"Build" Guide - how to Build your Private Label Business
The great thing about running an Amazon business is the freedom it allows in your personal life. You can go on holiday as you want and you can take a day off as needed. You set your own schedule and make your own deadlines. That also creates one of the more difficult aspects of your job as an Amazon seller, time management. Today on the show we have David Aggiss and we’ll be discussing time management techniques when you’re running an online business.
If you are first starting out, the challenge is finding enough time to work on your business. You have your full-time job, maybe a spouse and children, then your Amazon business on top of that. It’s going to lead to some late nights and long days. That’s the struggle of it. It’s important to set aside time-blocks for specific tasks. If you start working without this, you’ll end up working on a number of things and accomplishing nothing.
Customer service is a daily task. You’re probably going to be in Seller Central a lot anyway, which is a good thing so you can respond to customer questions and other issues as they arise. Once a week, you want to look at your listings. See if there is any way to improve them. You should take a look at your PPC and keywords to make sure they are performing how you want.
Expanding your business is an evening job. If you are looking to research new product lines or find new suppliers, make sure you have a few weeks available where you can put in some serious evening hours. You’re going to have to work everyday with emails back and forth with your suppliers, especially if they’re in China. Unless you can get on a Skype call, this process could take a week or more because of the time difference.
Skype is recommended to help speed up this exchange. However, keep in mind that if you’re looking into several suppliers, that Skype could get overwhelming. It is easier to maintain all the information if you limit it to email since that has understood, built-in limitations. Also, you will have a record of everything discussed.
If you find that you don’t have the time to handle everything that you need, consider outsourcing. Be aware of what your strengths and weaknesses are. Focus on your strengths, outsource your weaknesses.
If you are making enough money from your Amazon business that you can afford to outsource, then you are probably pretty proficient at the day-to-day Amazon tasks. Then you’ll want to continue to handle those. If your background is in web design, then build your website yourself.
If, however, you don’t know the first thing about building a website and you have no idea how to work on social media, outsource those. Chances are you can find someone that will do it better and faster. If a task is going to take you a week, but someone who is an expert can do it in a day, pay them to do it. The task will get done several days soon and you now have that week to work on something you’re an expert in.
While time management is important, focus management is as well. Like I said before, you have the freedom to make your own schedule, but you don’t have a boss to keep you on track. It’s easy to lose focus and let your business suffer because of it. You have to keep in mind why you want to run your own business. Whether it’s to have a luxury house, nice cars, or to simply spend more time with your family. Whatever it is, whether it changes over time, always remember that and let it be your motivation to stay focused.
Today on the show, I have one of the first contacts I made when starting this show, David Aggiss. I had him on, all the way back in November of 2015. Since then, he has given up the day job and is his own full-time boss. He has a few business, one of which being an Amazon business. We’re going to dive in and find out David’s strategy for selling on Amazon.com.
David started learning about Amazon in April/May of 2015 and began receiving some training. In about four months, he started selling his own product. He took off quite well in Q4. At the time, incentivised reviews were still allowed so he made that a large part of his strategy. His sales exceeded his expectations going from 10 units a day to 30 on average. He launched his second product in Q4 last year and focused on his listing since incentivised reviews were no longer available.
There are a lot of techniques for finding products. David decided to simply look through Amazon. This is a great technique for finding good products. Look for lower prices and low competition items when first starting out. If you find a good product and the listing isn’t optimised, then there is definitely an opportunity for you to sweep in and take over. You can use Google Trends, Merchant Words to help you find what popular and what people are looking for.
David didn’t use any tools to find products, like Jungle Scout etc. He didn’t know what his products would be so he wouldn’t know what to search. Once he picked the products, he verified through Jungle Scout that there was a demand. Now he has about 5 products he’s working through launching.
He search Amazon to find his products. He narrowed his search to products between $15 and $50 and looked for products that interested him. If you are interested in the product then it’s easier to relate and figure out what those buyers are looking for. Then you can tailor your listing to those shoppers.
Getting reviews has become much more difficult since Amazon banned incentivised reviews. With this new world, you have to pay more attention to reviews since you can no longer give products away in exchange for a review. One thing to pay attention to when getting started with a new product is the number a reviews your competition has. If they have thousands of reviews, it’s going to be much harder to compete because it is more difficult to reach a competitive level.
Make sure you competitors only have a hundred or so reviews so you can better compete. Then you can use other services to help get legitimate reviews. You can also try to get traffic coming in from off Amazon.Ads on Facebook, Google, and Bing are great places to start.
There are also ways you can use Amazon to boost your listing. Spending heavy on PPC at the beginning is a good way to drive traffic when selling on Amazon.com. Once your listing gets going, then you can cut back to where it’s profitable. One thing David mentioned was participating in Lightning Deals. These deals on put on by Amazon that offers their shoppers very good discounts for a very limited amount of time. There is a link underneath your Advertising tab on the main screen of Seller Central. It’s not all the time, but Amazon will offer you a Lightning Deal when it’s relevant. This is a great way to drive a lot of sellers to you listing and gives a nice boost to new products.
Amazon sets the parameters. They will tell you the time slot, the minimum number of units, and the sale price which is based on your sales history. David, for example, recently got a time slot for 1am to 7am. Not the best time as many people aren’t looking at Amazon so early in the morning. Despite that, he had an additional 40 sales from the deal.
Amazon has opened up a little more for third-party sellers to be able to get video on the website. This service has gained a distributor agreement with Amazon so they can get videos for other people, onto their listing. It’s different than the typical videos you’ve seen. If you become a vendor, everyone knows that you get the A+ content and you can put a video up top with your images.
Brad’s business partner used to work for IMDB and they know a lot of the people on the team handling this service. The service is pretty neat and they are trying to build up more and more video content inside of Amazon. You can actually put up a video and link it to your ASINs, and it will show up on the page a little further down. It won’t be on the top, it is right above the customer reviews. So when people are scrolling through and looking for more information, there is a section titles “Related Video Shorts.” It gives more information about the product itself, where people will be looking for it.
There are several types of videos you can do, it’s really fascinating. You can do unboxing videos, you can tag them as product comparison, you can do how-to videos, interviews, or you can do a straight-up advertisement for your product. There’s a whole list of different categories you can classify it as. This is particularly important for products that need to be explained or need some kind of information.
The service just processed a video the other day about a drain. It had this really cool strainer system, and the video showed everything about it. How it worked and why it was so much better than the competition.
These are the various tags you can put in. So you get the video ready, then you have to put in some metadata. You submit it through the service and then service processes it and distributes it into Amazon. The categories are Unboxing, How-Tos, Interviews, Product Review, and Advertising.
Yeah. This service wants to get more and more videos on Amazon. They love AMZ Product Videos because the service makes sure it’s high-quality videos. You can just put any video up. It has to be good quality, and you can’t have links going out of Amazon. This service scrubs all that which is why their contact in Amazon are really excited about this distribution agreement.
You just go to amzproductvideo.com and the service does two things. If you don’t have a video, they will develop some videos for you and upload them to Amazon for free. If you have a video, they charge for the processing they have to do, then upload it to Amazon.
It’s really quite easy. You just need: from http://amzproductvideo.com/pages/how-it-works
What we need from you.
We have several things we require in order to take your video upload request. They are:
- High Quality Video. We reserve the right to deny uploading a video where the content, resolution, or audio isn’t generally considered high quality. This is an Amazon requirement.
- Video File. We need a link to the following:
- Video File. Formats accepted are: 3GP, AAC, AVI, FLV, MOV, MP4 and MPEG-2 formats.
- Thumbnail image: 16:9 aspect ratio and a suggested minimum width of 1920px. Formats accepted are: JPEG and PNG.
- Metadata information. This includes:
- Title (100 char max)
- Synopsis (400 char max)
- Video Type: How-To, Review, Advertisement, Comparison, Unboxing or Interview
- Related ASINs: All the ASINs referenced in the video.
With that, you’ll up up and running in no time.
Once the video is on Amazon, it has it’s own page. Almost like it’s an ASIN listing. So you can go through and watch it at any point because it has a permanent location, like a YouTube video.
You can link your video to multiple ASINs. So if you had a brand with 20 SKUs and you wanted to make a brand video, you could link that video to all 20 SKUs. Or you can link multiple videos to one SKU. When you go to the Related Video Shorts on Amazon, you’ll see the video. If you have the URL to that video, which they will send you, it will list all the ASINs associated with it. In that previous example with the brand video, when you go to watch the video, on the right side of the screen, it will list all 20 ASINs.
He doesn’t have as much data as he would like. Based on the feedback from customers, they have seen increases in sales. A number that’s been floating around is that videos can improve conversion rate by 80%.
There is actually a volume discount. It’s 20% off if you do more than one. For one video it’s $250 for the processing if you already have one. If you need a video created, the prices are pretty competitive. Depending on the complexity, a 30 second video will run about $3000, for one minute it’s $4000.
It probably for people that are making serious money on Amazon. Although, if you have similar products, like different variations of pens, you could have one video linking to all those products.
There are other services that are similar. Often times you’d have to get the full-package and they can range from $750 – $1000. From what Brad Moss has seen, they are considerably cheaper than the competition. Also, there aren’t many people that are doing this.
It’s a really terrific service. Plus it’s still new, so now is the time to get in on the ground-floor.
Brad Moss was the Business Head of Amazon Seller Central itself. Which we all are at the mercy of. He built the Amazon Seller Central mobile app. He now does consulting company for Amazon sellers, Product Labs.
Brad got his Masters in business. He did some entrepreneurial things, launched some companies which won a few awards for some of them. He was successful in small realms and wanted to see if he could have an impact in a bigger realm, like Amazon. When he first go there he built something that no one has probably heard of because it didn’t launch. It’s called Gamification for Sellers. It was a really cool system that was held up because middle management was fighting over some resources Brad had. It would have made selling more fun and would have been able to track yourself.
When he finished, he had learned so much about Amazon Seller Central and how the system works that they decided to put him over Amazon Seller Central. Amazon had 168 teams that were dispersed through Seller Central. Each team was adding to the system, putting new tools here and there, without a real overhead strategy. That was Brad’s job.
He started putting frameworks down, and added the advertising tab. That team came, for sponsored products, saying they wanted to put it in Amazon Seller Central. Brad felt it was big enough that it should get that spot on top. Seller Central has become a beast unto itself. He wanted to overhaul the entire system, and scoped out how to do that. That only got so far when they starting think about the future. What’s the future of selling and the future of devices. At that time, mobile had come up.
There were a lot of people trying to do mobile at Amazon. They decided to focus on mobile and Brad made a case saying that they would make a lot more money if they focused on mobile. It would be more accessible, people would be able to check their seller account, they’d be able to scan things, and put new products up on Amazon. They passed the idea to the VPs, got the funding and built the Amazon Seller Central mobile app.
Those are systems and programs. So one team may have five systems. The internal structure at Amazon is really cool. It works really well in some situation, not so well in others.
When you’re there, you’re free to take your program, and figure out how to make it happen. When I was working on the gamification, I had my own team. I made the business case that it would improve the business for Amazon. Then we had to figure out how to get this new system, into the existing system.
We had to find the two engineers that were running the front page of Amazon Seller Central. Then we found several engineers that were running the back-end with the listing services. We had to go to all these different teams asking them for a day of their time to help us get into their systems. Amazon promotes that kind of culture where it’s very entrepreneurial. It’s up to you to figure out how to make it happen. It’s not coming from the VP telling certain teams to do this thing. They had to figure out the best way to get these systems to work. They had to negotiate and bribe with drinks after work.
It’s almost like the wild west in a way. It gets even worse when you have different VPs that have their own goals and directives, and it all comes down into one system. That’s where Brad was with in Amazon Seller Central. All these different VPs were all trying to pipe into the same system to accomplish their goals and there was no central authority to facilitate it. It’s pretty wild.
The perfect example is if you look under the reports tab, and there is business reports, and payment reports. Then there is this thing called fulfillment reports. If you go to Fulfillment Reports, it takes you to a new page with a lot of reports on the side. That section is owned by the FBA team, which is a different vice president than the marketplace team. The FBA team wanted to be able to keep adding new reports without having to go to seller central or the marketplace team every time. So they built a new page that they have full control over. However, it doesn’t make much sense from the user’s perspective.
When Brad first started, he was looking into a business case that someone had mentioned. He looked really deep into and thought that it would be really great. He made his report, show the analysis, and told them it would be a $30 million business if they do it. His director just shook his head and said no. That unless it was $1 billion over three years, they wouldn’t go after it.
That’s what made mobile so difficult. It was a really hard case to make. If a majority of the money comes from huge sellers on the marketplace, how would they use mobile, and how would mobile enable them to make more money because a lot of them just use API and feeds anyway. That’s what made the business cases so important.
That’s what is great about Amazon is that the mentality , from Jeff Bezos, is “It’s day one for the company.” The idea that they are still laying the foundation and groundwork for the company. If you do enough diligence from the business side, which was Brad’s job, and look at various things to be building, you can find these opportunities. Don’t settle for $50 million opportunities when you can find a $1 billion one.
You can see how that would trickle down. While working on Amazon Seller Central, people would propose improvements. The question came down to, how many sales will be generated by adjustment. If they can’t prove that it will increase sales, then they don;t get funding for it. So it’s pretty difficult to get funding to make those nice visual adjustments. There are resources called “Keeping the lights on”, that is some resources allocated to keeping things running, and they might be able to scrape resources from there to make those minor adjustments.
Buying wholesale from a brand owner is still viable for sure; someone which owns one brand. As far as a wholesaler, that distributes several brands, it depends. They have to make their profit too, and there might not be enough margin to go around. They are also likely to be selling to other Amazon sellers which would cut into your sales.
If you go to Back Country, they would carry the Black Diamond brand, as well as many others. Will wouldn’t buy from them but rather buy directly from Black Diamond.
One of the big reasons Will got into Vendor Central is that he hates launching products. It’s much easier to start with a product that already has 10,000 reviews. His philosophy is not to do something that’s hard just because it’s hard. So many people are worried about building a brand and launching products from scratch. It’s a lot easy to just make money first. Then, when you want a challenge, build your brand.
One recent product launch Will and his team did, was they got ping pong accessories from China. Got them in, slapped labels on them, no real packaging to them. They sent them into Amazon. There was four different types that they bundled in two and four packs. They’ve sold about 357 units in a month in a half and they just got their first review.
They spent $1000 on PPC to make $4000 so their A-cost is about 25% which is about break-even but gets them some traffic. It’s selling about seven units a day at $6 or $7 and he did nothing more than throw it up on Amazon. It’s all because he picked the right niche with the right keywords. He knew he could compete only on price.
If you are trying to go after a product that has 1500 reviews, then you will need 1500 reviews just to compete. What’s your strategy for getting 1500 reviews? If you do 1500 giveaways, that’s not sustainable. If someone wants to sell dog leashes because they love dogs, what can you do with that? You can’t put your love of dogs in the title. You can’t work with that. However, if you want to sell leashes because you see a gap in the market of seeing-eye dog leashes. They’re all 20ft long which makes no sense if the person is blind. It needs to be 4ft long. Great! You found a gap in the market. You found a specific keyword. There is a way to differentiate yourself and add value. Also, you didn’t need to do some crazy manufacturing. Just make a shorter leash.
No. No one really has that app on their phone. A lot of people will go out of their way to avoid shopping at Wal-Mart. Just Google “people of Wal-Mart”. There is a negative stigma. Much like eBay. Will they take a portion of the market? Yeah, but they won’t be a major competitor. People like the simple Amazon experience. Plus, if you’re going to buy something from walmart.com, why not just drive down the road and get it right now? The only real benefit Will sees from walmart.com is that if your product does well on their website, they might try to sell it in the stores and then you’ll be able to sell it in all the big-box stores.
Will was recently talking with a hedge-fund manager that owns a part of eBay who said that eBay looks good compared to other retailers. Who are the competitors? Macy’s who’s closing thousands of stores. Sears who is closing thousands of stores. Of course their going to look good in comparison when the competition is about to go bankrupt. They may grow 3.5% year after year, but the S&P average was 18%. 3% isn’t that cool. The numbers of people that get online in America grows at 3%. So eBay is growing at the rate of the internet and slower than GDP.
You will want to find a product in a category that Amazon isn’t sourcing and selling already. Then they will want to get their hands on it. Plus, if you have sales history on top of that, Amazon will love it. If you find that Amazon isn’t selling in climbing ropes, but they are selling 9 of the 10 dog leashes, then they’re not too excited to get anymore dog leases. Buying wholesale is a good way to start this.
It really depends on a lot of factors. It depends on how much cash flow you have, what kind of distributor you have, what the competition is like. Let’s say you have one Chinese supplier that you buy iPhone cases from. They’re the only ones that are waterproof and you buy 10,000 at a time and you have $100,000 in the bank. From they, maybe you build momentum in Seller Central, then move it to Vendor Central so they see the momentum. In Seller Central, you might be ranked in the thousands for iPhone cases, but in Vendor Central you might be rank 1 for waterproof cases.
There is a company in Hong Kong that does Vendor Central so they don’t have to pay taxes in each state whenever they sell in Seller Central. There is all sorts of different scenarios that will affect the decision. Amazon pays for inbound shipping when they order from you in Vendor Central. So if you have a large product that is expensive to ship, you can save a lot of money by using Vendor Central.
So 2017, third-party sales will still grow from 2016. However, at the same time, Amazon will condense. If you look at their earnings report, the number of items offered for sale has gone down; the number of items fulfilled have gone up. Amazon is clearing up a lot of junk sellers. You have people like Will going through and condensing their listings. Once they get rid of the riff-raff, it’ll be much more simple, and you can tell who the private labelers are that care, and who’s selling junk. Eventually, the junk ones will phase out. The sales of third-party sellers will go up, but the amount of third-party sellers and third-party products may fall over time. So, by the time 2018 rolls around, everyone will try to find a way to differentiate themselves because the third-party selling will become a thing of the past.
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.
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.
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.
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.
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.
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.
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.
Merch by Amazon is only one of many ways that Chris Green has been selling online. He started out as a seller on eBay actually. After Amazon opened their platform to other sellers he began listing there. He found that it was much lower maintenance on Amazon as he wasn’t getting a ton of questions from the buyers and he began listing more and more.
The major turning point for him came from being a buyer after signing up for Prime. With free 2-day shipping he and his wife order a lot from Amazon and realized that if he was hooked, other people would be as well. With the introduction of FBA, he and other sellers would have access to these same benefits and knew this was a golden opportunity. The fees were lower, it was much less work, and his customers would get the product faster. He was all-in after that.
With Amazon doing so much of the work, he found he had too much free-time. He would then go to bookstores and yard sales and scan books to send for Amazon. After that, he was bored again and wanted a better way to scan for products and came up with ScanPower, the leading FBA software tool where you can scan any barcode and it will tell you what you can sell it for on Amazon.
He got his start as a public figure after self-publishing a book, Arbitrage, teaching how to make money on Amazon. It started as a simple book that answers the most common questions about selling on Amazon and ended up being the go-to guide for people wanting to get started on Amazon.
Merch by Amazon is a very simple concept and Chris gets a lot of questions about it, mainly because it seems too good to be true. That there is no way Amazon would do this, or if you’re hearing about it then it’s too late and there is no more opportunity. That is all false. This is the ground floor of this platform because no one has heard of it.[Compare it to Prime and FBA.] Prime is a household name. There may be a few people that have never heard of it but it’s relatively commonplace, and it’s 11 years old. Most people don’t know what FBA is or have never heard of it, and it’s 8 years old. Merch by Amazon has been out less than a year.
Basically, all you need to do is come up with a design, make it a .png, and upload it to Amazon. They will then sell this as a physical product that people can buy and you get a cut of the profits. All you have to do is make an image that is 5400x4500px and 300 DPI png file. Then you upload it, make a listing and that’s it. You can pick 5 of the 15 colors in every size. If it sells, you get a royalty check. If it’s a $20 shirt, you’re looking at an $8 payout.
FBA wasn’t a new idea just like the t-shirt print on demand isn’t a new idea. There have been warehouse fulfillment companies for decades before Amazon got into the industry. However, Amazon has a huge customer base and has Prime which these other companies can’t compete with. That’s why Merch by Amazon is going to be so huge. People aren’t going to hop onto T-Spring and buy your stuff but they are going to Amazon and there they can buy with one click and get free 2-day shipping.
Yes! With FBA you have to get the product, buy hundreds of units, prep it, pay for it to get to Amazon, and hope it sells at a price that will return a profit. With Merch by Amazon, you don’t pay for anything. If you don’t sell a shirt, you’re out the time it took to make that image. You can make almost $8 on a $20 sale and not use any of your own money.
The only investment for Merch by Amazon is the image. You can now get Photoshop for $9.99 a month and they have their own tutorials. Or you can get on YouTube and find hundreds of videos on using the programme. If you go to http://merchshirts.com/ you can search for a keyword and see every item on Amazon for that word and you can see what’s selling.
You choose your selling price with Merch by Amazon. The royalty has to be at least $0.01 and a max of $49.99. There is a 15% fee so the final cost will vary depending on the royalty cost. When you make the listing, you put in what the final cost will be and it tells you what the royalty is. You can adjust the price based on what you are trying to get out of it. If it’s a brand t-shirt, you might price it lower so that you can get more sales and get your logo out there. You might price it higher if you are trying to make a profit. The most common price is $19.99 so if you don’t know what to price it, start there. If you’re going to charge more than $19.99, you better have a reason.
Different options will affect your royalty. The example Chris gives is a $19.99 Anvil shirt, with front side image. Cost plus listing fee is $12.31 giving you an estimated $7.68 royalty per unit. Even if you pay someone $5 for a design, as long as you sell one shirt you are making a profit.
It is completely separate. Go to merch.amazon.com and request an invitation. As of right now, due to the popularity of the program, they have a waiting period. In order to slow things down and to scale properly, they decided to limit how many new sellers are coming in.
As of right now, it’s tied to a buyer account. So if you use your personal buyer account to sign up, you may not want to bring people on because you would have to give them your personal account as well because they are tied together and cannot be changed. But only the login. If your account gets suspended for whatever reason, then your merch by Amazon won’t be affected. The best advice is to make a brand new account just for merch,
The term merch came from the concert scene where bands, in order to make money, would sell their merch after a show. At the time of this recording, merch is only t-shirts. However, there is a huge demand for other products. They didn’t call it t-shirts by Amazon so expect to see other items available in the future. Probably not in the near future due to logistics. Right now the have 15 colors, in 5 sizes, for men, women, and children. If they decide to do another type a shirt you’re looking at over 1,300 blank shirt options that they have to stock and keep track of.
Amazon has the data and has determined that t-shirts are the place to start. It is likely they will add more types of merchandise but it will be slowly.
You can see this trend in Amazon’s history of expanding from one product type outwards . Amazon started as a book company. Jeff Bezos was debating on 7 different categories and decided to start with 1 and getting established in that. Then they expanded out gradually into other categories.
How did you come to be selling on Amazon?
Ryan was a part of ASM and that what got him started. That’s what really piqued his attention. Ryan says that when he finds something he wants to do he really pushes ahead with it until he learns how to conquer it and ASM got him started on that.
He did very well on his first product despite it being a very commonly sold product on Amazon. He cites his creative thinking and hard working attitude to his success. He was able to take this generic item and really dominate the market with it. After his initial success, he was itching to expand with it.
From there he met with a good friend, Nakisha Muhammad and discussed some of the issues he was experiencing. She then became interested in Amazon selling and they went in together on a joint venture. She started seeing those same issues with seller central and limited reporting. She, being a world-class coder, approached Ryan saying she could build a solution. Together they worked on it and came up with their dream ‘seller central’. Thus, Hello Profit, was born.
What were the problems with seller central that made you feel the need to develop software to replace it?
In seller central, you see all these revenue numbers and it is extremely difficult to see what you’re actually profiting, even with Quickbooks or Xero. Once you have more than a couple skus, everything gets clumped together. If you launch a new item, it is difficult to see which one is profitable or which variation is actually profitable and which ones are draining you.
Can you describe the 3-5 commonest problems Amazon sellers have with profit and loss numbers on Amazon?
As mentioned before it is difficult to see where you are profiting. However, that really isn’t Amazon’s issue. It’s not the chore to make a cohesive solution. Their focus is customer service so there no benefit to them to make this. It’s up to us to understand how our business is doing.
2. The Payout Report
If you have ever downloaded this file, it is a mess. You could have 100,000 records of every little thing and way over on one side it the ascent it’s associated with. It is not humanly possible to go through all that manually, and figure out what’s happening.
3. Tracking Promotion Giveaways
It was difficult to tell how many promotions were given away on each day, and how that affects the bottom line. They give you that widget of like the top 5 promotional items, but if you have 10 or 50, that’s pretty much useless, plus it 24 hours behind or more.
How do you deal with Amazon ads costs?
A new feature that is going to be added to Hello Profit is a wizard that is going to help optimize ads. The purpose of HP is to help you see your real profit. Now. Amazon doesn’t make it easy to see this. So, HP pulls in reports through the API, and the main one is available the morning following today’s numbers. So you can’t see what today is doing, because the day isn’t finished, but you can see any day in the past, which is sufficient to tighten up your ad spending.
So, HP pulls that number in, on the merchant dashboard it deducts that range of ad spend from that range of sales. You can view the numbers from the very top, all the way down to every variation of every product and it pulls the information from every campaign and aggregates it for every product variation.
Do you deal with the keyword side of things, or strictly with the profit?
HP will have a campaign reports so you can see how your campaigns are doing. You choose any product you wish as well as any date range, unlike Amazon which only has a few predefined ranges. You can set thresholds for you ad spend, like amber level, you might be getting out of your comfort zone or red which is like you’re bleeding out. So you can see which keywords are being profitable and which ones you might want to cut.
The biggest takeaway from any of this is that there is fat to trim. You have to look at your daily numbers and find where you’re losing profit. You might not think you have a profit issue but you almost certainly do. It is not in Amazon’s interest to be transparent in how much you’re spending in ads. Whatever tool you use, it is vital to review your numbers.
What if you can tighten things up and save 10%? That’s like launching a whole new product. It is much more efficient to find that profit in your numbers rather than going through a product launch.
What are the problems with using a spreadsheet to handle your numbers?
That’s where Ryan and Nikisha started in the beginning. It is possible to get around 80% of Hello Profit’s functionality with a spreadsheet, IF, you are a master at spreadsheets and are willing to hire a team to handle the spreadsheets, but some of it is too advanced to handle with Excel. And you will end up spending your profits on the team.
There is so much data coming from Amazon, and the reports are so bloated, that it will take a team of spreadsheet experts to go through it all. It is much better to have a tool that can automatically handle the data. If you try to do it manually, you’re probably going to miss something and be off the mark at the end of the day anyway.
You might have $10,000 in inventory and it’s irresponsible to go about it blindly. That’s why it’s important to have a tool that handles this nightmare that way you can get back to being a business owner. Launching products, and expanding your business. And it’s important to outsource tasks that take away from that. So unless you’re an expert programmer and expert in accounting, you’ll need to outsource this. You can’t do everything.
What are the biggest mistakes sellers make with Inventory stats?
Ryan brings up a related issue that HP isn’t the solution for yet, though they hope to be, is the issue of inventory. This is one area you need to be proficient in or find a tool to help you with, because running out of inventory is so damaging to promotions, sales velocity, and making the algorithm happy.
If you’re out of inventory for a week or two weeks, how much does that cost? Can you calculate the cost of running out of inventory for two weeks? Also, on the opposite end, having too much inventory and being charged by Amazon for long-term inventory fees.
You have to consider seasonality, lead times of your suppliers, how long it will take by sea or by air and the costs associated, fudge factors if Amazon decides not to put your time out nine days for whatever reason.
You also have to consider the cost of getting ranked again if you run out of inventory, or even considering how things have changed in the time you’ve been out.
Let’s say you run the same promotional strategy that you did 6 months ago, the fields changed, the algorithm has changed. There’s no guarantee that you’re going to get back to where you were. So it could be a long-term loss because you didn’t act accordingly.
You also need to consider when and how much Amazon pays you out, so you can consider how much inventory you can afford. Hello Profit does this to an extent. It will predict how much you have made so far, and using that determine what your likely payout will be. So if you’re halfway though the payout cycle, just double what your prediction is.
What do you personally do in term of projecting cash flow?
The simplest thing Ryan has found is to go for products that have a high ROI. He likes to do 150% or more. This way he will have made enough to pay it off, cover associated costs, and have enough left over to buy another 1.5x inventory. This puts in some room so that he doesn’t have to be as perfect in his math and leaves enough profit to cover unexpected costs like increase ad spend if there is an increase in competition and has to reduce his retail.
One piece of advice to anyone is to make sure your ROI is solid. If all things stay the same and your demand goes up, as we all want, you’ll be able to buy more inventory than you have ever sold, and not have to pay in again. So each product, not only covers itself, but has groth built in. So if you order 1000 unit, next time you can order 1200.
Can you touch on the differences between profit and ROI?
If you Google the FBA revenue calculator, you plug in your competitor’s products, and it calculates the FBA fees you should have as well, and there is a field to plug in you landed costs. Once you hit calculate, it will hopefully show you a green number on the bottom, which is the anticipated payout to you for one sale. You can take that number then and divide it by your costs to get you ROI.
Let’s say your anticipated payout is $10 and your total cost is $5.
(105)100%= 200% ROI
This would be a great product. Because there is a lot of room for growth, you can decrease you retail if you need to, you can do a lot of giveaways, you can do promotions and ads, and you will still be profitable and you can still grow as demand grows.
How do you find products that have a high ROI?
Ryan recommends Jungle Scout, though Hello Profit comes with many of the same features. Ryan will go into HP and use Product Genie and search for all kinds of things and over time it aggregates all kinds of data, even things he wasn’t searching for because it happened to show up in the results as well.
It all goes into a database associated with his account, and he can search against things he didn’t know he had. He usually looks for a certain BSR. He doesn’t mess with sub-100 anymore, but if you can find one that 200-300 or the 1000 range, those are great products. If he can find one that is not too big or heavy, that he has an idea how much shipping will cost. He will take a look on Alibaba and get a rough cost estimate, then use the calculator to find his ROI. He can find out if this product is worth his time in a couple minutes.
Look at your competitor that you think has a similar business model and look in their storefront and find other product ideas for yourself. Leverage other people’s research. There are a lot of great products out there that might not have major numbers but a good ROI. Even it they only do 10-13 sales a day, launch 10 of them and you’ll make a good profit with that kind of ROI.
HOW TO SUBSCRIBE TO THIS PODCAST
A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.
For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.
This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app. Every time I produce a new episode, you’ll get it downloaded right away.
For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.
For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.
If you have any queries, just go to www.amazingfba.com/ask
Q& A Tuesday No. 7 Show Notes:
Q1: Anila: I know that inventory listed in Amazon.com can be listed on Amazon.co.uk under the same ASIN but can it work the other way round too? i.e. listed in UK first and same ASIN listed in US after?
Michael : Hi Anila, not done it personally but I believe so. Talk to SC – but maybe talk to more than one rep so you check it out properly.
Seller Central Response:
“Dear Anila,Thank you for contacting us. As per your concern, I would like to inform you that you can use the same ASIN in various marketplaces. Lets say, if you are selling an item on Amazon.co.uk then you can list the same item with same ASIN on Amazon.com or any other market as well.”
Q2: Dan: Quick question for those selling in the US and the UK – once you’ve set up your US seller central account, and then when you’re planning to sell the same product in the UK also, do you set up a completely new UK seller central account? When I try to set up my UK account, using my business email address, it says the email address is already in use. So should I set up a completely new UK seller central account using a different email address, and pay the monthly fees separately, or should I be somehow linking my US and UK accounts?
A2: Simple answer, yes, you need a new Seller Central Account for the UK. With a different email address. But actually it is a Europe account so it includes UK, Germany, France, Italy, Spain Amazon marketplaces (ie all Amazon European marketplaces).
I think this is actually good news in that it diversifies your risk – even if your US account was shut down (worst case scenario), your Europe one should be safe – and vice versa (as ever, check the latest ToS at the time of reading however!)
Q3: Ben: I noticed in your blog post to support the latest podcast that you recommend using <b>bold</b> html in the listing. [also paragraph <p>paragraph</p>] I can’t get this to work for love nor money…is there something I’m missing or have amazon stopped this? All my competition has bold in their listings…
Rob Sleath – “this has been against TOS for at least a year, if not longer. However general consensus seems to be to do it until you get told otherwise. I think they typically give you a performance notification/violation and blank out the description entirely. Performance notifications etc. are serious, particularly if you’ve had a few before. If you decide to do it you might need to do it via flatfile upload if it won’t let you enter it in the backend.”
Michael: It may be that Amazon have stopped the ability to do this directly in certain categories. I tend to copy or try to beat the competition until Amazon raps me over the knuckles but you need to weigh up risk and reward.
Q4: Ruth Hi everyone, what are the rules now on getting friends and family to review your products? Is this no longer allowed or is it allowed with a disclaimer? I am selling in the UK and after many delays my product is finally being on its way so I am working on my listing and my launch plan. I am also looking at review groups but I do have many friends and family wanting to support me and buy my product which is great, but if they could review it as well that would be even better. Also, if you sell items through other means (like in a shop or market or somewhere that’s not on amazon) – can the customers still leave a review on amazon?
Hi Ruth, as far as I know it’s always been against ToS (Terms of Service) in theory. I think it always was, to be honest.
It’s an obvious conflict of interest. Amazon and their customers obviously want objective reviews. We obviously want favourable reviews!
Having said which, if Amazon can’t link the buyer to you, you should be safe. Apparently, it’s easy for them to put you together if you’ve used the same IP address etc., otherwise you should be reasonably safe. I’ve heard that they may be able to trace your friends if you are Facebook Friends with them. But I have no strong proof or insider knowledge either way. Again a risk you need to weigh up. I might do it on a small scale if I had to but I wouldn’t want to do a large giveaway that way.
Again, you have to weigh up risks and benefits.
Risking a listing suspension over HTML in description is probably not worth doing, as the Description is no longer indexed by the algorithm and probably has little impact on buyers and thus conversion these days. So if you have had too many performance notifications, I would give that a miss.
But getting Reviews is vital, so if you have no other ways of doing it, I might push it a bit more on that front.