Avoiding Amazon Failed Products with Dani Avitz of Algopix
Avoiding Amazon Failed Products with Dani Avitz of Algopix

Learn how to avoid Amazon failed products, on how to resource dead inventory and more. Algopix gives a full analysis and shows the most profitable products.

How to improve Profitability 

  • Sourcing – if you don’t buy well, you won’t win (“Profit is made when you buy”)
  • Reducing dead inventory 

Dead inventory

Biggest pain points of dead inventory

If you buy some products based on intuition and they don’t sell, there are several downsides:

  • You’ve spent money (sometimes the bank’s money so you’ll pay interest on the debt)
  • You missed out on another opportunity (opportunity cost)
  • Usually, when we fail, it’s hard to admit we failed 
    • They say we are going to pay an analyst and “make sure it will sell” – so now we pay more money
    • Instead ask this guy – here is the good inventory I based on data, now how to expose more customers to this.  

In Dani’s previous agency, they had some great successes, while some products didn’t move at all. 

Clients called them asking why this was so and what they were doing with the slower-moving products. 

Response – “We don’t do magic. We take good products and help you with infrastructure.”

If you’re the brand owner – 

  • You pay money, you brand your product, and if you do a good job, you might succeed. 

The no. 1 rule 

  • Make sure you manufacture good products with demand (Creating demand is different from fulfilling it)
  • Get it produced at a reasonable price 
    • Look at competitors
    • calculate your expenses
    • Reverse engineer and get the price right 

Data is king

Creativity is important but the data is king to avoid amazon failed products. 

Let someone do the heavy lifting on the data though to save you time. 

How else to reduce slow inventory?

There are two aspects: 

Before you source, understanding the market – make a small bet

  • Maybe you can tell it won’t be a killer but it has some traffic and demand. 

It’s a bet -but if you bet on the product based on data you are in a safer position when avoiding amazon failed products. 

In addition,  if you bet on a product based on only modest sales data, you should be ordering an appropriately modest order size.  

If you are a PL seller, work with a factory that has a lower MOQ (Minimum Order Quantity). 

When you have a product already that is slow-moving. 

If you will have a decent chance to sell. 

Perhaps the answer could be international expansion. 

However,  maybe you’ll understand that demand is low and the only way to get rid of slow-moving inventory is to sell it for cost price. Bear in mind that demand varies and that maybe next month it will be easier. 

Is it important to assess taxes etc. as part of keyword or market choice?

Taxes are part of the game these days. 

Algopix produces a tax estimation. It is only an approximation but you may need to add about what it predicts. 

At this point, you might need to discuss with your CPA or accountant if you need more precise figures. 

Back in 2011, when Dani had started an agency, he visited big companies in UK, EU. 

90% of the time he sat with the CEO. 

The CEO would say “I know I can sell sunglasses on eBay. They are selling on eBay for $80, I can buy it for $20”

But Dani’s response would be: 

  1. Somebody offered it for $80. You don’t know if it sold
  2. Maybe it did sell but went for $60, not $80 
  3. You don’t know the cost structure. 
    1. Return rate
    2. Compensation for people who leave negative feedback (eBay) or review (Amazon)

You need to take care of all these factors before you can make any decisions!

Logistics estimation for FBM or own shipping

Since having product size and weight. 

This can only be an estimation which is pretty accurate. 

Amazon store audit

You should analyse your competitors’ overall offering if you are to realise understand the competition. 

  • What products sold, which one did not etc. 
  • Price points
  • The overall spread of products

It’s hard work doing this manually. 

  • A new feature for Algopix coming up – give them store URL – product level analysis. 
  • Great way to analyse competitor – maybe has 200-300 products. 

Is market research only something to do when you start a new product line? Or does it need to be continuous? And why?

 Established sellers still need to perform market research. 

  • You need to analyse existing inventory
  • Competitors
  • Consider international expansion
  • Renewing inventory
  • Expanding product lines

If you’re a reseller, you’ll usually get price lists 2-3X/week or daily. 

You’ll need to do a lot of research. 

For Private Label sellers, you always want to have a new line of products. So it’s even more critical 

You need to stay on top of your game in a changing jungle. 

  • There are marketplace seller changes
  • The marketplace itself changes. 

What makes Algopix different from the existing/standard market research software tools?

  • If you want to analyse multiple products eg 1000 products, you can upload an excel spreadsheet and analyse them all at once. 
  • Also identified unique identification process across different markets.
  • Also, have API access. This is great for larger businesses. 

How do people find out more about Algopix?

Youtube channel, blog etc. 

Free tools eg converting EAN, to UPC

Dani has recorded a video walk-through for Amazing FBA listeners/viewers, here: 

Are you offering any special bonuses for Amazing FBA listeners? 

Amazingfba.com/algopix 

  • A full analysis of the entire Amazon inventory
  • This shows the most profitable products and also money drains. 

Any final simple 1-2 pieces of advice for PL sellers who are wanting to expand their product lines?

  If you want to expand in inventory and are already working with a supplier, use the analysis tool. 

Product discovery if you want to find someone in general with broad keywords. 

This page contains affiliate links. That means that Amazing FBA will receive compensation from the service or product seller (“The Merchant” if you click on the link and go on to buy that service or product.

We only promote those products or services that I have throughly vetted (in many cases, personally use) and truly feel deliver value to you. It will never cost you extra to go via our affiliate link as opposed to going direct. Indeed, we always try to get an extra deal or bonus for Amazing FBA listeners and readers.

 

 


TRANSCRIPT:  

Michael Veazey 0:20
starting a business on your own can be lonely and worrying. selling online multiplies this issue tenfold. Getting expert help is a great way to reduce anxiety wasted time and confusion. The amazing FBA mentoring program is in its fourth year of helping sellers to get started on Amazon. By now we have former clients who have starting from scratch, done six figures and even in one case, seven figures a year. Obviously, these are not typical results, these are exceptional people. Nevertheless, we can help you get launched faster, safer, and with a much higher chance overall of success. with clients from Melbourne, Australia, to Manchester, England, we bring a genuinely international perspective, to find out more, go to amazing fba.com forward slash mentoring. Thanks for listening. So tell me about the dead inventory thing. So that’s obviously a very critical topic for a lot of people. If you over there, and you’ve got inventory sitting around, that’s not shifting, that’s that’s cash tied up. It’s going to be high storage fees, and amazon.com particularly will know the American Amazon Marketplace will punish you quite severely for that these days, especially in q4 as it’s coming up at the time of recording. So tell us how your best strategies for reducing dead inventory. How does that work?

Dani Avitz 1:40
So let’s do first of all, let’s talk about the pain, the biggest pain points for the inventory. So besides the fact you pay to Amazon, and you’re forced to pay for this inventory, just think of the falling situation, you just know the price pause for one for suppliers, up just some of the products Ben’s based on his recommendation, or intuition or lacking market research. And now you ended up with the inventory. Now, let’s think about the results of this. So first of all, you spent money. Usually, as a business owner, it’s not your money, it’s not the bank’s money, so you’re going to pay them an interest. So for this that, then you missed out a good another good selling opportunity, right? You you decided to solve bed product instead of good ones. So now you lost wife, right. And now let’s add to the most of the people like they have. And it’s okay, we are all human and it’s natural. Usually, when we fail, it’s hard for us to admit we failed. So we say it’s not a dead inventory, going to pay someone like Junior analyst, and is going to sit and see what they what they did wrong. Or maybe how we can improve. or eBay or Amazon visibility, right? How we can make sure this product will sell online. So we spending another money, we can good money for this baby inventory instead of taking this guy. And they’re saying, Hey, this is the good inventory, I bought a sauce, not my hands, a gut feeling. I saw this by my beta i received. Okay, and now let’s see how we can expose this many potential customers to this. So this is those are the main biggest points now. Like everything, the reason why we understood why there is a dead inventory. And it’s a major problem. Because some of our customers in our previous agency, we used to we had a great success stories, but some of the products I mean, there were bestsellers, some of them were so slow movers, you know, nothing happened. And from time to time, the business manager or the ecommerce manager called us and says, Hey, guys, you’re doing such a fantastic job with some of the products but what happens for those products, which they don’t sell. So without them, we don’t do magic’s okay. We know to take good inventory, that good product that you were able to purchase in a in a reasonable price, and make sure people will see them and we to help you with the infrastructure. This is in general, I can’t take slow mover and make sure it will be a best selling product tomorrow. I mean, if you’re the brand owner, and you are for example, you’re a private label seller, so we’re talking about branding, it’s a different thing, you pay money, you you brand your product, it takes time, you might end if you do a good job, you you might succeed, but again, people are buying good product. So you should make so the number one rule in order to make sure you avoid that the inventory is a to make sure you source or manufacturer, good product with demand. Okay, because it’s another it’s a different opera, if you want to answer demand, or to create demand. And second is ok, you understand there’s a great demand effort for this product, make sure you buy I mean source organic produce this product in reasonable price. So for private label sellers, I want to stay say, See your competitors be able to predict what’s going to be your additional costs related to save this product, do you know calculate the Euro expected expenses do reverse engineering the be able to understand how much you’re going to pay for the factory in order to produce this product because perhaps the additional $1 is going to kill your entire margin. So and you know God is in the small details

Michael Veazey 6:17
that is in the D says I like that is a different operation. So let’s just quickly recap, because I think this is really, really important. And at the first of all, that the first thing he said, I think is the most important which it comes down to a human trait, which is that we don’t like to admit we failed. And as I suppose it’s to do with that concept of Seth Godin calls the sunk cost, which is to say it’s with the mentality problem, really, which is I spend $10,000 on this and $2,000 five years of my life, two years, my life, whatever it is on x, and therefore X has that value to me. But the true values, the marketplaces, whatever the marketplace tells you, right? So I really like the fact you’ve lived that up, because I think it’s so was so critical. And you’re absolutely right. I’m normally the guy that people call and say, Okay, well this product is not selling, they call me and say how can I magically make this launch? And my answer is, well, if your market research sucks, and you bought it to higher price, you sunk, it’s already over, you know, the opposite is over. If you bought a wonderful product, but it’s too expensive, or if you bought a mediocre product, that when people get it, they give you bad reviews, you know, it’s not gonna happen. So I really like the fact that basically, it’s all at 20. Right? That’s my response, my take on this, but there are some products that are going to go crazy and sell really well. Some that sell Okay, and some they’re just dead. And if they’re dead, I guess you just need to abandon them. And that’s more or less what you you had a policy of the agency, right? You didn’t spend lots of time trying to push a boulder uphill, just let it lie there because it was a bad choices. Is that a fair summary?

Dani Avitz 7:54
Yeah, it’s actually I couldn’t phrase it better. And you know, we all women, woman, people, and most of us are entrepreneurs and business persons. And it’s not easy to admit, hey, I took a bad decision. But sometimes it’s the best for you your time, your energy and your money and your business to say, Okay, that was a bad business decision. But I’m a smart person, I’m going to learn from it, that my next procurement would be much better because it would be based on data. And, yeah, in differential eventually, we can, you know, creative is super important thinking out of the box is super important. But eventually, the data is out there, just let someone grab it, find it for you collected, analyze it for you, and serve it to you. So you will be able to make better business decisions

Michael Veazey 8:57
like that. So setting the date on a plate, I like it. So Emma is so assuming that you’re going to make a certain amount of less than optimal decision. So we say not necessarily bad that that’s the thing. If something’s really, really bad, you only know about it, but it’s that gray area in between. Right. So what do we do with reducing semi dead inventory? There’s moving but not very fast.

Dani Avitz 9:18
So, okay, growth question. And as far as I can see it, no two aspects. First aspect is, you just performed a market research and the result is not, you know, you can tell it’s not going to be a killer. But in addition, it’s not. You know, it has some traffic, there’s some kind of demand level, and you understand it’s a bit. So first of all, you understand it’s a bigger bet this is, this is a progress, right? Because you have the data. And if you bet on this product based on data, it’s your call, okay. And if you’re so this is one thing, in addition, if you if you bet on your product based on data, and perhaps you can spend less money on it, I mean, if you’re a reseller, so you source only 20 units instead of 200. If you’re a private seller, so you you’re going to search for a factory that offers a lower MOQ new quantity. So you actually reduce your risk right. Now, that was before you saw so put this your product. Now, what happens if you already have your product, and you understand that this product won’t make you rich, but it has a decent chance to be sought to get on. So in this case, first of all, other pics shows you different insights about 16 different markets, as I mentioned before seven of eBay, eight of Amazon and Walmart. So perhaps the answer for you will be international expansion, not sending on in the UK or in the US, perhaps and getting Australia and maybe you will be able to you will understand the demand is low. And the only way for you to get rid of this engine to send me the inventory would be selling it for you know, for for cost price. So you want so your body will be zero, but at least you get rid of it. And who knows maybe next month it will be much easier. And you would be able to say it only for cost minus. So this is how I see it. First be able to understand before you source or produce your product, this is not a winner, but but be able to bet on it. Secondly is to have you already have this product. So perhaps your solution is reducing the price or maybe set it in a different market that you didn’t, you know, the to your your current thinking of

Michael Veazey 11:56
great and either for another experience, I was listening every night and I had to go Well, yeah, this is common sense. But again, I think it needs to be said because a lot of the time common sense leaves the the building. And once your egos involved, as we talked about before and denial starts happening, we are going to make this product work. And that’s not how it works in Amazon marketplaces anyway, and I don’t think anywhere really, especially Amazon, but yeah, international expansion, be prepared to move it across place. And I really liked what you said as well, if you if you’re not sure that it looks like a real winner, but you’re willing to take a bet then make a small back basically places more back proportional to the sort of questionable nature, if you like, of the demand. And that’s really something I really, really push people to do is if they’re starting out from scratch, is not to do the classic private label thing that I was taught back in the day. And 2014, you could kind of get away with it to a degree but buying $5,000 worth of inventory when you’re not really certain of it is not a smart play. And as you say, there are factors that will work with ease of use mall mo keys or sort of test runs, and some that won’t. And I think reducing risk is really good. So I couldn’t agree with you more on that. So, so wanted to reiterate that anyone who’s listening, please don’t go in and spend all your money on one product without any expertise. This is not wise. So tell me about a couple of the details. And with market research, is it important to assess taxes? Is that really relevant these days? Is it big enough? Or is that just gonna add to confusion?

Dani Avitz 13:22
So taxes are part of the game, right? We know that the world is flat today, when it comes to e commerce, however, you do taxes out there. So Olympics provides and toxicity estimation, because of course, when you produce your own products, the tax structure is is based on many factors. And some of them are total customers factors. But usually when you Hey, you will have to pay additional $30 in taxes, in order to make this transaction happen. Usually this international production happened. So you will probably have to add $30, maybe 32, maybe 27. But it’s there. And you perhaps you should discuss this with your account CPA, or just to make sure you you’re familiar with it was again, many people they say hey, you know, I want to tell you a story. Back then I think it was 2011 when we just started the e commerce agency that was acquired, eventually. So we visited the biggest retail companies in Europe, in Israel, we had several customers in the US as well. And you know, usually when when I come for a sales meeting, so usually we 99% of the time, we said with the CEO and the owner, sometimes it was the same person. And they use the sentence. Hey, I know I can sell Google eBay, for example, because I sell sunglasses, and they just got prepared for the meeting with you. And they just found out that these sunglasses were sold in eBay for $80. And I buy it for $20 when it comes for branded services. And then I usually tell them, Hey, hold on, you saw someone that offered those sunglasses for $80. First of all, you don’t know if it was sold at all. Secondly, you know, in eBay, for example, you have what they call the best offer mechanism. So you don’t know if maybe it was sold. But for $60, then you have no clue about the expenses of thing, this product to be able to send it over to the end user, you don’t know how your return rate is going to look like you don’t know anybody with competency compensations, you will have to pay for people that will tell you hey, I’m going to review a negative feedback. So there’s so many factors out there. Therefore, when you start your own business plan, you need to take care of any one of the water, water mentioned any one of the factors I mentioned, and much more taxes are one of them. So if it’s $30, or safety for a 32.9 or 29. This is less relevant. As long as you understand their taxes, you understand the taxes, the range of the of the taxes, right costs. And you understand that your market research if you’re going to, to analyze specific markets should include taxes as well. Same for logistics, by the way we provide. Since we have the product dimensions and the dimensions, we also provide shipping estimation. Also, it’s an estimation because I can’t tell you in advance where your end user is going to, to ask you to ship his product, right? Is he going to ship it is? Is he going to ask you to ship it for his office in in Manhattan, or maybe to his home in New Jersey. But I can give you a pretty accurate estimation of the shipping costs. So if it’s going to take to cost you another 20 cents. This is not interesting, right? What’s interesting is the to know how much you’re going to pay difficulty on this logistic process.

Michael Veazey 17:43
Yeah, great. So again, once again, you’re just pushing it back towards the idea that you really have to know all the details. And I really Yes, a very good point, just if you see somebody offering something percent price, doesn’t mean that actually selling it. If he’s most of the research tools on Amazon, you can only see if people are actually been selling this price. And I think there’s only only a few price points that is really significant in the market, right because it is not selling, then it doesn’t really matter what they think the price is not real.

Dani Avitz 18:10
You’re right. In this point, I just want to share with you and with your listeners, but it’s a secret, a new feature, we’re about to deploy to release, within a few weeks, it would be we didn’t name this feature yet. So it’s really new. But it will be like an Amazon store audit. Just imagine you you see one of your competitors that you believe is doing pretty well. Like we said, we don’t know, if they said one thing so and you say you see that this competitor he hears like I don’t know 200 or 300 products or perhaps thousand products, and you wants to know what’s going on what products he was able to say no to, you know, like to be able to analyze like this, like an X ray of his Amazon store. So you will be able to provide our pics with the store URL. And you will get a detailed report in their own a product level analysis that will tell you exactly which product he was able to sell the expenses breakdown number everything you need to know. So this will be amazing and we’ll be able to share with you once it will be released. Perhaps it will be released within one or two weeks after this interview will be would be released as well.

Michael Veazey 19:39
Great. Well, we’ll keep people informed. And if you want to hear more or read the Show Notes for this episode, go to amazing fba.com forward slash elbow pics SLGO as an algorithm. BIX, right, that’s correct spelling elder say another question that comes up is this that obviously for new people, for newbies are starting however you want to call them. product research or market research is a critical thing and people spend hours obsessing about it. Now that can be the idea amongst established sellers that they no longer need to do market research. And what’s your response to that? Do you think established sellers can just get on with logistics and marketing sales? Or do they need to be doing market research as well still,

Dani Avitz 20:20
okay, from my experience, from our experience, both new and established sellers needs to perform market research because let’s let’s talk about established sellers, because we all agree that new sellers must use a market research tool. So an established seller would like to analyze his existing inventory. And to see in what other markets can sell. establishing an existing seller would like to analyze different products that are being sold by his competitors. So if the first use case was international expansion, the second use case is competitive analysis. And of course, existence center would like to renew his inventory and to source or produce new products because you know, even Apple which they they produce new products every six months, right? So as a seller, if you’re if you’re a reseller, you usually get price list on a daily basis, at least two, three times a week. Because this is your business, you’re you’re scouting for new opportunities, you want to know what works best, like I said before the 28 is a political principle, to be able to sort out the only product that you will be able to sell with the greatest profits and and stores it. So this is for resellers. for private label sellers, you always want to have a new line of products, right. So even for existing sellers, they can use and they should use market research tools in order to make sure in the top of the game, make sure the source of produce the right product, analyze the competitors because, you know, marketplaces, eBay, Amazon Walmart jungle, we have many changes mode from cast a bozo both by sellers and both by the marketplace. The marketplaces that, of course, on a weekly or monthly basis, and you want to know and to be able to you have the most up to date, information, of course, for pricing, it helps you to price yourself better. So first in person to me, and we have your mother, your listener, more listeners are more than welcome to visit our topics to see our RP scholar section, which contains lots of content, including case studies. And in this case that this section you can see you can read about real people from real companies who sell a lot of products, some of them has like 40,000 products. And they’re being they’re being active. They’re active sellers in Amazon, Amazon, like from 2002 or three. And they use our pics and they say we use our pics on daily basis. And by the way, speaking of that, so the other piece has to and in addition to what I just mentioned, a couple weeks has the following. First of all, we understand that many times you would like to analyze more than 123 products. What happens if you want to analyze 1000 or 2000 to 5000 products? What will you do so for that, I’ll go pick says a great feature that allows you to upload Excel spreadsheet with up to 3000 products and get all of your products analyzed at once. This is one thing. In addition, we developed a unique identification process, we know how to find any product and by any identify on different buckets. So the data we provide is very accurate. And it takes us less than 10 seconds to analyze a single place that In addition, we have our API. So this is the place to mention that we also provide API access. This is especially interesting for larger businesses will need to to analyze many products in real time, usually on the on the daily basis. So this is another angle of my answer to a question, be companies who are already selling online, but do need to perform market research on the databases.

Michael Veazey 24:29
Right. And I suppose that’s one of the ways that differentiates our topics from the other sort of research tools out there, which are more geared, it seems to people who are just starting out and who wants to find the magic of products or products rather than, you know, working in bulk, which is Yeah, being able to scale things is always one of the biggest issues once you’ve got a significant number of skews. Yeah, this is great stuff. How do people find out more about other pics and I’ve already mentioned the link will put in there and you have some case studies are there any sort of what other ways that you know upset that people can find out about our go pics

Dani Avitz 25:04
to find out everything about us just head to our website analytics.com. You might also find our blog interesting, it’s all about ecommerce where we built them useful tips and resources. And we also recently published an E book about how to get started on selling on Amazon and of course FR on YouTube Channel. In addition, with many freebies like free tools to convert between up CTN invoicing and vice versa. And I think most of I think, provides a great knowledge information for ecommerce,

Michael Veazey 25:42
right, and one thing we can say is that we’re all going to be creating a walkthrough of your tool for amazing bear listeners. So if you go to Amazon fba.com, forward slash out Apex if you think this might be a tool, but you’re not sure that you want to use them, we will put the walkthrough there. And it will also be on YouTube as well if you’re watching on you or in fact, if you’re listening to the podcast pop over to the amazing FBA YouTube channel. And you can find it there as well. So we will be going through that in detail and be interesting to see exactly how the cycle works. So for the moment them for the this is any final simple one or two pieces of advice for private label sellers specifically, which is our main focus here. Who wants you to expand their product lines? what’s what’s your main sort of most general advice thinking about your agency days?

Dani Avitz 26:28
Well, if you want to expand your inventory and are already working with suppliers that can only recommend to try out or bike analysis. As I mentioned before, you can analyze up to 3000 products at a time so you can easily upload the price quote, or any other product listing received to get the insights I was talking about. And if you’re looking to expand into new niches and want to grow the market opportunities, the product or topics for the discovery tool is the right thing for you. Because if you’re looking for new opportunities, you often don’t you often don’t have some specific products in mind yet right. So here you can search with broad product keywords and see relevant listing to get a quick overview, you can take your analysis further to for the products you’re interested in with the insights we provide. One last thing we also prepared something special for amazing FBA listeners. your listeners will be will get the full our pics analysis of their entire Amazon inventory for free. This is perfect to identify which marketplaces across the guild is the most the best profits for their inventory. All they have to do is to contact us and mention Amazon FBA in the queries title, we get it done for them for free.

Michael Veazey 27:48
Wow, that’s a really helpful awesome because that sort of analysis can be very either taken a lot of time and effort if the CEO of a small business is still doing that stuff, or Yeah, if you’re going to pay somebody to do that it’s going to be enormous paid. So that’s a really valuable bonus and just again, if you contact our pics direct just mentioned amazing FBA or you can go straight to the website will put a link out amazing fba.com forward slash elbow pics. So Danny, thanks so much for taking the time to come on today. And all the way from Israel, your guests all over the world. Israel. We’ve had a couple of days from a couple of times, but but different from the US perspective. And very interesting that you’ve got quite a connection from the USA and Europe from what you’ve been saying. So I guess you have a real overview of how this stuff works and your software being built in response to really a genuine understanding of the market and what people need. So very reassuring. Thanks so much for coming on and have a great day in Israel.

Dani Avitz 28:45
Thank you, Michael. It was a pleasure speaking with you and the hope that your listeners will find interesting and hopefully if so on land, at least one thing from this interview. So it was worth everything. Thank you so much. Thank you

Transcribed by https://otter.ai

Watch my full interview with Dani Avitz