Scaling an Amazon business to 8 figures
Scaling an Amazon Business to 8 Figures with Fernando Cruz of Marketplace Ops

Scaling an Amazon Business to 8 figures with Fernando Cruz of Marketplace Ops

Scaling an Amazon business to 8 figures is something Fernando Cruz  and his partner personally achieved. Fernando works for Marketplace Ops, which superchargeas Amazon sales for brands by managing their accounts.

Scaling an Amazon business – the background

Fernando and his business partner had a tech background

Each put in $20K into the business.

They tried to build Shopify store for 5 months. It was really hard!

What was hard about Shopify compared to Amazon?

At the time they were thinking in a very binary way.

They came from tech – which means raising a lot of money and you dilute your own equity in response.

They had mixed feelings around that.

You start to get freedom. But by raising venture capital you now have a boss!

So they decided that they didn’t want equity funding but were comfortable raising debt.

SEO is slow Shopify traffic 

The issue was that they weren’t comfortable with spending money on ads.

They had built partnerships – Fernando had been head of sales – and blogs.

But because they were boot strapping, they found that the time to go from zero to customers on a blog is too long and they were full time with it.

If they had had a hybrid strategy with paid ads, that might have worked.

Pivoting to Amazon from Shopify

It was originally a passion project and then they shifted to making money!

Found a course online and downloaded it and pivoted completely.

They started with 4 products at the same time which helped them learn a lot.

Hired a coach right at the beginning which was useful.

He was already doing $45K a month

  • Get used to giveaways
  • get more inventory

Home run Amazon Product

6th-7th product was a home run. Had to borrow lots of money from family and friends.

They found some niches that were pretty competitive

One that was a reasonable success that died after a few months

Did more in 1st month on amazon than 5 months on Shopify.

Over $2M in 1st year then started expanding the home run product lists

Borrowed a lot of money in the first year!

Borrowed maybe $200-250K

Went to everyone from high net worth

$30K from a friend and $30K from a parent.

If your products take off, you need more cash. So they refinanced one of those for $100K

Pushing for terms is a better move but they didn’t know that then!

SBA loan

In the second year, they went for an SBA loan – but you need 2 years’ financials

Now Fernando is a little more wary of debt but was very aggressive.

Some of the stuff they started tracking was

  • Success rate – how to define success
    • Over $2000 profit per month by end of 1st 90 days
  • Failure rate
  • What counts as a neutral product – breakeven

They realised neutral and successful products represented 90% of products after became successful

What else did you do right to get explosive Amazon sales growth?

They focussed aggressively on Amazon only on private label.

Some people want to do RA, Merch, wholesale and then diversify onto Shopify all within one year!

Surviving in hard times – how do you protect your existing Amazon business?

Now is a great time to get good at finance!

Get really detailed about book keeping.

Slow down and consider diversification.

Amazon was the arbiter of your product is “essential” or not

Set up Systems and team to be really quick and nimble

  • Check daily have our products moved from to non essential to essential
  • Projecting sales figures
  • Are we above or at breakeven?
  • Put yourself in a position where if things get worse, you’ll be okay.

If you’re doing well on Amazon

– focus on and dial in:

  • inventory planning
    • Supply chain planning
    • Focus on air shipments, not too much ingnvoety on hand.
  • Focus on essential categories
  • Set yourself up to take advantage when things normalize
  • Lessons
  • KPIs that Fernando focuses on financially
  • Federal assistance programmes
  • Dealing with categories not doing well

Example of repurposing

Fernando has the brand management agency

  • A ton of people were planning to go to market in retail brick and mortar stores and are now looking at Amazon
  • A lot of brands don’t bother with that!

https://www.marketplaceops.com/

  • You can partner with someone else who has financing and launch products together to bring in cash
  • Try to partner with people who are in the “essential” categories
  • You need to evaluate how quickly things will recover

How do we get into the mindset of the consumer and see what is coming in this kind of uncertain time?

  • If you’re in an essential category, it’s good to introduce more products
  • If you’re not, you need to see how much your sales were hit relative to pre-crisis sales
    • So you need to see how long it’s going to take to recovery
    • If you were travel related and have a 90% decrease, you need to think differently.
    • If it’s home and kitchen and only 30% down, you

Create 3 scenarios:

    • Reopen soon
    • Takes longer
    • Worst case scenario

Often you’ll find your worst case scenario is not that bad.

If your mid case scenario says you’ll be $10K down, you can

    • Cut unnecessary software
    • Push off interest payments
    • Get federal grants
    • Renegotiate with suppliers
    • Maybe get an SBA loan as an insurance policy.

If you lose 80-90% of sales,

  • you need to focus on survival
  • Drop expenses
  • Find other ways to monetise
    • Consulting
    • Your team
    • Your knowledge
    • You may need to lay off staff

For a free consultation, visit https://www.marketplaceops.com/

For other examples of rapid scaling on Amazon, check out these podcasts:

Ashley Pearce on scaling his business to 7 figures in 3 years

Will Tjernlund on evaluating the competition

Watch my full interview with Fernando Cruz