Why Amazon Sucks: The Master Thread

[amp0193]

I think a lot of it may have to do with people's familiarity with Amazon's shipping and guarantees on their products.

And the gift cards people give us for christmas/birthdays/etc that we can only spend on Amazon and not your website.

My next $100 worth of shopping will be exclusively on amazon, even if I'd prefer to shop on a brand's website.

 

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[Benjamin Kuflik]

This pretty much sums up what I was trying to say.

But I also understand what @AgainstAllOdds is saying (and agree determinant on perspective.)

Once again we come down to two distinct groups of people; entrepreneurs who are trying to create a legitimate brand with value skew, and dreampreneurs looking for easy "plug and play" money.

I jsut wonder if @AgainstAllOdds is actually selling on amazon or has at all started and built a succesfull business.....

Its as if Tinder would publish numbers about the percentages of long term real love relationships being successful through there site - I assume the numbers are prob 99% not successful.

Does that mean that we cant have relationships anymore and its not worth working on it??? of course not! but obviously swiping left or right will not build relationships.

Looking at Jungle scout to judge a real business that uses amazon as a great platform is simply wrong!

 

[Benjamin Kuflik]

Hey! I failed at this.

Thats a datapoint.

Down 2100 in 6 months I think. I made money one month.

Shoulda gotten 2100 dollars in scratcher tickets.

So? thats why its not a good business? thats why there is no opportunity?

Are you in this for the long run, you lost 2100$ in a business? good! you just spent $2100 on a important lesson, take that data and improve and try again!

What did you think? after one try with a couple of G's you will make it big!? nope!

BTW FYI $2100 is a very little amount to learn business.... well worth it! but put this money to use! learn, adapt and improve! dont blame Jeff.... or Jungle scout for that matter

 

[Benjamin Kuflik]

Thinking about how to take customers from Amazon's site and onto yours to save the 15% fee is a mistake imo, I sell on amazon and also do adwords to my website which spike my Amazon sales, what I've found is that getting that external traffic coming to and buying on Amazon effects my position in Amazons algorithm enough to more than offset the loss of the 15% fee...

I've actually thought about cutting out Amazons PPC altogether and just using adwords and the increased ranking that gives!

Agree
I dont even use adwords, simply ranking campaigns is enough.

Although moving in to 2020 the organic rankings is becoming more sacre, as we first have the headline ads, 3 sponsored ads, editorial recommendations, amazon choices and only then we have organic, (other then the first 2 or 3 positions)

so moving forward investig in PPC, headline ads, posts and all the other stuff is prob the best option.

 

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[amp0193]

1) Build a business built on amazon as your primary (only?) sales channel. If you do well, and manage to beat the race to the bottom, sell it for a whopping 2-4x annual net profit through empire flippers.


2) Build a consumer products brand, with customers that you own, and a website that gets the bulk of your traffic, and social media presence and media/influencer coverage, with traction and massive scale potential, and maybe Amazon as a non-primary sales channel... and get acquired for 3-5x annual revenue.


What is your end game? Which will help you reach your goals?


I was very lucky, and made quick cash over 2.5 years with #1. For some, maybe that's enough. But for me, it allowed me self-fund #2.


But with a good concept, a good team, and good strategic partners, you can skip #1 altogether.


People who achieve some success on Amazon, and try to then build a business off of it, like a second thought, are doing it backwards. Build a strong brand that attracts zealot customers, and if some of them want to go buy on Amazon, be there and allow them to do so.

 

[ZZZ]

Got this email today after appealing the termination of my amazon associates account, I'm sure most of you have read or heard about it:
"A specialist has reviewed your account and the decision to terminate your account was found to be correct. As stated previously, under the terms of the Operating Agreement (Amazon.com Associates Central - Associates Program Operating Agreement), we may terminate your account at any time, with or without cause. This termination is final and not subject to appeal. "
I always disclosed links & they won't tell me the reason for closure other than "because we can"
I was only making like $20 or so a month so it's not that big of a deal for me (Maybe that's why they closed it-- not enough traffic from my links?) anyways, add this to another reason amazon sucks!

 

[MJ DeMarco]

we may terminate your account at any time, with or without cause. This termination is final and not subject to appeal. "

Translation: We can destroy your livelihood when we feel like it, and without any just cause, recourse, or appeal. Yikes, truly puts a feather in the "amazon sucks" hat.

 

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[biophase]

1) Build a business built on amazon as your primary (only?) sales channel. If you do well, and manage to beat the race to the bottom, sell it for a whopping 2-4x annual net profit through empire flippers.

2) Build a consumer products brand, with customers that you own, and a website that gets the bulk of your traffic, and social media presence and media/influencer coverage, with traction and massive scale potential, and maybe Amazon as a non-primary sales channel... and get acquired for 3-5x annual revenue.

What is your end game? Which will help you reach your goals?

I was very lucky, and made quick cash over 2.5 years with #1. For some, maybe that's enough. But for me, it allowed me self-fund #2.

But with a good concept, a good team, and good strategic partners, you can skip #1 altogether.

People who achieve some success on Amazon, and try to then build a business off of it, like a second thought, are doing it backwards. Build a strong brand that attracts zealot customers, and if some of them want to go buy on Amazon, be there and allow them to do so.

All I know is that I am absolutely using Amazon in any new business that I start. The real question you need to ask yourself is how am I going to sell my product, not where.

 

[Kak]

Build a business built on amazon as your primary (only?) sales channel. If you do well, and manage to beat the race to the bottom, sell it for a whopping 2-4x annual net profit through empire flippers.

Well said.

This proves that even the people buying Amazon businesses know deep down that it is a dirty whore's market.

 

[MHP368]

BTW FYI $2100 is a very little amount to learn business....

I didn't blame anyone , and to be more specific I was making a mostly retail arbitrage run. I had a good candy wholesaler and made money on that (hint ; never run out of any product ever with FBA or you're only hope of regaining the buybox is a price war)


I mostly wouldn't reccomend FBA because the world simply doesn't need any more FBA sellers , if you're manufacturing and importing your own product , go crazy. If youre business plan is "me too!" Unless you have a time machine back to like 2010 , good luck.

I would call 6 months with one profitable month enough "adapting" but you feel free to keep your own businesses bleeding money as long as you want. I feel like if I have an idea with some real potential maybe I grind it out a bit longer , amazon fba? Half a years plenty for me
Edit : they actually had a documentary or tv show about people doing full time Amazon retail arbitrage via FBA , these people live in vans as mobile gypsies to earn 30 or 45k a year or some pittance. They roam walmart to walmart scanning for endless hours in clearance aisles. For the money? Better to work a job (walmarts are demoralizing places in case youve never been to one)

 

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[AgainstAllOdds]

I jsut wonder if @AgainstAllOdds is actually selling on amazon or has at all started and built a succesfull business.....

Lol. I'll come back to that post when you can afford the hundred dollars a year for an INSIDERS's membership.

 

[Kruiser]

I launched a new company the week before last black friday, so it's basically been selling for 5 weeks. So far, the company was sold about $21,000 in sales and spent about $700 in Amazon PPC. I doubt I could have done this on my own website and spent only $700.

I want to add that Amazon takes 15% commission, so you could argue that I've spent an additional $3,150 on traffic ($21k X .15% = $3,150).

So total spent would be $3,850. I wonder if I could get $21k sales on $3,850 FB or Google PPC spend.

Hmmm. I'm actually not sure. Just throwing out some numbers. Let's say I'm paying $2/click and have 5% conversion rate on my website.

1900 clicks = 95 sales @ 5% conversion rate (which is really high)

On Amazon I had 400 sales.

I think Amazon wins here.

Sure. Amazon can win when you first launch.

But in 3 months, won't you have 12 folks selling the same stuff you are (maybe with some color variations) with 12 different logos that they got on Fiverr?

Serious question.

That's why I quit Amazon. You work hard and create some wins and a few months later you are just swarmed by competitors who more or less copied you exactly.

 

[AgainstAllOdds]

There's no doubt that Amazon as a channel is a profitable avenue. However, the question is: how much profit relative to work? And how does that ratio compare to other avenues? There's dozens of channels that are a lot higher EV for the majority of products.

For ecommerce businesses, something like Instagram influencers + Shopify is a lot more protectable and scalable. There was a guy that popped back on here a few weeks ago doing $20M+ annually just through that.

Then there's offline avenues like tradeshows. You can build a 6-figure business through the right single tradeshow. How many posts are there on here about tradeshows? Maybe one or two total? And that's my issue with Amazon as a channel. Too much attention is given to it relative to channels that give you more control and long-term profit.

B2B Sales. Offline distribution. Another huge product money maker that rarely gets posted on here.

Middle-manning deals for distributors through 3PL warehouses. Another one that gets looked over in favor of "dropshipping".

E-Commerce + Direct Mail for products that are recurring revenue.

Creating look-alike audiences for consumer traffic and directing it to yourself...

The list goes on.

As @amp0193 and @Kak said - there's a reason why Amazon businesses are sold and bought at 2.5x annual profit. The income is unstable and fleeting. Have a profitable business? Great. How long before someone cuts your profits in a fourth? How long before a Chinese factory sells at your cost since their model allows them to? The attractiveness and ease of the channel comes at the cost of inevitable future competition.

 

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[AgainstAllOdds]

But in 3 months, won't you have 12 folks selling the same stuff you are (maybe with some color variations) with 12 different logos that they got on Fiverr?

Serious question.

That's why I quit Amazon. You work hard and create some wins and a few months later you are just swarmed by competitors who more or less copied you exactly.

This.

You need some sort of protection.

That could be an extremely strong brand. However, for most commoditized or yet to be commoditized products, brand doesn't mean much.

Introduce a new innovative product? No patent? How long before someone sees the margins, your sales numbers, and snags your customers with the same couple clicks that got you listed there?

@MoreValue earlier brought up Nike taking their products off Amazon likely because of knockoffs. What's keeping people from knocking off your brand with their own version of the same product? If there is something, then it's worth considering. If there's not anything, then you're playing a game that you're meant to eventually lose.

 

[DeletedUser0287]

Not sure why you tagged me.

Amazon is a channel, not a business.

And those who do well on it experience a nice CAGR. I subscribe to many "business for sale" websites where these businesses are listed, including their numbers. Many are started with little cash and sell for 150K in a matter of years, sometimes months. Those are impressive numbers.

Providing data (who's source is not from Amazon to begin with) that indicates most "Amazon businesses" fail is not surprising to me, but expected. In fact, the data (as you alluded) is probably worse than reality since a bias is involved with Junglescout.

Most people looking to "make money" fail in business, including on Amazon. Likewise, most people who self-publish books and throw it on Amazon also lose money.

I'd also add that people who use "jungle scout" are likely money-chasers looking to make money, not create legit value or enterprise business value. As I've stated for many years, Amazon is a channel not a business. People who use it as such probably fall into the "95% failure" category.

If you own a business that sells products, you probably need to be on Amazon.

As biophase mentioned in the other thread...



Money chasers.

No different than the passive income chasers, the "do what you love" chasers, and the "follow your passion" chasers ... having an approach that is NOT market centered will get you crushed and lumped into the 99%.

Sure. Amazon can win when you first launch.

But in 3 months, won't you have 12 folks selling the same stuff you are (maybe with some color variations) with 12 different logos that they got on Fiverr?

Serious question.

That's why I quit Amazon. You work hard and create some wins and a few months later you are just swarmed by competitors who more or less copied you exactly.

Yeah it seems like people doing amazon businesses have to constantly rush to research the next low value product they produce. When that dies out, now they gotta build another. All exploding low value products. Constant rat race.
Unsustainable.

High value products don’t only have concrete value, but tons of abstract value as I call it. Concrete value are things like materials it is made of and function. Abstract value is brand and the feeling you get when you get it. Unfortunately, selling platforms put a huge block on abstract value. It caps the magnitude you can put on each product.

You can only charge so much for concrete only value.

Only powerhouse brands can handle the commoditizing effects on these platforms. Apple for instance.

 

[Kak]

There's no doubt that Amazon as a channel is a profitable avenue. However, the question is: how much profit relative to work? And how does that ratio compare to other avenues? There's dozens of channels that are a lot higher EV for the majority of products.

For ecommerce businesses, something like Instagram influencers + Shopify is a lot more protectable and scalable. There was a guy that popped back on here a few weeks ago doing $20M+ annually just through that.

Then there's offline avenues like tradeshows. You can build a 6-figure business through the right single tradeshow. How many posts are there on here about tradeshows? Maybe one or two total? And that's my issue with Amazon as a channel. Too much attention is given to it relative to channels that give you more control and long-term profit.

B2B Sales. Offline distribution. Another huge product money maker that rarely gets posted on here.

Middle-manning deals for distributors through 3PL warehouses. Another one that gets looked over in favor of "dropshipping".

E-Commerce + Direct Mail for products that are recurring revenue.

Creating look-alike audiences for consumer traffic and directing it to yourself...

The list goes on.

As @amp0193 and @Kak said - there's a reason why Amazon businesses are sold and bought at 2.5x annual profit. The income is unstable and fleeting. Have a profitable business? Great. How long before someone cuts your profits in a fourth? How long before a Chinese factory sells at your cost since their model allows them to? The attractiveness and ease of the channel comes at the cost of inevitable future competition.

The bubble burst. I have been saying it would for a few years now.

Once upon a time people used to make real money in affiliate marketing.

They used to make money advertising to an email list.

People used to make money in Florida building "investment homes."

Then the music stopped.

History is full of people that thought they were going to ride a wave of money forever.

Those of you that say it is a place to launch your new brand... Good luck. The reality is you will start ranked among the other chumps that saw dollar signs and are trying their private labeled crap out. You will be FORCED to either sell below cost and hope someone finds you just to lose you money. OR you will be FORCED to buy advertising. But the other chumps and the people with actual converting listings were already FORCED to do that. So your spending will be 100% or more your ACOS and you will be hemorrhaging money.

Sounds like an ugly way to "start out."

I don't know about you guys, but I like to make money and being FORCED to do stuff isn't my idea of a solid business model.

It is EASIER to make money NOT doing what everyone else does.

Notwithstanding guys like @biophase who have obvious in and out knowledge of the entire platform and how to consistently smoke newbies.

Amazon is not easy. It is NOT for beginners anymore. You will loose your a$$ if you don't take this as serious as the pros do. Even if you somehow find a very experienced mentor that isn't already this bearish... It is still a very tough road.

 

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[daivey]

It's also security.

When you have major IT and information security people saying that Amazon is one of the only secure places to purchase online, then it's little wonder that everyone buys on there.

Do you want to enter your credit card into a random website and hope it doesn't get stolen?

customer service from Amazon is top notch..

they answer their calls, refund your money, follow up.

Had a package go missing, but it was 'signed for'. Amazon refunded money instantly no questions asked.

Which small time website owner is going to do that if their package is 'signed for'?

 

[biophase]

Sure. Amazon can win when you first launch.

But in 3 months, won't you have 12 folks selling the same stuff you are (maybe with some color variations) with 12 different logos that they got on Fiverr?

Serious question.

Have you ever seen the scene in Breaking Bad where Walter White says, I'm the one that who knocks?

View: https://www.youtube.com/watch?v=wMEq1mGpP5A


Ok, it's a little extreme of an analogy. I'm definitely not that company. However, that is my attitude when going onto Amazon.

You are worried that your product will get knocked off in 3 months. I'm the one that is stealing your sales away in 3 months. However, it isn't because I knocked off your product. It's because I came into your market and filled some gaps in the market.

It's impossible to NOT copy many parts of a product. If I decide to sell a backpack, it's going to have many of the same parts of all the current backpacks. But a few parts will be different. Maybe you forgot to put an airpod case pocket into yours because it was designed 3 years ago.

Below is a new company that I launched in November. This is not an innovative new product. It's been around for 30 years. In fact, I bought one of these in 1997 and based my design on it.

Sales were pretty good for Xmas. Before you say that this was due to PPC, take a look at my ACOS. Ranked on the front page within 2 weeks. Very low competition.

I'm not worried about someone else coming in and knocking it off because there are already lots of these on Amazon.

I doubt any new AMZ sellers will copy it and I will tell you why.
1) The product is huge. Amazon charges me $17 just to fulfill it.
2) The product is huge. Each carton only has 3-4 units.
3) The product is huge. I need a warehouse to store it.
4) The MOQ was high. My first order was $20k.
6) The product is winter seasonal (selling months are only November to April)

It does have direct from China competition. But even for China they aren't going to ship and store a ton of these at Amazon's current storage prices. They would need to find storage in the US.

So there's obviously a gap in the market here. But a novice or an experienced AMZ person isn't jumping into this to store a bunch of stuff at a warehouse, pay rent and then sell for 5 months out of the year.

So why am I doing it? Because it's actually semi-easy money in the winter. The goal is to find a complimentary product for the brand that can do the same in summer. Then they balance each other out to become a viable year long business.

 

[biophase]

Instagram influencers
Then there's offline avenues like tradeshows.
B2B Sales.
Middle-manning deals for distributors through 3PL warehouses.
E-Commerce + Direct Mail for products that are recurring revenue.
Creating look-alike audiences for consumer traffic and directing it to yourself...

All the above things are what you are supposed to be doing in addition to AMZ ppc. but most AMZ sellers think of FBA as their whole encompassing business. They don't do any of the above.

Some of my AMZ clients would launch and just run PPC. I'd check their IG and FB and see no posts in 3 months. All they do is complain about PPC costs being too high. You have to get outside traffic to your listing.

 

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[biophase]

With all the above said, I am happy to hear that people don't think Amazon is easy. I'd gladly welcome less new sellers. But what I would really love is less experienced sellers creating new businesses because it helps me out. Guess what else is great? People selling their seasoned FBA businesses to private equity or inexperienced buyers. They would just run an FBA business into the ground really quick. If I was ranked #2 on a product and then the #1 sold to private equity, I'd be super happy because I know that they will cut costs to maximize profit and I will over take them in a few months.

All this means is less competition in the future.

 

[MoneyDoc]

Amazon is not easy. It is NOT for beginners anymore. You will loose your a$$ if you don't take this as serious as the pros do. Even if you somehow find a very experienced mentor that isn't already this bearish... It is still a very tough road.

This is more accurate and fair to say than just saying "why amazon sucks". Yes, Amazon will suck if you're there to make a quick $1000 selling an essential oil diffuser, a fidget spinner, a spatula, a dog bed, a cat scratcher, a chef's knife set, or a table lamp. The problem with most new sellers is that they go in with eBay mentality. You can tell from their titles...

The "pros" as @Kak put it, are on amazon for only 1 reason - exposure for their brand. Selling a niche specialty snack? Guess what. Amazon owns Whole Foods. Think of how easy it will be to get into Whole Foods if you're one of the top ranked in your niche on amazon. You gotta think outside the box... and only then will you truly realize the power of amazon.

Side note, we recently applied to Walmart's online marketplace. Walmart is application only. So you can't just sign up. Your application is reviewed and you're either accepted or declined. Guess what one of the questions on the application was: Do you sell on amazon? *Insert store link.

 

[Walter Hay]

customer service from Amazon is top notch..

they answer their calls, refund your money, follow up.

Had a package go missing, but it was 'signed for'. Amazon refunded money instantly no questions asked.

Which small time website owner is going to do that if their package is 'signed for'?

That is an important question. The answer is: Those who know the value of a customer and will go the extra mile.

This was one of the most difficult things I had to teach my new franchisees. By way of example I told them about my response to a small customer who complained about faulty products. I called on her and saw immediately that almost all of the faulty products - small value but sold in large multiples for only about $8 - $10 each - were a competitor's product.

I said nothing except that I would replace them, which I did by hand delivery the next day. I gently pointed out that almost every faulty item had been supplied by our competitor.

RESULT: I had a new multi thousand dollar annual repeat customer. Huge ROI on that very low cost but apparently generous act.

The motto: GIVE VALUE, even if it means going that extra mile. There were many similar stories, but you can see why the business grew so fast.

Walter
SELL FRANCHISES.......DON'T BUY FRANCHISES

 

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[DeletedUser0287]

customer service from Amazon is top notch..

they answer their calls, refund your money, follow up.

Had a package go missing, but it was 'signed for'. Amazon refunded money instantly no questions asked.

Which small time website owner is going to do that if their package is 'signed for'?

A small time business with a remarkable high margin product will do that no problem.

 

[DeletedUser0287]

Have you ever seen the scene in Breaking Bad where Walter White says, I'm the one that who knocks?

View: https://www.youtube.com/watch?v=wMEq1mGpP5A


Ok, it's a little extreme of an analogy. I'm definitely not that company. However, that is my attitude when going onto Amazon.

You are worried that your product will get knocked off in 3 months. I'm the one that is stealing your sales away in 3 months. However, it isn't because I knocked off your product. It's because I came into your market and filled some gaps in the market.

It's impossible to NOT copy many parts of a product. If I decide to sell a backpack, it's going to have many of the same parts of all the current backpacks. But a few parts will be different. Maybe you forgot to put an airpod case pocket into yours because it was designed 3 years ago.

Below is a new company that I launched in November. This is not an innovative new product. It's been around for 30 years. In fact, I bought one of these in 1997 and based my design on it.

Sales were pretty good for Xmas. Before you say that this was due to PPC, take a look at my ACOS. Ranked on the front page within 2 weeks. Very low competition.

I'm not worried about someone else coming in and knocking it off because there are already lots of these on Amazon.

I doubt any new AMZ sellers will copy it and I will tell you why.
1) The product is huge. Amazon charges me $17 just to fulfill it.
2) The product is huge. Each carton only has 3-4 units.
3) The product is huge. I need a warehouse to store it.
4) The MOQ was high. My first order was $20k.
6) The product is winter seasonal (selling months are only November to April)

It does have direct from China competition. But even for China they aren't going to ship and store a ton of these at Amazon's current storage prices. They would need to find storage in the US.

So there's obviously a gap in the market here. But a novice or an experienced AMZ person isn't jumping into this to store a bunch of stuff at a warehouse, pay rent and then sell for 5 months out of the year.

So why am I doing it? Because it's actually semi-easy money in the winter. The goal is to find a complimentary product for the brand that can do the same in summer. Then they balance each other out to become a viable year long business.

View attachment 29638

Based on your example, is this really the amount of value you add to a single product? This reminds of the book, Zero to One by Peter Thiel.

No wonder why you have to start so many brands..., seems like you are choosing value additions that provide value in small magnitude that can be duplicated easy. Then the next guy comes in and easily copies that single addition of an AirPod Case.

Why not magnitude over volume, so you don’t have to constantly dink around with making another low value addition brand every damn month.

A magnitude of 10 rather than magnitude of 1

Edit: I wouldn’t even call these“brands,” but labels.

 

[Envision]

Amazon sucks for those that suck.

Im with @biophase on his approach and his mindset towards competition. I started on amazon with 5k, all the money I had as a kid... and turned it into a multi million dollar brand in 4 years. I dont know any other platform, business model, industry in the world that will allow that.

The stats on your post are of what average people (wantraprenuers) most likely doing retail arbitrage, selling white label items, or doing what ever money making product came across in an email from jundglescout took.

A real entreprenuer will see a niche/need and envision a brand, image, ethos into a line of products and leverage amazon for its traffic while reinvesting into their products, branding, and other sales and marketing channels.

I think if you had stats on the difference between the two above it would show a higher success rate with the latter. I dont know one person from this forum that is successful in their amazon/ecommerce business without a BRAND and a TARGETED NICHE. I can think of roughly 10 people who run 7 figure+ ecom companies literally from this forum (primarily started on amazon) and every single one has a brand with a product line.

 

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[Abood]

This thread makes no sense,

Amazon is a great place to start small and grow enormously. Get the PAC course by Jim Cockrum, I think it's a very low risk way of making money through Amazon and well worth the investment.

The marketing skills, the different selling models in the course is a very good fundamental knowledge base, that is applicable to any new venture you may start in future. FYI, some of the business models like OA/RA need absolutely 0 PPC and can make a 6 figure business with good ROI.

In the end, it's a hitch-hiking business like MJ DeMarco says,
It can be used to multiply your few 100$ to millions and use that to fund your 'need based' multi billion $ business.

The Amazon business is definitely going to put you on a rock solid fundamentals (especially if you are new) from product research to advertising to email lists to fan base to productocracy to accounting to hiring, all because it's low risk.

No other business in the world can be started with as as low as 100$, low risk, and with enormous potential.

 

[biophase]

Based on your example, is this really the amount of value you add to a single product? This reminds of the book, Zero to One by Peter Thiel.

No wonder why you have to start so many brands..., seems like you are choosing value additions that provide value in small magnitude that can be duplicated easy. Then the next guy comes in and easily copies that single addition of an AirPod Case.

Why not magnitude over volume, so you don’t have to constantly dink around with making another low value addition brand every damn month.

A magnitude of 10 rather than magnitude of 1

Edit: I wouldn’t even call these“brands,” but labels.

That was an example, but that's not how I add value. It was meant to show that you don't need to add much. However, this tiny piece of value can make someone on Amazon buy your product over a best seller. That is all you need to get your foot into the door.

Someone that starts a simple company with $5k. Gets sales with their "airpod" backpack. Makes $10k. Takes the $10k launches "airpod" backpack version 2 and then "iphone" fanny pack. Makes $20k. Launches "airpod" backpack version 3 and then "iphone" fanny pack version 2 and "ipad" messenger bag. Eventually you have a brand doing $100k a month that you started with $5k. At this point, who cares about the knockoffs, you have a brand that should have a decent following.

 

[biophase]

No wonder why you have to start so many brands..., seems like you are choosing value additions that provide value in small magnitude that can be duplicated easy. Then the next guy comes in and easily copies that single addition of an AirPod Case.

Why not magnitude over volume, so you don’t have to constantly dink around with making another low value addition brand every damn month.

I just wanted to address this statement also. A small magnitude value add can be enough to give you the advantage that you need to sell. The problem with a large magnitude value add for most people is that it generally puts your product into an unknown territory.

Going with my example, adding an 'airpod' pocket to a backpack is a small improvement. But it will likely cost $.25-$.50 in manufacturing. So you can price your backpack at the same price as others.

However, let's say you go big and make an ultralight backpack, weighs 5 oz, made of a new polymer. This is a massive improvement but costs you double of a normal backpack. So now you have to price it at double the price at retail.

So on Amazon, every backpack is $50 and yours is $100. However, photos can't convey that your backpack is 1/5 the weight as all the others. So nobody clicks on it and it gets poor sales. In addition, nobody has ever searched for ultralight backpack because it hasn't existed. So now you are bidding on people searching for regular backpacks in hopes that some of that traffic will pay more for an ultralight one.

Ask yourself, if you were just starting out with your $5k. Which is the less risky path? For me, I'm going with a little more risky stuff now because I can afford it and because I have experience. But when I was teaching my clients, I would tell them to go with the least risky path to get started.

And BTW, my businesses generally become streamlined after a few years and I have plenty of free time so I start another business. This is what I do for fun. If you want to talk a high magnitude business, this is my main business. This is my baby that I run and think about all day every day. When I need a break, I go work on my other businesses as a hobby.

 

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[DeletedUser0287]

I just wanted to address this statement also. A small magnitude value add can be enough to give you the advantage that you need to sell. The problem with a large magnitude value add for most people is that it generally puts your product into an unknown territory.

Going with my example, adding an 'airpod' pocket to a backpack is a small improvement. But it will likely cost $.25-$.50 in manufacturing. So you can price your backpack at the same price as others.

However, let's say you go big and make an ultralight backpack, weighs 5 oz, made of a new polymer. This is a massive improvement but costs you double of a normal backpack. So now you have to price it at double the price at retail.

So on Amazon, every backpack is $50 and yours is $100. However, photos can't convey that your backpack is 1/5 the weight as all the others. So nobody clicks on it and it gets poor sales. In addition, nobody has ever searched for ultralight backpack because it hasn't existed. So now you are bidding on people searching for regular backpacks in hopes that some of that traffic will pay more for an ultralight one.

Technically, you can convey the weight of the backpack through images. A picture of each backpack on a scale or video on Amazon. You are right about the doubling of costs which is why I don't sell on Amazon. It locks you in on commodity zone where people are only competing on function-based value.

The fact that you are considering "price" as a value skew tells me this is in commodity zone. Amazon sales channel suppresses the abstract value (brand) which locks you into the commodity zone.

One of my products is literally 5x the retail cost. But why does it sell? Because it has abstract value on my own website. I don't even consider the price of competitors anymore.

But for me personally, I do click on the pricest option if I do a search. I click because I am wondering "What makes this backpack double the price? What is so good about it?" Although quality and price don't always go hand in hand, I got burned many times buying the cheaper product.

TLDR; To get out of commodity zone, you need abstract (brand) value. Properly created on your website. Controlling every aspect of user experience. Unfortunately, sales channel suppress this brand value. Many instances of the word "brand" should all be replaced with label.

Ask yourself, if you were just starting out with your $5k. Which is the less risky path? For me, I'm going with a little more risky stuff now because I can afford it and because I have experience. But when I was teaching my clients, I would tell them to go with the least risky path to get started.

And BTW, my businesses generally become streamlined after a few years and I have plenty of free time so I start another business. This is what I do for fun. If you want to talk a high magnitude business, this is my main business. This is my baby that I run and think about all day every day. When I need a break, I go work on my other businesses as a hobby.

Gotcha, as @AgainstAllOdds stated the work ratio from doing these smaller businesses isn't worth it. I feared that you these low value adds as your main business...

As for the $5k...It would be hard for me to justify dumping $5k at scale for a product that isn't much different than the rest with a single value add, since you need to hit MOQ. If it doesn't sell, you just stuck there with essentially nothing. But if it does, your return can be quick. These businesses are just short term thinking and a small policy change can destroy them. Which is why I don't like that avenue.

What I am doing now is spending $5k on materials that can be used the prototype numerous iterations. The $5k is now many product iterations rather than at scale for a single product.

 

[broswoodwork]

Technically, you can convey the weight of the backpack through images. A picture of each backpack on a scale or video on Amazon. You are right about the doubling of costs which is why I don't sell on Amazon. It locks you in on commodity zone where people are only competing on function-based value.

The fact that you are considering "price" as a value skew tells me this is in commodity zone. Amazon sales channel suppresses the abstract value (brand) which locks you into the commodity zone.

One of my products is literally 5x the retail cost. But why does it sell? Because it has abstract value on my own website. I don't even consider the price of competitors anymore.

But for me personally, I do click on the pricest option if I do a search. I click because I am wondering "What makes this backpack double the price? What is so good about it?" Although quality and price don't always go hand in hand, I got burned many times buying the cheaper product.

TLDR; To get out of commodity zone, you need abstract (brand) value. Properly created on your website. Controlling every aspect of user experience. Unfortunately, sales channel suppress this brand value. Many instances of the word "brand" should all be replaced with label.



Gotcha, as @AgainstAllOdds stated the work ratio from doing these smaller businesses isn't worth it. I feared that you these low value adds as your main business...

As for the $5k...It would be hard for me to justify dumping $5k at scale for a product that isn't much different than the rest with a single value add, since you need to hit MOQ. If it doesn't sell, you just stuck there with essentially nothing. But if it does, your return can be quick. These businesses are just short term thinking and a small policy change can destroy them. Which is why I don't like that avenue.

What I am doing now is spending $5k on materials that can be used the prototype numerous iterations. The $5k is now many product iterations rather than at scale for a single product.

Wait... are you selling something now? Congrats dude! Can we get a thread on what you're up to?