Today is Monday, August 8th, and I’m writing this post in our campground in a small town called Libby, Montana. The goal of this trip was to completely “un-plug” and take a week off, but I’m so darn excited about what happened during last week’s week-long trip to Las Vegas to attend two trade shows, that I just couldn’t help but write this post while my daughter is taking her afternoon nap.
Why Did I Go To Las Vegas?
Last week I flew to Las Vegas to attend two trade shows, ASD and SuperZoo – plus there were a number of very successful Amazon sellers that I wanted to meet in person.
ASD is a closeout show, and you can think of it like the world’s largest garage sale for closeout inventory. Superzoo, on the other hand, is the largest pet industry trade show in the US.
I had modest goals for the week, and I’m happy to say that my results wildly exceeded the goals, and in the rest of this post, I would like to share with you some of what happened, and the major lessons I learned as a result.
What Happens in Vegas Definitely Doesn’t Stay in Vegas
ASD was the first trade show I’ve attended since my decision to pivot the focus on my Amazon business to wholesale, and away from private label. I’ve covered the reasons for this change in previous posts, so I won’t go into it again here; other than to say that the #1 reason for the change was the better scalability of wholesale vs private label.
At ASD, the goal for experienced buyers is to find bargains on closeout merchandise that is already selling very well on Amazon. If you know what you are doing, it’s like mining gold. If you don’t, well…it’s like gambling in Vegas and you can get killed.
In my case, my only goal for ASD was to network with Eddie Levine, who I interviewed in episode #205, and a number of other people that he’d introduced me to. I didn’t have any goals for buying product at ASD; however, thanks to some help from Eddie, I did buy $20,000 worth of the LeapFrog LeapTV Educational Gaming System at a price low enough that my $20k investment should earn me a $10k profit within the next 2-3 months. Without Eddie’s help, I never would have been able to source this deal.
The good part about this deal is that this product already sells like crazy and the inventory will fly off the shelves. That, combined with the discounted purchase price and lack of availability from other sellers make this about as close to a ‘sure thing’ as I could hope for.
The bad part about this deal, and closeouts in general, is that they aren’t as easy to repeat as a wholesale relationship with a brand for their regular inventory – which I’ll talk more about when I cover what happened at Superzoo.
How to Build Scaleable Wholesale Relationships
Much like what Dan Meadors teaches in his course The Wholesale Formula, the key to scaling your wholesale business is to establish relationships with brands for their products that aren’t just on closeout….and that was precisely my goal in attending Superzoo.
When I first hit the show floor, I felt a combination of several emotions. Overwhelm (the show is HUGE), fear (I don’t know what to say), and excitement (this place is full of opportunity!). Thankfully, I didn’t let my butterflies get in my way, and I immediately set out to visit the booth of the manufacturer of every product that my team of virtual assistants (VAs) had put on my shopping list.
To help you best understand how to replicate the results I’m going to share with you, I’m going to break this down into the key steps.
Pre-Show Game Plan
Prior to attending the trade show, I created a set of instructions for one of my VAs and asked her to add the name of every product that met the search criteria I’d provided for her into a Google doc.
In a nutshell, I told her to find products that were already selling a high enough volume that if I divided the total sales volume among all the competitively priced FBA sellers, I could hope to sell a minimum of about 100 units per month. Or, put another way, I could make expect to make about $500 in profit per product per month.
My VA was able to find several dozen products that were a match and she loaded them all into my Google spreadsheet.
As soon as I hit the show floor, I sorted my list from highest profit potential to lowest and started visiting booths….and much to my delight, several incredible things started to happen almost immediately.
First, thanks to my background in sales, I’m very good at asking questions, and I was able to quickly uncover several problems that affected almost every company I talked to, and, as a result, I was able to quickly come up with an elevator pitch that got better with each booth I visited (more on that in a bit).
Second, thanks to the conversations themselves, I was able to quickly realize that two of my pre-show assumptions were wildly inaccurate, and this created a boatload of new opportunity for me.
Incorrect Assumption #1: Prior to attending the show, I’d assumed that if a company was an Amazon vendor, meaning that Amazon buys their products and sells them (this is called First Party or 1P), I would want to avoid becoming a Third Party (3P) seller of this product because I didn’t want to compete with Amazon on price.
What I quickly realized was that because Amazon won’t sign a Minimum Advertised Price (MAP) agreement with a vendor, the brand has no ability to curtail Amazon’s selling their products below MAP. Realizing this was huge because I discovered that this was causing the brand all sorts of grief, because whenever Amazon was selling product X below MAP, the brand’s brick and mortar retail partners would cry foul!
As a result of discovering this golden nugget, I uncovered numerous opportunities with brands that were not happy selling 1P, and instead wanted to switch to 3P, with an exclusive 3p seller – which is exactly what I do.
Incorrect Assumption #2: Prior to attending the show, if a brand was the dominant seller on a given product listing and were managing their own 3P sales, I assumed that they would be unlikely to give me the ability to exclusively represent them on Amazon as their only “authorized” 3P seller.
In other words, they would happily “give” me all the profit opportunity if I took all the associated work off their plate.
As with assumption #1, I was wrong again! In fact, quite a number of companies I spoke with were actively looking for an exclusive 3p seller to handle their Amazon sales for them and when I told them that is precisely what my company does, they were thrilled that I’d stopped by their booth.
My Elevator Pitch
Now that I’ve given you a quick overview of two huge assumptions that I’d got wrong, I want to explain to you the elevator pitch that I crafted “on the fly” to address that 3 main problems that were common to the 30+ companies I spoke with.
Here is the exact approach that I used to start every conversation I had in each company’s booth.
While in the aisle, I’d pull up their brand name on Amazon. If they have products with lots of reviews, pick one, and see how many sellers were on the listing, and if Amazon.com was one of them. If their reviews were 4 stars or more, and they had lots of reviews, I’d walk up to one of their people with my iPad in hand and say, “I’ve just looked up several of your products and see that your customers really love your stuff, plus it looks like you sell quite a lot of it on Amazon.”
Then I would shut up and let them brag or say whatever they wanted about how great their company was. In this part of the conversation, I’d make sure to ask more questions that made it obvious that I was an Amazon expert.
After a while, they would invariably ask me what I did, and I’d say:
My company is an Amazon 3rd party specialist, and the brands that find the most value in signing an exclusive agreement with us typically have some or all of the following 3 major problems:
- If they are selling to Amazon (1P) and MAP pricing is important to them, they are having a hard time getting Amazon to not go below MAP and this is causing no end of grief for them with their bricks and mortar partners.
- If they are managing their own 3P sales program internally, they have realized that without dedicated expert resources to manage all the moving parts of selling on Amazon (listing optimization, keyword targeting, promotions & PPC management, customer service, and inventory management), they aren’t likely getting the most out of their presence on the Amazon marketplace, and…
- Because they don’t have an exclusive 3rd party relationship in place, all the existing unauthorized sellers are “racing to the bottom” on price, and this is devaluing their brand and pissing off their brick & mortar retail partners.
I’d then say, “So, if you have any of these problems, we should probably arrange a time for a longer conversation, and if you don’t, then you don’t need me, and I’ll just keep on heading down the aisle.”
Out of 30+ companies, only ONE said that they didn’t have any of these problems, and I suspect that was only because in that particular instance, I don’t think that person I was speaking with was anything more than a hired contractor to help man the booth who didn’t have a clue what the heck I was talking about.
In other words, every company I spoke with turned into an opportunity for new business for me!! Not in my wildest dreams did I expect that I’d be able to uncover 30 new wholesale opportunities in just 3 days.
To put this in perspective, if I can sign just 5 of these companies to exclusive 3P deals and each of the five has sales of $5K a day across their entire product line, that means that once these deals are signed, my daily sales on Amazon would increase almost immediately to $25K a day!
The only “limit” that I an see so far is that I don’t run out of the working capital needed to buy inventory – which is something that I can manage by making smaller orders more often, getting terms, and/or establishing operating lines of credit with lenders, or with Amazon itself.
For those of you thinking private label is the way to go, I hope now you realize just how big the wholesale opportunity is, and how much faster you can scale your business.
Literally all you need to do to get started is attend a trade show and follow my formula.
So, as you might guess, I’m pretty optimistic about how much I’m going to be able to increase my sales by the end of this year. If I don’t do over $100K in December, I’ll be stunned.
In fact, of all my years in business, this is the first time when I’ve felt strongly that I’m in exactly the right place, and just the right time, with the right business model.
If you haven’t started yet, I only have one question: why not?
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