It’s more than just growing your business on Amazon. You have to actively contact and cold call retailers in order to sell your products. It’s the next step in the process. You’ve sold on Amazon, you’ve diversified through other channels, and you’ve built up your brand. If you want to become a wholesaler, you have to take the time to build your brand. It’s not an overnight task. It takes a lot of time to build a brand.
It might not be a good idea to start large chains like Tesco or Wal-Mart. The better idea would be to find a smaller one in your area. Make contact with the owner or decision maker, and set up a presentation where you can make a pitch on your products. A fallback would be to create a PDF that goes over all the information. You can them email the document to them and follow up a few days later with a phone call.
You may not have the money to get a booth or a stand, but you can go as a guest. You can find local retails and get their contact information. Then you can send them an email and PDF where you talk about your company and make a pitch. One vital aspect, in order to become a wholesaler, is making these connections.
You can’t go to these retailers and sell some generic widget. It needs to be unique. It also helps to have several products in your catalog before you become a wholesaler. Bear in mind that even though it may take a year or two for your wholesale business to get going, the payoff happens when retailer orders tens of thousands of products at once.
The great thing about wholesale is the potential. It really is possible to to do great things with it. Whether you want to do it to make some extra income or make it into a large operation. Manuel has done this. He currently does about $300,000 on Amazon, and close to $1.5 million in wholesale. When you factor in his consulting and sourcing income, he is making around $2.5 million a year. The potential is there if you’re willing to put in the time and effort.
Get in touch with Manuel at importdojo.com and get a free eBook and newsletter.
Brad runs a one-stop consulting firm that helps Amazon sellers and one of the strategies they use is not to think of a product or product sales life cycle one dimensionally. There are different phases a product goes through. You want to identify those phases and what is need for each phase. A lot of people are wondering what to do for an Amazon launch. After the review blast is over, what do you do?
They have something called “Spur the Machine” that they do for their ASINs and sellers. It’s a four phase approach to the first step of getting something up on Amazon. In their experience, it takes about three months to get a product up and running and there’s a lot going into this.
The big thing is to take a snapshot, then stop and review your data. People tend to keep going and make small adjustments along the way. Doing that makes it difficult to see what’s happening and what’s causing it.
Some research was done on this topic. They gathered data from millions of SKUs and they found that the number of reviews stop mattering after 21 reviews. After that, it’s the amount of stars you have. Reviews matter for sure. Intuition would say that a product with 3000 reviews would do better than one with 100. However, according to the data, what really matters is the star rating.
Brad has found that when you run promotions, there is a higher rate of reviews that comes from people buying your product. The normal rate is about 1-3% of people who buy your product, will review your product. That number jumps up quite a bit when you run promotions. Usually, you don’t have to give away more than 30-50 units on products with a lower price point. With product over $100, you could probably get away with less.
A Facebook crowd around your brand is a great resource. You can promote new products there and get a good response
If you have built up a following around your brand. i.e. A Facebook page or group. You can leverage that following to help you. When you have an Amazon launch and are trying to get a new product out there, you can post about it on your page or group and tell them about your promotions, and ask them to leave a review. It’s a great resource if you have that following.
You can. It’s the idea of making your Facebook community feel special.
It’s hard to say. Within Amazon, it’s an individual person making the call every time. They have their SOPs that say if someone is given a promotion for a review, take it off. If it’s in a grey area, Brad has seen them overreach their bounds too much. However, there should be nothing against giving away promotions for your products.
It shouldn’t. It’s such a new thing and Brad doesn’t know what the internal procedures are but it’s not an incentivised review. You’re not saying, “Here’s a product so that you’ll review it for us.”
Brad could see that argument between two VPs as he has seen in the past, however, he doesn’t have much more insight than that. All he can really go on is the success of promotions in that past that his firm has experienced.
Are your products beautiful?
If you are selling on Amazon, you are likely private labeling products, probably from China. Although, if you are in America then you might be looking at other alternatives in light of Trump’s plan to raise tariffs. For now, let’s assume you are importing from China. China makes some of the world’s worst products. China makes some of the greatest, such as the Apple iPhone. It’s equally possible to create terrible products as it is to create amazing ones since 80% of the world’s manufacturing happens there.
Have you got a design that is interesting? If not unique, is it at least beautiful? Are you sure you are really checking the quality of your manufacturing?
From the consumer stance, simply put, is your product beautiful? Does it work beautifully? Is it reliable? Is it amazing?
Today, I was out in London and came across the amazing building. It was once a school for choir boys that is now a youth hostel. What makes it truly beautiful is the detail. They put so much care into the details that it is immediately striking. When you really look at the detail, it is magical as well.
Now my question, is your product doing that for your customers? If not, you need to get on that. I am, by no means, an expert in product design, but my business partner and I have some products on their way from China and we are very excited about them. We order samples from about six suppliers and got eight samples from some suppliers. We went through a lot of trouble. We reviewed 60 suppliers! Some were dodgy and their prices came tumbling down from $15/unit to $3; some didn’t have solid business credentials, and we rejected them.
We have a whole complicated system that we use to check out a supplier thoroughly, and I can go into that later if you are interested, but the big thing is to get a sample! Check through different photos on Alibaba, or wherever. Get out of Alibaba, do some Googling, go out and get some samples in real life. Whatever you need to do to get a vision of what would be your perfect vision of you product.
Keep in mind what your market wants. I’m not saying to create something in a vacuum. Never do that! Do research. Look at demand. Look at demand depth. If here a lot of sales in training shoes, but 90% is Nike, forget it. If you want a company that you can sell down the line for two or three times yearly revenue. If, you want a brand that people are willing and excited to buy. When people see your product in their search results, they should immediately be drawn to it and want to click. If you want a product where people will be amazed when they scroll through your photos and want to buy it. They you have to work and sweat and make your product beautiful.
Don’t stint on samples!
I hear complaining all the time about how suppliers want to charge for samples and whether it’s worth paying for. Let me tell you, it is. If you are going down the private label route, you’re going to be spending thousands of pounds, tens of thousands, don’t be cheap about the research. Don’t go too far and get 20 products when you know the 10th is really really good, but take the time to find that 10th products that is really really good. If you can’t afford to get the proper samples, can you really afford to get into private label?
The room is not mass producing cheap crap, it’s being the Apple iPhone of your category. China is the kings of cheap products, but there are still manufacturers where the designs are fantastic and the quality controls are rigorous. Even if you don’t design your own products,at least you can pick one that is still good.
You either have to do research designing your own product, or you have to do research in looking for a great design. Regardless, you have to do the work. Warren Buffett used to say, “You can either create value, or find value.”
Have you got a vision for you business?
I have to confess. I have spent way too long, jumping from product to product, trying to make a buck, which is fine. However, after a couple of years, I stop and think, “What’s it all about?” This is a very important question you must ask yourself, and it’s something that will change over time.
When I first started, my vision was to make a lot of money quickly and put it back into my life, into other projects that were important to me. While that is still a part of my vision, it has grown. Now my big picture is to build a business that I can sell for a decent amount of money, and be proud to own because it is producing really beautiful products; rather than before when I would grab any product that looked like it might sell.
If you take the St. Paul’s Cathedral, the full vision of the architect was never realized. As beautiful and amazing as it is, there plans were much bigger.
The first thing is, you have to start with a plan
You may not be working with stone and mortar, but it is still very similar. The financial aspects are similar. You have to work within a budget. Maybe you have more than you expected, maybe less.
In your business, you have to worry about competition
There are many other people that are selling the same or similar products to the same customers. You need to plan ahead to combat that.
You need to make your plan with the understanding that it will change. Amazon is always changing things, moving the goalposts. You need to have a plan that can adjust to change with it.
You can’t go in with £5000 and expect to turn in into £500,000 by the end of the year. Big visions are great, but you need to make realistic goals. You can’t invest peanuts and expect to turn it into a mint overnight.
While this has always been the location of the St. Paul’s Cathedral, the original burned down, along with a lot of the city, in The Great Fire in 1666. You need to be able to handle setbacks and recover. Sometimes we make a bad product, sometimes we get close to bankruptcy, sometimes we have business partnerships that go bad.
Out of that makes room for something bigger. A lesson to learn from the cathedral is the chance for renewal. When thing go wrong, that can open the door to create something much bigger, much better, and a much stronger vision. You can take lessons from before. Figure out what worked, and recreate those things, and figure out your mistakes and avoid them.
It’s good to make sure you have the right mindset but, I believe, success follows hard work. So e sure to go back, if you haven’t listened already, to episodes 115 to 120, for an overview of how to increase your profits by increasing sales, and reducing costs.
Think big. Act Big. If you are in London or come down to London, consider being a part of the AmazingFBA Mastermind group. My goal is to have two levels, one for those getting started and another for those that are much further along. All that is coming up so stay on the lookout.
The final 5th part of this miniseries of 5 episodes, this completes this overview of Profit Maximizing Strategies. Remember the basics: you can only increase profit 2 ways:
We looked last time at decreasing your overheads. Here we address the other profit killer: your Direct Costs.
Otherwise known as COGS=Cost of Goods Sold.
look at your Total Landed Cost (TLC): Here are some ideas for reducing these:
-Manufacturing cost – can you negotiate with your supplier for lower costs? If you order more units, can you get a lower per unit price?
-Freight cost – get multiple freight quotes. Order more in bulk so you can sea freight rather than air freight etc. Choose lighter products!
Also consider your Amazon costs when choosing a product:
-Weight handling costs: Consider product weight & calculate costs very carefully if considering a heavy product. Will it make a profit?
-Oversize product costs: same things to consider as heavy products.
-Amazon Warehousing/storage – generally these are low but again very bulky products may increase these – do your P&L calculations carefully as well.
Other supply chain cost reductions:
This is the 4th of 5 episodes in the mini series with One aim: Increase Your Profit!
Today we address the less sexy side of increasing profits: decreasing costs! All of us are to some degree aware of costs when ordering inventory because a sudden spend of several $1000 in one go generally gets your attention!
But there is a hidden profit killer that I’ve fallen victim to too many times: OVERHEADS!
Your overheads creep up over time, it seems, like weeds! Add the latest software product once a month, use a VA for research, add a bank account… and it can add up over the months to several hundred pounds a month. If you are running a huge business, that’s fine – but is it in proportion?
Here’s what works for me: every 3-6 months latest (don’t leave it for over a year like I used to!), I download a CSV of a bank statement. I go through all my expenses and ruthlessly cull half or even 2/3 – anything the business doesn’t really need yet and isn’t necessary for expanding in the next 3-4 months.
Check the best deal for a business address, phone numbers.
Do you really need complex accounting software? I’ve used Xero and A2Xaccounting for 2 years. I still can’t make my bank accounts reconcile with the system – the result is that the Xero accounts are wildly out with reality.
I’m giving up and saving myself £50 a month.
For sales and profits tracking, I find cashcowpro really really helpful at just $29 a month or so.
Bootstrap to start with, get the cash coming in and THEN spend a proportionate amount of money on overheads. You should in any case do things manually to start with so you understand your business numbers and processes.
Face it, we mostly check our sales stats more than once a day! It’s so easy to overlook overheads but the danger is that all your hard-won gross profits get swallowed in your overhead. I’m embarrassed to admit how long I let that happen. Don’t copy my mistake!
This 2nd way of increasing sales is so neglected, you can get ahead simply by implementing anything in this area!
The simple idea is to increase the AOV=Average Order Value.
It can be more difficult to implement on Amazon than just getting new customers but is potentially much more profitable.
If someone usually buys a $10 widget at 50% margin, you get $5 profit per sale. If you usually sell say 10 orders of 1 $10 widget a day, your profit per month=$5X10X30=$1500
If you can increase the AOV by say just $1, you would end up with $11X50%X10X30 profit=$1650. $150 extra ie 10% extra.
Multiply such effects across several products and it can add to your bottom line quickly.
The simplest way to increase your AOV is simply to increase price! But you have to weigh up against conversion rate changes etc. to see whether that increases or decreases your price.
Another way is to bundle together products physically eg a 3-pack, 4-pack, 6-pack etc etc. Easy and very very easy to sell on Amazon.
Another way that is even easier is to offer a discount via a promotion code. Eg BOGOF (Buy One, Get One Free) or buy 3, get 10% etc etc.
If you set things up wrongly, you’ll make less profit, not more, so know your numbers going into this! Done right, this is a simple way to edge up your profit margin.
A harder way but possible on Amazon, is to do cross-sells eg “this is also bought with X” (spatula with slotted spoon for example). It’s possible to influence this again using promo codes – you can offer a 25% discount off a slotted spoon, for example, when you buy a silicone spatula etc.
Another way that is hard to do on Amazon but possible, is to upsell eg from a $5 spatula to a $25 frying pan. Same kinds of methods.
Increasingly, we are looking at strategies that will work best when you have control – in other words, you start to build your own email lists (and other assets like social media subscribers/followers etc.).
There is one more basic way to increase sales that is used least of all by Amazon sellers but could be the most powerful of all…read on…to the next episode…
To find out more about the Amazing FBA London Mastermind mentioned in the episode, click here
JFDI -it’s nothing fancy; it’s a London saying. But it works…
If in doubt – stop making excuses. If you know you need to do something, Just Do It! It’s like Nike said (but with less swearing).
Sounds simplistic but it’s the mindset that gets stuff done: come what may, whatever it takes, whether you’re in the mood or not, inspired or feeling flat…do it anyway.
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
Option 2: Use research tools to generate ideas
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.