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NOTABLE! My opinion of the Amazon Marketplace

Discussion in 'General Entrepreneur Discussion' started by biophase, Sep 7, 2018.

  1. CigarMan
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    CigarMan Bronze Contributor

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    I have read many people have had success getting into gated categories. I have not looked into how, thanks for the article.

    If you have a brick and mortar store you can get almost any brand no problem. Apparently 90% of the companies you contact won't open a account for you without brick and mortar location.

    People have had success with just a website and a registered business. The only problem is you will be dealing with lower quality brands and distributors.

    You can pay a existing business for access. Or have a small store attached your warehouse. Maybe one store for each sector you are in.
     
  2. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    My friend did just that. He was selling horse saddles online and a brand said that he needed a storefront before they would sell to him. So he called a horse supply brick and mortar business and asked if he could use their store and they said yes.

    But, I still don't see why this would be the route that you would want to go.
     
  3. CigarMan
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    CigarMan Bronze Contributor

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    Brand name products are in consistant demand. You know what they are selling for, how many are selling and you know what you can buy them for. You pay nothing for marketing/branding.

    With some hard work you can open accounts, lets say you gain access to 10 000 branded products on Amazon. Maybe 1% of those products are worth your trouble, the rest you can use software to monitor since prices consistently change.

    You will be more more wide than deep, you won't be investing or depending too much into a single product. You will have to keep adding brands and distributors to grow your access to branded products but as sales grow that should get easier.

    Why do I want to go this route? Because everyone is looking for private label products to sell and sometimes it is good to go against the herd.
     
  4. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    In your scenario, are you purchasing and stocking inventory? What margins do you think you will get selling them on Amazon?
     
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  5. CigarMan
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    CigarMan Bronze Contributor

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    20 to 30% otherwise I won't purchase the product. So I will have to invest 10k per month and return 12.5k.

    I will buy inventory, get it ready and send it to Amazon and get a share of the buy box.

    I have never done anything like this before so scenario is a perfect word. I think a 1 month inventory is reasonable assumption?
     
  6. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I’m not sure if you can get that selling other brands. I’d be interested to see what wholesale prices you can get.

    Most people try to get 30% selling their own brand. So I just don’t see 30% purchasing wholesale on known brands.
     
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  7. steelandchrome
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    steelandchrome Author of The Retail Leader Book. Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    20-30% after FBA fees or before? FBA fees and regular sell fees can be killer even with expected rocking margins. I found to make an ok return you have to buy for maybe 30-35% of what you expect to sell for and that's not factoring in any PPC etc..

    Sent from my SM-G935V using Tapatalk
     
  8. CigarMan
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    CigarMan Bronze Contributor

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    My buddy use to own a health food store and he use to negotiate will all his supplier. Getting a discount will make more products viable on amazon.

    I can't compete with larger volume sellers but if an item is selling 50 to 200 products a month I think I have a better chance at getting a higher margin. I can sell lower margin products as well, it will be less grunt work for me on the sourcing side.
     
  9. CigarMan
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    CigarMan Bronze Contributor

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    There is no PPC expense. The demand is already there.

    20 to 30% after all expenses.
     
  10. BookwormMitch
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    BookwormMitch Silver Contributor Read Millionaire Fastlane Speedway Pass

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    If you sell someone else’s brand you have no control and no exit strategy. Even worse considering you are talking about selling on amazon. This is not a business it’s just a hustle to make a bit of money.

    If you want to sell branded products the way to make money would be to create your own website that sells branded products along side your own private label products and use the branded products as a break even or loss leader to get people to buy the private label products. This is actually what most big box stores and supermarkets are doing now and they are doing it for a reason. Buying from a brand you have to add thier margin in so how could it ever be as profitable as private label. “They have spent the money/margin on marketing and branding” you might say “so that’s worth the extra markup”. That’s true but even more of a point for you to build your own brand. All the extra money you spend on thier markup is being invested into thier brand and they will get it back when they sell the company. So why not invest it in your own company.
     
    Last edited: Dec 28, 2018
  11. CigarMan
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    CigarMan Bronze Contributor

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    Eventually I will start a ecommerce site. It will help with opening new wholesale accounts.

    My business won't depend on any product or brand. In fact I expect products to go in and out of profitability and will use software to monitor that. The name of the game is gaining access as many branded products as possible... if 0.5 to 1% of those items are viable on amazon at any given time then it is just a numbers game.

    I agree this is a hustle but there are also companies making 8 and 9 figures doing this. The exit plan is simple... sell the business.
     
  12. richm21
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    richm21 PARKED

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    Did anyone listen to the most recent Tim Ferris podcast with the 2 guys selling on Amazon:
    How to Generate 8-Figure Revenue at Age 21 (Or Any Age) — Real 4-Hour Workweek Case Studies (#354)

    As someone who has done Amazon FBA I find it hard to get my head around how they launched over 20 skus at once without taking on any outside investment. They say that the terms they got from their Chinese suppliers allowed them to scale. Any thoughts?
    Its quiet an informative podcast about 2 guys who are scaling out fast and just using Amazon.
     
  13. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    This is what they should have told you on their podcast:

    Alibaba offer two sources of credit for purchases on their platform:

    PayLater is open line of credit finance up to $150,000 provided by Kabbage at a rate that starts at 15% p.a. To help attract careless buyers, they advertise it as "Fees starting at 1.25% per month. Maximum loan duration is 6 months, so theoretically the amount of interest you would pay for the duration of the loan works out at 7.5%.

    It can only be used for minimum purchases of $5,000 and must be covered by Alibaba's Trade Assurance scheme. To learn how ineffective that "assurance" can actually be, either read my detailed 2 page explanation in sub-chapter 8.2 of my book, or you can read the 16 pages of Alibaba's rules and regulations plus the many other essential rules that can only be found in their help section.

    e-Credit Line is another open line of credit finance up to $500,000. It is funded by Alibaba. Maximum loan duration is 12 months. The current interest rate they quote is: "From 0.87% per month," but if you do some searching you will find that it can be up to 1.3% per month. You will also pay an additional drawdown fee of 1.5% of the amount you borrow each time you use funds for purchases.

    It is almost impossible to obtain credit terms from suppliers in China. I achieved the impossible when my suppliers agreed to allow me monthly terms, with no interest and no fees. That was a result of establishing strong relationships, built on their appreciation of my ethical standards, together with frequent visits. My franchisees automatically enjoyed that benefit, and I have since shown my book readers the key to getting such an account.

    I never borrowed to operate my business. Growth was funded from my huge profit margins.

    Walter
     
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  14. Greg R
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    Greg R Act, Assess, Adjust Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    I don't know how I just saw this thread.

    To add on to the other 63 posts...

    I've recently seen first hand, and can affirm pretty much everything in this thread.

    Here are some other observations from my own experience.

    Up until Q4, my website was my main source purchases. November came, and that completely did a 180 and flipped to Amazon. Before that I saw people go to my website first, and then buy from us on Amazon. Even though it is the same price, I think there is a trust factor so Amazon acts a another net to catch your customer. To add on to that, I now know where to allocate my advertising spending next year.

    We recently did a new product launch on Amazon with some success. BUT it is unbelievably hard to get reviews organically. We are on the second page for our keyword (now) but the amount of reviews still lack. I have no doubt in my mind that if we can get more reviews, we would be on the first page.

    Speaking of the new product, I launched it knowing that it would be a success on Amazon AND I also launched it knowing that it would be a success on other channels (such as subscription boxes, retail, and our website). I think the important point here is to make sure you manage your risk by making sure your new product can be a success across multiple channels.

    A question to ask yourself:

    Do you want to go big with a real business or do you want to have a hamster wheel lifestyle business?

    You can tell me I'm wrong, but Ecommerce can be summed up to into one channel with multiple sub channels. Other major channels are alive and well. If your product is a success online, chances are you are missing a huge opportunity to get into other high volume channels. The type of channels where 1 hour of work can net you a huge sale.

    A lot of people do not figure customer acquisition costs into the equation. Not only is Amazon PPC expensive, but it is expensive everywhere. This is even more of a reason to cast a wider net and allocate your ad spend across a calendar year wisely.

    Finding creative ways to lower your cash outlay is also key to making the gears turn. One option for this is to plan a product line that uses similar materials. This makes it easier for your manufacturers to say yes to combining an entire product line into a one-product MOQ. Very recently, we have discovered a way to get big sales without investing in large MOQ orders. We are going to double down on this.

    I guess my overall message here is that if your long term plan is to only be an ecom company, you are risking a ton of opportunity cost. People can dispute this all they want and say that "this doesn't apply to their business." This kind of small thinking is what will keep you small. JMTC.
     
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  15. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I'm guessing that if they could convince a factory that they will be successful that I can see factories doing this. My factories give me good terms now, but if I said that I could 10x my business and their business by them giving me 180 day after delivery terms, I think they would do it based on my track record with them.

    I think it would be hard to convince a factory of this on your first or second order though.
     
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  16. richm21
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    richm21 PARKED

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    The best terms I have been able to secure has been net 30 days. Do you think 180 days is possible?
    How would you best propose this to them?
     
  17. vshetty.vs
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    vshetty.vs Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Not sure if this is what you're talking about, but Lebron and his trainer just launched a company called ladder fitness. Now I knew Lebron was a great marketer( you don't make 800M without know how to get endorsements), but the branding on their product honestly blew me away.

    Just some context: Ladder provides supplements and protein powders for athletes(Pretty niche market, which is what got my attention). They are more expensive than your traditional Protein powder but they are certified by the national sports federation and made exclusively for athletes.

    They have leveraged some celebrity endorsements and created a website but also maintained a blog, created a social media following and even built an email list all before launching a single product.

    Ladder is not positioned as just another protein powder; they are a brand with a mission - helping athletes perform their best. It just so happens that the easiest way to do this is by creating NSF certified supplements.
     
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  18. Guts
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    Guts Contributor

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    "the ad money we spend will be aimed at creating conversions within IP that we own and control, and ultimately the brand will be much more healthy as a result of being forced to be profitable from day one."

    Hey @Vigilante , what do you mean by IP? Are you referring to IP addresses or is it an acronym for something else? Thanks!
     
  19. LittleJohn
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    LittleJohn Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    IP is intellectual property.
     
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