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#34 Amazon China Product Sourcing -Peter Zapf of Global Sources (part 1 of 2)

This episode, #34, is the first of two parts of the interview with Peter Zapf of Global Sources. Peter has a huge background in working with Asian (mostly Chinese) suppliers and the whole supply chain. He has a fantastic ability to bring common sense and simplicity to these complex issues.

Show notes for Episode 34 (Tactics/Qs)

Peter has been working in Hong Kong for Global Sources for about 15 years.

Global sources has existed for about 40 years. It exists to help sellers/retailers find manufacturers and vice versa. They started off with magazines; since 1996, they have a website (http://www.globalsources.com); since the early 2000’s, they have run Trade shows twice a year (in April and October), in Hong Kong (http://www.globalsources.com/exhibitions). They’re also running a Smart China Sourcing Summit for FBA sellers at their trade show (http://www.globalsources.com/summit)

Tactical Qs (FB group) RECENT POLL/EMAIL & from recent FB group posts:

What are the pros and cons of using a sourcing agent?

The pros: often they will get you a lower price so they will pay for themselves. And they provide feet on the ground.

Cons: Agents have a reputation for taking a cut from both sides – it could be an extra cost because you’re not going direct to factory. Also, It’s an extra layer of communication which may be a hinderance, especially with a complex product.

Is travel to China, to source products, necessary to grow your business?

Not really. Email and Skype work well for people starting out.

If you go Full time with your business, it’s very worth considering.

Travel “Lite” is to visit the Trade shows.

“Full” version is to go face to face and travel to meet the suppliers in the factory.

How do you work out what a “good” price is [for a product]?

The best thing is to get multiple quotes from different suppliers. Then go back to your preferred supplier and say “We’d love to work with you but can you match this price?”

However, low price is not the only factor! Consider also:

1. If you squeeze the price, the manufacturer will have to cut corners. This will lead to Quality Control (QC) issues. “You get what you pay for.” Think about how you want to balance cost and quality.

2. If you have say a 5% defect rate, that will lose any financial gains you make.

3. If your product costs are about 25% of your Amazon selling price, a 10% rise in your buying costs only add about 2% to your selling price.

Other ways to save money than just product cost:

Ordering bigger quantities.

Going to directly to the factory vs. using an intermediary.

Using sea vs. air freight.

Shipping direct to Amazon warehouse vs. stopping somewhere in-between.

How your whole supply chain is set up is important for price.

How do you know if you are dealing with a factory rather than an intermediary?

Look at the Global Sources site and look at the Business Licence and see if it includes a word like “manufacturer”. This works reasonably well in China.

But be aware they may manufacture some things but trade others!

The only way to really know if they manufacture your desired item, is to hire someone to visit the factory or do it yourself. (Compare name on business card, paperwork, factory itself, etc.)

Inspection and Quality Control (QC)- what are your basic recommendations?

It depends on the product but this works well for most categories.

1. Get several samples.

2. Write down everything you don’t like about them.e.g. batteries don’t go in easily; doesn’t turn on; scratches, dents etc.

3. Make an objective list of QC criteria.

4. Include this list with your Purchase Order. Your supplier may say “No, we can’t deliver at this level.” but it’s much better to know that up front!

5. Make an initial payment of 30%. Never pay 100% at this point.

6. Bring in a 3rd party inspector to do a Pre-Shipment Inspection. They should use your QC criteria from your Purchase Order (plus whatever you feel is also relevant).

7. They will then send you an inspection report.

8. Only then, if you accept the shipment, do you release the remaining 70% of the funds.

By telling the supplier upfront that you’re having a 3rd party inspection done, you’ll get lower defects. You are signaling to the supplier that you care about quality.

Inspection costs about 300 USD per man-day (for a 1st/2nd tier level Inspection company), and one man day is enough for a typical Amazon buyer shipment.

How to set up the quality control level?

AQL (Acceptable Quality Limit) is the main [internationally standardised] way to set quality control level and the statistics depending on order size.

Define in your QC criteria if a problem is =1. critical defect; or 2. major defect; or 3. minor defect.

Minor=> customer won’t return product eg box folded wrong

Major=> product still works but customer may return

Critical=> product doesn’t really work.

Set how many critical/major/minor defects are allowed:

AQL level Big Box retailers use is 0/2.5/4 (critical defects/major defects/minor defects)

Higher quality: 0/1/2.5

A lot of shipments actually do not pass inspection but the buyer still okays the shipment – the buyer may be okay with the minor defects and request improvement for the next shipment.

Get advice on these topics from your inspection company.

Overview of the inspection process in this multi-part article (Part 2 is my favorite): http://www.smartchinasourcing.com/home/china-product-quality/2485-managing-qc-inspectors-part-1-the-hiring-process.html

Description of AQL here: http://www.smartchinasourcing.com/home/china-product-quality/354-back-to-basics-what-is-the-aql.html

How do you set an appropriate quality level?

If the customer isn’t going to return the product, give negative reviews or negative feedback, then it’s probably fine. So that’s probably the main criterion for rejecting or accepting a batch.

This is another reason for not beating the supplier down too high on price!

Ocean Shipping

Do you recommend shipping insurance?

Like all insurance, it’s easy to get cover but it’s hard to get a payout if needed!

The actual probability of a loss is mathematically low. It comes down to risk tolerance.

If you can afford to lose the money, it’s may not be necessary. If it would bankrupt the company, that’s when to get insurance!

What is the cost difference between ocean and air freight?

There was a recent study on a product that was medium small sized, and they calculated a cost per unit of $6 by air and about $1 by ocean.

There are fixed port costs either end. A very broad rule of thumb is that above 150 kg or 3 cubic metres, sea shipping makes more sense. Also very bulky items need to go by sea (because of volumetric weight)

Customs clearance

How do you handle customs clearance at a US port? (also: What is the cost of customs clearance for sea shipping? How do you select a customs clearance agent for SS?)

Answer to all of these: let your freight forwarder handle it! Peter has talked to the folks at Flexport (based in the USA), but the industry is fragmented and there are many, many freight forwarders.

The Freight Forwarder will ask :

1. Do you want

a. EXW (Ex works) (pick up straight from factory gates?) or

b. FOB (Free On Board) (the supplier will get the products on board ship then the Freight Forwarder takes over)?

2. Where do you want it delivered to?

3. What are the dimensions and weight of the product?

They’ll handle port fees and inland freight fees. And they may or my not include duty in the quote but if not included in quote, and they will bill you for it. When Sea shipping, always use a freight forwarder!

Do you need a freight forwarder for air freight?

Be clear about the difference between Air Freight or Air Courier service. Here is a good article: http://www.thesourcingblog.com/air-freight-from-china-explained/

The latter is eg DHL, Fedex, UPS. [You may get away without a freight forwarder for this. I have several times. But it’s not foolproof- I also got burnt once! – Michael]

For air freight proper, you probably need a freight forwarder. If in doubt – ask a freight forwarder if you need to use them!

Do you need a separate customs broker?

The Freight Forwarder will usually either have that in-house or have a relationship with one. So basically they take care of it.

When making initial contact with Chinese suppliers, should I act as if [I am] the buyer and have to OK prices with my boss? Peter doesn’t recommend starting a relationship with “untruths”! Mostly the reason for this is for price negotiations. That leads back to price vs. quality trade off (plus the time and aggravation spent on negotiating for small price differences)

If you do want to negotiate on price, you can focus on getting multiple quotes and then compare. (Traditional retailers also figure out the costs of materials and labour and add on margin for the supplier, but this is more complex)

Is it true that Chinese factories generally give you a price that is close to the cost of production?

It can be. Chinese factories often get their profit margin from the VAT rebate of say 9-17%. If you are getting a good quote, the price can be close to cost – depends on how good your price is!

Any advice on Sourcing from US, UK and European Manufacturers?

This is not something that Global Sources focusses on although the issues may be mostly the same.

Is using a gmail address OK for contacting suppliers? (because of spam from would-be suppliers)

Suppliers are also getting more sophisticated – they will often look up you and your company in eg Linked-In. Good suppliers are capacity constrained. The new suppliers and ones that will work with anybody may not be the ones you want to work with!

To convince the good suppliers to work with you, you want to come across as well as possible (although some of the buyers from the larger retailers do use Gmail to avoid spam).

Try to have a company domain, a company website. Give background about you that sells you as a legitimate and experienced buyer or at least an experienced business person.

NEXT EPISODE

In Episode #35, Peter gives his strategic big-picture thinking about how to develop a long-term sustainable Product business. Amazing thinking that I have not heard anywhere else. Stay tuned!

NEXT EPISODE

In Episode #35, Peter gives his strategic big-picture thinking about how to develop a long-term sustainable Product business. Amazing thinking that I have not heard anywhere else. 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”.

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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.

#30 My most recent Amazon Product Mistakes

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This Episode, #30, has been prompted by my own life recently! Another Pure Tactics episode, based on learning from my mistakes!

SHOW NOTES FOR EPISODE #30

Product A
1. Unclear Niche Market choice – trying to straddle two markets/two basic function areas
2. Because of this, overpricing relative to the competition only fulfilling one basic function
3. Not clearly differentiating between the launch phase and the “profitability” phase ie seeing if organic plus PPC sales made sense without giveaways
4. restocking something that
  1. was selling slowly
  2. wasn’t selling profitably
5. not checking profitability thoroughly before restocking
6. Tying up capital in a slow moving product
Product B
1. letting a profitable, fast moving product get out of stock
2. not tracking everything including whether FBAI had sent my stock off to Amazon via UPS!

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”.

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.

#26 Peak Productivity Principles for Amazon FBA Business

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This Episode, #26, is all about Productivity!

There are 16 Principles for Productivity, with the 80/20 being the most important!

SHOW NOTES FOR EPISODE #26 – Productivity Principles for your Amazon 2016 Business

Keep your 5 BIG Goals for the Year in front of you (literally)
80/20 everything. What 20% of activities will produce 80% of results. Do these first!
Differentiate Urgent from Important
Accept that you’ll never do MOST of what You “Should”
Parkinson’s Law: Work expands to fill the time available. Shorten the time!
Be true to yourself
Get it Right First Time
Don’t reinvent the wheel -Copy and adjust
Schedule Time “A Schedule Defends against Chaos and Whim”
big picture when other people are asleep
don’t overthink
Eliminate before you Automate
Automate before you Delegate
Differentiate Working IN Your Business from Working ON your Business
Test & Measure – Time, Money, People, Systems
Become Self Aware- Effort, Emotion, Reactions

TOP THREE PRINCIPLES:

80/20 analysis – limit tasks to the most urgent or powerful
Parkinson’s rule – limit time to the minimum need for any task
Differentiate between Urgent & Important Tasks

Authors/Business Thinkers Mentioned in the Podcast:
Tim Ferriss: The Four Hour Work Week

Richard Koch: The Star Principle (episode #24)

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 wrote “80/20 Sales & Marketing” & 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).

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”.

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.

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

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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

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

STAR business: High growth and Market Leader. Action: INVEST!
Cash Cows: Low Growth Market but Market Leader: Protect!
Question marks: High Growth BUT not leader: Drive to leadership or Sell.
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):

Customer Attraction Formula (to ever more customers and ever more sales)
Commercial Formula (to lock in fat margins)
Delivery Formula (to deliver consistent, high quality products)
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”.

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.

#23 Reflections on 2015 Amazon FBA Business

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This Episode, #23 , is a “bonus” episode that is a little less formal than usual episodes. I hope you can forgive the more casual style and above all the lower audio quality – this was squeezed in between visits to relatives and loved ones!

The end of December/start of January is a natural lull and a chance to reflect on what worked and what didn’t work in the year before. This episode is really my reflections on my 2015 and my conclusions regarding my Amazon FBA business.
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SHOW NOTES FOR EPISODE #23 -Review of 2015

Here are the things I’ve been reviewing for myself – take what works for you and leave the rest!

Profit and Loss (only relevant if you’ve already been in business for a while)

Gather all the relevant details from the various sources
Use a spreadsheet or pen and paper:
Gross profit and loss by product
Net profit for whole business

Make Go/No-go choices by product in response to P & L

Recognise Product choice errors:

Not enough demand depth (top1-2 products take most of demand) (Low Sales for that Keyword)
Too much competition (Amazon Ads are expensive; very price sensitive)
Not enough differentiation of your product from others’

Expand your product line in response to your own data not just abstract market research

Respond to your customers’ requests (best)
Use your common sense to try products related to ones that sell
Make a test order of MOQ (Minimum Order Quantity) unbranded
If that starts to sell, then go back and place MOQ for PL (Private Labelled) products

Revise Budget/Cashflow Projections

First time out:

Create budget
Then add minimum 50% to budget. If possible, Double it!

When product is established:

add minimum 25%-30%. If possible, add 50%
Remember that the Amazon marketplace is always changing – mostly (sadly) due to increased competition

Revise Time Planning:

Double timeframe to product launch (e.g. 3 months -6 months)
Double time you put in per week (e.g. from 10 hours/week to 20 hours/week)

Allow for things not going to plan!
Outsourcing means the business is very scaleable, which is great
However, it means that much of your business is not under your direct control

Work on my own character:

Patience to deal with Things out of my control
Courage to do the things that are under my control!
Wisdom to know the difference…

Get guidance from others:

Up-front training (including for example this Podcast)
Find and use a mentor (pay if needed)
Join or create an accountability group at or just above your level.
Online communities (do join our Facebook group if you haven’t yet!)

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”.

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

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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

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 ($2 a unit)
  3. weight handling (USA)
Amazon Business specifics – Ad costs!
1. Monitor daily or at least weekly
2. Monitor Amazon stats:
  1. ACoS (Advertising Cost of Sales)
    1. by product
    2. by campaign
    3. by keyword
  2. Absolute spend & sales ($ 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
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
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”.

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

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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”.

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.

#16 How to Deal with Increased Amazon Private Label Competition

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This Episode, #16, deals with another hot topic area: How to deal with Increased Competition among Amazon Private Label Sellers. It’s a topic that intimidates some, but it’s a reality you need to deal with if you want to develop a real business and actually make profits in 2015 and going into 2016.

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

SHOW NOTES FOR EPISODE #16

The 7 Mistakes Amazon Private Label Sellers make that let the Competition beat them – and 7 Strategies to Overcome Them!

Mistake #1: Going for Individual Products not a market.

Strategy #1: Go for a niche market of people you understand, and to whom you could potentially sell a whole host of products – including training or informational products

Mistake #2: Not differentiating your product/ Copycat products

Strategy #2: Be clear about who your customer is: the Person and their Problem – and find a solution to their problem – don’t just copy everyone else’s products.

Mistake #3: Expecting “easy money”; Not planning for and then putting in Time, Money & Focus

Strategy #3: Prepare to put in serious money (See Episode # for details on this), Time and Focus.

For full details of what it takes to run an Amazon business, see Episode #13 show notes, and listen to the podcast episode.

Mistake #4: Over-committing to one product initially; Relying on Research not Testing

Strategy #4: Test every assumption! Two tactics:
1. Get MOQ of unbranded product, Market it normally and see if it sells; if yes, go and get a branded (Private Labelled) version.

2. When you go back to your supplier for new inventory, order an MOQ of an (unbranded) additional product to test.

Mistake #5: Relying on one Traffic Channel (Amazon!)

Strategy #5: Develop new Traffic Channels – e.g., YouTube videos, Facebook Page/Ads, Google Ads, Own Website (more a brand reassurance than a traffic source).

Caveat – one at a time! Don’t spread yourself too thin. Firstly, Test properly what works, then systematise what works. That includes eliminating time and money wasters (campaigns that bring little or no result), automating (e.g. using software to post content), and eventually delegating to VAs etc.

Mistake #6: Not building your own customer lists

Strategy #6: Build your own customer lists- mostly email

Tactic: put in inserts in your product packaging “To activate your Warranty, go to www.yourbusiness.com/warranty. Then set up a Landing page aka opt-in page with say WordPress on a Bluehost hosting or Leadpages, and an email autoresponder, e.g., aWeber. If you don’t have the know-how, outsource this, e.g., try fiverr.com. I’m about to create an episode dealing specifically with this. Stay tuned!

Mistake #7: Having a Small Back End! Trying to make all your money in the first sale to a new customer

Strategy #7: Create a suite of products that you could sell to existing customers. Especially aim to create and/or sell digital (information) products because each sale of those is nearly all profit!

You can sell other people’s products initially (try clickbank.com) as an affiliate if you don’t have time/inclination to create your own products at first.

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”.

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.

#15 Planning for your Amazon FBA Business

Podcast: Play in new window | Download

This Episode, #15, deals with a big area: Planning for your Amazon FBA business. It’s not as sexy a topic as some, but it’s a must if you want to develop momentum and hit big, exciting goals.

**STOP PRESS** REVIEWS CONTEST!

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

SHOW NOTES FOR EPISODE #15

See below Shownotes for Your Free downloadable Excel spreadsheet for Quarterly planning!

Overview
1. Targets (money in) & Resources (money out)
2. Approach/Mindset
  1. “Planning is indispensable; Plans are worthless”
TARGETS/ Needs

professsionals/outsourcing
1. photographer
2. designer
3. sourcing agent
4. book-keeper/accountant
5. Social media/blog VA
6. customer service?
mentors/peers

Your Free downloadable Excel spreadsheet for Quarterly planning! This is roughly the process I use but it is something of a first draft, so let me know how you would like this improved.

Download [1.43 MB]

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”.

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.

« Previous 1 2 3 4

Category

Planning

#34 Amazon China Product Sourcing -Peter Zapf of Global Sources (part 1 of 2)

#30 My most recent Amazon Product Mistakes

#26 Peak Productivity Principles for Amazon FBA Business

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

#23 Reflections on 2015 Amazon FBA Business

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

#19 Amazon FBA Seller Interview with David Aggiss

#16 How to Deal with Increased Amazon Private Label Competition

#15 Planning for your Amazon FBA Business

January 16, 2020

January 14, 2020

January 10, 2020

January 7, 2020