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#55 Amazon Private Label Strategies: Kevin King Interview Part 1 of 3

**WARNING: Contains a bit of swearing &  A Lot of Truth!**  

How did you come to be selling on Amazon?

Entrepreneur since age 4 when resold bubble gum to friends! Not had a job as an employee since age 17.  Direct marketing background not SEO. Sells calendars directly to consumers, also wholesale.

Been selling on Amazon since late 1990s – e.g. old CDs, DVDs etc.

Also in calendar business signed up for Amazon Advantage – media only e.g. CDs, DVDs

In Q4 gets purchase orders. Start of season 3-4 a week; end of season say 1000 a week.

That alone pulls in six figures – and everything else on top of Amazon orders is 100% profit.

So Kevin has seen the power of Amazon grow.

2 years ago he looked into the PL model but didn’t jump on it, which he regrets.

Started doing it May last year – doing some Retail Arbitrage – see how shipping and systems work. He realised RA is too much work and not scaleable. Race to the bottom.

Why do PL?

Calendars are seasonal. He had pay-per-view TV revenue stream but the internet had killed that off. Plus Kevin’s Background matched all the skills needed, including:

developing packaging, product development, online marketing -plus sourcing from China and Korea. So he went for it.

Kevin’s philosophy is to prove a product on Amazon then take them into retail on other channels.

Amazon is the bulk of his revenue. This is problematic long term because they could in theory shut your account down or suspend your best selling product at any point.

Recent example: Amazon wrote to Kevin saying they’re suspending his best selling product because of an image violation. They didn’t even tell Kevin what the violation was!

Kevin worked out it could be cartoons or extra elements in the images that he had put in. So he was able to deal with the issue. But it was a reminder that you’re vulnerable to some robots or some employee doing things by the book.

Where would you get started as a newbie with Product Selection?

How much money do you need to start in Amazon PL?

Product selection depends on how much money you have to start with.

Even Scott Voelker and other people say unrealistic things about how much you need to start. Kevin says you need a lot of money. There are stories of someone who started with $300 and made a lot of money. Some of the stories are untrue, some are true. But what’s missing: five days later that person took a loan from the uncle for $10,000 & 10 days later put $20,000 on the credit card. etc.

It paints a false picture. Some people get lucky, but it’s very rare. It takes a lot of work and a lot of money. If you just want a bit of extra holiday money you could do one of two products. But to make a living demands serious money, determination and hard work. Even Kevin didn’t realise how much money it takes even with his product.

Do you believe in staying in one Amazon category and building a brand? Or do you pick each product on its own merits/just follow the numbers?

In Kevin’s case, he started five brands because he came from a product background so he was a aware  one might not work. So he wanted to increase odds of success.

Launching second product won’t double sales unless it’s just an add-on or extremely complementary. So he’s not so worried about potential complementary sales.

However, if you can, do get them. An example is that Kevin started in the makeup category. The problem was  massive competition because it was easy to get into. Now for example he sells makeup tools instead of makeup itself, and many of those are complementary [cross sales potential].

How do you go about picking products? If you had $5000 to start out but potentially use credit card later?

If it’s capital intensive, what’s your approach to finance?

Kevin will make use of available credits. For example at bankrate.com you can get find credit cards listed. Like City and Chase which will give you know percent balance transfer and also wash purchases for about 15 months

If you have good credit and some good history, there’re other places like a deal struck on deck etc. If you have a pro seller account for a year and the metrics look good, Amazon will offer you a decent rate on loans as well.

How do you differentiate your products on the competition?

In some cases, Kevin sources products that are straight up private label from Ali Baba. But he makes a few changes. Every product has retail packaging.

A lot of people will take the brown box that is given by manufacturer, but customers care about the look of packaging.

Kevin doesn’t do an initial order under 1000 units – if he doesn’t have confidence in the product he won’t buy it. He believes he can sell out over time if it was a dud product. It may take a year and tie up cash but you can sell anything on Amazon in time. So the risk is not that great.

Kevin picked his first product in May 2015 it took two months to get products out but that was okay because he used for long photo shoots and made a really beautiful products and packaging.

Three Product Examples.

Example 1: Product for dogs, just wanted to do it, the research tool said no but Kevin wants to do it anyway. It’s doing well because it’s a great positioning and marketing.

He went to www.upwork.com for CAD design in Argentina which he had sketched on paper.

He went to one factory that messed it up; 2nd factory  however made new moulds.

Kevin rarely has a hijacker because they are original. The only time that ever happens to him is when you sell the products for $0.99 to people who have accounts on review groups. So they probably have 10 accounts and they basically use it today bit of retail arbitrage..

Example 2: Kevin spent $30,000 dollars on creating a mould and tooling. But where the best seller is selling a product for $10, Kevin is doing it for $100. BSR doesn’t matter to Kevin for that reason.

The competitor is making only $1 a sale, Kevin is making $20-$30. Because Kevin has differentiation against the high end to compete, BSR does not matter to him, also at the high end of product quality and price there is less competition.

Example 3: Kevin recently launched another product in the dog space. He did use tools like: ASIN Inspector, Jungle Scout, other tools including Merchant Words and UberSuggest. However, all these tools are just guesses. The only numbers you can totally trust are Amazon ads results.

Again, most of the competition were playing at the low end. They were the equivalent of McDonald’s, whereas he wanted to create a product that was equivalent of the best steak house in town/French chef. It’s a smaller market but enough to make it work.  They were using cheap packaging, where is Kevin created a  kind of cigar box type packaging.

Kevin’s product is twice as expensive as the main competition, and has half the number of products e.g. five treats instead of 20. On Friday it was put up with no promotion. He had 3 sales with no reviews. He started PPC (one sale) but it is already selling at a high price point without it.

Differentiation and going for the High End

Kevin makes sure to be different and go for the high end of the market [less crowded/more profit].

Kevin may sometimes go to Alibaba and source an existing product. However he will add pieces to it change things so it is different.That might be thought of as bundling, but Kevin things it’s bigger than that.  It is about changing things so it is different from the existing products.

He does not go into the model of getting it in fast and then get it shipped. He is in for the long haul, not “get rich quick”. People preach that model but Kevin doesn’t buy that.

Differentiation and building a brand is an end to end process. It is no good skimping on the product or if you have issues, even if the packaging is good, it will still go wrong!

Building on email list from your Amazon customers

If you use a manage by stats, they will take your Amazon customer’s postal address is match them up email addresses. This is not perfect, but 30 to 40% should match up. 

Testing your market and their views on products

Kevin recently send out an email to 100 people on his email list. He had 20 responses and he email he sent out 20 units from his competitors, In plain packaging.

He got great feedback on the pros and cons of different models. He also got the sales copy for his bullet and title. And he knew what was a good product.

Those who raved, he went back to and asked them for reviews. He had up a dead listing for the product said that it could have reviews on. So it actually had eight reviews on it before the product went live.

Reviews – numbers and discounts

It is a myth that you need 50 or hundred or 500 reviews. However, now you really need verified reviews. If you sell it out over 50% discount, it won’t be a “verified” review. Customers are also getting savvy.

Kevin now sorts by verified reviews when he is searching on Amazon, and other Amazon customers are probably starting to do the same.

An example of this is that Kevin got a product that got five stars reviews across the board from giveaways. But after it was used for real, the real reviews went down fast.

How to maximize positive reviews – Email followup tip

Kevin has the first email which does not even offer anything, it contains tips and suggestions and checks. For example if it is a potentially dangerous product, it tells the consumer to be careful when opening it.

The timing of this email is crucial. Assuming that most customers use Prime, they will receive the product two days after ordering. So Kevin times this email to arrive one day off to the order. In other words it is after the order but before they receive the actual product.

He puts the question in the PS: “Why did you choose us?” And offers a free gift if they onto this question. Always put something in the PS if you want someone to read it.

This gives an important psychological insight before they have a product in their hands. From this he can change the listing, bullet points etc. and he gets a lot of verified reviews. About 10% respond. It gives great insight into why they hit the buy button. The product itself can negatively or positively influence them.

You start to see patterns here.

Optimising listing

What are your main points? Photos? Title? Bullet points?

The title is really important. The reviews the second most important thing including a video on page 20 possible. Images are also very important. If somebody’s shopping for a well-known brand, the images not so important. But for private label, they are crucial.

Packaging is also very very important. If you have great packaging, it can help you make sales with the photo of the packaging itself.

An example of improving packaging:  Kevin started with a $1 box. The new box cost $2.20 but he was able to raise the price to $40- $50, his customers didn’t feel ripped off, they felt they were getting a good deal. This is what to aim for.

If you look at high-end products like Apple Samsung, the packaging is absolutely critical especially somewhere as competitive as Amazon. It gives the customer confidence even if it’s not fancy, it can be a couple bucks but the spelling must be good and it must look like something they can get in a retail store. In a retail store if you think about the people by based on packaging anyway.

You can use great packaging in your photos to catch the eye and differentiate your product.

Careful who you listen to

The figure of “ 50% of full price figure to get verified reviews” comes from Kevin’s own testing and people who know what they are saying. 

Kevin warns that some people don’t have a clue are giving advice, in Facebook groups and even some podcasters. Some give great value but a lot of the podcasters don’t have a lot of experience selling. It varies a lot. It’s best to trust the guests are doing the numbers.

[Michael does not claim to be an expert in doing big numbers, which is why these days he focuses more on more on getting in guests who are doing big numbers, and focusing on what they have to say]

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right away.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

2

#53 China Sourcing for Amazon: Keep money safe, Quality Control and Freight – with Manuel Becvar of Import Dojo – Part 2 of 2

(Part 1 of this interview for more from Manuel)

#53 Manuel Becvar interview – part 2 of 2:

How do you keep your money safe?

When you place order, tell them you’ll send an inspection team when 80% of production is finished, you’ll have to redo the goods and pay for the reinspection, and you’re not getting the rest of the money until the inspection is passed.

So never do 100% upfront payments; always pay 30% upfront, 70% when the goods are passed. 

Even if you just order $1000, please get an inspection; there are companies that will do an inspection with a 20 page report for $100 for one man-day, eg Trigo  if it’s simple. They send someone to factory and send report. 

Others are more like $300 for one man day eg Asian inspection for difficult products like electronics. But no use for say a comb or a brush.

How do you approach Quality Control for electronics particularly? The advice famously is to avoid electronics from China. [I had about 10% defect rate]

Manuel has 17 years’ experience in electronics, knows what certificates are needed and which components to inspect. He doesn’t recommend it as 1st or 2nd product.
But just get certificates, experts in electronics inspection. There is a higher defect rate – Manuel’s is about 4%. Lots of customers just don’t know how to deal with electronics, so they often send it back even though it’s working perfectly.

Is there a way to reduce defect rates?
Take reviews and customer complaints – Speak to supplier – 5/10 of reviews have this issue, can you improve on this? Also speak to inspection company and have them focus on those issues in future inspections.  

But Manuel does all this and still has 4% defect rate. Anything below 5% is okay  in electronics. Above that, consider abandoning the product.

FREIGHT

Air freight vs air courier -what’s the difference?

Air courier means someone like DHL, UPS, Fedex etc. They have special customs clearance channel and they handle the whole process for you. So it’s more expensive. An “All in” solution – where to pick up, where to deliver.

Air freight is same process but it’s usually a logistics company that works with big airlines e.g. China Airlines. There is more paperwork involved and you need to be involved. You need a customs bond, you are the ultimate consignee. You need to know the process.

Manuel has had rates for air courier of $4 /kg and for air freight of $2.30/kg so it can be a $2 difference.

Simplest solution is to ask the supplier about air courier or freight. Or ask their freight forwarder. Give them USA/UK address, tell them you need duties/import taxes upfront.
If supplier has no Freight Forwarder, just look on Alibaba or Google.

If you have to do DDU [Delivered Duty Unpaid], how do you avoid problems?

Suppliers usually have no idea how to deal with freight etc. – they are experts at manufacturing. Manuel works with a Freight Forwarding company DDP [Delivered Duty Paid]-it’s all in. They pick up at factory, they ship it direct to Amazon. He doesn’t get involved in customers clearance or amazon pickup appointments.

In the beginning he had to explain how to book appointments with Amazon.

So you ship direct to Amazon?

Yes. Always directly from China to Amazon warehouse.

What do you do about damage to packaging from Air Freight?

It’s a small %age. Always put a label saying “Fragile, handle with care” – this helps.

How did you train your Freight Forwarder?
They are based in Shenzhen head office. They knew how to deliver to USA -but they had never delivered to Amazon. Manuel chose based on price and helpfulness but had to train them in delivering to Amazon.  He gave them a clear workflow. After 2nd order, no more hiccups. 

So you don’t want someone who doesn’t know about exporting to USA?

True. If you can find someone with great price and knows about delivery to Amazon, even better.  Manuel recommends Dolphin Logistics, based in Shenzhen. Reach out to Manuel if you want more info.

How did you get $2.30/kg air freight price?

$6 for air courier is average. Manuel gets good prices because he ships 28 m3 a month!

To make it simple, give your air freight forwarders a clear business process. Tell them they need to deal with Customs brokers and make appointments with Amazon.

They can set up a Vendor Express account with Amazon to set up appointments (they can’t just turn up at an Amazon warehouse!)

How do you send inventory direct to Amazon from China? I guess you save money with intermediate steps but what are the risks and how to you mitigate them?
Manuel thinks  it can all be done cheaper in China. Get them to put FNSKU barcode on inner packaging, prepare cartons according Amazon requirements e.g. size, send them the shipping labels from Amazon seller central and you’re good to go.

If you have more than 20 cartons, the supplier needs to palletise the boxes in China, otherwise Amazon will give you a hard time!  If you have fewer, it’s okay for Floor Loading.

How else can you speed up your supply chain?

Don’t take care of the details yourself. If you have 10-15 products and have customer service, taking photos, etc etc – outsource everything you can to inexpensive VAs.

Focus on growing your business:  

  • New products
  • Optimising listings. 
  • New eCommerce Channels
  • Retail! Go to local store and ask if they want say 50 units.

Tell us more about expanding business – selling to retailers

Manuel actually started own business selling to retailers (through his time in HK) because he just thought Amazon was another eBay. It’s easier to start on Amazon, built a brand, built a reputation for products then reach out to retailers, DIY stores etc etc to sell wholesale.

Any other tips on the best way to approach retailers?

Start locally. Look into smaller importers that set to big brands at an exhibition & approach local distributors. If you can’t go physically go to exhibitions, go to exhibition websites and check then names of companies that exhibit, check them out and email them!

“My name is X, this is my brand, I’m importing direct from China, are you interested in buying?”
  

Are there other ways other than unique products and high quality to protect your brand against competition?

One thing is to have Amazon brand registry. Other than that, be better in terms of quality. Don’t give the competition grounds to attack you – quality, customer service – try to be an awesome company. Even if first few months not highly profitable, eventually it will pay off.

What is your prediction for competition in the next year or two? How do we protect ourselves?
Manuel had 6 enquiries last month in his sourcing company for a product that everyone is selling! Nobody has any imagination, it seems!

Be unique, have expertise in your product and be creative. Yes, competition is increasing but so is the market – Amazon has 51% of the (USA) online sales. There will always be a customer for [good] products. The USA population is about 300 million people!

CONTACT

How can listeners find out more about you or learn more from you?

Go to importdojo.com – there is a contact us page – or email [email protected].

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right away.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

2

#52 Working out UK Import Duty, Using Amazon Inbound Shipping – Q & A Tuesday no. 5

#52 Q and A Tuesday no. 5

Q1 : ANILA: For products coming from China to UK, how do you work out the duty value to put on the boxes to estimate for the taxes? Not a VATable product

MICHAEL:  Basis for duty is Commercial invoice value = Manufacture cost plus freight (if your supplier is handling freight, it will probably be on the same document). AKA Total Landed Cost (TLC). Then put that value into the dutycalculator website. 

Any freight experts here, please feel free to correct and or refine this statement.

If you are using a Freight Forwarder or even just a Customs broker, obviously ask them how it works and check any nuances for your own product.

Q2: BEN: Hi gang! Thanks for your help with my previous question. Here’s another one. I’ll shortly be sending my first delivery to Amazon. I haven’t finished the ‘send/replenish inventory’ section on seller central yet (as I’m not ready to send yet), but when i am, I presume I’ll end up on a page that tells me how to organise delivery with one of Amazon’s preferred carriers?

Otherwise…the Amazon help pages aren’t very helpful in detailing how I actually get my stuff from my house to their warehouse! I understand that amazon’s preferred carriers offer discounts for going to amazon…which I presume I book through seller central, rather than parceforce.com, for example.

MICHAEL:  Yes that’s right. Amazon’s preferred carrier is just the one, UPS. They give Amazon amazing shipping rates. Something like £1 a kg or less. Get a quote at the Post office or from a courier yourself and you’ll realise how cheap they are.

STUART: Unless, I have missed something but my experience of using Amazon’s preffered carrier, UPS, only applies when shipping from within a particular country.

For example, rates are fantastic when shipping from UK to FBA in the UK. However, when shipping from UK to FBA in the US, there are no special rates. I have found using Transglobalexpress to be very competitive, and they use UPS as well as other carriers.

MICHAEL:  Thanks for the hint, Stuart. May I ask why you’re shipping UK to US in the first place? Is it sending stock from UK you already have here in order to test the market for that product in the US?

STUART: That’s correct. I merchant fulfill in UK, and have sent stock to US FBA to test market.

Q. 3 BEN: Guys, I’d be interested in your take on this idea. Especially MICHAEL:  after the last two podcasts… I have heard some stories of people sending off their branding to suppliers to get branded samples, and then when they choose another supplier, the un successful suppliers have gone and made stuff with heir branding and sold it on to other people, or just gone ahead and stuck it on Amazon themselves.

What are your thoughts on getting samples made with ‘test’ branding. e.g. my branding with watermarks over the top. That way I can still see the quality of the printing/branding process and can still see roughly what my branding looks like, but I’m protected…

MICHAEL:  thanks for raising this point. A few thoughts:

yes that is a danger. It does happen.

Firstly, short-term, nobody really cares about your brand yet. So I wouldn’t over worry about it yet.

However, I like your idea in that you are testing the quality of printing but protecting your brand.

For that matter, if all you want to see is the quality of printing, you could use a different brand altogether!

But The only thing I would say is that by doing this, if you decide to go ahead with a supplier, you probably should get another sample done with your actual logo. Which will delay the process.

You could just trust them to do it well and get it done, I guess.

Overall, I’m basically in favour of your approach.

However, I would say this: I’m not sure how much back and forth you’re doing with Suppliers with samples. But it is really important in the PL market now it’s so crowded to move fast when you spot an opportunity in the market.

SO for speed, I would get my 2-3 samples from suppliers upfront without worrying about branding. Just check out the quality of the product. That should take max 7 days from order to having it in your hand.

Then choose a supplier on the back of that.

If you want to then check the quality of the printing of logos etc from your chosen supplier at THAT point, I would then order a proper sample with your real logo. Unless they really mess that up, I’m going to place an order. If there are minor defects, I’ll have them correct it and then send me photos of the corrected sample.

Then get the order placed and in manufacture

Please understand: There is nearly ALWAYS a trade off between speed and quality.

Yes, it’s good to have a professional process in place and yes you should protect your brand (reputation) and IP (Intellectual Property).

However, if it takes you 6 months to get to market with a good, but not amazing product, which is frankly pretty much the same as everyone else’s, the competition will often have killed off the profit in that market.

You’re better off getting your good but not great product to market, learn about the realities of trying to sell, listing optimization, handling Adwords etc etc and get some feedback from customers.

You may then simply choose

  1. to abandon that product, if quality is too low or it’s not profitable OR
  2. you could go back to your supplier and customise the product in response to customer

3, or if quality and sales and profit are all good, just go back and reorder!

Either way, you get MOMENTUM. Do not underestimate the importance of this.

“Money Loves Speed”. Quality, sadly, does not.

An eternal conundrum. My advice (as a perfectionist): “The Perfect is the Enemy of the Good”

Good luck .

BEN:

Thanks for the excellent and in depth response – it really is appreciated.

I have decided that this week I’ll be sending a ‘test’ version of my branding to three suppliers for samples. I expect to get them in 7-10 days, and then I’ll trust the best one to go ahead with the first full order using the real branding.

My ‘test’ version is close enough to my ‘real’ version that I’ll know what it looks like from the sample (it’s basically my branding with a ‘test’ watermark over the top, but in such a way that they can’t remove it’.

MICHAEL: Sounds perfect, good process. I like the thinking.

BEN: Only issue now is finding the guy who is going to design my packaging…wink emoticon

MICHAEL:  By the way, don’t assume that the Chinese will care about the watermark. If they spot a product that will sell, they will be interested. Period. Part of doing business in China. Yes protect your IP to a degree, plus make it clear in your paperwork that they are not allowed to use it. But then you’ve done what you can in practice. Then move on!

Also don’t spend much money on design before you know if the products are worth selling.

First check the sample quality before you invest time money or energy in it.

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right away.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

3

#51 Using Amazon Suppliers & Building Quality products with Manuel Becvar of Import Dojo – Part 1 of 2

   This episode, #51, is the first of two parts of the interview with Manuel Becvar of Import Dojo. Manuel has 11 years’ experience of sourcing in Hong Kong and China and also is an Amazon seller with several product lines live and selling well. 

EPISODE 51 SHOW NOTES

What took you to Hong Kong?

Went there for a 6 month internship  for an Austrian electronics firm in 2005. He was handling sourcing from suppliers. He fell in love with the city and a woman and never left!

He loved the drive and opportunities of Hong Kong. Very expensive but great place to live.

Do you also sell on Amazon?

Yes since August 2014. Also documented launching a whole brand. He currently has 7 products and 10 more coming in the next few months.

He’s focussed on getting after 3-5 categories in different categories. He launched then stopped a few more.  He has several businesses which were more of a priority till now.

What are they?

  1. Selling on amazon
  2. Sourcing company in hong kong for amazon sellers.
  3. A consulting and import course, step by step guide to import from china and sell on amazon but also sell to retail.

He started out with a consumer electronics brand, selling to retailers in Europe under own brand and their own brand, but also now on Amazon. Now Manuel is focussing on his own Amazon business as it is really picking up.

Tell me about stopping a product?

He used to sell smart phone accessories but then the prices got so low there was not much profit. Electronics can be very competitive.

What’s your process for selecting products? What are your selection criteria? Do you go by the numbers of individual products? Or build a brand in a niche?

Manuel is more old fashioned, doesn’t use Jungle Scout or ASIN inspection so much. He subscribes to relevant product websites. newsletters, goes to trade shows. Also looks at Kickstarter and Indigogo for product concepts.

Manuel doesn’t look into creating a huge brand in one category. Tries out one product in a niche e.g. coffee press. If that takes off, build into that niche. If not, don’t go into say grinders, filters etc. 

Coffee press now selling about 20 a day.

How do you  beat the competition?

you need to stand out to beat the competition.  Tries not to copy the competition. This is his approach. Will Tjernlund does copy the competition, but Manuel is more interested in creating unique products and building a brand.

How can we make a product unique in a simple way?

Example 1: Blue tooth speaker-

The sample looked bad, plastic finish, bad sound, packaging horrible. 

The finish rubber instead of plastic was 20 cents more but immediately looked better.  Then looked at components, sound was bad, different driver sounded much better and cost just 50 cents more.  Used photographer to get better photos. 

He turned a $10  product into a $30 product but only cost him $2 more.

Focus on finish, minor improvements etc.

Example 2 – Coffee Press

There are  lots of stainless steel finishes, but no copper finish.  So Manuel had that done and added in extra filters etc.

Look at the little things you can change.

Tell us about working with suppliers. What’s the best way to approach your supplier about this?

Introduce yourself including company presentation –

Create an excel file or word doc about the product- include bullet points, this is where it’s at, this is what i want instead. 

Also point out that if you improve the product, they will make more sales with other customers as well. so they are more willing to make changes with costs.

So you’re not trying to get an exclusive deal with them?

Amazon sellers are mostly a small part of a suppliers’ business. if Manuel does say $10,000 a year he’s a very small fish. that may be 0.5% of their turnover if you work with a big factory (this is true for his own coffee press. They also work with Tesco’s who order $1m a year)

How do you get an exclusive deal for amazon rights?

He has set up an agreement with the Purchase Order which says – “My plan is to order 10,000 units. Are you willing to give me exclusivity for a year. If I don’t reach 5000 units within 6 months, we can cancel this agreement. “

This give Manuel 6 months to figure out if he wants to place more orders and it means the supplier can make more profit too after 6 months. 

Manuel is okay with that because he would have a head start, maybe 100-200 reviews already. It’s okay to have competition. It’s not all about one item only.

Manuel is happy if he can do 6 months of excellent sales on one product. That repays the time and money invested already. 

Greg Mercer was saying if you get 6 months’ head start, you can defend your product against competition. So you agree with that?

Yes, that does work.

Where do you go to look for suppliers?

Manuel has collected over 1000 business cards for suppliers from previous job being a product manager, when he went to China every 2 weeks.

Manuel also works with a lot of trading companies. He will sometimes be willing to pay say 50 cents more and use a trading company, similar to agent. Some of them work as if you are working with factory, for example if factory doesn’t speak English, don’t know about country requirements eg CE (European Union), FCC (USA), FDA (Food & Drug Administration, USA) approval, doesn’t have experience exporting to a country, etc., etc.

So working with a trading company can make a lot of sense.

Alibaba and Global Sources Manuel does use if he can’t find anyone through his network – you can verify and vet the suppliers. You can still vet them by checking their certificates, asking who they work with,  Which markets they export to etc.

For example, If Manuel asks “where do you export to?” and they say, “Middle East” and you want to export to USA, don’t bother. He wants a supplier

It’s also good to know a few names in the industry eg small supermarket or worked with an Amazon seller before. Check business certificate.

What are the big does and don’ts for selecting a supplier? Assuming Alibaba, Global Sources or HKTDC and someone who is new to the process.

There is a lot of filtering you can do. e.g. a microwave on Alibaba, filter by Gold Supplier, trade assurance, 3rd party verification.

You can also filter by region – say 10 different provinces of China.

Let’s say Guangdong have 5000 suppliers and another has just 10. That shows you where the main factories are for this kind of product.

If a region specialises in making those products, they have the resources and the infrastructure.

Say in Jeijung province, with 10 supplier results, they probably don’t specialise in that.

There are many other filters you can use.

Send out enquiries to 10 suppliers. 3 or 4 get back to Manuel with and answer all his to Qs

Email out “vendor profile”,  asking for:

  • 2 customer references for customers
  • markets. Has he exported to this country before?
  • business certificates, and certificates for prods
  • no workers; when company established; annual turnover.
  • do they do R & D? Have their own engineers? how many product lines?

You get a gut feeling after a while.

This is included in import dojo ebook as a downloadable document.

Import Dojo is actually a 60-page book which is a bestseller on Amazon! It is free at the company’s site. 

 What’s next in your process?

Get a soft copy of any certificates needed – prove he has it!

IF that’s okay, then ask for a sample from at least 2-3 suppliers. Same process with all suppliers.  If all samples are equal, go with most responsive/proactive and helpful supplier, even if price is a little higher. Then place an order. 

So you’re okay with higher prices?

They need to make profit too, they work hard. The factory will be business partner, it should be a fair biz relationship. As long as profit is built into your price, it’s fine to pay a little bit more.

If you have individualised products and with good product price, you can afford
If you’re building a brand, if you squeeze in cheap products, it won’t help. 

I guess it depends on whether you have customised products vs. commoditised products sold en masse?

Yes, I’m building a brand, so selling cheap products to make a quick buck is not part of my strategy.

What is the best tip for negotiating on product price once you have verified that the quoted price is in the fair region? Should simple customisations really cost that much more?

There shouldn’t really be a big difference. Unless the supplier has to invest money into a new tool or a new mould. If it’s just a colour difference, it shouldn’t be much.

To find if it’s reasonable, ask at least 3 suppliers for a quote. IF one is way off on price, he’s either incompetent or trying to rip you off!

To contact Manuel, click here for the Import Dojo contact page.

NEXT EPISODE

In Episode #52, Manuel gives details on keeping your money safe, getting quality control for Electronic Products, simple ways to start with Freight, overall process and predictions for the future of Amazon. Stay tuned!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on your iDevice.

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.”  Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#40 Amazon Marketing Mastery Mini-Series: Niche Market (Part 1 of 7)

Show notes for Episode #40

Master Marketing Principles Mini Series: Part 1 of 7

Principle ONE: NICHE MARKET

Market=Buyers (Demand) and sellers (Supply)

They work in a Marketplace like Amazon

First thing is to find DEMAND

Understand the Buyers=Shoppers=Potential Customers

You need to define a PERSON and a PAIN (or PROBLEM)

PERSON implies Demographics eg age, gender, geography

PAIN implies Psychographics eg Personal Values, Motivation to Buy, Like Quality; Value low price etc.etc.

For example A 40-year old man who live in London

He wants to see clearly at night and not have to find batteries;

high Value: time, safety.

Competition (Sellers)

Look at competition through shoppers’ eyes –

They are looking for BENEFITS eg you can see clearly at night

Not FEATURES eg special lens on your light

So translate Features into Benefit

For example:

“Special NightVision (TM) Lens  – so you can see really clearly at nigh!

Rechargeable Battery XYZ type – so it will last for longer.

No more hunting for AAA batteries!”

Be a member of your target market if possible.

But then Ask  people (e.g., in person; survey; etc) to build up a picture of your ideal customer:
WHO are they? (PERSON) WHAT do they want? (PAIN)

Remember:

“Whoever understands your marketplace best, wins.”

 (Andre Chaperon of Autoresponder Madness)

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on yt sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

 

4

#24 Richard Koch and the Star Principle for Amazon Business Owners

This Episode, #24 ,  is another “bonus” episode that is a little less formal than usual episodes. Again, I hope you can forgive the more casual style and above all the lower audio quality – this was another episode squeezed in between visits to relatives and loved ones!

The start of a new year is a natural point at which to think about big-picture strategy and overall approach to business and business building.  If you like this approach, let me know in the Facebook Group and I’ll give more summaries of powerful business strategy books I’ve been reading.

This episode is about The Star Principle,  as espoused by the wonderful business strategist, Richard Koch (who is a fellow Brit!). This principle is behind Richard going from £3 million to above £150 million in net worth, with 8/16 investments making money, one with an astronomic return! (venture capitalists expect 1 in 10 to make money). This is almost unheard of – this guy utterly walks his talk!

SHOW NOTES FOR EPISODE #24 -Richard Koch and The Star Principle  

American Amazon strategists mentioned:

  • Jason Fladlien was (and probably still is) the biggest single affiliate seller of Amazing Selling Machine
  •  Ben Cummings was a star student of Amazing Selling Machine as sold by Jason Fladlien.  He now works with Jason and runs his own courses, masterminds, etc.

Perry Marshall (who is an excellent Adwords expert and teacher) interviews Richard Koch here in a very extended, natural interview. Totally worth viewing.

Perry Marshall is also publisher of the best-selling book ever on Google Adwords (let me know if you would like to know more about this book).

Richard Koch worked for the Boston Consulting Group and although he didn’t enjoy the job, he learned a business strategy  that was a simple but incredibly powerful strategy:

THE STAR PRINCIPLE

Star Principle 2X2 matrix graphic

There are just 4 types of business and 4 actions to take:

  1. STAR business: High growth and Market Leader.  Action: INVEST!
  2. Cash Cows: Low Growth Market but Market Leader: Protect!
  3. Question marks: High Growth BUT not leader: Drive to leadership or Sell.
  4. Dogs: Low Growth and Follower: Exit or Run for Cash.

So how does this work for an Amazon business?

Researching new potential product niches

  • Find & monitor trends in your industry or market:
    • Be a member of your target market & be consistently observant of product trends
    • Follow your industry/market magazines,  websites; go to meetings, conventions, etc.
    • Use Google Trends if it helps but use a variety of keywords
  • Go after markets where there is an upward trend overall

Reviewing/Reflecting on your own business

Once you have had a product or products live for a time, review your products. Aim: Determine whether you have found a Star, Cash Cow, Question Mark or a Dog!

MARKET SHARE

  • Monitor your position on Amazon in response to main keywords for your product(s).
  • If you aren’t yet within the top 4-6 positions for the most important KWs:
    • give away product until you have at least 50% of the reviews of the no. 1 or 2 player
    • spend aggressively on Amazon ads in launch phase BUT monitor profitability like a hawk so you know what the breakeven price will be.
    • Try to be as differentiated as possible in title, photos and bullet points (main photo is the no.1 thing!)
  • If you are within that, aim for no. 2 or no. 1  on main keyword
  • Above all, focus on being no. 1 for any keyword that has a certain amount of demand and is profitable!!
  • #6 in main market is nice; #1 in a niche is better IF it is still profitable.
  • Aim to be the dominant player in your product niche, however small 
  • If you can’t get onto page one after aggressive promotion, could it be that you have a Dog?? If you have, discontinue the product:
    • Reduce Amazon ad spend to a minimum. Discontinue Facebook Ads, Google Ads etc. if used.
    • Don’t order any more inventory
    • If you need the cash back out to invest in a product that has proven to be a Star or a Cash Cow, consider lowering the price to sell out faster and get the cash back out faster.

COST CONTROL

Direct Costs

  • After your launch phase (so you have hit 50% of the no. of reviews of the No.1 product and have got onto page 1 for top 2-3 keywords), scale back costs  so you make profit!
  •  Amazon ads are often the no.1 place to cut back
  • ACoS under 100% does NOT mean you’re making gross profit!! ACoS needs to be substantially less than the gross profit margin. E.g., if your gross margin is 33%, ACoS MUST be under 33% to be making a profit.
  • Don’t rely on  ACoS; add up all your amazon costs INCLUDING AMAZON ADS for a particular period; add up all the amazon sales for the same period – and determine gross profit and loss
  • A star business or a cash cow should have decent profit margins after launch phase.
    • If it’s only breaking even, see if you can reduce your costs. Above all, monitor and reduce your spend on Amazon Ads!!
    • If it still won’t be profitable, consider discontinuing the product

Four formulas to stay a star business (these need to be discovered and turned into routine and repeatable sytems):

  1. Customer Attraction Formula (to ever more customers and ever more sales)
  2. Commercial Formula (to lock in fat margins)
  3. Delivery Formula (to deliver consistent, high quality products)
  4. Innovation Formula (to stay ahead of rivals)

These are things that at first you probably can’t neatly formulate – but you should be using your experience to build these formulas  over time and then refine them based on reality, not theory!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on your iDevice.

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.”  Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#14 Why you should love Customer Service

This Episode, #14, is an “in-between-isode” dealing with one particular area: Customer Service for your Amazon FBA business. From this grows the whole area of your Brand and reputation, and your connection to your customers.

**STOP PRESS** REVIEWS CONTEST!

The first 25 people to review the show on iTunes will be entered into a draw. The winner will receive a £50 Amazon Voucher from Amazing FBA!  
Head over to iTunes now and leave your review! If you haven’t  already, you can also subscribe through iTunes to get all the info you need to start your own successful Amazon business!

CONTEST ENDS Sat. 27 Sept. 2015, so hurry if you want to win!

SHOW NOTES FOR EPISODE #14

  1. Customer service – why you should love hearing about your customer’s problems
    1. hearing from your customers means they are not yet leaving a negative review
    2. You can find out what aspects of your product are a problem for your customers – this is very important for improving the product.
    3. It’s a chance to connect with them. This is huge!
    4. Saying sorry and making someone happy who was in pain creates much more rapport than having little emotional interaction.
    5. It’s more likely that you’ll get a 5-star review from great customer service from a former 1-star review than an average buyer! (in my experience so far)
  2. Customer reviews – responding
    1. respond to ALL reviews – to encourage any behaviour, feed it with ATTENTION!
    2. to negative reviews, tell them you’re sorry, give them a way to contact you e.g. [email protected], and promise to put it right
    3. to positive reviews, thank them, put in plenty of keywords to help your listing rank for those!
  3. Brand Building
    1. Brand=total association a customer has with your product, company or you personally.
    2. It’s not just a logo or packaging. The latter are just a sub-set of Branding. For example if I see the Nike “swoosh”, I think of their running shoes. But I also think the same when I hear the word.
    3. Brand includes Reputation – i.e. what people say about you to others.
    4. It also includes the unconscious associations, e.g., for Nike, glistening sprinters (adverts), “Just do it” logo; also street wear in certain parts of certain cities! Positive AND negative.
  4. Positioning
    1. is different again from Branding – even more powerful.
      1. e.g. If you say “running Shoes”, you probably think of “Nike” – so you have got “top of mind”
    2. to start with, you won’t have that.
    3. You won’t even have any associations with your logo or visual branding, except the immediate type of impression that the visuals give. Important but not  the whole picture.
  5. Connecting with your customers off Amazon (marketing channels)
    1. Email lists – put an insert in your product packaging driving traffic to an email sign up page e.g., www.yourbusiness.com/warranty. – idea is to sign up for a product warranty.
    2. Social media followers,e.g.,
      1. Facebook Pages and groups
      2. Twitter followers
      3. Youtube subscribers etc.
  6. Sales channels off Amazon:
    1. Your own website
    2. other places e.g. eBay
  7. It’s not necessarily just about physical products
    1. You could also sell information products
      1. Physical ones
        1. Books! – Amazon started with this
        2. DVDs
      2. Digital ones
        1. Online training e.g., Amazing Selling Machine
  8. Don’t look for more Customers for your Products;                           Look for more Products for your Customers!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go.  To subscribe to my podcast for free, you’ll need an app to listen to the show from.

For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app.  Every time I produce a new episode, you’ll get it downloaded right on your iDevice.

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.”  Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

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