut!  It’s really  more about outsourcing than money saving.  

How do people find out more about you and Jungle Scout?

Greg writes a solid blog post each week. There’s a cool product case study (“Jungle Stix”). Just comment on the blog or Tweet: @mercer_greg

What are your views and thoughts on trends you see happening on Amazon? What are the most successful sellers doing right now?

One thing successful sellers have in common: if you can make a small improvement on a product, it works really well. Find a product with mostly 3 star reviews. Read the 1 and 2 star reviews; if it’s something simple you can fix, make the improvement they ask for. You can both take away sales and charge a premium for it. 

For example the product with metal buckle vs plastic buckles – Greg sold his for $29 and the competition was selling for $14.95 , and the cost difference to Greg was about 50 cents!

Also larger/oversized items, although there are still opportunities with smaller, unmodified products.

What’s new and what do you see coming in terms of changes that we should be thinking about adapting to?

If looking at 2016, & probably 2017, there will still be lots of good opportunities in the .com store especially with modifications and larger/oversized items. Realistically it probably will start  to get really competitive by say 2018. By then a lot of other marketplaces like UK, Germany, Japan and India will be maturing with more demand, which Greg will be entering in due course. 

Parting Advice:
If you’ve been listening to the podcast and researching for a while, it’s time to get started. A lot of people seem to be worrying about things they don’t need to worry about. You’ll hit little roadblocks but it’s important to keep pushing forward, get your 1st product up for sale. It’s probably not as complex as you think!

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

 

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#34 Amazon China Product Sourcing -Peter Zapf of Global Sources (part 1 of 2)

   This episode, #34, is the first of two parts of the interview with Peter Zapf of Global Sources. Peter has a huge background in working with Asian (mostly Chinese) suppliers and the whole supply chain. He has a fantastic ability to bring common sense and  simplicity to these complex issues.  

Show notes for Episode 34 (Tactics/Qs)

Peter has been working in Hong Kong for Global Sources for about 15 years.

Global sources has existed for about 40 years. It exists to help sellers/retailers find manufacturers and vice versa. They started off with magazines; since 1996, they have a website (http://www.globalsources.com); since the early 2000’s, they have run Trade shows twice a year (in April and October), in Hong Kong (http://www.globalsources.com/exhibitions).  They’re also running a Smart China Sourcing Summit for FBA sellers at their trade show (http://www.globalsources.com/summit)   

Tactical Qs (FB group) RECENT POLL/EMAIL & from recent FB group posts:

What are the pros and cons of using a sourcing agent?

The pros: often they will get you a lower price so they will pay for themselves.  And they provide feet on the ground.

Cons: Agents have a reputation for taking a cut from both sides – it could be an extra cost because you’re not going direct to factory.  Also, It’s an extra layer of communication which may be a hinderance, especially with a complex product.

Is travel to China, to source products, necessary to grow your business? 

Not really. Email and Skype work well for people starting out.

If you go Full time with your business, it’s very worth considering.

Travel “Lite” is to visit the Trade shows.

“Full” version is to go face to face and travel to meet the suppliers in the factory.

How do you work out what a “good” price is [for a product]?

The best thing is to get multiple quotes from different suppliers. Then go back to your preferred supplier and say “We’d love to work with you but can you match this price?”

However, low price is not the only factor! Consider also:

1. If you squeeze the price, the manufacturer will have to cut corners. This will lead to Quality Control (QC) issues. “You get what you pay for.”  Think about how you want to balance cost and quality. 

2. If you have say a 5% defect rate, that will lose any financial gains you make.

3.  If your product costs are about 25% of your Amazon selling price, a 10% rise in your buying costs only add about 2% to your selling price.

Other ways to save money than just product cost:

Ordering bigger quantities.

Going to directly to the factory vs. using an intermediary.

Using sea vs. air freight.

Shipping direct to Amazon warehouse vs. stopping somewhere in-between.

How your whole supply chain is set up is important for price.

How do you know if you are dealing with a factory rather than an intermediary?

Look at the Global Sources site and look at the Business Licence and see if it includes a word like “manufacturer”.  This works reasonably well in China.

But be aware they may manufacture some things but trade others!

The only way to really know if they manufacture your desired item, is to hire someone to visit the factory or do it yourself. (Compare name on business card, paperwork, factory itself, etc.)

Inspection and Quality Control (QC)- what are your basic recommendations?

It depends on the product but this works well for most categories.

1.    Get several samples. 

2.    Write down everything you don’t like about them.e.g. batteries don’t go in easily; doesn’t turn on; scratches, dents etc.

3. Make an objective list of QC criteria.

4.   Include this list with your Purchase Order. Your supplier may say “No, we can’t deliver at this level.” but it’s much better to know that up front!

5.   Make an initial payment of 30%. Never pay 100% at this point.

6.   Bring in a 3rd party inspector to do a Pre-Shipment Inspection. They should use your QC criteria from your Purchase Order (plus whatever you feel is also relevant).

7.  They will then send you an inspection report.

8. Only then, if you accept the shipment, do you release the remaining 70% of the funds.

By telling the supplier upfront that you’re having a 3rd party inspection done, you’ll get lower defects.  You are signaling to the supplier that you care about quality.

Inspection costs about 300 USD per man-day (for a 1st/2nd tier level Inspection company), and one man day is enough for a typical Amazon buyer shipment. 

How to set up the quality control level?

AQL (Acceptable Quality Limit) is the main [internationally standardised] way to set quality control level and the statistics depending on order size.

Define in your QC criteria if a  problem is =1. critical defect; or 2. major defect; or 3.  minor defect.

Minor=> customer won’t return product eg box folded wrong

Major=> product still works but customer may return

Critical=> product doesn’t really work.

Set how many critical/major/minor defects are allowed:

AQL level Big Box retailers use is 0/2.5/4 (critical defects/major defects/minor defects)

Higher quality: 0/1/2.5

A lot of shipments actually do not pass inspection but the buyer still okays the shipment the buyer may be okay with the minor defects and request improvement for the next shipment. 

Get advice on these topics from your inspection company. 

Overview of the inspection process in this multi-part article (Part 2 is my favorite): http://www.smartchinasourcing.com/home/china-product-quality/2485-managing-qc-inspectors-part-1-the-hiring-process.html 

Description of AQL here: http://www.smartchinasourcing.com/home/china-product-quality/354-back-to-basics-what-is-the-aql.html

How do you set an appropriate quality level? 

If the customer isn’t going to return the product, give negative reviews or negative feedback, then it’s probably fine. So that’s probably the main criterion for rejecting or accepting a batch.

This is another reason for not beating the supplier down too high on price!

Ocean Shipping

Do you recommend shipping insurance?

Like all insurance, it’s easy to get cover but it’s hard to get a payout if needed!

The actual probability of a loss is mathematically low. It comes down to risk tolerance.

If you can afford to lose the money, it’s may not be necessary. If it would bankrupt the company, that’s when to get insurance!

What is the cost difference between ocean and air freight?

There was a recent study on a product that was medium small sized, and they calculated a cost per unit of $6 by air and about $1 by ocean.

There are fixed port costs either end. A very broad rule of thumb is that above 150 kg or 3 cubic metres, sea shipping makes more sense. Also very bulky items need to go by sea (because of volumetric weight)

Customs clearance

How do you handle customs clearance at a US port? (also: What is the cost of customs clearance for sea shipping? How do you select a customs clearance agent for SS?)

Answer to all of these: let your freight forwarder handle it! Peter has talked to the folks at Flexport (based in the USA), but the industry is fragmented and there are many, many freight forwarders.

The Freight Forwarder will ask :

1.    Do you want

a. EXW (Ex works) (pick up straight from factory gates?) or 

b. FOB (Free On Board) (the supplier will get the products on board ship then the Freight Forwarder takes over)?

2. Where do you want it delivered to?

3. What are the dimensions and weight of the product?

They’ll handle port fees and inland freight fees. And they may or my not include duty in the quote but if not included in quote, and they will bill you for it.  When Sea shipping, always use a freight forwarder!

Do you need a freight forwarder for air freight?

Be clear about the difference between Air Freight or Air Courier service.  Here is a good article: http://www.thesourcingblog.com/air-freight-from-china-explained/

The latter is eg DHL, Fedex, UPS. [You may get away without a freight forwarder for this. I have several times. But it’s not foolproof- I also got burnt once! – Michael]

For air freight proper, you probably need a freight forwarder.  If in doubt – ask a freight forwarder if you need to use them!

Do you need a separate customs broker?

The Freight Forwarder will usually either have that in-house or have a relationship with one. So basically they take care of it.

When making initial contact with Chinese suppliers, should I act as if [I am] the buyer and have to OK prices with my boss?                     Peter doesn’t recommend starting a relationship with “untruths”! Mostly the reason for this is for price negotiations. That leads back to price vs. quality trade off (plus the time and aggravation spent on negotiating for small price differences)

If you do want to negotiate on price, you can focus on getting multiple quotes and then compare. (Traditional retailers also figure out the costs of materials and labour and add on margin for the supplier, but this is more complex)

Is it true that Chinese factories generally give you a price that is close to the cost of production?

It can be. Chinese factories often get their profit margin from the VAT rebate of say 9-17%.  If you are getting a good quote, the price can be close to cost – depends on how good your price is!

Any advice on Sourcing from US, UK and European Manufacturers?

This is not something that Global Sources focusses on although the issues may be mostly the same.

Is using a gmail address OK for contacting suppliers? (because of spam from would-be suppliers)

Suppliers are also getting more sophisticated – they will often look up you and your company in eg Linked-In. Good suppliers are capacity constrained. The new suppliers and ones that will work with anybody may not be the ones you want to work with!

To convince the good suppliers to work with you, you want to come across as well as possible (although some of the buyers from the larger retailers do use Gmail to avoid spam).

Try to have a company domain, a company website. Give background about you that sells you as a legitimate and experienced buyer or at least an experienced business person. 

NEXT EPISODE

In Episode #35, Peter gives his strategic big-picture thinking about how to develop a long-term sustainable Product business. Amazing thinking that I have not heard anywhere else. Stay tuned!

NEXT EPISODE

In Episode #35, Peter gives his strategic big-picture thinking about how to develop a long-term sustainable Product business. Amazing thinking that I have not heard anywhere else. Stay tuned!

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

#31 Amazon Ads Specialist Danny McMillan Interview – PART ONE

This Episode, #31, was prompted by our very own Facebook members! They said in a survey that Amazon Ads were the area they most wanted expert help with. Danny McMillan responded by giving many golden nuggets to our listeners.

This is the first of two episodes containing this interview.

SHOW NOTES FOR EPISODE #31

WHERE TO CATCH DANNY

Doing a presentation in Hong Kong after the Canton Fair. 

Www.dannymcmillan.com

To connect with Danny, click on these links:

 Linkedin;

Twitter: @dannymac1000 

Facebook: Facebook

Danny’s background 

Had been looking at eBay. 

Realised Amazon FBA had everything he wanted in a business. 

Radio show on Kiss FM for 2 years at the turn of the noughties. 

Ran own record labels late ’90s/early 2000s. Creating an Amazon business has many similarities including working in a team.

In 2008, left music biz. Become MD of a tech startup for 2 years. Shut down in 2010 after £500K in investment. 

2012 head of digital at a ticketing company which had an exit. He used PPC to increase business and gain investor confidence. 

Danny’s specialist skills that he brings to  Amazon:

On page optimisation and SEO for ASIN

PPC/Amazon ads

Import/Export processes 

Why Amazon? 

You can bootstrap but it is easily scalable. 

In most start up companies; it’s about how fast you can resolve the customer’s problem before you run out of investor cash. This is a lot easier to do with just one web page (such as an Amazon product listing) and building out scale from there

There are various specialist roles in an amazon business. Danny was attracted to the marketing and SEO/Adwords side. 

Why are Amazon ads important?

Instant visibility esp when you have no sales history, no conversion history. 

It also helps ranking on Amazon for organic sales as a conversion history is built. 

Common issues

A lot of people do something like:

  1. Run an auto campaign 
  2. Give up on that
  3. Run manual campaign 
  4. Tweak something every day in an unstructured way. 
  5. Then they are basically lost! 

You need a clear strategy. 

LINKS TO DANNY’S SPREADSHEETS: click here

SEE DANNY’S DETAILED NOTES HERE

DANNY’s RECOMMENDED SIMPLEST ACTION SUMMARY:

Week 1. 

Create first auto campaign. 

End week 1: Cut and paste keywords into Amazon and check for relevance ;add negative exact keywords to the campaign that don’t fit your product criteria. 

If needed, tweak product page (title and back end keywords) but be mindful that wholesale changes can / will affect rankings

Week 2: 

add second auto campaign with higher bids

Week 3: 

create a bridge to manual campaign. 

Weeks 4+:

Use 3rd party tools to gradually add keywords:

DETAILS ON SETTING UP AMAZON ADS

WEEK ONE

Set up your first auto campaign. Aim: tuning or validating your listing and showing your listing to Amazon. 

Guidelines: £10 a day budget, 40 p per click bid. This varies by product category so only a starting point. You need / can define this yourself, be an experimenter….

If you get no impressions after two days, up the bid per click. 

After one week, run a keyword report. If you find irrelevant words, add them to your auto campaign as “negative exact match” keywords, which means they won’t bring up your advert. 

The aim of starting out with PPC is a “clean out” process. Basically you are finding the converting words and getting rid of irrelevant ones that waste clicks and money. It is NOT to get sales at first, although that is a good side effect!  The goal here is to play it long and reap the benefits.

WEEK TWO

if you are getting a lot of unrelated keywords showing up in the auto campaign, tune your listing. 

Tweak the title if needed. 

Careful with changing this later too much as it affects organic ranking. But at the beginning you haven’t much to lose. 

Also the back end Search Term Field (keywords; which are in the final tab in the product editing part of seller central). You usually have 5 fields for this, each 50 characters so total 250 characters. In some categories Amazon has rolled out 1000 chars to play with in the top line, we are still testing the effects of lines 2,3,4,5.

WEEK TWO

We are still just using auto campaigns. 

Danny has European auto campaigns in France, Spain and Italy and the ACoS is below 15% so it can work really well. But… Patience is the key here as you have to rough it out sometimes to get it under control.

Create a Second auto campaign for same product but with higher bids (far enough away to avoid the algorithm getting confused) . 

This may have some impact on first auto campaign. 

Bring  over exact match negative keywords from the first auto campaign. 

Aim: guide amazon’s algorithm to “get” your listing. 

Run your auto campaigns for about a month. 

Patience is important. 

More details in Part Two – next Episode!

LINKS TO DANNY’S SPREADSHEETS: click here

SEE DANNY’S DETAILED NOTES HERE

WHERE TO CATCH DANNY

Doing a presentation in Hong Kong after the Canton Fair. 

Www.dannymcmillan.com

To connect with Danny, click on these links:

 Linkedin;

Twitter: @dannymac1000 

Facebook: Facebook

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.

#19 Amazon FBA Seller Interview with David Aggiss

This Episode, #19,  is a very exciting first for the Podcast: our first interview!

David Aggiss was one of the first to join our Facebook community and has been a very active member, including taking the initiative to reach out to me and meet up in person at a conference.

David took some great training, and has been very committed to working his business. As you would hope, that has resulted in some very quick successes. Here, David shares his journey, what worked, what challenges he has had to overcome.

** REVIEWS CONTEST!**

The first 25 people to review the show on iTunes will be entered into a draw. The winner will receive a £50 Amazon Voucher from Amazing FBA!
Head over to iTunes now and leave your review! If you haven’t  already, you can also subscribe through iTunes to get all the info you need to start your own successful Amazon business!

CONTEST EXTENDED to the end of November or 1st 25 reviews, whichever comes first !

SHOW NOTES FOR EPISODE #19 David Aggiss Interview

  • David’s Background: got into property as an investor then moved into mortgage broking.
  • Was drawn to Amazon FBA private labelling model because it offered Passive Income.
  • Passive Income is important to him as a way to get to spend time with his young family and to escape office culture.
  • Also it can be as hands-on or hands-off as you like (Amazon handles sales and can do customer service – you can outsource a lot as well)
  • David started with Amazon training in April this year and his first product went live in September.

GIVEAWAYS and REVIEWS

  • He allocated 200 units to dollar giveaways, targeting 100 reviews (because of the psychology of triple digits of reviews, and because biggest direct competitor has 200+ reviews)
  • Aim was to give away 10 units a day for two weeks
  • Put in three batches of 50 codes to AMZTracker
  • Turned on PPC Amazon Ads after about 20-30 reviews
  • He actually gave away just 150 units, for about 100-110 reviews (so about 66% converted to reviews) as he was running out of stock and had hit his target no. of reviews.
  • David was able to be selective as his product was popular, so he tried to select reviewers who had reviewed similar products, had given a few video reviews and gave decent length reviews [i.e., not just one short sentence!]

SALES

  • Sales got quickly to 10 a day, then went up to 15, then 20, then up to 25 sales/day
  • Sales: Month 1: including $1 giveaways, $5000
  • Month 2: $6000 but that includes running out of stock!
  • PRODUCT SELECTION:
  • Don’t overanalyse
  • Avoided oversize items because of upfront costs and cost of Amazon fulfilment
  • Went for something that could be bought for about $2 a unit
  • Did due diligence and made sure the numbers stack up
  • Not too competitive
  • Happy to go for 10 sales/day

SOURCING AND FIRST ORDER

  • Manufacturer’s MOQ was 1000  to have his logo on product plus customised packaging
  • David negotiated down to 700 units only with custom packaging (no logo on product)
  • But then after firming up the order, he said to supplier he was going to be ordering more, so negotiated including logo on product on the 700 unit order

CAPITAL and CASHFLOW

  • David has only used his capital for stock ordering. Other costs e.g. Amazon Ads etc. are on the Credit Card for cashflow reasons.
  • He needed about £2000-3000 upfront to order inventory and launch the product

AMAZON ADS

  • David turned these on after about 2 weeks and about 20-30 reviews
  • He ran a manual and auto campaign alongside each other at the start
  • He put a $20 daily budget to Manual and $10 to Auto
  • The auto campaign only produced 1-2 sales and those were for a Keyword he knew already was important
  • He then paused the auto campaign
  • He launched with bids of about $3 a click to get onto page one with ads while product was on page 14 or so of organic search results
  • He then gradually reduced the costs per click over time.
  • ACoS (Advertising Cost of Sales)  started off over 100%; then it went down to about 65%; last month it was around 45%.

BIGGEST CHALLENGES AND HOW DAVID OVERCAME THEM

1. Stock management

  • running out of stock happened because he didn’t expect sales to take off so fast
  • The solution is that he will over-order (now has 1500 units in transit either in China or in the USA) and have 3-4 months worth of stock of his first product so he can focus on buying and launching product no. 2

2. Quality issues

  • These weren’t so terrible but there were higher returns than David wanted.
  • He is having the returned units shipped to him in the UK
  • He will then inspect these and then ship some on to China
  • David uses Viabox to receive returns, which gives a free USA Address. They’ll also store packages for up to 30-60 days and arrange shipping pretty cheaply.
  • David’s shipping 18 units for $40 (1.6 oz weight/unit). I make that 1.8 pounds in weight, so that’s about $22 a pound of weight or £14.75/lb (or about $49 a kg=about £33)

3. Reseller on his listing

  • One of David’s buyers for $1 (giveaway for reviews) listed his product for sale.
  • David had saved the URLs of the profiles of all of his reviewers
  • So he was able to track down the reseller and sent them a stern email
  • The reseller on his listing disappeared!
  • David had been prepared to just buy the product to get rid of the reseller anyway.

4. Time management

  • During the set-up phase, because of doing the Amazon business on top of having a full-time job and a young family, David was having to work evenings and weekends, sometimes 2-3 hours late evenings.
  • His solution is to commit to the business, and to try to fit in an hour whenever it’s possible, even if that’s 11 pm after a full day of work and family life!

BEST THINGS ABOUT THE AMAZON FBA BUSINESS MODEL

  • It can take off very fast
  • It requires very little input to maintain once set up
  • The money to be made is very substantial

ADVICE FOR NEWCOMERS TO THE BUSINESS

  • “Jump in and get going!”
  • Don’t over-analyse. For example, in his first batch of products, David had no inserts and no instructions. He’s just sorted both out for his last (2nd) batch.
  • If start-up capital is an issue, you can do what David did and use capital for stock but put the recurring costs on a credit card.
  • Have enough stock to not run out if you can!

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.

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