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

Show notes for Episode #40

Master Marketing Principles Mini Series: Part 1 of 7

Principle ONE: NICHE MARKET

Market=Buyers (Demand) and sellers (Supply)

They work in a Marketplace like Amazon

First thing is to find DEMAND

Understand the Buyers=Shoppers=Potential Customers

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

PERSON implies Demographics eg age, gender, geography

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

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

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

high Value: time, safety.

Competition (Sellers)

Look at competition through shoppers’ eyes –

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

Not FEATURES eg special lens on your light

So translate Features into Benefit

For example:

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

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

No more hunting for AAA batteries!”

Be a member of your target market if possible.

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

Remember:

“Whoever understands your marketplace best, wins.”

 (Andre Chaperon of Autoresponder Madness)

HOW TO SUBSCRIBE TO THIS PODCAST

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

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

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

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

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

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

 

2

#39 Thinking like your Amazon Customer

Episode #39 Show Notes

This is another bigger-picture podcast. Yes, we all need to measure our numbers and do analysis. But always remember that any number is a measurement. Behind it is a customer’s actions and ultimately feelings!

It’s all about Your Customer:

1. their motivations to shop and buy

2. Emotions driving them: Inspiration (desire) or Desperation (solve a painful problem!)

3. Extrinsic motivation (other people) e.g. peer pressure vs. Intrinsic motivation (inner, personal reasons) e.g. desire, curiosity

4. They start with an image (or sound or feeling) in their mind

5.  THEN they try to find the words for that

6. Only then does the customer start to connect to your marketing with

Keywords.

Your customers are not searching for your product. They are searching for the image they have in their mind.

If your product image chimes with this (or is better), that’s when they will click on your listing (if the reviews etc. look right).

In order to show up in response to a search, though, you need to get your product showing. That means optimizing your listing for, and advertising for, keywords.

This is biggest area to explore.

Most customers are not expert. So the keywords your customers may use are NOT necessarily the “correct” or “logical” words especially if they are not very expert in that product type or area.

So think like a customer. Preferably actually BE a member of your target market.

Every week or month, search for products LIKE yours as if you are an ignorant but desperate customer!

You’ll stumble across important keywords to test out. Crucially, you’ll also be in touch with your customers’ mindset.

We’re aiming for a blend of your instinct & feel for your customers and the analysis of numbers.

Upcoming Guests on the show:

Greg Mercer of Jungle Scout (Product selection)

Will Tjernlund (Strategy)

Manuel Becvar of Import Dojo (China sourcing & Freight)

Mark Carpenter of Avalava (US Sales tax)

Penny Lowe of Wellington Consulting (Accountant)

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

1

#35 Amazon Sourcing – Big Picture Strategies with Peter Zapf of Global Sources (interview part 2 of 2)

 Peter Zapf of Global Sources has 15 years’ experience of sourcing from his hot seat in the action in Hong Kong.  He spoke with me at the end of March about all things China Sourcing related. In Episode 34, he discusses tactics. But in this half of the interview, he discusses some big picture strategies with huge implications. Required listening for the ambitious Amazon Entrepreneur!

SHOW NOTES FOR EPISODE #35

1)      Product strategies: 

a.       commoditized light vs. differentiated heavy 

Many people are using the same Criteria for product selection,  e.g., light, small, can be air freighted, etc.

The problem is that if everyone uses the same product criteria, you end up with huge competition.  Yes, they’re easy products to start with, but the space ends up crowded.

There is  nothing wrong with starting with RA (retail Arbitrage)  or commoditized products – it’s a great way to learn about importing, working with Chinese suppliers, creating a product listing, PPC (Pay Per Click) advertising etc.  It just doesn’t seem like a long term business to Peter.

If for example you choose large, heavy products, you have to use ocean shipping, which means there currently is a lot less competition.

You’ll order need to place a larger order to make the logistics make sense.  So there is more capital needed upfront and it is tied up for longer sitting on the ocean.

These are problems to solve but they are also barriers to entry.

  Your own design is the next step as an even bigger barrier to entry.

In retail Arbitrage, you’re competing for the buy box with the exact same product.

With private labelling, at least you are not competing for the buy box. But If the supplier designs the product, you are competing for ranking with essentially a commoditised product that others can sell.

Your design will protect you more from the competition if it is harder to copy. For example, a longer or thicker yoga mat is not a very hard difference to copy.  Often this depends on the amount of money you have or are prepared to invest.

If you need for example to use a designer, get regulatory compliance checks done, use lawyers and legal contracts with manufacturer, the supplier needs to make a new mould…this all adds to the cost and complexity and makes it harder to duplicate.

This then becomes more about how to minimize your upfront risk. Say if you create 8 new products, how can you set things up such that you only need 4 to succeed to break even, rather than say 5?

There was a famous example of a company called “Quirky” which went out of business recently.  They spent $400,000 ( http://www.theverge.com/2015/4/24/8488531/quirky-invention-powered-by-quirky) designing a blue tooth speaker – and then sold 30 units!!

Trademarking and Patent protection can be complex.

But Trademarking is much easier, faster and cheaper than patents. It might be that you can get a U.S. trademark something for a few hundred dollars. Worth checking with a company like Legal Zoom

How to minimize your risk/reduce costs

Think about reducing supply chain costs:

  Logistics:  use ocean shipping to improve your price competitiveness (or have more margin to put into advertising).

How can you fill a container to make the max use of the space?

Can you spend $200 to have the pallets of goods delivered from US port to an Amazon warehouse in California rather than $hundreds to go across the US?

Reducing supply chain costs by removing a step:

Flexport recently explained to Peter there are two options:

Option 1: Have freight forwarder take freight all the way to a specific Amazon warehouse (so set up on Seller Central BEFORE setting up freight from CHina) or

Option 2: Freight Forwarder will usually have own warehouse, so get it sent there rather than FBA Inspection etc. then on to the various Amazon Warehouses.

Ocean shipping: If Amazon asks you to send products to say 3 different USA warehouses, if you set that up before finalising your freight/shipping, you can get your supplier to break it into the right number of pre-packed pallets. This means your consignment won’t need reworking inthe USA.

This saves a step/time but also reduces costs: Your supplier is likely to do this at no/low cost.

Order quantity: Order large enough quantities to get a reduced price per unit and economies of scale in the supply chain.

Packaging – can you reduce the costs?

3)      China Suppliers competing with you on Amazon:

There are manufacturers already selling on Amazon. That’s the bad news. The good news is that most of them don’t always want to commit a lot of money and energy to it because they are used to getting paid upfront; on Amazon, they have to wait a longer time for their money! Also, they are not usually so good at listing copy and photos, custom service and the other marketing functions.

HOWEVER there are a lot of domestic China Private Label Sellers (not manufacturers) selling from China.

Peter has talked to them and they say their disadvantage is that they don’t understand consumer needs.

BUT they are very good at commoditized products e.g. Power Banks for mobile/cell phones. So be wary of commoditized products!

Some are creating their own brands and competing on price.

You advantage is understanding your local (national) consumers better, so you know what product changes are needed. To the extent you can take advantage of that, you have an advantage.

Knowing your own customers helps greatly with product selection.

Also you have native speaker language skills, knowledge of good product listings, photography etc.

4)     Differentiating your  products: 

Basically you may need to make some kind of upfront investment to really differentiate your product (time and/or money). Then the key becomes mitigating risk.

Here’s a possible strategy:

1. Crowdfunding- get a design then post it up in Kickstarter or Indiegogo. This validates the idea and you can get the money upfront for an initial production run.

2. Make sales on Amazon to prove product acceptance, margins, sales volume and customer response (reviews)

3. Sell to brick and mortar retailers, leveraging feedback from Amazon volume, revenues and reviews to convince the retailer it’s a great product.

Retailers will also need to know you can replenish inventory within say two weeks. So you would need local warehousing (as your supplier would probably need about 3 months to manufacture and deliver a new consignment of product if you are shipping by ocean).

Parting words:

Don’t let setbacks hold you back. Learn from them, then move on.

For example, an “incorrect” product selection can be frustrating.

But  you’ve still learnt so many skills: product research and selection, finding suppliers, communicating with suppliers, setting up supply chain, creating Amazon listings, PPC marketing, keywords etc., etc., etc. So you can take those skills and move on to the next product.

If looking for products, try Global Sources!

For more help with the sourcing process: go to www.smartchinasourcing.com, which is another website run by  Global Sources.

Global Sources is also running a Smart China Sourcing Summit co-located with their Hong Kong trade shows.  Danny McMillan will also be speaking there.  Information at http://www.globalsources.com/summit

There are many guest posts – look at the links to the authors and follow them, to get more info on particular topics.

For actionable tactics from this first half of this interview, go to Episode 34.

To ask Questions for Peter for his follow-up interview,  go to our Facebook Group.

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.

HOW TO SUBSCRIBE TO THIS PODCAST

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

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

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

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

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

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

4

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

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

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

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

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

American Amazon strategists mentioned:

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

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

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

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

THE STAR PRINCIPLE

Star Principle 2X2 matrix graphic

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

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

So how does this work for an Amazon business?

Researching new potential product niches

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

Reviewing/Reflecting on your own business

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

MARKET SHARE

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

COST CONTROL

Direct Costs

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

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

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

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

HOW TO SUBSCRIBE TO THIS PODCAST

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

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

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

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

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

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

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

#14 Why you should love Customer Service

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

**STOP PRESS** REVIEWS CONTEST!

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

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

SHOW NOTES FOR EPISODE #14

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

HOW TO SUBSCRIBE TO THIS PODCAST

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

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

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

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

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

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

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