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133 Will Tjernlund on Selling to Vendor Central – Part 2 of 3

What’s the process when you find an opportunity to work with a brand?

It’s just a matter of contacting the brand when you find an ugly looking Amazon listing. It takes 60 seconds to do a Google search to find their contact information and send off an offer. It doesn’t make sense when people say that they’ve been eyeballing a company for two months and can’t decide whether or not to pull the trigger. Just contact them and move on. If there is something that you need to do that is causing you anxiety, just pull the trigger and do it.

What are Vendor Central and Vendor Express? And how does that tie into the selling to Amazon conversation?

Vendor Express is for everyone, anyone can sign up. Vendor Central is invite only. They are basically the same. Instead of sending inventory to Amazon and waiting for it to sell, Amazon will place purchase orders with you. As soon as they place the order and you ship it to them, it’s already sold. For some companies, especially bigger companies, it works better with their cash flow. This way their inventory only leaves their warehouse after they’ve been paid rather than sending off $40,000 worth of inventory and waiting three months to get the money.

Plus, once you’re in Vendor Central, it says your product is shipped and sold by Amazon. You get invited to Amazon marketing services that allows you to put videos in your listing. It allows you to make your listing an A+ listing where you get images in your description.

How does the cash flow work, exactly?

Some companies have negotiated it down to 30 days, but for the most part Amazon pays you every 60 days. Some of these old-school U.S. vendors still have 60 and 90 day payment terms. So if you can get one of these vendors, you can grow on vendor central forever. You can buy $100,000 worth of product from the distributor, sell it to Amazon for $130,000, then you don’t have to pay the vendor until you get paid from Amazon.

This works well for bigger, established companies that can have unpaid accounts. But if you’re small, not getting paid for 60 days can kill you.

I have heard a lot of people say they are wary of Vendor Express because it has a lot of problems. What are some of the problems areas you have found?

Unlike Seller Central, you can’t edit your images and description whenever you want to. If it’s, something like 90 days old, you have to email them and ask them for permission to edit the listing. It’s annoying that you have to contact them to do stuff, but the plus side is that when you contact them, they are willing to do a lot more. If you’re on Vendor Central, then you’re seen as more of an established company rather than some random seller on Seller Central. They trust you more and that you’re trying to do what’s best for the company rather than trying to find loopholes.

They’ll combine duplicate listings, it’s easier to take down people that are selling bogus stuff. There was one company that had a cheap product for people to retail arbitrage. It had about 30 listings for the same product from all these different sellers. Will went to Amazon, had them combine all of them into one listing. It’s now the #1 listing in its category. It had 3,000+ reviews from all the different listings. Then they went and gated that listing, kicked off all the other sellers, and the company he’s working for is making a lot of money from this product, whereas before, they weren’t making anything.

You can make parent-child a lot easier on Vendor Central, if you have a high ranking product already. Or under one SKU, you can bundle together multiple ASINs. If you’re selling a fishing rod, and the parent-child, comes with different fishing lines. Those are two different ASINs, and they’ll actually combine those in Vendor Central. Whereas on Seller Central, you would be sitting there trying to do giveaways. Or I can take it seriously, wipe out the competition, add all the bestsellers to the number one listing, and really take this thing to the next level.

How do you deal with the cash flow issues? How do you handle it when Amazon orders just one or two units?

The one or two unit orders are just going to happen. Especially, if you have a small catalog with only one or two SKUs. If you have 1000 SKUs, then one or two units of each product isn’t that big of a deal. The main issue is price control because you don’t know what Amazon is going to sell at. With a lot of these brands, they want to know they their products are selling at the right price because they don’t want to screw over their brick-and-mortar stores. Whereas Amazon will sell it at whatever price they want, even below cost.

Another big issue Will had with a client, was that there was a hot seller in that category, and then they have Amazon basics, and they had the third best one, and Amazon quit placing purchase orders. They had someone in Vendor Central, and they had their AmazonBasics, they didn’t need another. Now that one listing, they also had on Seller Central. If Amazon doesn’t order it, then it’s not in stock. If it’s not in stock, then it can’t be prime. Then they can’t run PPC. Since it didn’t sell, Amazon wouldn’t order it. It was a vicious circle. To fix it, they had to kick-start it on Seller Central, generate some sales to remind Amazon that it actually does sell.

What’s the best way to get on Vendor Express?

The best thing is to sign up immediately. Amazon wants a lot of SKUs, they don’t really care about the price. So if you have a catalog of SKUs, like 100, then Amazon will get a lot more excited than if you had just one.

I would imagine have 50 suppliers would be a nightmare, so how do you get to the point of having a lot of SKUs to offer?

Minimum number of suppliers. Good luck having 50 SKUs, from 50 different suppliers. However, if you have one supplier that has 50 SKUs, then they add 50 more. Will’s brother added a supplier with 10,000 SKUs. He put then on Vendor Central and Amazon order one of each. He sold 10,000 units that day.

#50 Product Process, Suppliers, Freight and Amazon Future with Anthony Lee Part 2

NEW PRODUCT PROCESS

So a product jumps out at you from the universe.

Can you talk us through your process with a new product (from selection to re-ordering)?
(from product selection, via supplier selection, freight/supply chain, getting products to Amazon, product launch)

What are your criteria/ numbers?

Look for main KW “The thing that it is” on page 1 – using Jungle Scout, Anthony wants to see at least 60% of sellers doing $15,000 sales each. He wants a handful under 250 reviews. They’ve probably been there under a year, so there’s room for AL to take some market share.

He’ll glance at BSR – a number between 2000-4000 =mid competition. Anthony is confident he can easily get on page 1.

80% of all factories in the world are in China – it has lots of real estate, dedicated to factories. Everything AL sources is located in China.

Next step is to find a supplier using Alibaba, Global Sources,. Global sources is his go to place. HK is an easy place to reach and many of their suppliers go to their trade show. HKDTC (never had much success so far) and Made in China as backups.

Criteria: Gold Supplier for 3 years – they have to pay for that. Make sure they take some kind of secure payment -they’re probably not trying to rip people off.

Send out your enquiry. Ask for samples first – if it’s crap, cost doesn’t matter! 3-4 samples generally.

You pare down – send emails. certain %age come back; ask for samples; certain %age respond.

Whittle down to highest quality then  pit them against each other for quotes.

“I really like your quality and I personally would like to work with you. But my partners would like to work with your rivals because of price.”

ALWAYS make custom modifications. Put logo on product not just package, have the product itself your brand colours. Better for brand and for hijackers etc.

Give them design specs, place a 30% deposit but have them send you a sample of your design.

Use that to check quality and for photos.

How do you deal with Quality control?

Have an inspection co. like Asianinspection or Richforth. Contract them for a man day (unless it’s electronic in which case you might need a week) 300 USD for one man day.

Have it set against a margin of error. So you know it’s good to go before you leave the factory.

You tell the factory they won’t get 70%

You can work with a sourcing agent. It’s just hard to find someone you can trust. Most of them are very much making a deal with the factory and you. Get paid on the front end and the back end. It turns out AL has 15 years’ experience as an importer and AL is now communicating with him. That will help with QC – they can check factory, batch inspection.

The real low tech way/cheap way to do it – find someone on Upwork to go to the factory and send a Skype video or pictures of the production line or products. Have them toggle switches etc.

What are the biggest issues you’ve met with suppliers? What are your best solutions?

AL has been “lucky” but that’s because he has a lot of hoops to jump through before he’l work with them. He’s heard the horror story e.g. sample quality not real quality or jack up prices last minute etc. Not experienced yet.

The best way is to very very thorough about selection process.

What other hoops do you make them jump through?

Communication. How responsive are they? If it takes 2 days to get an email back, am I a priority?

When we get to a certain point, what’s your Skype? how about your mobile/cell phone?

I have them send pictures of the production facility. Because

  1. see the factory. 2. How willing are they to do it?
    The factory is your biz partner – they’d better act like it! If you were gong into  biz with someone in your own country how you would you want them to act?

How do you handle freight? Supplier’s carrier?

How do you deal with inventory management?
It’s a big area of confusion! AL does not have a courier account with DHL etc. because he doesn’t do much air freight. He just uses supplier’s courier account for samples – he  even has a standard template for samples.

For everything else he uses sea freight as it is significantly less expensive. Generally he shipped LTL (Less than a Truckload /LCL (Less than a Container Load) although now mostly 20-40 foot containers.

Because the closest US coast to China is the West coast, and the most common port is Longbeach, he specifically looked for a Freight Forwarder in LA. So that is freighting by sea and delivered the shortest distance. Then he does LTL pickup by Amazon who picks up palletized and labelled units ready to go to Amazon.

SO you’re looking for a one-stop shop for warehousing and freight?

Yes, wanted to make process as easy as possible. They contract with a customs agent to handle the customs clearance. AL just gets an email with the bill. They make it really easy.

An alternative is to use Asia based Freight Forwarders – they get amazing deals on fast boats out of China. So you need to go through the same process.

Amazon decided that everything is going to Moreno CA so West Coast made sense. However, every time they have a strike, his products get stuck. The absolutely best way is to go out and get as many quotes from FF as possible. As lots of questions and get one that will take the time to educate you. One of them might say “Well our clients do it this way” and make a suggestion.

Tell us about inventory management – when a product is selling, what then?

What about “Killing off” products with low sales or low profit?

AL doesn’t yet use inventory management software – doing it manually is a pain. It’s tricky because you base reordering decisions on two weeks’ sales; then you get a spike in sales and you will run out of stock. The other danger is demand drops off instead and you buy too much inventory so you pay high warehousing fees. That’s when supply chain management evolves.

You need to look at warehousing deals so at some point you can bring in whole containers and bring  only a couple of pallets to Amazon.

Every product is seasonal. You need to be in the game before you learn that pattern for a particular product. A store manager might be your first hire – a necessary one if you’re going to have and grow a business based on importing.

When to let go of products?

A lot of people come in thinking they need to make lots of sales or it’s over. If the product is still making you a profit, you should maybe reconsider. Even if it’s only a small amount. If you get 5% return, it’s worthwhile.

What’s your approach to cashflow management?

Al is just starting that conversation – chances are you will run into this soon enough. The solution is not in the system itself. Cash injections become important.

AL’s short term solution has been credit. Will Tjernlund uses Amazon outside of PL to make cash faster – wholesaling ideas are fantastic. When you’re in this business, you’ll make a lot of connections. It could be someone in your local area who doesn’t have product on Amazon or it’s not selling well. You probably have more Amazon experience than they do. SO soft sell – let me help you with this – good way to make extra cash. AL has recently been working out profit share deals with people who want to

Leverage whatever skills you have. A lot of people want this skill but don’t have time to develop. A lot of retailers are on a 36 month contract and paying whether they make sales or not. You could come in with a solution  and make them extra money.

You can work out a wholesale deal. You can do consulting. Whatever comes your way.

Bigger picture

What’s working well right now in your business (that you can reveal)?

Finding great margin deals by establishing relationships with factories and suppliers. Then get on page 1 for main keywords.  AL has one  product only selling 2 a day which will kill it in Q4.

What are the most successful sellers you know doing right now?

One person is leveraging Facebook advertising for both Amazon and Shopify sales.

Either learn an avenue really well, or pay someone else who knows it really well.

Another friend takes advantage of every single offer. Every beta programme they do, she takes it. She’s got someone at amazon who answers her email. She is killing it!

Find an area where you can get visibility for your products and get really good at it.

What do you see coming in terms of changes that we should be thinking about adapting to… In the next year?

Predictions are mostly wrong! But a focus of unique products is coming – we’re in the middle of a Kickstarter crowdfunding craze. SO AL assumes that Amazon will get a lot more of untested unproven concepts coming out. This might be the next generation of sales. The marketplace has proven they like this kind of thing. There will be a lot less competition for those products.

If you have an idea, this will be growing, -there are prototyping companies out there, go for it.

In the next five years, there will be other marketplaces – whatever teenage girls are doing now will become big! App based – right now, teenage girls are buying products on App based programmes like Wish etc, which are basically like eBay

Do you have any parting words of advice?

The most important thing is: understand you are serving a marketplace, a niche, not just selling a product. Treat it like a business – it’s an investment – go at it with a calm pulse, understand that it takes time. The growth curve is never easy, it’s never in a straight line but stick with it.

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#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

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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.

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#45 Amazon Master Seller Will Tjernlund Part 1 of 2

Episode #45 Show Notes: Will Tjernlund Interview Part 1 of 2

How did you get into Amazon Private Label Selling?

Will’s brother started selling on eBay around 2003 and ordering from Alibaba.  Will was 13 asking million Qs. Aged 16 he did different forms of RA selling on eBay using his dad’s CC! He started selling on Amazon Full Time about 3 years ago.

Where are you at today with Amazon Private Label?

Will has sold $10m in 3 years. He’s outsourced the part where he has to be there. He’s travelling and running his business from his laptop (like Greg Mercer! – see episode #42)

How did you do that?

Some wholesaling from US brands and Canadian brands and Private Label. If he can see a risk free dollar to invest for $1.20 in a couple of months, that’s where he’ll go. Basically he’ll follow the cash! 

How do you know where the cash is?
Two paths
1. People do a bunch of research for 2 months, order a sample, test it, brand it, get logos made, finally get nice packaging, get 2000 units into amazon, give away a few hundred units.

2 Will might call a US based brand, lots of products on Amazon, 100+ reviews but they’re not Prime.

He’ll call them, say, “Your account is not being well run,  so most of your customers have to pay for shipping. We can run it better.”
He’ll order lots of product. He can see if that they sell $50k, he can buy $5000 worth and flip it in 10 days and make $2500 while the other person is still doing their research!

Do you just go after individual keyword opportunities or build a brand?

If you see a wholesale company where say 10 of their 100 SKUs sell like crazy -Will often will Private Label one of those so as to offer the illusion of choice to the customer. But he will sell both the wholesale product and his Private Label product.

So it’s going after a microniche?

If you can take over all the listings on one page, it’s very valuable. Make all the listings individual rather than Parent-Child IF it is a low-competition keyword.

Do you just not bother with Parent-Child relationships?

P-C makes a lot of sense if you’re after a competitive keyword because you’re trying to drive all your sales to one listing. But if you have a low-competition keyword, it makes more sense to own the first page. 

Does that take a lot of capital to invest?

If Will sees that a brand sells $50k a month, the first order was still just $5K to return $7.5K. Then you reinvest for $11K and then keep doing that. Turn the cash around as fast as possible. Go after their hottest sellers and this is much easier. 

Example: One brand Will bought from recently had an average selling price of $150 for its products.

He ordered about 50 of their hottest selling products and sold those out within 5 days.  It’s all about turning your cash as fast as possible.

For those just starting on first product, how can you use this approach?

Fake it till you make it! Find products sold by a wholesaler that  are not being presented properly on Amazon. Make a free one week Shopify store, put in pictures of products and prices. “willsshovelstore.com” and an email.

Email them and say: “We’d love to sell your products. I’m looking to Place an order for $5000 right now. “ If it’s a $5m company,  that’s over 1% of revenue so you’re a salesman’s dream.

Then on to the next?

Yes! You cut so much BS out: creating the UPC, photos, listing creation etc. because they already exist! So you just accept products in, send them back out to Amazon and then move on to the next brand.

If Will calls the brand and spends 2 hours on the phone and ends up making $40,000 profit in a year, that’s $20,000 an hour income!

He’s not wasting his time building a brand. Getting cash in, not spending 2 months to make a logo.

Michael made a similar mistake starting out, which took 5 months to go live. The competition goes crazy, you don’t know if it will sell out- it’s all risk, little reward. Will takes little risks and gets rewarded multiple times: the aim is to make 20% return 6 times a year[=around 300% annual ROI- Michael] instead of trying to find one home-run product that will make you a million a year. 

It’s a lot easier to sell  1000 products once a day than 1 product 1000 times a day.

Isn’t the downside of that getting cash tied up in inventory?

So just order a week’s worth of inventory. A lot of US brands will have just 3-10 day lead times. 

So a really different model than everyone is teaching?

It’s hard to teach Amazon in general because everyone has different education, cash, cash flow, they have different responsibilities in life…it’s hard to write one course that suits everyone.

Are you basically saying you would do wholesale first and Private Label afterwards?

More times than not, it’s super obvious. Say Will buys a product from a wholesaler for $40 and they want him to sell it for $150. If there’s that much margin, it must be bought from manufacturer for $10-15. Will goes Alibaba and confirms his suspicions. Then he’ll source it and sell a Private Label version for half the price. A lot of the time, customers want the half price product as much as the named brand version. So you’re selling it on price not brand.

For those just starting on first product, should they go for wholesale or Private Label (ie look on Alibaba etc.)?

Alibaba can be great, Will advises going after the lower-competition products. If you’re making $10 profit and selling 10 a day, that’s amazing, that’s $36K a year.

It’s so much easier to go after a lower competition product than after a product selling $50K a month. A lot of the time they are being sold by someone making a loss to keep the competition at bay. 

Will likes to see one listing with 300-400 reviews (shows demand) and lots of listing under it with 20-40 reviews (competition is low). With giveaways Will can get that number very fast and get the 2nd Place spot. The 2nd listing down can sell as many as the 1st. The 1st may just have been there longer.

What are the biggest problems you see with people launching their own Amazon business?

Just not getting started in the first Place! Analysis Paralysis on research.  Working on the business without making cash.

The other thing is cashflow. If they have $5K to invest, they order $5K of product, that means they don’t have enough cash to order new inventory before running out of stock. If they have a 30 day lead time, and invested all their cash in inventory, selling too much too quickly can be a problem.

What’s the solution?

The solution is to only put half of your investment cash into any order.

For example, Will and his brother ordered a container of knee scooters for $40K. That was 210 units.  The lead time was 60 days from ordering to in stock at Amazon.

On the first day, they sold 7 units. If you do the maths, that means 210 units would sell out in 30 days (no. units/units sold per day)  So they had to go back to the supplier that week and place another $40K order.

 If you only had $40K in the first Place, you’d have to wait until you’d sold ¾ of your inventory before placing an order, which means you would be out of stock for 2 months.  If you sell 20 units on the first day, do your multiplication!

While generally taking out a loan to start an Amazon business is not good, when you have proven sales, and you need to get back in stock, this is a good time to get a loan from family or friends.

Will has been talking to private equity firms who want to lend to Amazon businesses because they love proven cash-producing products because they are tired of investing billions in startups with no turnover!

What are the other big mistakes do people make when launching their products?

Not thinking through:

  1. How will you get on page 1?
  2. How will you stand out? What will make the customer buy your product over someone else’s?

Will will often do it via price but also it can be being differentiated. 

What are others tips on differentiation?
Size – if everyone is selling a 10” pan, sell a 6″ or 12” each

Colour – If everyone is selling a black product, sell a pink one. Even if the demand is lower.

Will sometimes stands over his mother’s  shoulder to observe her buying style.
She doesn’t really care about 3 vs 5 bullet points,  she doesn’t know about all the reviews- she’s not in an Amazon bubble! She takes about 2 seconds before hitting the one-click checkout button.

You need to stand out quickly via something visual – people aren’t interested in reading text. 

What other big mistakes do sellers make?

That’s about it. Either sellers  don’t have enough cash or they try to sell a product they can’t rank for. There are few other problems. Getting ripped off by a Chinese supplier is very very rare- but Will gets many emails saying “I sourced this super competitive product and I have 5000 units, what should I do?”

If you recognise you’ve got into an over-competitive product, there isn’t much you can do. You could try giving out lots of units and spiking the sales rank but otherwise, sell them as a job lot on eBay! 

You should have started smaller or tested demand some other way. So the mistake has already been made.

Be “Young Dumb and Stupid” – a lot of smart people try to over-complicate Amazon – just sell a good product at a good price, then move on to the next one.

The biggest things to differentiate yourself are product selection and good cashflow management. 

Will listens to no Amazon podcasts and instead reads general business books and applies general business principles to the Amazon model and it “turns out pretty decent” [$10m in sales!]

How can people contact you, Will?

Email: [email protected]
Twitter: @wtjern
Website: www.amzhelp.com
Facebook: www.facebook.com/tjernlund

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