Ask me anything about eCommerce (Ongoing)

[biophase]

Bio, is the process still as follows? :

Spend hours researching on Alibaba for that special product you think will have good margins.

Go back and forth with the china man.

Order samples.

Test samples, put them on amazon. See if if you can sell them.

If you can sell them, order more.

Is that the gist of it?

This is the process that many people follow. But I don't follow this process at all because you are not adding any value. As an example, say that you found that kitchen knife sets sell for $50 on amazon and that you can get them for $15 in China. You look on amazon and there are 15 people selling these kitchen knives at $50. You find the supplier making their kitchen knives and you put a red handle with your logo on them and sell them for $50 on Amazon. So what did you really do? Nothing. You created another kitchen knife set on Amazon that looks like 15 other ones except with a different color handle.

What I would do is see what I can change about the kitchen knife set. Here are things that you can do to improve the kitchen knife set:
1) Use a better quality blade
2) Use a better quality handle
3) Improve the knife block
4) Use a different combination of knives
5) Add more knives
6) Add a butcher block cutting board
7) Add a money back guarantee
8) Change the blade shapes

Imagine if you did 2-5 of these things. How do you think your listing will stack up compared to the original 15 listings? What if your cost ballooned to $25 and you still listed your knife set at $50. Do you think that you would sell more units? Do you think that you need to giveaway sets for free reviews? No, in this case, people will find your knife set and buy it because it is better when compared to the other sets out there.

 

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[biophase]

Alot has changed since my Ask me about Ecommerce AMA from 2012, so I thought I'd do an updated AMA as some of the answers in the previous thread are now outdated. The online marketplace has shifted greatly in the past couple years. Some examples of what has changed:

• Google Shopping is now at the top of your search results, so ranking #1 for a specific term is not as valuable as before. I don't do anymore SEO.
  
• Big box stores like Amazon, Walmart and Target now dominate the results whereas before smaller niche stores did.
• Amazon is now the place to be in Ecommerce.
• A huge shift has happened from dropshipping to importing and branding.

So go ahead and ask away!

 

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[biophase]

While Amazon is a giant, it also takes a HUGE chunk away from profits.

Do you recommend any other channels ( Etsy, etc ) besides your own store?

I don't think that Amazon takes a huge chunk from profits. But this may depend largely on your product. If you have a product that is either large or fairly heavy, then Amazon's FBA program may actually be a wash for you.

For example, I have a $90 product that is 6lbs and 16x12x8 to ship. In 2015 Fedex and UPS went to dimensional shipping for ground shipments, so this shipment normally costs me about $14 to ship to a customer in the United States. So after 2.5% CC fees and shipping and a box, my net cost on a $90 order is $72.75.

When this product sells on Amazon, Amazon will take 15% of the sales price plus about $4.50 for fulfillment. That comes out to $19.50. An added cost for me is to ship this product to Amazon's warehouse, so let's say that is about $3. So in an Amazon sale, I net $67.50.

The difference is $5.25 for this particular product for me.

But if I am doing PPC on my products and it costs about $.35 for a click and I have a 5% conversion rate, I am spending $7 for every sale. If this is the case, the Amazon sale is actually more profitable for me. I would need a 6.6% conversion rate for Amazon and my Ecommerce store to be even.

Now couple this with the fact that I do not need to do any customer service or spend any employee on this sale, and you can see how Amazon's FBA channel may be a better sale for you.

Again, this all depends on the type of products that you sell.

Personally, I only use my Ecommerce stores and Amazon. I've found that Ebay is filled with people who want cheap stuff. I use Ebay to get rid of my open box stuff and products that I am having trouble selling. I price everything on Ebay at clearance prices. It's a good way to move shitty inventory without making your brand you cheap in your store or on Amazon.

 

[biophase]

You said there was a small product that you were importing that margins were low but it helped your brand so you did it. How did you go about brand expansion and the selection of said brand to dominate whichever niche you are in?
When you make changes to products how do you communicate that with the manufacture and if they say they cannot do what you are asking what is your course of action?
How many products are you currently selling?
What does your day to day operations consist of?

I look for products that work within my company. So if I sold kitchen knife sets, it would be natural for me to go into butcher blocks, cutting boards, kitchen drawer organizers or anything kitchen utensil related. Once you are in all those products, you can move outward to plates, cups, place mats or pot holders. You could even go further out and do home related products. Once you are in these niches you will see what is missing and needs to be sold.

I don't know how many products I'm selling right now. It's probably between 50-100.

My day to day is fairly simple now because I have an employee running it. All I work on is new product development and the occasional box unloading.

 

[SeanyHang]

It is up to you to do the research. Sometimes the manufacturer has no idea why they are building what they are making. If you are trying to sell knives and don't know the difference between a good quality blade and a poor one, you should not be selling knives. Because someone like me is eventually going to come along and blow your product out of the water and sell it for cheaper. Then watch your sales decline.

This is probably considered a hand-holdy question - but I would imagine a lot of guys here might be thinking the same thing.

If I'm going to try and make a better knife, the first thing I'm going to be thinking of is the metal used to make it (then maybe the shape, the wood used in the handle, etc.)

So then, I go to Google and type in "Best type of metal used in knife" where I find a page that tells me that the "ultra premium" type of metals are going to be " CPM S90V, M390, ZDP-189, Elmax and CTS-XHP".

After I searched this I realized that this particular page is talking about pocket-knives. I figure the metals in pocket knives and kitchen knives probably differ due to their different uses and do another search for "the best type of metal used in kitchen knives".

I then get a bunch of different results and pages with information that all differ and possibly contradict one another. But I read through and find that -DUH- not only are pocket knife alloys and kitchen knife alloys going to be different.. but individual knives in your kitchen set are going to have different alloys than one another.

As I read through, I still have no idea which metals are actually going to be the best. As matter of fact, after these simple google searches I realize that there is a PLETHORA of information on knives that I've never even thought about before.

As somebody who isn't a cook or a knife enthusiast, the only things I've ever thought about a knife was that they were sharp, had a blade and a handle. But then out of the corner of my eye I notice a chart on knife anatomy.

Holy crap. There's a lot more to knife anatomy than I EVER would have thought.
And then...

Mother of God.... LOOK AT ALL THAT STUFF THAT I DON'T KNOW WHAT IT IS!! This obviously isn't a kitchen knife.. But should I know what this stuff is in case I want to be able to incorporate it into my kitchen knife?!?!

Stainless steel? Non-stainless? Hell, I may even want to look into ceramic knives.. And I know even less about ceramic than metal!




MY CONCLUSION

So after my 20 minutes of research (This post wasn't hypothetical.. I actual did the searches and then posted what I was thinking) I found that I know even less about knives then when I started.

This is a PHENOMENAL thing and I think drives home the point of why @biophase 's process is superior to just finding shit on amazon and alibaba and then importing that.. Barrier to entry. Most sellers are not going to even do the 20 minutes of research I just did.. They're going to find something that's selling on amazon, find it on alibaba, change the logo, and import/sell the exact same thing that 48 other guys are selling. With a bit of research you'll be able to stand out from the competition and sell a better product.


***But my question is***

How do you determine when you've researched enough? Do you spend weeks researching how to make the best knife? Do you buy books and spend months on knife forums to become a knife expert?

Maybe you just do what I did and utilize simple google searches - But that's also a rabbit hole that could take forever to get the answers that you're looking for AND result in analysis paralysis.

There is obviously a point when you've spent enough time doing your research and it's time to get the ball rolling and start making some sales. When is that time for you @biophase ?

(Also - I'm aware that this is the type of question with an answer that is probably something along the lines of "it depends" depending on the person, the product, the complexity, etc... But maybe give us a small glimpse into your mind to see how you might put in the research and determine what changes need to take place.)

 

[MJ DeMarco]

I was asking if he was buying from a specific website or Factory. I couldn't care less, I'm cashing 10x times the median argentinian salary while on med school. I don't need to take on some one's bussiness, and I'm also in Argentina. You should watch your acttitude, you are a grown up man, not some 16 Smart a$$.

First, I wasn't aware that "cashing 10X the median argentian salary" gave you a license to ask about sensitive business details that shouldn't be asked on this forum. Your salary has zero relevance.

Second, if you were expecting @biophase to answer "I import XYZ from factory ABC in the Ghangzhou province" you obviously haven't been paying attention while enjoying your stay here. Perhaps the forum is less friendly nowadays because top contributors are tired of seeing their ideas hacked and poached by drive-bys. Gee, I wonder how many brainiacs are suddenly now trying to start carpet cleaning companies?

Third, don't tell me how to act in MY house. You are my guest and you are here by privilege, not by right. If you fail to see that relationship, leave.

Fourth, due to ill-timed and ill-asked questions, unfortunately my primary function here is no longer to contribute, but to protect the dedicated contributors who spend their time here providing valuable insight to those who want to apply it to their business. I do my best to protect these contributors from low-rent thieves who have nothing better to do than to hack and poach the exact business/supplier/product from those who mistakenly disclose it to the some 100,000 users who visit here, most of them, hidden in the shadows.

Unfortunately, the forum mirrors a socialist economy where the majority takes while the minority gives. You can bet for damn sure I'm protecting the givers over the takers.

Thank you for your understanding.

 

[Fathazard]

So, I read the entire thread and took notes. Thank you Biophase and others for some amazing insights!

Here's a summary of the most interesting points (for me) in this thread so far:


NICHE SELECTION

• The easiest niches to compete in often have the worst overall listing quality. Look at the first two pages of product results. Having a high quality listing among these will be half the battle won. Good copy, pictures, title etc.
• It's good if the top 3/5/10 listings combined have above 3000 units sold per month or so. This ensures that you are competing for something worthwhile. (How do you accurately judge this? Jungle Scout as I understand it is often inaccurate?)
• It does not matter how many competing products there are, if you can add customer value above the top products.
• Don't be afraid to launch product that do only $250 per month. Just do it 20x.
• Do not look at number of reviews or best seller ranks - only what you can improve.

MODIFICATIONS

• Aim for small improvements inspired by 1-2 star reviews on other similar products. Fix real pain points.
• Improvements that are cheap to make might be desirable. Changing shape of plastic/metal often requires a new mold to be made by the manufacturer = $ 2000. Changing buttons to a zipper might be a couple of cents per unit.
• Some improvements might be as simple as more color options. Car interiors are often Beige, black and... red or something - but products for cars are often available ONLY in black. That's an opportunity.
• Commit to ONE product in the beginning, and make it the best possible.
• Offer the improved product as soon as possible. Don't wait until it's perfect - if you do you will never launch. There is time to go back later and improve upon it even more.
• Make sure it's better, not just different.

FINDING MANUFACTURERS

• Alibaba is still the place to be. But beware of dealing with middlemen and scammers. Use common sense.
• If your manufacturer sells your product to someone else, it's time to jump ship. (Also incorporate your brand in the mold next time!)
• Remain careful. Place medium sized orders regularly, rather than huge ones rarely. You never know when they might just up and run away.
• Sometimes, you can sell their generic product first to test out the market. "You can sell their product for 50 units. Then move to your brand when you feel confident. You just change your listing title or product name. It's no big deal selling 50 for someone else. The new customers won't know the difference." // @biophase .

SAMPLES

• Order your modified products on the first order, not generic ones.
• Always get a sample of the final product - even if it costs $50-100.
• A mold may cost you $2000, but think of it as a per unit cost. On a $500 unit order, that is only $4 extra per unit. Add your logo/brand to the mold, and no one will steal it.
• An expensive sample cost might be an indication of a bad manufacturer - conversely, a low sample cost often indicates a good manufacturer.
• Send your first email with all the information the manufacturer needs to send you a sample of your modified product. Quantity, Artwork, Logo, pantone colors, header card design, packaging information and address. Ideally, the response is just a simple confirmation from the factory. This is a quick way to sift out the gold from the mud.
• Ask them to send you 1-5 pieces, and you can start selling right away!

SHIPPING

• Have your supplier package the goods in sellable condition - to save yourself the trouble of repackaging.
  
• Desiccant packages (the small thingies that absorb moisture) might be worth looking into - lest your shipment be soggy when it arrives!
• From China shipping with air takes less than a week; shipping with boat takes 5-6 weeks. (To america)

GETTING REVIEWS

• Reviews from giveaways are being hit hard by Amazon - might even be removed. Although it's alright to do it a few times. Unclear what the limit is. The practice used to be: Order 200, give away 100, break even, and then profit on your next order.
• Make friends and family buy the product at full price, then refund them and get the product back. Voila - review.
• You can sell at cost for a few months - then ramp up price when you rank high.
• Review groups still exist, find them on Facebook or just google. Again, it's uncertain how many units Amazon will allow you to give away and still count the reviews. (Biophase would Not do giveaway's to these groups, but you can still try to sell to them normally. Or do giveaways on platforms like Instagram)
• Use feedback5
• If people are passionate about your product - they leave more reviews. Consider this when picking a niche.

MISC

• Use Stitchlabs for inventory control across different platforms (Amazon, your own store, etc).
• Your own warehouse might be worth it after a while. FBA costs roughly $4 on a $10 product that is envelope sized.
• Sell returns or badly selling goods on Ebay. Or cut your losses and move on.
• Avoid patents - they are expensive and take time. Most of your modifications won't be engineering breakthroughs anyway. Avoid breaking the patents of others though - simple changes are unlikely to do so.
• Get barcodes here: http://www.cheap-upc-barcode.com/ . Send them to the manufacturer. You need one barcode per unique product. A color change makes it a unique product.
• Keep up with competitors who compete on brute force (price, huge advertising budget) by changing your value proposition. Sell a 3-pack, a life-time guarantee, a warranty, or a free secondary item. Or modify your product again to better suit the needs of the market. (It's extremely important that you have branded in this case).
• Setting up Amazon PPC: Run an automatic campaign for a week and let Amazon generate the keywords. Choose the best converting among these to use in a manual campaign.
• When you pay China via paypal they charge 5% in fees. It may differ with factories, but there is usually a surcharge when you pay with a credit card. You can wire the money over instead.
  
• Find a way to make the customer WANT to give you their email (for further marketing). Slip a warranty registration card into each product that prompts the user to register - or something similar.

 

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[biophase]

Hmmm. You know what? If i'm going to be honest about it, I don't actually have a number for what the right amount of competition is. Less is better. More is worse - but that's obviously completely relative and I now realize that I need to come up with something more quantifiable. I probably got that type of mindset after I read @Ecom man 's thread (and many other ebooks/programs on importing) and would see a lot of what he did (after reading that thread is when I took the jump into importing).

That's talking about only having five competitors - but I'm sure @Ecom man has his own way of doing things completely different than the rest of us... it'd be awesome if we could create a separate thread (I don't want to hijack @biophase 's ) and have all of the guys who are successfully importing and selling on Amazon/ebay/ecommerce talk about their individual processes.. I'm sure there's a bunch of similarities but the differences in philosophies and processes would be fascinating.

I think you need to just do it. Like I said, if your backseat organizer is 100% better than the current #1 on Amazon, why would you give a shit about the number of competitors? Why would you care if your product only does $8000 a month, profiting you $2500 a month? Is this number too low for you? I launch stuff that does $250 a month. That's a measly $5000 a month. I don't care that it does $250, I just launch 20 more. If you never launch you will never get anywhere.

 

[biophase]

If you have an advantage or can get ranked, do it!

I have never used any review service in my main niche. I get them to #1 by selling at cost until they get to #1. Put it this way, if my product is already better than a competing product and we are both priced at $40. What happens when I drop the price of it to $25? You guessed it, it sells like crazy. A few weeks at $25 and I'm at #1. All the sales and reviews are organic. Then I move the price back to $40. Now I stay there.

I have used a review service once, I got 25 reviews for a product. This was in a competitive niche, the same one where a competitor got 320 reviews within a month. He is on the front page, I'm on the 6th page right now. But, my product is better than his. In fact, I had requested 50 reviews, but cancelled at 25 because I didn't them any more. The 25 sales got my product in the search results and that's all I needed. Once in the search results, it will sell itself. I sell 1-3 of these a day now.

 

[biophase]

BTW, A little rant and information about importing...

In my experience, the companies that ask ridiculous amounts for a sample always seem to end up being the shitty ones. I would venture that they are shitty so they only make money by asking high prices for samples.

I usually get samples from 2-4 different vendors. Some companies will charge a reasonable $10 for a sample and some will charge $50. Then some will charge $30 for shipping and others $50. Then on top of that, some will charge a 5% paypal fee.

So I usually get a sample from whoever I like in my email exchanges and I tend to ignore the high costs because in reality, I can spend $200-$300 getting samples, because I know that when I get the correct sample, I will make alot more later on.

However, after doing this a few years. I've noticed that the high sample priced companies never delivered on quality. I have never moved forward with a company that made me pay alot for a sample. I usually got the best samples from the companies that sent the sample for free or a low price and charged reasonably for shipping.

Because I am fairly experienced at this, I usually send all the information that they need in my first email. I send my quantity, all my artwork, logos, pantone colors, header card design, packaging information and even my ship to address. What I really expect is an email that just says, we can do this at XXX price shipped to your door.

But what I usually get back is a bunch of questions that I answered in the first email. However, there will always be that one vendor that read the whole email and quoted everything perfectly, or very close to it. I usually give these guys a shot at a sample no matter their price.

Just last night, I was in talks with 5 vendors on a new product. This is a fairly simple screen print onto polyester product costing between $.50-$2.00.

Vendor #1, I sent my artwork PDF and they literally printed it and sent me back a photo of a finished product within 1 hour! And it looked good. I was like holy shit, that was fast. I paypal'd them $30 and they are sending my the sample so I can see and feel it.

Vendor #2 game me excuses like they couldn't read my file, the artwork was the wrong size, and wanted me to resize my artwork. I told them I would not do it and also told them I had samples coming already. Then magically they could do it! They want $60 setup charge to make my sample and $30 to ship it. No thanks. Their prices are 60% the price of Vendor #1.

Vendor #3 could not understand my artwork, I told them I want a 2.5cm x 2.5cm logo in the corner and they sent my a proof with dimensions showing the logo at 5cm x 4cm. Not a good sign to start with. They were priced the same as Vendor #1.

Vendor #4 and #5, were out of the ballpark in pricing. My guess is that they were not a factory.

So in this case, I only ended up with one sample coming. If it matches my current offering, I'm going with them. Even if they aren't the cheapest.

 

[biophase]

Hey Bio,

Loved your previous thread, read it near two years ago, and have since been in the import game, growing rapidly.

In on page one of future legendary/gold thread

I'll ask some questions:
1) Are you using TaxJar or anything to collect tax on amazon sales?
2) How do you do organize your book keeping? Software to suggest, have hired help or your own spread sheets?
3) At your stage do you have any employees for customer service, other tasks? Where did you hire them? Do you prefer local or overseas.
4) Amazon to Shopify. This is something I am starting to turn my attention towards. With Shopify or your own ecom portal, the benefits are obvious: take customers off the AMZ channel, can use upsells/downsells (basically all sorts of promotional techniques), abandoned cart, retarget, build customer lists, more images (no rules), integrate with social media etc, but of course do not have the organic amazon searches, trust factor, prime, yada yada. Do you focus on an ecomm store? If so, do you use FBA or a fulfilment house that can ship world wide? For my business, world wide shipping is an appealing interest, especially with marketing via Instagram and YouTube. I realize FBA Europe is not integrated as well. Thoughts on all of this?

5) What software do you use?

I use Azon Seller Tools, Manage By Stats, Search Ranker, Camel Camel Camel, merchant words (not really any more).

I listened to a podcast the other day about an Amazon seller who has made (and this is really interesting) vertical integration (sort of) with the supply chain. That is, he is listed as a trading company on Alibaba, selling his product to other western buyers but sourcing from his another factory in China. He has a Chinese employee who helps source the products from the other factories, combines orders and makes and takes healthy profits off the top. What is his advantage? He knows exactly what Amazon and other western buyers want, and has tailored the Alibaba listing to cater EXACTLY to this need. Amazon listings used to (and still do) suck and under market/sell the product. He took this concept up to Alibaba. Food for thought.

I don't use any Amazon related software at all. I am not in the business of finding the next big thing. I just make my own products and sell them. I don't look at sales rankings, or change prices daily. I don't know what much of that software even does.

If I think the product will sell based on my knowledge of the market, I will go ahead and try it.

I launched a product that cost me $4.50 and sells for $13. About a $2 profit there, but it fit into my brand and nobody was selling it on Amz. So no big deal, I just went with it to build my brand. More branded products gives my brand more visibility.

Well, turns out that I am selling about 250 of these a month, making $500. Then I found a new factory that is making these for $1.95 now. So this one tiny is now generating $1000+ a month profit for me. If I ran numbers on this product, I would have never done it.

BTW, I've had some people run those software programs on my niche and I can tell you that the numbers are way off. One software listed one product of mine as a pretty decent product. I looked at my sales and I'm selling 2-4 a month of this product. I could only imagine if someone used that software and ordered 500 of them to sell. They would be very disappointed!

For inventory control I use Stitchlabs. For bookkeeping I use bench.co. That's it. Oh, I use Feedbackfive for getting reviews.

I have a warehouse and a full time employee. I don't ship directly to Amazon. I ship to my warehouse and then to Amazon. And of course I fulfill my own ecommerce store orders through the warehouse. I ship worldwide except to Russia where I seem to get a ton of fraudulent orders.

You can list as a trading company on Alibaba, of course you will take a cut and your prices will be slightly higher than people in China. But if you could provide excellent service, people may not care (depending on how much you take). The problem I see with doing that is that he knows that the market will be saturated with the products that he is specifically representing. And the likelihood of many of his new customers succeeding is very low. He may just be taking a small cut off of one time orders and hoping that a few of his customers hit it big. The problem is that the ones who are successful will probably move on to factory direct later due to pricing.

 

[biophase]

@biophase Not sure if this was asked, but what are some big things not to do? I'm not in eCommerce, but always find these answers can apply to a wide range of niche's.

Don't dropship.
Don't just try. You must commit to something. I hate when people say they will give it a shot. That to me means that they will fail.
Don't hop from product to product. You need to give you stuff a chance.
Don't do multiple products at once. Concentrate on one product at a time and make it the best possible. Once you get experienced, then you can do a few at a time.

I'm sure there is more...

 

[biophase]

Thanks Bio. My question is more of a general nature. Do you feel the whole import, brand and use amazon FBA is nearing saturation? Obviously there will always be brand churn but it just seems that every man and his dog these days is scrolling Alibaba and doing this...to varying degrees of success. Has / will / can Amazon FBA hit the shoeshine boy moment?

Was it an opportunity for first movers or do you think opportunity is still wide open?

There is always an opportunity. Obviously if you just do what everyone else is doing, you will just be like everyone else. So if you just go on alibaba and import what everyone else is doing, then yes, you just get into a price war that will go down to the bottom.

It's still wide open if you have a good product. There's never a time where you can't sell a good product. Just because people have been selling shoes for 50+ years doesn't mean there isn't room for a better shoe. If that comes along, the guy making it isn't wondering if there are too many shoes already out there.

I'm launching new products every month on Amazon.

 

[biophase]

Even veterans make mistakes or get bad orders. I've been dealing with a few weather issues that have never surfaced before. A couple products on my last shipments have been "humid" on the inside. Because Amazon requires sealed polybags, if the factory is packaging during or after a rain storm, the humidity can be high inside the factory (many don't have AC). This moisture gets sealed inside the polybags, and add a one month journey in a hot container and you get some bad, smelly product.

Problem is, your China supplier will say that everything looked fine when they shipped it, and it probably did. I'm sure they didn't pack smelly product and ship it to me. They are probably even used to the humidity so they don't think 'hey it's pretty humid, maybe we should wait to seal these up'. So now I will require them to put desiccant packets in each polybag before shipping. This will add cost and some weight.

This is just one of those things that happens, and you never think about it until it happens.

 

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[biophase]

This is exactly what I ran up against. My first product was a low barrier to entry on price and therefore competition came in high numbers. These guys were doing huge giveaways and spending way more on advertising that what I could.

On Cyber Monday I dropped one of my products to $7.99, sold each one at a $1.50 loss. Sold 87 of them. Jumped from page 6 to the bottom of page 1. After the holidays, I'm going to drop it back down to $7.99 again and leave it there until I'm top 1-3. I can afford to go months losing money on a product to rank it.

Let's say I sell 2000 a month and lose $3500 a month for 2 months straight. Assume that I rank at #1 afterwards. Then I raise my price back up to $20 and make $10 a sale. Now I'm selling only 1000 month (due to the price increase) and $10, making $10000 a month. I make my lost money back in 1 month.

 

[biophase]

I like your mindset of improving upon existing products. Earlier, you mentioned that none of your products have patents and yet you don't seem concerned that your manufacturer they will sell your newly developed product to other retailers when it's finished. Why is that? Do you have a formal agreement with your manufacturers as you're working with them to develop a new product or some sort of recourse? Thank you for all the great insight!

I do not have any agreements with the manufacturers. So far the factories that I am dealing with seem fairly honest. And when I visit them I do see my competitors products in their showroom, however they tell me that they cannot sell that product to me. But it doesn't mean I can't use it as a base to modify it. They tell me that their US customers visit once a year, usually trying to see what else they can sell. It's pretty overwhelming when you visit. Your brain just goes crazy.

Basically, you see what raw materials they have. You see what machines they have. And you see their labor force. You can literally design things on the spot and ask them, can you make this? for how much? They can make anything. You just need to provide them the capital and they will make it to the best of their factory's capability.

One factory guy began to ask me alot of questions about selling on Amazon. So I stopped answering him. If they ever figure out Amazon, they can just ship the product to FBA and give it another name. It will be a year or two, but once they figure it out and it becomes mainstream in China, say goodbye to your margins.

A short derailment here... alot of this talk is exactly why you CANNOT just blow your money once you start making it. Nothing is 100% safe and secure. You should treat your business as if you are an NBA player who can blow out a knee at anytime. We always look at athletes and say how stupid they are for not saving any money when we see that they are broke.

But, people making 6 figures also need to do the same thing. You don't want to be that high flying guy on Amazon for 3 years and then back at a job in year 4. Maybe I don't worry about this stuff that much because I've been saving my money.

 

[biophase]

Because how am I suppose to know what a better quality blade is? Is this something I should be researching constantly trying to figure out the best materials?

It is up to you to do the research. Sometimes the manufacturer has no idea why they are building what they are making. If you are trying to sell knives and don't know the difference between a good quality blade and a poor one, you should not be selling knives. Because someone like me is eventually going to come along and blow your product out of the water and sell it for cheaper. Then watch your sales decline.

Whats is your process like when trying to change a product? Do you send your manufacture a 3D CAD model, or a PDF sketch of the product? Or is it as simple as just asking and letting them handle the rest. As long as the change is made and you see the difference in quality after receiving them and your good to go?

This all depends on the product. It can range from CAD drawings to a simple email or hand drawn diagram. There's no hand holding here, you just do and and learn as you go. I have no idea what they need to do to make my improvements. If they tell me they need CAD drawings then I get CAD drawings, if they tell me they need only a drawing, then I make a drawing.

Are all your 50-100 of your products custom made in some way? Or are there some where you just see the margins and it matches in your store and you sell it?

They are all custom. If I found a normal product that sold well on Amazon, why would you NOT try to improve it? If my knives are selling well, why would I sit back and be happy with that? I would want to improve them on each shipment. That's only way to stay ahead of the game.

 

[biophase]

You can use this concept alot. Watch from 44 seconds.

My friend was competing in a space where everyone was selling 1 and 2 packs of the product. So I told him to do a 4 pack. Guess what, it worked! Sometimes the answer is easy.

 

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[biophase]

Let's assume Amazon and FBA is our sales channel.
Do you prefer to use PPC advertising, or do you prefer organic growth when starting a new store, or adding SKUs to an existing store?
If you use PPC ads, are you using Amazon's? Google AdWords? Both, or something else entirely?

I do use Amazon PPC, but it is a supplement to organic growth. The current Amazon formula that most people are using right now is:
1) Use giveaways to get reviews
2) get 25+ reviews
3) Amazon PPC to get sales and boost search rankings
4) Sell organically

I just saw this company giveaway at least 200 products because they went from zero to reviews to 70 to 150 to 220 in the span of 4 days. Now they are at 320 reviews. So they had to have given away at least $2000 in product. Personally I think it was too fast, but now they are sitting at #6, so it works.

I know some people running Google PPC direct to their Amazon listings and they say it converts well.

 

[biophase]

So after my 20 minutes of research (This post wasn't hypothetical.. I actual did the searches and then posted what I was thinking) I found that I know even less about knives then when I started.

This is a PHENOMENAL thing and I think drives home the point of why @biophase 's process is superior to just finding shit on amazon and alibaba and then importing that.. Barrier to entry. Most sellers are not going to even do the 20 minutes of research I just did.. They're going to find something that's selling on amazon, find it on alibaba, change the logo, and import/sell the exact same thing that 48 other guys are selling. With a bit of research you'll be able to stand out from the competition and sell a better product.

***But my question is***

How do you determine when you've researched enough? Do you spend weeks researching how to make the best knife? Do you buy books and spend months on knife forums to become a knife expert?

Thanks for the post. It was a great example of the process. So guess what... if you emailed a few people in China now, you can at least talk intelligently about a knife.

When you get 2 quotes back of the same looking knife and one is using metal rivets an the other is using silver plastic ones, you will actually know what they mean. Whereas before, you probably would have just glossed over that fact and picked the company that gave you a cheaper quote.

I think you will know when you have researched enough. Think about it, you are launching a business. You just did 20 minutes of research. How much research do people do before opening a restaurant, or buying real estate. How much knife knowledge would you have in 3 days?

Then go on Amazon and look at the top selling knives. Read the reviews, especially the 1-2 star reviews. The reviews should mean much more to you now. Find out why some knives are shitty and see if you can fix them. Maybe people like heavier handles? lighter handles?

Also, another thing to do is to research how each knife is used. I have a kitchen set of knives but I use whichever one is clean. I have no idea what the big knife is used for vs the skinny knife. They all cut apples fine. Once you know why something is designed the way it is, you will understand it alot better.

I'd probably keep going until I found a new to improve the knife. I don't know how or what it will be, but it has got to be possible!

 

[biophase]

Hi Biophase.
I had a question about the improvements you made.
Let's pretend you had a knife made by XXX. You say that you want to put finger indents on the handle to make it easier to hold. Doesn't this require a new mold to be made, and you would have to pay a thousand or more for the mold?

It may require a mold and yes you would have to pay for it. Let's say the mold is $2,000. If my first order is 500 pcs, it just adds $4 to each product. So my first shipment is going to have a lower profit margin by $4 per unit. That's how I look at it. Either way, you need to look at the numbers and make sure they work.

But the huge upside is that if your product sells and your new handle is a hit. It will be tough for anyone to copy you, because the mold is yours. You mold your logo into it and nobody else will use it. No knockoff is going to spend money to make a mold.

Even though the risk is higher, the EV or upside on doing this is huge. You need to think risk vs reward. Many times your risk is under $5000, but the upside can be +$10k, $25k, $100k for many many years. Much better odds than playing options or the stock market.

 

[biophase]

Hello biophase,

First of all thanks for doing this.
I would like to ask you what you think about outsourcing especially when starting out?
You said that you improve your products yourself and let your manufacturer produce it.
Do you hire a designer or do you make the drawing yourself?
Do you let someone else do the CAD animation if necessary?
Do you hire web developers and graphic designers to build your ecommerce stores (or do you use a shopsystem with template or program yourself)?
Do you take product photos yourself or do you hire professional photographers?

My situation is like this: I am just starting out and dont have that much money to invest (I invest everything I got).
I could hire a professional photographer now to make my product photos or I could invest in equipment and learn photo skills and do it myself.
Wouldnt be that expensive because tutorials/guides are free at the internet and I can borrow a high quality cam from a friend and so on.
I am just wondering what you think about that? Better to learn a skill you need for your ecommerce business or hire a professional who does it for you?

Thanks in advance.

I still do everything myself. So I draw stuff on paper, hire a fiver guy to make it look nicer. I haven't had to do any CAD animation. I build all my own ecommerce stores, I buy templates and modify them.

I take all the photos myself. Back in 2010 I knew nothing about photography. I took a few courses and now I have a full studio at the warehouse. As you can probably tell, I am a hands on person. I do all my own photo editing. The only thing I outsource are logos because I am not that creative.

I don't mind learning skills. I know people here like to outsource because time is money, but you can ask me about any aspects of my business and I know it inside and out.

Oh, the other things I outsource are payroll, taxes and importing stuff. I know nothing about customs and duties and ISFs.

 

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[MJ DeMarco]

Where do you buy from in China?

Really? You want him to name his supplier and his product? Do you want his bank account number too?

 

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[biophase]

I'm always looking for products that have <500 competitors OR new products that I can ride a wave of demand for.

This is not a good method to build a business. Yes, you can do this but you are constantly looking for products, because when the wave ends, you need new products to generate your income. I think this mindset is wrong.

My products don't have any "waves", I've been selling them since 2007. I don't need to worry about alot of things that the white label people worry about. I don't need to watch my listings daily. If you want freedom 5 years from now, you can't keep looking for the next best thing.

 

[biophase]

Biophase - do you not even bother with this research? Would you look at something like back seat organizers and just check the guys listings to see if you can make a better listing? 987 sellers is a LOT of sellers - but some of those listing on the first page are absolutely garbage and you can undoubtedly do better. My suspicions are that you wouldn't do this product for a variety of reasons - but I'm curious to know why.

You know I look at your research and I'm thinking I would do this product. First of all, I don't believe Jungle Scout's numbers. Someone sent me some research that they did. Number 8 is one of my products. I sell maybe 1-2 a month. It's got 1, 3 star review. I don't know why JS thinks I sell 28 a month. I can't even give it away at $13 now! lol


This is how I look at those products. They look pretty easy to make. They are definitely easy to modify and improve. I would take on the #1 and #2 competitor. They don't even have different colors to match my car. Why isn't there a gray, beige and black colors. Those 3 colors are the most popular interior car colors. You can do so many things to this product to make yours different and better.

You don't even know how much one of these costs to make and you are tossing the idea away? What if each one costs $2 to make? Why did you decide not to do this product?

 

[SeanyHang]

You can usually tell by the quality of the Amazon listings on the first 2 pages if a niche will be competitive or not. You can tell if the other sellers went to Amazon school.

Extremely interesting response. So does this mean that you don't mind products/niches that have a lot of sellers as long as those main sellers have listings you know you can blow away? I personally have been using Jungle Scout to do product research just to give me a general idea of the competition.

I've been trying to come up with product ideas lately that solve pain points - and thus I sit in front of my computer and just think "uhhh...COUGHING! YEA COUGHING SUCKS!" and then do an amazon search for "coughing" and see what long tail keywords/ products show up... From there I find products that look like I may be able to PL (at this point just in a "me-too", sense) after searching and drilling deep and maybe looking at seller accounts to see what products they're selling. Basically I'm trying yours and @Vigilante 's approach to finding products rather than looking at amazons top 100, movers and shakers or ebays top selling items to find goods. I'm doing this because I completely agree with you guys that the top selling products that are also cheap and light are wayyyyyyy too saturated and competitive now... I'd rather find something that not EVERYONE is after for a quick buck.

So anyway while I was doing one of my searches, I came across backseat organizers. I hadn't seen one before and I thought that they were pretty nifty! They definitely solved a pain point for parents who have to deal with their kids crap all over the place in their cars. If I wanted to go all out in true @biophase fashion I could figure out which fabrics and materials are going to be the most durable so they don't rip if the child really messes with it. I could make it not smell like shit (on one of the products there were several 1 start reviews that said the material STUNK). I could also figure out a way to make them more efficient with pocket placement and maybe secret zipper pockets. Maybe you could put a mirror on it - whatever there's tons of ways that you could modify this product to make it unique to you if you take more than the 10 seconds I just took to brainstorm random differences.

But then I typed in "backseat organizers" in amazon in the "ALL" category and found this.

Now 987 sellers is enough to scare me off. I honestly wouldn't even try messing with this product.. But then lets take a look at Jungle scout.

This search is filtered by the Sales rank.. I like that they're all pretty low relatively speaking.. And I also like how most of them dont have THAT many reviews. The two top guys have 914 reviews and 447 reviews which I don't love (especially that 914) but I think I can manage to get more than 100 reviews which might boost my rank somewhere near these guys... Still I don't like this product much becuase there are too many sellers.

Then...

I filter the next search by estimated revenue. I've heard jungle scout can be hit or miss with this - but regardless I like to use it as a tool just to give me a general idea. The main thing I don't like about this is that the two guys on top seem to be generating almost all the revenue.. 23k, 18k, and then the third is all the way down at 8k... That could mean that those top two guys are some name brand product that will be extremely hard to compete with even with a better product.

Finally.

I sort by seller. Amazon is simply a seller on too many of these products. I'm not comfortable with that. I'm officially out and looking for another product.




Now honestly.. the work that I just put in with brainstorming and jungle scout wasn't horrible at all. It took a few minutes of my time, yes - but now I know that I definitely don't want this item and believe it's competitive.

Biophase - do you not even bother with this research? Would you look at something like back seat organizers and just check the guys listings to see if you can make a better listing? 987 sellers is a LOT of sellers - but some of those listing on the first page are absolutely garbage and you can undoubtedly do better. My suspicions are that you wouldn't do this product for a variety of reasons - but I'm curious to know why.

 

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[biophase]

Kind of a random question. But when you send your products into amazon, do you ship them in a brand new box?

No, I ship them in the box they came in from China. Your box looks way better than mine. My boxes are always messed up because we push them off of the container onto the ground for unloading.

 

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[exclusives88]

I've decided i'm not going to use alibaba, i'm still confused about finding manufactures and making sure they aren't just middlemen, what are some ways to find out if you're dealing with a manufacture. Do you just type in "product name manufacture" then just go down google and list them all, then contact each one and see whats the best option? What are some countries to look for factories in besides china that could be beneficial?

@Lukebrisbane I'll help you with this one.

-In the search function, I would check accessed supplier. That will help eliminate some of the middlemen but does not eliminate ALL so you should still be careful.

-For any manufacture websites that ends with .cn, you can usually tell they are manufactures if they have an ICP number located on the bottom of the website

-Middlemen usually have high MOQ and are not negotiable. Prices are also generally higher so I would e-mail multiple suppliers.

-One way to eliminate middlemen is by asking if you can visit the factory. Usually they are manufactures if they allow you to visit but middlemen can also make this up and give you a address that is not theirs.

-Manufactures (in China) usually have addresses in Shenzhen or Guangzhou and NOT Hong Kong.

-On Alibaba, go to their profile and go to their product listings. Generally, their products will be in one niche. Usually middlemen will have products across multiple niches. For example, a manufacture would sell leather bags, leather ipad covers, leather wallets. A middle men would sell leather bags, kitchen knives, dog toys (probably extreme but you get the point)

-You can look at other countries depending on the products you are looking to source. India is pretty big on textiles, clothing. Mexico is good. What I heard is that Mexico quality is better than China but is more expensive.

I suggest you go to this thread:

https://www.thefastlaneforum.com/co...sourcing-specialist.55062/page-25#post-481336

 

[biophase]

@biophase - I bolded my questions so it's easy to read for you. I hope they have not been asked before.

Do you consistently look for new products now that you have 80 SKUS (I think based on previous pages)? or do you focus more on expanding your current product lines/brands? You have 2 threads going on with new businesses in 2014/2015.

I ask because I currently have 6 products and 3 brands in difference niches. I've been working on them for the past 3 months. I don't see myself getting into new products just yet as I am still not getting consistent sales. When do you know the products are duds?

How do you manage your time on each businesses?

Do you need an intern? (I'm only half joking)

I am always looking for new products within my current lines. The number of SKUs needs to keep growing or you will get swallowed up by your competition.

My 2 new threads from 2014/2015 are new businesses, separate from my other one. I may shut down or sell the 2014 one, as I am concetrating on the 2015 alot more.

Products are duds if you are not turning them over fast enough. You have to allocate your capital wisely.

If you have a product that costs you $10,000 and you can't turn that in 12 months, then you wasted $10k because you could have spent that on another product that may have turned that $10k over 2x in a year. I have some right now that I'm shutting down just based on math and capital.

One product is $80 cost, profits only $25. I have to buy 300 at a time. So $12000 initial investment. Profit is $7500. But it takes 1 year to sell them all.

Another product is $25 cost, profits $25. I have to buy 500 at a time. So $12500 initial investment. Profit is $12500. But they sell out in 6 months. So each year this product brings in $25000.

The second product is clearly better even thought their capital outlay is relatively the same. The first product is a GOOD product. But when you only have so much money, you need to choose the better one. If I had a ton of money, I'd do both.

 

[biophase]

1) At what point did you decide to get warehouse space?
3) Was your eCommerce store profitable before getting warehouse space? Or did money come out of your own pocket to rent the warehouse?
2) Currently does your sales for the month cover the cost of the lease? Or are there times where you don't make enough sales to cover the monthly cost?

1) I moved to a warehouse in 2011.
2 & 3) So I need to ask you first before I answer, why you would ask this question? Because the answer seems obvious to me, but I want to understand your thinking?

Why would I move to a warehouse if my store was not profittable? Why would I increase my expenses if I was still in the red. If my sales were not covering the lease of my warehouse, I should not be doing an AMA on ecommerce. My lease payment is usually covered by the 3rd day of the month.