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Personal Brand vs. Manufacturer's Brand

Dom117

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Hi guys

November has been awesome for me, I just passed the 4k revenue mark for this month and couldn't be happier. The number doesn't tell the whole story though. It feels like I'm still on very loose sand. This might be interesting for all the Ecommerce entrepreneurs here that still lack control in their businesses.

Couple of side notes:
- Product is seasonal(5-6 months) and this is the best month of the season, should start to drop off again.
- 90% of sales come from marketplace, 10% from personal Shopify store. (Lack of Control)
- Profit +- 30%
- All traffic comes from Facebook ads aimed at Belgium/Netherlands
- All products come from the same Manufacturer (Lack of control)

He wants to expand the business in my region and was asking questions about how I sell to this region and details about logistics etc.

This manufacturers sells directly on AMZ and Aliexpress under it's own brand but at about 1/3 the price I am currently charging.

Just recently this manufacturer contacted me to ask if I was interested in a different deal.
He wan't to sell under his brand and he wants me to develop this market and I get a certain commission on sales.
I'll just paste his proposition right here.

My plan as below:


1. All the goods and money by our side, you can get very high commission from net margin, regarding the commission rate, we can negotiate it after.

2. Using the brand "MANUFACTURER BRAND" we can sign a 1-2 year contract for protecting that you will be our sole partner in that market

3. We can offer more products not only WIDGET X

4. You main job: Provide Dutch customers service and parcel delivery, including communication with marketplace support team.

5. We can help you to improve e-commerce operation, including provide more attracting pictures and content of selling point, keywords launch strategy. By the way, I am in charge of Amazon operation.

6. Offline business development



Any question, please let us know, thanks.

This deal sounds like a lose situation for me and I know they will drop me if the see the opportunity. For the moment they still sell WIDGET X to me but there are new products coming and they only want to sell them under their own brand.
I feel like I have the following options:
1) Keep doing what I do right now and risk not getting the new products and eventually not getting any products any more.
2) Try and get a better deal where I sneak in my own brand or try and keep him dependent of me.
3) Do what he suggests and probably be out of business in 1-2 years but start something new on the side.

Anybody who had to deal with the same situation?
@Walter Hay , am I lost or is this situation salvageable?
 

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Longinus

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I once was in that situation, yes. Selling products of a brand that wasn't mine.

I was promised many things, like exclusiveness. One month later, another Chinese seller sold the same product under the same brand :rofl: They hijacked the listing I put a lot of effort in too. Lost some money and a lot of time, lesson learned. Never doing that again.
 

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I'll probably be shot down in flames for this post but:

CENTS

it fails on 3 out of five. Milk it for what you can get and build something more sustainable. Even though I sold via Amazon and eBay for years I still don't get why so many people here go down the Chinese/FBA niche.

There is zero loyalty with Chinese manufacturers and there is very little barrier to entry so there goes CONTROL and ENTRY. If you have a decent selling product Amazon will eventually source it themselves and cut you out of the loop (even less CONTROL). In the meantime one or more want-to-be Joe publics will source the same or similar product (because they have been sold a course and bought a software subscription to show them how to find your best seller) then they will latch onto your product and reduce your margins to tatters.

We had all these issues 5 years ago! I would never consider that system now. To me it's building a business on sand. At some point it will all come crashing down. And bear in mind even if you have 100 products (we literally had 1000's) most of your profits are coming from probably 10 to 15% of your products (80/20 principle) so it doesn't take much to wipe out a good portion of your earnings. And if you get targeted that could happen all within a week.

-
 

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I helped market a patented brand product. The founders I worked with had a great relationship with the manufacturer. Exclusivity contract in the Nordics. The effect of the product was backed by clinical studies and it'd been repped on a major TV show, so it was easy for me to market it. Everything was going great.

Then the manufacturer got acquired. The contracts were never renewed with the new owners.

No other way to source it. Nothing to sell. Business dead.

Be careful with control. I've seen the effects of ignoring that command a few too many times this year. :rofl:
 

Longinus

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it fails on 3 out of five. Milk it for what you can get and build something more sustainable. Even though I sold via Amazon and eBay for years I still don't get why so many people here go down the Chinese/FBA niche.
Easy, because it's still profitable and scales. I tried to sell my product to a retail chain, my profits went below zero. Rather take the risk by selling on Amazon with 40% margin then.

There is zero loyalty with Chinese manufacturers and there is very little barrier to entry so there goes CONTROL and ENTRY.
Are we loyal as clients to them? We will also go to a different supplier if they offer better prices. See next point about entry.

If you have a decent selling product Amazon will eventually source it themselves and cut you out of the loop (even less CONTROL). In the meantime one or more want-to-be Joe publics will source the same or similar product (because they have been sold a course and bought a software subscription to show them how to find your best seller) then they will latch onto your product and reduce your margins to tatters.
What you say here is true for regular "let's follow this $495 course to start selling on FBA" sellers. This is not how most sellers on the forum are working.

In short, yes it surely violates some CENTS, but what company that starts out doesn't? CENTS is something to strive for, not some requirements to start a business.
 

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Easy, because it's still profitable and scales. I tried to sell my product to a retail chain, my profits went below zero. Rather take the risk by selling on Amazon with 40% margin then.
Yes I totally see it from that point of view. But knowing this would you have done the same again if you were starting out?

What you say here is true for regular "let's follow this $495 course to start selling on FBA" sellers. This is not how most sellers on the forum are working.
Really? Enlighten me because I'm curious. Unless you have a patented product and/or a protected brand that only you control (not white-label goods) I can't see how you are not always under threat. You could say that's the way of the world but if you do well on Amazon you are literally flying a red flag saying look at me, I've got a successful product.

We managed to avoid it for several years but when it hit, boy did it hit and from all directions. Unique products, our own unique brand, our own bar codes on everything, registered trademarks. Nothing protected us.

I guess until you have suffered the full brunt of this (including Amazon themselves competing directly) you won't fully appreciate how this can cripple a business in a very short space of time. I know you have suffered it from your post. So how have you protected yourself?

A friend of mine lost everything including his wife and children when his multi-million pound business on Amazon crashed and burned when he got into a price war with his competitors (they all had the same suppliers).

[QUOTE="In short, yes it surely violates some CENTS, but what company that starts out doesn't? CENTS is something to strive for, not some requirements to start a business.[/QUOTE]

Yes I used to look at it that way to an extent (before I considered the wisdom of MJ's formula) but I can't see how you can strive for it later on if you have a company that violates them in the first place. In @jon.M example above how do you realistically overcome control when the business is based on the whims of another company? When the rug is pulled out from you that business is gone.

_
 

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My own brand was ROCKING in the United States... until... the success lured in every single Chinese resident with a wifi connection. The bottom dropped out of the market faster than you can say "Amazon sucks."

My new conclusion is that the product either has to be uniquely manufactured in the United States with a high barrier to entry, or a complex product sourced overseas that requires a high degree of consumer interaction, customer service, technical expertise, difficulty in shipping, or other complexities.

If a product has a chance of being commoditized, it will be. The knock off cycle is no more than four years from initial marketing to market oversaturation.

Maybe the best example of this is in the history of digital picture frames, and in that scenario it didn't matter what your brand was. When the market eroded by 80% in the period of 90 days, it didn't matter if you were Samsung or ABC brand. Anyone holding the merchandise when the bottom fell out lost their a$$.

The answer lies within the degree of complexity captured astutely by MJ in the Millionaire Fastlane with regard to barriers to entry.
 

RazorCut

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Apologies to @Dom117 for sidetracking your thread. :frown:
 

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Yes I totally see it from that point of view. But knowing this would you have done the same again if you were starting out?
For sure.

Really? Enlighten me because I'm curious. Unless you have a patented product and/or a protected brand that only you control (not white-label goods) I can't see how you are not always under threat. You could say that's the way of the world but if you do well on Amazon you are literally flying a red flag saying look at me, I've got a successful product.
Yes, you say it yourself. It's a good product I'm selling, but not successful enough for competitors to enter. Greed is my friend here, because most sellers only care about the quick buck.

Let's say one of my ASIN's makes $400/month profit. Not a single seller would bother, which is good. So I keep adding slow selling products like those. My sales are steady, and my competition is low. I was out of stock for one of my main products for 2 months now, still made good profit. Overtaking my market is still possible, but will need a lot of time and a lot of cash.

And everybody wants to get rich quick, so that's a no go for them.

Patience and dedication, that's my barrier of Entry.

It takes a long time to grow for me, way longer than most sellers. But I can sell my products for a good price. While I have competitors too, there's no price war or anything going on. Not all my suppliers are from China.

There's one competitor in my niche. A new "invention" of me was copied by him and he sells it at 50% of my price. But I still keep selling mine. It would still be hard to make 100% the same products as me.

This isn't my strategy btw, kudos to @biophase who has a lot of good posts and threads about it.

I guess until you have suffered the full brunt of this (including Amazon themselves competing directly) you won't fully appreciate how this can cripple a business in a very short space of time. I know you have suffered it from your post. So how have you protected yourself?
Amazon is one of my competitors. Perhaps another reason why other sellers don't come in this niche. And perhaps they can sell more than me, I don't really care. I'm certainly planning to build more channels outside of Amazon. But it's thanks to Amazon that I am where I am now: living in Europe, selling products in the USA, while I sleep.
 

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I feel like I have the following options:
1) Keep doing what I do right now and risk not getting the new products and eventually not getting any products any more.
2) Try and get a better deal where I sneak in my own brand or try and keep him dependent of me.
3) Do what he suggests and probably be out of business in 1-2 years but start something new on the side.

Anybody who had to deal with the same situation?
You have a manufacturer who has ambition and to me that is scary. It's not wrong for them to try to make more money and get into direct retail. They figured out that you know the market better than them and want to partner. If not you, they will ask someone else. Personally, I would look for a different manufacturer and begin to move away from them. What you need to do is build a strong brand now.

Don't help them understand the market. If they aren't offering you their new products, they are competitors to you. Your advantage is that you do understand the market and understand Amazon better than them now. They can't figure out how you can sell at 3x the price.
 

RazorCut

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Let's say one of my ASIN's makes $400/month profit. Not a single seller would bother, which is good. So I keep adding slow selling products like those. My sales are steady, and my competition is low. I was out of stock for one of my main products for 2 months now, still made good profit. Overtaking my market is still possible, but will need a lot of time and a lot of cash.

And everybody wants to get rich quick, so that's a no go for them.

Patience and dedication, that's my barrier of Entry.

Ah I get it. Slowly, slowly catchy monkey and fly under the radar. :thumbsup:

-
 

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biophase

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Really? Enlighten me because I'm curious. Unless you have a patented product and/or a protected brand that only you control (not white-label goods) I can't see how you are not always under threat. You could say that's the way of the world but if you do well on Amazon you are literally flying a red flag saying look at me, I've got a successful product.

We managed to avoid it for several years but when it hit, boy did it hit and from all directions. Unique products, our own unique brand, our own bar codes on everything, registered trademarks. Nothing protected us.

I guess until you have suffered the full brunt of this (including Amazon themselves competing directly) you won't fully appreciate how this can cripple a business in a very short space of time. I know you have suffered it from your post. So how have you protected yourself?

A friend of mine lost everything including his wife and children when his multi-million pound business on Amazon crashed and burned when he got into a price war with his competitors (they all had the same suppliers).
Again, this comes down to branding. When under priced competitors come in, you need that loyal customer base. I know that is hard to build on Amazon, but that's also where your product choice comes into play. Nobody is brand loyal on a pair a scissors, but they may be for sandals or supplements.

I think you just have to know that you aren't competing on price and drive that into your head all day. For me, I'm building a large Facebook following along with alot of brand loyalty. It keeps my prices decent and somewhat protects me from price wars.

Regarding your friend and his business, we all know that price wars are coming. There's no way to avoid it. I purposely don't spend my money or leverage it because I don't want to be bankrupt when the income disappears. I definitely think about what would happen if my Amazon account just disappeared one day and plan accordingly.
 

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Regarding your friend and his business, we all know that price wars are coming. There's no way to avoid it. I purposely don't spend my money or leverage it because I don't want to be bankrupt when the income disappears. I definitely think about what would happen if my Amazon account just disappeared one day and plan accordingly.
Very wise. In regards to my friend he did bring it on himself as he wanted as much market share as possible and was one of the biggest sellers so getting deep discounts. He thought that meant he could bully the market. It worked for quite a while but when the worms turned and it all hit the fan he had moved to a huge warehouse, had lots of staff and major overheads. Recipe for disaster.

-
 

Walter Hay

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There is gold in this thread in the form of a strong lesson about CENTS, and the experiences being referred to by various members.

I started off by preparing to insert quotes, but there were too many, so I have chosen to comment on at least some of the posts by copying and pasting the parts to which I am replying.
@RazorCut wrote: I'll probably be shot down in flames for this post but:"
No complaint from me. You have done a great service by posting this, and your follow up details of such a calamity when loss of CONTROL hits home.

@Dom117 wrote:
"Anybody who had to deal with the same situation?
@Walter Hay , am I lost or is this situation salvageable?"

I think you might have my book, in which I warn against this very situation. It has never happened to me, but I have seen it happen to many others.

It is not only Chinese businesses that will offer to set you up as a distributor with an exclusive agreement and when they get to know enough about the business, dump you. This is common in many countries where I have experience.

@biophase wrote: "They figured out that you know the market better than them and want to partner. If not you, they will ask someone else."

That is absolutely true, so what can you do?

I suggest that your best option is to accept their deal and make hay while the sun shines. Take advantage of everything they offer, but all the while set up your new business and make sure it is invisible to them. Be cautious about your reliance on Amazon.

Your new business should also see you applying the principle described in @Vigilante's last paragraph. This can be achieved through complexity of the product or the process, but also by the complexity of actually finding a product. If sourcing is difficult that makes ENTRY difficult.

Remember what Vigilante wrote: "My new conclusion is that the product either has to be uniquely manufactured in the United States with a high barrier to entry, or a complex product sourced overseas that requires a high degree of consumer interaction, customer service, technical expertise, difficulty in shipping, or other complexities.

If a product has a chance of being commoditized, it will be. The knock off cycle is no more than four years from initial marketing to market oversaturation.

The answer lies within the degree of complexity captured astutely by MJ in the Millionaire Fastlane with regard to barriers to entry."

I will comment later about reliance on Amazon.

Walter
 
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amp0193

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or a complex product sourced overseas that requires a high degree of consumer interaction, customer service, technical expertise, difficulty in shipping, or other complexities.

If a product has a chance of being commoditized, it will be. The knock off cycle is no more than four years from initial marketing to market oversaturation.
The above describes the products I sell. Highly complex. Lots of moving parts and problems. Overhead and resource intensive.

Things like this can be commoditized. However, it might take 20-30 years instead of 4. That's a big head start if you're early in the game. Lots of time to make improvements and set yourself apart. If you're going in with your eyes wide open, you'll be able to stay up top. I can count the number of new competitors in my space in the last year on one finger. But then 3 closed up shop. So I guess it's a net of -2 for 2018.

There's only so many people with the willpower, the patience, the skills, and the resources, to pursue things like this.
 

RazorCut

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I will comment later about reliance on Amazon.
Funny enough @MoneyDoc has just started a thread about Amazon being hacked.

The theory is it's the Chinese (they always get the blame) targeting high selling, high review listings so they can move their products up to prime spots for Christmas. It started happening about a week ago. They are hacking listings in weight loss and Keto (maybe more but those for sure) and changing the image to a Guy Fawkes mask. Imagine the you have built a product up to over 1700 reviews as below:

2018-12-13_06-09-56.jpg
To get that many reviews that listing would have had HUGE numbers of sales and so the strength of its ranking would probably be pretty much unassailable.

Now it's been hacked Amazon will remove the listing and all those sales that the business owner was counting on over the Christmas period are dead and buried. The chances are that listing is gone for good as Amazon couldn't care less how well your product sold, they will still get their cut from another competing listing.

That wasn't a Photoshop'd image, I just took the screen shots off Amazon.com That listing was being boosted with paid advertising too. If you click on it you get this so Amazon have already removed it:



2018-12-13_06-17-30.jpg







2018-12-13_06-09-56.jpg
 

Andy Black

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Funny enough @MoneyDoc has just started a thread about Amazon being hacked.

The theory is it's the Chinese (they always get the blame) targeting high selling, high review listings so they can move their products up to prime spots for Christmas. It started happening about a week ago. They are hacking listings in weight loss and Keto (maybe more but those for sure) and changing the image to a Guy Fawkes mask. Imagine the you have built a product up to over 1700 reviews as below:

View attachment 22821
To get that many reviews that listing would have had HUGE numbers of sales and so the strength of its ranking would probably be pretty much unassailable.

Now it's been hacked Amazon will remove the listing and all those sales that the business owner was counting on over the Christmas period are dead and buried. The chances are that listing is gone for good as Amazon couldn't care less how well your product sold, they will still get their cut from another competing listing.

That wasn't a Photoshop'd image, I just took the screen shots off Amazon.com That listing was being boosted with paid advertising too. If you click on it you get this so Amazon have already removed it:



View attachment 22822







View attachment 22821
Removed rather than reinstated properly? That’s poor.
 

RazorCut

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Removed rather than reinstated properly? That’s poor.
It can be devastating but it's Amazon's property so they can do whatever they like.
 

ned.ryerson

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My own brand was ROCKING in the United States... until... the success lured in every single Chinese resident with a wifi connection. The bottom dropped out of the market faster than you can say "Amazon sucks."

My new conclusion is that the product either has to be uniquely manufactured in the United States with a high barrier to entry, or a complex product sourced overseas that requires a high degree of consumer interaction, customer service, technical expertise, difficulty in shipping, or other complexities.

If a product has a chance of being commoditized, it will be. The knock off cycle is no more than four years from initial marketing to market oversaturation.

Maybe the best example of this is in the history of digital picture frames, and in that scenario it didn't matter what your brand was. When the market eroded by 80% in the period of 90 days, it didn't matter if you were Samsung or ABC brand. Anyone holding the merchandise when the bottom fell out lost their a$$.

The answer lies within the degree of complexity captured astutely by MJ in the Millionaire Fastlane with regard to barriers to entry.
And this is exactly why I do not get excited about products. It was only ever one product I have created. It was software and I made dang sure that I got aquired within 3 years of making it and cashed out.

I focus on creating Service delivery capabilities that I can pivot to the next emerging market that yields the highest Bill rate. You operationalize the service and scale it. As you start to see a commoditize he's in pivot to the next Emerging Market need. I've been doing this since 1998.

Sent from my SAMSUNG-SM-G930A using Tapatalk
 

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biophase

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And this is exactly why I do not get excited about products. It was only ever one product I have created. It was software and I made dang sure that I got aquired within 3 years of making it and cashed out.

I focus on creating Service delivery capabilities that I can pivot to the next emerging market that yields the highest Bill rate. You operationalize the service and scale it. As you start to see a commoditize he's in pivot to the next Emerging Market need. I've been doing this since 1998.
I find this so interesting because I would only do 100% product and never touch a service business.

It's so interesting how we can have totally opposite strong opinions on this and both be right. :)
 

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I find this so interesting because I would only do 100% product and never touch a service business.
It's so interesting how we can have totally opposite strong opinions on this and both be right. :)

I think we all take a path that somewhat fits within our experience, skill-set and ethos.

I get bored easily so have taken many different paths over the years. But as time goes by the paths seem to narrow and head pretty much all in the same direction.

-
 

ned.ryerson

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I find this so interesting because I would only do 100% product and never touch a service business.

It's so interesting how we can have totally opposite strong opinions on this and both be right. :)
This was my path to Independent wealth. Deliver business management or information technology services for $150 to $250 an hour. Operationalize that service for 2x margin. An example might be delivering a Enterprise IT Cloud Governance model. Then once it's fine fine-tuned I productize it into a $50,000 offering. Drop three of those assessments a month working part time.

How many people can net that kind of money with 20 hours a week active participation in the business selling products on Amazon eBay Etc?
 
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amp0193

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Removed rather than reinstated properly? That’s poor.
It can always be re-instated later... if you say the magic words. I've got a couple 404s un-done in the past.

Amazon bans first, asks questions later.
 

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