There are many ways to buy wholesale to sell on Amazon. How do you maximize your profit and turn it into a cash flow business? Listen in to today’s episode.
I have a very special episode today if you’re an Amazon beginner. If you’re not yet on Amazon or playing with the business model, this episode is for you.
Today we have CJ Rosenbaum with us to do answer some listen submitted answers. I recently sent out a newsletter requesting the listeners to submit their Amazon questions. Be sure to subscribe to the newsletter so you don’t miss the next opportunity.
A lot of us sellers do while label existing products. It’s important that you don’t inadvertently break IP laws and get into Amazon legal issues. Continue reading
It’s more than just growing your business on Amazon. You have to actively contact and cold call retailers in order to sell your products. It’s the next step in the process. You’ve sold on Amazon, you’ve diversified through other channels, and you’ve built up your brand. If you want to become a wholesaler, you have to take the time to build your brand. It’s not an overnight task. It takes a lot of time to build a brand.
It might not be a good idea to start large chains like Tesco or Wal-Mart. The better idea would be to find a smaller one in your area. Make contact with the owner or decision maker, and set up a presentation where you can make a pitch on your products. A fallback would be to create a PDF that goes over all the information. You can them email the document to them and follow up a few days later with a phone call.
You may not have the money to get a booth or a stand, but you can go as a guest. You can find local retails and get their contact information. Then you can send them an email and PDF where you talk about your company and make a pitch. One vital aspect, in order to become a wholesaler, is making these connections.
You can’t go to these retailers and sell some generic widget. It needs to be unique. It also helps to have several products in your catalog before you become a wholesaler. Bear in mind that even though it may take a year or two for your wholesale business to get going, the payoff happens when retailer orders tens of thousands of products at once.
The great thing about wholesale is the potential. It really is possible to to do great things with it. Whether you want to do it to make some extra income or make it into a large operation. Manuel has done this. He currently does about $300,000 on Amazon, and close to $1.5 million in wholesale. When you factor in his consulting and sourcing income, he is making around $2.5 million a year. The potential is there if you’re willing to put in the time and effort.
Get in touch with Manuel at importdojo.com and get a free eBook and newsletter.
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.
Today, we have one of the giants in Amazon, Will Tjernlund. He’s a man that is always ahead of the curve and is always willing to help the rest of us catch up. This isn’t Will’s first time on the show, you can find his last interview in episode 45, and episode 46.
The big trend coming to 2017 will be selling to Amazon directly using Vendor Express, Vendor Seller, AMS, and all these other buzzwords we have to learn now.
Will says that it’s inevitable. Eventually, Amazon does want to source and sell themselves. If you can get ahead of the curve and get on their side early, it will only help you in the future. It’s one of those things that you know you’re going to do it three years from now, and you’re going to ramp up three years from now, why not go ahead and do it today. Will’s of the mindset that if you’re going to have to do it in three years, then do it now and be the expert in three years when everyone has to do it.
Because it’s their game plan. If you read The Everything Store, Jeff Bezos’ biography, he talks about it being the game plan to make it easier for third-party sellers to sell on their marketplace, take care of the annoying aspects like fulfillment, customer service, storage, and marketing.
Then, all they need is us third party sellers, essentially, glorified sourcing agents, to find the best SKUs and see what sells the best. Then they start from the top and decide if this product is easy enough to manufacture that they just want to come out with their own Amazon Basics version of it, or if they want to work with the biggest brands in that category and source their products directly.
So, if you’re not selling directly to Amazon, eventually they are just going to try to squeeze you out.
Third-party sales are becoming a bigger part of Amazon, something like 50% of sales were from third-party sellers this past Christmas season, but from the different advantages Vendor Seller gives you and the heads up if gives you, and also that it works better with Amazon’s business model, it’s for sure, the way of the future.
Right. Just think of a general catalogue, think of kitchen knives. Like a block with 10 knives in it for $29.99. Amazon can come out with that knife block for $29.99 and then there will be, like German manufacturers with brand names.
The customer has to decide if they want to get those cheap Amazon knives, do they want to get the expensive German knives, or something in between. That’s were you, as a third-party seller, has the advantage. You can offer that middle product that better than Amazon’s version, but not as expensive as the German brand. You make sure it’s good quality and all your packaging looks good, and Amazon buys directly from you because you’re filling a gap in the market.
It’s different for every category. For that category, that may be the best route taken. Also, think of it this way, when you jump on Vendor Express and get upgraded to Vendor Central in six months and you’re selling directly to Amazon, then everyone else who is selling those mid-level knives will get blown out of the water because yours are going to be shipped and sold by Amazon.
Two or three years down the line you’re going to have a lot more reviews than everyone because you’re shipped and sold by Amazon. They do different sales and they do different marketing things to push your products. Then, when these other mid-level sellers try to jump on Vendor Central, Amazon doesn’t want to work with them because you’ve got them covered.
Will’s been taking a roundabout way by looking for big brand names that have terrible accounts and I go and consult with those companies. He will offer to run their Amazon accounts. He will then optimize their listings, fix violations, and get everything back in stock. From their, he’s been using these big brand companies as his private label arm. He will suggest new products. If they’re selling a bunch of kitchen accessories, he will suggest another one, which is smart for them since they own their own factories. They then will fly to China to get samples, and then buy every product on the first page of Amazon as comparison.
Right now, Will is looking for niches of these companies that he is already consulting for, let them handle the research and development, and he looks for products that are within their wheelhouse, but not being manufactured yet.
Let’s say they sell 40 different types of ladles, he will suggest a slotted spoon. He’ll look up that product on Jungle Scout, and find their review-to-revenue ratio. Check the revenue to review ratio: Let’s say slotted spoons have 10,000 reviews and $100,000 revenue a month, so $100 revenue to review ratio is good. He takes that information to the company and shows them that there isn’t much competition, it has proven sales, and it’s in the category they are already selling in.
Will uses the review-to-revenue ratio as a way to quickly gauge the lifecycle of a product and it’s maturity. Determine if it’s easy to ship. If every listing on the first page is being sold by Amazon, then you’re probably too late. From there you look at every facet and see if will work, and if you can’t find anything wrong with it, it’s worth a shot.
Will likes to find products that you have to explain what it is. It’s that niched down.
It wouldn’t be unusual within the niche. For example, a little tool that is only used for cutting fly fishing rod lines. Yeah, it’s a weird product. It’s a small piece of metal with a blade. It’s costs $.50 to make and the guy is buying it for $10. Not much by the way of sales, but there’s no competition and it’s $8 profit.
It also has to have a very specific keyword that the customer searches for. A woman recently came up to Will talking about her product that was a wireless bluetooth headset that you can sleep in. When asked how a customer would search for that, she replied with “bluetooth sleeping headphones that are wireless.” The problem with that is it’s too specific, no one will search for that, and you can’t rank with “bluetooth headphones” or with “wireless headphones” as as that’s too general/generic. Since she didn’t have a keyword in mind, she could even do a revenue-to-review ratio because she did know where to start.
Exactly. Will recently started climbing and there is a tool called a grigri. Now, no ones knows what a grigri is, but if you’re in mountain climbing, everyone know what it is. Plus, how easy is it to rank for this very specific word, grigri? No one else is going for it. Anyone who searches for it, knows what it is and wants to buy, and if someone doesn’t know what it is, they wouldn’t need it anyway. Also, if no one know to search for it, then there isn’t any private labelers nipping at my ankles, looking it up on Jungle Scout.
Yep, and it works really well with US brands. Will contacts these climbing brands that have been in the niche for years, and they’re selling these harnesses for $140 when they sell them wholesale for $40 because they have this established brand. So, no one knows who Black Diamond Climbing is, but every mountain climber knows who they are. So when someone searches for them on Amazon, they are astounded that they can get the entire cataloge because no one else carries as much. From Will’s perspective, it’s amazing. There is high demand, he doesn’t have to do any research and development, and he can still make huge margins, and he only has to place an order once a month with a U.S. based distributor.
Many of these distributors have very small minimum-order quantities. One particular company said their average yearly order volume from one of their distributors is $2500.
Will finds them by searching through Amazon. As he’s looking for climbing stuff, he notices that these major brands have three of the five bullet points filled out, their out of stock, or they have one of the five images. All sorts of these red flags exist and they tell you that these Amazon accounts are being managed poorly and they don’t understand the Amazon ecosystem.
It’s easy enough to contact these companies, become a distributor, and send them a message. Tell them who you are and that you were looking to buy one of their products on Amazon and saw that it was a mess. Let them know about the issues you found and that you can help them get their account in order. Ask them to make you the only distributor on Amazon, you won’t screw over the brick-and-mortar store by selling their product too low, you’ll pay up front, and keep their product in stock. All the things you can promise them that their distributors can’t promise them. These other sellers are only using them and not adding any value whereas you can actually add value to their company. You can be this A+ consultant, but you’re paying them instead of them paying you.
Another selling point is that it’s in their best interest to work exclusively with you. You can make sure to keep their listing looking good and their prices at the right level. They wouldn’t let big-box stores carry their products if they didn’t know who was selling it, at what price, or what the packaging looked like.
Imagine you’re a big mountain climbing company that specializes in making the best carabiner. You have been in business since 1975, you have 10 people working in manufacturing, 1 person in accounting, 1 person in HR, and 5 people in sales. Each salesperson has their region in the U.S. and they call up local shops asking if they want to place an order. Their whole job is to get as many accounts under their belt as possible. Then, all of these distributors start selling out the backdoor, and now they have 40 people selling on Amazon. This puts the company in a tough situation. They told these stores that they can only sell in the store. They can’t cut them off because they have been doing business for 40 years and they want as many accounts as possible. However, the Amazon market is hurting their brand.
These old-school companies will gladly sell to you because they still have the mentality of “sell to everyone,” but some will question the sale if you are selling it on Amazon because of this issue.
A lot of these companies don’t know the first thing about Amazon. They will contact seller support and demand they stop sellers from selling their products.
There are some gated brands like Nike or Louis Vuitton, and there is no way you can sell their stuff on Amazon. You can go onto Amazon and gate your brand. If you explain that customers are getting hurt by counterfeits, then they will likely approve it. Make sure to put in the customer first mentality and use the word counterfeit and you’ll have a better chance.
It depends on the company. When Will calls up these companies, he just feels them out on how they want to go about it. They might just want him to be a distributor, that’s fine. Or they might want him to be a distributor only if he can keep the price high, that’s a different conversation. Or they might want him to run their Amazon account, but it’s all going to be under their brand. Each time a company will ask for something different, and usually he will say yes because they are simple things. You just have to feel the company out.
If they’re making $20 million in sales on Amazon, then they’re making enough money to go and hire a whole team. Until they get to that point, it’s better to hire a someone like Will to handle it. It’s not worth it to take six months to hire and train a team when they don’t even know what to train them on.
Exactly. Amazon is like this big scary monster in retail. Instead of them trying to deal with it, Will is like the band-aid on the wound. They are sick of dealing with it, it’s not working with their business model. Just hand over that part of the business to an expert that will take care of everything. All they have to do is deposit a check.
Episode #45 Show Notes: Will Tjernlund Interview Part 1 of 2
How did you get into Amazon Private Label Selling?
Will’s brother started selling on eBay around 2003 and ordering from Alibaba. Will was 13 asking million Qs. Aged 16 he did different forms of RA selling on eBay using his dad’s CC! He started selling on Amazon Full Time about 3 years ago.
Where are you at today with Amazon Private Label?
Will has sold $10m in 3 years. He’s outsourced the part where he has to be there. He’s travelling and running his business from his laptop (like Greg Mercer! – see episode #42)
How did you do that?
Some wholesaling from US brands and Canadian brands and Private Label. If he can see a risk free dollar to invest for $1.20 in a couple of months, that’s where he’ll go. Basically he’ll follow the cash!
How do you know where the cash is?
1. People do a bunch of research for 2 months, order a sample, test it, brand it, get logos made, finally get nice packaging, get 2000 units into amazon, give away a few hundred units.
2 Will might call a US based brand, lots of products on Amazon, 100+ reviews but they’re not Prime.
He’ll call them, say, “Your account is not being well run, so most of your customers have to pay for shipping. We can run it better.”
He’ll order lots of product. He can see if that they sell $50k, he can buy $5000 worth and flip it in 10 days and make $2500 while the other person is still doing their research!
Do you just go after individual keyword opportunities or build a brand?
If you see a wholesale company where say 10 of their 100 SKUs sell like crazy -Will often will Private Label one of those so as to offer the illusion of choice to the customer. But he will sell both the wholesale product and his Private Label product.
So it’s going after a microniche?
If you can take over all the listings on one page, it’s very valuable. Make all the listings individual rather than Parent-Child IF it is a low-competition keyword.
Do you just not bother with Parent-Child relationships?
P-C makes a lot of sense if you’re after a competitive keyword because you’re trying to drive all your sales to one listing. But if you have a low-competition keyword, it makes more sense to own the first page.
Does that take a lot of capital to invest?
If Will sees that a brand sells $50k a month, the first order was still just $5K to return $7.5K. Then you reinvest for $11K and then keep doing that. Turn the cash around as fast as possible. Go after their hottest sellers and this is much easier.
Example: One brand Will bought from recently had an average selling price of $150 for its products.
He ordered about 50 of their hottest selling products and sold those out within 5 days. It’s all about turning your cash as fast as possible.
For those just starting on first product, how can you use this approach?
Fake it till you make it! Find products sold by a wholesaler that are not being presented properly on Amazon. Make a free one week Shopify store, put in pictures of products and prices. “willsshovelstore.com” and an email.
Email them and say: “We’d love to sell your products. I’m looking to Place an order for $5000 right now. “ If it’s a $5m company, that’s over 1% of revenue so you’re a salesman’s dream.
Then on to the next?
Yes! You cut so much BS out: creating the UPC, photos, listing creation etc. because they already exist! So you just accept products in, send them back out to Amazon and then move on to the next brand.
If Will calls the brand and spends 2 hours on the phone and ends up making $40,000 profit in a year, that’s $20,000 an hour income!
He’s not wasting his time building a brand. Getting cash in, not spending 2 months to make a logo.
Michael made a similar mistake starting out, which took 5 months to go live. The competition goes crazy, you don’t know if it will sell out- it’s all risk, little reward. Will takes little risks and gets rewarded multiple times: the aim is to make 20% return 6 times a year[=around 300% annual ROI- Michael] instead of trying to find one home-run product that will make you a million a year.
It’s a lot easier to sell 1000 products once a day than 1 product 1000 times a day.
Isn’t the downside of that getting cash tied up in inventory?
So just order a week’s worth of inventory. A lot of US brands will have just 3-10 day lead times.
So a really different model than everyone is teaching?
It’s hard to teach Amazon in general because everyone has different education, cash, cash flow, they have different responsibilities in life…it’s hard to write one course that suits everyone.
Are you basically saying you would do wholesale first and Private Label afterwards?
More times than not, it’s super obvious. Say Will buys a product from a wholesaler for $40 and they want him to sell it for $150. If there’s that much margin, it must be bought from manufacturer for $10-15. Will goes Alibaba and confirms his suspicions. Then he’ll source it and sell a Private Label version for half the price. A lot of the time, customers want the half price product as much as the named brand version. So you’re selling it on price not brand.
For those just starting on first product, should they go for wholesale or Private Label (ie look on Alibaba etc.)?
Alibaba can be great, Will advises going after the lower-competition products. If you’re making $10 profit and selling 10 a day, that’s amazing, that’s $36K a year.
It’s so much easier to go after a lower competition product than after a product selling $50K a month. A lot of the time they are being sold by someone making a loss to keep the competition at bay.
Will likes to see one listing with 300-400 reviews (shows demand) and lots of listing under it with 20-40 reviews (competition is low). With giveaways Will can get that number very fast and get the 2nd Place spot. The 2nd listing down can sell as many as the 1st. The 1st may just have been there longer.
What are the biggest problems you see with people launching their own Amazon business?
Just not getting started in the first Place! Analysis Paralysis on research. Working on the business without making cash.
The other thing is cashflow. If they have $5K to invest, they order $5K of product, that means they don’t have enough cash to order new inventory before running out of stock. If they have a 30 day lead time, and invested all their cash in inventory, selling too much too quickly can be a problem.
What’s the solution?
The solution is to only put half of your investment cash into any order.
For example, Will and his brother ordered a container of knee scooters for $40K. That was 210 units. The lead time was 60 days from ordering to in stock at Amazon.
On the first day, they sold 7 units. If you do the maths, that means 210 units would sell out in 30 days (no. units/units sold per day) So they had to go back to the supplier that week and place another $40K order.
If you only had $40K in the first Place, you’d have to wait until you’d sold ¾ of your inventory before placing an order, which means you would be out of stock for 2 months. If you sell 20 units on the first day, do your multiplication!
While generally taking out a loan to start an Amazon business is not good, when you have proven sales, and you need to get back in stock, this is a good time to get a loan from family or friends.
Will has been talking to private equity firms who want to lend to Amazon businesses because they love proven cash-producing products because they are tired of investing billions in startups with no turnover!
What are the other big mistakes do people make when launching their products?
Not thinking through:
Will will often do it via price but also it can be being differentiated.
What are others tips on differentiation?
Size – if everyone is selling a 10” pan, sell a 6″ or 12” each
Colour – If everyone is selling a black product, sell a pink one. Even if the demand is lower.
Will sometimes stands over his mother’s shoulder to observe her buying style.
She doesn’t really care about 3 vs 5 bullet points, she doesn’t know about all the reviews- she’s not in an Amazon bubble! She takes about 2 seconds before hitting the one-click checkout button.
You need to stand out quickly via something visual – people aren’t interested in reading text.
What other big mistakes do sellers make?
That’s about it. Either sellers don’t have enough cash or they try to sell a product they can’t rank for. There are few other problems. Getting ripped off by a Chinese supplier is very very rare- but Will gets many emails saying “I sourced this super competitive product and I have 5000 units, what should I do?”
If you recognise you’ve got into an over-competitive product, there isn’t much you can do. You could try giving out lots of units and spiking the sales rank but otherwise, sell them as a job lot on eBay!
You should have started smaller or tested demand some other way. So the mistake has already been made.
Be “Young Dumb and Stupid” – a lot of smart people try to over-complicate Amazon – just sell a good product at a good price, then move on to the next one.
The biggest things to differentiate yourself are product selection and good cashflow management.
Will listens to no Amazon podcasts and instead reads general business books and applies general business principles to the Amazon model and it “turns out pretty decent” [$10m in sales!]
How can people contact you, Will?
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