On the show today is somebody who is really a big name in the ecommerce and online training for the ecommerce world, Steve Chou from MyWifeQuitHerJob.com. Today he will be teaching us how to get started with ecommerce off Amazon.
Steve and his wife started as consumers looking for a product (custom wedding handkerchiefs) that they couldn’t find, so they created it themselves. However, they had to order over 100 from the manufacturer, and they only needed 6, so they sold the rest on eBay. A few years later, in 2007, they got pregnant and wanted one of them to stay home. But living in Silicon Valley they needed two incomes to live, so they started looking for ways to replace her 6-figure income.
They remembered their success selling handkerchiefs on eBay, and started there. In their first year of ecommerce, they made 100K in profit. Steve’s wife quit her job and the rest, as they say, is history! These days, their online store Bumble Bee Linens is still going strong. They’ve both quit their jobs. Steve teaches others how to get started with ecommerce. Ten years on, Steve has some tips for people to get started with ecommerce today.
Get Started with Amazon
Start with Amazon. It’s the easiest option because there’s a built-in marketplace where customers are already looking to buy. In comparison, eBay is more difficult to use and the customers are more likely to complain and not willing to pay as much. However, you can use eBay to minimise your risk. It’s like a safety balance: if it’s selling on eBay then you know you will be able to liquidate it if for some reason it doesn’t sell on Amazon.
Steve mostly recommends starting with private label. Creating a unique product has more long term benefits. Retail arbitrage isn’t so good because it’s not scalable and won’t be sustainable in the long run (5 – 10 years). However, it can be good for certain personalities that are too nervous to go straight into private label. It is more temporary but it gives people the confidence to get started.
The Minimum Investment to Get Started with eCommerce
The minimum amount you’re going to need to get started in private label is $1000 but preferably $2000. Be aware that when your budget is very low you are limited to some of the cheaper products. If you do need to get started really cheap, go the AliExpress route. You won’t necessarily make a profit, but just break even and validate that something will sell.
As for advertising, you will need to set aside money for that as well. It will take you a little while to get profitable, but to get to the profitable point it depends on what you’re trying to sell and how competitive it is.
Tips, Tricks, and Tools to get Started with eCommerce
Steve uses Jungle Scout, Long Tail Pro, and Terapeak. Jungle Scout web app is a great tool but if everyone else is using that too then everyone comes up with the same products or similar products. In an ideal world, you don’t rely on that but some people get stuck and need ideas, so it’s great for students just starting out.
One way to start is to find something good on Jungle Scout then use Terapeak to make sure that it’s selling on eBay. Look for the sell-through rate on Terapeak (the number that specifies the percentage chance of an item selling once it’s been listed) to be over 33%. This provides confidence because if you know going in that you have a way to minimise your losses and liquidate your inventory to cash it removes a big mental barrier to entry for private label selling. Terapeak also cultivates and categorises the completed listings, including what’s hot. You can perhaps find something there because eBay and Amazon are different marketplaces.
Steve also uses Long Tail Pro to help find out what people are searching for on Google. You can use it to determine how viable a niche is in terms of a search for your own website. When picking a product to sell, determine how competitive it is in the website landscape because they’re two totally different marketplaces.
When just starting out, pick one individual product rather than a whole niche. You don’t want to spread yourself too thin and lose focus. Check reviews and revenues for products that sell at least 150 units per month and under 100 reviews per month.
Look at the product for things to improve upon. Look for something that doesn’t have a strong brand and something you can add value to, based on what is out there.
Don’t get stuck in analysis paralysis. Data is great, but there is something to be said for just jumping straight in as well. Pretty much anything sells on Amazon over the holidays! The real question is what happens after the holidays. However, do something if you get stuck. Get going and see what happens.
Watch Get Started with eCommerce and Amazon with Steve Chou Part 1 of 2
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