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

dude_abides

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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
 
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biophase

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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.
 

Iammelissamoore

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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.

Based on my own experiences, I too am quite happy with doing ALL hard work up front, in whatever I must, and then let good things flow the rest of time. Set a SOLID foundation in ALL we do and then just watch growth!
 

amp0193

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Guest06196

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* 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.

Awesome post @biophase
I've just finished this Gold thread and will embark on your ongoing AMA soon.

One question: Is there an inexpensive way to create a brand? It costs a lot to have some sort of legal protection, such as trade mark or patent. Even with that the effect is only limited within one country. I don't think a logo can do much if not registered. Any suggestions? Thanks~
 
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Elijah

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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.


Wow, the content you are sharing on this forum is amazing! Thank you for that! So you would not recommend any amazon courses for beginners? I would like to get a deeper look to avoid (some) stupid mistakes, so I want to get a foundation asap so I can start already.
 

BOUM

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I stumbled on this thread (and your AMA) and I just wanted to say thank you. Your insights made me reflect on a recent failure (lead generation if you are curious). As pointed out previously, your comments can be applied to many other businesses.

Starting in the entrepreneurship world is a jump in the unknown, and I believe we are many to fall in the traps of looking for "how to / step-by-step" guides when fumbling around at our beginning, there is a real and big industry surfing on this. This ends up in doing the same as everyone like you mentioned, this is not fastlane and I'm glad to have leaned this lesson.

This is a thread every new entrepreneur should read!
 

TheOrchestrator

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My god...shovels....they're all f*ing shovels. Just about every single freakin e-course on e-commerce and arbitrage, even many of the high-dollar courses! The lessons that I'm getting from threads like these, as well as the @biophase progress threads and the AMA threads on the INSIDE really just makes most of these courses look like a bunch of gold-plated shovels being sold to gold-rushers. After reading a ton of stuff from @biophase and other successful buyer/sellers here, I think it's time to get back to the drawing board. No wonder people like biophase run circles around the newbies, and it's not primarily because of his superior domain knowledge/experience, but because he starts with Entry and Need as his first considerations. I can already see myself as one of those wide-eyed shallow-pocket newbies, getting excited because I've made the first page and now think I'm onto something...right before I'm engulfed by the flood that I don't see coming. Yeah, I still have a lot to learn...
 
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TheTorche

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A lot of great lessons for a newbie like me in this thread. Thank you to everyone for sharing all this info on the forum, specially @biophase.
 

AceVentures

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Another great thread Biophase, couldn't thank you enough for your endless contributions. It couldn't possibly be fair for me to absorb so much value without making an honest effort to give back in some sorts.

Therefore, I thought I'd take a moment to highlight some of my personal takeaways and summaries after digesting the entirety of this thread. I'll be paraphrasing and summarizing, so if anyone believes I've done it injustice please feel free to correct me.

----------------------------------------------------------------------------------------------------------

Biophase's Original Post, and the topic of this thread

You can argue there is an easy and hard path to doing business on FBA.
EASY WAY - Ride the trend. Look for products. Make simple improvements. Flood the market. Price war. PPC. PUSH marketing. Hang on and hope you don't get crushed by the swarm of other AMZ sellers.​
HARD WAY - commit the upfront effort/hardship necessary to make a viable product, but more importantly, lay the groundwork for a legitimate business and brand. Differentiate, not by slapping a logo, but by venturing into the depths of manufacturing that typically prevent/slow average AMZ sellers from competing.​
Product Improvements

  • If you decide to improve a product, make sure the improvement carries your brand. For example, if you pay for and build a new mold, make sure your brand name is built into this new mold. Else you just paid the tooling and R&D for every other AMZ seller that may contact this supplier

  • If you genuinely skew value on a product with say 10 competitors, your NEW product would not be competing against 10 competitors, it would be competing against 1 other design. (labeling/repackaging/bundling vs actual improvement)

How many # should I order in order to test the market?
Ordering a very small batch, say 5-10, wouldn't be sufficient to tell you much about the market. Biophase:"I mean if you run PPC and all 5 sell in a day, I guess that is a good metric. But what if it takes a week? Was it due to your price, listing, lack of reviews, etc?? I guess for me, I personally couldn't make a decision based on selling 5 pieces. "
Should I pay for an Amazon course if I'm a beginner to E-Commerce?

You certainly can. You can find much of the information needed to setup and start selling on Amazon pretty easy, online for free. Finding the right product, is the hard part. Save the money you would spend on courses for your samples instead.​
Are there trustworthy suppliers, and how do I recognize them?

"Yes there most definitely are" - @Walter Hay . Relationships are going to be very important, and the personal standards of the individual you're doing business with will be important.​
As an example, Walter points to an experience in which he had a custom mold with a supplier. This supplier was ethical/courteous enough to notify Walter of his competitors wishing to use his mold, which he wouldn't allow.​
Can your supplier turn around and compete against you?

Yes most definitely. However, if you diversify the medium through which you sell, it will become more difficult for your supplier to narrow down where your sales are coming from, possibly deterring them from competing. ie, if I buy 20,000 pieces from the manufacturer, and flip all of them on Amazon, he can quickly see my business and attempt to replicate. However, if I flip the 20,000 pieces across 10-15 different platforms, he wouldn't know where you are doing your volume.​
Is it a good idea to add a Freebie to your product?

Walter Hay weighs in here. "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."​
Essentially, if you can provide the freebie, with the breakeven cost cooked into the cost of your main product, it might seem like you're being extra generous when it isn't necessarily costing you more.​
----------------------------------------------------------------------------------------------------------

I'm sure there are a lot more pieces of magic in here, and they'd apply to anyone at different stages of their business I suppose. As for myself, as a newbie, I found the above takeaways in this thread and was hopeful it might help others as they make their own rounds through these threads.

As always, many thanks for keeping us honest and on our feet, rubbing elbows with seasoned e-commerce veterans such as yourself.
 
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Walter Hay

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  • If you decide to improve a product, make sure the improvement carries your brand. For example, if you pay for and build a new mold, make sure your brand name is built into this new mold. Else you just paid the tooling and R&D for every other AMZ seller that may contact this supplier
In my notes for the next revision of my labeling book I already have this note:

"Having your brand built into a mold won't necessarily guarantee that the mold will be used exclusively for manufacturing your product. There is a sneaky trick used by some manufacturers in China.

They use a mold insert with your logo on it. This allows them to insert a blank so that there is no brand in the molding, or else charge the cost of a new mold to the next competitor wanting to copy your design.

This is very difficult to overcome, and by far the best would be to have your new product made in another country."

Walter
 
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Mario_fastlaner

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Every once in a while I come back re-reading this thread.

So underrated even if it’s gold and 250+ likes.
 

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