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248 Product Launch – How to Launch a Product on Amazon with Chris Rawlings of Judolaunch

Welcome back to Amazing FBA. I've got part two of my interview with Chris Rawlings of Judoluanch, and today we're talking about product launch on Amazon.  If you missed part one of our conversation, you can find it here. Read More

135 Greg Mercer on the Best Products to Sell On Amazon – Part 1 of 5

We have Greg Mercer on the show again. You can listen to our previous interview on product research, as well as one on supplier negotiations. Greg studied civil engineering at university and had a corporate job that he hated. He began selling on Amazon as a break from his day job. He managed to quit his day job and just do FBA full-time. He did that for about two years when he was frustrated by trying to find products to add. The best way to scale your Amazon business is by adding more products. Greg didn’t have a lot of capital to throw around so he wanted to find ones. Out of this need, Jungle Scout was born. Now he joins us to help us find the best products to sell on Amazon.

Today, Greg is still selling on Amazon. He has released a few products in the last few months. He’s been working on Jungle Scout, and that has expanded into a quite a tool for Amazon sellers. There is Jungle Scout, which a research tool. Jump Send is a deal site to get you additional sales, as well as a follow-up sequence. Splitly is an AB testing tool for Amazon sellers. Fetcher, which is profit analytics. It calculates what you’re really making after refunds, promos, etc. All the numbers Amazon likes to hide from you.

Let’s start with the one thing that every struggles with: finding something to sell. What is your first step to finding the best products to sell on Amazon?

That’s a common issue. Everyone knows how good of an opportunity Amazon is, but it’s finding products to sell that is a struggle. The best products to sell on Amazon are ones that have existing demand, that means Amazon customers are already searching for it. You want products that have low competition and that have good margins. Those are the main things. Other things you may want to consider are whether they may infringe on any patents, and they don’t need to be licensed. Think of liability; if a person can hurt themselves with it, you may want to steer clear. Lighter, smaller items are generally less complicated. They are easy to ship and you don’t have to worry about oversize storage limits.

Jungle Scout was created to solve that issue, but you can look on the Amazon’s best sellers page. You can get ideas from Pinterest, look at what people pin a lot. You can hang out in big cities where trends start first. Once you do that, make a list of product ideas and go to Amazon. There is actually a free way to find out how well a product sells. You can click on a listing, then look at the best sellers rank under the product description. Then you can go to junglescout.com/estimator. It’s a totally free tool, you don’t even have to put in your email. You put in that sales rank and it will give you an estimated amount of units that product sells on a monthly basis and see what the demand is.

You say you want high demand and low competition, can you define that in some way, and how do you find that out?

For demand, you want to look for products that are already selling on Amazon. A beginner mistake is that people “know” that a product will do well if it gets on Amazon. A small percentage of the time, that might be true, but more often than not people are wrong. It’s much safer and less risky to go with something that is already selling.

I want to see 2000 units a month, being sold on Amazon. Let’s use a coffee cup as an example. If you search “coffee cup” on Amazon. Then take the top 10 listings, or however many are relevant. Let’s say 8 are selling coffee cups. Then click on each of the listings, get the best sellers rank. This is helpful because it tell us how well this product is selling. This number, by itself, is very difficult to interpret. However, at Jungle Scout, they have come up with an algorithm that can estimate how many units are sold based on that number. It changes on a daily basis and they have a full-time data scientist that is always updating this. So, get that number for each listing, find the units sold on Jungle Scout and add them up. If it’s more than about 2000, then the demand is there.

One issue that many people have had, is regarding the monthly sales number. Some sellers have noted that the estimate Jungle Scout shows differs than the actual numbers when they lookup their own products.

The first thing is to look out how they drive these algorithms to estimate the sales. Depending on the category, they collect between 200,000 and 500,000 data points every month for that category. This is the relationship between the unit sales and the ranking number for that day. Then they run a regression analysis and they come up with a line of best fit to estimate the sales based on the rank.

The best sellers rank changes on an hourly basis. The way they estimate sales is that if a product continues to sell as well or as poorly as it has for the past few days, this is how many units will sell in a month. If, last week, your product was selling 10 units a day, but this week is selling 1 unit a day, Jungle Scout will estimate based on the 1 unit per day. So you’re sales might be 60 units that month, but Jungle Scout will only estimate 30. It’s the best they can do with the limited data Amazon gives out.

Some people will get on there and see their products are 10% more than Jungle Scout’s estimate and will conclude that you need to add 10%. That’s not true. If you look at the regression analysis, there are some points that run above the line, and some below. They’re taking the average of hundreds of thousands of products in a particular category. So, your 1 product may not fall on that line, but if you average the whole category, it will be on that line.

People seem to put too much faith in tools. You can give me the best painting supplies in the world and I still could paint a good picture.

Exactly. People get caught up, too much, in the tools. Keep in mind this is still just an estimate. You’re using this tool to determine a ballpark range on a product’s sales. Jungle Scout may estimate that a product does 900 units a month. In reality, it might be 800 a month, or 1000 a month, but you know it’s in that range. It helps with forecast and it help determine if there is good demand in there.

Let’s go back to the 2000 units a month number. I had a product that, on Cyber Monday, sold 103 units. Now, the same product is selling 4 or 5 units a day. How do you account for that, especially this time of year when sales volume tend to be low?

This is difficult. One tool that helps is Google Trends. This tool allow you to see how a search term has trended over the years and seasons. This is a fairly good gauge of how items will sell on Amazon. As many people know, Greg has done public case study selling bamboo marshmallow sticks called Jungle Sticks. Based on Google Trends, you can see how the sales have changed based on the seasons. January to February are the slowest times. July and August were the highest times. And if you look at the sales, you can see that matches up. So can look on Google Trends to determine if this is a high season or a low.

The reason I like to use the 2000 or 3000 units, is because people like to answer “It depends”. It’s too arbitrary if you’re a beginner. At the end of the day you’re looking for the item with the biggest spread between demand and competition.

As you know, sales tend to spike in December, plummet in January, then even out the rest of the year. Would you try to take account of that?

If I was a complete beginner looking to sell my first product on Amazon, I wouldn’t worry about that. That’s more higher level strategy. Focus on getting your first product up on Amazon and learn the rest later.

If you’re already have your products on Amazon, and you’re trying to figure out forecasting, that is a good idea. Two good resources are Google Trends, and Keepa. Keepa has a really nice, free database of how sales rank has trended. A lot of products have two years or so of data. You can look at the and see how the sales rank has trended over the months and seasons. You can try to start estimating how well your product is going to sell.

Some products you can tell by common sense. If you’re selling lawn products, then the summer months are going to be the best. Other products, like the marshmallow sticks, it’s not as clear when they’ll sell well and Google Trends can help with that. If Google Trends shows there is twice as much searching for marshmallow sticks in the summer months, then you know to order a little extra inventory.

How do you measure competition?

Reviews are a great indicator of competition. That’s probably the biggest thing to look at. On top of that, the quality of your competitors listings. If they have a poor listing, like one picture, a really crappy title, than that is someone that would be much easier to outrank. As opposed to someone with a really good listing.

The first thing to look for is how many reviews they have. Older, more mature products that have been selling consistently well, are harder to outrank.One way to tell how mature a product is, is how many reviews it has. An older product that sells well, is going to have more reviews. A product with 1000 reviews is going to be much harder to outrank than one with 15. A rule of thumb is to look for something, where 3 or 4 of the top reviews have under 50 reviews. That signifies that it’s probably a young niche.

Tell me about the relationship between the average review and the number of reviews. I had a product that had a 4.9 average but only 22 reviews. It was selling quite well against competition which had 700 reviews. Is that a one-off thing or is there a correlation between the average review?

One thing to understand is how Amazon ranks the listing. They use keyword relevance. The sales velocity probably makes up about 50% of the algorithm. That would be the number of sales per day. Another factor is the conversion rate of your product. Now the sales velocity and the conversion rate depends on a number of factors. Those including the quality of your pictures, the price, the social proof, the average star rating. If you competing against other listings that have a lower rating, then you’re probably have better conversions and more social proof. People would much rather buy a product with a higher average rating than one with more reviews.

I’ve noticed that if a product goes from 4.9 to a 4.6 average, the conversion almost halves.

Yeah. Visually, if you have a 4.9 average,Amazon displays 5 stars. But a 4.7, they show 4 and a half stars.

#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.

 

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

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

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

What is the Canton Fair and when is it?

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

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

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

Why travel all the way to Asia to find products?

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

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

What is a rough budget needed for attending the fair?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Some of Danny’s other focuses this year.

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

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

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

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

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

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

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

#50 Product Process, Suppliers, Freight and Amazon Future with Anthony Lee Part 2

NEW PRODUCT PROCESS

So a product jumps out at you from the universe.

Can you talk us through your process with a new product (from selection to re-ordering)?
(from product selection, via supplier selection, freight/supply chain, getting products to Amazon, product launch)

What are your criteria/ numbers?

Look for main KW “The thing that it is” on page 1 – using Jungle Scout, Anthony wants to see at least 60% of sellers doing $15,000 sales each. He wants a handful under 250 reviews. They’ve probably been there under a year, so there’s room for AL to take some market share.

He’ll glance at BSR – a number between 2000-4000 =mid competition. Anthony is confident he can easily get on page 1.

80% of all factories in the world are in China – it has lots of real estate, dedicated to factories. Everything AL sources is located in China.

Next step is to find a supplier using Alibaba, Global Sources,. Global sources is his go to place. HK is an easy place to reach and many of their suppliers go to their trade show. HKDTC (never had much success so far) and Made in China as backups.

Criteria: Gold Supplier for 3 years – they have to pay for that. Make sure they take some kind of secure payment -they’re probably not trying to rip people off.

Send out your enquiry. Ask for samples first – if it’s crap, cost doesn’t matter! 3-4 samples generally.

You pare down – send emails. certain %age come back; ask for samples; certain %age respond.

Whittle down to highest quality then  pit them against each other for quotes.

“I really like your quality and I personally would like to work with you. But my partners would like to work with your rivals because of price.”

ALWAYS make custom modifications. Put logo on product not just package, have the product itself your brand colours. Better for brand and for hijackers etc.

Give them design specs, place a 30% deposit but have them send you a sample of your design.

Use that to check quality and for photos.

How do you deal with Quality control?

Have an inspection co. like Asianinspection or Richforth. Contract them for a man day (unless it’s electronic in which case you might need a week) 300 USD for one man day.

Have it set against a margin of error. So you know it’s good to go before you leave the factory.

You tell the factory they won’t get 70%

You can work with a sourcing agent. It’s just hard to find someone you can trust. Most of them are very much making a deal with the factory and you. Get paid on the front end and the back end. It turns out AL has 15 years’ experience as an importer and AL is now communicating with him. That will help with QC – they can check factory, batch inspection.

The real low tech way/cheap way to do it – find someone on Upwork to go to the factory and send a Skype video or pictures of the production line or products. Have them toggle switches etc.

What are the biggest issues you’ve met with suppliers? What are your best solutions?

AL has been “lucky” but that’s because he has a lot of hoops to jump through before he’l work with them. He’s heard the horror story e.g. sample quality not real quality or jack up prices last minute etc. Not experienced yet.

The best way is to very very thorough about selection process.

What other hoops do you make them jump through?

Communication. How responsive are they? If it takes 2 days to get an email back, am I a priority?

When we get to a certain point, what’s your Skype? how about your mobile/cell phone?

I have them send pictures of the production facility. Because

  1. see the factory. 2. How willing are they to do it?
    The factory is your biz partner – they’d better act like it! If you were gong into  biz with someone in your own country how you would you want them to act?

How do you handle freight? Supplier’s carrier?

How do you deal with inventory management?
It’s a big area of confusion! AL does not have a courier account with DHL etc. because he doesn’t do much air freight. He just uses supplier’s courier account for samples – he  even has a standard template for samples.

For everything else he uses sea freight as it is significantly less expensive. Generally he shipped LTL (Less than a Truckload /LCL (Less than a Container Load) although now mostly 20-40 foot containers.

Because the closest US coast to China is the West coast, and the most common port is Longbeach, he specifically looked for a Freight Forwarder in LA. So that is freighting by sea and delivered the shortest distance. Then he does LTL pickup by Amazon who picks up palletized and labelled units ready to go to Amazon.

SO you’re looking for a one-stop shop for warehousing and freight?

Yes, wanted to make process as easy as possible. They contract with a customs agent to handle the customs clearance. AL just gets an email with the bill. They make it really easy.

An alternative is to use Asia based Freight Forwarders – they get amazing deals on fast boats out of China. So you need to go through the same process.

Amazon decided that everything is going to Moreno CA so West Coast made sense. However, every time they have a strike, his products get stuck. The absolutely best way is to go out and get as many quotes from FF as possible. As lots of questions and get one that will take the time to educate you. One of them might say “Well our clients do it this way” and make a suggestion.

Tell us about inventory management – when a product is selling, what then?

What about “Killing off” products with low sales or low profit?

AL doesn’t yet use inventory management software – doing it manually is a pain. It’s tricky because you base reordering decisions on two weeks’ sales; then you get a spike in sales and you will run out of stock. The other danger is demand drops off instead and you buy too much inventory so you pay high warehousing fees. That’s when supply chain management evolves.

You need to look at warehousing deals so at some point you can bring in whole containers and bring  only a couple of pallets to Amazon.

Every product is seasonal. You need to be in the game before you learn that pattern for a particular product. A store manager might be your first hire – a necessary one if you’re going to have and grow a business based on importing.

When to let go of products?

A lot of people come in thinking they need to make lots of sales or it’s over. If the product is still making you a profit, you should maybe reconsider. Even if it’s only a small amount. If you get 5% return, it’s worthwhile.

What’s your approach to cashflow management?

Al is just starting that conversation – chances are you will run into this soon enough. The solution is not in the system itself. Cash injections become important.

AL’s short term solution has been credit. Will Tjernlund uses Amazon outside of PL to make cash faster – wholesaling ideas are fantastic. When you’re in this business, you’ll make a lot of connections. It could be someone in your local area who doesn’t have product on Amazon or it’s not selling well. You probably have more Amazon experience than they do. SO soft sell – let me help you with this – good way to make extra cash. AL has recently been working out profit share deals with people who want to

Leverage whatever skills you have. A lot of people want this skill but don’t have time to develop. A lot of retailers are on a 36 month contract and paying whether they make sales or not. You could come in with a solution  and make them extra money.

You can work out a wholesale deal. You can do consulting. Whatever comes your way.

Bigger picture

What’s working well right now in your business (that you can reveal)?

Finding great margin deals by establishing relationships with factories and suppliers. Then get on page 1 for main keywords.  AL has one  product only selling 2 a day which will kill it in Q4.

What are the most successful sellers you know doing right now?

One person is leveraging Facebook advertising for both Amazon and Shopify sales.

Either learn an avenue really well, or pay someone else who knows it really well.

Another friend takes advantage of every single offer. Every beta programme they do, she takes it. She’s got someone at amazon who answers her email. She is killing it!

Find an area where you can get visibility for your products and get really good at it.

What do you see coming in terms of changes that we should be thinking about adapting to… In the next year?

Predictions are mostly wrong! But a focus of unique products is coming – we’re in the middle of a Kickstarter crowdfunding craze. SO AL assumes that Amazon will get a lot more of untested unproven concepts coming out. This might be the next generation of sales. The marketplace has proven they like this kind of thing. There will be a lot less competition for those products.

If you have an idea, this will be growing, -there are prototyping companies out there, go for it.

In the next five years, there will be other marketplaces – whatever teenage girls are doing now will become big! App based – right now, teenage girls are buying products on App based programmes like Wish etc, which are basically like eBay

Do you have any parting words of advice?

The most important thing is: understand you are serving a marketplace, a niche, not just selling a product. Treat it like a business – it’s an investment – go at it with a calm pulse, understand that it takes time. The growth curve is never easy, it’s never in a straight line but stick with it.

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#49 Amazon market research, credit & margins with Anthony Lee Part 1

How did you come to be selling on Amazon?

Working as a waiter! Not really. AL saw a video on PL on Amazon and that was it!

How come Private Label?

AL was taught only PL and that’s what he’s done. He only knows about wholesale from Will Tjernlund.

Do you sell only on amazon.com or also in the UK and/or Europe?

Currently in the USA. Everyone expands their business in their own way. AL has decided to focus on building off Amazon rather than expand Amazon internationally.


How do you find products?

The “Standard” answer: try to find things that you use. Walk around kitchen/dining room and when you see something that you use, you will able to ID with target demographic because you are in it! (About 2 products found this way). Makes figuring out Customer Avatar much less complex.

Then check the numbers to see if other people are making money with the product. If they check out, go deeper.

The “real answer”: Decide on a Category e.g. kitchen. Then look in the relevant dept at the shops, in your friend’s cupboard – become mindful and the universe will show you a product! [Then check the numbers]

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

Start with product on own merits. Then plan to expand into the category with your brand.  Then start thinking of the implications – what are complementary products?

How do you deal with the increased competition in the Private Label Amazon market( esp. USA)?

A lot of people look at the competition – there is a lot of “sky is falling” thinking!

The days you could trip over something to make $100K a month are over but that was always going to be short lived. Now it’s just levelling out.

BUT The idea it’s too saturated is silly. More people starting on Amazon leads to new products on Amazon which create new markets – also if you intro a new product, you’re the only seller!

You don’t sell a product and have an Amazon business; you have a physical prods biz and Amazon is just a channel.

Do you use other sales or marketing channels?

Took a while to learn that FBA is the most affordable fulfillment centre. AL spend 6 months looking for alternatives but Amazon is the best!

The next was finding companies to connect Amazon FBA to other channels. AL has put products on Jet – long approval process – eBay templates are being built. Next month going on Sears, Rakatan. Shopify site is nearly up. 

Tell us more about a “Customer Avatar”?

If you sell anything, you always have an ideal customer/target demographic. Person most likely to see, love and buy your product. Focus on them and don’t go broad – you will miss easily sales if your message is too diluted. Focus language- when you’re writing bullets/description e.g. if you sell male enhancement, the language is men “he/him”etc. – refine that ever deeper the more you know your avatar.

Ask” by Ryan Levesque (on Smart Passive Income podcast) uses surveys for this.  Do you do this?

It’s hard to do this because Amazon’s customers are not your customers. But once you have an email list, it’s very powerful, yes. But until you have that, just pay attention to your data.

If you run FB ads, look at the demographics and over time build a picture.

Gender, age range etc. e.g. Baby market – AL started with idea of just mums but gradually got more specific.

Surveying your own audience/buyers really does give you amazing results.

Yes, it is very important who you’re hitting

[Andre Chaperon the email marketing “guru” is obsessed with Customer Avatar].

Dealing with increasing competition – from moderate to tough. How do you deal with this?

Before AL used to say: “Find a product and do it really well.”  Now it’s: “He who has the most SKUs wins”. [SKU=Shelf Keeping Unit, i.e. a product line]

When you start out,   “failing” may be that your listing is buried in page X.  Once you get to the point where you know what you’re doing, “failure”=selling only 5 a day of a product.

But if you have 300 product lines doing 5 sales, that’s a living!

Having a fleshed out catalogue is  great for your brand. if you approach wholesalers you’re better placed. there are many benefits. It’s a very capital intensive approach but all of Amazon products business is capital intensive so you just have to be very intelligent with your product choices of inventory and expansion.

How do you make intelligent choices i.e. use of capital?

Most people come in thinking “If I can make $8000 sales/mo at 45% margin i could quit my job.”

AL says: “Keep your job and reinvest your money for 5 years.”

With a traditional business, you would give it 5-10 years before you give up on it. So why not with Amazon?

It’s a tough sacrifice but if you reinvest everything repeatedly, you’ll really build out your cat and have more options. That and intelligently using credit. Business credit cards are building AL’s credit and opening new SKUs.

Where would you advise using credit and where avoid?

If you can afford to make 3X the minimum payment per month, then using a credit card to expand your brand is okay. So in the end, that won’t hurt your credit. What you do have is new inventory to make new money off. This is a strategy if you have  couple of products doing pretty well.

If you’re starting out, it’s more of a risk. AL did max out 3 credit cards to start because he had no capital. It’s a personal choice. But it’s not a good idea to take out credit for a highly competitive product.

What sort of margin would you aim for in general?

Aim for 50-55%. It never works out that way because of competition and price wars. AL has an average across all SKUs of 36%. But the wiggle room is there now.

HOW TO SUBSCRIBE TO THIS PODCAST

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

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

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

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

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

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

1

#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

 

#40 Amazon Marketing Mastery Mini-Series: Niche Market (Part 1 of 7)

Show notes for Episode #40

Master Marketing Principles Mini Series: Part 1 of 7

Principle ONE: NICHE MARKET

Market=Buyers (Demand) and sellers (Supply)

They work in a Marketplace like Amazon

First thing is to find DEMAND

Understand the Buyers=Shoppers=Potential Customers

You need to define a PERSON and a PAIN (or PROBLEM)

PERSON implies Demographics eg age, gender, geography

PAIN implies Psychographics eg Personal Values, Motivation to Buy, Like Quality; Value low price etc.etc.

For example A 40-year old man who live in London

He wants to see clearly at night and not have to find batteries;

high Value: time, safety.

Competition (Sellers)

Look at competition through shoppers’ eyes –

They are looking for BENEFITS eg you can see clearly at night

Not FEATURES eg special lens on your light

So translate Features into Benefit

For example:

“Special NightVision (TM) Lens  – so you can see really clearly at nigh!

Rechargeable Battery XYZ type – so it will last for longer.

No more hunting for AAA batteries!”

Be a member of your target market if possible.

But then Ask  people (e.g., in person; survey; etc) to build up a picture of your ideal customer:
WHO are they? (PERSON) WHAT do they want? (PAIN)

Remember:

“Whoever understands your marketplace best, wins.”

 (Andre Chaperon of Autoresponder Madness)

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

 

3

#15 Planning for your Amazon FBA Business

This Episode, #15,  deals with a big area: Planning for your Amazon FBA business. It’s not as sexy a topic as some, but it’s a must if you want to develop momentum and hit big, exciting goals.

**STOP PRESS** 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 #15

See below Shownotes for Your Free downloadable Excel spreadsheet for Quarterly planning! 

    1. Overview
      1. Targets (money in) & Resources (money out)
      2. Approach/Mindset
        1. “Planning is indispensable; Plans are worthless”
    2. TARGETS/ Needs
        1. Financial
          1. sales targets -$/units/mo
          2. gross profit
          3. net profit
          4. free cashflow
        2. Exit strategy?
          1. timeframe
          2. value/money
          3. marketplace?
        3. time
          1. time to x sales/month
          2. time available (hours/week/month)
        4. contacts/prospects/customers  (if any yet)
          1. existing lists (if any yet)
          2. JVs (joint ventures – if you have industry contacts)
        5. Products
          1. Amazon Top Level category?
          2. no. products
          3. no units sold (inventory)
        6. skills areas to develop
          1. business building!
            1. mindset
            2. skills
            3. business structure (blueprint)
            4. planning
          2. product research
          3. sourcing
          4. marketing Channels
            1. Amazon PPC
            2. Email list building
              1. Lead Pages
              2. aWeber
              3. inserts
              4. FB marketing?
            3. Social media
              1. FB
              2. Youtube
              3. Twitter
          5. marketing calendar – depending on your market…
            1. Halloween
            2. Thanksgiving
            3. Christmas
            4. Mother’s day
            5. Father’s day
            6. Valentine’s day
            7.  4 July
          6. customer service
          7. financial planning
        1. professsionals/outsourcing
          1. photographer
          2. designer
          3. sourcing agent
          4. book-keeper/accountant
          5. Social media/blog VA
          6. customer service?
        2. mentors/peers

Your Free downloadable Excel spreadsheet for Quarterly planning! This is roughly the process I use but it is something of a first draft, so let me know how you would like this improved.

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.