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

[biophase]

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.

 

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[biophase]

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?

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.

 

[biophase]

So yesterday I finally shipped 1000 units of this product to Amazon. I made this post on Dec 26 2015, it is Sep 1 2016 and I FINALLY got this product delivered and on its way to FBA. This is an example of how long it can take to make your own product vs. a slapping a logo on off the shelf product.

Just checked the competitor and a few more have arrived since then. So now I have 7 competitors to deal with, but my product is different. I don't even worry about them. My product is not really competing against 7 competitors, its competing against 1 (because all the other 7 are the same).

I guess this will be a good case study on my method. I'm throwing it up against these guys with no launch or reviews. Will check back in a month.

Ok so it's now one month later and I got some data on this new product.

Right now I am sitting at #6 for its 2 word keyword. Here are the stats for the top 5.

Price - # of reviews - stars
$14.38 - 78 - 4
$12.99 - 32 - 4
$19.99 - 61 - 4.5 (AMZ student)
$21.99 - 101 - 4.5 (AMZ student)
$20.99 - 11 - 4.5
$16.99 - 3 - 5 <-- ME

Here are excerpts from my 3 only reviews:
In any case, they performed absolutely perfectly. The length helped us... And I'll be happy to have them for... etc if needs be with their extra application capabilities.

Nice and light. Comfortable. Find a smaller one if you are under 5'9.

Solid quality and value, and plenty big despite my much larger than average height

Interestingly, all 3 reviews commented about its length. This was one of my modifications to this product. Many people complained that it was too short. So I made mine 4 inches longer and I specifically put that in the description and bullet points.

The length was also a huge pain point in going back and forth, if you read a few posts above I talk about how my supplier couldn't get the length just right.

So as you can see, my slight modifications have solved an issue for taller people that they cannot get from the top 5 sellers.

I've sold 53 at an average price of $15 (26 in the last week). My cost is $10. So I have broken even with this product in my first month. But, I averaged 1.76 sold per day. But in the past week, I'm selling 4/day, so it's accelerating, most likely due to my ranking now.

I have raised my price to $18.99 now, so I will make $2 per unit this month. My ultimate goal is to get it up to $24.99, and a $7.50 profit per unit. But that may be a stretch since others are dropping prices a little.

So to summarize, ranking at #6, averaging 4/day in the last week, minimal profit, no PPC, 3 reviews.

Product is performing exactly as expected. Product will probably be a $500/mo profit product. Just another cog in the wheel.

 

[biophase]

T
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.

So yesterday I finally shipped 1000 units of this product to Amazon. I made this post on Dec 26 2015, it is Sep 1 2016 and I FINALLY got this product delivered and on its way to FBA. This is an example of how long it can take to make your own product vs. a slapping a logo on off the shelf product.

Just checked the competitor and a few more have arrived since then. So now I have 7 competitors to deal with, but my product is different. I don't even worry about them. My product is not really competing against 7 competitors, its competing against 1 (because all the other 7 are the same).

I guess this will be a good case study on my method. I'm throwing it up against these guys with no launch or reviews. Will check back in a month.

 

[Imgal]

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.

 

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[biophase]

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?

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.

 

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[Tony I]

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.

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

 

[biophase]

Amazon is getting into the freight forwarding business to cut out the middle men and supply manufacturers with a route directly to FBA. It's going to be easy enough to get onto Amazon, better not make it easier for them to understand your sales volume.

Your factories are not stupid. They will google your brand and see where you are selling and for how much.

If they only see it on Amazon and they are shipping you 20,000 units a year, you bet they know how much you are selling and I'm sure they are thinking about competing.

However, if they ship you 20,000 units a year and see your product on 10-15 different websites AND also on Amazon, they may not know where you are doing your volume. This may deter them from getting in and competing with you. They may worry that they get into Amazon and only sell 1,000 units.

 

[biophase]

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.

How are you going to sustain this? Are you going to be looking for products every month? This is all fine, but you aren't building a business here. It's like you are just selling stuff on Ebay. You can go this route, but I've seen it many times. The guy who takes his time in the beginning will end up victorious over your method.

MJ has this example in his book. The one with the two guys building a pyramid I believe?

 

[QDF]

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.

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.

 

[biophase]

I am so pleased to see this post. It puts a touch of reality into the area of new product development. Starry eyed new entrepreneurs tend to be impatient, but you have been doing this for long enough to take a realistic approach, and that should help those new to the scene.

There are many factors that can result in this long lead time from concept to delivery, but the Chinese tendency to not want to be rushed is often a factor. It might not have been in your case, but I mention it so that others will appreciate that rushing a Chinese business person into decisions and action can be counter-productive.

Walter

Hi Walter,

I ended going with 3 different factories and they just couldn't get things right. Not big things, but tiny little things like I'd spec 150cm and the samples would come back 148cm. They'd agree to fix it in production and I'd tell them no, I want another correct sample, then it would be 149cm. The problem with textiles, is that when I ask for 150cm, they'd cut 150cm, but on the edges they need to fold it over and hemmed the edges making it shorter.

They either couldn't grasp that they needed to cut 152cm, or I suspect that they quoted based on 150cm of material and were trying to skimp out on the material, after all, 2cm x 142cm x 1000 pcs equals alot of extra material.

I never did get the 150cm, I just agreed to 149cm. I needed to get this out and if it sells well, I'm going to get my 150cm on the second order! LOL

 

[Kingsta]

Great read and wonderful insight.

"Smart people learn from their own mistakes. However, wise people learn from other people's mistakes."

 

[biophase]

They all look like a gagglefuck of bad copy and fake reviews, I am curious what you would do to improve these if you were to sell them? I am not interested in selling them but it's nice to have an actual product that I could see your feedback on.

Off the top of my head I could see maybe adding a puncture repair kit? Other then that I see a whole lot of complaints about how they don't stay inflated for more then an hour, so would you contact the manufacture and try to change the material it's made of, or using different liners for the inside so it doesn't leak?

I can see how this post may come off as me trying to get your advice so I can implement your ideas, but I am just trying to see how your thought process works. Thanks!

Yes, I would figure out why they aren't holding air. I bet the seal flap is bad and probably needs a better material or some type of rubber. Then I'd make the material thicker and more resistant to punctures. If I'm going to do all that, I'd probably change the shape a little. I personally think it's too tall, there's no reason it needs to be that tall unless you are trying to make a chair. If you want to lounge on it, it could be several inches lower.

All this will add cost, so the product might end up being $75-$100. But if you had an $99 product which 500 4-5 star real reviews and your product was noticably different, you wouldnt care about all the knock offs. Customers would be able to clearly see which one is head and shoulders above the rest.

EDIT: So I just took a closer look at the product. They are using the exact same seal as dry bags. The material looks like a lightweight nylon. In fact, I import a product just like this one, except I use it as a bag and it's much smaller. Someone just needs to make a better sealing flap. I can bet that the ones that don't seal are using plastic edges instead of letting the material overlap the seal. Also, a thin double rubber strip would fix it and I bet some use it and some don't.

 

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[biophase]

Hi @biophase,

Thanks for the great thread!

I'm very interested in designing/enhancing products to sell through Amazon FBA or other ecommerce platforms.

My question is since I have no experience with selling through Amazon, would you recommend AMZ training or similar training to learn the basics of researching potential niches, assessing competition, setting up promotions, Amazon keyword marketing, etc? Maybe even start by sourcing an existing product as a test/training?

On the product design side, I have an engineering background and I've worked in manufacturing so I think I know enough to get started once I have a market identified.

All the best

I don't think you need to pay for those courses. You can pretty much find all that information for free online. The actual setting up and selling on Amazon is the easy part. Finding the right product is the hard part. Save that money you would have spent on those courses for your samples.

 

[biophase]

Then you've got product sourcing. @biophase may disagree but I found it extremely frustrating trying to source products I knew nothing about. A jack of all trades, master of none scenario in my opinion.

No it is definitely frustrating. However, suppliers will be more willing to deal with you when they know that you already sell items related to what they make. If I contact another supplier and I give them my brand name, they will look it up and see that I'm already selling. This definitely makes them more eager to respond.

Also, it's true that as you expand your current suppliers can usually make everything in your niche. But I like to have at least 2-3 suppliers so all my eggs aren't in the same basket.

I always end up becoming an expert in all of my products after a while. It just happens.

 

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[biophase]

Hey Biophase,

I've found a product with high revenue, low competition and high margin. Only problem is the shipping costs drop the margin from 50% down to 20% because of the carton size and unit per carton size for my order (air freight). If doing sea freight, the quote is not much better.

You have any tips for getting around this?

Order more? It's important to note that high margin products are not high margin products if the shipping cost is high.

There's a reason margins are high before shipping. That's because if they weren't people couldn't make a profit on them after shipping. You need to account for shipping costs in your margin calculations as the market price will always balance the overall product costs out.

Lastly a 50% margin product is not a high margin product. Are you saying that it costs $10 and sells for $20? If so, this is pretty low margin. A $10 product should be selling for $50. That's an ok margin. A high margin product is something that you pay $10 for and sells for $80.

 

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[Andy Black]

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 not 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.

@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:

• What's your problem?

(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.)

 

[biophase]

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.

You are assuming that you can sell AAA at break even. Dropping price won't do much if you can't get onto the first page. If you have no differentiation or brand, someone else will match your break even price to and then what would you do? My point is that with these types of products you will work your butt off to sell them. I'd rather work on them before and have an easier time selling them.

If you do it correctly you hopefully won't ever get to the scenario where competition hits and prices are driven down. If the herd has caught onto your product and you have done it correctly, you would still be in the game at a higher price. How did the herd catch you if you have differentiated? Did they pay $1000 for a new mold? or did they just ask your supplier to make then some of your product because your product wasn't really yours?

I'd rather spend $10,000 and make $10,000 on it and have it be a lasting product. I don't like to delete any listings.

 

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[Walter Hay]

Thank you for your insight.

In your experience, if I were to try to find a manufacturer for my own product, is there anything I should look out for? Are there cues that would suggest the manufacturer is/is not truth worthy or someone I should build a business relationship with?

One of the things you should look for is how polite, helpful, and prompt they are in responding to your early contacts.

If they seem difficult to get on with in the early stages, they are likely to continue that way.

Be cautious about accepting what they say. If it is something you can check, then check it out. Of course I guess you know that if they ask for payment via WU you should go elsewhere.

It is worth searching their name and its possible variations on Google. Most names will not be found there except for their listings on B2B sites, but if there are bad reports they will often turn up on Google.

If you have a copy of my book have a look at Chapter 12 which is all about Assessing Suppliers.

Walter

 

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[Walter Hay]

So yesterday I finally shipped 1000 units of this product to Amazon. I made this post on Dec 26 2015, it is Sep 1 2016 and I FINALLY got this product delivered and on its way to FBA. This is an example of how long it can take to make your own product vs. a slapping a logo on off the shelf product.

Just checked the competitor and a few more have arrived since then. So now I have 7 competitors to deal with, but my product is different. I don't even worry about them. My product is not really competing against 7 competitors, its competing against 1 (because all the other 7 are the same).

I guess this will be a good case study on my method. I'm throwing it up against these guys with no launch or reviews. Will check back in a month.

I am so pleased to see this post. It puts a touch of reality into the area of new product development. Starry eyed new entrepreneurs tend to be impatient, but you have been doing this for long enough to take a realistic approach, and that should help those new to the scene.

There are many factors that can result in this long lead time from concept to delivery, but the Chinese tendency to not want to be rushed is often a factor. It might not have been in your case, but I mention it so that others will appreciate that rushing a Chinese business person into decisions and action can be counter-productive.

Walter

 

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[biophase]

On one of my products, I have a particular question: Some of the improvements that I've found from Review data could be done by your process of simply making a manufacturing customization, while other improvements seem like it could be done via purchasing the raw ingredients for the product and customizing it myself (it isn't a very difficult production process at all).

Would you recommend that? As in, would it affect prices and lessen the "stealability" of the modification in your opinion?

I think the more you can do outside of China, the less "steal-able" your product is because the people in the USA won't want to do any work, they want to do China straight to FBA warehouse shipping.

 

[biophase]

Bio are there any examples that would spring to mind. I am trying to look for products that I can improve and that also are difficult / restrictive in some sense as a barrier to competition entering. We always read keep it simple (no moving parts etc) but seems that may be no longer the best option for brand longevity! Always great to get your perspective.

MJ used an example of selling mirrors. They are big, bulky and prone to breakage during shipping. If you just look at size and weight there are cushions, kettle bells, glass objects, etc. These are tough to ship so many people would avoid them.

Other products like shoes have so many sizes and are somewhat complicated to design.

 

[biophase]

Here is a great example of an Easy product. Who here wishes that they are in this niche right now?

I wanted to get one and can't figure out if any are actually any good.

Look through these listings and tell me which product you would buy? How does the public choose? Does any one stand out in this sea of same products, same photos, tons of fake reviews and giveaways.

https://www.amazon.com/s/ref=nb_sb_noss?url=search-alias=aps&field-keywords=kaisr&rh=i:aps,k:kaisr

 

[amp0193]

I'm very interested in designing/enhancing products to sell through Amazon FBA or other ecommerce platforms.

I saw your avatar and definitely thought @MJ DeMarco was getting into Amazon.

And then I was disappointed.

 

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[amp0193]

pardon my ignorance, but what is the "add to card 999 test"? I've never heard of that before.

Try to buy the product.

Put a quantity of 999 in your cart for that item.

There will be an error, and it will automatically change to whatever the total number of their stock is (unless they have more than 999).

So, day 1 - 350
Day 2 - 345
Day 3 - 344
Day 4 - 340


You can track what their sales are, or at least get a rough idea.

 

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[biophase]

Hey Bio,

Question on FBA. Is it still as important as it was a few years ago? Is it the best way to move product? I have read through the costs and benefits and can see where it makes sense for what you sell, but lets say Im selling something in the 20 dollar range that is fairly lightweight but kind of big like maybe 12x12x12. Does it still make sense to use them? Also if I decide to go FBA, what would be the best way to get say 500 of a product that size at under 1 lb each to the warehouse. Thanks in advance.

I think it is still just as important. But in your example, I don't understand why you wouldn't go FBA.

You have a 12x12x12 product that weighs under 1 lb. Amazon charges you $2.99 to ship this. Can you ship it cheaper? Your box would be $.25 and a first class stamp would be $2.60. If you shipped this Fedex it would be $8-$10.

The best way is to use Amazon's deeply discounted UPS or Fedex rates.

 

[Paul David]

Great thread. And I'll go a step further than @biophase.

The issue a lot of sellers have on Amazon is that their business is based solely around Amazon. It's sounds great selling 100pcs a day of 1 product but would this produce the same sales via a website with just one product on it. I very much doubt it.

Or what if you have 100 products, all in different niches. How do you build a brand or profitable website via that method? As @biophase said above customers will have a great deal more confidence dealing with a company with more products that just the odd one or two in that niche.

Then you've got product sourcing. @biophase may disagree but I found it extremely frustrating trying to source products I knew nothing about. A jack of all trades, master of none scenario in my opinion.

I selected a niche which has a higher barrier to entry than most categories and with a large enough market to satisfy my ideal income.

When I'm sourcing new products now the likelihood is one of my current suppliers can offer it. I don't have to go looking for new manufacturers, start building relationships etc.

Our company is also starting to build a reputation as 'experts' in our niche. Something that cannot be done trying selling everything under the sun.



Sent from my D5803 using Tapatalk

 

[Walter Hay]

There are ethical Chinese manufacturers who actually notify their customers of knockoff requests?

Yes there most definitely are. I have met many very ethical business people in China.

Relationships are of great importance, but the low personal standards of the individual might override those relationships if there is a lot of money involved. Personal standards have to be high if the relationship is to prove more important than money.

I have had similar experiences to the one mentioned by @Rudynate . I have had advertising removed from an associated company's literature when it showed a design that was exclusive to my business, and over the years I have been contacted by several manufacturers when they were contacted by a competitor of mine.

In one such case, the competitor thought the mold was an "open" mold, i.e. one owned by the factory and open for use by all customers. It was not, it was one that I had paid for. The manufacturer was not prepared to allow others to use it, and informed me of the decision as a matter of courtesy so that I would know what my competitor was doing.

Walter

 

[csalvato]

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.

 

[Walter Hay]

Idea of adding value is what gave me the idea of including a freebie instead of trying to sell the item at 3x markup like I see others doing. Quite a few sellers are selling what will be my freebie item branded with their label actually, but otherwise they are basically identical. Maybe I can get manufacturer to put my logo on it too.

Sent from my SAMSUNG-SM-G900A using Tapatalk

I have had a lot of experience supplying self liquidating premiums to big corporations and the idea might suit you. Rather than give the product away for free, they sell it at, or slightly above, cost. People love something for free, but they also love something way, way cheaper than they would pay elsewhere.

You get the benefit of seeming generous, but without it costing you. Be sure to include all costs, including freight, duty, taxes if any, Amazon and PayPal fees etc.

Just because it seems so cheap on Alibaba, that doesn't mean you can't get it for even less. 3 or 4 X Alibaba cost is not all that great, particularly when you add freight, duty, etc. You might have found the product being offered by one of the traders masquerading as a manufacturer on Alibaba. A common occurrence.

Walter

 

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