[03:16] It’s a pleasure to have you here. So you are the director of Product. As I mentioned, when I read your bio for a company called IO Scout, which puts you in a really great spot to be observant of trends that are going on in the eCommerce business as well as the things that successful sellers are doing that unsuccessful sellers aren’t doing and that’s what I want to talk about today. So let’s start with the trends. What trends do you see any commerce for late 2020—obviously that now we have hindsight but going forward into 2021?
- For sure. That’s a great question, by the way, because we all know that consumption is changing. We know that the restaurants, travel, and luxury product sales are up to decrease. And for sure, eCommerce boom fields record online competition. So in 2003, we have the SARS epidemic, and China, unfortunately, had to face serious limitations in traditional sales, so this pushed digitalization. Alibaba grew them and other Chinese huge sellers grew.
Now with the COVID pandemic, and for sure, this has changed our buying habits. So eCommerce sales are at an all-time high after the pandemic. And at the height of the pandemic, 10 years of commerce growth happened in just three months, in 90 days. So eCommerce is booming and we are in the sweet spot, I would say—although we are in the middle of the pandemic, and for sure… Not only that, but the consumer behavior changes. Right now, instead of going grocery shopping, we would order some things that were never ordered home.
Right now the customers and people who are basically making their decision about sales, what to buy, for them, fulfillment is definitely the differentiator. So you know, right now today’s brand has to have fast, free, sustainable for sure, and branded shipping. So in case let’s say, the customer has to choose whether to purchase a product, let’s say with like two-day delivery or same-day delivery, we would probably choose faster delivery. But of course, this all depends on the customer.
Moreover, it’s important to remember that retention becomes the top priority as acquisition costs peak. We as the business face the same although say we’re not an eCommerce business, but we face the same. The costs of acquisition right now is much higher compared to 2019. Nevertheless, globally, consumers and regulators are basically vary. Google and Apple are to consider making it harder to target ads across channels.
At the same time, some of the experts are saying that one of the trends is basically the reduced cost of entry for basically traditional sellers. Because right now, the website development companies or some other companies are making the services cheaper. So it’s much more—let’s say, it’s not that expensive as it was before to build your own website, for example, because all the industries right now are not in their best position.
[06:57] I was gonna say so in terms of categories, which categories—if someone’s looking at either expanding their product line or starting a new business, what categories are you seeing an uptick in over the last quarter versus say, the quarter a year earlier?
- I wouldn’t say that we have been on the market for too long. Nevertheless, a lot of things are, in some categories, definitely booming. For example, we all understand that everything that’s associated with home, for example, would be higher in terms of demand compared to other categories associated with a vacation or something like that. So definitely, it’s great to take a look at things like Google Trends, what people are looking for, or use and some other tools, for example, in order to see what has been very popular among people. So this is something that—in our case, and with our users and our customers, I would say that home improvement, for example, has been growing and of course, some other tools associated with home.
[08:11] Okay, and groceries as well.
[08:16] And health and personal care, because we sell in those categories, and we’ve seen nice lifts in them. For the folks who are listening who have been in the wings for a while, and they’re thinking, you know, they haven’t started a business yet. They’re thinking 2021 is the year that they want to be able to jump on the bandwagon, take advantage of this huge lift in eCommerce, which will probably create a sustainable lift because habits have been changed significantly, thanks to COVID. What is required to get a private label business up and running on Amazon?
- For sure. And this is also the trend. As I mentioned earlier, everyone wants to have fast shipping, everyone wants to have something that is convenient. And in 2019, around $2 trillion was spent just in a year on marketplaces. So for sure, the best day is today to start an Amazon business. And customers will shop in marketplace rather than eCommerce stores because they understand that they can just say go and buy everything in one place. You know, in our case, it’s Amazon.
To start an Amazon business, what’s required? This is pretty simple, you can just google “How do I start an Amazon business?” and one of the first results will be amazon.com, which will tell you where to start and what to do.
One of the things that basically they’re saying is that, “Hey, make sure that you have the business model that you would like to go after. Choose the plan, whether it’s individual or professional.” If we are with a private label seller in our case, we would choose the professional account. And just like make sure that you have all the documents ready for starting your business. And after that just add start adding a product.
But in a real case scenario, we understand that in order to start an Amazon business, a private label Amazon business, you have to follow many more steps. Let’s say if you have a product already, for sure, you know what to do. If you don’t have the product yet and you want to start your eCommerce business for sure you need to make sure that you are—let’s say selling something that will be sold and you’re investing money in something that will be sold. And the first step that all of the sellers need to make is to find the product that you are to source, that you are to basically sell afterwards.
So the steps that Amazon themselves described and the steps that a seller needs to take—a future seller needs to take are for sure very different. And answering your question friend, for sure, it’s important to have an Amazon account, that’s probably the easiest step to take.
After that, you need to make sure that you know what you want to sell, and you have the product to sell. If it’s a private label product, you need to perform your product research. And you have to, not only let’s say just invest 20 minutes into that. You need to do some homework. And I do believe that we’re going to speak about that later on.
And then you start selling for sure. After you start selling, you need to invest money into advertising, and into other strategies that would make you or brands grow in terms of number of products, and much more.
[12:09] All right, and we are going to break that down a little bit further, a little later in the interview. But before we get to the strategies, for example, for sourcing products, which is obviously very first and most important thing to do, once your entity set up and you’ve got your Amazon Seller Central account, we’re going to get to that.
Before then I do want to ask you, in the position that you’re at, in IO Scout, you do get to see a lot of different sellers. And I’m quite sure that there are things that are common to the most successful sellers that the unsuccessful sellers aren’t doing, what are some of those things?
- Sure. So one of the things that I personally noticed, because I do customer interviews, and one of the things that we are very proud of is we speak with our customers, and it doesn’t matter what time it is, or where the customer is located, we would definitely speak with our customer. If we’re speaking about successful Amazon sellers, what I personally paid attention to is that it’s 100% dedication. And it cannot be—let’s say a side business, which you invest time, just like as a part time job. Unfortunately, this doesn’t work this way. And the good friend of mine, an Amazon seller, has to quit her job in order to become a top seller on Amazon. So this is one of the things that she did.
Another thing is persistency. And of course, something that I also paid attention to is self education, all the time. Even if you are a successful seller, the things are changing constantly. The way that Amazon—how often Amazon ads, changes or changes their let’s say policies, and many other things are happening. So being—let’s say, always, on top of what’s going on is definitely something that successful Amazon sellers are doing and they’re always up to speed on what’s going on.
And the other thing that I paid attention to is definitely sharing expertise. Because there are a number of Amazon sellers and the ones who are, let’s say successful, they would share their expertise, definitely, let’s say not just like given out commercial secrets or anything like that. But let’s say they can spend 60 minutes of their time teaching other brand new sellers or sellers who have less expertise, what to do, and definitely listening to other sellers and their issues, because you never know what’s going to happen next. So this is something that I paid attention to in terms of like successful sellers.
And another thing that I paid attention to is that the successful sellers never tell you that, “Look, I’m a great seller. I don’t need anyone to tell me the thing, what’s going on.” And they also share their experience. Because as I mentioned earlier, we are not—we haven’t been on the market for as many years as other software companies out there. Nevertheless, we worked on the maps, successful sellers who just gave us feedback, and they told us “Look guys, that’s great. Just do whatever you’re doing.”
You also asked me about the unsuccessful sellers. And something that I paid attention to is probably that’s the same with other not only sellers, but the type of people for selling. “Look, I read a book about how to become an Amazon seller and I know everything.” So this is the type of a seller who already knows everything, he doesn’t need anyone’s help, he knows what to do. And he just blames everyone out there that the sales are not growing, or that’s not probably the best time of the year to sell the product or something like that. So that’s where we are.
Apart from that, another thing, unfortunately, that I faced with some of the sellers who are not doing as well as others, is basically going after products, which are rather trendy at this point of time. Because, you know, face masks boom, in March. And so many sellers ended up with those masks, basically, in their just garages, and wherever they are storing the masks. And that’s something that is very important. And this is something that he asked me about what has been, let’s say, what are the trends and other things. So this is something that is very important to see where your product will be, let’s say in the next three to 12 months’ time, because you don’t want to just end up with the inventory that’s never going to be sold.
[17:32] So let’s talk about some best practices for sourcing products. Because if you can’t get that part, right, nothing else really matters. Because you know, and I’ll use myself as an example. Four or five years ago, when I started on Amazon, I initially tried to start as a private label seller before became a successful reseller. And I transitioned because I didn’t know what I was doing in private label and my first two product selections were horrible and it really didn’t matter how much money I spent on ads. I was never going to organically rank because the competition was far too stiff. And as a result of that I was never going to make any profit and that’s what caused me to be incredibly frustrated, and ultimately led to the transition to my being a wholesale reseller, which for me worked out really, really well.
That said, it actually is a pretty good business model, if you can make a go of it with private label because your margins are higher, you’re in more control of your brand. Plus, you have an asset that you can sell for more money when you don’t want to do it anymore. So best practices for sourcing products. Let’s walk through that.
- Sure. So I just recently shot a video on how to, let’s say, find the product. And for sure, if we had all of the time there, we would probably be talking about that. But I’m gonna stop here. And of course, we have to understand that there are some elements of profitable product opportunities, which are high demand and low competition. Price, which is as a lot of let’s say consultants or trainers are saying is between $15 and $17. It’s important to take into consideration the profit margin, the market depth analysis, and possibility basically to be private labeled, because some products can never become private labels, you know.
Two more things that are important to consider, of course, the BSR, the Best Sellers Rank and the number of reviews of those products. So some of the things that are important to consider.
There are some general product types to avoid, which don’t, which you don’t want to end up with, for example, easily breakable products, for example, hazmat. Some things like I don’t know accessories with replacement parts because they may become obsolete. Definitely you don’t want to do with products that have patents because you’re never going to make it.
Some of the steps to begin your product selection is basically to begin the process by identifying preliminary products. Because of course it doesn’t—as you mentioned earlier, it’s not just one or two products that you want to look at. But there’s a many more products that you want to consider. You use your criteria to find products for preliminary evaluation. For example, like I mentioned, the price between 15 and 70 US dollars, the weight, the size, below the oversize limit, for example. The BSR of over 100 because you’re never probably going to make it to the first 100. And you can go…
- Oh. For sure. I’m speaking about for, the initial product search, it would be better to look at the products with BSR of over 100, not 100,000. Okay.
And you can go to product finder, if you’re looking, for example, for products in IO Scout and use just one category or several categories. Then you’re evaluating your preliminary products by looking at the market depth of each. So the idea is we’re looking at the market overall, not just at top-selling products in the niche, for example, and you’re just deciding what keyword and how your potential buyers are going to find your product. For example, you’re just typing in the keyword and you’re looking at what is available out there.
Moreover, you are creating a snapshot of the overall market for the product and evaluating the revenue, for example, and the reviews in order to—for the market to pass it to the next step. So after you have created, for example, a list of 100 or less products, you have to end up after performing all of those steps and analyzing the depth of market or market depth, you end up with 15 products, for example, or 20 products. And you can evaluate each and every product and take a closer look at them. So you have to understand, as I mentioned earlier, this takes time. Sometimes this is the step when a lot of sellers or future sellers just end up very frustrated because this takes time.
And it’s important to have the product matching. Let’s say the following things: product costs should be low, profit margins should be high, the return on investment should be high. And something that is important and a lot of sellers don’t consider, they have to understand their return on investments. And to do that, you have to take into consideration the price of the product, the cost of the product, which you can look up, for example on Alibaba or any other website where you’re planning to source your product from. You have to have the product that may have the low number of reviews. And of course, you have to perform the market depth analysis.
After you finalize all of those 15 or 20 products, you just choose two of them and start sourcing for your product. In case you have a low budget, for example, one of the most important things to consider would be definitely the cost of the product because you don’t want to end up spending all of your money on just the product itself without—let’s say, putting aside money for marketing, for example, or for shipping, or for anything else that’s required.
[23:57] As a rule of thumb for a new seller considering going through this process and launching two products, including the cost of the first order, as well as the cost of the promotions and advertising that are going to be needed to get the product to get traction, assuming they’ve made a decent selection. How much money per product do you think that they should budget for?
- Well, that’s a great question. And I would answer that 2000 up to 5000 would be the average budget that we’re looking at. We do have, let’s say sellers that had less than 2K. But if we’re speaking about private label, unfortunately, that’s an average amount that you have to consider. For sure there are businesses, there are private label sellers that spend more than 10K. But it doesn’t…
[24:55] There are private label sellers that spend a hundred grand launching a product and those are also doing $100 million dollars a year in sales.
- For sure. Nevertheless, we understand that it doesn’t matter what your budget is. Do you have to consider all of the things and let’s say the first package that you are to order and the first let’s say number of samples that you can order and other things. Because if let’s say the budget is the key differentiator and something makes you make the final decision for sure. You have to consider cost. If you have more money costs would probably not be the thing that would make you go after the specific product for sourcing.
Nevertheless, it’s important for our listeners to consider that there are different things that you can keep in mind. And we suggest not only looking at just one or two products and only looking at just one product when you’re analyzing the products available out there. But it’s important also to see what is available and what are, let’s say, products that may be alternatives to the product that you are looking to sell. For example, if we’re a lot of consultants, and a lot of Amazon teachers speak about garlic press, for example, we have to understand that they come in different sizes and shapes. And all of these sizes and shapes have to be considered in order to understand if you need to go out for that product or not.
[26:38] Makes a lot of sense. In terms of the way product sourcing has changed now versus a year ago or so, do you think there’s been any significant changes or is the process about the same?
- To be quite frank with you, we don’t see too many changes at this point of time. There were issues at the beginning of the year, when there was COVID outbreak in China, in terms of the delivery times and the shipping times. But that was probably one of the things that changed compared to 2019, if we’re to say about 2020. In other things, no, we haven’t seen any changes to be quite frank with you.
[27:27] Okay. What are some of the biggest mistakes you see people making, especially the new people when it comes to sourcing products? And I’m sure there’s plenty of them.
- Going all in to be quite frank with you, because we already spoke…
[27:41] Going all in? Is that what you said? Going all in?
- Yes, that’s what I said. So and without I mean, we have a seller that has 5K, on that he wants—that he spends let’s say, working nine to five, as you know, and then he wants to become an Amazon seller one day. So he quits his job. And he just spends $5,000 on all of the inventory. And you can guess where this brings him?
- Well, for sure. And apart from that, this is one of the common mistakes that we see. Another thing that I also mentioned earlier is definitely going after something that is very trendy at this point of time. Face masks is an example, hand sanitizer is another example. And this is also something that, let’s say will end up—may end up nowhere, because sometimes the trend may be very—it’s not one day tramped, but it may last for some time. At the same time, this is something that has been crucial. And that has brought a lot of negative experience to the sellers.
Another thing that I also paid attention to, and I was in the call with our seller, who was using our product. And one of the things that’s important to consider is making sure that you are working with good suppliers. Because if we are working with not very reliable suppliers, very bad things may happen. And that supplier may just—well, you don’t want to know what’s going to happen. And that’s the reason why it’s very important not just to go with, let’s say just an unreliable supplier, and you haven’t seen let’s say the samples, or the supplier doesn’t have any reviews or something like that, but they have a very good price, for example. So this is something that is very important to consider as well.
And it’s also important to understand that apart from just, let’s say everything that’s associated with the product itself, it’s also very important to understand that there are extra money that you are to spend. For example, there is budget for marketing, there is budget for shipping, and if the seller is not, let’s say based out of the US but he’s an FBA seller, it’s also very important to consider that.
Moreover, it’s very important to consider, let’s say, if the seller chooses not the FBA model but the FBM model, it’s very important to consider the price of shipping. For example, international shipping. This can be not very popular for just an Amazon user to purchase the product and the cost would be more expensive than the product itself. So it’s important to consider that as well.
[31:02] Okay, so I always go we’ll finish off with this, who is IO Scout? Like what is your software doing? Who it’s most suited for? Who’s the ideal customer?
- Fantastic. Great question. So we are what we like to call ourselves, ourselves an all in one tool for Amazon sellers. And we have more than 10 tools available in IO Scout. We have the product finder tool, the product tracker tool, the keyword research tool, as well as sales estimator, FBA calculator inbuilt in the product. We offer Google Chrome extension, and other things like reverse ASIN and inventory management and much more. So we are suited for I would say, any type of Amazon seller, it may be a newbie or more experienced seller. Nevertheless, we welcome everyone.
And I would say in terms of voltage, the type of business that we go after, we may be a good fit for wholesale. We may be a good fit for private label and force arbitrage. So I would say we are one product fit it all. Nevertheless, the best thing is for us to try out the product.
[32:38] All right, so folks, we’re gonna be doing a live stream here in a couple of days. You’ll be able to get more information and to register for it by going to brightideas.co/ioscoutlive. That’s all one word, IOScoutlive, you can register for the live stream there. And in that live stream, there’s going to be a more comprehensive demonstration of the software. I’d imagine there’s going to be some type of special offer for the Bright Ideas audience that you can’t get elsewhere.
So if you’ve been thinking about getting your business started on Amazon, and you’re looking for an opportunity to increase your knowledge about how to do it correctly, as well as become more aware of some of the powerful software that is available, I would encourage you to make sure that you carve out time to attend that live stream and again, you can find that at brightideas.co/ioscoutlive.
El, thank you so much for making some time. It has been a pleasure to have you on the show.
- Thanks Trent. Have a great one. Bye.