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Navigating the changes at Amazon since we started

amp0193

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None of this really matters if your product has high barriers to entry.

Focus on the fundamentals. Get the product right.
 
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Brett Beckwith

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This is an interesting thread! I'm just going through the works of building up my Amazon FBA business and this was very helpful on my current outlook of things.
 

Geekour

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None of this really matters if your product has high barriers to entry.

Focus on the fundamentals. Get the product right.
How can one go about increasing the barrier to entry for a product?

Would it be wise to import into Amazon FBA first or just sell via own website focusing on marketing there and eventually getting onto amazon. I am curious because I have read before that amazon is not too friendly with new sellers come 4th quarter time of year. I would hate to rush and go through creating a product in a rush before 4th quarter since I have not yet done the necessary product research.
 

E-Sharp

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customer who asked for a refund because the item took too long to arrive ( the order was fulfilled by Amazon ). The customer got his money back and doesn't even have to return the product. However Amazon refunded me only a part of the fees I paid.

I open cases and kindly ask for fulfillment fees to be credited back to me when this happens. Same thing when an order is sent to a non-deliverable address.

If I'm paying them to fulfill orders, I expect them to deliver on time and to a real address, otherwise why should I be charged for it? IME they have generally agreed with that reasoning but opening a case is required.
 
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MJ DeMarco

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Thread title slightly modified and upgraded to NOTABLE.
 

amp0193

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How can one go about increasing the barrier to entry for a product?

Here are some ideas:

Sell something that is hard to make. Requires lots of upfront design, something completely custom, something proprietary and patented, something difficult to replicate, something that took you more than an hour to create.

A product that is expensive, requires high minimum orders, has difficult logistics, is big, heavy, has lots of moving parts, is hard to quality control, is hard to find a reliable factory, is not on alibaba.

Basically you need to go through a ton of shit yourself to get your sellable product. If it was easy for you to source and sell, it's easy for everyone else too, and just being the first mover may not be enough to keep you in the game long-term.



Would it be wise to import into Amazon FBA first or just sell via own website focusing on marketing there and eventually getting onto amazon.

Just do both. It only takes a couple of hours to make an Amazon listing. Maybe a couple of days if you're going to get real fancy with it.


I am curious because I have read before that amazon is not too friendly with new sellers come 4th quarter time of year. I would hate to rush and go through creating a product in a rush before 4th quarter since I have not yet done the necessary product research.

Someone else correct me here, but I think this might only apply to toys and a couple of other categories. @DBXI do you know?

Also, it's June. So you wouldn't be a new seller by then, yeah?
 

amp0193

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I open cases and kindly ask for fulfillment fees to be credited back to me when this happens. Same thing when an order is sent to a non-deliverable address.

If I'm paying them to fulfill orders, I expect them to deliver on time and to a real address, otherwise why should I be charged for it? IME they have generally agreed with that reasoning but opening a case is required.

There are several things that Amazon will reimburse you for. But they almost never do it without you asking.

It's good to go through every few months and reconcile.

3rd link in my sig is a thread with some step by step on this.
 
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Geekour

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something proprietary and patented
Do you mean to patent own product? I see your point. I have been reading up on threads here and not everyone patents off the bat. Do you say this because amazon/ecom is changing and to weed out the "me too" products? Surely going after patents and licensing adds to barrier but correct me if I am wrong but some of the members have purely done a value add on existing products without the patenting like for example @biophase

A product that is expensive, requires high minimum orders, has difficult logistics, is big, heavy, has lots of moving parts, is hard to quality control, is hard to find a reliable factory, is not on alibaba.
You just made all the amazon gurus cringe lol
 

amp0193

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Do you mean to patent own product? I see your point. I have been reading up on threads here and not everyone patents off the bat. Do you say this because amazon/ecom is changing and to weed out the "me too" products? Surely going after patents and licensing adds to barrier but correct me if I am wrong but some of the members have purely done a value add on existing products without the patenting like for example @biophase

You don't need to patent. I don't have a patent on any of my products.

But having a patent on something proprietary is certainly a huge barrier to potential competition.

I was just throwing out ideas.


You just made all the amazon gurus cringe lol

They just say what people want to hear. People want shortcuts and easy.
 

JTR

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So you know that I sold one of my Amazon businesses earlier this year. I've also been looking into purchasing another "Amazon" business. In doing my research it is pretty amazing at how many buyers are out there for these businesses.

I talked to my broker and there are bidding wars on good ones. They literally sell in hours. Then there are many available in the $5M+ range. A strategy that my broker told me was that large companies will buy at 3x and sell at 5-8x. What they do is buy a bunch of businesses in the same niche, say outdoors, which are doing $3-$10M, then package them together as a $100M business and resell for a much higher multiple.

I'm guessing that as a $3M company, you get no love with Amazon account reps, but once you combine them all and become a $100M company that Amazon will look at you differently, thus easing the control factor.

Just posting this as an observation. I don't think I'm going to be buying one anymore as in my price range the businesses are very green and lack alot of control.
I made bold the parts I'm replying to specifically. I haven't posted in awhile as I've been the busiest this past year than I ever have at any point in my life, but these two comments specifically made me post.

Have you put any thought into the idea of buying an "Amazon" business that isn't exactly an FBA? i.e. SaaS business in the Amazon sales and marketing niche. Kind of puts you away from what I would guess your bread and butter is, but gives you significantly more control. Think if MerchantWords & JungleScout had a baby.

There's a saying that goes something along the lines of, "When everyone's buying cars, you wanna be selling gas."

Edit: I remembered it, it's the gold rush analogy. Close enough >.<
 
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biophase

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I made bold the parts I'm replying to specifically. I haven't posted in awhile as I've been the busiest this past year than I ever have at any point in my life, but these two comments specifically made me post.

Have you put any thought into the idea of buying an "Amazon" business that isn't exactly an FBA? i.e. SaaS business in the Amazon sales and marketing niche. Kind of puts you away from what I would guess your bread and butter is, but gives you significantly more control. Think if MerchantWords & JungleScout had a baby.

There's a saying that goes something along the lines of, "When everyone's buying cars, you wanna be selling gas."

Edit: I remembered it, it's the gold rush analogy. Close enough >.<

I'm not interested in those types of businesses. It's not what I know and I don't want to have to keep up with Amazon's backend or API. I'd basically need a full time developer. Plus I don't use any of those tools so I wouldn't be my own customer.
 

annagreenang

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Amazing, thank you.

--

To add my .02, whilst most newbie / low level sellers will likely get bled dry over time, I feel Amazon (as with other online outlets) are going to get much better for people who have "real" businesses.

The big problem you're citing is with people who rely on Amazon for their business to succeed.

Their entire "value" proposition is centered around accommodating the demand that is coming from Amazon's organic audience. They don't do much in terms of innovation, marketing or support. Their "service" (as a business) is to provide users with the simplest way to buy "x" product from Amazon.

Whilst you may argue that this is how "business" is meant to be done - the simple reality is that most people are only promoting products, and have very little control over the product or how it's used.

Any changes in the way the product is manufactured, delivered, or consumed, will cause massive problems for the vendor (as demonstrated with your post). Amazon might be a great way to reach millions of people - but the same dynamics apply with any market.

I've seen it happen with...
  • SEO
    Pre-"Panda", anyone could get ranked highly for quite competitive keywords by just buying a ton of non-related links. After Panda (2011), Google focused on ensuring the quality of a site's links, content and social profile. 99% of the crappy thin affiliate sites got blown out of the water. In other words, it became much harder to attain higher ranks on the platform.

  • Local Marketing
    Selling marketing services to dentists, chiropractors, lawyers, schools and other "local" service providers was a thing for a while. Some people did well with it, but - as with everything - dried up after about 2 years. The reason was that once the "big" local providers had been accommodated for - it became much harder to persuade smaller ones to sign up.

  • Blogging
    Becoming a "digital nomad" by "blogging" was the sh*t in 2012 but died a death (typically because people didn't have anything exciting to share). I've made the mistake before so it's only natural. People don't want to read about "you" - they want to "live" through you. This means that if you're running a "blog", your job is to give people a taste of their dreams/fantasies. Obviously... only a handful of folks can pull this off, hence the bubble bursting in early 2013.

  • Social Media
    After being a big deal in 2015, focus has now moved into "crypto" and "drop shipping". Back in the day, a new "social media guru" popped up every day. Now, with the "market" mature - hardly anyone cares. Ironic, because "social" is now a HIGHLY lucrative traffic source (if you're authentic and do it properly).

  • Drop Shipping / Amazon FBA / ECommerce (Shopify)
    The current fad is "drop shipping" and "thin retail". Nothing inherently wrong with the model (I used to do it with JandRSports) but the problem is that 99% of these guys are all using the same suppliers & traffic sources (FB ads). Almost none of them are investing into a strong foundation (brand), and even the ones making money are finding the model to be ephemeral. Like the other fads before it, there'll come an inflection point where either the traffic sources (FB/Twitter/YouTube) or the market itself will become much harder to convert. This is when the market matures, the larger "winner" brands come along - and make it much more difficult for smaller outfits to compete.
The point is that - with all markets - there's a time when buyers are easier to convert because of the novelty of the whole thing. Scentsy is a great example. Competition is lower, and what competition exists can easily be out-maneuvered with lower prices or some other gimmick.

The Internet is PEOPLE - which is why the adoption of new "platforms" (Google, Amazon, YouTube, Twitter, Facebook, Alibaba, etc) spark new gold rushes (more eyeballs = more money).

However, as quality improves and prices lower - barriers-to-entry prevent increasing numbers from being able to turn a profit (channels buyers to 1 of ~4 vendors who have economies of scale). This is where Amazon is today. YouTube recently went through it (adpocalypse). Facebook in the process (Congress hearing).

That's not to say it's infeasible to make money (it's just harder as competition is more prevalent + you need to bring quality). The main reason why people now find it difficult is because most are leeching off Amazon's organic traffic pool - which can only sustain a finite number of sellers. The same happens in almost all markets; the guy who doesn't "need" the outlet will actually do well with it.

The best companies - in ANY market - bring traffic to the platform. They do so by the cultivation of "unique" content. This is either by way of how they use a product (Apple) or how the product works (Dyson).

In the case of Amazon, I only go there if I want a particular product. I don't casually browse their listings and certainly don't "window shop" unless there's something that catches my eye.

This is almost exactly how the Internet has grown. Everyone has 4 or 5 resources they peruse daily (Email, News, Youtube, Twitter, Forums). It's through those platforms they are introduced to new ideas, resources & people. This expands their networks and is why we have the "walking dead" of today glued to their smartphones.

If you want to cultivate a company with the "modern" web - the key is utilizing the plethora of massive "channels" (Amazon, Google, Twitter, YouTube etc) to share your SERVICE with a wider audience. As mentioned, it's all people - and you'll generally find those following you on Twitter will also be consuming your YouTube content. Don't get distracted by numbers.

The secret is to focus on delivering a service. This is metaphoric as it is actual...

-

Over the past couple of years I had been working on several client applications in Ruby on Rails.

To get these online, I used "cloud" VPS servers (DigitalOcean etc). Whilst cheap, they had no software to deploy Rails apps. I created some, and have now been working to package it for sale on Amazon...

View attachment 19717

Ironic, but our little software is the only tool in the world which allows you to provision "cloud" VPS servers across ALL cloud platforms. If you wanted to deploy infrastructure on Rackspace, whilst routing US traffic to Azure servers, you can do it with our software.

Our "service" (in this instance) is to enable people to deploy software to ALL platforms. That's our USP and what we need to deliver with as much ferocity as possible. We don't "need" Amazon to do that.

As a company, our "service" is still to provide "immersive digital experiences" - the more potent we deliver that, the more people want to pay us - whether through Amazon or not. This is the type of "real" company which succeeds irrespective of which platform it shares its wares.

Thank you for sharing helpful information
 
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Paul Bunker

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A lot of the eCommerce focus on the forum was a group of several that started around the same time. Dozens of us were doing eCommerce, with several different products but the same basic strategies. Amazon has changed a TON since @biophase, @AllenCrawley, @LightHouse, @JAJT, @Kak and several others got started on the platform and found great success in marketing predominantly through Amazon.

My next business will use Amazon as a channel, but will not be an Amazon centric business. I have watched the above guys evolve their businesses over the years to adapt to the changes on Amazon.

At one point, my business had an unhealthy reliance on Amazon, completely violating the commandment of CONTROL.

Amazon is still THE force to be reckoned with, but in building a business from scratch today realize a lot of things have changed since some of the early advice you could read on the forum regarding how to find success on Amazon.

  • PPC costs have dramatically increased in nearly every category
  • Views have declined radically for non-advertised offerings
  • Feedback rules and methods have changed
  • Amazon algorithms have changed
  • There's been a huge influx of commoditized international competitors
  • There's been changes to policies regarding returns
  • There's been an evolution of ways sellers get scammed and listings get scammed
  • There's been a relaxing of Amazon's pursuit it IP theft
  • There's been a cleansing of many smaller sellers who no longer sell on Amazon
  • Customer expectations have changed to adapt to Amazon's "the customer is always right" philosophy
  • Customer abuse has changed to adapt to Amazon's "the customer is always right" philosophy
  • Retail arbitrage is nearly dead, and the people who paid thousands to learn this "business model" might as well move on to their next MLM investment
And that's not all. But there have been a ton of changes over the years which have eaten up those that were unable to adapt. A retail darwinism.

Other venues are starting to take on some traction and prominence, but perhaps @biophase and @AllenCrawley have done the best job of building brands that were significant beyond Amazon. I am sure there are many others here also, but I thought it might be beneficial to introduce a discussion on "the new rules of the road" specifically regarding Amazon for those who are researching business models.

It's not like it was. It's not coming back to how it was. You can still make a business and a life with Amazon as a channel, but I no longer believe that building an Amazon business is a prudent, futuristic decision for someone who wants to build something bigger.

SERIOUSLY helpful comments for me - thank you!
 

Xeon

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