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GOLD Do you want to do it the EASY way, or the HARD way?

Discussion in 'The Unscripted Entrepreneurial Mind' started by biophase, Dec 26, 2015.

  1. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    So you've decided to jump on the Amazon bandwagon and import a product and list on Amazon.

    Do you want to do it the easy then hard way or the hard then easy way? I see most people on here and the thousands of Amazon class lemmings choosing the easy/hard way. I don't discount that this way works but it is way tougher. For those of you just jumping in after reading and taking an Amazon class here is what you can expect.

    Here's the Easy/Hard Way

    Let's say you have $5000 to spend and you choose a AMZ perfect product like a pork shredder. Below is exactly what happened to me when I ventured into an AMZ perfect product. Now before I go into this, I went into this fully understand what I had to do and what it would be like. I also have relatively deep pockets so I can outspend my competition. But the reality for me is that this is one of 80 products and I did not want to devote the time needed to succeed on this product. I will call this product AAA for the rest of this post. AMZ sellers refers to people who have taken an Amazon class.

    March 2015 - I decide to import AAA after some research. There were about 15 popular models on Amazon and 3 dominant AMZ sellers. The product sells for $20, cost in China is $3. Total cost landed by air is $6.

    April 2015 - After going through the sample phase I chose a supplier and ordered 800 units.

    June 2015 - Before my product even got to Amazon in July, there were at least 10 more AMZ sellers who have decided to do this product. The top seller, we will call SellerA in March was pushed off the front page and is now on page 2 with 800+ reviews.

    One particular seller had deep pockets. We'll call them SellerX. They jumped onto the scene averaging 75 reviews a day! From 0 to 700 reviews in 2 weeks. This moved them to middle of page 1.

    I felt sorry for the other 9 AMZ sellers that were barely showing up with only 20-30 reviews. I could tell that they could not afford to give away 700 units. They probably planned to giveaway only 20-50 units.

    July 2015 - My first units hit Amazon. Priced at $19.99, profit per unit was $8.33. I did a giveaway of 25 units and moved from page 17 to page 6. I then lowered my price from $19.99 to $10.99 which was a $3 loss per unit sold. This moved me to page 1 briefly. I lost $250 in this month.

    August 2015 - 5 more AMZsellers hit the market. They all did giveaways of course! I drop down to page 3, then 4, then 10. I still made $400 in this month.

    September 2015 - I don't recognize anyone on the first page of Amazon for this product. SellerX is holding at #1. The rest of the sellers are all new AMZ players. I still made $250 this month.

    October 2015 - I don't even bother to check this anymore. Oh SellerA, he was #1 all of 2014, middle of page 2. I made $32 this month, basically sold 4 units.

    November 2015 - More sellers still coming into the market. I drop my prices a little more. I made $50 this month. Profit margins are now $5 per unit.

    December 2015 - Still more sellers coming into the niche. I estimate that since March 2015, 50+ new AMZsellers are in this one niche. I made $150 this month.

    Many of the AMZsellers are doing monthly giveaways now. They need to keep giving away units to keep their sales count high to keep ranking. As more sellers come into your niche, they will be discounting, giving away their product. So if you want to stay on page 1 or 2, you need to do the same. Don't think that you can giveaway 25 and rank. If you are starting out with limited funds, you will get bled to death.

    Some interesting notes:
    To write this post I had to find my product through search. As i went through the results I saw:
    • Guys who were on the front page in March 2015 are now on page 3-5
    • I am on page 6, grid style. Not bad.
    • I found that 2 reviews got deleted. I used to have 31, now I have 29 only.
    • Front page product averaging 500+ reviews
    Remember, just 9 months ago it was not like this. If this is the business you want, go for it!

    So now what?

    Now, I look at this market I can know I can compete. Here is why. First, my product is on page 6 and I'm still selling 1 a day with no PPC. Why? Because there is some value add. If you put my product on page 1 with most of the others, it will be the best value. Second, I have the funds to keep this product going at break even just to sustain it.

    I can place another order for 3000 units. I can do a planned giveaway, 150 units a month for the next 6 months. That's 900 units. Total cost to me would be $6 for the product, $3 for the giveaway, or $8100 total.

    Assuming this keeps me close to the top of page 1, I would sell the other 2100 at $8 profit to make $16800. So the profit from this would be $8700.

    In this market I would have to keep my volume up. So that means monthly giveaways. My competition SellerX would likely see me doing this and also do their own giveaways.

    The rest of the AMZsellers who are trying to make a living will slowly fade and give up. They just won't be able to outspend the deeper pockets.

    But I'm not going this route. This market is not worth my time. In the next few months I will be at least 10 more AMZsellers per month come into it.

    You don't want this to be your money maker. Just ask SellerA. They were rolling last year with no competition and then it just got flooded and will continue to be flooded as this product checks ALL the boxes on the AMZ seller checklist.

    Here's the Hard/Easy Way

    Last year I was selling this product made by another manufacturer that we packaged in our warehouse on Amazon. My cost was $6 and I sold on Amazon for $13. Measly $2.00 profit. Most people would avoid this like the plague. How do you live on a product like this?

    Well for me, it was more of a brand recognition product. Sold cheap, no profit but got our name out. It also got annoying that we had to print labels and pack this thing. So we looked at China. They would make it for the same price basically. Cost of $6 landed into our warehouse. But the difference was that it was all packaged and ready to go. So basically for the relief of not having to package the product, we decided to import this over from China. In doing so, I was able to make a few changes so it was not the exact same product as before.

    (I am glossing over the back and forth sample creation, changes in product, etc... All the hard stuff that it takes to make or improve a product)

    First order from China was 1000 units. Hits Amazon. I drop the price to $9.99. Basically a loss of $1. Within 1 month it climbs to #1. Then we start selling a bunch. I raise the price back to $13. We average about 250 units a month. So we are making $500/mo.

    Second order from China was 3000 units. We had a huge price drop as we found a better factory. Now our cost is $2.50 per unit. Bam, profit is now $5.50 per unit. Now we are selling 400 units a month. So we are making $2200/mo.

    This little product is now making us $2000/mo. fairly consistently. No PPC, no giveaways, no competition. It's sitting at #2-#3 right now, priced at $13.69. One tiny product, $24k a year!

    Which way is better?

    Well I hope you can see the difference in work. With the second product, you do all the hardwork upfront and then let it sell. With the first product, you do the easy stuff up front and then spend the rest of your time trying to sell it.

    I much rather do the hard work first.

    As for the first product. I think I'm just going to let it sell out and die a slow death on Amazon. I'd rather put my energy into other things.
     
    Last edited: Dec 27, 2015
    StayPositive, astr0, Midas and 205 others like this.
  2. Kingsta
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    Great read and wonderful insight.

    "Smart people learn from their own mistakes. However, wise people learn from other people's mistakes."
     
  3. YMCMB
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    Amazing info here. Thank you.
     
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  4. Omni
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    Omni Bronze Contributor Speedway Pass Summit Attendee

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    Wow, beautiful post @biophase! Thanks for sharing your case studies!
     
  5. BlakeIC
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    BlakeIC Silver Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    I am glad there is someone who realizes that AZ is being flooded with new sellers on items as you described

    Not like it matters for me though, i am already blacklisted on amazon in terms of being a seller and buyer
     
  6. Andy Black
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    Andy Black Any colour, as long as it's red. Staff Member Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    @biophase

    Thank you for taking the time out of running your business (and over a holiday period) to write up your insights and advice for the rest of the forum.

    This is gold. Too many people want to follow the well-trodden path with the clear map and step-by-step instructions laid out for them. They don't realise that finding and solving their own problems is where they build their business and lead.

    Related video:

    (I hope you don't mind, but I changed the thread title to make it non Amazon specific. This should be required reading for those who don't use Amazon too.)
     
  7. Imgal
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    Imgal Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    I love this and I love how transferable it is to so many different industries as well. Take the affiliate marketing world for example. I see so many people get caught up in the excitement of finding an amazing keyword with no competition. They throw a 5 page site with little content on, but they're the only one pushing this thing so they make some great returns.... then someone else stumbles over it and they throw a few more links and social signals at it. They start taking the top spot and the big money... so the first has to push harder. Now they're buying paid ads and just breaking even.... then more enter the market and everyone is struggling to retain position, let alone reach the point of break-even.

    And then there's the other way to do it. The way where you're not trying to be the one who ranks for the product name. Your focus is on creating something that people are actually going to want to click on, not click off as fast as you possibly can.... so you spend time reading forums, social media sites and reviews of products in your niche to see what is the actual problem, what is it that people are struggling with. What answers do they need... and then you build a site around solving a problem and not in 5 spun sentences, but in numerous articles that explain things in depth. You go out and find the sites producing the great content and you spend time curating it. You reach out, you build relationships with others. It's a hell of a lot harder upfront than that spun article or two, but the email list you'll build, the free promotion you get as people share your articles and throw powerful links at you that you'd never get with your spammy site... well I'd take that option any day.
     
  8. juan917
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    juan917 Silver Contributor Read Millionaire Fastlane Speedway Pass

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    Care to share your story as to why?
     
  9. csalvato
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    csalvato Platinum Contributor Read Millionaire Fastlane Speedway Pass Summit Attendee

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    Awesome post just to see the different perspective you have as a successful importer/amazon seller compared to my neophyte perspective. Learned a TON with such a short post.

    One question, just to clarify, because I want to make sure I am looking at the lesson the right way...

    Is the "easy/hard" way you are referring to to find an item with a super huge margin and then running all the giveaway tricks to dominate the market?

    If so, does that mean the "hard/easy" way is to find a niche few people will want to touch because the margins are lower...then once you get recognition and hit economies of scale, you start to see bigger profits?

    Thanks @biophase for the post, even if you don't get around to answering.
     
  10. eliquid
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    eliquid Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    u da man



    [​IMG]
     
  11. Madhu
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    Madhu Contributor Speedway Pass

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    Awesome post. I think the 'easy' niches advocated by courses are bubbles. There's too many people jumping into them. A lot of them have too much hope and not enough business sense and so will happily sell their product at a loss until they die and give up. But it doesn't seem there's any shortage of people.

    This is interesting, as I always assumed that Amazon customers wouldn't buy on brand recognition? I can see them buy a big name brand, but I thought a new brand would be too small to have impact. Nice to see that I am wrong.
    Now that you've made and improved a product (rather than using an existing one without improvements) is there any danger that another company could contact your manufacturer and profit of your hard work?
     
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  12. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    The easy way is to find something on the AMZ checklist, slap a brand name on it and toss it into a slew of Amazon competition. Then follow their step by step guide with giveaways, discounts, reviews, etc... It's easy to following their process. But be prepared to fight for your sales every step of the way.

    The hard way is to tackle a tougher product. One that AMZsellers would absolutely avoid mainly because they are lazy, not underfunded. Pick a product that other people would say no way too. It's harder to get it started, but you are almost guaranteed no competition in the future. It doesn't mean lower margins. My example just happen to have low margins.

    I'll give you another example that I'm working on right now. There is a product that 3 sellers currently sell. I ordered this product from 3 of the sellers and as I suspected they were all exactly the same product. All of them had the same issues and problems.

    I contacted a bunch of factories. Many of them made this exact same product. MOQ of 100, $6/pc. So right here I have a decision to make. Do I go the easy way or hard way?

    Easy Way

    I could be seller #4 on this product. Super easy, I could just spend $600 and these units are headed my way. I can be selling this on Amazon 2 weeks from today. Problem is that I have the exact same product as everyone else. I could outrank these guys with AMZ strategies, but I know that I'm selling the same thing.

    Hard Way

    If I wanted to modify this product. The MOQ becomes 1000 units, $6/pc and tooling costs of $1600. It will take me probably 2 months to get this product going and I'll need to spend $7200 up front. But when my product hits Amazon, it will look different and be much improved over the 3 sellers currently selling. My product will rise to the top organically, no giveaways needed. It will also stay there. In 2 months, I'll rock their AMZ world. They'll probably contact their supplier and ask if they can get this "improved" version. Of course, they would not be able to (unless my factory backstabs me) without the 1000 MOQ and tooling costs.

    * side note: My product will have name brand name built into the new mold. So if the factory screws me, the other seller's product will have my brand name on it. I'd have a much easier time filing a claim against them.

    * side note: You never want to improve a product without adding your brand into it. Else you may have just paid the tooling and R&D for every other AMZseller.

    Do you think the other 3 sellers will go spend $7200 to compete with me? I doubt it. They will just carry on spending $600 per 100 pcs. They won't even try to compete because they aren't willing or don't have the funds to improve the product.
     
  13. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    For brand recognition, I feel like it's better for your brand to sell more products and look like a legitimate company than to have a few products. So if someone is looking to buy protein powder from me. They may click on my brand name to see what else I sell. If I only sell that one tub of Protein Powder, I feel it makes them wonder about the size of my company. But if I have 10 other bodybuilding supplements, I think it would make them feel better about purchasing the protein powder.

    The second question, I just answered in my post above.
     
  14. Madhu
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    Madhu Contributor Speedway Pass

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    Thanks, really eye opening advice.
     
  15. BlakeIC
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    BlakeIC Silver Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Seller Account: Twin brother (unknowningly to me) got suspended from AZ like 7 years ago. I signed up for AZ and got suspended I guess because I had the same last name and address, support was brain dead and wasn't of any help. To make matters worse I was also scammed buy my 2nd buyer for $100

    Buyer Account:
    I have no idea why for this one, received a notice a couple weeks ago stating my buyer account is now permanently suspended because it was linked to an already suspended BUYER account. Never had any buyer account suspended neither my twin
     
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  16. csalvato
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    csalvato Platinum Contributor Read Millionaire Fastlane Speedway Pass Summit Attendee

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    Thank you for the insights and thoughtful advice in your reply.
     
  17. Tony I
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    Tony I Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

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    this is such GOLD advice.

    "the person that is willing to delay gratification and think long term always wins." In your case, your delaying the easy profits in favor for a much bigger payoff down the road. and you're adding unique value while they are money chasing.

    I hate when people say a market is "saturated." Sure, if you're going to do the same exact thing as every other seller then yes, the market is saturated. But if your product has unique value, you never really have to worry about saturation.

    thanks for the insight @biophase
     
  18. Valor
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    I think this applies to much more than just Amazon. Amazon is more or less just a small microcosm of the marketplace as a whole.

    This is why I don't worry a ton about Amazon becoming flooded with sellers. The only people who have to worry about this are the people who are trying to scam the system (the "easy" way).

    A truly great product (the "hard" way) can win in any marketplace, regardless of whether or not it is flooded with other buyers.
     
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  19. stepstone
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    Super valuable story and advise.
    Do you mind to clarify a little more on "adding your brand into it"? I mean how exactly would you set a barrier for competitors to get your improved design without investing a lot? Thanks
     
  20. TeflonDon
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    Pretty sure bio means have them print your brand name/design into the mold, so if the factory does supply your competitors, the products are gonna have your brand on them, making it obvious. If the brand isn't part of the mold itself, the factory can sell plain unbranded ones which hurts you a lot more, as you paid for the mold itself.
     
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    Quick question Biophase - Improving on the product is one way to go. What about going for a bigger, bulkier product - that you will have to sea ship. I have usually found that sea shipping is usually a good barrier to entry. I have already done it two times now - so I know the steps involved. I am thinking that sea shipping should help me differentiate this for a while.

    BTW - The way I think about this is that I am using the current Amazon fad to build my war-chest that I can use to create my actual business :)
     
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    On more question @biophase - As for your product AAA, why would you not sell it at-cost, recoup the money and invest in something innovative? This is another of my strategies. A fad product is fine - as long as you ensure that you can get out at-cost. Here is how the math works:

    You find a AMZ perfect product with not much competition.

    You buy product for, lets say, $10,000
    You profit about $6000 after giveaways. You got $16,000 in the bank

    Now you buy product again form $10,000
    You profit another $6000. You got $22,000 in the bank.

    You enthusiastically buy product for another $15,000 thinking you are gonna bank even more.
    Competition hits. Prices are driven down. You see that the herd has caught on to this product and the sheep are coming your way. But, you know that you can ALWAYS sell out your stock at-cost (because of the obvious price advantage).

    So you sell out at a slight loss or at cost. Lets say you make back #13,000. So in total you now have #25,000 in your bank account (you started with #10,000). If you can find a product with enough sales velocity to achieve all of this within 6 months, you are effectively multiplying you money 2.5 times in 6 months.

    Now you try to find another product that you can repeat this with. And, also, in-case you want to make innovations/improvements to the same products and enter the field, that is also possible!

    Ttis is the strategy I am following right now. And don't get me wrong - this will not be a lasting business. It is a form of hustle until I have a big enough warchest to create an actual sustainable business.
     
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    This is how I've been looking at it as well. Get in before there is too much competition, profit, then sell at cost once it gets too flooded (if need be)

    Curious to see Bio's answer.
     
  24. TaylorB
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    After you buy 15K of product with your 22K and sell it for 13K you're left with 20K not 25K... :)
     
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    Hey Bio! Another great thread.

    Quick question: I am currently working with a manufacturer on making variations to an existing product as well and am thinking of ways to make sure my product is able to be bought/sold by other buyers. With that said, my item is made of wood, so there are no molds to have my brand name in.

    My modifications are pretty simple, but they solve 90% of the complaints most people have about the other 10-20 sellers.

    What would you do to protect your item in this situation? I can PM you my item/modifications if it would help give more clarity.