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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

 

#46 Will Tjerlund on Suppliers & Amazon Future Part 2 of 2

Episode #46  Will Tjernlund Interview Part 2 of 2

Suppliers

Many people worry about getting ripped off by a Chinese supplier but it doesn’t make business sense – there is a lot more money to be made selling repeat orders!

What are your main tips for beginners on finding suppliers?

You can find them on Alibaba or via a China Sourcing Agent.
On Alibaba, just make sure they’re a gold supplier and so forth.
If you need peace of mind, Asia Inspection will do a factory inspection for $100.

Have them send pictures of the packaging and product while they are being produced.

Any main dos and don’ts for working with suppliers?

Choose a product that is as simple as possible – that way, it’s hard to mess up making it! A hunk of rubber, wood, plastic. So: very few moving parts, no electronics, hard to break, etc.

Keep it simple! That’s how Will is able to travel the world with a laptop!  Don’t follow weird passions like Robotic toys! Many people overcomplicate Amazon. Don’t try to make it as hard as possible; make it as easy as possible!

How do we make it as simple as possible?

Think of everything that can go wrong. If you can’t think of anything, that’s a good product choice!

Will likes to sell (mostly) to Needs not Wants, e.g., Polka Dot underwear vs. a bolt.

It’s not just about price.  If you sell a 10 inch bolt for $8 instead of $12, most people will buy it because all bolts look the same. They’re not saying “Some day I’m going to buy this 10 inch bolt”!

Also if you need to liquidate such a product, there’s a clear market for it, to reduce your risk.

How can you build profit into that for yourself?
Email the supplier and ask how much would it be for 1000 units of this product?

If they say, $1 a unit landed cost, do some quick math[s]: If selling for $8, paying $3.60 or $4.50 in  fees, so still making $3 each. So for every one dollar invested, he’s getting $3 back.

Do you have a minimum or max selling price?

No it’s more like a timespan to profit ratio. Also it’s about time you’re spending for what return. If you’re spending all day on something with a 15% return, that’s not  as good as something with a 33% return where you simply reorder every 3 months.   


So it comes back to cashflow?
If I gave you £10 million now, could you make $2 m back in a year? Yes! 
If I gave you $500K, could you? No. [But if you returned 20% every 2 months on it, you’d end up with $1.492 million – Michael]

So it’s all about getting cash back as fast as possible.

Compounding interest is the 8th wonder of the world, so you need to take advantage of it!

How do you deal with increasing competition in Amazon Private Label?

As competition grows in a niche, Will sends his products directly to Amazon, and Amazon gets nearly 100% of the Buy Box. The margins are lower but Will gets the sale nearly all the time.

Vendor Express (where you can apply) and Vendor Central (invitation only) are the places that Amazon will do that.

If you have some kind of sales history, Just go to Vendor Express, tell Amazon “I want to sell these items directly to you”, you offer a price, they tell you if they accept that or not-they often will. If they accept, they will start placing Purchase Orders and you sell directly to them.

You’ll have to keep some inventory to hand, [and you’ll have to accept getting paid 59 days in arrears!-Michael]. But if it’s a Private Label product, Amazon will outrank all others for the product for that keyword.

Is that open to everyone?

Vendor Express is – just google it and sign up!

Is that what you do when PL is not viable for profit any more?

It’s not normally a price war – it’s usually if someone else optimises their listing etc. (Private Label sellers) and does giveaways. Will has too many SKU’s to watch any individual listing.

How do you manage 2000 listings?

It’s manageable because Will has only about 20 suppliers. He uses software like Stitch Labs and Restock pro, which will alert him when (according to his presets like lead time) a product line needs restocking. When he has built up a big enough order of products from one supplier, he’ll go to the supplier. Will has good knowledge in his mind of  which suppliers have short or long lead times

Are you literally keeping it all in your head Like a chess game?

Often it’s triggered by writing a cheque. Or you can just go down a checklist by supplier. It doesn’t take long.

If you’re ordering 100 SKUs from one supplier, you can just order say 50 units of each and still fill a container.  So Will gets economies of scale but doesn’t risk much in any individual SKU. Also you’re turning that cash around quickly.  “Cashflow is everything”.

Where do you see the relationship between Amazon and Private Label sellers going over the next year or two?

Competition is growing but a lot of the time the competition are doing the same dumb things! So over the next 2 years, there will still be profit to be made.

Within 5-10 years, for anything that is a semi-commodity, China is just going to sell directly to Amazon. Amazon is opening training centres in China. So you’ll need to stay in low-competition niches and fly below the radar.

What sort of commodity products would that be?

Everything in the top 100 BSR that is not a real US brand name. Shopping on needs will be taken over by Amazon: eg silicon spatula – if Amazon can source it and sell it profitably for $2.99 and PL sellers have to sell at $9.99 to break even, Amazon will win the sale every time and therefore build massive numbers of listings. Amazon Basics is only going to get bigger and bigger.

How do you see yourself dealing with this increasing competition?

Will partly depends on the US brands to keep growing their businesses with their own marketing, product research and sourcing.

If you have 4 SKUs total and one gets de-ranked because a bunch of Chinese sellers come in, you’ve lost 25% of revenue.  Will has his risk much more diversified. Also he can see trends coming from a long way off via his many SKUs. He will be able to pivot at this point if needed.

Will follows the investment principles: Diversify and get cashflow.

How can  people who are starting out take advantage of this?

It’s not one size fits all! That’s why so many courses out there don’t make sense.

If you have $500 [£342] to invest, flip stuff from AliExpress, drop ship or get a second job and save more cash. Will suggests find a successful Amazon seller and work for them for $15 an hour and learn how it works.

$5000 [£3422] to invest is on the border. Will says it’s hard to order just $2500 of stuff from China (you’ll need to keep $2500 in cash). Maybe you can find a small retailer or do some Retail Arbitrage or find a wholesaler who will allow you to drop ship their larger products – eg, a fireplace manufacturer (big, bulky stuff). It’s not quite enough to start a business! 

If you can go to AliExpress, lead times are so much quicker [than on Alibaba] -you can have a  product in your hands within 10 days. If you find something profitable on Alibaba, see if you can air freight it and still make a profit.

If you can invest say $3000 [£2,053] to make $700 back after a month or so, that is a very good start [23%return-Michael].

As you order more, the profit margins will only get bigger over time. The rich get richer on Amazon. The more you sell, the better you rank; the more you sell, the more you can buy, so the price you buy at gets lower and your profit margin gets bigger. As you grow, it gets easier.

$10,000 [£6843] to invest is enough to order from China [by sea]- a $5000 order will get you somewhere – you could Private Label or find a Mom and Pop shop that does say $10m a year in revenue or less (spend half of inventory and keep the cash back).

if you have $50K [£3,4216] to invest, you can just call up wholesalers off the bat and say you have £10K to invest.

Once you get bigger and bigger, it becomes ever more important to save money.  For example, if Will can increase profit by 1% by saving money, when turning over $10m a year, that’s $100,000 extra profit.

At a 20% margin, that would be extra sales of $500K a year to make that profit number up. So it’s a lot easier to make more profit by saving money than extra sales.    

Try to just sell as much as possible as the beginning, but at some point you will need to lower your costs. 

How can people find out more about you, Will?

Email: [email protected]

Twitter: @wtjern

Website: www.amzhelp.com

Facebook: www.facebook.com/tjernlund

What is your parting advice for someone wanting to get started?

Don’t go after your passion, go where the cash is. Don’t be afraid of making a mistake, more times than not you can liquidate and get your money back. Keep moving forward! 

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

 

#22 Money Clarity for Amazon Business Owners Part 2 of 2

This Episode, #22 ,  is the second  of 2 that deals with the area of money basics and accounting. This episode is about basic principles  – the next will be much more specific to Amazon businesses.

Understanding and dealing with finances can be both intimidating and boring! Not a great combo! Sadly, this is one area of business you really cannot afford total ignorance of. However, once you gain clarity in the basic principles, it is easier to automate, outsource or even eliminate certain processes or records, meaning you get a more stable, safe business while costing yourself less money, less time and less worry.

I hope this episode helps you. However, I am not an accountant, and I really do have to recommend you get advice before you get far into this capital -intensive and complex business. I recommend Penny Lowe, who has had the ASM Amazon training and understands the needs of Amazon business specifically.

SHOW NOTES FOR EPISODE #22 -Money Clarity Part 2 of 

    1. Amazon Business specifics -Cost of Goods Sold (COGS)
      1. Landed costs
        1. unit manufacture
        2. box
        3. freight (see this episode for details)
        4. duty and VAT
        5. customs broker
      2. Other pre-Amazon costs
        1. China inspection
        2. UK/US inspection
        3. Other added items e.g., Batteries
        4. Cost of inserting added items
        5. inserts printing (e.g. “Join ourReview Club”)
        6. insertion of inserts
        7. Amazon inbound shipping
      3. Amazon costs
        1. sales commission (normally 15% of sales price)
        2. pick and pack/order handling ($2 a unit)
        3. weight handling (USA)
    2. Amazon Business specifics – Ad costs!
      1. Monitor daily or at least weekly
      2. Monitor Amazon stats:
        1. ACoS (Advertising Cost of Sales)
          1. by product
          2. by campaign
          3. by keyword
        2. Absolute spend & sales ($ or £)
          1. by campaign
          2. by product
          3. by keyword
      3. Product- based by week
        1. compare your sales for last week with ad spend for last week.
        2. What is your overall ACoS by product?
        3. What is overall ad spend
      4. Then look at the “True” profits
    3. Accounting software
      1. spreadsheet
      2. Xero (online)
        1. advantages
          1. can give pro advisor ie accountant or book-keeper access
          2. can deal with multiple currencies (costs £5/mo more)
          3. can use “A2X” to import amazon costs and income ($19 a month)
        2. disadvantages
          1. not cheap
            1. £20/month standard
            2. £25/month premium (includes multi currency)
            3. BUT there is an offer till 31 Dec. 50% off for six months!
          2. complex
          3. can’t deal with tracking inventory easily
      3. Waveapps (online)
        1. advantages
          1. free!
          2. easy to set up
        2. disadvantages
          1. not designed for inventory based businesses
          2. Not so easy to integrate with Amazon
      4. Quickbooks (According to my accountant)
        1. advantages
          1. very standard
          2. more forgiving than Xero (According to my accountant)
          3. about £10.50 a month for “Essentials” (price held for next 12 months) or £15 including stock control
            1. (I haven’t used this so can’t say how well it works or how easily)
        2. disadvantages
          1. more expensive than Waveapps
          2. I can’t recommend based on experience
    4. Using professionals
      1. financial consultant – get advice before starting to expand on a big scale – Wellington Consulting (Penny Lowe again!)
      2. accountant – Penny Lowe
      3. book-keeper

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.

1

#21 Money Clarity for Amazon Business Owners – Part 1 of 2

This Episode, #21 ,  is the first of 2 that will deal with the area of money basics and accounting. This episode is about basic principles  – the next will be much more specific to Amazon businesses.

Understanding and dealing with finances can be both intimidating and boring! Not a great combo! Sadly, this is one area of business you really cannot afford total ignorance of. However, once you gain clarity in the basic principles, it is easier to automate, outsource or even eliminate certain processes or records, meaning you get a more stable, safe business while costing yourself less money, less time and less worry.

SHOW NOTES FOR EPISODE #21 -Money Clarity Part 1 of 2

  • Basics of accounting:
  • Books:  Phil Stone: Understanding Small Business Accounting  (Amazon link)
  • Penny Lowe:  (Penny is my accountant and advisor) Understanding your accounts (Amazon link)
    1. Balance sheet
      1. assets
        1. Current assets
          1. cash in hand
          2. bank accounts
          3. INVENTORY!
        2. Fixed assets
      2. liabilities
        1. Equity
        2. Debt
    2. P & L
      1. meaning- change in value of equity
      2. includes value of inventory!
    3. Cashflow
      1. Cashflow vs. profit
  • Types of Accounts:
    1. annual
    2. management
    3. projected
  • Capital requirements
    1. Sources of Capital
    2. Equity
        1. Your money
        2. investors
    3.  Debt
      1. bank
      2. loan from family etc.

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.

#19 Amazon FBA Seller Interview with David Aggiss

This Episode, #19,  is a very exciting first for the Podcast: our first interview!

David Aggiss was one of the first to join our Facebook community and has been a very active member, including taking the initiative to reach out to me and meet up in person at a conference.

David took some great training, and has been very committed to working his business. As you would hope, that has resulted in some very quick successes. Here, David shares his journey, what worked, what challenges he has had to overcome.

** 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 EXTENDED to the end of November or 1st 25 reviews, whichever comes first !

SHOW NOTES FOR EPISODE #19 David Aggiss Interview

  • David’s Background: got into property as an investor then moved into mortgage broking.
  • Was drawn to Amazon FBA private labelling model because it offered Passive Income.
  • Passive Income is important to him as a way to get to spend time with his young family and to escape office culture.
  • Also it can be as hands-on or hands-off as you like (Amazon handles sales and can do customer service – you can outsource a lot as well)
  • David started with Amazon training in April this year and his first product went live in September.

GIVEAWAYS and REVIEWS

  • He allocated 200 units to dollar giveaways, targeting 100 reviews (because of the psychology of triple digits of reviews, and because biggest direct competitor has 200+ reviews)
  • Aim was to give away 10 units a day for two weeks
  • Put in three batches of 50 codes to AMZTracker
  • Turned on PPC Amazon Ads after about 20-30 reviews
  • He actually gave away just 150 units, for about 100-110 reviews (so about 66% converted to reviews) as he was running out of stock and had hit his target no. of reviews.
  • David was able to be selective as his product was popular, so he tried to select reviewers who had reviewed similar products, had given a few video reviews and gave decent length reviews [i.e., not just one short sentence!]

SALES

  • Sales got quickly to 10 a day, then went up to 15, then 20, then up to 25 sales/day
  • Sales: Month 1: including $1 giveaways, $5000
  • Month 2: $6000 but that includes running out of stock!
  • PRODUCT SELECTION:
  • Don’t overanalyse
  • Avoided oversize items because of upfront costs and cost of Amazon fulfilment
  • Went for something that could be bought for about $2 a unit
  • Did due diligence and made sure the numbers stack up
  • Not too competitive
  • Happy to go for 10 sales/day

SOURCING AND FIRST ORDER

  • Manufacturer’s MOQ was 1000  to have his logo on product plus customised packaging
  • David negotiated down to 700 units only with custom packaging (no logo on product)
  • But then after firming up the order, he said to supplier he was going to be ordering more, so negotiated including logo on product on the 700 unit order

CAPITAL and CASHFLOW

  • David has only used his capital for stock ordering. Other costs e.g. Amazon Ads etc. are on the Credit Card for cashflow reasons.
  • He needed about £2000-3000 upfront to order inventory and launch the product

AMAZON ADS

  • David turned these on after about 2 weeks and about 20-30 reviews
  • He ran a manual and auto campaign alongside each other at the start
  • He put a $20 daily budget to Manual and $10 to Auto
  • The auto campaign only produced 1-2 sales and those were for a Keyword he knew already was important
  • He then paused the auto campaign
  • He launched with bids of about $3 a click to get onto page one with ads while product was on page 14 or so of organic search results
  • He then gradually reduced the costs per click over time.
  • ACoS (Advertising Cost of Sales)  started off over 100%; then it went down to about 65%; last month it was around 45%.

BIGGEST CHALLENGES AND HOW DAVID OVERCAME THEM

1. Stock management

  • running out of stock happened because he didn’t expect sales to take off so fast
  • The solution is that he will over-order (now has 1500 units in transit either in China or in the USA) and have 3-4 months worth of stock of his first product so he can focus on buying and launching product no. 2

2. Quality issues

  • These weren’t so terrible but there were higher returns than David wanted.
  • He is having the returned units shipped to him in the UK
  • He will then inspect these and then ship some on to China
  • David uses Viabox to receive returns, which gives a free USA Address. They’ll also store packages for up to 30-60 days and arrange shipping pretty cheaply.
  • David’s shipping 18 units for $40 (1.6 oz weight/unit). I make that 1.8 pounds in weight, so that’s about $22 a pound of weight or £14.75/lb (or about $49 a kg=about £33)

3. Reseller on his listing

  • One of David’s buyers for $1 (giveaway for reviews) listed his product for sale.
  • David had saved the URLs of the profiles of all of his reviewers
  • So he was able to track down the reseller and sent them a stern email
  • The reseller on his listing disappeared!
  • David had been prepared to just buy the product to get rid of the reseller anyway.

4. Time management

  • During the set-up phase, because of doing the Amazon business on top of having a full-time job and a young family, David was having to work evenings and weekends, sometimes 2-3 hours late evenings.
  • His solution is to commit to the business, and to try to fit in an hour whenever it’s possible, even if that’s 11 pm after a full day of work and family life!

BEST THINGS ABOUT THE AMAZON FBA BUSINESS MODEL

  • It can take off very fast
  • It requires very little input to maintain once set up
  • The money to be made is very substantial

ADVICE FOR NEWCOMERS TO THE BUSINESS

  • “Jump in and get going!”
  • Don’t over-analyse. For example, in his first batch of products, David had no inserts and no instructions. He’s just sorted both out for his last (2nd) batch.
  • If start-up capital is an issue, you can do what David did and use capital for stock but put the recurring costs on a credit card.
  • Have enough stock to not run out if you can!

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.

2

#13 What does it take to create an Amazon FBA Business?

This Episode, #13, deals with one basic question: What does it take to create an Amazon FBA Business?

If you think you have what it takes, then  subscribe to listen to the whole Startup System. Start from episode #3 and go all the way to Episode #12  (episode #1 is a quick intro from me about the podcast, feel free to skip it;  episode #2 gives you the overview of the process I used to get to $20,000 in total sales in 7 months so that might be useful).

**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 #13

  1. What does it take?
    1. Training/Inspiration/Guidance
      1. inspiration to start!
      2. structure from someone already achieving what you want
      3. guidance (mentor/coach)
      4. community (see later )
    2. Money
      1. training
      2. inventory
      3. China inspection
      4. freight
      5. USA Inspection
      6. inbound shipping
      7. FNSKU labels
      8. Giveaway costs
      9. ALTERNATIVE BUSINESSES if you want to build the  Capital to do Private Label products:
        1. non branded products (Lower MOQ)
        2. retail arbitrage Anybody Can Do It Podcast
        3. eBay
        4. Freelance work – e.g., teaching, consulting
    3. Time
      1. TIMEFRAME
        1. 2-3 months to live
        2. 1-3 months to breakeven
        3. 3-12 months to profit as a whole
      2. TIME COMMITMENT
        1. 20-40 hours/week
        2. 10-20 hours/week possible
        3. competition!
    4. mindset
      1. DOUBLE VISION
        1. “Vision” (Imagination of ideal future)
        2. Seeing clearly (Reality)
      2. Reason Why -strong strong motivation
      3. trusting your intuition – whatever it says
      4. finding a true match
      5. persistence
      6. beware paralysis by analysis!
      7. Take daily action
      8. Surround yourself with like minded people
    5. Community
      1. online
        1. podcasts
        2. facebook groups
        3. blog
      2. offline
        1. Skype accountability group
        2. face to face meetings

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.