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On this instalment of Amazing FBA, 10k Collective member Ashley Pearce returns with part two of our interview. If you missed part one and you’re a seller new to Amazon, make sure you go back and take a listen to Episode 252. If you’re already caught up, today we’re going to be talking about scaling a business; specifically scaling a business up to $1 million in turnover per year.
Setting Realistic Goals when Scaling a Business
For the second time in our two-part series about selling on Amazon, Ashley mentioned the book Think and Grow Rich by Napoleon Hill concerning goal setting and nurturing a specific desire in your mind. The particular goal we’re talking about today is scaling to $1 million. However, if you focus solely on the money, you don’t necessarily get the motivational impetus you need to grind through the moments of frustration involved with building and scaling an Amazon business.
Intrinsic motivators, for many, are the key to success. Money is a key enabler, but it’s just an enabler. The motivation to grow and be successful often must come with a big-picture lifestyle change in mind. Without big-picture motivation, the inherent bank account yo-yo effect inherent to Amazon retailing can be enough to kill even the most money-motivated seller’s drive to succeed.
Building a Support Network that Actually Works
Like so many others looking to grow their business on Amazon, Ashley struggled early on to find support in his peer group. His colleagues from his day job could understand the language he was using to describe the problems he’d encountered in the Amazon sphere. But when it came down to brainstorming to solve them, they were of little help.
Every time Ashley would face a stumbling block like a product that failed to meet early expectations, he’d find himself isolated. He’d pore over the data hoping to see a glimmer something he’d missed the last time around. Without a system of support build on real people who were experiencing the same kinds of successes and failures, he was lost. That’s when he joined the 10k Collective.
Finding Perspective; Knowing when it’s Time to Throw in the Towel
Building a successful business on Amazon isn’t merely about throwing completely random products up in the marketplace and seeing what sticks. The path to Amazon success has become more complicated. You’ve now got to build a brand. Killing off a product that’s become a part of your brand comes with a complex set of consequences. Even if that specific product has been less than profitable. Sure, you could go ahead and cull the bottom 80 percent of your products in favour of the profitable 20 percent.
But what will that do to your overhead? Can your business survive now that your shipping containers are half full? Will you miss your black swan event by paring down a product that could have massive future demand? All of these things must be taken into account when evaluating product efficacy. Looking at products on an individual basis is essential, but keeping an eye on the bigger picture is paramount.
Sometimes it’s worth it to hold onto a product that’s only marginally profitable, or even not yet profitable. Continuing to order and sell that product keeps the overhead on the more profitable listings well in the black. Would it be great to be able to replace the stagnant or profitless 50 percent of your shipping container each quarter with brand new products that fit with your line? Sure! But that’s not always feasible. Product development is a time-consuming and expensive process.
Streamlining the Product Development Process
You don’t need a masters in mechanical engineering and a CAD certification to develop a good product in conjunction with a Chinese manufacturer. The process can be as simple as taking a few quality photographs and popping them into a powerpoint presentation. Then send that to your supplier to demonstrate changes you’d like made to your prototype. Don’t get me wrong, having a background in engineering helps, but it’s not imperative.
Another approach is to modify the sample physically and send the entire thing back to your manufacturer. With this approach, you’re not relying on crude pictures and vague language to make sure you get what you’re looking for. Â The more efficiently you can communicate your needs to product manufacturers the better.
Jeff Bezos, Jim Collins and the Flywheel Concept
Jim Collins wrote Good to Great in 2001. Jeff Bezos took the concepts in that book seriously. 555So much so that he brought Collins in to discuss his Flywheel Concept at Amazon. A flywheel is a mechanical device specifically designed to store rotational energy. Momentum is crucial to the development of any business. If you think of your Amazon startup like a flywheel, it can be challenging to get that metaphorical wheel spinning. Those first few inches of rotation may take days, weeks, or even months.
But once that flywheel is spinning it can be tough to slow down. With every incremental gain, the flywheel gets easier to turn. The concept applies to all endeavors in all walks of life.
Ashley Pearce is a member of the 10k Collective and six-figure Amazon seller. If you’re getting started as a seller on Amazon, or even if you’re looking to scale up, like Ashley is, toward that $1 million a year mark, check out the Amazing FBA Mastermind programs so you, like Ashley, can find a knowledgeable support community of your own.
Watch Scaling a business on Amazon with Ashley Pearce Part 2
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