Wouldn’t you love to be able to sit down for coffee with the CTO of a $65M Amazon reseller so you could ask all sorts of questions about the data sources they use and the systems they have put in place to run a business that size?

Well, guess what? Today, we are going to do exactly that!

My guest in today’s episode is Scott Needham, CTO and co-founder of Buy Boxer, a $65M Amazon reseller.

Full Transcript

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Trent: Hey there, everybody. Welcome back to another episode of the Bright Ideas Podcast. I am your host, as always, Trent Dyrsmid. And like we always do, my goal in each and every episode is to help you to shine a light on what is working in the world of e-commerce, so that you can take away what I call actionable golden nuggets and implement them in your business right after listening to the episode. 

And the way that I do that is I bring smart folks onto the show to share with me their perspectives, their experience and their knowledge and today we are going to do exactly that. My guest is a fellow by the name of Scott Needham. Scott, thank you so much for coming to join me on the show. 

Scott: Hey. Thanks. Glad to be here. 

Trent: So, for folks who maybe aren’t familiar with who you are; let’s start with that. Who are you and what do you do? 

Scott: So, who I am; I am the CTO of two Amazon businesses. One of them is just a seller account, you know, like most of people listening are probably interest in selling on Amazon. Really, what I spend most my time doing is running the company, Buy Boxer. But mainly, like just building automation for selling. And so, I see something that we do well and I’m like, “Well, to automate that and do this 100 times.” 

And then the second is we spun off a business that’s more of a services business; it’s called Balance and that’s where we try to identify all the ways that Amazon owes sellers a reimbursement and then we recoup those reimbursements. That’s something that we built for our own account and realized its value and offered to others. 

Trent: Okay. And so, your Amazon business is a pretty sizable business. Your annual revenue in the last 12 months, if you’re allowed to disclose it, is in what range? And I think you can disclose it. 

Scott: I think… Sorry, zoom; it just like. 

Trent: It did. It just paused. Let’s do that one again. 

Scott: Yeah.

Trent: So, folks know the size of the business that you’re the CTO of; what’s the annual revenue? 

Scott: 65 million. 

Trent: Okay. So, pretty… 

Scott: That’s what we did last year. Yeah. 

Trent: Pretty big.

Scott: You know, we started in 2012 and the first few years is like crazy growth. And when you work on Amazon and you work your tail off, you can double the size of your business; which is awesome. You know, if you’re in retail, growing 5 to 10 percent a year is great. 

And then the truth is the last three years, we probably, our growth is much slower as we’ve tried to diversify and think in different ways. That’s why we have 150 employees and mainly wholesale. I don’t know. 

Trent: Yeah. Okay. So, a very sizable reseller business. So, the way I discovered Scott, by the way folks, is he had posted an Ask-Me-Anything thread in the Reddit forums and there was a pretty interesting discussion. And prior to that, I didn’t know who Scott was and that’s why I invited him to be on the show. 

One of the things that really caught my interest, Scott, was your extensive use of Keeper data in your business. So, can you tell us why is Keeper such a big deal for you guys and how are you using it? 

Scott:  So, we just have Keeper just as an extension. You know, you put on the Chrome extension, all of a sudden, it gives you like this view of a product page and you its history; it’s just all in line. Amazing data. 

And then like two or three months, someone’s like, “Well, just download that data.” and I was like, “Oh, no. You can’t do that.” And then I just google it and I was like, “Oh, you actually can.” 

They actually sell access to their data and when we got that data, it’s just like your creativity is as far as you can take it. I think the first thing that I built in was I loved how reliable they were with Amazon Retail. As a seller, you know, they just built a whole picture of how much Amazon keeps in stock and where they’re at. 

I had actually built scrapers by myself and I kind of failed at that; nothing like super reliable. I’d just rather pay someone else to like do that for me and then we just like pull down that data and we use it for creating reorders or even initial orders of our products. 

Because we just want to avoid Amazon Retail at all expense because they’re operating at a different game. If they see Walmart drop prices or if anyone out there breaks math, they’ll break math. {indistinct 5:10} twice. They don’t have to make money. 

And so, we were determining that for every 10 percent in stock rates that Amazon was keeping; whether it was 50 percent in stock rate, 90 percent in stock rate, our gross margin went down. 

Don’t confuse this though, you can make money on products that Amazon has and that will kind of be like a false… you’ll want to chase that because you’re like, “Oh, look. We beat Amazon on this product.” 

So, on the whole, as you scale, it’s really not going to work out for you. Maybe one supplier with one product that works. And that’s good; make that an exception. But I would advise people, if you’re going to try and scale in any way, just avoid them and find the holes. And Keeper like, more than anything out there, has helped us find those holes. 

Trent: So, let’s talk about product sourcing for a minute. Folks who have been following me for a while know that we’re pretty systematic about the way we source products, but I suspect it’s actually quite a bit different than how you do it. 

So, we’ll go through a process where we’ll have virtual assistants looking for existing reseller accounts on Amazon that meet certain criteria, then we’ll use software tools to extract the products from each of those stores into these huge spreadsheets, then the spreadsheets filter all the data to bring the gold, so to speak, to the top. These are the products that we think, “Hey, if we can actually source this at a given margin that it would be a profitable product for us to carry.” And then we reach out to those particular brands and trying to establish relationships. And that has led us to sell, not 65 million, but a number of millions per year on Amazon. 

I’m guessing your product sourcing strategy is quite a bit different than that? 

Scott: Yeah. We’ve had to get creative. We’ve done some of that same strategy that you say and it’s great; it works. You can find where other people are finding success and you can either piggyback or sometimes, you could even beat them on price. 

But one of our more latest techniques is actually using Keeper again. They have one feature that returns on every acens, up to 100 thousand in a given category. 

So, you take toys; we will download the top 100 thousand toys and then then start getting data off of each of those aces and kind of build a map of all that’s on Amazon. We’re like, “Okay, Disney. You know, they have 2 thousand acens that have a brand of Disney” and obviously, that one’s kind of too big to handle. 

But we find what we consider are like a niche brand, then we start to like we get more data around them and we filter around that; such as how many active FBA sellers are on these brands? And, you know, we usually find a sweet spot is around two to four. If there’s just one FBA seller, you know, it’s almost always themselves selling it and obviously, they won’t be interested in new Amazon resellers. 

But if you find ones that have like on average across their product line of two or three, those are usually really good indicators of the newer company that is not super established, that maybe is interested in a slim, three or four authorized Amazon resellers. 

And that’s kind of how we’ve done our sourcing; just building this map of all the brands that are doing well on Amazon and then trying to like add data to that of like, you know, sometimes we even say like, “What’s the average price of their product? What’s its average size?” 

Trent: Can you also use Keeper to say show me within this map that you’re talking about… So, let’s say we’ll use the toy example. So, you’ve gone first and you said, “Okay, give me the 100 thousand skews in the toy category.” So, now we’ve got that list, then you’re saying, “Well, let’s narrow that down to all of the ones that have only two to four FBA sellers.” Okay. So, now we have a subset of that list. 

And can you then say, “Show me all of the companies in that list that have had a sales increase of X or more in the last year across all of their products?” 

Scott: We have not. I haven’t done like a sales increase. That would be interesting. 

Trent: Could you do that? 

Scott: You say what? 

Trent: Could you do that? 

Scott: If you average the sales rank… 

Trent: Yeah. 

Scott: I mean, like the way I see it, Keeper can give us kind of a historical map. You know, you’ve got the sales rank data over time and you know you could average that out. You could say like, “Okay, Q4; what was someone’s sales rank of 2017 vs 2018?” and you could probably come up with some interesting deltas to figure out if someone’s jumping up or is jumping down. 

Then again, I would argue or be like, “Well, I think if you filter efficiently, you’re going to come down to a list of maybe only 20 to 40 suppliers; something that’s not overwhelming.” 

Trent: Yeah.

Scott: And you could filter it down further, but I think we’ve managed it like, “Since it’s a list of 40, we can do this in a few days of work figure out and do the due diligence on each one of them to see if there’s an opportunity.” I think that’s a very interesting way to filter it further and there’s probably ways that I haven’t even thought of yet. 

Trent: So, walk us through them as best you can. So, after you’ve gone through, again using the toy category, you’ve got a 100 thousand skews then you’ve narrowed it down to those that have two to four FBA sellers. What would be the next step of the filter for you? 

Scott: Well, you need to jump in. You need to be looking at their products. I didn’t say this in that filter that we also look at Amazon’s in-stock rate. So, one FBA seller is like, “Okay. Now, is Amazon largely present on this brand or like completely absent?” 

Trent: Okay.

Scott: For some of them, you’d see that maybe they’re are like 10 percent; maybe they grab a few skews, they get them through a distributor or something and then there are still a longer tail of opportunity. 

We actually do this. We designed it for this alone. We actually designed it to identify small and light. So, I would argue that we probably are bigger in the small and light domain than anyone out there. I can’t qualify that, but I know when small light came out, how big we were going in that. That’s why we built this map is to find the companies that had products that fit the small and light dimensions. 

If you’re familiar with our program where like the {indistinct 13:48} of fees on small and light are usually about a dollar or less. And you ship to different fulfillment centers and they kind of have a few different criteria, but a dollar on a competitive well-selling product is a big deal. 

Trent: Now, I think if I remember correctly in your Reddit thread, you said that small and light ended up having some problems for you; was that right or was that against where you were only stocked against Amazon? 

Scott: So, that’s where we got too close to the sun. I think our first few months of small and light was like awesome. We were finding a ton of opportunities. Now, that it is two to three years in the small and light, there are other people that are doing it effectively. 

But our first month, we went really big into it and we actually started beating Amazon. So, we started investing more in small and light and against Amazon. And then three/four months later, we were like, “Oh, our gross margins are turning south.” 

We kind of got excited when we found a brand or two that we were beating Amazon retail and getting, you know, small and light, you can move through like units; a lot of units. It’s not uncommon to see 20 to 50 to a 100 sales a day in the small and light products because you’re really finding that they’re the fast movers and the extra dollar that you have, you’re beating everyone. That’s how it was at the time. Right now, I don’t know if it’s quite as the Wild West as that. 

But we found a brand that we’re beating Amazon, we started putting a green light to buying against Amazon all over the place. And that’s where small and light really got after us and we started to be a poorer performing part of our inventory. 

And now, we’ve like slowly brought it back to where it’s actually over performing relative to its investment. {indistinct 15:55}

Trent: Okay. So, in just a minute, I’m going to ask Scott a question about where they’re buying their products from and how they’re buying their products. But first I want to bring you a quick message from our sponsor. Our sponsor for this particular episode is PayAbility. 

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All right, Scott. So, where do you guys buy your stuff from? Because as a reseller, we can buy from the brand or we can buy from distributors or both. Walk me through what’s been most successful for you. 

Scott: So, it’s probably defined. Our product mix is actually distributors. You know, when you use automation to judge bigger catalog sizes, that’s how distributors have really allowed us to get a ton of aces. 

You probably will get slightly better margins if you have direct relationship. Distributors, you know essentially, what their services is is they have a bigger catalog and they probably are paying anywhere from 5 to 10 percent above cost. 

But we’ve really leveraged these huge catalogs and analyzed like, “Okay, of these 100 thousand skews, what are the top 1000 in sales rank? And then of those 1000, which ones are profitable? How many FBA sellers are on each one of them?” 

And we were able to leverage each of these categories. It’s really easy with a distributor when they cover a category really well. You can jump in a big way. And if you have let’s say money. So, you’re using PayAbility and you’ve got plenty of money, but you want to increase your catalog size. I mean, distributors is one of the fastest ways to do that. 

Now, of course, there’s some catches. Some distributors will have a few of their suppliers that will be very picky about Amazon sellers and even on map. So, you do have to pay attention to those same principles. But I mean, the types of products that you have access to is just a lot bigger. 

Trent: Do you buy from Unify? 

Scott: Yes. 

Trent: Okay. So, Unify in their catalog, if you had to guess, how many skews do they get in their catalogue; it’s going to be hundreds of thousands. 

Scott: Yeah, it’s definitely not one of our bigger distributors and we made a lot of mistakes buying from them through, you know, our… sometimes we’ve bought products without even looking at them and actually that really push us away from that because that’s how you end up with a wheelbarrow in your warehouse and with like oversized products. And I think Unify, they have a lot of grocery; right? 

Trent: Yeah. 

Scott: Well, our Unify first shipment came in and they’re like, “Well, where’s your freezer?” We’re like, “What are you talking about?” There were some cold storage products that came through. And yeah. 

So, that’s one problem like trying to scale things and using just a machine for our process that a virtual assistant would be much better at doing. 

Trent: Yeah. So, what I want to do here if we can, is I want to talk a little bit about the process that you’re using. So, I just used Unify as an example. But you get a big price list. It has a 100 thousand skews in it. The software that we’re using is something called Price Checker to analyze that particular price list. Do you use the same software or did you build something on your own? 

Scott: I built something on my own. At first, I thought it was really unique, but now, I bet you Price Checker does exactly the same kinds of things. Do you use UPCs? 

Trent: I believe so. I’ve never done it personally; people on my team do it for me. So, I have zero personal experience with it. 

Scott: So, UPC can match to multiple aces. 

Trent: Yeah.

Scott: And so, the software that we’ve built in-house was probably like 7 years ago. Price Checker may not have existed back then. And so, like out of necessity, we built it. And so, like a UPC matches to different aces and you essentially choose which of one of those has the sales rank and the profit margin and any other criteria that you want to kind of design around; like if it has like poor reviews or if Amazon’s on it. You can try and filter that stuff out. 

And so, yeah, we’ll take that those 100 thousand skews and then just create like 2000 listings immediately. 

Trent: So, you could out of 100 thousand skews, you would expect to be able to find 2000 products that would be profitable for you? 

Scott: Yeah. That’s probably about it. That’s about it.

Scott: I know some companies that have like 60 thousand. One distributor has 60 thousand UPCs and we probably have about 5000 from them. So, it’s roughly one-tenth or maybe a little bit less. 

Trent: So, let’s dive a little deeper into that. So, let’s talk about margins. What type of gross margin, when you’re buying from a distributor, are you shooting for an 18/19 percent gross margin or are you just doing it at 10? How much? 

Scott: I think our minimum is about 15 percent. 

Trent: 15. Okay. And then the next thing is so, these 5000 skews, what is your minimum threshold in expected profit per month per product? 

Like are you going to carry a product that’ll… like I’m trying to understand the minimum. It’s like, “We’ll go down to a product that makes us 50 bucks a month or 30 bucks a month.” What does that look like? 

Scott: Well, we operate from just kind of like a week’s of cover. We do one, essential like a test buy where we buy like three units or six units or 12 units; very small. And we let our existing sales really define the future of that product. Did we make money off of it? And what was its sales velocity? 

If it sells 2 a day and it’s doing it at 20 percent gross margin, our systems will catch that and see its velocity and then order four to six weeks of cover based off of that, if we’re running low on inventory. I mean, there’s different way to handle it.

Trent: Again, let me… 

Scott: Yeah. 

Trent: Let me jump in with a follow-on question. So, let’s say you’ve got these 5000 of the 60 thousand where you’re like, “Okay, there’s enough margin.” So, what I’m hearing is you didn’t necessarily filter those 5000 to see what their sales velocity was, instead you guys decided to make very small orders for 5000 different skews and then you looked at the actual data. 

So, you could have bought stuff that just wasn’t going to sell because you didn’t pre-filter sales velocity, you arrived at sales velocity data as a result of your test buying. Is that correct? 

Scott: We do use sales rank {indistinct 24:40}.

Trent: Okay.

Scott: The Amazon category sales rank. I could tell you that for toys, we buy up to about 300 thousand. For some people, that’s very long-tailed. And because of that, we are realizing some of the… we find sales in the 300 thousands. You know, maybe it’s six a month, but usually, the long tail actually has slightly better margins. 

Trent: Yeah, I would think so because there’s less competition. 

Scott: Yeah, but there’s also a higher chance of that product just getting stuck for a little bit longer. 

Trent: Yeah.

Scott: So, I’m not going to say it’s like rosy out in the 300 thousand land, but because of that we, just got a month ago, we kind of actually reduced our rank band a little bit. I think toys was at 350, we did the 300, just to reduce the chances of something getting stuck. 

Trent: Yeah, okay. So, in taking this approach, one could grow their catalog really quite quickly, as long as you had enough capital to be able to fund the inventory from what it sounds like. 

Scott: Yeah, I wouldn’t say we make… You know, in the initial order, I don’t think we’re ever going more than like 1000 new skews at once; that’s pretty big for us. 

Trent: So, that’s actually a good plan. I’m glad that you mentioned that. So, you’re dealing with a distributor, they’re giving you their price lists. I’m guessing that at some point you’re saying, “Hey, I’ve got this P.O. for you and it’s going to be 1000 different products.” Are you using that to negotiate better pricing? You must be. 

Scott: Absolutely. Distributors, the first time you go to them, they definitely can go down and they will. Sometimes, they’ll be like, “If you’re doing 50 thousand a month with us, we’ll take off 5 percent of your entire P.O.” That’s fairly big. The bigger you get, the more 5 percent gives you a significant margin. 

Trent: Yeah. So, when you are analyzing the price list to begin with, let’s say it’s a brand new distributor that you have no history with. I know that that probably doesn’t happen for you anymore because you probably deal with all of them at some point. 

So, you aren’t yet seeing the best pricing. When you’re analyzing the price list, do you just assume that you’re going to get a 5 percent discount and do your analysis with that 5 percent discount baked in? So, then you’re coming up with this P.O. and you’re saying to your sales rep, “Hey, I’m going to send you a $300 thousand P.O., but you need to give me 5 percent offer to work for me.” 

Scott: So, we actually have two layers of like analysis, I guess you could say. We run the price list once and say 100 thousand. We actually create skews on listings that may not be exactly a profit that we want today, but they’re close. 

So, we don’t order everything on the list that we create, but what we do is by creating that skew, we bring it in our system and we’re able to see that trend over time. And if it all of a sudden becomes profitable, our system is already ready; we’ve already ran the list. 

So, we’re a little bit… what’s the right analogy? But like we have a wider basket upon skew creation and then we narrow when we’re actually creating the purchase order. 

So, something could be at break even, but it’s such a good rank. We’ll still create the skew because we know we have access to it and in a month’s time, a lot can happen; people can stock out, whatever the reason and we may invest in it later down the line. 

Trent: So, you say, “create the skew.” I’m assuming that that’s some type of reference to an internal process that you guys have. Was does that mean? 

Scott: That’s creating the listing on Amazon. That’s submitting a feed to Amazon where you have you know… 

Trent: So, this product isn’t even on Amazon yet; is that? I’m not following.

Scott: No, no. What I’m saying is we’re matching with an existing product on Amazon, but to… Let’s see. There’s advantages doing this because sometimes you can create a skew; whether it’s restricted or whatever, but our initial funnel is just a wider basket. And it just submits the feed to Amazon of the product… whatever skew process that you have; whether it’s your identifier and then like a product ID. 

So, we submit that and so, we’re ready to go. The moment that hits our warehouse, the skew is already ready to scan and go in. 

And then there’s a separate process in the middle where we actually create a purchase order. So, we kind of separate those processes a little bit to kind of make the most of running a list and then being a little bit more judgmental when we’re actually putting money on it. 

Trent: So, let me feed this back to make sure that both myself and the audience are understanding what you’re explaining. So, you’re getting this price list, you’re doing an initial analysis of it. From that analysis, there will be a subset of the products in the price list that basically get a thumbs up. You will then create the skew, to use your terminology, by submitting a feed into Amazon. 

Now, I’m still a little bit confused on that because all of these products already exist on Amazon. So, there’s product listings that are already there. So, I’m not quite sure why you’re creating the skew. And then if you want to dive in and help to clarify that, that would be good. 

And then the second part is once you’ve created the skew, the thing I don’t quite get, that then in some way shape or form helps you to figure out what your actual P.O. is going to be. I know the audience doesn’t get it yet because… or maybe they do, but I don’t get it yet. 

Scott: So, I’m sure half of them have the same thought that you… So, you can’t ship a product into Amazon until you have a skew created; until Amazon have that listing. 

Trent: Okay. I now know what you mean. 

Scott: Yeah. I do use those words interchangeably. And so, on the first run through of the list, we just create all those listings. 

Trent: Got it. 

Scott: And to make it, “So, should this product shop at our warehouse? It’s good to go.” And but our purchase order, we’d probably only send in on half of those skews that we’ve created on the first round. 

Trent: Yeah, okay. 

Scott: There’s a chance; I mean, this definitely happens. It’s the second purchase order. A few more of those that we made on our first round get caught in our second purchase. 

Trent: Got it. Okay. Makes sense. All right. Now, in our pre-interview, we talked about ways to negotiate for better margins. So, I want to make sure that we turn that stone over and look for all the worms that are underneath it. 

You talked about obviously having large purchase orders, large puts you in a position of negotiation. Do you also do things like… So, one of the guys on my mastermind actually works for a distributor. And he was talking to me about the importance of promotional schedules. So, when you know the promotional… actually the term is Promotional Calendar. 

So, a given distributor carries a list of brands and those brands all have promotional calendars with that distributor when their deals or their BOGOs or whatever it is that they’re going to run happen. And then he says, “You really need to buy during those windows for those brands’ products to be able to get that better pricing.” 

Is that’s something that you guys have done or are there other ways that you’re able to get better pricing? 

Scott: Sure. Certainly, you know sometimes we chase those promotions. I know I believe the… It’s not gift. What is that category? It’s not stationery… party supplies. I know party supplies is part of this consortium where, like all the companies together, we get a rebate at the end of the year from like how much… if we if we buy $100 thousand in party supplies, we get maybe like a 3 or $4000 check rebate. 

Trent: Okay.

Scott: So, we do chase those and then we start to build that into our pricing. And then there are some distributors that are very like calendar based. And the truth is we do pull the trigger on some of those, but we haven’t really designed a system around that. And we try and go for the everyday price, because we’re concerned about replenishing inventory on a timely basis. 

Scott: Yeah.

Trent: And so, we put in its everyday price. And then when a when a deal comes in and we see it and it’s in front of our face and we know it’s already a good product, we’ll just deepen this one opportunity you know on this month and we’ll will buy a little bit deeper to take advantage of that. 

Trent: And just so people have perspective on your comments, how many skews do you have in your catalog? It’s a big number. 

Scott: So, right now FBA products that are in Fulfillment Centers, we’re at 80 thousand. 

Trent: Okay. So, let that sink in for a minute folks. At 80 thousand, you are not looking at any one skew individually with human eyes. I mean, everything is systematized and automated and that’s how you ended up with a wheelbarrow showing up and you’re like, “What the hell? It’s a wheelbarrow.” 

Scott: Yeah. I’ve got a lot of those horror stories. I really try and put a process into… So, before an initial order, someone at least works on it. Because sometimes Amazon doesn’t have the right dimensions. You know, to you try and key off of their dimensions, they don’t know yet because no one submitted it. But maybe it has a good sales rank because of some merchant sellers. 

So, I would say we do have a distribution capabilities. We do get our hands on the product eventually and we could see it and they can click a button that said like, “Okay, never order this again. I don’t want to have to box this desk.” 

Sometimes, it’s like we get really awkward stuff and I’m always pushing like, “If something’s hard to ship, that’s not our bread and butter. We want the small…” Like I said, like small and light. That’s just how you pack more value in smaller spaces and you’re investing in less boxes. 

Trent: Okay. So, there’s two more ways that you use Keeper the data that I want to talk about before we finish up today. And we’ve been a fair amount of time so far, so we’ll try and blast through these in a shorter period of time, if we can. 

One of them is you mentioned to me in our pre-interview that Keeper does play a role in helping you to maintain a relationship with the brands that you’re buying directly from. Did I get that right? 

Scott: Oh yeah. 

Trent: So tell us about that. 

Scott: In a few ways. One, we kind of like pull down KeepUps data on reviews and historic sales rank to show movements on a particular aces. And then we return that to our vendors and our suppliers in a report. We called that our Amazon Business Report. Those are a few features. 

But another one is we give them an estimate of all the activity that’s happening on Amazon. We’ll tell them, “Okay, we’ve analyzed your 30 aces and we have found that this seller, Joe Schmo, has 10 aces in FBA and he’s competing very well. He’s winning the buyback sometimes. And then we find out that this other unauthorized seller or authorized seller is on all 30 of the aces, but he’s not even competitive because he’s priced out; he’s like $10 too expensive.” 

And so, what we help is distill and we give them an estimate sales ratio of what what’s happening on Amazon. 

Trent: Okay.

Scott: Because sometimes, they’re working with brick and mortars and they don’t know which ones are like big on Amazon and really like pushing their product through their stores or not. And so, we just give them a picture of like, “This is what’s happening on Amazon.”

 And Keeper gives you the offers; they gave you the offers page. As someone that has scraped data on Amazon, I know that they protect the offers page more than the detail page. 

Trent: Okay. And for (I’m going to put myself in the layman category). If I was to go look and sign up with Keeper to buy their data, there’s no interface, there’s no presentation layer. I mean, I’m literally just buying a data feed that I then have to build. 

Do I pump it into my own database and then write queries against it or how am I making use of this data? 

Scott: Okay. They do have an interface that allows like some search ability. I haven’t used it a lot, but for example, before this phone call, I was like, “Okay, let me get a little bit more familiar.” 

You know, you can do some sales rank analysis just with their user interface. It’s not completely beautiful. I would say, Jungle Scout probably beats it in terms of like the GUI friendliness. 

Trent: Yeah.

Scott: But you can go through their data. But yes, if you want to develop software on it, you have to pay them money, you know, anywhere from like $20 to $1000, depending on how much data you want to pull. 

And they do have a very great description of that data and how to use it. Well, we just use a database, you know, a sequel database and that kind of map out what data we want from them and put it under our database and then we kind of create our own queries. 

Trent: Okay. So, the second question, which I think you’ve answered already in the first question, was how does Keeper play a role in helping you to uncover and remove unauthorized sellers? 

So, in the event that you didn’t fully answer that, let’s make sure we don’t skip past that one. 

Scott: So, the thing is you always want to know which ones to worry about. If you have an exclusive or semi-exclusive relationship, you know that unauthorized sellers coming in can really hurt the profitability on that. You need to know which ones to worry about. And it’s usually one, two or three. They may have 30 unauthorized sellers, but most of them just aren’t of consequence. 

And so, I have to find the three that are a consequence and then we kind of do some research to find out who they are, where they’re sourcing the product. And with the brand’s permission, we will started sending them messages, trying to let them know about what the brand wishes for their Amazon platform. 

Trent: Okay. I want to unpack that a little bit. You said there that it helps you to, for the brand for the sellers that are of consequence, it helps you to figure out who they are and where they’re sourcing from. How does Keeper figure out those details? 

Scott: Well, I’m saying some of our research is actually off of… it’s more of like a Google research. 

Trent: Got it. Okay.

Scott: Well, if they have merchant offerings, we could find out what state they’re from. You know, sometimes they have a website or contact information. 

Trent: Wouldn’t you just look at their store and look at their products and figure out an FBM product and place an order and then when you can see where it was shipped from when it arrives? 

Scott: You don’t have to buy it. A lot of times, FBM products tell you it ships from Indiana; ships from the state. 

Trent: Okay. 

Scott: Here’s a little tip. One thing you can also do is send them a seller message with a link. This is probably, I don’t know, maybe in a gray area; I don’t know. But we’ve actually had no success with it. But I know we’ve been phished before. 

Someone sends a seller message to you saying like, “Hey you’re selling this brand. Click here to get authorization.” Well, that clicking is tracking your IP address and they’re able to locate you. 

So, actually, we sent one or two messages trying to do that, it didn’t have success, but I know it’s happened to us. And so, be aware that it’s in the buyer or seller messaging. No, not the buyer or seller; when you just want to ask a question about a product. 

Trent: Okay. You also said that where brands give you permission, you’ll message the other sellers saying, “Hey, you’re unauthorized.” How are you messaging them? Because one seller is not allowed to message another seller through the Amazon platform; It’s a ToS violation. 

Scott: It’s definitely… You caught red-handed. I think it’s a very gray hat tactic. I mean, you see it happen all the time. 

Trent: Okay.

Scott: But truthfully, it’s not as effective as the… what’s happening more and more now is brand registry is playing a role in identifying and saying like, “Hey, this person is violating a trademark.” We get those communications with our huge catalog sites, we get one or two a day and they’re very serious. 

Trent: Yeah.

Scott: The brand registry like has {indistinct 44:31} that we’re scared of. 

Trent: Yeah.

Scott: And because of like the ToS, we truthfully, we try and go above board and want to comply with like Amazon’s policies across the board. Because in the end game, like we want our accounts to stay in good standing. 

Trent: Yeah.

Scott: And so, we have we have about 15 brand registries and we’re really pushing like towards that route. 

Trent: Okay. Last question before we wrap them; Seller Fulfilled Prime. Are you using it? 

Scott: Yeah. They’ve made it a lot easier, if you are doing any merchant-type fulfillment. We have a lot of {indistinct 45:13} products that we can’t send into FBA. And so, what we’ve done in our warehouse add we have maybe a few hundred thousand dollars of inventory in {indistinct 45:22}. And we were able to turn on Seller Fulfilled Prime on a region because it has to be shipped ground. 

Our warehouses in Indianapolis and we tell Amazon, “We only want to ship ground. So, give us the two-day ground region around Indianapolis” which happens to be 57 percent of the population. 

So, you go into your shipping templates and I actually had someone on Amazon walk me through it. I think I know a few things about Amazon, but still like I’m really scared when it comes to certain things on Amazon you’re doing about scale. You build a shipping template that says like, “Okay, this is a Ground Prime and it has to be a two-day radius of our warehouse.” 

The reason you should do that if you’re already doing Fulfilled by Merchant is for a certain subset of the population of the United States, you will have a better offering. You will now be Prime; you’ll have that badge and that may allow you to raise your price. 

Trent: Yeah, absolutely. So, we’re in Boise and I’m thinking to myself, “This is an interesting little experiment that I’d like to actually perform. Because I can’t imagine I’m getting 57 percent of the population.” 

Scott: No, maybe… but you have California. I bet you that California is going to be two-day shipping. And so, that’s still a third. I bet you might have close to a third of the population. 

Trent: Yeah, okay. Well, hey, thank you so much, Scott, for coming on the show and answering my many questions and helping to enlighten the audience on how to become a more successful Amazon reseller. Really appreciate it. 

You did mention that… I want to give you an opportunity to plug it. You have a business that helps people with reimbursements. I think you said is that; right? 

Scott: Oh, yeah. My opinion is people should be aware of reimbursements that they’re owed. Whether you use our Balance services; that’s great. There are others. 

And I just really think if you have FBA inventory, you could expect Amazon to reimburse you 1 percent of your sales. There probably is an additional percent or two, depending on the type of product that if you identify it in the reports, you know, your damaged products that Amazon damage in their warehouse and have yet to reimburse you, if you tell them about that, you’ll see just in a seller support case, you’ll get money.

Trent: I like getting money. 

Scott: Yeah. This is true; Buy Boxer, the first two months that we started doing this, in so many cases and we were able to really, you know, using automation to successfully identify which ones have not been reimbursed yet where we’ve been damaged and kind of doing a lot of ins and outs. Sometimes we’re referencing 10 different reports at a time to really prove it. We got out about $100 thousand each month of our first two months using this. 

Trent: Wow.

Scott: And there is a window; you can only look back 18 months. So, if you’ve been in business for a few years, you probably should act sooner rather than later. I’ve been a day like I’m not super ambitious about like growing the services business to the moon, but there’s like five or six others; test them out find out which one’s best for you. I know… 

Trent: What’s the URL for yours? 

Scott: dalenceservices.com

Trent: How do you spell that? 

Scott: D-A-L-E-N-C-E (that’s dalence) services.com. Yeah. 

Trent: All right. Well, that’s a wrap for today. Again, Scott, thank you so much for taking some time to come on the show. 

Scott: Thank you. It’s been great. 

Trent: To get to the show notes for today’s episode, go to brightideas.co/277. If you enjoyed this episode, I have two small but very important requests. Number one, help another entrepreneur discover all of the golden nuggets by sharing this episode on your social profiles or wherever else you would like to. 

And then number two, if you would take a moment and head on over to the iTunes store and leave us a 5-star rating along with your comments. Man oh man, I would be eternally grateful for that. Thank you so much. 

Thanks very much for listening to the Bright Ideas Podcast. Check us out on the web at brightideas.co. 

Alright, show is over. I’m tired. 

Questions Asked During the Interview

  1. Who are you and what do you do?
  2. How are you using Keepa in your business? (Keepa plays a huge role)
  3. How does Keepa play a role in your product sourcing?
  4. Do you buy more from distributors or direct from brands?
  5. If you prefer distributors, why is that?
  6. What are some of the ways you are getting better margins from distributors?
  7. How does Keepa play a role in helping you to maintain your relationship with brands?
  8. How are you using Keepa to help brands to uncover and remove unauthorized sellers?
  9. Are you doing any Seller Fulfilled Prime?

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Today’s Guest

Scott Needham has developed automation software on Amazon for seven years using any available data to try and get an edge. He has founded two businesses. First, BuyBoxer, the seller with the largest selection of FBA products. Second, Valence Services, a spinoff to help sellers maximize reimbursements they are owed from Amazon. He’s most proud of all the creative ways he’s found to lose money on Amazon.

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