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GOLD! Ask me anything about eCommerce (Ongoing)

Michael Bowers

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I’d lower your ppc cost per click to where you can break even. Will you still be seen at that price?
PPC is very confusing because Im constantly lowering and raising and then lowering the bid. I cant seem to find that sweet spot. My Acos progressively increases as time goes on regardless. The short answer is that I will lose money regardless. The Acos has to be around 15-20% but the reality its around 55-75%. At this point I want to sell the units at a wholesale price just to get some money back but dont know where to try and sell them.
 

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biophase

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A question for those who run their own e-commerce store or sell on eBay and manage their stock at home, rather than stocking with Amazon.

What's the best way for dropping off multiple parcels in one go? I'm in the UK, but pretty sure it works more or less the same in Europe or the US. Let me explain the process.

So when my item sells on eBay, I can use eBay's delivery service (called Shutl), which gives me an option to choose from one of multiple well-known shipping companies and get a small discount as well, since it's all done through eBay.

You choose the parcel weight/size, the shipping company, it shows the cost, you print the label, attach it to the parcel and it's ready to go. The tracking number gets automatically attached to the transaction too, so the buyer can see when you've dispatched the parcel and can track it while it's in transit.

I'm not at home during the day for the shipping company to collect my parcels, so I choose to drop them off myself at a nearest local shop that has a partnership with that particular shipping company. Once I arrive, I take everything to the shop, they simply scan the labels and give me a receipt as a confirmation that they have my parcels or depending on the shipping company, you can also get a text message on your phone or email. Then the shipping company collects my parcels from that shop and that's about it.

It all seems to be working well at the moment, because I'm only sending a few parcels per day, but I'm already starting to get funny looks from the shop owners, as it feels like this method of posting is more suitable for casual senders, rather than business sellers who send xx parcels every day.

I'm not 100% sure, but I think some shops get a small commission per parcel for offering to hold the parcels for the shipping company, however some do it for free just to get more customers into the shop...Well, that's the idea behind holding parcels anyway.

So I can't really imagine myself walking into a shop with 50 parcels every day and scanning them one by one, while there's a queue building up behind me....Granted, I drop them off early in the morning (7 am) before I get to work, when the shops are not busy, but you get my point, right?

Am I doing anything wrong? Any suggestions?

Appreciate your help guys.

Thank you
I was dropping off 30-40 boxes a day at my local Post Net. They got $.75 per box so they didn't mind at all. You shouldn't wait in line to drop off your boxes. Talk to the employee or owner and have them let you drop off all boxes in the back or something and then let them scan them all when they have time.
 
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biophase

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PPC is very confusing because Im constantly lowering and raising and then lowering the bid. I cant seem to find that sweet spot. My Acos progressively increases as time goes on regardless. The short answer is that I will lose money regardless. The Acos has to be around 15-20% but the reality its around 55-75%. At this point I want to sell the units at a wholesale price just to get some money back but dont know where to try and sell them.
If ACOS needs to be 15-20% then you definitely bought the wrong product to start. Maybe try to sell them in bulk on Ebay? or to a Amazon competitor who is ranking well?
 

Michael Bowers

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If ACOS needs to be 15-20% then you definitely bought the wrong product to start. Maybe try to sell them in bulk on Ebay? or to a Amazon competitor who is ranking well?
Ya, I was thinking about selling it to a competitor. Its my first amazon product and unfortunately I underestimated the cost of advertising. Lesson learned. Thanks for the help. Much appreciated
 

Blackman

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I was dropping off 30-40 boxes a day at my local Post Net. They got $.75 per box so they didn't mind at all. You shouldn't wait in line to drop off your boxes. Talk to the employee or owner and have them let you drop off all boxes in the back or something and then let them scan them all when they have time.
I would have to look into this more thoroughly and find out if the shops are actually making anything out of this or like I said, it's there just to get extra customers in with no benefit per parcel.

As for leaving parcels for them to scan later on, I tried this with just 1 parcel in a local shop and didn't have the best experience...The courier with that particular parcel was UPS and it takes less than a minute to get a notification of receipt when you drop off a parcel.

However, in this case, I dropped off the parcel at 9am and had to come back to the same shop at 12pm to find out if it was scanned or not....Of course, it wasn't and the guy had to do it in front of me before I left.

Yes I know, it was just a one off with one shop, but unless I get to know to the owners of the shops, I wouldn't feel comfortable leaving parcels without getting a drop-off receipt, as otherwise you have no proof to trace them.
 

LittleJohn

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To be honest, I think that small time newbies will get crushed nowadays in any market unless you picked one that has such low traffic that there are a few competitors.
In the state of the Amazon Marketplace Opinion thread you said, "I feel that the strategy for launching has changed and now requires a more complex approach."

You were saying that the days of the one product launch are gone and basically you must build the brand out from the beginning.

Is your above quote in this thread referring again to one product launches that would get crushed? Hopefully this makes sense can you clarify your position for me please?

thank you.
 
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biophase

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In the state of the Amazon Marketplace Opinion thread you said, "I feel that the strategy for launching has changed and now requires a more complex approach."

You were saying that the days of the one product launch are gone and basically you must build the brand out from the beginning.

Is your above quote in this thread referring again to one product launches that would get crushed? Hopefully this makes sense can you clarify your position for me please?

thank you.
Yes, because people with smaller budgets that can launch one product and not afford PPC or to breakeven would be crushed by those who can.

An example I see is one niche that I'm in where my product is $100, and others are now selling for $25. I know what my cost is so I know that the $25 people (multiple sellers) are losing money per sale.

But I think that they are positioning themselves for the long term to rank high and have alot of reviews on Amazon. If these companies have multi million dollar investments, you bet that they can lose $5-$10 per sale for a year or two.

For example they sell 100 units a day, lose $1000 a day, in a year they've lose $365,000. But in year 2, they decide to raise the price to $80 and make $30 a sale. Then they make $1,100,000 in year 2. So they net +$720k in two years.

This is a long term strategy. Could you compete against them?
 
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biophase

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Ya, I was thinking about selling it to a competitor. Its my first amazon product and unfortunately I underestimated the cost of advertising. Lesson learned. Thanks for the help. Much appreciated
I don't think you learned here. You did not underestimate the cost of advertising. You picked a product with shitty margins. Do you see that?

Your said your ACOS margins were 15-20%. This means that if you spent $15 on PPC, you needed to sell $100 in product which means that you made only $15 on a $100 sale. If I extrapolate that to a $17 product. You were making $4.25 on a $17 product.

Assuming that Amazon took it's 15% plus about $4 in fulfillment, you received $10.45 for every $17 sale. If you made $4.25 per sale, your product cost landed at Amazon was $6.20.

A $6.20 product selling for $17 is not good. That is not even 3X! You really need to be around 5-6X. If I sell a $17 product, my landed cost would need to be $3.
 

LittleJohn

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Yes, because people with smaller budgets that can launch one product and not afford PPC or to breakeven would be crushed by those who can.

An example I see is one niche that I'm in where my product is $100, and others are now selling for $25. I know what my cost is so I know that the $25 people (multiple sellers) are losing money per sale.

But I think that they are positioning themselves for the long term to rank high and have alot of reviews on Amazon. If these companies have multi million dollar investments, you bet that they can lose $5-$10 per sale for a year or two.

For example they sell 100 units a day, lose $1000 a day, in a year they've lose $365,000. But in year 2, they decide to raise the price to $80 and make $30 a sale. Then they make $1,100,000 in year 2. So they net +$720k in two years.

This is a long term strategy. Could you compete against them?
Thanks for going deeper and clarifying that for me man I appreciate that. And, no of course can't compete with that scenario. Good stuff thank you.
 
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LittleJohn

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I don't think you learned here. You did not underestimate the cost of advertising. You picked a product with shitty margins. Do you see that?

Your said your ACOS margins were 15-20%. This means that if you spent $15 on PPC, you needed to sell $100 in product which means that you made only $15 on a $100 sale. If I extrapolate that to a $17 product. You were making $4.25 on a $17 product.

Assuming that Amazon took it's 15% plus about $4 in fulfillment, you received $10.45 for every $17 sale. If you made $4.25 per sale, your product cost landed at Amazon was $6.20.

A $6.20 product selling for $17 is not good. That is not even 3X! You really need to be around 5-6X. If I sell a $17 product, my landed cost would need to be $3.
Looks like a good breakdown and the fact that I'm still trying too wrap my head (fully) around this shows Im not the brightest bulb in the room (being funny I believe in my faculties - but seriously) also that I need to search/study ACOS and how you arrived at everything.
 

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A $6.20 product selling for $17 is not good. That is not even 3X! You really need to be around 5-6X. If I sell a $17 product, my landed cost would need to be $3.
So, you're saying that for a product / company to be making any profits, it needs to be selling at 5x or more its cost of production? Tbh, this is really high and I'm not sure it's the norm (in eCommerce in general, not just Amazon marketplace).

Also, what are your thoughts on lead magnets with regards to eCommerce? Have you used them before?
Lead magnets as in coupons/discounts, informative blog content related to the product and other incentives. A lot of articles about how to use lead magnets tend to be more for people selling eBooks or SaaS.
(*the big con with using coupons as lead magnets is that it trains customers to only buy when there is one)
 

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biophase

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So, you're saying that for a product / company to be making any profits, it needs to be selling at 5x or more its cost of production? Tbh, this is really high and I'm not sure it's the norm (in eCommerce in general, not just Amazon marketplace).
When your price point is that low, under $25, you need at least 5x. With products that are between $30-$100 you can get away with 3x.

In general most Amazon products look like this 33% COGS, 33% profit margin, 33% Amazon fees. So you could get away with a $5 product selling at $15, making $5. But once you put PPC into the mix it will drag your 33% of the profit down. An ACOS of 33% and you breakeven.

What would be better is selling at $15, COGS $3, Amazon fees at $5, profit is $7. Now your breakeven ACOS is around 45% which is way more doable on a competitive product.
 

David 964

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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!
Hello Biophase,

I am in service business and I don't know much about e-commerce, actually I don't know nothing except it's a online store. However I would like to learn about it. But I have no clue where to start. Is there any book or youtube chanel you would suggest? Perhaps thread which explain e-commerce for beginners?

Maybe you are familiar with some of titles bellow:
I would really appreciate your input / pointing in right direction.
Thanks.
 

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Not sure if this is the best place to post this question, but here it goes.
Does anyone have any experience trying to work around patents? I have an idea that I know there is a need for. The problem is, there are two companies that are selling this product and there is a patent on the product. Their products accomplish the same thing, but they are slightly different. They are doing an absolute terrible job though. Their websites are terrible. Only one of them has it on amazon and it has zero reviews. So, I know it can be done much better. Is it worth hiring an attorney to do patent research to tell me what improvements I could legally make to the product?
@biophase @Walter Hay @JasonR @Vigilante
 

Walter Hay

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Not sure if this is the best place to post this question, but here it goes.
Does anyone have any experience trying to work around patents? I have an idea that I know there is a need for. The problem is, there are two companies that are selling this product and there is a patent on the product. Their products accomplish the same thing, but they are slightly different. They are doing an absolute terrible job though. Their websites are terrible. Only one of them has it on amazon and it has zero reviews. So, I know it can be done much better. Is it worth hiring an attorney to do patent research to tell me what improvements I could legally make to the product?
@biophase @Walter Hay @JasonR @Vigilante
I would never try to bypass a patent without professional legal advice. Patent law is very complex and failing to understand just one word in a patent lodgement could be disastrous.

Many people gamble on the patent proprietor being unwilling or financially unable to sue, but if someone sued you for millions, claiming loss of profits, would you survive?

Walter
 

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I would never try to bypass a patent without professional legal advice. Patent law is very complex and failing to understand just one word in a patent lodgement could be disastrous.

Many people gamble on the patent proprietor being unwilling or financially unable to sue, but if someone sued you for millions, claiming loss of profits, would you survive?

Walter
Do it from China. The Chinese don't recognise patents.
 

Sanj Modha

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But then selling in the US could get him in trouble right?
Not if the company is registered in China. I know factories who do it and they don't give a F*ck about it either.

I know guys who swipe the best performing Kickstarter campaigns, build and sell the product before the Kickstarter's ended. They sell millions of units too.
 

Sanj Modha

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Not if the company is registered in China. I know factories who do it and they don't give a F*ck about it either.

I know guys who swipe the best performing Kickstarter campaigns, build and sell the product before the Kickstarter's ended. They sell millions of units too.
Any US lawsuit would have to go through Chinese courts. Good luck with that.
 

Tanu1234

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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!
How many reviews are required to kick start sell on amazon?

What is effect of review on sales?


Sent from my iPhone using Tapatalk
 

tmb22

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I would never try to bypass a patent without professional legal advice. Patent law is very complex and failing to understand just one word in a patent lodgement could be disastrous.

Many people gamble on the patent proprietor being unwilling or financially unable to sue, but if someone sued you for millions, claiming loss of profits, would you survive?

Walter
Thanks for the reply Walter. I'm not a billionaire yet, so no I would not survive. I'm speaking with an attorney next week. If there's no way around it, I am going to try and buy the company out somehow
 

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tmb22

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Not if the company is registered in China. I know factories who do it and they don't give a F*ck about it either.

I know guys who swipe the best performing Kickstarter campaigns, build and sell the product before the Kickstarter's ended. They sell millions of units too.
that's too shady for me
 

Walter Hay

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But then selling in the US could get him in trouble right?
that's too shady for me
Apart from the ethics, reliance on the extreme difficulty of pursuing any case in Chinese courts does give IP thieves some protection, but that is not the whole story.

The legitimate IP owner will easily succeed in having the copyist's sites and other listings taken down. This overnight destroys their illegitimate business.

The IP owner will often sue the thief for damages, with the result likely to be bankruptcy.

Law enforcement authorities get involved if the offense is deemed serious, and heavy fines and sometimes prison time result.

These things happen quite often, but get relatively little press, because there is so much more exciting stuff with which to entertain the public.

Walter
 

Ernie McCracken

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How do you feel about launching a brand into Amazon? To clarify, I developed my own unique product, invested in totally custom tooling, and am building an ecom presence from scratch. No alibaba sourced stuff.

I'm afraid if I put up products on Amazon, I'll get hammered by fake reviews and other black hat tactics that will kill my brand before I ever get off the ground. So many horror stories out there about the amazon snake pit. Any thoughts?
 

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Hey @biophase ,

Can’t thank you enough for the massive amount of value you brought to this thread over the years. I just read through the whole thing and I’m left with 2 questions.

1. How did you validate your niche once you first startet your brand?. Did you check for more products with potential for improvement right after you decided on your first product in a specific niche? Or did you first make sure that there will be enough products to improve on before you even got involved in the niche?

Not sure if this one was answered:

2. How do you deal with the upcoming force sending to FBA directly from China? I see more and more of these folks all over the place selling direct every month. Can you still compete through differentiation or don’t they just copy your product improvements in no time so they regain their advantage to offer at a better price?
 
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biophase

biophase

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Hey @biophase ,

Can’t thank you enough for the massive amount of value you brought to this thread over the years. I just read through the whole thing and I’m left with 2 questions.

1. How did you validate your niche once you first started your brand?. Did you check for more products with potential for improvement right after you decided on your first product in a specific niche? Or did you first make sure that there will be enough products to improve on before you even got involved in the niche?

Not sure if this one was answered:

2. How do you deal with the upcoming force sending to FBA directly from China? I see more and more of these folks all over the place selling direct every month. Can you still compete through differentiation or don’t they just copy your product improvements in no time so they regain their advantage to offer at a better price?
1) I usually have an idea of how I would expand before I do the first product. So if I were doing a stapler, I'd think about how my brand would look. So I'd probably think, stapler, tape dispenser, pencil holder and then maybe some desk organizers.

2) I don't pay any attention to them at all. You will have to figure out a way to do something that a China competitor won't do or can't copy. Or just do it better than them. They can't communicate as well as you. They don't know what they are making or know the intricacies of how the product is used.
 

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2. How do you deal with the upcoming force sending to FBA directly from China? I see more and more of these folks all over the place selling direct every month. Can you still compete through differentiation or don’t they just copy your product improvements in no time so they regain their advantage to offer at a better price?
Look at basically any smaller Chinese brand on Amazon (not talking about Huawei or something). "Branding" is something they never heard about: the name of their brand is made up and doesn't make any sense (to name a few that I just searched: Nowyeh, Yescom, Wondruz, Loveuing, this list goes on), the language they use in their listings is often so terribly bad (might have used online translators), and their photos are a joke more than often.

Some people look through this and buy it, but for most westerners, it looks so unprofessional on the first sight. Chinese marketing is so much different than ours, and that's how we still can make a difference. Although it will probably not stay that way.
 

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@biophase I can’t thank you enough for the amount of info and insights you’ve given throughout this epic thread.

I would like to know your opinion regarding a product I’ve been thinking of selling. And that is Books. Physical books to begin with.

From what I could research books are and will remain to be in demand throughout the world, you can store them for an indefinite period of time if you need to, meaning you don’t have to worry about selling them before certain period of time. I’d say books are kind of a “safe” product. But I could be entirely wrong.

I wouldn’t manufacture anything, but buy them from wholesalers in my country or other countries.

Provided that I have USPs that outweigh those of big bookstores, do you see this as a viable option?
I will be selling exclusively through my own website.

I would love to hear your thoughts. Cheers.
 

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