#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.
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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 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
- 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!
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