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.
At-Show Execution
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.
Conclusion
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?
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/08/LasVegasFeaturedImage.jpg6271200Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-08-08 14:13:512018-08-01 18:42:11Opening The Flood Gates on Wholesale – A Summary Of My Trip to Las Vegas
Today I’ve decided to try something new here on my blog. Beginning with this post, assuming there is enough positive feedback, I’m going to publish a short income report that will show this week’s income, vs the prior week, along with a list of the changes that I made.
My goal in producing these short reports is twofold:
I want to give greater transparency into the week to week goings on “behind the curtain” of my Amazon business
I want to create an eCommerce journal for my own future reference and I figured this was a pretty easy way to do it
If you find value in this report or you have questions, please be sure and head over to the Facebook post for this week’s report and share your comment or question.
Income Report for July 18 – 24, 2016
As you can see below, sales for the week totaled $1850.97 with a loss of ($230.34). The reason for the loss was that I invested heavilyin PPC leading up to last Tuesday, at which point, I reduced my bids from $3/click down to $2.50. The prior week was mildly profitable, largely because I wasn’t as aggressive with my PPC spend.
Significant Activities This Week Included:
First Wholesale Product: I launched my first wholesale product and we made 4 sales. This is not private label product and it I had it up for sale within a week of my initial contact with the supplier.
Listing Suspension: Our primary product’s product listing got suspended by Amazon, thanks to a competitor telling Amazon that we’d ripped off their main image. The crazy thing is that even though we didn’t steal their image, all they had to do was tell Amazon we did and Amazon suspended our listing. Be warned!
No Lightning Deal: As you can see below, the week of July 4th was one where we had 3 Lightning Deals active. As you can see, these special promotions have a dramatic impact on revenue and profits!
Our flagship private label product has massive demand and I’m investing heavily in PPC to see if we can get ranked high enough organically to make the product a profitable part of our product portfolio. So that I (and you) have a record of this experience, I’m going to keep track of it here in the weekly income report.
About the product: It’s in pet supplies, and the top seller’s sales volume is over $100,000 a month.
So far, our investment in inventory totals $6,975 and we have purchased 1,500 units.
In each week’s report, I’m going to include an ongoing summary of:
Total investment in inventory
Total revenue
Total investment in PPC
Progress in Best Seller Rank
Profit (and loss) report
Below is this week’s report card. As you can see, the reduction in my PPC spend decrease revenue, which in turn, had a drastically negative impact on BSR.
Planned Actions for the Coming Week
In the week ahead, I’m going to:
Continue to offer promotions to increase the number of reviews
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
My guest in today’s episode is an entrepreneur by the name of Norman Crenshaw. Norman is employed full time as an IT professional and over the last few years, he’s been moonlighting as an Amazon seller.
In today’s interview, Norman and I had a very candid conversation about his journey on Amazon and what it has taken him to achieve the $40K per month in sales that he’s enjoying today…and let me assure you that his was not a straight line journey to success. In fact, as you are going to hear, Norman is just as good as yours truly at making mistakes early on!
My hope for you in this interview is to learn what it takes for a “regular guy” to build a business that can be started part time, for a small amount of capital, yet has the potential to grow into a 7 figure business in just a few short years…or less.
Listen to the Audio
In This Episode, Norman and I Discuss:
His first two failed products and what he learned
How he applied those lessons to his third product (his first success)
How Amazon’s PPC played a critical role in getting his product to rank
How he’s been able to charge a premium price
How he sourced the product
The major lesson’s he’s learned so far about selling on Amazon
Below is the JungleScout report for Norman’s top product. Notice that #1 product’s review count and price compared to Norman’s product in the second position. Simply by using photographs to highlight some subtle differences between Norman’s product and his competition, he was able to lift his sales by 30%!
This is a perfect example of the importance of continually testing new ideas on your product listings!
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/07/NormanCrenshawFeaturedImage.png366700Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-07-25 14:07:042018-08-01 18:42:11BI 210: How Norman Crenshaw Failed His Way to a $40K per Month Amazon FBA Business
In today’s episode, I’m going to share with you my results and key lessons learned in my first 90 days of selling on Amazon. So far, it’s been an amazing ride and I have learned some incredibly valuable lessons that I believe are going to serve me very well over the next 90 days.
My goal with this post is twofold: to share with you how I’m doing, as well as to share with you some of the key lessons and take aways.
My hope is that you will use this information to improve what you are already doing, or, if you haven’t started on Amazon yet, to serve as a kick in the pants to encourage you to get going!
Listen to the Audio
In This Episode, I Discuss:
My Revenue, ROI, and Profit Margin
The effect of Prime Day on my sales and profits
The massive boost in sales from Amazon Lightning Deals
Some of my biggest mistakes
Software tools I’ve tested
My wildly successful Social Media experiment
The major shift in my business going forward
Total Revenue, ROI, and Profit Margin
My first product listing went on live on April 11, 2016, and since then, sales have happened pretty much every day – which is one of the things I love about selling on Amazon.
As you can see on the image below, my total revenue as of the end of July 12th (Prime Day) was $18,763.54. My profit margin was 17% and the total profit generated was $3,234.58.
During that time, I received 1,790 orders; 470 of which were promotions where I heavily discounted the product (usually 80% off) to generate reviews.
Behind the Scenes Breakdown By My Top Products
Prior to selling anything, all you ever get to look at is estimates of how much products sell (using tools like JungleScout). This is all fine and dandy, but the real learning begins once you start selling. My hope with this section of the post is to give would-be sellers insights into what is actually possible once you take the plunge.
Product #1
Here’s a screenshot of the very first product I launched. My total investment in inventory for this product was $861.
As you can see, it’s been a very good product for me with an ROI of 216% and a profit of $1,577.77. I have now received all my original investment back twice over, and the best part is that I still have 142 units in stock, so all sales going forward will be 100% profit.
The only problem with this product is that it has limited demand, because, like many new sellers, I was very careful to choose a product that wasn’t overly competitive. In hindsight, I was too cautious.
What you can’t see from this screenshot was that prior to the Lightning Deal I ran on it, this product hadn’t done nearly as well from a revenue perspective – due to the limited demand I just mentioned.
Prior to the lightening deal, my profit margin (ROI) for this product was just shy of 50% when I wasn’t running any promos.
Below is the report for this same product before the Lightning Deal. As you can see, gross sales were $4,8333.81 and my profit was just $174.71, largely because I ran a LOT of promos on this product to generate reviews. It now has 195 reviews with a 4.5 star rating.
The process of launching this product and getting reviews taught me a great deal of valuable lessons, so it was worth every penny.
Here’s the original JungleScout report that I used to make my decision to invest in this product. As you can see, there is relatively low demand. Also, at least one of the top 5 sellers (for this keyword) had fewer than 100 reviews. (Note: there are several other keywords that people use to find this product, so for each of those keywords, the report below would be slightly different.)
Product #2
This next product has been an excellent investment. I say so because, despite the fact that it also has low demand, it’s earned a fantastic ROI and has a killer profit margin.
My total investment in inventory for this product is $1,194, and as you can see below, I have already received all my original investment back, and I still have another 192 units in stock, so going forward, all sales will be pure profit.
To create this product, I actually combined two of the products from my very first order into a combo in an effort to differentiate myself from the competition. My landed cost per unit is $3.41 and the product sells for $19.97.
Thanks to promotions, this product now has 26 reviews and ranks fairly well, as you can see in the chart below. Each line represents a keyword that my listing ranks for. Over on the left, you can see which page of the SERPs, my listing, for a given keyword, will appear.
In the last 30 days, this product has earned me $685.45 in profit, which I am thrilled about because this income is now totally passive.
Here’s the original JungleScout report that I used to make my decision to invest in this product. As you can see, the demand is really low. So low in fact, that I would not normally have chosen this product. The only reason I ever bought it was that my supplier for product #1 told me that I should buy it, so I thought, “sure, why not?” and I placed a small order for just 100 units.
The big take away here is that if you don’t swing the bat, you can’t hit the ball!
If you are one of those people suffering from analysis paralysis, my hope is that seeing this will help you to realize that you have to take action in order to be successful.
Product #3
Here’s a screenshot of another product that I invested in with my first order. My total investment in this inventory for product is $738.
As you can see from the screenshot below, total revenue for this product so far is $3,309.95 with a 215% ROI and a $784.71 profit. I now have all of my original investment back, and I still have another 220 units to sell!
Much like product number one, this product has limited demand (it targets most of the same keywords as product #1). This was another of the products that I ran on a Lightning Deal and the day we ran this product on the Lightning Deal, it sold $890 worth (60 units).
To get the 69 reviews this product has, I’ve run 79 promos (not everyone who buys the promo leaves a review) where I offered it to buyers for 80% off.
Note: when you see that I’ve offered 80% off, I actually lose money on every sale because even though my cost of goods sold (COGS) is covered by the 20% I receive, Amazon’s fees still apply and they take about 1/3 off the top. For example, If I have a product that is normally $10 with a COGS of $1 and I give 80% off, I receive $2 per sale…BUT Amazon charges me about $3, so $10 (retail price) – 80% = $2 net proceeds – $3 (Amazon fee is based on the $10 “normal” price) – $1 (COGS) = a $2 loss per sale.
Products #4, 5 & 6
These next three products make up the majority of the remaining sales, and of them, one (#4, on the left) is a product that is in very high demand with a TON of competition.
So far, this product is one that I’ve run 15 promotions on to earn a total of 11 customer reviews. My initial investment in this product was just $753. My landed cost per unit is $5.02 and it sells on Amazon for anywhere from $16.99 to $26.99.
Here is the JungleScout screenshot for one of the main keywords for this product. As you can see in the screenshot, there are prices above $26.99, but the pricier products have more features than the one I’m selling.
As you can see, there is massive demand, plenty of depth, and a few sellers in the top 10 have under 100 reviews. It was this low review count, combined with the very high demand that made me want to take a risk on investing in this product.
Including the extra 1050 units I’ve just ordered, my total investment in this product will be $6,026 and between PPC and promotional expenses that I expect to incur, I do not expect to make an immediate profit on my $6K investment. Instead, I’m hoping that by investing heavily in PPC, I will be able to get this product ranked organically. If I am successful, over the next year, I could sell over $500,000 worth of it and make a killing in the process. Or, I could just break even. Time will tell.
This product will represent my last significant investment in a private label product for a while. To understand why, read the rest of this post :)
Products # 7 through 14
I do have another eight products that I have invested a total of $8,474 into. What about them?
Good question! Six of them are very similar to each other. So similar in fact, that I’ve asked Amazon to combine all six listings into just one listing with 6 variations. I await their response on that. My thinking is that the one listing will be easier to get to rank because all the sales & promotions will be focused on just one listing vs the 6 that I have now.
Another of the listings is for a product that I think I just goofed on…though, I do plan to run more PPC and promotions to get it to rank as it is kind of similar to the six above…though not similar enough to combine (though maybe it is?).
I invested $2,715 in this product, and, worst case scenario, I’ll just drop the price and wait for them to all sell to get my money back.
The last product (#14) of this bunch is a very high demand product, similar to #4. I have invested $1,595 into this product and, to be honest, I just haven’t put in the necessary effort to promote it; largely because the ROI is much lower than product #4 and they pretty much serve the same purpose for a customer. I will probably continue to run promotions on this product and see how that affects the listings rank in the Amazon SERPs. I suspect it will turn out to be a “learning experience” and not much more – though I’m sure I will still get all my investment back.
Prime Day
This year was my first time being a seller for Amazon’s Prime Day – which I’m told is like another Black Friday for Amazon Sellers who get to participate.
Unfortunately, I wasn’t invited to directly participate in Prime Day; however, I still benefited by creating some one-day specials on some of my more popular products. As you can see below, the day was still a pretty decent one at about 2.5X my regular daily sales.
Lightning Deals
If you aren’t familiar with what a lightning deal is, it’s a promotional tool offered by Amazon to 3rd party sellers like me.
I don’t yet know much about how to qualify for one, other than to say that you must have a product that Amazon allows you to run a deal on, plus you must have at least 99 units and be willing to offer a discount of at least 20%.
Once approved, the deal gets scheduled to run for 4 hours and then it’s over.
Last week, the first 3 of my Lightning Deals went live, and as you can see, each of them had massive impact on July’s revenue!
As you can see, over the 3 consecutive days that I ran Lightning Deals, total revenue was $4,892.10, compared to just $233.63 over the same 3 days the week earlier (the prior week was unusually slow and I don’t know why).
Profit from the Lightning Deals totaled $2,180.44 with a 385% ROI. Suffice to say, I’m going to be running as many more Lightning Deals as possible.
The major lesson here is this: you must get your products selling enough to qualify for a Lightning Deal, and if you have to use promotions or PPC at a loss to do it, the profit generated in each of the subsequent Lightning Deals will most likely make it totally worth it. In my case, it was definitely worth it!
Major Mistakes I Made
It is impossible to succeed in business without making a number of mistakes along the way (and ironically, fear of making a mistake is the #1 reason newbies never get started).
In fact, the mistakes I make are generally the source of my greatest lessons – which is one of the reasons that I am such a strong believer in “taking action” instead of just endlessly reading about what others are doing.
Side note: If you want more details how how taking action will lead to success in ways you didn’t expect, watch the video below. I recorded it back in 2010 and it’s been watched about 2.7 million times since, so I must be saying something people resonate with – and it’s particularly applicable to product research.
Listing Products in the Wrong Category
When I started selling my fashion jewelry, I wasn’t able to get un-gated in Health & Personal care where similar products are sold, so I opted to list them in Jewelry instead. What I didn’t realize at the time was that in the Jewelry category I would not have access to promote my products with Amazon’s Sponsored Products (PPC).
To rectify this problem, I tried repeatedly submitting invoices from my Chinese suppliers to Amazon to get approved to sell in Health & Personal Care and I was turned down every time. To say it was wildly frustrating is an understatement!
In the end, I had to hire a consultant and spend nearly $1,000 to get approved to sell in Health & Personal Care (I also got approved for Grocery and Beauty at the same time) so that I could ask Amazon to move my products into this category. Luckily for me, I ended up being able to “trade services” with the consultant (she needed help with marketing) and my cash outlay was just $250 instead of the full $1,000.
Not fully understanding the restrictions of each of the categories that I participated in was a HUGE mistake! Make sure you read the fine print BEFORE you order your inventory!
Too Many Similar Products
Another mistake that I’ve made is created separate product listings for each of my fashion jewelry items, instead of creating a single product listing with variations. Had I gone the single listing route, I would have a lot more reviews on the one listing, instead of having to spread these reviews around the 6 separate listings. Plus, if I had just one listing, it would have recorded more sales; thereby (presumably) helping its rank in the Amazon SERPs.
I’m working on getting the listings consolidated now and will report back in a future episode how that helped (or hurt) my sales.
I love me a good software tool! They save me time, give me valuable data, and make my life easier.
So far I have tested a number of tools and I’d like to share some brief comments on each of them in the hopes of helping you to better understand which one(s) you should use.
JungleScout: This is without a doubt my favorite tool because it makes product research so much easier. It comes in two versions: a browser extension and a web application. Both are incredibly powerful and I couldn’t live without them.
With Junglescout, I’m easily able to figure out the key data that I need to quickly determine if I should stock a product or not.
ReviewKick: This app is made by the same people as JungleScout and is the primary app that I’ve been using to get reviews for my products. For a long time it was free, but now it’s a paid application and starts at $29/month. It’s super easy to use and very effective.
AMZTracker: This is an app that I have used on and off as I have tested other tools that had overlapping functionality. The key functions that is performs include: getting reviews, tracking keyword rank, performing keyword research, providing an on-page analyzer, and producing Sales Tracking. If you don’t need a second source of getting reviews, some of the other apps I’m going to mention below will do pretty much everything else AMZTracker does. AMZTracker starts at $50/month.
Inventory Lab: This app is the first app that I tested to get profit and loss reports for my Amazon business. It starts at $49/month and does little else besides accounting reporting. If that is all you need, it’s a terrific app to try out.
Sellics: When I switched from Inventory Lab’s accounting app, I decided to give Sellics a try and I was really glad that I did. It’s kind of the Swiss Army Knife of apps for Amazon sellers and I highly recommend it. It’s packed with features, including KPI dashboards, keyword rank tracking, competitor spy, review tracking, basic profit & loss reporting, PPC manager, and a product search tool very similar to JungleScout’s web application. If you can afford only one app, Sellics is the one I recommend.
HelloProfit: If you want the best Amazon seller accounting application that money can buy, Hello Profit is it. The dashboards and reports are insanely good (this is the app I have used for many of the screenshots up at the top of this post), plus it allows me to track my products’ keyword ranks, download my customer lists, track PPC performance, search for best selling products, and much more. I LOVE this app!
Feedback Genius: This app is the very first one that I used as my auto-responder for people that bought my products. The goal is to get them to leave seller feedback and product reviews after buying and the app does a terrific job of that. I highly recommend giving it a try.
SalesBacker: SalesBacker is another app that is pretty much just like Feedback Genius and it’s the one I’m using at this point in time. I decided to use this instead of Feedback Genius because I like to test apps and for me, I found the user interface a little easier to use…plus I’m friends with Chris Guthrie, the owner. If you need to get more product reviews from people who’ve bought from you, I highly recommend this app as well.
Chrome Extensions to Speed Up Product Research
The next four extensions are all free and incredibly powerful for speeding up product research for wholesale products. They will be of much less use if private label products are your only focus.
Keepa – Amazon Price Tracking Chrome Extension: Keepa is a static app. It creates a price history chart right below a product image on any Amazon product page. No click involved. For many products, Keepa also tracks if and when Amazon has been a seller of the product as well as the sales rank history of the product. This information is displayed in an easy to understand chart. Download Keepa here.
TWF Buy Box Scope: This extension creates a box that pulls up the ASIN, category and sales rank to the top of the product page to save you scrolling, and it also lists all FBA sellers that offer prices within 2% of the buy box. Download TWF Buy Box Scope.
DS Amazon Quick View: This an app that displays rank information and category information in the Amazon search page saving you time to see if a product is even worth your click. Download it here.
My Hugely Successful Social Media Experiment
Back when I decided I was going to get into the pet supplies niche, I created a Facebook page for dogs. The goal was to buy likes and see if I could use this audience to help me launch my dog products, get reviews, build a subscriber list etc…
As you can see below, I had to spend $550 on FB ads to buy enough likes to get the ball rolling. During the 2 1/2 months that I was spending $6/day on ads, the growth was ok, but not mindblowing by any stretch.
But then around mid-June, the organic growth just started to go crazy and we’ve been steadily adding close to 1,000 likes a day since.
As if that is not enough, check out last week’s post reach and engagement. We reached 325,416 people (this means the post showed up in their feed) and a whopping 145,795 people commented, liked, or shared our posts. Insane!
Here’s the best part: adding content takes me under 10 minutes a week because I have figured out how to pretty much automate it using Pinterest, Buffer, and Zapier. All I did was create a zap that automatically added a new pin to my Buffer Queue so now every time I click on the button on Pinterest to save a pin to one of my boards, that image will get posted to my Facebook page. The result is effortless content curation.
How I Plan to Leverage My Facebook Audience
As it may not be immediately obvious how I plan to get a payoff from my $550 investment in building this audience, I thought it might be a good idea to point out some of the ways that I plan to leverage this asset.
Product Launches: Each time I launch a new product, I can create posts about it and then choose to boost them with additional spend. If I offer these products at a discount, I will be able to get reviews, just like I’m doing with ReviewKick now.
Contests: I have just started to experiment with asking for user-submitted videos. I’m telling the audience that if they submit a video, they will be eligible for a discount coupon for our products. This will create awareness for our site and our Amazon listings. Plus, I expect I’ll end up with some pretty hilarious videos :)
Build an Email List: Having access to this audience is kind like having an email list, though not as good. I plan to offer promotions, coupons, etc…as a way of collecting email addresses, which I will then use to promote additional promotions, coupons, product launches, etc…
Establish Wholesale Accounts with Brands: As you’ll read about in a minute, despite the reasonable level of success I’ve experience in my brief adventure in private label products I’ve decided to make a major shift in my business.
Going forward, I’m going to focus on wholesale instead of private label, and as a part of that, I will need to establish relationships with pet suppliers so that they will sell me their products at wholesale prices.
During those conversations, you can bet I’m going to going to point to this Facebook page and say, “look, I have a huge audience that I can promote your products to” and, as the size of this audiences continues to increase, that statement is going to carry an increasing amount of weight with potential suppliers….or so goes my thinking.
The Major Shift in My Amazon Business Focus
Ok, so I’ve kinda saved the biggest announcement for last.
Ever since I interviewed Dan Meadors and learned how well he was doing with branded products that he was buying wholesale from US suppliers, I have been super keen to learn more about the benefits of this model vs the private label route that I’ve followed so far. My next inventory investment will be in branded wholesale products.
Why have I made this shift, you ask?
The Major Challenges in Private Label
Building a private label business take a lot of work. To succeed, you have to do the following:
Find products with just the “right” amount of demand vs competition
Find suppliers on Alibaba to source from
Deal with China – which means getting up super early, or working in the evenings (which I hate doing)
Figure out the logistic of importing goods from China (which can be uber complicated)
Create fully optimized Amazon listings (lots of work)
Shoot super-high quality photos (expensive)
Trademark your brand(s) (to prevent listing hi-jackers)
Give away a TON of product on promotions to get reviews (expensive)
Spend lots of money on PPC campaigns (that lose money – unless you are lucky) to help build your organic rank
Ensure you never run out of stock (your listing’s sales rank gets KILLED when you run out of stock – I learned this the hard way)
In the last 4 months, I have done every one of the things you see above, so trust me when I tell you that private label is no walk in the park. It’s still a terrific business, but I don’t think I can ride that horse to my goal of $5M in annual revenue, much less the $10M that will be my next goal after $5M :)
The biggest surprise I’ve had with my Amazon business so far is just how hard it is to get visibility for my product listings. It’s much harder, and much more expensive, that I’d thought it would be.
Keep that in mind if you are going the private label route.
The Wholesale Business Model
In the wholesale business model, as Dan and his partner Eric helped me to realize, all you have to do to be successful is:
Find products in high demand without too many “competitive” sellers (you will learn in Dan’s course that not all other sellers are “competitive”)
Find suppliers in the good old USA to sell them to you at a reasonable price
Earn a share of the “Buy Box”
That’s it!
You don’t have to create product listings, get them ranked, shoot pictures, get reviews, worry about trademarks, and deal with the hassle of communicating with, and importing from, China.
With wholesale, all you do is add yourself as a seller to an existing listing and that takes virtually no effort at all.
The best part is that when you are dealing with high demand branded products, the chances you won’t be able to sell your inventory to get your money back is near zero, because these listings are already ranked and product is selling every day.
There is obviously a lot more to succeeding in wholesale, and I’ll be sharing those lessons as I learn them. With that said, you are probably now thinking wholesale is the way to go… especially if you want to build a multiple 7-figure business like I’m planning to do over the next couple years.
Want to Learn From the Best? Follow Dan’s Wholesale Formula
Shortly after my interview with him, Dan was kind enough to give me access to his Wholesale Formula training program and I have learned a great deal as a result. (Dan will be opening up access to his course again on July 21, 2016 for just one week)
Here’s just a few of the most valuable things I’ve learned from Dan’s Wholesale Formula:
They key metrics to focus on for wholesale product research
LEAF sourcing (Dan’s acronym for his method of research)
How to contact suppliers, and what to say (and not say!)
How to improve my odds of getting approved for a wholesale account (I’ve already been approved for about a half dozen in my first two weeks and I will be placing my first orders in the next week or so)
A TON of critical details for streamlining my wholesale business, including:
Creating optimized SKUs
Shipping alternatives
Checking in my orders
Setting up critical alerts
Dealing with business constraints that could slow me down
Outsourcing
and much more…
As an example, thanks to Dan’s guidance, I’ve built a team of virtual assistants and completely delegated product research and contacting potential suppliers. This saves me a HUGE amount of time every day.
Now all I have to do each day is look at a short list of products that meet my criteria and respond to replies from potential suppliers.
How big of a deal is that? Well, finding products and contacting suppliers is the #1 time pig in wholesale (as well as in private label), and it’s also the #1 most important activity to undertake in order to grow revenue, so I think it’s a pretty huge deal.
You can’t sell what you haven’t sourced, so sourcing as fast as possible will lead to the fastest revenue growth. Period.
Conclusion
My first 90 days have been an amazing ride, I’ve had a blast, and I’m super excited to see what I can accomplish in the next 90 days. I’m willing to bet it will be a LOT more than I’ve accomplished in the first 90.
If, after reading this, you think that you want to get started, I want to offer you this one caveat: If you aren’t 100% committed to working your ass off to be successful, you don’t need to invest in your education by watching Dan’s videos and/or buying his training course, as it will be a total waste of your time and money.
So, with that said, if you want to see the first one of Dan’s free training videos, you can see it here.
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/07/Featured209.png366700Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-07-13 09:25:292018-08-01 18:42:11BI 209: How I Generated $18,763 In Sales In My First 90 Days On Amazon
In today’s episode, I interview an entrepreneur by the name of Bobby Jacques, who, after 8 years as a government employee, decided to start selling private label products on Amazon. After just one year, he’s launched 5 products, quit his job, and is now running a rapidly growing eCommerce business that did $47K in May of 2016.
Listen to the Audio
In This Episode, Bobby and I Discuss:
Why he picked Amazon
How he got started
How he researched his products
How he generates reviews
How he finds his suppliers
Product customization
How he handles shipping
The lessons he’s learned from selling in his categories
How sponsored listings have played a role
Links Mentioned in This Episode
Junglescout (Bobby’s favorite product research tool)
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/06/BobbyJacquesInterview.png6271200Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-06-21 09:55:262018-08-01 18:42:12BI 208: How Bobby Jacques Hit $50K/mo in Sales (and quit his job) in His First Year on Amazon
Welcome to my May 2016 Amazon FBA Income Report and general business update! I have decided to share my income reports here on my blog as a way of keeping a log of my journey towards my goal of building a $30,000/month eCommerce business by the end of 2016.
I have a lot more than just the income report to share in today’s episode/post, so grab a cup of your favorite blend of coffee and get ready to take some notes!
Note:this report does contain affiliate links to tools that I use. If you choose to use one of my affiliate links to purchase a product, I will receive a commission. If you do decide to use one of my affiliate links, you will not pay any more for the product than you would if you went directly to the product vendor’s website.
Listen to the Audio
May 2016 Income Report
All figures and screenshots below are from either Amazon Seller Central, or an Amazon FBA accounting application that I use, called InventoryLab. It’s a wonderful app that creates all the reports automatically. If you would like to purchase it, here’s my affiliate link.
First, lets start with gross sales. As you can see in the screenshot below, my gross sales from my 4 products that were live in May came to $4,311.94.
The four products that were for sale during May were all in the jewelry category, and as such, I have not had access to Amazon’s Sponsored Listings program…which has been a huge bottleneck to my sales (more on that later).
Now that we’ve seen gross sales, let’s take a closer look at what really counts: PROFIT.
As you can see below, the net profit for the month of May was $341.14; definitely not a huge sum of money by any stretch of the imagination. Based upon sales of $4,311.94, this equates to a net profit margin of approximately 8%.
When looking at this net profit margin, it is important to understand a few key things:
I ran a lot of promotions during May and lost money on every one of the transactions that was a promo. The total amount of the discounts provided was approximately $1,716. I arrived at this figure by subtracting the $2,596.16 of “total sales” (shown in green) below, from the $4,311.94 of gross sales shown in the screenshot above.
There is always a time delay between what is reported by Inventory Lab’s P&L statement (below) and Amazon’s gross income report (above) and that delay will result in a small discrepancy on the net profit margin. Over time, the figures between the two reports are accurate; however. It’s just that they don’t line up exactly for any given month. If you want the textbook explanation on why this is, you can get it here.
For June, I have completely stopped running promotions, and my net profit margin on these four products is right about 50%, so even though June’s sales (so far) are lower than for the same period in May, profits are much higher!
My 10 New Products
I’m writing this post on June 13, and by the time it’s live, I expect to have another 10 new products live on Amazon. You can get more details on this in a recent Facebook post.
Of these 10 new products, 8 are jewelry, and 2 are in the pet products space, and as you can see below in the JungleScout screenshot, the sales volume is quite high for this product. Suffice to say, I’m super excited to launch my product using a social media strategy that I’ll describe later in this episode/post.
My Biggest Mistake and How I’m Fixing It
I’ve always said that if there is a huge mistake to make early on in a business, I will find a way to make it, and in my FBA business, I have made good on that promise!
The huge mistake that I made is choosing products in a category that don’t allow me access to Amazon’s Sponsored Listings program to advertise my product listings. This is the #1 reason why I ran so many promotions in May. It was literally the only way – within the Amazon platform – to draw attention to my listings, which would have otherwise been buried way down in the search results.
Stimulating sales on Amazon is the #1 way to get your product listings to rank better in the Amazon SERPs because, more than any other factor, sales of products has a positive influence on the search algorithm, and even though promos are offered at a huge discount, in the eyes of the algorithm, they still count as a sale.
So, mistake #1: I picked a product that was in a category that didn’t give me access to Amazon’s PPC program. DON’T DO THAT!!
When you are picking your products, there are two factors that are critical:
These products will be listed in a category that is “un-gated”
The category your listings will be in will allow you access to Amazon’s PPC program
Luckily for me, I found another (gated) category that I can apply to sell in. Yay!
Oh, wait…getting ungated is INSANELY DIFFICULT!
In theory, it supposed to be easy as pie. Just submit 3 of your suppliers’ invoices that contain the following information:
No problem…or so I thought! I must have submitted my 3 invoice 20 times and every single time someone from some third world country would send me a boiler-plate reply telling me that my invoices were invalid!
When I asked what was wrong with the invoices, they would say, “I’m sorry, we can’t tell you that”.
OMG!! Talk about frustrating!
In the end, I learned that pretty much the only way to get un-gated is to obtain an FDA certification; which is an extremely complicated process that required me to spend $1,000 on a consultant for help.
The good news is that I should be un-gated any day now and as soon as I do, I’m going to have all my jewelry moved to a new category where I will have access to Amazon’s Sponsored Listings (PPC) program.
That, combined with having so many new products, should result in my seeing a massive increase in sales over the next 30-60 days or so.
My New Products and How I’m Using Facebook to Help Launch Them
Of the new products that I’ve just shipped to Amazon’s warehouse, two of them are pet products that I will launch using a Facebook strategy that I’ve been studying. The two products are in the two big and 3 of the small boxes below in my truck bed.
In a nutshell, here’s the strategy:
Step 1: Create a Facebook page around a topic that people are passionate about. In my case, I created a page all about dogs.
Step 2: Start sharing content on the page and buy LIKEs. This is dead-easy to do. Each day, I visit Pinterest and add 7 or 8 images to my Buffer account (I actually do it just once per week and it takes about 20 minutes), which are then posted on the Facebook page. So far, I’ve bought about 16,000 likes for about $0.04 per like…so about $640 in ad spend so far.
Step 3: Create a post with your product and offer it at a discount. This is the part that I will be doing in the next week or so. The posts will link to a landing page where a visitor can opt in and receive the promotion code via email. To make this work, you will need two things: an auto-responder and coupon software. I’m planning to use Mailchimp and Amazon Coupon Server.
So why run a promotion this way instead of using ReviewKick as I have done in the past? There are a couple of reasons actually:
Reason #1: I like to test different things and then share my results here on my blog.
Reason #2: I have built an eCommerce site for my pet products and I want to find out if I can use Facebook to profitably drive traffic to this site. If not, I will simply use the mailing list to drive traffic to my Amazon listings in the future.
I’m not really a fan of trying to build my Amazon business and an eCommerce site at the same time, but, as you will see later in this episode/post, I needed the eCommerce site anyway, as a part of the branded products strategy that I’m going to focus on next.
How I’ve Decided to Handle The Issue of Collecting Sales Tax
In italics below, is the information they provided to me:
Since you are an FBA seller you could potentially have nexus with all of the states in which there are warehouses. That’s because all those states say that your inventory counts as nexus. blog.taxjar.com/internet-sales-tax-nexus/
Right now, we’ve shown you several states on your DASHBOARD as a way to inform you that you could be required to collect sales tax in other states. It’s up to you to decide if you want to collect there or not. (This blog post lists the Amazon fulfillment centers that we currently know about: blog.taxjar.com/amazon-warehouse-locations/)
If you’re not sure where your Amazon inventory is creating nexus, we show you how to track it here. blog.taxjar.com/amazon-fba-nexus/
After you determine where you have nexus, if you want to get rid of any states from your TaxJar dashboard, just click the wrench under the state name in your Dashboard to remove it.
Once you know where you have nexus, the next step is registering for a sales tax license, and the states expect you to register to before collecting any sales tax. We talk about the timing of registering here. blog.taxjar.com/when-register-sales-tax-license
Another thing you’ll want to do after you have your sales tax registration is tell Amazon to start collecting taxes for you. Here’s a guide that talks about setting up your state settings and product tax codes in Amazon: http://blog.taxjar.com/how-to-set-up-amazon-sales-tax-collection/
If you haven’t collected any taxes yet, or if you weren’t collecting taxes for the entire filing period, you’ll notice that each state report has 2 tabs–one that shows your Actual Sales Tax Collected and a second tab that shows the Expected Sales Tax Due. This second tab is our estimate of what you may owe, based on the assumption that all of your sales are taxable. We explain more about this feature here: blog.taxjar.com/expected-sales-tax-collection/
If you are already selling on Amazon and aren’t collecting tax in states where you have nexus, you should definitely get this looked after!
What I’ve Learned About Selling Branded Products and Why I’m Focusing On It Going Forward
So far, my business has focused solely on private label products. In other words, products from China that I can brand as my own.
After interviewing Eddie (episode 205) and Dan (episode 206), I realized that focusing my business on branded products instead will make it easier for me to grow faster. Both Dan and Eddie have built businesses that will do $10 million (or more) in just their 5th year of being in business.
Wow! I’ll take some of that please!
There are a lot of differences between private label and branded wholesale and I strongly encourage you to listen to each of these episodes for a better understanding of these differences, as selling branded products may not be for you.
In my case, I’m attracted to it for a few key reasons:
I get to deal with US suppliers so I don’t have to work evenings talking to China
Access/sell a much wider range of products in multiple categories so I can diversify more
Avoid having to create my own brand(s), shoot pictures, create product listings, etc…
Will allow me to get to $10 million faster than just private label
So does this mean I’m abandoning my private label business? Hell no! I have 14 products that I’m planning to aggressively promote and so long as they remain profitable, I will keep stocking/selling them.
Answers to Listener Questions
This week’s question is from Carlos.
Here’s my answer: For the vast majority of people, I think starting an FBA business is a far more viable option…and it is much less risk. To help you better understand my answer, let me tell you about something called Retail Arbitrage.
The #1 Easiest Way For You to Get Started on Amazon With Zero Risk
So far in this post, and in prior episodes, I and my guests have discussed primarily a business model that sells private label and/or branded products.
There is a third model that is especially good for brand new sellers who have some free time, a small amount of capital, and an aversion to risk – and it’s called Retail Arbitrage.
Here’s how it works: Go to a store like Walmart and find branded products that you can buy (from Walmart) for less then they are selling on Amazon. Buy them, ship them to Amazon and sell them.
Voila, that’s it.
Today I stopped in at Walmart for 5 minutes on my way home from the gym to see what products I could find that were cheaper in Walmart than Amazon. Here are the products I randomly selected:
As you can see, every product I looked was an arbitrage opportunity. Check out the Farberware Slotted Turner! I can buy it for $3.97 and when I sell it on Amazon, I’d net $8.49!!
Are these the best products to start off with? I doubt it…but it took me only 5 minutes to find 4 opportunities!
In case you don’t believe it is possible to quit your job doing retail arbitrage, I encourage you to listen to episode 206 with Dan Meadors. Dan and his partner got started this way with just $600 and then, if I remember correctly, they did $50K in sales while they still had jobs. The next year, they quit their jobs and did $860K in sales!
If you want to learn this model from the same guy they did, his name is Chris Green and you can buy his book here.
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/06/Ep207.png366700Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-06-14 13:06:522019-10-20 17:44:06BI 207: May FBA Income Report, New Products, Huge Mistakes, and More!
In today’s episode, I interview Dan Meadors to discover how he’s built an $10M business on Amazon in just 4 years. If you have been thinking about selling on Amazon, and are looking for a concise set of instructions to get you started, you don’t want to miss this insightful interview!
About Dan Meadors
Dan Meadors and his business partner Eric Lambert started selling on Amazon in 2011 using a credit card with a $600 limit.
Since then they have utilized Retail Arbitrage, Online Arbitrage, Private Label & primarily Wholesale to generate over $10,000,000 in sales, with their business continuing to see exponential growth.
Dan and Eric also developed The Wholesale Formula, the premiere training program for selling products wholesale on Amazon.
Listen to the Audio
In This Episode, Dan and I Discuss:
How he got started on Amazon using the Retail Arbitrage model
Why he and his partner eventually switched to private label, and then to branded wholesale
An overview of his business model
A deep dive on his product selection criteria (killers info here!)
How he finds suppliers
How he convinces suppliers to sell to him, and why he prefers they intitally turn him down
Misconceptions around the buy box
What his lifestyle is like now vs when he was doing Retail Arbitrage
His #1 focus for the year ahead
Links Mentioned in This Episode
Junglescout (Dan’s favorite product research tool)
https://brightideas.co/wp-content/uploads/2016/06/DanMeadors.png6271200Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-06-06 13:55:522019-03-04 15:01:53BI 206: How Dan Meadors Built a $10M Amazon Business in Just 4 Years – Starting With Just $600
In today’s episode, I interview Eddie Levine, President of Dub Hub, Ltd, to discover how he’s built an $8M eCommerce company in just 4 years. If you have been thinking about selling on Amazon, but don’t think building a private label business is for you, you don’t want to miss this insightful interview!
About Eddie Levine’s Business
Officially established in November of 2012, The HDL Group is a multi-channel wholesale eCommerce company that sells name brand products from a vast array of categories. Eddie has grown the company into a multi-million dollar operation including over $1 million during its first full year alone, all with one partner and zero employees.
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In This Episode, Eddie and I Discuss:
How he got started in eCommerce
An overview of his business model
How he finds suppliers
The role of trade shows
Ways he adds value to his suppliers
How he got started selling to the US government
How he uses Facebook to drive more target traffic to his product listings
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/05/EDDIELEVINE.png6271200Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-06-01 09:26:242018-08-01 18:42:12BI 205: How Eddie Levine Started with Just $5,000 and Went on to Build an $8M eCommerce Company Using Amazon
If you are going to be successful selling physical products on Amazon, one of the primary keys to success will be your ability to quickly generate positive reviews for your products, and in today’s episode, I’m going to share with you exactly how I’ve been able to generate 154 reviews in just 6 weeks for my #1 product.
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In This Episode, I Share:
My total revenue to date
A major mistake that I made and how it negatively impacted my sales
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/05/204c.png6271200Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-05-19 11:27:022018-08-01 18:42:13BI 204: How I Generated 154 Product Reviews in 6 Weeks
In last week’s episode of my podcast, I shared with you how much revenue I’d generated in my first two weeks of selling my private label products on Amazon.
This week, I decided that it was important to take a deep dive into the numbers to determine if my experiment was a success or a failure. You’d think that this would be easy to do via the Amazon Seller Central interface, but sadly, their reporting is pretty simplistic, so I had to spend a couple of hours creating a spreadsheet that would give me a clearer picture on how each of the five products I have listed so far are doing.
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Watch the Video
A Deep Dive Into the Cash Flow
Cash flow is the heart of every business, and so I wanted to spend enough time to figure out where I’m at, now that I’ve reached just over $5,000 in sales.
Getting Started
To start, let’s have a look at my initial cash outlay, and what I got for it.
As you can see in cell G4 of the chart above, the total cost for my initial inventory was $1,293. For that sum, I received 900 units, split across 5 products.
In row six, you can see the quantity of remaining inventory. In row 7, is the estimated retail value of that inventory (using my average selling price for the units sold so far). And finally, in row 8 is the estimated profit potential of this remaining inventory, assuming I didn’t have to run any more promotions to sell it all. (I WILL have to run more promotions, because in the Jewelry category, I don’t have access to Amazon’s PPC program)
The main point of this first chart is to show you that to get started, I invested $1,293 in inventory.
Revenue
Now that you’ve seen what I spent on inventory, let’s have a look at sales so far (21 days of selling from April 11th through to May 1st).
As you can see above, as of May 1st, gross revenue totaled $5,094.02. Not a home run by any stretch, but not horrible either.
In row 11 of columns B through F are the average selling price for each of the five products, and in row 12 is the gross units sold for each product. In row 13 is the total gross revenue for each product.
The product in column B is has been for sale a week longer than all the other products, plus, it is the product for which I ran the largest promotion.
Cost of Goods Sold
In traditional accounting, the next thing that we normally look at after revenue, is the Cost of Goods Sold (COGS). This line item is critical in understanding our gross profit margin.
As you can see below, the gross profit margins on my products are just over 90% (cell G19). What that means is that for every $1 of revenue, $.90 is my gross profit; out of which I will have various expenses that will be deducted before determining the net “owner profits” of my business.
Selecting products with as high a gross profit margin as possible is absolutely critical to your success, and there are a number of reasons for this.
Financing the Cost of Inventory
The most important of these reasons is that as your business grows (and sales increase), your need for more inventory is also going to increase and unless you have a pile of cash lying around, you are going to be using the profits from your sales to finance the cost of additional inventory (there are other methods for financing inventory, but I’m not going to get into that in this post).
Put simply, if you pick a product with a gross margin of just 30%, that means for every unit you sell, you are only going to be able to buy 1.3 units more inventory. Whereas, if you have a gross margin of 90%, you are going to be able to buy 1.9 units more inventory for every unit you sell.
Think about that for a few minutes.
If you want to grow fast, you must be able to finance your need for increasing inventory….OR…..you must figure out a way to turn your inventory faster.
For example, if you have just two inventory turns per year, instead of say, 4, you are going to need TWICE as much capital to finance the cost of that inventory.
This is one of the reasons why I’m so concerned about the speed of the delivery of my inventory. If I can get it faster, I can make more frequent (smaller) orders with my suppliers, and as a result, I won’t have to tie up as much cash in inventory that is sitting in the warehouse.
Be sure to factor this in when you are deciding whether to ship by sea (cheaper and slow) or by Air Express (more expensive and fast).
Financing the Cost of Promotions and Advertising
The other factor that is critical to your success is having a high enough gross margin to allow you sufficient capital to allocate to the cost of promotions and advertising.
In my case, as you will see below, I ran a large number of promotions (because PPC is not available to new sellers like me in Amazon’s jewelry category) to increase my BSR (best seller rank) so that my product listings would show up higher in the Amazon search results (SERPs).
As you can see below, shortly after I started running my promotions, my sales spiked way up for a few days, before settling back down.
I stopped running promotions on April 21st, and since then, organic sales have been relatively steady, as shown below. And, thanks to a very high gross margin, these organic sales are very profitable.
The big take away here is this: make sure you choose a product with a gross profit margin of at least 75%…especially if your product’s selling price is $20 to $50!
Now that we’ve covered the Cost of Goods Sold and the importance of gross margin, it’s time to have a detailed look at my expenses and net profit.
Expenses
In my Amazon business, the only expenses that I currently incur on a regular basis (aside from the value of my time) are:
Amazon selling fees
FBA fees
Cost of promotions and advertising
As you can see in row 22 below, I sold 216 of my 900 units of inventory on promotions. On average, I discounted the price of each product by 85% in exchange for an honest product review. To facilitate this, I used software called ReviewKick as it made this really easy to do. Plus, it’s FREE.
In row 24, you can see that in total, the cost of my promotions reduced my gross revenue by $2,508, PLUS, I also had to pay Amazon selling fees and Amazon FBA fees on every single order that I received for a product that was offered on the promotion.
So, how did the cost of the promotions and Amazon fees affect my bottom line? Prior to today, I hadn’t taken the time to actually calculate it; hence the reason for this post. :)
Net Profit (Loss)
As you can see in cell G30 below, so far my net profit is a whopping $154.10! I’m rich!!
Ok…so maybe I’m not getting rich from Amazon FBA yet; however, before jumping to conclusions on whether or not this experiment was a success, there are some very important factors to consider.
Factor #1: It’s Only Been 3 Weeks
When I began this experiment, I had zero expectation of profits. In fact, I fully expected that the investment in marketing (promotions) needed to achieve organic ranking was going to produce a loss on my first batch of inventory.
Improvements in ranking don’t happen over night.
Factor #2: This Product Shows Strong Potential
How did I justify the loss I expected to take? Simple.
When I looked at the figures below, I could see that the average product for this search result was generating $8,143 in revenue per month (479 sales x $17.07 avg price). I then noticed a few other key things:
The 3rd listing had just 80 reviews and was generating $7,794 a month in revenue
The 5th listing had just 114 reviews and was doing $33,183 a month in revenue
The 11th listing had just 60 reviews and was doing $9,096 a month in revenue
The bulk of the sales were NOT being generated by ONLY the top 1 or 2 listings
There were no major brands
The gross margin on this product was very high
So….IF I could generate just the average of $8,143 per month after spending a few thousand dollars on promotions, would it have been worth it? Hell yes it would have.
The reality is that I am still expecting to “spend” more on promotions and will continue to do so until one of two things happen:
I achieve a solid ranking and steady (profitable) sales
I reach a point where I no longer believe I can “buy my way” to profitability
Factor #3: I Needed to Gain Hands On Experience
You can listen to all the podcasts, and read all the posts you want, but there is just no better way to learn how to do something than by actually doing it, and that is exactly how I looked at this adventure.
No matter what the financial outcome in the short term, I was going to learn something, and that is exactly what has happened.
Perhaps this first product will fail? Ok, I have 4 more in this category, and one of them, much to my surprise, has emerged as the best seller because it’s ranking #1 for its keyword. I had no idea that was going to happen so fast.
Perhaps all these products will fail? Ok, I will try more products in another category where I do have access to Amazon’s PPC. (I am doing exactly that, regardless of how these products fare.)
Factor #4: I Needed to Understand How Amazon Works
There is no owner’s manual for the algorithm that determines where a given product will end up in Amazon’s SERPs. The only way to attempt to figure it out is to try a bunch of things, and then take notes on what happens….and that is exactly what I’ve been doing day after day.
There is absolutely no question in my mind that I can build a $1M + business on Amazon over the next year or so. Will my investment of $1,293 for this first batch of 5 products play a role in the long term? I have no idea.
Honestly, I don’t expect that they’ll end up playing a big role; largely because of the big error that I made in choosing a product category where I don’t have access to PPC.
But so what! I don’t know about you, but I don’t know of too many other businesses that:
Can scale as well as this
Give me as much free time as this
Require such a paltry investment to start as this
What’s Next For My Business?
As you might guess, I have ambitious plans for the future of my Amazon business. Here’s an overview of what is happening next:
I’ve ordered more jewelry inventory (because I’m running out) so that I can continue this experiment
I’m investing $700 in professional photographs of my current products (I did the first ones in-house)
I’m about to launch another promotion for one of my products using super URLs (I have not used super URLs at all so far)
I’m launching another new product in the pet supplies category (and I’ll have access to PPC in that category)
Want to see how all this turns out? Become a subscriber so you don’t miss future episodes.
In an effort to make discussion more social, I’ve moved comments onto Facebook. If you have a comment or question, please click the button below to be taken directly to the Facebook post.
https://brightideas.co/wp-content/uploads/2016/05/Episode-203.png366700Trent Dyrsmidhttps://brightideas.co/wp-content/uploads/2020/06/Bright-Ideas-logo-1030x255.pngTrent Dyrsmid2016-05-03 09:24:142018-08-01 18:42:13BI 203: A Deep Dive Into the Numbers After Reaching $5K in Sales on Amazon
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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.
