Arbitrage vs. Private Label: Differences in Seller Strategy w/ Guests Garland & Max

Arbitrage vs. Private Label: Differences in Seller Strategy w/ Guests Garland & Max

There are many ways for sellers to sell on Amazon. We often largely explore the pursuit of rising in the ranks for Private Label sales, however this week Cameron dives into what it looks like to scale an extremely successful arbitrage business! He’ll be interviewing two sellers that have established an incredible arbitrage operation and continue to also scale their Private Label operation. This episode is all about digging into comparison between the two selling types, and pulling out how Garland and Max have successfully scaled (and are still scaling) both. 

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Podcast Transcript

The Top 5 Frequently Asked Amazon Seller Questions w/ Viral Launch Coaches Brandon & AJ

The Top 5 Frequently Asked Amazon Seller Questions w/ Viral Launch Coaches Brandon & AJ

We aggregate a LOT of data here at Viral Launch. ‘Data’ can look like a couple different things – one of them being direct interaction with the Amazon Seller community. Viral Launch has a coaching team that interacts with & guides a LARGE number of Sellers every single day, and have a solid understanding of what’s happening in the Seller community as a result. Today, we break down some of the most recent commonly asked questions sellers have been asking with two of the coaches that have been in the middle of it all. 

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Podcast Transcript

AJ:

Consider the source.  Too often we see people come to us with a product that they’re looking to validate that they’ve found on some list somewhere, you know, or they have seen from a Kickstarter campaign.  If you’re finding a product based off of something that’s visible to everyone, everyone else is going to be looking for that product.

CAMERON YODER:

Hey, what’s up, everybody?  My name is Cameron.  I am cohost of the podcast, Follow the Data with Casey Gauss, and today we actually have kind of a different or, I don’t know, just more unique episode.  So at Viral Launch we have a pretty good opportunity to just be in touch with a lot of Amazon sellers.  We have a team of what we call coaches, and I’ll explain this later in the episode, but we have a full team of coaches who are in touch with sellers every single day, in tune with what’s going on in the Amazon space and what people are experiencing, frustrations they’re experiencing, everything in between and what they, what is working, what is not working.  There’s just a lot that our coaches are in tune with.  And so honestly it’s a pretty valuable resource just to bring them into the picture sometimes with content that we have. 

And today’s episode is that, or involves that.  So we actually asked the I asked the coaches to conglomerate a lot of information that’s going on in the Amazon space right now with Amazon sellers into the top five questions that Amazon sellers are asking right now, and it’s what they’re asking right now, and it’s also kind of what they’ve been asking.  So today I bring two coaches in, Brandon and AJ, to talk about the top five questions that they are hearing Amazon sellers ask.  And we go through the answers.  We talk through the answers to those questions.  So that is what today’s episode is.  That’s what it involves.  So enjoy the show.  If you have any questions – I always say this at the end, but if you have any questions on what we talked about or any comments, feel free to shoot us a direct message on Facebook.  We’ll get back to you.  Facebook is probably the easiest way for us to reach out to people.  Just shoot us a DM, any questions, any comments, any ideas, and I would love to hear from you.  So all right, enjoy the episode.

What’s up, everybody?  So I’m here with two of our coaches just to explain a little bit about Viral Launch.  At Viral Launch we have a team of coaches and/or I kind of call them consultants when I talk to other people about our team.  But I have two of our coaches here.  They’re awesome guys.  I have Brandon and AJ.  Brandon and AJ, what do you guys have to say about being here today?

AJ:

I’m stoked.

CAMERON YODER:

Wow, stoked.  Brandon?

BRANDON:

He said it.

CAMERON YODER:

He said it.  He said it.  Well, guys, so you’re coaches.  How would you describe – just to give the listeners some context here, where is your perspective coming from?  Tell us about coaching a little bit.

BRANDON:

I mean I think we pretty much spend all day looking at Amazon, and so through that we’re able to provide a lot of insight as to what we’re seeing in the markets, what we’re seeing in the markets relative to our services, as well as just different product trends and things like that.  So a lot of times outside of the data we’re able to provide perspective on, you know, maybe something – maybe a market looks really great, but at the same time we’ve seen a bunch of clients come to us in the last few weeks with product in that market.  And so it’s probably something to stay away from, whereas the data maybe wouldn’t pick up on that yet because it’s not registering as being oversaturated yet.  So there’s a lot of data, but there’s also a lot of kind of intellectual or analytical insights that play into our thought process and logic in kind of guiding and consulting our clients.

CAMERON YODER:

That’s exactly – that’s a really good way to put it.  It’s a really good mixture of data, handling data, but also being aware, having that human element of being aware of what’s in the market and how to respond to it.  And so that’s the perspective that AJ and Brandon are speaking from today, and so we’re actually going to go over kind of five really frequently asked questions from sellers that our coaches get, and we’re going to answer those questions and talk through those answers to those questions.  And so, all right, guys, let’s just kind of jump into the questions, the five questions here.  So question number one that a lot of sellers give to our coaches, that a lot of sellers are asking right now, from the perspective of a seller who is just starting on Amazon, what do I – the question is so I’ve just started on Amazon.  What do I do next?  I’ve just started selling my products on Amazon.  What do I do next?  What is like the proper timeline after I start selling?  Guys, what do you think?

BRANDON:

I mean, I think the major kind of chokepoint is review generation.  So once you have your product live on Amazon you’ve got to start kind of strategizing ways to get reviews.  There’s not a lot of easy ways, so really just making sure you have good email follow-up sequences in place, you’re providing really great customer service.  You also want to start exploring your PPC options, getting some strategies in place there to help get you a little bit of visibility from the get-go, and then making sure that your content is really well-optimized, that you’re priced to compete within the market, and so you’re really, you know, offering a good product at a good price that’s providing a lot of value to potential customers.

AJ:

Yeah, so I agree with Brandon there.  I mean I think a lot of it is dependent on the market that you’re in, as well.  So obviously reviews are going to be important regardless of the market.  But there are some markets that are just going to be crazy competitive and you’re going to need to do really well with review generation.  So something like a fat burner is going to require, you know, thousands of reviews to do well, whereas something that doesn’t really have a lot of ambiguity behind the results that you’re going to get, like batteries or whatever, you know, you might not really need a ton of reviews to be competitive off the – from the beginning.  So I think making sure that you make every decision within the context of your individual market is pretty important as well.

CAMERON YODER:

In terms of congruent steps, like so let’s say someone – well, let’s talk through the steps.  So I – see, for me to give some input here just on like the steps that a seller takes, step one typically is like establish your business, right?  Not everyone has to establish an LLC, but you can do that if you want, right?

AJ:

Yeah.

CAMERON YODER:

Establish a business.  Do product research.  Pick the right product.  You source that product, right?  Then you do – that’s like everything post.  After you have sourced the product and you start selling on Amazon, it’s like creatives, right?

AJ:

Yeah, yeah.

CAMERON YODER:

So photos –

BRANDON:

Photos, listing content –

CAMERON YODER:

Listing content.

BRANDON:

Enhanced brand content if you have that open to –

CAMERON YODER:

EBC.  Then start generating reviews?

AJ:

Yeah, I would say driving traffic to get reviews.  So they’re not just going to come on their own.  You’ve got to – once you’ve optimized your listing with all the creative stuff you’ve got to find a way to get some traffic to that listing, and that’s where PPC comes in play, external traffic.

CAMERON YODER:

So start generating reviews through traffic.  So that’s around this period of time, like in terms of the congruency stage of selling on Amazon.  That would be like you get your creatives in play, your photos, your listing, and you start generating reviews through something like PPC?

AJ:

Yeah, and I think that’s definitely one strategy.  A lot of people, you know, if you want to be more aggressive, they do start off with something like a giveaway right off the bat, even without the reviews.  There’s just the expectation there that the giveaway is going to get you on the first page presumably, but once you’re on Page 1 you’re going to need to supplement some organic sales with either another giveaway or a really aggressive PPC campaign or whatever.  You know, as you’re on Page 1 you have the visibility there, you can kind of take advantage of that and bring in some organic reviews that way as well.

CAMERON YODER:

What do most people – what do most sellers get wrong in the checklist, the Amazon checklist?

BRANDON:
I think one huge mistake is just not taking the time to develop the content.  I mean it’s pretty crowded on Amazon these days.  So you really need to make sure that you are selling your product as a higher-quality or with better wording, better imagery.  And you know, a lot of people are sourcing from similar if not the same places, so products can be virtually identical, and really differentiating yourself through sort of a value prop, through the presentation of the product is hugely beneficial.

AJ:

Yeah, I think a lot of people jump straight to, you know, they want to get ranking.  They want to get visibility, but the fact of the matter is if your listing is not in a position where it’s converting well once it has the visibility, you need to make sure that that step’s taken care of before you jump on some kind of crazy promotion.

CAMERON YODER:

There are a lot of steps that sellers miss.  Creatives is probably one of the most important ones that either sellers don’t focus enough on or put enough resources into.  Let’s go to question number two.  In terms of question number two that as lot of sellers are asking revolves around reviews.  So it’s kind of a series of questions, but number one, how do I get reviews?  Do I need reviews to launch a product?  And how many reviews do I need?  Let’s touch on the first one of that series of questions.  How do I get reviews?  How do sellers best get reviews?

BRANDON:

Yeah, so I mean there’s – especially now Amazon is extremely rough on cracking down on reviews that are coming from any sort of incentivized places.  They’re really doing their best to track Facebook groups, private Slack channels, private [subreddit 0:10:10.9] channels to really prevent any sort of incentivized reviews.  That’s not to say that your competition isn’t going to be pulling some shady business to get reviews, but it’s potentially a quick way to get shut down and have your business disrupted.  So within the terms of service there’s no way really to quickly generate reviews or a large volume of reviews. 

But that said, there are things that you can do to help kind of be proactive about it.  And so having the email follow up sequence in place is beneficial.  I know – you know, buyers are able to opt out of receiving those emails, but at the same time a lot of people don’t, and so just putting your best foot forward there can help get you something.  I mean I think additionally customer service is one really kind of underemphasized thing for getting reviews and helping to stave off negative reviews, just making sure you’re really proactive anytime somebody is reaching out to you, especially in those early phases of launching a product can help kind of get your footing on review basis. 

And then the other proactive thing that you can do is really just making sure you can get as much visibility as possible.  And so obviously you do that through PPC, and you know a lot of people are concerned about ACoS and spend on ads, but really in those beginning phases you just need to get your product in front of as many people as you can in order to drive the sales, which will in turn hopefully drive those reviews.

AJ:

Yeah, I would say along with that one other kind of quick win or option available to people, if you are brand registered you might look into the early reviewer program as well.

CAMERON YODER:

It’s a good way to get started.

AJ:

Yeah, it’s a good way to get started, and I don’t think there’s any exception, anything you can do outside of getting the visibility.  That’s honestly the biggest thing.

CAMERON YODER:

I think this is a top question that a lot of sellers ask for a reason, and it’s something that’s really hard for a lot of sellers to obtain.  Reviews are the currency of Amazon, and if you want to be completely white hat, it’s one of the hardest, most difficult things to do.  I really do think all of it stems back to having a quality product.  And again, you don’t have to have like the best product on Amazon, right, but if you just have a – if you have a bad product and you put your product in front of customers that are buying it, you’re going to get bad reviews, bad organic reviews.

BRANDON:

But along with that – and this is kind of jumping away from the review point for a second – but a lot of sellers also come to us with a product that is much higher price than a lot of other products on the market, and they try to make that quality argument.  And that is potentially a very valid argument, but it’s also potentially a hard sell, especially when you’re given a limited amount of text and imagery to really sell that point.  And so really understanding your market, understanding what the value of similar products are in your market is going to be crucial to being successful because if you’re really out of line on price point or, you know, even if you’re providing a much better quality of product in a market that has less, you know, quality products, overall it’s going to be harder to compete just because more people are going to buy a cheaper product than people that are willing to spend more money for a higher-quality in most cases.

CAMERON YODER:

It really is finding – it’s finding that balance between – maybe the correct phrase should be don’t have an awful product, right?

BRANDON:

Yeah.  I mean you obviously want one that doesn’t have any problems, but at the end of the day, you know, if you can spend an extra $5 to make something better, it may not be worth it as long as the initial product that you’re looking to source is going to be quality enough.

AJ:

Yeah, I think it comes down to, again, making decisions based off of your market.  So you know, in some markets creating a premium product might do you some good, but in other markets how many people really want a premium coffee mug or whatever?  You know, you have to make sure that all the decisions that you’re making are in the context of your market and the buyer behavior in that market.

CAMERON YODER:

So a question leading off of or into reviews a little bit more, do I need – the question is do I need reviews to run a launch?  A launch being, let’s just say in this case it could be a launch through Viral Launch, but also just like a promotion in general to increase keyword ranking.  Do I need reviews?  Let’s say you’re a seller; you just put your product on Amazon.  Do I need reviews to launch my product?

BRANDON:

I would say no, but with an asterisk.  So essentially you don’t need reviews to drive the ranking.  You can get the ranking on Page 1 with a brand-new product, no reviews given that you’re moving enough inventory in a narrow enough window of time so you’re getting good velocity.  But at the same time your ability to retain that ranking is typically at least semi-dependent on your reviews.  So you know, if you have the ability to, you know, one way or another to drive some reviews within a reasonable timeframe so you’re not sitting with no sales history for a long period of time, we typically would encourage you to try to get a couple reviews first.  Essentially – also you know you get a little bit of a honeymoon period when you launch a product that a lot of sellers talk about, and so it can be a little bit beneficial to ride that out and kind of see where you fall in ranking before you jump into running a launch right away.  But at the same time if you’re really struggling to get those reviews and you’re just not moving any product, the launch can be beneficial in getting you that visibility to help kind of jumpstart you a little bit.  So long story short, the promotion will help to drive ranking either way, but obviously at the end of the day when you’re looking at organic sales, having that review base is going to help to drive some of those.

AJ:

Yeah, I think that’s something that’s really important to reach out to a coach or some kind of consultant on as well because it can all just be really dependent on the product and its position in the market.  So if it’s a really seasonal market and there is a short window of time where you can even get sales, then yeah, by all means get the visibility right off the bat.  Take advantage of that increase in demand.  But you know, if there is some external factors that would lead us to believe that you would really need a very strong base of reviews to be competitive, then we’re going to kind of point you in that direction as well.

CAMERON YODER:

A lot of these questions are really market product dependent.  Like the question of do I need reviews to launch, really it does, it depends on how competitive your market is or if it’s seasonal or traditional.  Really if you’re launching into a really competitive market, then also maybe the number of reviews that you’ll need to start off initially if you start ranking will vary, right?

AJ:

Yeah, exactly.

CAMERON YODER:

You’ll need more – yeah, and more initial reviews to rank well.  So okay, this kind of leads into – actually maybe that answers the question of how many reviews do I need.  Is there a set number of reviews that customers need for their product?

BRANDON:

Absolutely not.  I mean there are some markets that have very, very low review barriers to entry.  I mean just off the top of my head, like you know particularly like adult products tend to be pretty low review because people don’t like to publicly review those.  But there are like newer markets and things like that that you know, if there’s a new product that’s kind of developed and it’s just sort of making its way on Amazon, a lot of times, you know, those reviews haven’t really caught up to those massive quantities that you see in like a lot of supplement markets and things like that.  So it’s really just dependent on the market.  I mean there are some products that you can compete very well right off the bat with no reviews just because your competition is all kind of on the same playing field.  Others, literally everyone on Page 1 has over 1000 reviews, and it’s going to be exceptionally hard to compete there without getting a large quantity of reviews in place.  And yeah, I mean seasonality plays into things as well because a lot of time seasonal products are kind of more flashes in the pan for sellers, and they ramp it up for a short period of time and then don’t really put much emphasis into it later.  So reviews can potentially count a little bit less there.  So it really just is a product by product, market by market kind of analysis on what you need to be competitive.

AJ:

Yeah, so like Brandon said, I think it’s based off of market maturity, so obviously markets where there have been several products live for several years, they’ve just had more time to aggregate those reviews.  But there can also be buyer behavior within each market.  Some things take a lot of social proof.  People are going to want to see a very large number of reviews to actually make the purchase whereas other things they might not need that because they know fully what they’re buying and there’s little to no doubt on how it will satisfy their goals or whatever.

CAMERON YODER:

Reviews are, no doubt, a really hot topic, a really important topic for sellers.  Anyone that’s beginning, or anyone that’s an advanced seller and selling a lot, reviews are going to be a topic for a while, and things are changing so it’s really important to get processes down now and soon so that you can start aggregating those reviews because things are changing, as we talked about in our last, or one of our recent episodes.  Okay, so kind of another question that a lot of sellers ask is how much inventory do I need for my product?  Now that is, again, the question is how much inventory do I need?  That is a very broad question, and of course the answer is it depends.  But guys, what do you have to say to people that are asking that question?

AJ:

Yeah, so I think that question is something that you’re always going to need to have some data to make that decision.  As with any of these that we’re coming up with it’s a market decision, but having the data available, some sales estimations available to see how the products are doing currently that are on Amazon can really help you project demand and lead you to get that initial inventory count that you’re looking for.  So there’s definitely not a one size fits all answer for that.  It’s really just more the things that you’re going to want to look at are how products are performing right now, if there’s any seasonality with them.  The best thing to do is really just look at comparable products to what yours will be when it is live and see how those are performing.  Take into consideration review counts, price, all that kind of stuff.

BRANDON:

Yeah, I mean there are markets where people are – the top sellers are selling 100 units a month or less.  I mean there are markets where people are selling 10,000 units a month.  So I mean it’s definitely optimistic to assume that you would immediately get to that point as well.  So there’s a lot that kind of goes into it, and you know thinking a little bit ahead of time about how aggressive you want to be out of the gate with things like promotions or just driving traffic, getting, you know, spending money to make money essentially.  If that’s kind of your endgame you really want to ramp up fast, then you’re probably going to want more inventory in stock.  If you’re looking to kind of let things develop organically over time, maybe you go a little bit more conservatively. 

And another big thing to factor in is what kind of the pricing tiers when you’re manufacturing are based on your inventory quantities because if there’s a huge jump in price it might be worth it to buy that little bit of extra inventory to make sure that you’re getting a better price and can sell it for a better price.  But additionally, like the time frames can be really wide, so if you’re sourcing domestically maybe you can get something in a week.  If you’re sourcing from China maybe it takes six weeks.  And so you’ve really got to look at market history and what people are doing now and kind of analyze the best and worst case scenarios there.  And it’s a really hard question to answer just because there is no right answer because there are so many variables at play with regards to how aggressive you’re going to be and what the market’s looking like, what predictably it’s going to look like. 

And so yeah, I mean, I think if you’re talking to a coach or somebody that has some expertise they might be able to steer you in the right direction, but ultimately it just kind of comes down to what you feel comfortable with a lot of times, as well.  But I will say that the biggest factor is you don’t want to run out of inventory if you can avoid it at all costs.  I mean there are even strategies around that so you can airship part of your shipment and then freight the rest by sea if you need to get product in quickly.  So there are options, but kind of knowing the timeframe that it’s going to take you to get your products in stock is really crucial into helping to develop that initial inventory order.

AJ:

Yeah, so taking into consideration lead time like that with new orders, it’s sometimes good to look at the number of units you would want to have on hand, but it’s also good to look at it as a how many units do I need for this period of time.  So instead of saying I have 500 units on hand, I have three months’ of sales on hand kind of thing.  So taking into consideration your lead time you’re able to forecast demand and see how many months of supply should I have on hand given that it takes me this much time to get a new order in.

CAMERON YODER:

I think, again, like you guys already said, this question is a really hard one to answer for individual sellers.  I think a lot of this comes down to asking yourself where you want to be in the market that you’re in.  Oftentimes – and also if like I think, Brandon, you said, whether you want to rank organically or whether you want to go for something like a launch because if you run a launch that is going to increase the number of units that you need right away.  Typically – I’m not going to put a number to it, but I was talking to a seller just at a conference last week, and he was asking me about how much inventory he should order if he wanted to do a launch.  And typically a good practice would be to take a look at sales data again, like something like Market Intelligence, right, looking at all the sales numbers, taking a look at the position you can expect yourself to be in realistically.  Maybe that’s like top 15, averaging out those units, maybe giving yourself two months of what that average is, and then increasing, increasing that by the amount of promotional units that you’ll need.  And again, the amount of promotional units that you’ll need will probably come from something like a consultant or a coach.  At least that’s what I would recommend.  But having a typically two months’ lead time for inventory is a good practice to have.  But again, the balance comes from – the balance comes from having enough inventory but also not spending all of your capital to have it all tied up in inventory if you have multiple products on the ocean or being manufactured at the same time.  If you have – if this is your first product you also want to be conscious of how much money you have. 

So can this question be answered indefinitely with specific percentages and numbers?  Not right now.  The answer is not right now.  But talking to – again, talking to someone who knows what they’re doing or can give you those numbers and has seen people succeed or fail, that is the answer to that question.  But the best thing we can talk about right now is best practices for inventory management and what to expect from data. 

So next, let’s go to the next question.  So a lot of sellers ask about – a lot of sellers ask our coaches about validating product ideas.  Basically they’ll come to coaches and say hey, is this a good idea?  Is this a good idea for a product to sell on Amazon?  And there is of course there are a lot – there is a lot that goes into validating a product and validating a market.  But guys, what our – what would you say are some of the most important criteria for determining whether a market is a good market to get into?

BRANDON:

My big starting point is always going to be looking at the average review quantity of listings on Page 1.  So ultimately you want to see something that has, you know, decent sales, something that you feel comfortable with, you know, and that’s different for everybody.  Maybe somebody is happy to sell 100 units a month.  Maybe somebody is looking for 1000+ a month.  But you also want to make sure that there isn’t a huge maturity of reviews on the listings on Page 1 because essentially if you’re moving into a market where everyone on Page 1 has 1000+ reviews it’s going to be really hard to compete.  So usually when I tell people when they’re starting out with a product finder tool like Product Discovery, set a threshold of like around a maximum of 100 reviews and a maximum sales quantity of – or sorry, a minimum sales quantity of around like 500 or so, and feel it out that way.  And you can always tweak those variables to kind of see how things develop or see what other data points you are finding with those results.  But that’s kind of the two most crucial things.  I mean getting more in depth definitely looking at market maturity is a thing because if the market is really mature it can be hard to enter.  If there is a lot of brand name products competing in the space it can be really hard to enter.  I mean if you’re launching your own toothpaste, for instance, you’re not going to be able to compete with Crest.  So you know, you’ve got to find those niches where there isn’t a lot of brand loyalty in place. 

Checking to see if Amazon is a really active seller in the category can be beneficial as well.  If they’re vending a lot of products, then it’s potentially another little, you know, monkey wrench in your ability to rank and compete well.  Yeah, so then beyond that I mean I think it’s just finding products that obviously you also have the margins on.  And so price point is really crucial.  And if something is selling for $20 but it’s going to cost you $15 to source it, it might not be a great idea.  If something is selling for $20 and it’s going to cost you $5 to source it, that’s probably a little bit better.  So you know, determining kind of what Amazon’s fees are going to be, what shipping is going to cost, what manufacturing is going to cost, that all plays into whether something is a good product as well. 

Then the last point that is potentially hard for an average seller to predict or analyze, but this is where we I think provide the best value is being able to validate it in the context of what is being seen as far as popularity of the product.  So a lot of times manufacturers make something for a seller, and then they push really hard to sell a version of that product to a bunch of other sellers to capitalize more on it.  And so you get a lot of sellers entering the market with basically the same or very similar products.  And additionally, you see trend markets that pop up and a bunch of people jump on board, like stuff from Kickstarter that people are able to clone.  I mean the biggest example we’ve seen in probably the last year is the fidget spinner craze.  So you know, for the first few people that were in the market, they made money hand over fist.  For everybody else that got in, they were screwed because they couldn’t get ranking on Page 1 and got stuck with tons of inventory, and it was just really, really volatile.  And so a lot of times people come to us with products that based on the data look great today, but the fact that we’re able to see that, you know, we’ve worked with 10 people in the last week with this product, it is a little bit of a predictor that, you know, maybe by the time you get this product to Amazon it’s going to be pretty oversaturated. 

AJ:

Yeah, I would say along with that, you know, consider the source.  Too often we see people come to us with a product that they’re looking to validate that they’ve found on some list somewhere, you know, or they have seen from a Kickstarter campaign.  If you’re finding a product based off of something that’s visible to everyone, everyone else is going to be looking for that product.  So consider the source.  Obviously, like Brandon said, reviews are huge.  That’s probably going to be the bulk of your research.  Digging a little deeper into the reviews, they can tell you a lot about the quality of the product as well.  If you have a market where a lot of products are very similar and you still think that you can differentiate in some way, a lot of times if you dig into the actual reviews themselves and look at commonalities, reasons why people left negative reviews, you may have been able to find a defect or flaw in a product design that your competition isn’t finding.  And obviously if you bring that product to the market and it’s in a better position to satisfy customers’ wants and needs without that flaw, then you can do well.  So I would say ultimately, like Brandon was saying, there is a ton of stuff that you can consider and just taking in as much as you can, having as many eyes on the product as you can is really just going to do so much for you in the long run.

CAMERON YODER:

I think the final question actually is a good lead-in kind of out of this one, or they relate together really well.  So we talked about finding a good product market, but also really, and this might share honestly a lot of the same things that we talked about or that we mentioned, but fifth question a lot of sellers ask is how can I tell right off the bat that a market is oversaturated?  How do I tell?  So maybe I know how to recognize a good market, but how do I recognize a bad market right away?

BRANDON:

I always think it’s easier to find a bad market, or to identify a bad market.  And it really just comes down to looking at, you know, everyone has massive quantities of reviews.  Sales are really volatile.  So you know, you see some people with huge, huge quantities of sales.  You know, one huge indicator is if you’re looking into like Market Intelligence, you have some people that are selling huge quantities, others that are selling next to nothing, especially when you get to like Page 2, Page 3, that can be a big kind of red flag because the sales are not being shared.  But in general I think a lot of sellers get very excited when they see massive sales quantities, and what is underappreciated there is the maturity of the products that are getting those sales.  And so a lot of times, you know, you look at that, but realistically you probably can’t compete at that level or at least at that level for a very long time.  And so I like to look for stuff that is going to be profitable.  So you know, you’re looking for stuff where the numbers aren’t insane on either end.  So sales are good, but maybe not like, you know, million-dollar month product kind of thing.  And you’re also looking for reviews that are very low as far as the quantity of them.  So I mean I think obviously that’s the biggest barrier to entry.  Those mature products benefited a lot from the previous incentivized review rush and all that.  And so it’s really hard to generate 1000 reviews legitimately today.  And so looking for markets that, you know, the best sellers don’t have that threshold really makes it a good market.  And so yeah, I mean I think the biggest indicator for me is always the review quantity.

AJ:

Yeah, I agree with Brandon.  So not so much on just the looking at the specific number of reviews, but the distribution of them.  So you know, if there are 10 sellers you’re analyzing, 10 products you’re analyzing and three of them have thousands of reviews, everyone else is at 10 or 15, stay away.  Same with sales.  If something is – if the distribution of sales is super wide, that’s probably a good indicator that they are really well-established products in that market.  They’re going to be very difficult to compete with.  At the same time, though, if you see a pretty flat distribution of sales and they’re spread across several products, several products have low review counts and there’s not a clear leader, you know there might be opportunity to make your product the leader.

CAMERON YODER:

I really do think when it comes to whether a good market is a good market or a bad market, there are indicators that we can tell listeners that set a standard.  At the same time, every seller is at a different spot in their seller journey.  Every seller has a different amount of resources, and a good market, quote unquote, for one person might be a bad market for another.  And so it’s really important to stipulate that you, as a seller, need to sit down – and we’ve said this on the podcast so many times – sit down and ask yourself what you’re capable of, how much you have to invest in an Amazon business and how much risk you are willing to take because your lens for a good product and a bad product will change depending on what you’re capable of doing.  At the same time there are those standards that we can set to say hey, you can see, you can spot a, quote unquote, good market from miles away or, quote unquote, bad market from miles away if you know the things that Brandon and AJ talked about.  I don’t know if you guys want to add anything else.

BRANDON:

Yeah, I mean I think that’s a great point as far as where you’re at in the seller journey really kind of depends on what you’re looking at for products as well.  I mean I think if a first-time seller was coming to me and their first product idea was going to be like a face cream, for instance, I would tell them to stay far away from it.  But if you’re a seller that has a really well-established beauty brand and you’re selling really well with a bunch of other products in a similar line, it might not be the same situation because you have a, you know, you have a clientele that is purchasing your products.  You probably have some customer lists that you can market to, things like that.  So you have a lot more resources at your disposal, and you have a brand name that’s recognizable that you can kind of fall back on a little bit so people, you know, there’s a little bit of quality assurance built into that as well.  So it’s a really kind of different scenario for somebody that has an established product line or something like that to move into a market that might be oversaturated for the first-time seller.

CAMERON YODER:

AJ, do you have anything to add?

AJ:

No, he said it.

CAMERON YODER:

Well, hey, I don’t know, guys, do you want to say anything to the listeners before we end everything here?

AJ:

I think just to reiterate the first point, you know we’re here for you.  We have the experience that a lot of people don’t necessarily have, and we can come at decisions with a unique perspective.  So I just encourage everyone to lean on someone, even if not us, someone like us that can purely give you advice that’s unbiased and not self-seeking.

CAMERON YODER:

Yeah.

BRANDON:

Yeah, I have two more points of advice that are kind of for the first-time sellers.  So the first one is when you are looking to source a product look for something that you’re maybe interested in, but something that you’re not necessarily in love with.  A lot of sellers that we encounter that may have really cool product ideas, but it’s something that they’re really, really passionate about.  So if you’re like a skateboarder or something and you’re really passionate about skateboarding, you launch a line of skateboard bearings or something like that, and it’s a huge passion project for you, but at the same time from like the capitalist mentality, when you have that emotional bond to a product it leads you to make worse decisions in a lot of instances because you try to make it work when it’s not working.  And so finding something that you maybe have a little bit of interest in but are not overly passionate about is good because if something is not working with it you are less emotionally invested and are able to kind of walk away. 

And so I always kind of tell people don’t necessarily think about what you love when you’re looking to sell something.  Look at what’s going to make you money and what’s going to give you kind of the best situation to succeed, and then as you get resources built out maybe you have more of a position to take a risk on something that you’re really, really passionate about and you can afford to lose some money on it.  But if it’s a first product, you know, stick to something that you aren’t super, you know, emotionally tied to. 

And then my final point is just to – a lot of times like research tools can be fantastic for helping you to find product ideas, but I also like to encourage people just to think.  I mean not in a bad way, but like I just think that there are a lot of really cool product ideas that are very kind of under thought of by your competition that you can stumble upon just by looking at what you use in your day-to-day life, what you would like to have, you know, just very simple things can be huge winners on Amazon purely because they’re so simple that your competition doesn’t thing to look at it.  And it’s not – you know, I like to stay away from the flashy stuff, you know, similar to kind of the fidget spinner thing.  You know there’s huge hype around it.  A bunch of people rushed into it.  You want to be going the opposite direction and looking for stuff that people use and use regularly, potentially use every day or reuse, you know, things that people are reordering regularly, but stuff that’s just common.  I mean the very basic common household things and stuff like that can sometimes be huge hits just because they’re not flashy.  And so thinking about things from that perspective outside of the research tools and then looking at the research once you have some of those ideas compiled can be a huge advantage to going about finding a first product to source as well.

CAMERON YODER:

I think that’s very well said.  I think that’s a very undervalued piece of advice in the Amazon community is simply to honestly take time to stop and think.  Just take a moment to think about it because honestly sellers right now tend to get lost in data, tend to get lost in tools, which are fantastic and really add to the experience, but also you have your mind and your experiences, which no one else has.  And so I think that’s extremely valuable.  Well, thank you both.  Thank you, AJ.  Thank you, Brandon, for coming on the show.  I really value your guys’ time and your guys’ input for sellers.

AJ:

Thanks, cam.

Brandon:

Thank you.

CAMERON YODER:

For sure. 

And honestly, that is it for today’s episode.  Thank you all so much for tuning in.  I had such a great time with AJ and Brandon, and we most likely will bring them in again.  Again, I asked them to conglomerate a lot of information, a lot of different questions that sellers are experiencing, and so we will probably use that as a resource, and we would love to also hear different questions from you because we just love hearing direct feedback from you.  So go to Facebook right now on your phone.  Look up – type in Viral Launch or speak text Viral Launch, whatever’s easiest and safest for you, and hit us up.  Just send us a message even if you’re not following us, but also you should follow us, and shoot us a direct message with just any questions you have on Amazon, anything you want answered, any thoughts on what we’re doing, on what’s going on in the Amazon space.  Really, it could be anything at all.  We’re going to Boost next week.  Next week will be the Boost event that we are attending.  So hit us up there.  We’ll be there with a pretty solid team.  We’d love to hear from you.  We’d love to meet you if we haven’t met you yet.  And as always, until next time, remember, the data is out there.

Amazon Review Changes: Drastic Shifts In Seller Strategy & How To Respond (Part 1)

Amazon Review Changes: Drastic Shifts In Seller Strategy & How To Respond (Part 1)

As a Seller, it’s a serious challenge to grow your business and increase sales while so many changes are constantly happening to Amazon’s platform. Amazon is changing the way that buyers ‘buy’, and sellers ‘sell’. Over the past month, Amazon has been making changes to Reviews. Some of these changes have already drastically altered Seller Strategy. Other changes have the potential to drastically alter Seller Strategy in the future. In this episode, we break down recent changes to reviews on Amazon. We’ll break down what the data is saying, how these changes impact you now, and how they impact your future on Amazon.

Listen on iTunes   Listen on Stitcher

Podcast Transcript

CAMERON YODER:

As a seller it’s a serious challenge to grow your business and increase sales while so many changes are constantly happening to Amazon’s platform.  Amazon is changing the way that buyers buy and sellers sell.  And too often Amazon will make changes without any sort of warning or indication of what’s to come.

CASEY GAUSS:

Over the past month Amazon has been making changes to reviews.  Some of these changes have already drastically altered sellers’ strategy.  Other changes have potential to drastically alter sellers’ strategy in the near future.  I’m Casey Gauss.

CAMERON YODER:

And I’m Cameron Yoder, your hosts for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and the best practices for success as an Amazon seller.

CASEY GAUSS:

In this episode Cam and I are going to break down recent changes to reviews on Amazon.  We’ll break down what the data is saying, how these changes impact you now, and how they may impact you in your future Amazon endeavors.  Let’s jump in.

CAMERON YODER:

All right, so we’re talking about the review apocalypse –

CASEY GAUSS:

Apocalypse?

CAMERON YODER:

– that’s happening.  No.

CASEY GAUSS:

Review apocalypse.

CAMERON YODER:

Review eclipse.

CASEY GAUSS:

All right, review apocalypse it is.

CAMERON YODER:

All right, it’s settled.

CASEY GAUSS:

Anyways, so guys there’s five major changes that we want to go through.  Candidly, we don’t have all the data, nor do we want to act like we do.  So we want to show you what we’re seeing.  You know, we’re tracking hundreds of millions of products on Amazon, so we want to use this data to help you make better decisions, to really get a good scope or understanding of the scope of the changes that are being made.  And so this is something, probably a topic that we’ll have kind of an updated post on, whether it be a blog post or podcast, so that you can see like how those changes are continuing throughout Amazon or as we continue to get more data.

CAMERON YODER:

And some of this episode really is just updating you on what has happened in the Amazon space, and another aspect is, like Casey said, delivering actual data and information.  And also, like Casey said, we’re still accumulating data on this subject, and so that’s why we don’t necessarily want to point to very specific numbers, acting like we have it all conglomerated right now because we’re still collecting that data.  But again, telling you what’s happened, collecting all that information while also delivering you some information that we do have.

CASEY GAUSS:

Right, and at the end of the day I think there’s two main things that you need to walk away with – well, three main things.  One, just a better general understanding, but two, I mean more and more are changes happening faster and faster on Amazon, and so I think that you absolutely need to just get used to it.  So it is the sellers that are quickest to adapt to whatever changes are being thrown their way, whether it be from competitors, suppliers, or from Amazon themselves.  Those that are willing and able to adapt to whatever the new landscape or new paradigm looks like are those that are typically the most successful.  So we want to help you get the knowledge you need to know what decisions to make moving forward.  And then number three is just that so many people freak out about some of these changes, and like I said these are going to be happening more and more.  I imagine so. 

And so just understand that when these changes are made these are opportunities for you to adapt, move quickly, and at the end of the day, you know, a lot of the times it just levels the playing field even more.  So we look at it as – or you may look at it as, you know, this change is now going to have this dramatic impact on your business.  Oh wow, how can we continue?  But in reality a lot of the time it just levels the playing field for those doing black hat activities and allows you to have that much more of a competitive advantage or to diminish the competitive advantage those black hat sellers do have.  So it’s not always the case, but for the most part it is, and so I just want to encourage you to be okay with these changes.  And don’t freak out.  Just adapt with them.  Figure out the new rules, play to those new rules so that you can continue to kill it on Amazon.

CAMERON YODER:

Adapt, learn, and let’s talk about those five changes, five major changes that are, or have already happened, or are currently happening, or are going to happen in the future.  The first one, the first one that we want to talk about are random reviews that are being completely – I shouldn’t even say maybe random necessarily.

CASEY GAUSS:

Seemingly.

CAMERON YODER:

But seemingly random or selective reviews that are being wiped off of Amazon.  Casey, what we got here?

CASEY GAUSS:

Yeah, so we are still compiling the stats.  We’ll probably have a blog post out at the time of releasing this.  We’re crunching a lot of information right now.  It’s a little bit tough because there’s multiple changes happening at the same time, and we’re trying to silo those changes.  But anyways, literally millions of reviews have been wiped from Amazon over the last 60 days.  So over the last 90 days there have definitely been changes.  The majority of changes actually have come over the last 30 days at the time of recording this.  This is June 5th.  So over the last 30 days, but a good amount over the last 60, even more over the last 90, but literally millions of reviews are being wiped.  And so, so far the product that we’ve seen the largest drop in review quantity is actually 16,000 reviews lost on one ASIN.

CAMERON YODER:

Single product.  That’s a single ASIN.  That’s not necessarily variations.  Or does that include variations or not?

CASEY GAUSS:

Does not include variations.

CAMERON YODER:

Single ASIN.

CASEY GAUSS:

A single ASIN lost 16,000 reviews.  Now you know, there’s just these wild review fluctuations going on, so I’ve seen everything from – I was looking at a product where it lost 11,000 reviews in a day and went down to like one, two reviews or something like that.  But literally like a few days later got like half – so I’ve seen some products where they get all their reviews back, and then I’ve seen some products where they get like half their reviews back, right?  And so it’s literally all over the place.

CAMERON YODER:

So Amazon, have we – there isn’t necessarily a pattern, correct, that’s been recognized as to these reviews being removed and/or are they correlated with something like black hat activity obtaining those reviews?

CASEY GAUSS:

Yeah, I mean there’s got to be a method behind the madness, and that has not seemed very apparent to us.  So this is happening for brands like Rubbermaid, and TP-Link, and Netgear.  So these major, major brands, but also happening to third-party sellers.  And it can be as little as a couple of reviews being removed.  Sellers may not have even noticed.  But then, like we said, some people losing over 10,000 reviews on a single product. 

So it’s across the board.  So one theory that we have, kind of from some of our tests – now I want to stipulate that this is a theory.  This is not proven.  We don’t have insider data helping us to understand this.  But what we are seeing is that Amazon is flagging particular buyer accounts.  And so this lines up with another change that we’re seeing.  And so which, you know, it helps to support this theory.  But essentially we feel as though, or we think that we’re seeing individual buyer accounts get flagged.  And what’s this this means is essentially – and this spreads into another point coming up – but anyways, if a particular buyer account gets flagged for leaving suspicious reviews or whatever, we then see either all of that person’s reviews removed, so you know that would affect all the products that they’ve purchased and left reviews on.  So it’s not specifically targeting a single ASIN, and those ASINs may – we’ll bring it up in another point, but something else will happen to those ASINs. 

But so I do know that they – or very much so believe that they are targeting individual products as well.  That’s why there’s no chance that they are targeting, let’s say this product that lost 16,000 reviews, on one day they didn’t find 16,000 buyer accounts or whatever that had happened to leave a review on that product and wiped all of them out.  They’re going after individual products as well.

CAMERON YODER:

Yes, so impact on the market – basically, again, point number one is that reviews seemingly are being removed.  Whether it’s completely random or specified to a specific product, it’s unclear at this point in time.  But regardless, reviews, a large amount of reviews, have been removed and are currently being removed.

CASEY GAUSS:

So one interesting thing here – so again, the question is how much time do we want to take to really go and quantify some of these things because we have the data; it’s just a matter of opportunity [cost 0:08:49.1].  We’re working on some big things, but so I was just doing some quick looking around last night and some products that had 5,000 reviews removed or whatever, like some of them you can see on the exact day that those reviews were removed you can see a drop in their sales or a drop in their best seller rank.

CAMERON YODER:

Crazy.

CASEY GAUSS:

Right.  And so you can easily see that this is definitely, definitely having an impact on sellers.  Now we didn’t go – you know, we could do some really cool things like go and quantify the average impact to sales that is being had on the products that are losing reviews, and we could see like if they lost at least X percent of their reviews it had this kind of impact on sales.  Interesting stats, for sure, but maybe not worth our time.  You know, if you’re listening and you really, really, really want these stats and you’re going to promise to share and tell all your friends, like shoot us an email, and if we get enough feedback like maybe we will really go dive in because it’s definitely interesting.  We just have so much that we’re working on.  It’s hard to –

CAMERON YODER:

Right.  All that to say what we are seeing is a direct correlation between these reviews being removed and a drop in sales.  So there is significant impact being placed on the market right now.

CASEY GAUSS:

And one of my favorite points about this is like there is that study, and there’s a bunch of, you know, software providers in the space [unintelligible 0:10:13.2] saying that if you have over 21 reviews then there is no difference, right?  And so these guys who are losing – this person that lost 16,000 reviews, they still have hundreds of reviews, and some of them that lost like 5,000 reviews or whatever, they still have thousands of reviews, but they did still see a decline in sales because they lost reviews even though they have over 5,000.  So if more than 21 reviews, or more than 1,000 reviews, it doesn’t matter, and it doesn’t affect sales?  That’s absolutely not true, and this is the best example of that.

CAMERON YODER:

So point number one, reviews are being wiped.  Point number two – this is an interesting one – reviews are getting split, seem to be getting split, among variations.  Now here’s the thing.  About some of these points that we’re talking about, we’re not saying that they are indefinitely going to happen across the entire Amazon platform.  However, what we are recognizing is that they are happening with specific ASINs.  So in this case what we are seeing is that how things used to be, basically, all products would share reviews under the parent ASIN.  So let’s say you have a – you’re selling a coffee mug.  Let’s say you have a red coffee mug and you have a blue coffee mug.  If you go to that parent ASIN that has all the variations you would see the same amount of reviews.  They would just be – all the variations would share those reviews.  Now what we’re seeing with a couple products on Amazon is that the people that bought a red coffee mug and leave a review, the review sticks for that red coffee mug specifically.  And then people that buy the blue coffee mug and leave a review, those reviews are left for the blue coffee mug specifically.  So what ends up happening is if you’re looking at variations under a parent ASIN, each variation is going to have a different number of reviews and just different reviews in general.

CASEY GAUSS:

Yeah, so actually, Cam, I’m pretty confident that this is going to be happening across the board –

CAMERON YODER:

Everywhere.

CASEY GAUSS:

Yeah, Everywhere.

CAMERON YODER:

But not right now.  Right now it’s not across the board.

CASEY GAUSS:

Right now it’s not, but something definitely to expect.  So this, I feel like does kind of suck.  But I see some benefit to it as well.  So it does suck from the standpoint of one very common strategy is to just put everything under one listing so that you can take advantage of the reviews, start getting some sales going on a new ASIN, and then once you have a significant number of reviews on that new ASIN, you can then split it up, then go take as much of the search result real estate as possible.  So this strategy is going to be gone now, I think, unless the majority of searches are coming for like blue coffee mug but people end up buying the red coffee mug or something like that.  But I think the main advantage of this, of these variation hacks are gone. 

So we’ll see what happens.  I think that as we all have to kind of adapt to this new system or whatever, this new structure, we will continue to develop new strategies as we think about it.  You know, I haven’t really taken much time to think about it, but definitely something to be aware of.  I have some friends who were absolutely killing it because one of their variations was just like had tons and tons of reviews, but when they were ranking for other keywords they still showed those reviews, and so they were just able to wipe everybody out in their market.  And now they won’t have that advantage.  Now sure, because they leverage that they got more sales, which allowed them to generate more reviews.  So they are much better off than had they not have done that in the first place, but still can definitely be impactful for people.

CAMERON YODER:

This change of each variation having their own unique number of reviews does really benefit the consumer.  It is very beneficial for a customer to go in, look at variations and see reviews for those specific products.  For sellers specifically it does make things a little bit more difficult.  But again, like Casey said towards the beginning, this is just something that as a seller you’re going to have to adapt to because it does make sense.  It just makes everything a little bit harder.

CASEY GAUSS:

So one down side to this, I was hoping that it would – maybe some of you guys have seen the examples where, you know, it’s a testosterone cream that has 10,000 reviews and all the reviews are for like crazy things like cat beds, HDMI cables, like camping gear, stuff like that.  The reviews are for these really random, random products for a testosterone cream.  And so I was hoping that this update would make that tactic not available because it sucks.  If somebody can just go and get 10,000 reviews out of nowhere and they’re all verified, like that sucks.  And so you know they don’t always remain, and Amazon will wipe them out sometimes, not all the time.  But regardless, that tactic still remains as a black hat tactic that people can use against you unfortunately.  Hopefully that is something that is blocked here soon.  I can’t imagine that it’s not.  We’re actually talking about just for fun so that everybody knows and maybe to help bring it to Amazon’s attention, building just a quick tool that helps us to find those reviews – or sorry, those products that are cheating in this manner or using this method because like at the end of the day like I appreciate people’s hustle and like, you know, their ingenuity for coming up with these things, but it hurts the seller that’s trying to be legitimate.

CAMERON YODER:

It does.

CASEY GAUSS:

And as a company we have to play by the rules, and we have to teach people to kind of play by the rules.

CAMERON YODER:

Overall I think this change makes sense for some very specific variations on products in Amazon, like if they’re very different, like if you’re talking about variations with jewelry where you have a ring that has a completely different diamond design than another, that makes complete sense.  But for others where it’s just kind of a simple color variation, I think that’s a little more difficult.  Bottom line, this kind of make sellers have to work a bit more or work a bit harder for reviews in general.  Like if you have five variations, now you’re going to have to maybe work five times as hard to get those reviews for each variation.  In the end, though, this is an adjustment that you as a seller are going to have to make, and so that is point number two.  Point number two is reviews that are being split among variations.  Another review change, another thing involving reviews that has changed in the market –

CASEY GAUSS:

It has been deemed the quote Great Amazon Purge.

CAMERON YODER:

The Great Amazon Purge.  And I believe the stat – Casey, correct me if I’m wrong, but I believe the stat is 4,800 out of the top 10,000 reviewer accounts were wiped out completely.

CASEY GAUSS:

Yeah.

CAMERON YODER:

Completely.

CASEY GAUSS:

So according to reddit – we’ll post it in the show notes – you can go see they have this bot that is going and finding new Amazon top reviewer accounts that have been purged.  And so 4,800, you know that’s half of the Amazon top reviewers, which is just – so there’s 10,000 – maybe there are still 10,000?

CAMERON YODER:

Well, maybe there are still 10,000, but –

CASEY GAUSS:

Yeah, of the top 10,000 Amazon reviewers 5,000 of them have been shut down.  And I think this shows that nobody is safe.  They’ve always kind of drawn attention to these top reviewers and hailed them as like, you know, their reviews really mean a lot.  And apparently they don’t mean too much if Amazon is willing to get rid of half of them.

CAMERON YODER:

If they’re removing them.

CASEY GAUSS:

Yeah, so anyways, not like super actionable, but definitely interesting.

CAMERON YODER:

It’s just that does show that no one is safe, and perhaps, again, like we saw before where some reviews were allowed to kind of come back into the system, perhaps Amazon has taken these reviewers out of the system and will let them come back.  But for now they’re gone.

CASEY GAUSS:

I don’t know about them coming back because if you have seen any of the articles recently for the last month or two of buyer accounts that get banned from Amazon because of like too many returns or stuff like that, and then that person just is not able to create a new account or use their Amazon account anymore, which is really crazy to see.

CAMERON YODER:

It is.  Fourth change, fourth change involving reviews.

CASEY GAUSS:

This is probably the most minor so far but could be a precursor to other new things.

CAMERON YODER:

It’s an indication of something that we’ve actually talked about before in a review episode a little while back.

CASEY GAUSS:

Yeah, if you haven’t checked it out – so we have some interesting and novel thoughts.  Now I have heard some new people or some people talking about these ideas since our podcast, of course, but you should definitely check it out.  Basically we talk about what we think Amazon’s review system will look like in the near- to mid-future.  We think there has to be some systemic changes that will change a lot of the strategies and game on Amazon.  So definitely check that out.

CAMERON YODER:

This fourth change kind of –, again the indication of this fourth change goes along with one of our big predictions which we had in that episode, but this fourth change involves seller feedback, okay?  So before if you would go on to an offer listing page for products and you would look at all the different sellers with offers for that product you would be able to look at the seller feedback from the offer listing page, okay?  So on the page you would look at all the offers, all the different offers from all the different sellers for that product, and from there you would be able to see seller feedback, the seller feedback rating.  So typically, until very recently you were able to see, or Amazon displayed the lifetime, the total lifetime seller feedback that all of these sellers had.  However, very recently Amazon has changed this display.  So now instead of seeing seller feedback that is lifetime, that is that seller’s lifetime, it’s now displayed as a 12-month rolling feedback.  So basically, long story short, instead of seeing lifetime feedback for a seller, now we’re starting to see that seller – Amazon is only displaying a 12-month rolling feedback.

CASEY GAUSS:

So yeah, 12-month rolling feedback is not a new thing, right?  So if you go to a seller’s store then you will be able to see 30, 90 and –

CAMERON YODER:

Lifetime.

CASEY GAUSS:

12-month and lifetime feedback on the seller.  And so they’ve been doing these rolling metrics, but this is the first time that we’re seeing it on the product page.

CAMERON YODER:

Right.

CASEY GAUSS:

Like and this is only happening to – it’s happening on the account level, which is very interesting.  So again, we – just some quick glances weren’t able to discern what the cause or how they were delineating between who to show the aggregate or lifetime feedback versus the 12-month feedback, but this could definitely be a precursor to what we think is going to one of the ideas of how we think the Amazon review change is going to happen.  So not very actionable, not too much going on, but definitely something interesting and to be paying attention to, especially just among all this noise among of review changes.

CAMERON YODER:

So instead of applying this to the product review side, this is an indication that in the future or sometime maybe Amazon will implement this rolling review system to products.  So instead of seeing the lifetime reviews for a product, for example, maybe you’ll see the number of reviews that this product has gained over the past 12 months, at least displayed.  And maybe if you click into that you’ll be able to see the lifetime reviews, but just like seller feedback, buyers often are not going to click on a seller, look at all their data and see the lifetime reviews.  They’re just going to take what they see up front on the listing, on the offer listing page and say like okay, this seller has this review rating. 

So again, indication possibly for the future.  Maybe Amazon will push this rollover system into their product feedback into their product reviews.  Point number five, the fifth review change that we see happening in the Amazon system right now are reviewers getting blocked, ASINs getting flagged.  Casey, you touched on this a little bit at the beginning.  Maybe touch on it specifically again.

CASEY GAUSS:

Yeah, so I’m sure some of you have seen it in the Facebook groups.  We’ve been seeing this probably for the last three or four weeks, actually beginning of May.  So over a month now, wow.  So anyways, what happens is you go to leave a review and – on a particular product – you click on the star rating, and then it says – you know, a message pops up saying sorry, we’re unable to expect accept your review of this product.  This product is currently – this product currently has limitations on submitting reviews.  This may be because we deleted – or sorry – detected unusual review behavior on this product or to maintain the best possible shopping experience.  And so then it has a link to the customer review guidelines.  So there’s some really interesting things here.  We have some more testing to do to figure out the specifics.  We don’t want to disclose too much of what we’re doing to test, but basically this is very interesting. 

And so what happens, or what we’re seeing happen is if there is a significant – now significant, we don’t know what that means exactly.  If there is a significant number of reviews being left over a set period of time – we don’t know exactly what that set period of time is.  We have some guesses.  I’ll share that in a second.  But if too many reviews are left over a certain period of time Amazon will block the reviews.  And from what we’re being told this then triggers a – basically the product and/or brand has to be looked into further to better understand is this manipulative behavior, and if so, then go do deeper digging, where we’re seeing some people get suspended because their email sequence or whatever was not in line with Amazon’s guidelines.  So they’re going – I think this is a manual process where they go, they review the product, they review the brand to go see what are these guys doing to see this kind of review volume?  Is this malicious or not?  And so we’ve seen where it takes as few as a few days to be unblocked from reviews.  The most I’ve seen is seven consecutive days, but we have seen it go from seven consecutive days getting unblocked and then going through this dance of being unblocked and blocked.  So one very interesting point here is that actually the unverified and verified reviews are blocked irrespectively. 

So we haven’t tested too much of going back and forth, but so basically what we’ve tested is okay, a product is ineligible or currently being blocked for unverified reviews.  Well, verified reviews, meaning someone has actually purchased a product at call it full price, is then still able to go and leave a review.  But if too many verified reviews are left within – for us we’ve just been testing within the context of a day – if too many verified reviews are left within the context of a day, then the verified reviews will be blocked.  And it’s possible that the verified reviews are blocked but not unverified reviews.  So very, very interesting. 

So what do we think kind of the limitations are?  So just some casual testing here and there, it looks somewhere around three unverified reviews in a day and five to seven verified reviews in a day.  So please don’t hold us to those numbers.  We still have quite a bit more testing to do to find the specifics, but that gives you a general jumping off point.  And so again, we mentioned that reviews could be, at the very beginning of this podcast, that we are seeing some products that seem to get blocked when some of the reviewers get flagged for – so if a reviewer gets flagged, then it is very possible that the products that they’ve left reviews on then get this review block, and this review block, like I said, can happen for days at a time.  We’ve seen it where it’s blocked for three days, unblocked for a day, blocked for three days.  And we’ve seen where a product is blocked but then is good for the last, I don’t know, three weeks or so.  So still figuring out the specifics, but I actually, for the most part I like this. 

So too often – we’ve all heard of the stories where products get hundreds of reviews over the course of a week or two weeks, and we all know that for the most part these are not legitimate methods, and there is one method that I know where you can get hundreds of reviews legitimately in the course of a week or so.  But these are very rare and tend to be across a whole product line, not just a single ASIN.  Anyways, I like this change because I feel like this is Amazon stepping up their game to make sure that these malicious black hat sellers are not getting tons and tons of reviews in a short period of time, able to just launch their product to the top and just start taking all of the sales on these products that don’t deserve it, essentially. 

So we’ll see how this continues to change.  One thing that I would love for Amazon to really start paying attention to, for a little bit we thought this was the case, but now not so sure about that, or not – I don’t think it’s in place right now, but I’d love for Amazon to kind of just pay attention to the referral path or where that customer is coming from to leave reviews.  But anyways, I think they’re doing a good job of playing it safe so that we can take legitimate action.  Now that does mean we have some – I have some friends that have legitimate review acquisition strategies where they’re getting like insane rates, like 20% review rate, which is just insane.  The downside is they’re getting flagged, and so they are legitimate reviews from legitimate people and like legitimate buyers, and yeah, their ASINs are getting flagged because they’re doing too well with the review acquisition strategy.  But overall I think that this is positive for people.  Now it’s just a matter of figuring out what are the limitations in terms of too many reviews too fast so that we can stay within those lines and make sure not to get on Amazon’s radar, and to make sure that we are able to get as many reviews as quickly as possible in a legitimate fashion.

CAMERON YODER:

Overall, big picture, these five changes – I’m going to go over them again.  The five changes, which were random reviews being wiped, reviews being wiped in general, reviews getting split among variations, the Great Amazon Purge, a.k.a. the top reviewers, 4,800 top 4,800 reviewers being wiped from Amazon, the seller feedback change into a 12-month rollover and blocked ASINs or blocked reviews being in place.  Each of these seem to show Amazon’s moves now, which may indicate where they’re going in the future.  Seemingly, Amazon is taking big steps, big strides that they haven’t really taken before against fake reviews, against reviews in general, making it, in some cases harder for small sellers, but also harder for big sellers.  Basically they’re changing the way that reviews happen and are displayed on Amazon.  And we could look at this, and we could say – we can look at this and just kind of moan the whole time that it’s happening and not act, but basically we have to play with the cards that we’re dealt, and in this case we have to play by the rules of the Amazon game.  And the rules are changing a little bit right now.

CASEY GAUSS:

Yep.  Overall I feel like this helps small sellers, these changes, outside of maybe the variation change.

KEN CHRISTIANSEN:

Right.

CASEY GAUSS:

But I mean it is what it is, and guys, we need to focus on how we can move forward and build the best business possible with the new rules versus looking at how things used to be and getting upset, complaining, or feeling like our chances of success are limited.  They’re just – they are not.  There is still so much opportunity for success.  And yeah, let’s go and achieve these like crazy goals, build our dreams, chase after our dreams together, no matter what the specifics of the landscape are.

CAMERON YODER:

We want to thank you all so much for listening.  Seriously, we do this for you, and we do this every week for you guys.  We love hearing feedback from you.  So if you have any feedback on today’s episode we honestly would love to hear from you on your thoughts on potential changes and the changes that are happening now for reviews on Amazon.  So if you’d like to leave us any feedback at all, I’m going to encourage you, push you to our Facebook page.  Seriously, if you go to – if you look up Viral Launch on Facebook and you just shoot us a message about the podcast we’ll get right back to you.  That’s something you can do on your phone right now.  Seriously, take out your phone if you’re listening and you’re not driving and shoot us a message right now.  You can also look forward to our blog post on this subject.  That will be going out sometime soon.  And if you would rather call in, you can call us at 317-721-6590.  But again, thank you all so much for listening.  We look forward to your feedback and your questions.  Until next time, remember, the data is out there.

From Side-Gig to Full-Time: Leaving Your 9-5 to Focus on Amazon w/ Guest Taz Ahsan

From Side-Gig To Full-Time: Leaving Your 9-5 to Focus on Amazon w/ Guest Taz Ahsan

The ultimate goal for most Amazon sellers: freedom. Many sellers get into selling on Amazon to gain some sort of financial freedom. Even with this light at the end of the tunnel, it’s a struggle for sellers to find the balance between working a full-time job and grinding with Amazon on the side. Taz Ahsan, our guest on today’s show, has successfully scaled his Amazon business while working in a time-consuming, full-time job. Today’s episode gave us the chance to break down how Taz is successfully finding harmony between working a full-time job, Amazon on the side, hosting a Podcast, and living life all at the same time. There’s a LOT to take away from this week’s episode – let’s dive in.

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Podcast Transcript

CAMERON YODER:

The dream shared by almost every single Amazon seller, freedom.  Whether you’re unhappy with your 9-to-5, stuck in a job you don’t really want to be in or brighten up at the idea of venturing out to do your own thing, freedom and independence are large goals for a majority of sellers getting into Amazon.  It’s difficult to find the balance between working in your current job and scaling your Amazon business at the same time.  Knowing when it’s time to make the switch is difficult, and leaving a secure job for a risk like Amazon ends up scaring a lot of people off from making moves that would allow them to move towards their goal of independence even more quickly.  I’m Cameron Yoder, your host for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data that we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and the best practices for success as an Amazon seller.

In this episode Casey and I talk with Taz Ahsan, an Amazon seller who has honestly successfully scaled his Amazon business while also working full time at a pretty demanding job.  And he’s successfully worked towards what a lot of sellers are after, which is ultimately independence.  Taz has a really unique perspective.  If you’re considering leaving your job, or if your goal is to make Amazon your independent thing, whatever your goal is with Amazon, Taz is honestly in the grind right now.  So he has a really good perspective to offer.  All that being said, today’s episode is a really good one.  Let’s jump right in.

CASEY GAUSS:

What’s up, guys?  So we’re here with a good friend of ours, Taz Ahsan.  This guy is absolutely killing it and in a way that maybe some of the other people that we have had on the podcast are not.  And so this guy is, I think, a very special guy, and he’s absolutely taking the right approach to getting started on Amazon.  And so we really kind of wanted to talk about this.  So this is largely for those that are kind of just getting started.  You still have your 9-to-5 job.  And I know a lot of us are asking the questions of like when should I get out of my 9-to-5 to really focus on this Amazon business?  And you may be dreading going into work every day, and you may just not be happy with where you’re at, but sometimes delaying that gratification is what allows you to have the ultimate success over time.  And so that’s why we felt like it was really awesome to bring Taz on here so that he could share his experience with how he’s growing his Amazon business while having a full-time job.  So Taz, welcome, man.  We’re so stoked to have you finally.

TAZ AHSAN:

Thank you for the amazing intro, Casey, and honored to be here.  And you called me a special guy, man.  I didn’t know you felt that way about me.

CASEY GAUSS:

I like to call it how I see it, man.  So for those of you who don’t know, Taz has a 9-to-5 job.  He was – Taz, correct me if I’m wrong, but you got started doing wholesale and then recently got into private label, correct?

TAZ AHSAN:

I’ll correct you.  I got started doing retail arbitrage.

CASEY GAUSS:

Gotcha.

TAZ AHSAN:

And then wholesale.

CAMERON YODER:

How long did you do retail arbitrage?

TAZ AHSAN:

About three months.

CAMERON YODER:

Three months, and then –

TAZ AHSAN:

That’s as long as I could last without a vehicle.

CASEY GAUSS:

Oh wow.  How did you get into it then?

TAZ AHSAN:

The whole Amazon thing, so it started back in – I think it was – I guess it was December 2016 into January 2017 was when I first sold something, but the idea came from a friend of mine who – I was at an event.  So I’m into personal development, so I was at this Tony Robbins event volunteering, and I was talking about this idea I was working on with my friend.  I was like hey, I’m building this social media marketing agency.  I just wanted to start my own thing, and he told me about something he was doing, and he explained to me what retail arbitrage was on Amazon.  And I said hmm, okay, so I have this thing I’m trying to build.  I don’t really know what it is or how I progress, and then you’re telling me if I buy these things I can start making money on Amazon.  Okay, so let me just switch to what you’re doing was basically what happened.

CASEY GAUSS:

Nice.

CAMERON YODER:

Yeah.

TAZ AHSAN:

And I literally there and then ordered all this stuff off Amazon for retail arbitrage, like you know some boxes and the tape and all this kind of stuff, so I could go and start scanning things when I got back.  And that was it.  I got directly into retail arbitrage.

CAMERON YODER:

Wow.  What led you then – you said you did wholesale next?

TAZ AHSAN:

Yeah, so I did that for about like – I was into it fully for about a month, a month and a half, and as I was doing it I was listening to podcasts.  There were loads of podcasts out there.  I listened to all of Manny’s, and I was like okay, there’s definitely a better way of doing this because whilst I was doing retail arbitrage I still had my full-time job, of course, and retail arbitrage is very labor-intensive.  So I was – after the office I was walking downtown or getting an Uber downtown, buying like thousands of dollars of stuff and then coming back and then –

CASEY GAUSS:

With an Uber?

CAMERON YODER:

You were Ubering there?

TAZ AHSAN:

Uber.

CASEY GAUSS:

Hustle.

CAMERON YODER:

Yeah, that is hustle, man.  That’s dedication.

TAZ AHSAN:

And uberPOOLing most of the time.

CAMERON YODER:

Yeah, so you’re lugging around all the stuff in an uberPOOL.

TAZ AHSAN:

Yeah, and they’re like what?  Who is this guy?  Does this stuff even fit in the back?  And sometimes I had to make adjustments, like carry stuff inside the car.  Sometimes I was like hey, do you mind just holding this for me in the car?  It was kind of insane.  And then on the weekends I would rent cars.

CASEY GAUSS:

Gotcha.  So correct me if I’m wrong, but you have a good paying job, too, right?

TAZ AHSAN:

I have a six-figure salary, yeah.

CASEY GAUSS:

Yeah, nice.

CAMERON YODER:

Nice.

CASEY GAUSS:

Nice.  So I really appreciate the frugality and like the hustle in that respect, right?  So why were you, you know, cost-saving on the uberPOOL?

CAMERON YODER:

Why were you hustling, man?

TAZ AHSAN:

Well, it was the first thing I had ever done on my own.  So I had started like a small company in the past with friends and didn’t really go anywhere, and this was the first time I was doing my own thing, so I was just thinking to myself, well, what’s the best way and most cost-efficient way of doing this?  So I thought well rather than spend $25 on an Uber, I don’t  mind, I don’t care if I have to squeeze in with people and I save $15 because I was going downtown, and I was going at peak times, and I thought that stuff’s going to add up, so why not just pool it?  And sometimes I would, if I had loads of stuff and I actually knew it wasn’t going to fit in a trunk I’d be like okay, got to – probably not going to be able to pull this one.  But most of the times I’d go straight into pools, yeah, because this was my thing now, and any money – it was different before where I’m getting a salary.  I don’t know why it’s a different mindset for me.  Now it’s my business.  I don’t want to spend that money that I could be using to grow the business.  That’s my mindset now.

CAMERON YODER:

Taz, did you have – you had the job that you have now then, when you were doing retail arbitrage?

TAZ AHSAN:

Yeah, so I moved to the US a couple of years ago, about 2 ½ years ago, and I’ve had the same, pretty much the same role at Akamai Technologies, yeah.

CASEY GAUSS:

So I’d love to just clarify real quick for everybody to recap, so this guy has a six-figure salary, but he is so focused on keeping capital so that he can grow his business, so he’s taking an uberPOOL and getting in, you know, these somewhat uncomfortable situations just so he would have more capital to continue to put into the business.  Right, Taz?

TAZ AHSAN:

100%.  And this whole retail arbitrage piece was, in essence, in order for me to generate some capital to then go into retail – sorry, private label.

CAMERON YODER:

Taz, did you start out – even with retail arbitrage did you have one big main goal to do something like leave your full-time job and make this a full-time thing, or did you just start out wanting to generate some side income, kind of have a side hustle and wasn’t really sure where it would go?

TAZ AHSAN:

So I definitely had the mindset of I want to create something for myself.  That was the main thing, and I also 100% saw it becoming my main source of income.  I didn’t know how long that was going to take me, and I wasn’t –  I didn’t have my mind set on oh my God, I have to leave my job in six months, like you were saying in the intro.  I don’t hate my job.  I really enjoy my job, and I see it as a blessing, and I see it as a way for me to take risk in a business and be able to support myself whilst I keep growing and just, you know, snowballing all of the profits into the business.  That’s exactly what I did with retail arbitrage for 2 ½ months.  Whatever I was generating I was just putting it right back in and paying off that card and just going out and buying more stuff.

CASEY GAUSS:

Nice.  So then fast-forward.  We actually met in China on a China trip, and you were sourcing products for private label, correct?  This is April of 2017.

TAZ AHSAN:

Yes, so this – I’d say when you say sourcing products I am using quotes in the background when you say sourcing products because at this time, right – so this is my timeline.  I get into Amazon around about in January.  This is the time where I’ve tapered off retail arbitrage and I’ve switched to wholesale, but I honestly went to China really not knowing anything about sourcing.  Like really nothing.  I didn’t know what I was going to buy.  I was like filling out POs in Yiwu, not really knowing what I was doing, but I knew some cool people were going to be there, and lo and behold, I met you.

CASEY GAUSS:

Nice. 

CAMERON YODER:

That’s legit.

TAZ AHSAN:

Yeah, so it worked out.  So then from there you started a podcast of your own, correct?

CAMERON YODER:

At that time?

TAZ AHSAN:

So it was a few months later.  So back end of July, early August was as I was starting to figure things out – so I came back from China, and I was like I don’t understand any of this stuff, so I started doing more and more research.  I spoke to loads of different people, and then I finally came out with my brand idea of what I wanted and started manufacturing, or starting that process.  And I thought I think it would be a great idea for me, someone who is really new, I don’t – and the cool thing, I think, from my perspective is I don’t have a business background either.  Like Manny and some other guys have run their own businesses, and they have all this great experience, which lends themselves really well to starting their own Amazon business.  For me I’m coming in super raw, not having any of that knowledge.  I mean I know how to do my job, and I think I’m a smart guy but I don’t really know anything.  I didn’t really know anything about business at the time.  So that’s the perspective I thought I would try and bring, and also just to kind of raw and honest, here are all the mistakes I’m making kind of perspective on the podcast.

CASEY GAUSS:

So you started a couple months after we met.  You started your podcast a couple months after we met in Yiwu in April.  What was the month that you started the podcast?

TAZ AHSAN:

So late July was my first episode that I had out.

CASEY GAUSS:

Okay, awesome.  And for those of you who want to check it out, it is called The Amazon Entrepreneur podcast.  Obviously Taz is a cool guy that we know, love and trust.

CAMERON YODER:

Super cool.

CASEY GAUSS:

Yeah, so anyways, wanted to see – so you started end of July, and then when did you see your first sale on Amazon?

TAZ AHSAN:

So I was very, very ambitious with my – with what I was trying to do, and the very first product I chose was a big oversized product, and it was taking a really long time to manufacture, and I was having all these issues with the factory, the factory being shut down and coming back up, and my manufacturing timeline doubled from 45 days to 90.  So in that time I was thinking hey, well I don’t want to wait all this time just to launch this one thing.  What else can I launch at the same time?  So I looked into a few other things, and then I found something that I could manufacture.  I was like okay, well I’ll choose this thing.  So I chose something else that kind of still pretty much related to my brand, my brand idea, and I got going with that and that eventually came in – I air-shipped those into Amazon, and I made my first sale in, I think it was October, early October.

CASEY GAUSS:

Nice.

CAMERON YODER:

Wow.  So okay, hang on.  Let’s pause at this point in time.  So you’re running, you’re working your full-time job, you’re working your full-time job and you’re running your podcast, and you just got your first sale.  That’s right?

CASEY GAUSS:

And at the time – I’m going to add to this – I was working with Manny, and I was doing some consulting for Helium 10.

CAMERON YODER:

Okay, dang.  So you were doing a lot.  But okay, I just want to take a pause, a snapshot here.  What did your day-to-day look like during this time, just the specific period of time because obviously you were grinding a lot?  How, just at this specific point in time when you’re getting your Amazon stuff up and running, when you’re handling a podcast, you’re handling consulting, everything, how did you balance it well and/or did you crash and burn at first?

TAZ AHSAN:

It was definitely a struggle.  And then I’ll also add one other thing.  I had a girlfriend at the time, and that requires its own time, obviously.  I wanted to – and I wanted to give – Cara [sp], if you’re listening I still love you – but so my routine was pretty insane.  So I would start at 5:00, and I’d give myself – I usually give myself about an hour or half an hour, an hour myself to in the morning, just to meditate to kind of figure out what I’m doing with the day.  I planned everything.  So I’d plan out every, pretty much every hour of the day.  So the morning time, that first couple of hours I’d talk to suppliers, and [unintelligible 0:12:48.8] back and forth with suppliers, people who were working on designs for me and figuring out things with China because they were kind of the tail end of their day, but they work pretty late so I could talk to them.  And then I’d go and work my full-time job, so I’d be there from 9 to 5, 6, whatever that would be, and in between that though sometimes I would fit in the consulting call with Manny or those guys or work on something else.  Then I’d come back.  I’d usually go straight to the gym, and so say it’s about 7:00 now.  Then I’d go back into okay, do I need to report a podcast, do I need to edit a podcast, spend a couple of hours doing that.  Then China will come back on.  So roundabout 9:00, 10:00 I would talk to them a bit more, and then in between some of those days were just that and I really didn’t get to spend any time with my girlfriend or anything.  And then we would make time like different days because she was pretty busy as well.  It was a bit insane for me, but we would still figure out time to slot in time for each other as well.  But it was insane, for sure.

CAMERON YODER:

So it was an ebb and flow.  It was a lot of – it was a lot of stuff kind of all at once, but you were kind of able to balance everything?

TAZ AHSAN:

Yeah, it was – I mean I honestly don’t really believe in balance.  I believe in counterbalancing.  I think sometimes you just have to go really, really hard for a period of time.  And it’s a choice, right?  You can choose to take things slower, but that isn’t my personality.  I’m someone who really wants to get things done quickly, and I’ll push myself.  And I’ll know I need to sacrifice certain things at the time.  So that’s why I call it counterbalancing.  So I’ll sacrifice some time and do all these things and work really, really hard, but then I’ll make sure I take time back and give myself time to go away and relax, or travel and not really work as hard.  So I think it’s a counterbalancing act.

CASEY GAUSS:

Awesome.  I’m with you.  I’m all about, hey, there’s this incredible opportunity ahead of us.  So the last thing I want to do is look back, you know, 10 years from now and say wow, I wish I would’ve not watched as much Netflix or whatever because I could have done X, Y or Z.

TAZ AHSAN:

Yeah, and I do want to add, though, I definitely did it in hindsight, so I also have a lot of belief in myself that I can pretty much do anything I put my mind to, and I believe that’s a fact.  But I took on – I definitely took on too much where that being my first ever run and trying to launch seven products and at the same time not even really being able to dedicate myself –

CAMERON YODER:

Wait, seven products?

TAZ AHSAN:

Oh yeah, yeah.

CAMERON YODER:

Oh snap.  Okay.

TAZ AHSAN:

So here’s what happened, right?  So I had this – I was like okay, I need to get some cash, as well.  So I have about – I think I had – what did I have, about 25K built up [unintelligible 0:15:13.9] saved from the retail arb stuff, 20 or 25.

CAMERON YODER:

Nice.

TAZ AHSAN:

And then I was like okay, well, I want to get this big product in, and that first order was massive.  And because I didn’t really know what I was doing at the time so in total that order was $45,000.  I obviously didn’t put all that down, but I had to put a deposit down for that and knew I had to pay 25 to get it in.  And that’s one product.  That’s all that cash gone.  I was like what am I going to do for the rest of the time? Well, let me find some more cash.  So I leveraged different funding sources, and I thought okay, well now I’ve got all this cash.  I need to figure out some other products to launch.  So I started figuring out all these other products I wanted to launch related to my niche, and got all these cool ideas I thought were going to be great.  And had everything gone perfectly I would have had all of them in for Q4. 

In hindsight it was very, very silly and risky to do that.  And had I got all of them in I still wouldn’t have had this I don’t even think I would have been able to afford to – I definitely wouldn’t have been able to afford to reorder any of them.  I would have sold out and had to figure out how to [unintelligible 0:16:14.4] and that’s the whole thing on cash flow.  Like cash flow is so important in this game.  You always need to have some fluid cash to be able to reorder stock.  Otherwise you’re going to run out of stock.

CASEY GAUSS:

And kind of the point of this podcast, or this episode, is that by keeping yourself in your job you’re making money from the job that you can push into the Amazon business, and 100% of the money from the Amazon business you can continue to push back in, right?

TAZ AHSAN:

100%.  So had I been a bit smarter I would’ve said okay, maybe I’ll do one or two products and just keep it going, but I didn’t.  I went crazy, right?  But what kept me alive was my real job.  So let’s fast-forward to say October when I launched [this 0:16:52.8] thing.  I launched this product and two weeks in I got an IP claim, right?  Just start to rank, just start to stick, IP claim.  Fake IP claim.  So now I spend another $1,000 with a lawyer trying to get that fixed, so I’m out for another two weeks.  That obviously reduces my funds further.  Then I go to – I’m like okay, this is – I’ve got traction again.  I do this relaunch.  I get traction and start into something.  Okay, I am going to sell out.  This is selling really well.  It’s Q4; everything is going to sell.  And so I send, I get – these guys are already manufacturing the next batch, and I send them $16,000 to get that next batch in.  They disappear.

CAMERON YODER:

Disappear?  What do you mean?

TAZ AHSAN:

No contact.  Is it ready?  I send the money, nothing.

CAMERON YODER:

Oh shoot.

TAZ AHSAN:

So they’ve completely disappeared.  That was the only other product I could have got back or got in stock in time, so they’ve left with that money.  I haven’t got enough money to get the other stuff in.  Oh, I’m too late.  Actually I have enough money to get some of the stuff in, but it’s too late anyway.  It’s not going to come in in time for Q4, so I’m left with no stock, less 16K and waiting until January of 2018 to get some of the stock in January and February.  And I’m paying $4500 in loans and credit thinking that I was going to be pulling in massive amounts of cash.  So had I not had my full-time job I would have been in some serious trouble because there was a period of time for about two months, two or three months, 2 ½ months I wasn’t selling anything.

CAMERON YODER:

So you had to really rely on your full-time job at that point in time to really pay off or maybe pay some of that debt and I mean live at the same time. 

TAZ ASHAN:

Stay alive.  Yeah, basically.  Yeah, I mean, and that’s a benefit.  That’s one of the biggest benefits of having a full-time job.  So the first one is obviously that I don’t need to take any money out of the Amazon business to live my life.  I can live my life through my full-time job and roll the profits into Amazon.  But the second thing is I also have a higher comfort level with risk because I do know that if everything goes pear-shaped in the business – I don’t believe it will, but it went pretty badly late 2017, late 2018 – no, 2017 yeah.  But I still had the safety blanket of my full-time job that hey, if everything goes really badly I can still survive with my salary and pay that off and keep going.  So yeah, I’ve been – honestly I’ve been dumping so much of my cash, and I’m working with my accountant now, my CPA, to try and figure out exactly how much has been going in.  But I’ve been dumping massive amounts of cash of my own every month into the business just to speed up that growth as well.  I don’t plan on taking anything out for a while.

CASEY GAUSS:

Well, I love it.  So okay, so your first sale in October of 2017.  I think things really started to kick off when, in March or February I think you told me?

TAZ AHSAN:

Yeah, so in November was when I sold out of that other stuff, right, and it was 1000 units.  It was great.  I made like – made – I sold like a 30K in the month.  I was like wow, but then I obviously couldn’t get any of that stuff in.  So now I was out all of December, out all of January, and then I got my stock in like early February, but and then I started the process.  I was also a bit – I didn’t really plan it perfectly.  I could have been way more ready than I was, and I didn’t factor in the fact that one of the products I was launching had pretty low search volume so I could have launched it as soon as it arrived, but I had all these fears about super high sales velocity in January because of the fallout from Christmas.

CASEY GAUSS:

Right.

TAZ AHSAN:

And Q4.  So oh no, I can’t.  I can’t launch this thing.  I should slow down.  But yeah, it was a mistake.  But yeah, then so things really started to pick up probably around when I launched that first product.  But then I launched  a couple more behind it around February, March.  I wasn’t really [unintelligible 0:20:34.7] March when it started to pick up, and then April I guess everything was kind of ranked and April, May was when things really started to pick up for me.

CASEY GAUSS:

And now you’ve crossed the 50K a month mark, right?

TAZ AHSAN:

Yeah, so I just crossed probably about a week and a half ago, two weeks ago I had crossed the 50K a month mark with three products.

CASEY GAUSS:

Yeah, which is insane.  And again, you would – like so 50K a month –

TAZ AHSAN:

And I’m dealing with a patent claim.  So it would have been four products.  It probably would’ve been higher up right now.  But these things happen.

CASEY GAUSS:

50K a month is a lot.  Approximately what percentage of that is profit would you say?

TAZ AHSAN:

Right now my margins sit at around 25%, but it doesn’t include all of the – like it’s difficult to figure out exactly.  Like if you look at – if I look at my last week’s sales my margins very between like 25% and 30%, and that’s inclusive of all costs and [PPC 0:21:28.7] and all that kind of stuff.  It doesn’t include all of the, say, the launch stuff I did or all the preparation of the listing and all that kind of stuff.

CASEY GAUSS:

Okay, but still I mean that’s – call it over $10,000 a month already in profit.  So I could definitely see people getting super stoked about that,  saying okay, you know I only need $5,000 a month to live or whatever.  I can quit my full-time job, and I can really go full-time on this Amazon business.  And so where are you at in that current like scope of things?

TAZ AHSAN:

So it’s interesting because I’ve spoken to other people who have been in similar situations to me where they’ve been making X amount, and have thought this would be a good time to take a step back.  And I mean they were already in the millions, and over 1 million.  And as soon as they stopped and started to funnel a little bit of money out of the business they realized how quickly that was slowing down their growth.  Like it was very, very visible effect because they couldn’t now just take all that cash and roll it back in, and because cash flow is so important.  And if you’re doing this well you’re keeping it very, very tight.  So if you are reordering things you don’t have too many things liquid because if you have too much cash you’re finding another product and you’re investing in that and started that whole process again.  But then because you’re doing that, if you take money out then you suddenly realize oh, my product launch process has slowed down, which means your growth slows down.  And so from my – go ahead.

CAMERON YODER:

No, I was just going to ask like – well I want you to finish your – finish your thought and then I want to ask something.

TAZ AHSAN:

Yeah, so from my perspective I’m thinking I have a great job.  I have no reason apart from time – time is the one thing that I don’t have a lot of, but I’m at this point now where I’m – I just want to grow, and I want to work really hard, so why not?  I’m young, and I’m healthy.  This is the time for me to do it.  So given that, I don’t see a reason for me to really just go full time at this and leave my job because I think I’m doing pretty well, and I really, really enjoy my job.  So I enjoy my job.  Yea, h I’m building something on the side which is going to become huge, which is my plan, right?  I’m not doing this as a, hey, this is my side hustle; I’m not really taking this seriously.  This is super serious for me, and I have a podcast because I want to help other people do this as well.  And one of the driving factors behind the podcast is I know people, A, want to learn about how to sell on Amazon, but B, there are lots of people out there who don’t want to do the thing they’re doing, their job, whatever their 9-to-5 is.  And they want something else.  I don’t fall into that category completely, but I definitely do want a way of life that my job won’t afford me in the long term.  I want to be able to just disappear whenever I want, and hey I’m going to take three months and do this, whatever I want to do.  So that’s the level of freedom I’m trying to get to.

CASEY GAUSS:

Yeah, and I’m personally of the belief that, again, anybody selling on Amazon or getting started in selling on Amazon, we still have such an amazing opportunity ahead of us.  So like making something your side gig that could really turn into something that you go and you sell for a few million dollars after a couple of years, like I think that we should be taking it seriously because you can do literally, like you’re saying, whatever you want.  You can disappear, and you’re not really doing yourself justice if you’re not taking it seriously enough I feel like.

TAZ AHSAN:

100%, and what you just said in taking something that’s kind of a side hustle or whatever, by taking it seriously and over a couple of years selling for a few million is not a fad – or sorry, it’s not a fable.  It’s the truth.  Like that actual story can happen.  I just had somebody on telling me that’s exactly what he did, and this opportunity is here now.  You have to take it.

CAMERON YODER:

I want to –

CASEY GAUSS:

Sorry, last thing.  On that note I think that as Amazon continues to – you know, as competition continues to increase on Amazon it will also become more difficult to maintain a side hustle without putting in the work necessary.  And so what two years ago, three years ago was easy for you to get in, make some good money and not really spend much time on it will continue to get harder to have that kind of story.  So again, it’s like you might as well get in, get all that – like go really hard, build up this valuable asset and then sell it.  Get all that risk off the table because I hear people time and time again say that they’re just looking to get to a good amount of revenue and then sit on it until they retire.  I just don’t see that happening because what we see happening is all of my friends or the guys that have tons of money, they come in and they can just dominate any market because they’re able to outspend people in promotions or paid media or whatever.  And like someday someone is going to come across your market, or a few people are going to come across your market that has traditionally been doing well for you.  But if these guys are coming in and using all kinds of tactics to outrank you and take away your market share and your sales, it’s not going to be this great retirement vehicle.  And so what the retirement vehicle should actually be going hard, selling your business, getting $1 million off of it, go invest that smart, you know, in a smart way and live off of that.  Live off the returns that you’re getting off of dividends or something like that.

TAZ AHSAN:

Yeah, and it’s funny you say that because it’s the exact same thing that I’m doing now.  Everyone is scouting out new markets, and whoever is in that market right now, whatever profit or revenue they experience is going to be diluted, and I’m in markets where new people are coming in and new people are launching, and that’s just a fact, and there is always going to be more competition.  But to balance that out there are all these amazing tools out there like you have to help you launch, help you do all these different things that lots of people still aren’t using, aren’t aware of.  And you can really separate yourself by being diligent in what you learn and what you study and who you listen to in this environment because there is still going to be hundreds of thousands of people doing this wrong.  And if you really focus in there are so many – there are also new niches coming out all the time.  There are new people coming onto Amazon to buy.  More people are buying on Amazon.  So still think like the challenges – the challenge [weighs out, outweighs 0:27:32.8].

CASEY GAUSS:

I agree.  I’m not saying that I don’t think there’s opportunity.  I just think that over time it gets more difficult to take the lazy approach to getting that opportunity.

TAZ AHSAN:

Oh, for sure.  Oh, absolutely.  You know, three years ago I’m sure you know what it was like.  You know you could literally go on Alibaba, find a thing, not even put your logo on it, sell it and start making $10,000 a month.

CASEY GAUSS:

Yep, no need for good photos, no need for a good listing, no need for launches.  Like you literally just list it up there.

TAZ AHSAN:

Yeah, and now it’s very, very different.  So you definitely have to have a plan.  Treat it like a real business.  But like you say, the opportunity is still there.  It’s huge.  It’s still massive right now.

CAMERON YODER:

So Taz, I want you to touch on the idea of patience.  So I think the concept that we’ve been talking about really is the balance of being patient but also taking advantage of an incredible opportunity, and that’s what Amazon is.  Amazon is that incredible opportunity, but many people get antsy in their 9-to-5 and want to just kind of leave as quick as possible, or think it’s the best idea to leave.  So how do you know – how would you best tell someone?  There isn’t really, I don’t think, a just a direct answer for this, but how would you let someone know from where you’re at right now, because you’re in it, how would you let someone know when the time is right, you feel, for someone to leave a full-time job to focus on Amazon?  What would you speak to that with the idea of having patience but taking advantage of the opportunity? 

TAZ ASHAN:

First of all, I don’t have patience.  It’s one of my challenges.  This is why I tried to go so hard last year and you know fell a bit flat on my face.  And I think it depends on the person’s situation really.  You can – and it also depends on how much time you want to put into it.  9-to-5 is exactly what it is, 9-to-5.  If you wake up at 4:00 you have four, five hours to do stuff, and then you come back at 6:00.  You have another four or five hours to do things.  So you could honestly, depending on how dedicated you are – and it’s probably part of the reason why I don’t need to – I don’t feel like I need to quit because I make use of the time I have.  So I don’t – so it depends on the situation, depends on how much time you’re putting into it, but the biggest challenge with deciding whether you’re going to quit your job or not is the realization that you’re going to slow down your own growth.  And if you’re happy with – if you’ve got to a point where you think okay, well I’m making 250 a month, a good 50 of that is profit and I’m happy to take 5 of that and still look to have a view of okay, I’m going to sell or exit because I think – honestly, I think that’s the best way to really generate cash in this business.  Like Casey, like you were saying, it’s not about staying in the same market and just hoping that revenue’s going to stay the same because it 100% won’t.  Like it will change from month to month as new people come in.  So you do want to try and build something that has a really strong foundation and have that – build a really attractive business and then exit.  So to do that, though, you need to put in the time.  And it should be more about how am I going to build this amazing vehicle rather than how quickly can I leave my job?

CAMERON YODER:

You are a pretty disciplined person, and you’re obviously motivated.  What would you say – let’s talk about those two concepts.  Let’s talk about motivation.  Let’s talk about discipline when it comes to Amazon specifically because I feel like a lot of people might come into this space and enter into just even entrepreneurship in general and maybe be missing one aspect of either motivation or discipline.  In what you’re doing and what you’ve done, where do motivation and discipline come into play?

TAZ AHSAN:

So motivation – I have to explain what the concept is.  It’s a finite thing, right?  Willpower and motivation, they’re similar, and it’s finite.  So it’s very difficult to be on all the time if you’re doing it for a soulless kind of reason.  So I do think about why I do this, and one of the biggest reasons why – I said I wanted to live a certain lifestyle, but an even bigger reason than that is I want to give my family a life they’ve never had.  And they worked so hard for me, and I basically was poor growing up and still, you know, they’re doing okay, but I want to create something really special.  And I have one, one of these goals where I just want to buy my dad this brand-new Mercedes.  It’s something that is really close to me, and it makes it really easy for me to wake up at 5:00 and get these things done most of the time.  And when it comes to discipline, discipline is formed, and to do that you have to form a routine.  And discipline comes from that.  When you get into – and people think discipline is a lack of freedom, but if you really think about it when you have discipline and you go through certain things you’re supposed to do every day, that gives you the freedom to do all these other things that you didn’t have to do in that routine, or it gives you the freedom once you’ve built this amazing vehicle, this amazing business, once you’ve sold it you have so much time to do all those things that you’ve wanted to do.  But it’s about delayed gratification.  It took me a very long time to really hone in on that concept because initially I was always like oh my God, I want to – like the retail arbitrage thing is kind of a misnomer because you sell things, you get money.  You sell things, you get money, and it’s a really quick turnaround.  So when you go down and start doing private label you have to use that money, and it’s sitting there, sitting in China, sitting in a deposit, and it’s coming over on the ocean, and it’s getting checked into Amazon.  Then someone’s going to buy something.  Then there’s going to be refunds.  And it takes a – it’s such a long process to actually get paid from that first set of products you launch that again, I always harken back to cash flow, but you have to be at peace with delayed gratification and know that – know why you’re doing what it is you’re doing, like why you’re creating this business.  Even if it’s not for whoever – you know, I have a great reason for my dad, and I want to do all these other things.  But even if it’s just for you and you want to create a different life for yourself, just kind of envision that life.  Know why you’re doing something.  If you really feeling really crap one day or you just don’t feel like doing whatever it is you’re doing, what helps me is going back to why I’m doing it, like why do I want this, why am I selling on Amazon?  Why am I trying to create this business?  And I try and look at and envision the life I’m trying to create for myself.  And so it helps me.  It brings me back, and I’m like okay, well look.  This is why I’m doing it.  I want to live a different life.  I want to be different.

CAMERON YODER:

Taz, what would you say some of your greatest challenges have been with balancing a full-time job – even though you like your full-time job – balancing that job and scaling Amazon at the same time?  Like you’ve mentioned time and maybe even just energy, but how did you – what were those challenges, and how did you overcome them?

TAZ AHSAN:

I think actually the biggest challenge that I faced that I didn’t know I was facing at the time was spending time on dumb things and not prioritizing my time.  So when I – so I haven’t ever really been taught Amazon.  I’ve just done my own research, studied different things, learned, done different trainings.  I’ve never actually gone through hey this is the course.  Here’s Amazon.  Go and learn it.  There are so many things out there right now that you can do that for.  I didn’t really do that, so I think my challenge really was I was doing it – so here’s an example.  I don’t have a product idea.  Yeah, I’m learning about how to optimize a PPC campaign.  Why?  Why am I teaching myself that?  I remember this so vividly.  I think it might have even been on the plane to China.  It was this four-hour training, [unintelligible 0:34:31.3] seller training that I’m listening to, and I’m studying it.  I’m taking tons and tons of notes.  And at that time I was like oh yeah, cool.  All right, yeah, I’m learning this.  Now I’m like why the hell am I wasting this time, did I waste this time learning about PPC?  I had no guidance, right, so I think it was not being able to – I didn’t know how to prioritize.  I didn’t know that hey, I don’t need to waste time on PPC because I’m six months away from launching a product.  I can learn that when the time comes or closer to the time. 

So I think that was probably my first challenge.  And it was a time thing because I had way more time than I realized, but I was wasting time on these things that didn’t matter.  And then as soon as you start getting more – you’re trying to launch more and more products, and you have upwards of 10, 15 different suppliers contacting you every day, that’s a lot of time, and that can get overwhelming.  So it’s definitely time is probably one of the biggest challenges.  And to overcome that it’s definitely my biggest thing about the entirety of 2017 was getting a mentor.  Having someone who, whether it’s like a mentor through a course you’re doing, but someone you can contact directly, you can ask a direct question to when you’re doing things, who can review your progress and who can say that’s a terrible idea don’t do that, or why are you wasting your time there?  Focus on this.  And so when I got that, that freed up so much of my time and also my own nervousness having made all these mistakes because I now have someone who is doing the numbers I want to do, who is helping guide me along this path.

CAMERON YODER:

Did you just find – did you find a mentor just from traveling around, meeting people, getting connected in the space?

CASEY GAUSS:

Just a note.  Taz is probably the best-connected person I know.

CAMERON YODER:

Yeah, he is very well-connected.

TAZ AHSAN:

Well, that was my investment, right, so I made all these mistakes in 2017, but one of the things I did do was I went to a ton of events.  I think I went to four, maybe five events, and I networked hard because I didn’t really know what the hell was going on, but I wanted to learn, right, and I had a thirst for knowledge.  So I was asking tons of questions, meeting tons of people.  And yeah, one of the people that I connected with I made a proposition to.  I propositioned to be my mentor and yeah, it worked out.  So now I get mentored by this guy, and it’s fantastic for me to be able to – what I think is a tough question he will be just like – and it matched my personality because I might overthink something.  He’s like why are you doing that?  No, don’t do that.  Do this.  Okay.  That’s it.  And there’s no more thought.  There’s no more thought involved because I trust him, right, and you have to – if you do [sign out 0:37:00.8] for somebody or find somebody, just make sure you trust whatever they’re saying because it’s pointless if you have a mentor who’s going to try and guide you and you don’t listen to them.  That’s just  the ultimate waste of time.  But definitely my biggest lesson from 2017 is follow something.  Don’t do it so unstructured as I did.  Like I didn’t even do a course or anything like that.  I was just like oh, you know, I really honestly thought – this was my thought.  All right, I went through 115 episodes of Manny Coats’ podcast, and I thought man, I know exactly what I’m doing.  Done.  I knew nothing.  I knew less than nothing.  The more I listened to the more confused I was getting because I was going through his whole process that he went through in 2016, and half that stuff wasn’t even relevant in 2017.

CAMERON YODER:

So okay, just to kind of summarize everything – not necessarily done yet, but to summarize everything, what would you say are just some of your best tips for sellers to focus on working towards the ultimate goal of independence?

TAZ AHSAN:

What stage are these sellers at?

CASEY GAUSS:

There’s a really good range.  The largest like cohort or whatever would be to sellers that are doing at least $100,000 a month – or yeah, somewhere around $100,000 a month.

CAMERON YODER:

Yeah, yeah, somewhere around there.

TAZ AHSAN:

I think the biggest thing for me is – and getting to that point is scale.  I think it’s all about growth, and the quickest way to grow is by launching new products.  I think you need to make sure you have a system.  So I have a very specific strategy for exactly how I launch a product.  I know what the numbers are.  This is what I’m going to do.  This is how I’m going to do it, and this is how much it’s going to cost.  And I have a plan for that product.  I know how much it’s going to cost, and then I can decide okay, well now I understand this is my cash flow for this product, and I understand what’s coming in.  What can I do next?  And I think by having a pipeline of products that are constantly coming out, that’s the best way, the single best way of getting to exceeding the 100K, exceeding the $1 million, $2 million mark.  And my other partial tip is maybe don’t go for those massive $100,000 a month products themselves.  And this is actually advice that has come to me from many multiple million sellers who all say to me yeah, we’re not really going for those massive ones anymore.  We’re launching five products a month.  They’re all going to do around 10,000 because that’s – those are the markets that are far less untapped and are much easier to launch into and much easier to maintain.  And you can churn out those launches, and they cost less as well.  And then most likely you’re going to also have less issues with people who are using black hat tactics against you or leaving fake negative reviews and all this kind of stuff in those niches that are slightly less popular.

CAMERON YODER:

Taz, do you think that complete independence with – from a 9-to-5 job, from another job, just focusing on Amazon, do you think complete independence like that is real – being completely honest – is realistic for a lot of sellers?

TAZ AHSAN:

I think it depends on how far you want to take the business and at what point you want that complete independence.  It’s 100% realistic, and I wouldn’t be in the business if that wasn’t an end term goal for me.  Now I have a slightly different situation as well because I am also in the US through a visa, so I’m going through a green card process with my company.  So I have some other hard stops that won’t let me leave the company.  But really thinking about in my own mind, if I had a choice side probably give myself a review date of about a year and look at where I’m at in 18 months and then decide at that point where do I want to take this, and how well am I doing?  Because you can be doing really well, like I get to $250,000 a month by the middle of next year, and that’s a decent amount of profit.  I’m doing 50K profit.  Like what more do I need?  How much further do I need to go?  And I think you do need to ask yourself that question and figure out well, at what point do I need to leave?  And at what point do I want that next level of freedom because at some point you’re going to be working so hard on the business and you’re going to be scaling a team, you’re going to be paying other people to work for you, and you’re still going to have your own thing, your own full-time thing.  You have to understand at some point that that can’t work.  Like I think I – personally, myself, I think I’m going to get to a point where I might hit a certain revenue number and think man I really do need to manage my team more, and I need to spend more time here.  And I haven’t got to that point yet because I’m still new and I think I can get to a decent amount of revenue right now having the full-time job.  But there is a tipping point.  I don’t know what that is for myself personally yet, but I believe there is one.

CAMERON YODER:

Taz, is there anything else that you want to leave our listeners with?

TAZ AHSAN:

Yes.  I always want to tell everyone who is listening to just jump in.  There’s so much – I know there’s fear, and I know there are going to be challenges.  So know this.  There’s two main messages I want to leave you with.  The first thing is just try.  Just jump in.  Try and fail, whatever it is.  There is so much information out there , and there’s so much good information out there.  I really hope that if you are listening to this or listen to my podcast you understand I’m coming from a place of authenticity.  I’m not lying to you.  I’ve made all these mistakes.  I could tell you in five minutes all the things not to do initially.  And if you listen to my podcast you’ll hear all those crazy things, and you’ll figure out a ton of stuff from that and what not to do.  The second thing is if you’re going to jump into this know there’s going to be ups and downs.  There’s going to be challenges.  My first product I had a patent claim.  I had an IP claim on it, and it disappeared.  They ran off with money.  I’m still figuring that out, but it’s okay because this comes – it comes with the good and bad, and eventually when you get over all of that stuff I’ve learned so much through those experiences that it’s going to be really hard to knock me off right now.  Like having gone through all those challenges and going through more now because I’m dealing with another patent claim right now – going through this, and learning these things, and understanding hey, this is how you build a sustainable business, it’s going to be really hard to break me down and be like hey you can’t be successful because I’ve gone through all that crap already.  And I’m going to go through more of it.  So just understand that it’s going to be probably a bit of a roller coaster ride, but in the end it’s 100% worth it.  So just take the leap and give it a try.

CAMERON YODER:

Awesome.  That’s really good advice, Taz.  Thank you.  Taz, thank you so much for being here on the podcast.  You provided a lot of really great perspective, a lot of value just to everyone, wherever they’re at, whether they want to get started or they’ve started now or they’re scaling, there’s a lot here that people can take, and I know there’s a lot also that we didn’t get to touch on.  So thank you so much for just being here and for being an awesome guest.

TAZ AHSAN:

I really appreciate it, guys.  It’s an honor.  And yeah, I wish you guys all the best.

CAMERON YODER:

Taz, everybody, we’ll link to your – we’ll talk about your podcast in our show notes.  So if you want to check it out then you will be able to do that.

Well, that is all for this week.  Thank you so much for joining us here on Follow the Data.  For more insights and reliable information on how to succeed on Amazon, subscribe to the podcast, subscribe to our blog, follow us on YouTube or like us on Facebook.  The options are limitless, and we’ve got news, tips and best practices that can help you build your FBA business.  And also, everyone your feedback is really important to us.  It’s really important to me as well.  If you’re listening on Apple Podcasts, please consider leaving us a review and/or rating, just your honest opinion.  I would love to see what you have to say about the show, and if you know a fellow seller who needs help or just needs encouragement, honestly, with their – with, working full-time and handling Amazon or is considering getting into Amazon, send them this episode.  I think Taz has a lot of great things to speak to a lot of people, and this is a topic that a lot of sellers are talking about.

So if you know anyone that would benefit by listening to today’s episode, then shoot them our way.  We’d love to help them out, and we’d love to help you out.  So if you have any questions, or concerns, or anything at all, hit us up on Facebook, or give us a call.  Our number is 317-721-6590.  I would actually – personally, I would love to see what you all would like to see in future episodes.  We have a lot planned on the content schedule for the podcast in the coming future, but I always, always love to hear what people want to see us or hear us talk about.  So if you have any suggestions or any ideas, just really shoot us a message on Facebook.  It’s as simple as looking us up, looking up Viral Launch and DM-ing us, sending us a direct message, okay?  So I would love to hear from you all on ideas for future episodes.  I’m stoked to hear from you.  I’m excited to hear what you all have to say.  That is it for this week’s episode.  Until next time, remember, the data is out there.

Failing Successfully: How To Use Failure To Grow Your Business w/ Casey Gauss

Failing Successfully: How To Use Failure To Grow Your Business w/ Casey Gauss

Sellers in the Amazon space today seem to only talk about success. But what about the other side? The side that sees less attention? As a seller, it’s important to recognize that failure is a critical aspect of growth for you and your business. Failing successfully on Amazon can make or break even the greatest sellers. With the right systems in place, it can be used as one of your most valuable assets. Scaling your business effectively means knowing how to best respond to failure. In this episode, we break down how you can leverage failure to effectively grow your business. We’ll talk through how you can shift your mindset towards failure, and how this mindset shift can change your life as well as your business.

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Podcast Transcript

CAMERON YODER:

Sellers in the Amazon space today seem to only talk about success, but what about the other side, the side that sees less attention?  As a seller it’s important to recognize that failure is a critical aspect of growth for you and for your business.

CASEY GAUSS:

Successfully handling failure on Amazon can make or break even the greatest sellers.  With the right systems in place it can be used as one of the most valuable assets.  Scaling your business effectively means knowing how to best respond to failure.  I’m Casey Gauss.

CAMERON YODER:

And I’m Cameron Yoder, your hosts for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data that we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and the best practices for success as an Amazon seller.

CASEY GAUSS:

In this episode Cam and I are going to break down how you can leverage failure to effectively grow your business.  We’ll talk through how you can shift your mindset towards failure and how this mindset shift can change your life as well as your business.  Let’s get started.

CAMERON YODER:

All right, so we’re talking about an interesting topic today.  This is data-driven, but it is also more motivational based, something that honestly not a lot of people in the Amazon space have talked about or are talking about right now.  You seem to only hear about the successes that are going on in Amazon, and honestly I think that just seeing those or hearing those can be – it can wear on you if you do experience failure, which you will experience failure in your Amazon journey, just like everything else in life.  And because of that we felt like it was really necessary to talk about failure and talk about failure as an Amazon seller, or just as a person in general, as you continue to expand your business.

CASEY GAUSS:

Yeah, just to preface, we’re going to first start off kind of talking about failure in business in general, and then we’ll talk about where we are seeing a lot of Amazon sellers fail.  And so just to hopefully help you see kind of around those corners and make sure that if you are failing you’re failing gracefully and you can avoid failure if possible.

CAMERON YODER:

This is an interesting statistic to start out just kind of the discussion.  According to Jeff Bezos’ recent shareholder letter, for the first time more than half of units sold worldwide last year came from third-party sellers.  Yeah, that’s honestly crazy.  It’s a crazy number.  Over 140,000 businesses topped $100,000 in sales.

CASEY GAUSS:

And 20,000 topped over $1 million in sales.

CAMERON YODER:

It’s just crazy.  It’s crazy to hear all these numbers, and I think it’s easy for sellers to think that well all these other people are succeeding so obviously if I’m failing I’m doing something wrong.  But no, that’s not the case.  You see these numbers, like over 140,000 businesses, 20,000, all these numbers, it could be easy to think that you’re alone if you’re experiencing failure, but you’re not.  These people are – shareholder letters don’t talk about the failures that are happening in life, and in business and Amazon, and so that’s what we’re here to – that’s what we’re here to shed some light on.  So like Casey talked about before, like Casey mentioned, we’re going to talk about just Casey – we’re going to talk about Casey’s experience with failure.

CASEY GAUSS:

Yay.

CAMERON YODER:

And just failure in general.  But it’s more than that.  We’re going to talk about his ability to turn failure into success.  And so that’s what this first half of the podcast is going to be, just about his experience with failure, his experience with turning failure into success, and then we’re going to jump into Amazon specific failure aspects.  Okay, so Casey, how do you feel right now?

CASEY GAUSS:

I feel like I’m hoping that I give some good value.  There is some pressure there.  That’s how I’m feeling.

CAMERON YODER:

There is some good pressure there.  But really, I mean Casey, this is my perspective.  Casey’s been through – he’s been through a lot, and obviously Viral Launch is growing right now, and he’s experienced a lot of success, and he’s also experienced failure throughout just his journey at Viral Launch and outside of Viral Launch.  And so I see an incredible perspective that he has to offer us, and if you don’t know Casey he’s a really good guy, and he just loves people in general.  And so we are here to provide value to you today.  So Casey, all right, let’s talk about failure here and more than that, turning failure into success.  But what are or were some of your most memorable failures early on just with business in general?

CASEY GAUSS:

Yeah, I mean so, you know, I’m 25 so I haven’t had too much time to fail too much, but definitely before Viral Launch there was some kind of notable failures that really ended up helping me along the way.  So I do want to talk about those.  Failure number one is, you know, I tried to create a web design business.  So I, you know, took some coding lessons, then naïvely thought I knew how to build websites.  And so I started this website design business, and my mom was dating a guy at the time who had his own car shop.  And so I was like hey man, like you don’t have a website?  I could easily build you a website, and it will only be $500, blah blah blah.  So getting started I thought it was going to take, you know, oh it will take three, four weeks or so, and it took like at least double that, and even so the website was not very good at all.  He was not happy, and but I’m really glad that I went through it, the reason being is like through trying to make this website I ended up learning so many different things around what it looks like to actually build websites.  I looked at – or I learned so much about like, okay, what does it look like to build a contract?  I was also trying to get other like website clients, which I don’t know why I didn’t have more time to build websites, but anyways, like started going through that process of trying to get other people to sign up so that I could build them a website.  So there’s a lot of cool learning experiences there, which we’ll touch on here in a moment. 

Another failure is, again, out of naïveté – naïveté I think it is.

CAMERON YODER:

Naïveté.

CASEY GAUSS:

Anyways, naïvely I was trying to build like this social network, right?  So who wasn’t like four years ago, five years ago or something?  But anyways, you know, this was – I’m really passionate about help helping people, and I thought I had a great idea for social network to help people.  So through this I made a ton of great connections kind of in the dev world in the business world and started really understanding what it’s like to build a business, let alone a social network.  And so again, just a ton of learning experiences through there.  I’ll get to those here in a moment.  So too big failures that I would like to talk about, web design business that, you know, I was in college trying to do that, learned a ton.  I’m talking like coding out like hand coding HTML, CSS like all that stuff, not like WordPress or something.  And then, yeah, secondly trying to build the social network.  So yeah, we’ll get to that here in a moment.

CAMERON YODER:

How – so you experienced those failures, and those stick out to you in your mind.  How would you say were you able to push past like the idea of failure, or how long did it take for you to get past that?

CASEY GAUSS:

I mean each one took like different – so the web design business, I knew pretty quickly that like, wow, this is really tough.  It’s taking a ton of my time, and I’m also just not that great at it.  So that one, you know, only took me like a month after I had completed like my first website.  Then failure number two, going back to the social network, that took a long time.  I was like still trying to build that probably for like a year, but there is like a ton of good that came out of that.  So how was I able to move past it?  So I’m definitely somebody that is so focused on the future, and I’m always excited about, you know, the opportunities or what can come out of the hard work that I’m putting in.  So like almost blindly I’m willing to fight through this difficult times or this hard work because I’m so excited about, you know, that light at the end of the tunnel that I’ll just continue to push forward and push forward.  And I know that by working hard is the only way that I can push forward.  If I’m not working hard, if I’m like oh, this sucks, like I’m just going to go coddle myself and watch Netflix or something, like I know that that’s not going to help me get to my goal, so I’m willing to kind of just put in the work to reach that light at the end of the tunnel.

CAMERON YODER:

There is a quote from Robert Herjavec who is one of the Shark Tank guys, right? 

CASEY GAUSS:

Yeah.

CAMERON YODER:

I just saw him speak the other week when I was in, when I was in Florida, and he had this – he said this quote and it really stuck out to me.  It actually has to do with this.  Robert said that the greatest people in life are the ones who don’t continue or spend time feeling sorry for themselves.  So it’s accepting something that has happened and moving past it, and kind of like Casey said, looking to the future and saying like okay, that happened.  I’m going to set that aside, and I’m going to look to the future.  But that’s – let’s talk about Viral Launch specifically now.  So let’s talk about the early days of Viral Launch.  Are there any specific failures, Casey, that stick out in your mind about establishing Viral Launch early on?

CASEY GAUSS:

I mean, there have been just an insane number of failures along the way.  Some of them were just like hey – you know the lesson there was just like hey, don’t do this again.  So for example, we used to run all of our promotions through an email list.  We didn’t have the website that we do now.  And so anyways, essentially someone would give us a code.  They’d give us a link to their product, and we’d send out an email with that coupon code.  It was a shareable coupon code.  People were setting multichannel fulfillment orders to hold the rest of their inventory.  So anyways, let’s say you wanted to give away 50 units today.  You would only keep 50 units available essentially in Seller Central, and then we would get rid of all those units, essentially, through the promotion.  So anyways, people would share a link and share the coupon.  And so we sent one out – or somebody wanted to give a – use their own URL that would like automatically redirect to like different keywords.  And so I was like I’m not very comfortable with that, but like we trust the company so we’ll do it.  And so we did it, and then after all the promotions had gone to the Amazon product it ended up diverting to their own website saying it had the same colors, like same font, same style, look and feel as our buyer group website, and they were just trying to sign up traffic.  They’re like oh, opt into our ultimate VIP group or whatever.  Just put in your email here.  So like that sucked because we couldn’t even turn it off. 

So that’s just a quick failure, but like some bigger ones that had some really good kind of learning lessons for me is, you know, early on I was so afraid of kind of growing the company.  I just felt like I was beholden to Amazon, I was beholden to this system, and I was so afraid that something was going to change and that if I hired someone I would have to let them go as soon as that change happened.  And in my mind that change was happening, you know, tomorrow or sometime in the very near future.  So for the first year and a half, like I didn’t try to grow Viral Launch very much.  Like it was all just organic, and I just kind of maintained things and handled customer service.  Like I just wasn’t building a business at that point because I was too afraid of Amazon kind of shutting things down or changing their algorithm.  And I really wish that in this particular case I could actually go back because what I have learned from that is essentially like you need to go hard, as hard as possible at any given moment and like there are always risks with running a business no matter what it is.  Uber, for example, even Uber has the risk of iOS not liking what they’re doing or something, right, and shutting down, competition, regulatory issues.  Like there’s risk inherent to every single business, and what I learned is like you have to go as hard as possible at any given time.  Like yes, you need to be smart, and you need to be like calculating risks, but if you are not going as hard as possible, like all your competitors are going to be, or some of your competitors are going to be.  It’s those guys that are going to have the leg up along the way.

CAMERON YODER:

So that idea comes from like what is holding people back.  Do you think that’s like a fear of failure?

CASEY GAUSS:

Yeah, I mean absolutely.  And this one, it was relatively calculated in terms of risk, but like I think that this definitely applies in the Amazon space.  Like we see so many people like back in the early days of incentivized reviews, right, like nobody wanted to do it because they didn’t – like there’s a number of different reasons, right, everything from like they didn’t think Amazon liked it, they didn’t like it or they thought it was like gaming the system, and it kind of was, right, but you were able to do it.  And so yes, all those people that did it ended up having their reviews removed, but the point here – but in reality – so for example, you know, I have a friend in a very competitive space, and he was giving away just thousands of units to review groups or whatever to get reviews, and he was just running thousands of promotions for ranking.  So anyways, for like one of the highest volume keywords on Amazon at the time, he had like 14,000 reviews, and he was ranking incredibly well.  Amazon did come through and they removed like 10,000 of those reviews, but he had more reviews than everybody else at that time and is still selling like amazingly well.  And so this is like another great relevant example of somebody that went as hard as possible in the given like context of the rules, and that really, really set them up for long-term success versus all the people that were saying, you know, oh, you know, I’m not going to do that.  Amazon is probably going to get rid of it at some time, at some point.  I’m really focused on building a business, and it’s like, you know, that’s great, but that person is probably making $50,000 compared to our friend that is making, you know, $40 million a year.  So like it’s a huge lesson, I think, for me and something that I do wish that I could take back.  There’s other, like a lot of failures in Viral Launch where we tried creating all kinds of like new tools, new URLs, like we would go spend a bunch of time trying these things out, and I’m glad that we did it because like that shows us, you know, Thomas Edison’s quote is like –

CAMERON YODER:

I didn’t fail –

CASEY GAUSS:

Yeah, I learned a thousand ways not to make a lightbulb or something like that, and it’s like the same is true for Viral Launch.  Like I had this idea like oh, I wonder if relaunches would be super effective because basically like if you look in the UI Amazon says like oh, buy this product again.  And so I was wondering, I wonder if Amazon appreciates people that – or products that have a lot of repeat buyers.  Maybe they will rank those ones higher.  So what we tried doing is running launches, like so you just ran a launch for, you know, your fish oil, and then you come back like 30 days and you run another launch to the same exact people to one, obviously they want a refill, especially on consumables, but then two, maybe Amazon sees that and says wow, these repeat purchases are super valuable, or whatever, so we definitely want to get this product ranking because they are getting a lot of people to rebuy.  And so anyways, went, built out a bit, like I’m always someone that likes to build kind of a minimum viable product, an MVP, so anyways that’s what we did, and it didn’t produce any, you know, significant results really, and so we moved on.

CAMERON YODER:

You spent time, and that translates to the Amazon space actually really well.  Like I feel like paradox of choice comes into play here as well where there are almost too many options to choose from, and so you slow down as a result.  However people also, I think, in the Amazon space fear like the result, the end result of what’s going to happen by like picking one specific thing over the other or like the fear of failure combines with the paradox of choice really to just slow down people.  In this case like that’s a very specific example, but you chose to just move forward, literally not knowing what was going to happen.  And you spent time and resources doing that, like time and resources that could have been put towards something else, like something else that you knew was more effective, right, but instead you chose to focus on that out of the possibility that it was going to work.

CASEY GAUSS:

Yeah, I read this book called Chaos Monkeys.  It’s really cool.  It goes, you know – anyways, I won’t get into it, but one of the quotes – the guy worked at Facebook and he said you know at Facebook they try everything.  So they try 10 things.  Seven of those things fail.  Two of those things break even, and then one of them is like a moonshot and, you know, ends up being Facebook Messenger or Facebook Newsfeed, or like this huge thing that has billions of dollars of impact on the company and then, you know, on the world, essentially.  And so like – but you would never have gotten to that one thing, or the probability of you getting to that one thing is a lot lower if you didn’t try the nine others.

CAMERON YODER:

Right.  If, Casey, if you would go back, if you could go back in time would you change anything about the mistakes that we talked about or that you’ve made in the past, or do you think you would let yourself experience those failures?

CASEY GAUSS:

Yeah, I mean so for the younger self failures, the web design business, like the app or whatever, like I would not change those at all.  Like I learned so much around kind of building a business.  I learned a ton around development, which then helped me to develop like the first versions of Viral Launch.  And so if I didn’t have that prior experience I wouldn’t have been able to create versions one of Viral Launch, and I didn’t have the money to hire other people to create those first versions, and so Viral Launch probably wouldn’t be here if I weren’t always trying those other things.  Or if I would have let those other things get me down, then Viral Launch wouldn’t have been here because yeah, I felt like I was just failing at everything that I was trying.  There was another thing in between Viral Launch and the social media app or whatever that also was failing.  But like I continued to try, and if I would have said wow, I just failed on three things, like this isn’t for me, I need to move on, then yeah, Viral Launch wouldn’t be here.  And like that’s thousands, tens of thousands of lives that we get to impact here at Viral Launch, so like obviously like I’m super, super grateful that I was able to continue.  The one thing that I did mention that I would change is yeah, going much harder at the start of Viral Launch.

CAMERON YODER:

Yeah, which would maybe increase the chance of failing in other areas, like if you would go harder, but then you would continue to pick yourself back up and keep on going. 

CASEY GAUSS:

Right.

CAMERON YODER:

In terms of leveraging failure, so we’ve talked about failure and how you’ve like kind of gotten past it, but when talking about just sellers and business, business owners and establishers, entrepreneurs in general, how in your opinion, Casey, can people best leverage failure for growth?

CASEY GAUSS:

Yeah, I mean I think that one, it’s more your like adversity to failure that you have to cope with.  Again, looking at the Facebook example, like you have to try those 10 things statistically, like you’ve got to try those 10 things to find that one, right?  And so I just can’t encourage you enough to just get out there and try.  I’m someone that, like doesn’t really like planning that much because like yes, we can plan, but we don’t know what’s actually going to happen until we get there.  Who is it, like Mike Tyson?  Some boxer has a saying that it’s like everybody has a plan until they get punched in the face, and it’s like that’s exactly what happens in entrepreneurship, selling on Amazon.  It’s like you have a plan for something and things may go slightly according to plan, or they may go pretty close to according to plan, but inevitably there’s going to be things that you did not expect or not to the degree in which you’re seeing them, and it’s really your ability to adjust, cope with that and continue pushing forward that is really going to determine your success long-term.

CAMERON YODER:

In terms of seeing failure, like early signs of failure, let’s say there are – some failures – there are certain aspects of failure that are really good, right, like if you take – you can take any failure really and learn something from it.  But let’s talk about maybe noticing certain failures early on.  Like would you say there are early signs of failure from what you’ve experienced?  Like have you caught something early that you knew was just not going to be good or profitable or beneficial for Viral Launch and you were able to, since you saw it early, catch it and not fail from it and succeed?  What do you think?

CASEY GAUSS:

Yeah, I mean I don’t have any specific examples, but like, obviously trying something out – let’s go back to the retargeting launches, like I had the notion that – let’s say in this example I had the notion that it wasn’t going to work, but the potential reward of it working and the – versus kind of the amount of time I was going to have to put in, which was relatively low, the kind of risk reward thing there was like super high on the reward side, so it was definitely worth me trying out.  So even if I thought that there was a really good chance that it was going to fail, the potential reward was so high that it was definitely worth me jumping into.

CAMERON YODER:

That’s – I think a big part of it is the mentality or the acceptance that failure is going to happen, right?  Like it’s just an awareness.  Like if you go through everything on Amazon specifically thinking that failure is not going to happen, then obviously you’re going to be surprised when it does, just like the punch in the face sort of thing.

CASEY GAUSS:

Right, yeah, and again, like the risk reward calculation, if like the reward is an extra $5000 a month, let’s say it’s like a review strategy, right, like this against TOS review strategy.  So if the risk there is that your account gets suspended for a sustained period of time or maybe even banned – I doubt banned – but anyways, let’s just say banned, or by getting an extra, you know, by doubling your review rate you could make an extra $10,000 a month, well, getting banned from Amazon, the risk reward is not there.  An extra $10,000 a month, or I could potentially get banned, like you should not do it.

CAMERON YODER:

Right.  Let’s – one aspect of failure and success, I think, is that you can learn from other people’s failure to benefit yourself.  So really like you don’t necessarily have to fail yourself in that specific area to learn from it, right?  You can learn from someone else’s failures.

CASEY GAUSS:

Yeah, 100%.

CAMERON YODER:

And so let’s break down Amazon space specifically now.  Like let’s focus on Amazon.  Let’s talk about the biggest areas that we see sellers kind of just experiencing failure in.  Casey, what do you think some of the biggest – some of those biggest areas are that listeners can benefit or learn from?

CASEY GAUSS:

Yep, I think the two main things are product selection and then listening to the wrong people, misinformation.  I actually think that probably misinformation is the number one reason people are failing.  Actually I’m not sure.  It’s either product selection or people listening to misinformation.  With product selection I mean there are so many – if you have heard me talk at a, or like at an event, like some of my presentations go into if I’m talking about product selection, or sourcing products, or product discovery or whatever.  I talk a lot about kind of the reasons why people fail in product selection.  Just the high-level overview is that people don’t understand their budget and their goals, and so they’ll look at a product and say, yep, it looks like people are making a lot of money.  I want to jump in here and make the same amount of money.  And like the thing is is they were looking at the fish oil market where it’s, you know, super competitive, or the essential oil diffuser market, which is super competitive, and they have a budget of like $5000 or something, right?  And so like sure you can kind of make money, but you have no ability to hit the sales volume that these guys are doing, which is like $500,000 a month or something.  So just not understanding kind of their budget and getting into markets they have no business being in

CAMERON YODER:

It’s so easy.  I see this so often where people see the numbers.  They see the numbers, and they want to make it a reality that they can get those numbers, right?  Or they say like oh, you know, like $50,000 a month, like yeah, I can make that work.  Or oh I see one guy that’s making, like you said, I see one guy that’s making $50,000 in this market of fish oil.  All the others – sure, all the others are making $25,000 or even less, like $8000 a month, but this guy’s making $50,000, so I am going to make $50,000.

CASEY GAUSS:

Yep, that’s the other problem is like looking at one particular ASIN and then assuming that that is the case for the market.  And so yeah, they look at this guy – this one guy’s making – I’ve seen this a lot.  One guy is making $50,000, you know $100,000 a month and then everybody else is making $8000 a month, and you know, you’re like well if I source that same exact ASIN I can get the same results.  And like what you don’t know is what is driving that person’s sales.  Are they driving like a ton of traffic through Facebook ads?  Is it somebody that has a brand you just don’t know about?  Like where are those sales coming from?  Like you just don’t know that.

CAMERON YODER:

And that’s – and going back to your original point, it all comes down to picking the right product.  Like it all starts – if you think about the process of Amazon and everything that happens after, like how you get money, where you get money from, of course there are strategies surrounding everything, but it all starts with how or what you select for your product to sell.

CASEY GAUSS:

Yep, I think that covers kind of everything, or just having an unrealistic expectation on kind of margins or what price you can charge.  You know, sometimes it works, sometimes it doesn’t.  You know, so people come and say well, mine’s way higher quality than everybody else, so I’m going to charge double the price.  And then like at the end of the day people don’t want a grill brush that’s super high quality, and they don’t want to pay $40 for a grill brush.  They want to pay the $20 average because they just want to clean their grill, and it’s like not that big of a deal.

CAMERON YODER:

Right.  Or some people rely on bundling to solve their product selection issues.

CASEY GAUSS:

People don’t know what keywords their products actually sell through.  They’re just like you know I’m really passionate about this type of tea or something, and nobody searches any of those keywords, so now you have to go rank for the generic keyword tea, and like that’s really hard because nobody’s heard of your flavor and they’re really sketched of it.  Anyways –

CAMERON YODER:

Well, let’s touch on the second-biggest because both – there were both of these points.  It was product selection, and there was just information in the Amazon space.  Casey, what do you think?

CASEY GAUSS:

Yeah, information, like so this is going on – this actually just happened yesterday.  Someone posted – this guy, you know, I met him at a conference and like I really liked him.  I just recently have just been so upset about misinformation or just get very kind of agitated around misinformation.  And so anyways, met this guy at a conference.  He’s definitely like a younger seller.  I don’t think he’s, you know, probably doing more than $5000, $10,000 a month.  Anyways, yeah, he had this guy come on who is a quote seven-figure seller.  I don’t know if he really is, but let’s say he is.  And he comes on and he says, you know, giveaways don’t work.  Amazon made this huge algorithm change – algorithmic change, he said, which is different than an algorithm change, but anyways, not to be mad about specifics, but anyways, he said algorithm change, and like basically Amazon – like giveaways don’t work anymore.  Amazon is only looking at giveaways, and they only have kind of 25% the weight that they used to like a month ago.  So yeah, at the time of recording this it’s like May 11th, I think, and so anyways, he’s saying like all the way through March and I think April they were working, but like starting in May or late April they stopped working.  And it’s like absolutely not true.  We have just tons of case studies.  I was just talking to the team.  Like we have tons of case studies over the last two weeks where people have been super successful.  But so, so many people are reaching out to me saying like, are launches really done?  And now it’s just like spreading.  Like these rumors spread like wildfire, just saying like launches don’t work.  And so I don’t think this is that big of a deal, but if this rumor, which is absolutely not true, can spread that quickly from a guy with, you know, just a few thousand subscribers on YouTube, just imagine all the other rumors that are spreading around Amazon.  And so we try to do a good job of dispelling those rumors, but like, you know, our audience is only a portion of the overall Amazon.  Like nobody has the entire Amazon audience.

CAMERON YODER:

You should go – well, you don’t have to listen to it, but literally our first episode.  It was our first episode.  It was September 28, 2017 that was about the rumor of 90% off promotions.

CASEY GAUSS:

These rumors come up like we need to really go back and look to see how often.  I think it’s at least every two, three months because this – we just had to post a case study like in February, I think, or somewhere around February because everyone was saying oh, promotions aren’t working.  And it’s like dude, we’re running hundreds of launches right now, and they’re working pretty well.

CAMERON YODER:

This is fear.  This is what fear does to people.  And of course like that’s not to say Amazon wouldn’t or can’t change something tomorrow.

CASEY GAUSS:

Yeah, I mean I do expect them to change this at some time, and so does everybody else, but like I’ve been expecting that for 3 ½ years, and they just haven’t yet.  The data isn’t there.  And you know, again, like we talk about, like I think one of our major advantages is that we just have so much data, so much access to data that, you know, this guy’s one large didn’t work.  I didn’t watch the rest of the video, but anyways I think he did one promotion.  It didn’t work that well, but it was like a brand-new product, and there was like all these reasons why – like he didn’t give away enough units.  It was like to competitive, like I don’t know.  Anyways, everyone was kind of roasting him because it didn’t seem to be kind of like a great scientific study I guess. 

Anyways, so anyways, just a lot of [unintelligible 0:29:50.2] a lot of misinformation.  It doesn’t matter where it’s coming from.  Again, like I said, we’ve tried to dispel a number of myths on here, and we’ll continue to do that.  But we just hear all kinds of crazy things.  Like one example that really upset me – I was at a conference and the people like – I was at a conference and the people also run a course, and so through this course they teach you when you get a product list it up on Amazon when you first get it checked into FBA.  List it up on Amazon for like $2 or $1 so that friends and family can buy it at full price, they can leave a review, and then it will be verified.  And you do this up until – and you only have like one bullet point or something and they title and like one image or something.  So anyways it’s hocus-pocus, and they tell you that once like you get all the reviews that you want, then you can raise the price, you can add in all the information to your listing and then it will finally be able to be found in the rankings.  First off, products can be found in the rankings if they’re listed on Amazon and there are keywords associated with the listing, which can happen just by being in a particular category.  So first off, that myth, busted.  Like it could show up in the results.  You know, there’s these listings from name brands like Dove or whatever that have terrible, terrible listings, and they’re still ranking. 

So anyways, there’s that, but the main problem is that when you raise your price a lot of the time from $2 to $20 or $40, however much you want to charge, like you lose the buy box for a good period of time, and so nobody can even sell.  So this guy had like an iPhone or a Galaxy S8 case or something, and it was like just launching or maybe – I don’t know.  Anyways, the newest phone case, and that product was about to be announced or about to go live, and so he needed to have it up and able to sell on Amazon.  But he couldn’t have the buy box if he charged any more than like $2.50.  But you can’t charge $2.50, so he was like not capable of selling that product anymore all because this course taught him to do that.

CAMERON YODER:

So there’s a lot – I mean there’s a lot of, a lot, a lot of misinformation out there.  Even you pay money – let’s say you pay money, you go to a conference.  There’s probably a lot – well we’ve seen a lot, like first-hand a lot of misinformation there.  So what should people do?

CASEY GAUSS:

You know, I don’t know the answer to that, right?

CAMERON YODER:

It’s a hard question.

CASEY GAUSS:

Because like I don’t.  I think it comes down to you need to be doing – I think you should be listening to everything.  You should be skeptical about everything everybody says, including us.  I think that you should be testing everything and just be very vigilant around making sure that the data that you are getting or are able to get, you are paying attention to and making decisions based off of that.

CAMERON YODER:

That’s – the only thing I would add to that, which we’ve talked about this before, but questioning everything that you hear.  The most – we see sellers experience failure when they just blindly accept what other people are saying and then follow through with that.  I think questioning everything is really important.  I also think surrounding yourself with like-minded people who are critical is really important as well because if you’re in a group of people who accept everything, then it’s going to be hard to say no.  If you’re in a group of people that are critical and are testing everything together, it’s going to be easier to find, I think, truth in that.

CASEY GAUSS:

Yep, absolutely.

CAMERON YODER:

The only other thing, the only other things that I see Amazon sellers maybe experiencing failure in is – we’ve talked about this before as well, and Casey talks about this at conferences, but a lack of aggression.  If you’re confident in the data that you’re seeing and confident in your product, just being aggressive with how you sell, with product launches, with sourcing, being aggressive really speeds up the process.  Like Casey talked about before with just testing a lot of things out and moving forward with them and punching it hard, that can really progress your business quickly.

CASEY GAUSS:

Yeah, I mean there’s just a number of them.  Like so some people will quit their job too soon because they just want to be able to check that box on I quit my job.  And so then they start pulling out too much capital from the Amazon business, which is something that we’ll be talking about here soon.  People have a hard time with inventory forecasting.  So people run out of stock all the time, and people start targeting bad keywords, or like people get very emotionally tied.  This is something that we’re trying to figure out what the actual topic is or how to build a podcast out of this, but there is this great article – it’s super long – kind of about like the Chinese and their mindsets around Amazon and how they’re able to have so much success .  And one of the reasons was just because they don’t get very emotional about their products or their brands, and they’re just focused on the data, and like they make decisions super fast.  And again, so I think one of them is just getting emotionally tied to your products, to your business, to where it’s impairing your ability to make like good, logical decisions.

CAMERON YODER:

All right, Casey.  We talked about the biggest failures for Amazon sellers, but in terms of setting themselves up for success, how can Amazon sellers best – how do you think Amazon sellers can best set themselves up for success?

CASEY GAUSS:

I think the number one thing is don’t over-analyze.  Like so many people are like spend months and months just looking at the data and don’t actually pull the trigger, don’t make a decision.  Like you’re going to get so much more data when you actually pull that trigger, make that decision, jump in and see that kind of experience for yourself.  So again, like I – and this kind of comes with being aggressive to a degree, like I just want to encourage you to jump in and move as quickly as possible, like your competitors are doing it, and so you need to be doing it the same.

CAMERON YODER:

I think it’s really important to also know your capacity.  Know what you’re capable of because if you put yourself in the way of moving quickly, like you will experience failure.  I mean we’re telling you on this podcast you’re going to experience failure, but if you experience failure beyond your means, then it’s going to be really hard for you to dig yourself out of that. 

CASEY GAUSS:

Oh yeah.

CAMERON YODER:

If you take a lot of money and you can’t pay it off, you’re going to be in a tough spot.  So I would say be smart about moving quickly, but also move quickly.  Like there’s a fine – there’s a hard balance there.  It’s really important to know what exactly you’re capable of, and just like we talked about before, setting yourself up for success in the Amazon space specifically looks like expecting failure, like expect failure to happen.  Know that failure is going to happen so it won’t surprise you when you experience it.

CASEY GAUSS:

Yeah, and have a plan with that.  So then have a plan for if things do fail, have that contingency.  And it’s like okay, that’s fine.  I ordered far too many units for this holiday period.  Let’s say, you know, you sell Valentine’s Day items.  Like sure, maybe you ordered too many, but it was kind of a go big go home situation, and you would rather have too much inventory than too little because it’s so much money that you’re missing out on, and so then make sure you have a good place where you can go liquidate that inventory for a decent price, or maybe at the very least get it out of Amazon so you’re not paying those long-term storage fees.

So that’s all for failures for us, guys.  I just wanted to thank you again for tuning in.  I, you know, know that being an entrepreneur, we can definitely feel alone, and we can definitely get really down on ourselves for failing, right?  Like we look at the Mark Zuckerbergs of the world, we look at the [anchors 0:37:03.4] of the world, we look at, you know, all these people that have been so successful, and we don’t see what their path to that success was.  We don’t see all the failures that they were making.  And so I think it’s very easy for us to put it on ourselves and say well, shoot, you know, I can’t really measure up to Mark Zuckerberg, or Bill Gates or whoever because like, you know, they just had this meteoric rise to success, and I would imagine that on that path to success they had so many, so many micro failures, but they just continued to move on and push ahead.  Like Mark Zuckerberg, for example, had a bunch of things that he tried getting off the ground before the Facebook came to be.  So like I just hope that this podcast, if you are in that stage where things maybe aren’t going as well as you would hope this can be kind of that little pick me up to show you again or just to remind you and encourage you that hey, this is just part of the process.  This is making you the much better – a much better version of yourself that is going to be that much more successful, you know, in the next phase of business.  So yeah, hopefully a little encouragement for you.

CAMERON YODER:

We do actually really want to hear from you guys concerning this topic, just concerning failure and what failure you guys have experienced or have pushed past and experienced success from that failure.  So our question of the week has to do with failure, and it simply is what failure have you experienced and/or also what success have you experienced from that failure?  So in order to answer that question, or if you have any other questions regarding failure, hit us up on Facebook, just seriously DM us, hit us up on the DMs.  It could even be Instagram, but Facebook if you pull out your phone right now, literally right now, and you – unless you’re driving – and you look us up on Facebook.  You can literally just message us and we will get back to you.  You can also call in.  Our number is 317-721-6590 to drop us a line.  Until next time, remember, the data is out there.

Trademarks and Amazon: Why and How You Should Trademark Your Brand w/ Special Guest LegalZoom

Trademarks and Amazon: Why and How You Should Trademark Your Brand w/ Special Guest LegalZoom

Trademarks are both complicated and essential to long-term success for Amazon businesses. Trademarking your Amazon brand is crucial for protection and access to exclusive Amazon features (Brand Registry 2.0), however there is a lot of misinformation concerning what a trademark is and how to best establish one. On this episode of Follow The Data, we sit down with Nicholas Santucci, the Lead Trademark Attorney of LegalZoom Legal Services, Ltd. to break down this confusing topic and shed some light on how you should move through the trademark process.

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Podcast Transcript

CAMERON YODER:

Starting a business can be intimidating, and fear of the unknown can be paralyzing.  In order to confidently proceed with your FBA business you need to know that your company is legally sound.  A registered trademark for your brand is one way to ensure that you’re starting out on the right foot and won’t run into trouble down the road.  Plus, with Amazon’s brand registry program there are serious perks to having a registered trademark for your brand name. 

I’m Cameron Yoder, your host for

Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.  In this episode we talk to lead trademark attorney at LegalZoom Legal Services, Nicholas Santucci, about how and why you should trademark your private label brand.  Stop letting complicated legal jargon and confusing paperwork stop you from accomplishing your dreams.  Let’s jump in.

Hey, everybody.  Before we get started playing the interview with Nick I just wanted to talk a little bit about this episode.  There is a lot, a lot, a lot of good content in this episode, and we try our best to just break down and make trademarks understandable because this is generally a confusing topic or topic that sellers sometimes don’t have a lot of information surrounding or haven’t heard someone talk about.  So the goal with this is really to just break it all down.  We talk about trademarks in general and on how trademarks can apply to or do apply to Amazon sellers.  But I’d encourage you, give it a listen, give it a shot.  There’s a lot of stuff here that you need to know in order to set yourself or set your brand up for success in the long run.  So let’s jump right in.

NICHOLAS SANTUCCI:

Let me start sort of from square one with, you know, what is a trademark and what’s the purpose of all of this?  Why are we talking about it?  So I mean first of all I’m Nick Santucci.  I’m the Lead Trademark Attorney for LegalZoom Legal Services, and let’s talk about trademarks.  So very, very up-front.  There’s these three general buckets of intellectual property law protection in the United States that people are going to be interested in, patents, copyrights and trademarks.  So generally if you’re making some sort of new technology or new gadget you need patent protection, okay?  Generally.

CAMERON YODER:

Okay, technology and gadget.

NICHOLAS SANTUCCI:

Technology or gadget, you’re looking in the patent bucket.  If you are a creative and you make money by selling copies of your work, then generally you need copyright protection.  Copyright is literally the right to control who makes copies of your work.  So if you make photographs, or music, or movies, or you write books, or you write blog posts, then you want to control the right to make copies of those because you make money by selling those copies.  That’s copyright protection, okay?  So then we get to trademarks, and trademarks are brand names is the easiest way to think about them.  Of course it doesn’t need to be limited to a brand name.  You can have trademarks that are, you know, less traditional.  Like the NBC chimes would be a sound trademark.  But broadly a trademark is a source identifier.  It answers the question who made these goods or services?  You know, and I’m looking at my watch right now, and it says Casio, and that’s the trademark.  It answers the question who made this watch, right?  So it is a way for consumers in the marketplace to distinguish your goods from those of others.  And having a strong trademark regime is good for the economy because it lowers consumer search costs.  That is the time and effort required for consumers to purchase the same goods or services again and again.  We don’t want to make it hard for consumers to make purchasing decisions.  In fact, we want to make it as easy as possible because it’s good for the economy, and we want to do a bunch of other things.  We want to prevent counterfeiting, and we don’t want consumers to be confused about the source of the goods or services that they’re purchasing.

CAMERON YODER:

So a trademark — a trademark allows consumers to purchase items quickly and confidently?

NICHOLAS SANTUCCI:

Yes, exactly.  That’s a good short way to say it.

CAMERON YODER:

Okay, so who — in this case who — well, are there even more specifics or intricacies to a trademark?  So a trademark has to do, again, with — it’s synonymous with the brand.  And I’m sure it goes deeper than that, but are there different types of trademarks then, or does it go deeper than that, or is it all just kind of –?

NICHOLAS SANTUCCI:

Yes, yes, there certainly are different types of trademarks ranging from — so you know, at the extreme or like the nontraditional trademarks, like a sound trademark like the chimes for NBC, those notes in that order at that tempo are registered as a source indicator of NBC.  And then, you know, it gets even more detailed with pink as a color for fiberglass insulation is a source identifier.  If you like bicycles, Park Tool makes tools for working on bicycles, and they have a trademark for the color blue for use in connection with bike tools.  So when you see Park Tools they’re actually — they have blue handles, and that’s actually a registered trademark.  So you know you can register all kinds of different things if they identify the source of your goods and services.  But for our purposes the two kinds of trademarks that a small business is going to be applying for at the outset are the standard character trademark, which is just the words.  It is the brand name.  It protects those words or characters in that order without regard to font, style, size, color, shape, whatever.  This is the most important application for a small business up front because a logo, if you were to apply to protect a logo, your logo evolves over time, but your brand name doesn’t evolve over time unless you change it.  So for instance, Coca-Cola has a live trademark that was registered in 1928, and it’s still alive and well today, and Coca-Cola still renews it, and the reason they do is because it’s for the standard character mark.  So as long as the name of the product doesn’t change but the logo changes, that registration will remain in force if it’s maintained, and it will remain valid.  So just –

CAMERON YODER:

How long does — like how long until you have to renew a trademark?  So like how long does Coca-Cola, or how frequently does Coca-Cola have to renew?

NICHOLAS SANTUCCI:

Sure.  The short answer is 10 years.  So after the registration date there is going to be a maintenance filing between the fifth and sixth year after registration, and then another maintenance filing 10 years after registration, and then every 10 years after.  So long as the mark remains in use in commerce and the registrant can prove that to the USPTO in these maintenance filings, then a trademark can last forever.

CAMERON YODER:

Now what’s the difference between a — is there a difference between, or what is the difference between a registered trademark and an unregistered trademark?

NICHOLAS SANTUCCI:

Yes, okay, so a trademark broadly is a source identifier.  It answers the question, who made this?  Now in the United States trademark rights are based upon use of a mark in commerce in connection with the underlying goods and/or services.  So it’s kind of like – so once you use a trademark in commerce in connection with some goods or services, you, these rights attach.  You automatically have what are called common-law rights in that trademark, okay?  And those common-law rights actually create the ability to sue and be sued for trademark infringement, okay?  So without regard to a registration there can be lawsuits going on just based on common-law trademark rights and parties use of a trademark in commerce. 

Okay, now the registration comes into play — a very simple way to think about a trademark registration is that it makes it much easier for you to sue somebody for trademark infringement or to stop somebody from using a mark that is confusingly similar to yours.  Now that’s sort of an oversimplification of trademark registration, but here is the analogy that I always use for conducting a trademark search and registering a trademark is that this process is the best that you can get in the United States to lower your risk of encountering problems for adopting and using a trademark, and that will become more clear when we talk about a trademark search.  You know, if you want me to just kind of get into the search [now I’m happy to 0:10:29.6].

CAMERON YODER:

Yeah, yeah, I think that’s – yeah, I’d say we talk – I say let’s talk about trademark searches.  So we kind of went over, we went over what a trademark is in relation to other entities like it, but honestly what stumps a lot of people in specifically the Amazon space and registering for a brand, for their brand, is even knowing where to start with searching.  Like let’s say – well, maybe you should just lay it out.  Like, I mean there are two kind of options.  You can either do it yourself, or you can get someone to do it for you, right?

NICHOLAS SANTUCCI:

Yes, yes, so that’s right.  And so I mentioned earlier a simple analogy, and the analogy with a trademark search is analogous to a title search on a piece of – on a house when you go to buy a house.  So just like a house or any piece of real estate, a trademark is a piece of property.  It’s a piece of intellectual property, but it’s still a piece of property in many of the old sort of common-law property laws apply to trademarks because they’re a piece of property.  So before you buy a house and you invest all the money that it takes to buy a house, you – and it’s mandatory in some jurisdictions – you conduct what’s called a title search, and a title search aims to uncover whether there’s anybody else in the world that has a valid claim of rights in that piece of property because the last thing you want to do is spend all this money on this house if in two years that person with a claim of rights is going to come and sue you for the house because you don’t want to be involved in a lawsuit because it’s a drain on your time and resources, right? 

So that’s what a trademark search is.  Only instead of searching the availability of the house, you’re searching the availability of trademark, of the trademark.  You’re seeking to answer, is there anybody else out there using this trademark with rights in this trademark that would be superior to my rights in the trademark such that they can sue me later on or make me stop using this trademark?  Because you know, even in the simplest example, you know, let’s say you’re a tattoo parlor, and you invest in this trademark and you buy a sign and hang it on your window.  You know, even if the sign only cost you like $100 if you get a cease and desist letter from someone saying, you know, destroy all your materials bearing this trademark or we’re going to take you to court, you know if you don’t want to go to court then at the very least you’re going to throw your sign in the garbage, and then that $100 that you invested in your sign is gone.  I mean in reality, you know, it’s probably a lot more money that you have invested in this name.  So you’re trying to uncover whether you can use it, what is the risk associated with adopting and using this trademark?  Now doing it on your own versus getting, let’s say an attorney to do it for you, there’s a huge difference.

CAMERON YODER:

Yeah.  What does that involve typically?  Like what would you say is – or maybe just break down what the positives and negatives are, like what the risks are for someone doing it themselves.

NICHOLAS SANTUCCI:

Right.  So there are many considerations that go into determining whether trademarks are confusingly similar, right?  A legal standard that’s used to determine, you know, whether courts are going to stop people from using trademarks, whether they’re liable for trademark infringement, so the factors that go into that determination are more than the sort of common person would think, right?  So it’s appearance, sound, meaning, overall commercial impression, right?  That’s sort of a simplified way to think about it.

CAMERON YODER:

Wait.  Can you say those again?

NICHOLAS SANTUCCI:

Sure.  Appearance, sound, meaning, overall commercial impression.  And a simple way to think about this is if you do a simple trademark search, like a direct hit trademark search, let’s say you thought of a great brand for basketball sneakers called Nykee, n-y-k-e-e, right?  If you do a direct hit trademark search, that search is not going to bring up Nike, n-i-k-e, right?  And you’re going to miss that conflict, and then you’re going to move forward, and you’re going to see well there’s no results for Nykee, n-y-k-e-e, so I must be good to go.  But it’s sort of a loaded example, but it’s illustrative because everybody knows you can’t use Nykee, n-y-k-e-e, right?  Nike, the big company, is going to have a problem with you branding your sneakers n-y-k-e-e, not to mention consumers are going to see those sneakers and they’re going to be like, what?  You know, does this have something to do with the Nike that everybody knows?  So that’s one problem is sort of just the scope of the search.  Are you going to be able, on your own, to use the tools that are free and available to you to search for the trademark effectively?  And the simple answer to that question is, well, without educating yourself, you know, sort of – I don’t know, I would say that it’s going to take a lot of work for you to get up to speed and to be able to do that search confidently on your own. 

Now, you know, I invite you go to the USPTO’s website, and the service is called TESS, T-E-S-S.  It stands for Trademark Electronic Search System.  The first option is this basic search option, and it’s great.  It’s a direct hit search, and it’s great for answering the question has anybody applied for or registered the exact mark that I’m searching?  But that, you know, that’s great for brainstorming and sort of getting that initial answer, but you really need an in-depth trademark search to uncover all conflicts that may be similar in appearance, sound and meaning.

CAMERON YODER:

If it goes – if someone wants to do it for themselves, like keep on searching for themselves, is that as deep as it goes, the TESS on the USPTO, or are there other resources that people can use to even just dig a little bit deeper?

NICHOLAS SANTUCCI:

So there are many – so do it on your own, you mean actually run the search on your own? 

CAMERON YODER:

Yes.

NICHOLAS SANTUCCI:

You know there’s different levels of sort of doing it on your own.  For the United States I would say that TESS is the gold standard, right?  It is directly to the USPTO database, and if you can’t rely on the USPTO database, like what database can you rely on?  So I would say that if you search the USPTO database that is the best tool, and you know, beyond the basic search.  I mean trademark attorneys use this database all day long to conduct much more complex searches that involve, you know, operators and, you know, taking into account all the variations of spelling and meaning that a trademark can have.  You know, so TESS, I would say TESS is the gold standard.  Now there is a ton of third-party providers who, you know, run searches for you.

CAMERON YODER:

And what do those go through?  Those don’t just go through USPTO, I’m guessing, unless they just do a more in-depth search on USPTO, but they use other – those third-party applications or services use other search methods, or do they just scrape Google, or what exactly are they doing?

NICHOLAS SANTUCCI:

So any third party that is searching, is claiming to be searching US trademarks is ultimately linking to TESS, is ultimately linking to the USPTO.  And if that third-party is not linking to TESS, then I would say as a trademark attorney do not use that third-party.  I mean what could they possibly be searching if they’re not searching TESS?  And I would not trust it.  I would not advise my clients to, you know, to do that.

CAMERON YODER:

Well let’s say – s TESS is the best way to just even just get an initial idea, right?

NICHOLAS SANTUCCI:

Yes, yes.

CAMERON YODER:

How secure would you say TESS would be?  Like how confident should someone just searching on TESS and that’s it, like how confident should they be in their trademark if they’re just doing that?

NICHOLAS SANTUCCI:

Yes, okay, so here’s the deal with TESS, right?  So it all – we start to get into the depth of the trademark search.  So that first option on TESS, like the direct hit search, that’s when we talked about the two Nikes and how the direct hit, the direct hit wouldn’t find the relevant conflict.  So a trademark search, the value of a trademark search sort of is dependent upon its depth, its thoroughness of searching.  So a comprehensive search – and the term comprehensive is generally used in the trademark attorney or the trademark, you know, industry I guess, to denote to you that this search is as thorough as it could possibly be.  So a comprehensive search would take into account those variations in spelling, right?  So Nike, n-i-k-e, would come up if you ran a search for n-y-k-e-e.  And also maybe Spiky would come up if it’s registered for use in connection with basketball shoes.  So it takes into account the goods and services in connection with which a mark is registered, and it’s thorough.  And not to mention a comprehensive search is not only going to search the USPTO database.  It’s also going to search the common-law sort of set of trademarks that are out there that you need to be concerned of because there is two questions that a comprehensive search is intending to answer.  The first is can I get this trademark through the United States Patent and Trademark Office to registration, or will it encounter some impediment to that during the process?

CAMERON YODER:

Right.

NICHOLAS SANTUCCI:

For the answer to that question, that’s searching TESS.  That’s searching the USPTO database because we want to know has anybody applied for a trademark that could be considered confusingly similar to my trademark before me, and will a likelihood of confusion refusal issue due to that trademark?  So I know there is so much jargon, but the bottom line is that – let’s back up and talk about the process for a little bit here.

CAMERON YODER:

Sure, sure.

NICHOLAS SANTUCCI:

You apply for a trademark with the United States Patent and Trademark Office.  Once the application is received it is reviewed by what is called a trademark examining attorney.  This is an attorney employed by the federal government, the Patent and Trademark Office, that deals with trademarks exclusively, and they examine the application for compliance with a bunch of statutory requirements, and they also conduct a search of the trademark registered for your applied-for mark to find out if there’s anybody that applied for a mark before you that could be considered confusingly similar to your trademark.

CAMERON YODER:

Okay.

NICHOLAS SANTUCCI:

If they find a trademark that could be considered confusingly similar, they’ll issue what’s called an office action, which is just a fancy name for an official letter from the USPTO, and in that office action will be a likelihood of confusion refusal, and it will say hey, I am refusing registration of your trademark because it is likely to create confusion among consumers with this prior registration.  And then that’s where trademark attorneys, you know, come into play a lot because sometimes it makes sense to actually argue against a likelihood of confusion refusal.  Sometimes it does not.  But you know, so this search – back to the comprehensive search – the first question is am I going to get a likelihood of confusion refusal?  That’s what the search of the Patent and Trademark Office database aims to answer.  And the second question is what is my risk of [running a foul 0:24:16.9] of any common-law user of the trademark?  So early in the conversation –

CAMERON YODER:

Common-law user, what exactly does that mean?

NICHOLAS SANTUCCI:

Okay, so early in the conversation we said that use of a trademark in commerce creates what are called common-law rights in a trademark regardless of applying for the mark at the USPTO.  Those common-law rights create the ability to sue and be sued for trademark infringement.  What does that mean?  Well, that means that even if somebody has been using a trademark – no, even if somebody has never applied to register their trademark they can still sue you for trademark infringement.  So just by virtue of using a trademark in US commerce they get rights in that trademark.  So that’s what the second part of the comprehensive search is intended to answer, what is my risk of an infringement lawsuit by anybody who is using a mark confusingly similar to mine that hasn’t applied to register it at the USPTO?  Does that make sense?

CAMERON YODER:

That does.  Now I do want to ask, that first refusal, that initial refusal from the United States trademark office, whoever the first person to get a hold of your trademark application and either accept or deny it, let’s say it gets denied.  How often do denials happen?  Like should people expect for their trademark to be denied, or should they – like should people submit applications expecting for it to be denied and to not be surprised by that, or the should they be surprised by a denial?  What do you think?

NICHOLAS SANTUCCI:

Sure.  Yeah, so like we said, the denial would be in an office action, okay?  And 50%, about 50% of applications submitted to the USPTO receive an office action.  So it’s very commonplace and oftentimes when you’re working with an attorney you will apply to register a trademark, you know, anticipating an office action, like we know that this is probably going to issue an – trigger an office action issuing, but you know, it makes sense for us to apply for your trademark in this manner because it’s the United States Patent and Trademark Office’s sort of responsibility to spot those issues and to issue an office action.

CAMERON YODER:

So what are some of the – do you know, or can you give us some of the most common reasons that a trademark would be denied?

NICHOLAS SANTUCCI:

Yes, so the reasons are very, you know, can vary.  I mean there are so many reasons.

CAMERON YODER:

Of course, of course.

NICHOLAS SANTUCCI:

But you know, and they can vary.  What I’m trying to say is they can vary in complexity.  So you can get a refusal because your goods and services aren’t drafted well enough.  So you have to, when you apply for a trademark, you have to name the goods and/or services in connection with which your trademark will be used in commerce.  So let’s stick with – you know, let’s stick with Nykee, the Nykee trademark, n-y-k-e-e,  and so that trademark is going to be for basketball sneakers, right?  So you would apply for Nykee for use in connection with basketball sneakers.  The description of goods and services that you submit to the USPTO in connection with your application has to meet a bunch of standards.  It needs to be what’s called definite enough.  You know, it can’t be indefinite, and it can’t leave too many things, you know, open to the imagination.  So the refusals that people can receive range from minor sort of procedural corrections that need to be done to the goods and services, you know, to a deficiency in the specimen of use that they submit to the USPTO.  And in order to do that you submit a specimen of use.  That could be [efficient 0:28:37.8].  But when you’re getting to the sort of serious refusals that are, you know, more complex, you’re mainly dealing with a likelihood of confusion refusal or some sort of descriptiveness refusal that attacks the, what’s called distinctiveness of a trademark, and it’s ultimately about information that the mark conveys about the underlying goods and services.  So you may know that generic trademarks cannot be protected.  You know, in fact generic terms are not trademarks, right?

CAMERON YODER:

Right, so when someone tags a generic term, and can you give an example of a generic term?

NICHOLAS SANTUCCI:

Yeah, sure.  So facial tissue is the generic term for Kleenex brand facial tissues, right?  So a generic term does not answer the question, who made these goods and services?  Instead it answers the question, what are these goods or services?  So you cannot protect a generic term.  So I’m looking at the blue mug on my desk, and I cannot register the trademark blue mug for use in connection with blue mugs because competitors need to be able to use the terms blue mug to describe their goods and services, and we’re not going to let people monopolize terms that need to be used in legitimate competition, so getting back to the trademark regime and being good for the economy.  So that goes to say that the term needs to be distinctive.  It needs to have some requisite level of distinctiveness.

CAMERON YODER:

But even if it has, even if you – like because there are a lot of people – I mean, so there are a lot of refusals, right?  So even, like you said, 50% of applications typically – again, it’s a rough estimate but like around 50% get refused.  So we see a lot of people, at least on Amazon, a lot of people giving just random, random names to their brand, spelled in a lot of different ways.  But if you – even if you have a spelling variation of something that’s similar, that’s selling similar goods you still have a very good chance of your trademark application getting denied.  Like even if it’s spelled differently, you know, like there’s an X or something in place of another letter, if it’s similar you still run the chance of getting denied, right?

NICHOLAS SANTUCCI:

Yeah, that’s right.  You know, marks are compared with respect to appearance, sound and meaning.  So when the case of that the factors that would matter would be, you know, sound and meaning.  Although they’re spelled differently, you know, they still sound exactly alike and look exactly alike.  And the same is true for assessing a trademark with regard to its level of distinctiveness.  So back to the example of blue mugs.  If my trademark was blue, b-l-o-o, mugs, m-u-g-g-z for use in connection with blue mugs, it’s still going to be refused as generic because it’s a blue – it’s still a blue mug, and the meaning of those terms is still blue mug.

CAMERON YODER:

Now I have another – I understand, and that’s a really good point.  I have another question that kind of jumps back to a similar – it’s a similar topic.  It’s another topic a little bit, but let’s say someone gets a successful, or successfully trademarks their brand, their random brand name, for a specific set of goods and services.  If they – what happens when they expand outside of those goods and services and they start selling – let’s say the goods and services they applied for and they got approved for are in category A.  Let’s say they branch out of that then into category B and start selling goods and services that are outside of their trademark under that brand name.  What do they run the risk of doing with that?  On Amazon that would be like, you know, you get a – you successfully trademark your brand for selling, like let’s just say fish oil, right?  Like I’ve trademarked my brand to sell like fish oil goods or like supplements like that.  But then you start selling cardboard under your trademark, which you – your trademark brand, which you did not apply for as a specification of goods and services that you’re dealing with under your trademark.  Is that an issue?  Are there issues with that or not really?

NICHOLAS SANTUCCI:

Oh yeah, oh yeah, there’s many issues.  So I think the way to think of it is that it’s a new trademark at that point because we said that the two sort of key components in a trademark application are the trademark and then the underlying goods and services, and when you change one of those factors, here being the underlying goods and services, from fish oil to cardboard, it’s an entirely different trademark, which arguably needs a new search, and it needs a new application.  I mean this is very commonplace for businesses that rely heavily on trademarks and branding to make money.  So when a brand makes one product you apply for that trademark.  You get it registered.  And then when you want to expand to different products that are so different you really need to do the same thing to get the same protection. 

The gray area is somewhere in between where you expand to goods or services that are within what is called the reasonable zone of expansion for this business, right?  So for in the case of fish oil, you know, if Acme makes fish oil and then Acme starts to make, I don’t know, some other supplement, let’s say emu oil, you know, then maybe there’s a question of oh, well, someone in the supplement industry already is making fish oil probably it’s reasonable that they would expand into emu oil.  Now that may or may not be true, but the question certainly arises then, and so where it gets relevant is let’s say someone – so let’s say Acme makes fish oil, and then another person starts making Acme emu oil.  Does Acme who makes fish oil have a claim against Acme making emu oil because it was reasonable that they could expand into emu oil if they wanted to?  Or are these goods and services related to begin with?  But the bottom line is that when you expand into new goods that aren’t covered by your current trademark protection you need to go through the process again, and it’s very commonplace for businesses to have many, many trademark registrations over time, and then this builds what’s called an intellectual property portfolio. 

CAMERON YODER:

I see.

NICHOLAS SANTUCCI:

And then you just manage all these registrations and you maintain them, and it’s big business for, you know, the brand.  And an example of this is Anheuser-Busch.  They make a bunch of beer and beer products.  They make Bud, Bud Light, you know, Bud Light Lime, and then Anheuser-Busch, and Anheuser-Busch is the house mark.  That’s the big overarching company that makes all these brands, and then all these brands have a bunch of registrations for all the different depictions of the brand names.  So not only does Anheuser-Busch have an application, but so does Bud, so does Bud Light, so does Bud Light Lime, and then they have all the standard character and logo applications for all of those brands, so it’s very commonplace to have to file, you know, multiple trademark applications if not very, very many trademark applications.

CAMERON YODER:

What’s typical for Amazon sellers, honestly, is to – I’d say the standard, the standard, what happens most of the time is where people start selling goods on Amazon and they trademark later.  How they trademark their brand later, or they have to change their brand name.  So people are already selling these goods.  What best practices can people put into place to either just insure or increase the chance of success when applying for a trademark for their brand?  Like what steps can people take to just start off well?

NICHOLAS SANTUCCI:

Yes, okay.  So if you wanted to start off, you know, the best case scenario is to file – is to look before you leap.  So you want to know whether you’re going to experience any problems before you experience any of them, and the way to do that is when you’re thinking about using a brand name, conduct a search, get an attorney’s review of that search, and then if you decide there’s an acceptable level of risk, file what’ called an intent to use application.  An intent to use application does not require proof of use to the USPTO upfront.  Instead what it’s used for is to, if you have this intent to use a market commerce, filing that application will bubble up any problems or people who would oppose you as soon as possible so that you can sort of get a sense of the risk of using that mark as early as possible.

CAMERON YODER:

Now one thing that sellers run into is getting trademark ASAP.  Like it takes a decent amount of time to get approved or to hear word back on your application, something like, what, average of, I don’t know, six months?  Is that – what is the average right now in terms of hearing back?

NICHOLAS SANTUCCI:

Yeah so when you submit a trademark application it takes the USPTO about three months to just review the application.  Now assuming the best case scenario, if your application gets reviewed, then it has to get published, and to publish is a 30-day period in which the public has the opportunity to oppose registration of your trademark.  So that’s another month there.  Then if it passes through publication maybe it’s going to register about three months later.  So that’s like the best case scenario.  If you encounter no problems you’re looking at 7 to 8 months before your mark will register.  But much more likely is that, you know, you will have some sort of issue or some back and forth with the patent and trademark [process 0:39:55.2].

CAMERON YODER:

You mentioned that, the intent form.  What was that called, the intent of use form?

NICHOLAS SANTUCCI:

Intent to use application.

CAMERON YODER:

Intent to use application.  So how would that help?  Since sellers are so concerned about getting, just getting their application in ASAP, would that benefit sellers?  How would that benefit sellers?  It would let them know soon that if their mark was going to cause issues or not, but how soon would it let them know?

NICHOLAS SANTUCCI:

Really the best answer I can give you is sooner than it would take if you waited to file the application.

CAMERON YODER:

Gotcha.  So would you recommend – do you think people should jump into that first just to be sure?  Like would that end up saving – because you either have two paths.  You apply for that, or you apply for the trademark directly, and in both cases if you apply for the intent of use application and you find out that your application or that your brand is already being used, then you can restart the process sooner and maybe you spend less money.  However, if you just jump the gun and you end up getting it right with the just straight up application for your brand or your trademark, if you get it right you’re good to go.  What would you say – would you recommend one over the other, or I don’t know, just what are your thoughts?

NICHOLAS SANTUCCI:

Absolutely.  The right way to do it is to conduct a search up front to assess the risk.  If there’s an acceptable level of risk, submit an intent to use application to get the process started because the intent to use application also serves an important function of locking in your filing date.  So what matters when it comes down to a dispute between parties with trademarks is oftentimes who used the trademark first.  The intent to use application, you know, once the application, or if the application is perfected to registration, the rights, the priority rights that [unintelligible 0:41:54.0] that is considered to be when your rights began will date back to the filing date of the trademark application.  So although it takes a relatively long time for a mark to make it to registration, it’s not all that problematic because what matters is the date that these applications are filed, you know, especially in the case of an intent to use application.  So there’s many advantages to filing as soon as possible, and of course that’s what I would recommend doing.

CAMERON YODER:

Got it.  Now there is – I have one more primary question.  So the chances of being denied are pretty high.  Would you suggest that when someone gets denied – I don’t think people should feel surprised just because so many applications get denied maybe the first time, but if they get denied should they be confident in reapplying themselves, or should they just kind of jump in straight to get a lawyer if they don’t have one already to handle the process?  What do you think?

NICHOLAS SANTUCCI:

Yes, so the problem here is that once you get denied, you know, the reason that you could be denied is because you just, you knew so little about trademarks and trademark law that you settled on a mark that had no chance to begin with.  So if you go to a lawyer with that sort of denial the lawyer is probably going to take a look at your office action and say well yeah, you know, your mark is generic.  You can’t register this.  If you had just talked or did some research to begin with, then you wouldn’t have wasted the money on that trademark application.  So definitely the way to go is invest a relatively small amount of money up front to get the search, to get the opinion of a trademark attorney and to anticipate these problems before they arise.

Now if you have an office action and you do have this good brand and you think it’s legitimate, you should not be discouraged.  You know, read the office action.  Do your best to read it and understand what the examining attorney is telling you to do in the office action.  It may be as simple as picking up the phone, calling the examining attorney and telling them well I want to proceed in this manner.  Now it’s important to realize that the process of obtaining a trademark registration is adversarial, just like the court system.  It is attorneys that are reviewing and rejecting your application, and when they issue an office action, you know, it’s going to be a legal writing that you’re reading.  And if you, you know, don’t have training, that sort of training, it can be intimidating.  I would say don’t be discouraged.  Do your best to read it.  You know, contact an attorney.  They’ll help you at the very least understand it.  It might cost less than you think it would cost to overcome the issues in the office action if they can be overcome.  But the bottom line is don’t be discouraged.  There’s things you could do.

CAMERON YODER:

Nick, is there anything – I’m sure – I mean there’s a lot, there’s a lot, a lot on this subject of trademarks, but is there anything else that you’d want to tell listeners about trademarks, whether it’s applying for trademarks, or what you should do in the case of getting denied?  Is there anything else that we did not cover that you would like to explain?

NICHOLAS SANTUCCI:

I think that it is important to understand that investing in this area of your business has immense potential to pay off or potential to pay off immensely, even if that is in the form of avoiding a problem in the future that could cost your business $20,000.  The trademark application with the federal government costs about $300.  It’s a small price to pay to do it right the first time, and I think that if you sort of wet your toes in learning all there is to learn about trademark law you’re going to realize that it simply makes more sense to outsource this work, to pay an expert to do a lot of it for you because it’s going to cost a lot less in time in the long run.  And the other thing to note is that if you mess it up, if you mess up the registration it can end up affecting your rights, so it’s not – these applications aren’t just throw-away.  It’s a legal instrument.  And there is something at stake.  People do experience problems in this regard, and it ends up costing them a lot of money.  You don’t want to be in the situation where I’ve seen clients that they’ve invested in a brand for, you know, four years, and at the end of those four years their decision is to go to court and spend years in court and possibly hundreds of thousands of dollars or to throw away all the hard work that they invested in their brand.  And both of those decisions are extremely painful for a business.  And if you invest a little bit of money up front protecting your intellectual property you could avoid that down the line.  And I think that there are so many options, you know, nowadays to receive high quality legal work that makes sense.

CAMERON YODER:

Now Nick, you’re part of the LegalZoom team, and that is – I mean that is one area that people can go to for whether it’s trademark questions or trademark help.  Can you tell us a little bit about LegalZoom, just what LegalZoom is, what LegalZoom does, what LegalZoom helps people with?

NICHOLAS SANTUCCI:

Sure.  So I work for LegalZoom Legal Services, a law firm.  I’m the Lead Trademark Attorney there, and I work primarily with a product that is an attorney-led product that focuses on trademark clearance and application filing.  And what I mean by that is this attorney-led trademark registration product is a comprehensive search for your proposed brand, attorney review of that search, and then attorney drafting and filing of the application.  So this is focused exactly on what my general advice to people who haven’t done this before is, which is to frontload the work.  Before you go down the path too far with a trademark that’s going to cause you headaches do the search, have an attorney review the search, and then file the application because you want to catch those problems before you even need to address them, ultimately saving you money.  So that’s what the attorney-led trademark registration product aims to do.  It aims to give you a picture of what to expect up front so that you don’t experience big problems down the road.

CAMERON YODER:

I’ll link – since LegalZoom is a really good resource just for people to even check out to, or whether they have questions about trademarks or not, they just want to look into it, I’ll link to LegalZoom in the podcast description, just as a resource for the sellers to check out.  Nick, I wanted to thank you again so much for being on the show, just for talking with us through the ever-confusing topic of trademarks.  Thank you so much for being here.

NICHOLAS SANTUCCI:

You’re very welcome, Cam.  Thanks for having me.  I know it’s a lot of jargon, but it’s all there for a reason, and I hope I made sense of some of it for you.

CAMERON YODER:

No, you very much did.  You very much did.  Unfortunately it is a topic that it’s hard, it’s hard for sellers to wrap our minds around.  But it’s very important to get it right because if you don’t then it can cost you time, and time is money, or it can literally just cost you straight up money if you make a mistake in the trademark application process, or even years down the road.  So again, thank you so much.  It’s been great having you on the show.

NICHOLAS SANTUCCI:

Thanks, Cam.

CAMERON YODER:

That is all for this week.  Thank you so much for joining us here on Follow the Data.  For more insight and reliable information on how to succeed on Amazon, subscribe to the podcast, subscribe to our blog, follow us on YouTube or like us on Facebook.  We’ve got a bunch of different avenues for you to find us on.  We’ve always got news, tips and best practices that can help you build and establish or scale your FBA business.  Your feedback is so important to us, so also if you’re listening on Apple Podcasts, please leave us a review and/or a rating.  It’s as simple as just clicking a star rating.  Whatever your honest review is for the podcast, we’d love to hear from you.  And if you know a fellow seller who needs help getting their brand name trademarked, send them our way.  We do absolutely love to be a resource for sellers in this space, just knowing what they need and delivering what they need as well.  So please tell your friends, spread the word and share the show. 

And again, just as always, thank you so much for listening.  If you do want to be featured, call in at 317-721-6590 and/or also hit us up on Facebook.  You know we’ve got – it’s just as simple as opening up your Facebook app right now on your phone.  You might be on your phone.  Wherever you are, unless you’re driving don’t do this, but open up your Facebook app, go to Viral Launch and message us directly.  We’ve got people watching, waiting for you, waiting for your message.  So until next time, remember, the data is out there.

Exposing Amazon Black Hat Tactics: A Seller’s Defense with Leo Sgovio

Exposing Amazon Black Hat Tactics: A Seller’s Defense with Leo Sgovio  (Follow The Data Ep. 34)

What is ‘Black Hat’? What does it look like on Amazon? How can Sellers defend themselves against strategies like this? On this episode of Follow The Data, Casey and Cameron break down current Black Hat tactics, and how they are affecting Amazon Sellers, with Leo Sgovio, the Head of Innovation at Viral Launch. They’ll talk through the current ‘state’ of Black Hat, what you need to be aware of, and how to leverage this information for success on Amazon.

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Podcast Transcript

CAMERON YODER:

Maintaining rank can be difficult if you’re in a market that’s saturated with competitors who use black hat SEO techniques, but how do you know whether your competitors are fighting fair?

CASEY GAUSS:

Black hat is extremely difficult to combat when you’re committed to staying within Amazon’s terms of service, and it’s even harder to fight when you don’t understand what’s happening.  I’m Casey Gauss.

CAMERON YODER:

And I’m Cameron Yoder, your hosts for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data that we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.

CASEY GAUSS:

In this episode we talk to Viral Launch Head of Innovation, Leo Sgovio, about black hat SEO techniques.  We’ve had Leo on the podcast before, and we got a lot of great feedback from this super smart guy, so we’re looking forward to another session with him.  We’ve asked him back to touch on a topic that has remained a mystery for a lot of sellers, and that is black hat activity.  Leo is a performance-based advertising specialist with experience in multichannel digital advertising, and he is the Head of Innovation here at Viral Launch.  He’s worked for over nine years in digital marketing, during which time he successfully built and managed multimillion-dollar traffic acquisition strategies in travel, career, real estate, finance and online retail markets, including Amazon.com.  Let’s jump in.

CAMERON YODER:

What’s up, everybody?  So we have Leo Sgovio with us.  Leo, honestly –

CASEY GAUSS:

All the way from Toronto.

CAMERON YODER:

All the way from Toronto, Skyping in all the way from Toronto.  Honestly, Leo, I talked to a lot of people, and one of their favorite episodes was with you, the last episode that you were on, so you’re just a popular guy.  Thank you for being with us today.

LEO SGOVIO:

Thank you guys for inviting me again.  Yeah, I’ve heard really good feedback about the last podcast, and I’m looking forward to talking today about black hat stuff.  It’s actually one of my favorite topics.

CAMERON YODER:

Yeah, that’s – we’re honestly looking forward to jumping into the discussion around black hat as well.  We want to make sure, before we start just anything with black hat, we want to make sure that our listeners know that by talking about, by talking about black hat activity we are not encouraging it, right?  We want to inform.

CASEY GAUSS:

Yeah, I’ve talked about this topic before.  This is, again, like Cam has said, we’re not suggesting you using these tactics, just a lot of times it’s hard to understand why are these people outranking me, or you know, getting tons of reviews?  They must be doing something black hat, or are they running launch – you know, I think there are so many questions that come up because it is kind of a black box in terms of being able to attribute what is driving success for competitors.  And so talking with Leo and better understanding what kinds of things are going on out there will help, hopefully, you make better decisions from a strategic standpoint.

CAMERON YODER:

So Leo, before – well actually, first question, first question concerning black hat activity; could you even just describe to us about what black hat is?  Like what does black hat mean?

LEO SGOVIO:

You know, there are different ways to interpret black hat, but in our world, in digital world, I’d say black hat will be like practices that are used to manipulate search engines or programs through means that violate the terms of services.  So in our context, the Amazon world, this term is used it to describe an illegal activity, or let’s say, you know, distinguish a good guy from a bad guy with regards to marketing of or promotional activities that are being adopted when it comes to Amazon.

CAMERON YODER:

So in this space there are even other terms, right?  So black hat is used to – or these terms are used to distinguish good guys from bad guys, black hat determining a quote unquote bad guy, but there’s also – there are also terms like white hat and gray hat, right?

LEO SGOVIO:

Correct, yes.  So black hat obviously is something that you know you’re doing.  It’s illegal.  You’re not supposed to do it.  You’re just doing it because obviously it’s beneficial.  It’s a shortcut.  White hat, of course, is, you know, something totally the opposite, you know, follows terms and conditions, and you’re not breaking the rules.  When it comes to gray hat it’s obviously something that it’s kind of, you know, illegal, but you’re not really doing anything that might cause a suspension.  Let’s put it this way, right?  In the worst-case scenario you might, you know, get an alert from Amazon saying that you’re not supposed to do this.  For instance, when we send out emails, you know, like multiple emails asking for users to leave a review, like we know that that might kind of break the TOS, but worst-case scenario Amazon might just send us an email saying just stop doing it, and we probably won’t get suspended for that.

CAMERON YODER:

Got it, got it.  Okay, now Leo, you’ve been in the SEO space, specifically on Google, for quite a long time, and on Amazon, on both.  Can you describe to us, if you remember it, your first experience with black hat activity on even just outside of Amazon?

CASEY GAUSS:

And this is not saying, you know, activity that you’ve done or anything, but just maybe your first encounter with something crazy was going on and yeah, you found out essentially?

LEO SGOVIO:

Yeah, so like I mentioned earlier this is a topic [unintelligible] and the reason why I know so much is because I’ve obviously, you know, have done some of it.  So of course, and back in early 2000 it was, you know, the good Google days, I came across black hat techniques when with regards to manipulate website rankings.  So it was very easy back then to build links towards your website from different [unintelligible] and you know like within 24 to 48 hours your website was there ranking on page 1 within, you know, like the top three positions.  So we obviously in the SEO space that was considered a black hat technique, and then, you know, obviously Google shut down the operations.  And I want to make sure that, you know, the listeners here understand what the implications are when, you know, these techniques are adopted. 

When these techniques were working very well on Google what happened was Matt Cutts back in the days, which was head of spam at Google, decided to join all these private networks, and it was very easy for them to detect all these blog networks that were selling links to website owners, and what Google did, they started buying links from these sites, and after a few months of research they came up with a list of thousands and thousands of websites that suddenly [weren’t] indexed from Google, and all of a sudden now you saw websites, even websites like JCPenney if you guys remember.  At one point I believe also Kijiji was penalized.  Like I’m talking about big properties lost their rankings because Google – it was so easy for Google to just, you know, figure out what they were doing.  And so I want people to understand that because for Amazon it’s the same thing.  You know, now there are a lot of groups that offer, you know, free reviews on Facebook.  So if I were to work for Amazon and wanted to quickly understand who was doing that, it would be so easy for me to just hang out for these Facebook groups and now I know who’s buying reviews. 

But later I came across, you know, either, you know, black hat techniques always, you know, involving you know, more on the affiliate marketing side, promoting cookie stuffing, which is a very sophisticated black hat technique that involves, you know, the adoption of advanced technology.  You need to hide yourself, make sure that you’re cloaking, you know, you’re not showing your real domain and, you know, the IP address is different.  So that’s how I came across all these techniques and allowed me to understand more about what’s going on, you know, like underground.

CAMERON YODER:

Got it, got it.  And in transition over to Amazon, when did you even first just notice that black hat stuff – I’m sure since you saw it, since you saw it happening in Google you may have thought that it might be happening on Amazon.  Did you see all this black hat activity happening on Amazon when you kind of first jumped in?

LEO SGOVIO:

Yes, yes, of course.  I did.  And I knew that there must be similar methods that sellers were adopting too many [unintelligible] rankings on Amazon.  I mean I started investigating these practices.  I noticed that it was just a matter of sending, you know, the algorithm the right data points to see movement in the ranking.  So for instance, I came across products that had just a few reviews, and they were ranking on page 1, you know, top three.  And it was just, you know, didn’t make sense.  So that’s when I understood that definitely there was some black hat activities going on on Amazon as well.

CAMERON YODER:

Got it.  And what does – in terms of – because black hat can mean a lot of things, right?  But traditionally can you break down what does black hat stuff just even look like on the Amazon platform?

CASEY GAUSS:

Actually, Leo, this is how you started – this is how you kind of heard about me, heard about Viral Launch actually for the first time, right?

LEO SGOVIO:

Yeah, that’s interesting actually, and now here I am, you know, kind of like [unintelligible].  But of course one of the podcasts that kind of like got my attention was yours actually, Casey and [unintelligible] talking about black hat stuff, and you know, I was curious because obviously, like I said, this is really a topic that I love, and you guys were talking about bots and, you know, how people are – what people are doing to manipulate the rankings.  And since then I started, you know, stalking Casey.  I’m like I like this guy.  He’s a very smart guy.  And then later on I met Casey at the conference, and now I’m working with Viral Launch.  So that’s amazing the way it worked out.  But of course yeah, that’s how I got to know you, Casey. 

CASEY GAUSS:

Nice.  Yeah, no, which is super cool to hear on the other side of it.  So just to answer Cam’s question directly, Leo, please interject if I, you know, get anything wrong, but what was going on?  I think this is like late 2016 early 2017, essentially Amazon’s ranking algorithm started to pay attention heavily to, or maybe I don’t know if it started or this is when people really started picking up on it, was essentially you were able to drive ranking with no sales.  And what was going on was Amazon was paying attention to these different pieces of data or data that the front end was sending to the back end.  Essentially what that was was okay, if the user goes, interacts with the listing in certain ways, if they go look at reviews, if think click into reviews and they click add to cart, Amazon was looking at this as some – what they were calling it is education, which means the bot or somebody was going down looking at the reviews and then intent, intent to buy.  And what that was was adding to cart.  So simply by having a bot, people would build these bots that would spin up a new IP – or use a new IP address, spin up a new instant, you know, go to Amazon, search fish oil.  Go click into competitors’ listings.  Go find your listing.  Click into your listing.  Scroll down to look at reviews.  Scroll up and down.  Spend different times on the page.  Click this, click that, you know, click into up-votes or down-votes.  Click into questions or whatever, and then ultimately end in an add to cart.  And some people would have programs that would just do this thousands of times a day, even up to, you know, hundreds of thousands of times a day at one point as bots became less and less effective on these super high-volume keywords, largely because everybody was doing them.  And so basically people just were writing these programs and had these programs and even selling these programs where you could go and get these bots that would just drive your ranking.  And I don’t remember what the delay was or how quickly you would drive ranking, but it was extremely powerful, and you know, people were ranking for every keyword from vitamin C serum, to essential oils, to iPhone 7 case or whatever the popular case was at the time, like they were everywhere.

LEO SGOVIO:

Absolutely, Casey.  There is nothing I can add actually.  You said it all.  That’s exactly what was happening back then, and I’m actually glad that Amazon kind of stopped it.  Like they figured out what was happening, and that stuff is no longer working now.

CAMERON YODER:

Do people use bots now, or is there any sort of bot function now that people are into?

LEO SGOVIO:

I would say so.  There is definitely – there’s definitely people that are using bots still.  Look, even if, you know, you’re not able to rank a keyword now for a specific keyword using bots, I mean things like, you know, making sure your product is the top of wish list or shopping list and these things, this stuff is still working.  So I’m not sure to what extent you might, you know, see an increase in sales when your product is number one on wish list, but it might still help, so some people are still doing it.  Now there might be other people.  I’m not saying that I know of any, but that’s probably just because of the way I think, but I’m not surprised if there are people that have evolved and so now they’re – they take, they took it to the next level, so making purchases with bots, you know, to obviously because you guys know now it’s all about purchases when it comes to Amazon.  So I would definitely think that there are still people using it. 

How easy it is to build those?  Is it worth it?  Probably not.  You know you need to really understand what you’re doing when it comes to building bots, and that obviously can, you know, you can risk your account, so that’s something that I wouldn’t suggest, you know, anyone doing.  And I remember when I was talking for my first time at one of the conferences about, you know, like black hat techniques, this guy asked me, you know, can you – do you mind, you know, talking to me a little bit more?  Maybe, you know, I can even pay you to teach me a bit more about black hat.  And then I asked him, you know, do you know what engagement metrics are?  Do you know what footprints are?  And he’s like no, I have no idea.  I said so, you know, just stay  away from black hat stuff because obviously you are going to get your account shut down, right?

CASEY GAUSS:

It seems to me like the new black hat method of ranking is largely around having a bunch of fake accounts and then going and making purchases.

LEO SGOVIO:

Yes, so we are seeing this now happening with, you know, just using like friends and family going in on Amazon searching for a keyword, you know, buying a product.  You see, you know, that specific product ranking on page 1 within like a few days.  So people [unintelligible] that figured that out.  There, you know, starting to build bots that do exactly that.  But let’s say – let’s leave it at that.  Like obviously I don’t know the details about it, but I think this is the next, you know, like obviously version of, you know, the bots, right, and what they do now.

CASEY GAUSS:

Yeah.  It’s really funny to see.  I have two things here.  It’s really funny to see kind of how this, the black hat evolves.  So you know I have friends that have been in since like 2011 or so, and basically you know they told me that in the early days what everybody did was they would just buy their own products.  It didn’t really matter what account, and then they started, you know, one person that I know, he’s Chinese.  He lives here in the US, but he has a bunch of people in China that all use Amazon – they were using Amazon gift cards purchased with his business credit card – this is crazy – purchased with his business credit card.  They were purchasing his products to drive keyword ranking.  And then that stopped working.  And then he set up a bunch of separate accounts all using like the same credit card, I believe, and that was working for a little bit and then stopped working.  He got lucky.  He never got suspended for this.  I don’t know how.  Pretty insane, but anyways, and then that stopped working, and then is when bots started to become more and more prevalent.  So I know any time I see somebody ranking that I don’t think should be or they come out of nowhere – this occasionally happens, like you’ll see someone, you know, page 1 for fish oil where like the top three have been pretty solidified over the last, I don’t know, two years let’s say, or so it seems.  And out of nowhere occasionally some guy will come up and they’re ranking number one, and their BSR is terrible, the reviews, they don’t have any, and so immediately I send it to Leo and say Leo, we’ve got to figure this out.  Why is this guy ranking?

LEO SGOVIO:

Yeah, it’s true.  And that’s what we do, right?  Usually we understand what’s going on, but sometimes these guys get really, you know, sophisticated with, you know, the way that they manipulate the rankings.  But at the end of the day, I mean it’s an algorithm, so as long as you’re smart enough to understand what ultimately the algorithm is supposed to do and this is, you know, optimizing their results for, I mean you can figure out a way to make sure that your products, you know, get more visibility.  And you can do it through, you know, like obviously sales, and this is why giveaways have worked well for a long time.  So I think ultimately it’s about understanding also what your competition is doing so that, you know, you see if there is a chance for you to get there.  But yeah, I think it’s not for everyone.  This is for sure.  And these people that do a good job at it in a white hat way, those are the people that most likely hire a developer to just, you know, automate the process.

CASEY GAUSS:

Yeah, and like Leo was saying, it’s important, and this is why one reason we had to bring Leo on to the team is because this guy knows a lot of the time what’s going on in the black hat communities, and so it’s great for us to know, okay, what are the black hat tactics here, and what are the opportunities to then move them into like do it in a white hat fashion or a way that’s aboveboard?  And so so far no crazy thing has happened.  The nice thing here is maybe for all those people freaking out, you know, like the opportunity’s so low on Amazon because everybody’s just doing black hat and getting away with it.  So we see plenty of people, accounts getting suspended that are doing this.  And the nice thing is that a lot of times these black hat things only exist for so long, and so the people focused on the black hat side of things end up, you know, working hard implementing these black hat strategies.  They work for a month, a few weeks, maybe a few months.  The bots actually worked for quite a while.  But anyways, and then they go away.  Would you say that’s the case, Leo?

LEO SGOVIO:

Yes, yes.  Couldn’t agree more actually.

CAMERON YODER:

Leo, could you touch on just like the general population of Amazon because I feel like people or sellers do kind of pass off if they don’t know too much about black hat activity, can pass off black hat as like the sole reason why their sales are decreasing or like they’ll just put a blame on a dropping market on black hat stuff.  Is black hat a – should it be a legitimate concern for sellers and/or does it change the market in general?

LEO SGOVIO:

That’s a good question.  I would definitely say that sellers need to be aware of this technique, and of course, you know, be concerned about it.  Just this morning I received a call from a friend, and you know he’s saying that he’s being attacked with negative reviews on Amazon.  The good thing is that he’s been in business for a long time with amazing products, and most importantly the products that he has are really great quality products.  So for someone that doesn’t understand what’s going on, right, it would be really hard to, I would say to compete and then come up with a counterattack strategy, right?  So to answer your question, this is definitely something that for, especially for a new seller, you need to understand what you’re getting into and before, you know, you do – it should be part of your product research process actually because before you get, you know, into this product research, analyzing numbers and figuring out, you know, okay this is a good product or not for me, you should also understand what the market looks like.  And if there are black hatters in the market in the space are you ready to fight them with the same weapons, right? 

So you know, like I see these days a lot of Chinese adopting black hat techniques now, and things are getting actually pretty scary.  It is no longer about just, you know, down voting or up voting a bad or good review.  Yesterday I saw a post on Facebook by someone that got actually hacked, his listing got hacked by a Chinese seller that replaced his hero image with a Chinese image with a tag that says don’t force me to attack you.  I’m afraid you will suffer heavy injuries.  Thanks next level black hat.

CAMERON YODER:

That’s literally a threat.

LEO SGOVIO:

It is, right?  So I mean if you’re a new seller what do you do?  If you call Amazon they don’t know what’s going on, right?

CAMERON YODER:

Right.  Okay, that is a blatant thing that someone can notice, right, but what are some other black hat things that someone maybe should even look for if they’re entering into a market?

LEO SGOVIO:

So with regards to black hat I would say things that are just blunt, you know, like visible, number of reviews.  I mean you can use a bunch of different [plug-ins] these days to understand when the product was launched, [unintelligible] reviews this guy got, right, over a period of time.  And I see a lot of new products these days with, you know, like 100, 200 reviews and they’ve only been, you know, live for two to three weeks.  I mean that’s a clear indication of some black hat activities going on, activity going on.  And like Casey always says, considering the reviews is the [unintelligible] currency of Amazon.  So if you cannot compete with that and you know that there is a black hatter that knows how to get reviews very quickly, then that’s an indication, right, for you that you know, might be not a good product.

CASEY GAUSS:

Yeah, and Leo, if I could just jump in here, I think this is a great reason why I’m such a big advocate of finding these un-sexy markets where you’re not doing too much in revenue because usually the people in the black hat world, people so focused on black hat, are focused on these huge markets so that they can cheat, cut corners to get there.  They’re not, you know, cutting corners and risking their account for you know $10,000 a month on a product, or $20,000 a month for a product.  Would you say that’s the case?

LEO SGOVIO:

I definitely agree actually, Casey, and I think something that listeners should be aware of is the fact that if you’re going after these, you know, high-volume niches like beauty or supplements, you’re kind of forced to look into black hat techniques.  I’m not saying that eventually you’re going to, you know, adopt them, but you need to be aware of what’s going on.  Otherwise you’re just, you know, I think increasing your chances to fail.

CASEY GAUSS:

Yeah, I mean it’s so – if everybody else is cutting corners and you’re staying in the lane, I mean it’s hard for you to get ahead or even keep up.

LEO SGOVIO:

Right.

CAMERON YODER:

How can someone, how can sellers defend themselves without using black hat as a method of defense?  Is there a way for sellers to kind of prime themselves for defense, or do they just kind of have to take it and do the best they can?

LEO SGOVIO:

I definitely think that there is a way to defend yourself, and probably the best way to defend yourself is to build a brand so that you don’t have to rely on black hat techniques.  And even if you – so one thing that I like to talk to Casey about when it comes to driving rankings and obviously building an Amazon business is to focus on your product, focus on your brand, focus on external traffic.  Make sure that people know who you are outside of Amazon so that worst-case scenario, you know, even if you’re dealing with black hat people or sellers, or Amazon does doesn’t like for whatever reason your account and you get shut down, you have a backup plan, right?  So your brand is recognized outside of Amazon.  You’re driving traffic to your own store.  You don’t necessarily have to rely on, you know, having 500 reviews because people have already heard of you outside.  And so now you don’t have to worry that much about, you know, going after black hat techniques.

CASEY GAUSS:

Yeah, Leo, is there anything that we maybe didn’t touch on that is going on in the black hat community that you, that you feel comfortable sharing and would be interesting to people?

LEO SGOVIO:

I will say that what’s working today is pretty much, you know, similar to what was working, you know, a year or two ago.  And with regards to bots, things have, you know, changed a little bit.  Obviously you can no longer automate the process of just adding to cart and add to wish list to improve your rankings.  But when it comes to, you know, getting reviews I still see the same techniques working.  People are getting reviews through Facebook groups, friends and families, through funnels, so things like that.  Obviously these are – and I wouldn’t, you know, consider a funnel a black hat technique, but I don’t think there is anything new going on besides like there are a couple of things which I don’t really feel comfortable sharing because, you know, like I don’t want people to, you know, go and research these things after the podcast, which would make a mess of the Amazon space to be honest with you, you know, and so – but there are things like, you know, what these Chinese guys are doing.  You know, there’s a way to do that.  People are taking over other sellers’ listings by adding them to their own accounts or, you know, vendor accounts.  So I don’t want to get into details, but that stuff is happening, which is worse than what was happening two years ago.

CAMERON YODER:

Yeah.  Does Amazon – how long does it take Amazon to react, if at all?  Do they take a year for them to like put up a roadblock for black hat activity or not necessarily?

LEO SGOVIO:

Look, it’s a good question.  Sometimes never.  I mean I’ve seen people getting away with it since 2012, 2013.  I think they’re doing a good job now.  Maybe they’re hiring more people in the spam team, making sure that these techniques are being caught as soon as possible.  But a lot of times if you find out what’s going on you tell Amazon, I mean the company is so big that by the time it gets to the right person, probably the email now is even forgotten, right?  So I’m not encouraging people to do it because Amazon doesn’t care, but sometimes, you know, the response time from Amazon is just, you know, too long for you to react quickly.

CASEY GAUSS:

The area that they do have the least tolerance for is definitely reviews, and so if you’re going to mess around, don’t mess around with reviews.  That’s the – you know, working with 8,000+ brands or whatever, the only time I’ve seen a seller account get actually banned was – or outside of, you know, like fake Chinese, like counterfeit type stuff.  But anyways, is when the sellers were messing around with reviews far outside of the norm, and they just did not heed Amazon’s warnings.  They continued and continued and continued and ultimately they ended up being banned.  And again, that was specifically around reviews.  Now I’ve seen plenty of people get, you know, policy violation warnings for all different kinds of things, but nothing as hard as they were hit – as this one seller was hit because of reviews.

CAMERON YODER:

Well hey, Leo, thank you so much for joining us on the show.

CASEY GAUSS:

Yeah.

LEO SGOVIO:

Thank you, guys.  Appreciate it.

CASEY GAUSS:

One thing that I do want to say to the listeners is if we ever see anything big in the black hat space come up, much like the bots, and we feel comfortable sharing it, we will definitely keep you updated.  I think this is one, just a cool interesting topic.  Two, there is a lot of sellers that may not be aware of kind of what’s going on in this community, not that we’re encouraging it, but you know, we’d like to be a resource to let you know hey, this is going on.  Just be aware.

LEO SGOVIO:

I agree with you, Casey.

CASEY GAUSS:

Is that cool, Leo? 

LEO SGOVIO:

Yeah, of course.  I think it’s good to educate people on what’s happening so that they are aware and, you know, they can make better decisions, smarter decisions going forward than just, you know, going and research information on forums or blogs that are not, you know, as experienced, let’s say.  So I definitely agree with you on this.

CASEY GAUSS:

Nice.  And you’re also not wondering what magic they’re using to, you know, propel themselves up there, that there’s actually a reason, or there is actually a technique behind it, and you can stop, you know, banging your head against the wall trying to figure it out.

CAMERON YODER:

Right.  If anything, the information itself is the defense, or is a defense against something like that.

CASEY GAUSS:

Yeah, for sure.  Well put.

LEO SGOVIO:

Right.

CAMERON YODER:

Hey, thanks again, Leo.  We really appreciated all of your input, and your insight and your knowledge.

CASEY GAUSS:

Yeah.  Stay warm in Toronto.

LEO SGOVIO:

Thanks, guys.  Yes, actually this is the first weekend the temperature will be probably plus, over the zero.

CAMERON YODER:

Oh man.

LEO SGOVIO:

Yeah, yeah, it’s been a bad winter, but I appreciate it.  Thanks, guys.

CASEY GAUSS:

All right.  Well, Leo, our Director of Innovation, thank you so much.

LEO SGOVIO:

Thanks, guys.

CAMERON YODER:

Well, that is all for this week.  Thank you so much for joining us here on Follow the Data.  For more insights and reliable information on how to succeed on Amazon, subscribe to the podcast, subscribe to our blog, follow us on YouTube or like us on Facebook.  We’ve got news, tips and best practices that can help you build your FBA business.

CASEY GAUSS:

As we mentioned last week, we are going to start asking a question each week, and we will be adding your answer into the following week’s episode.  So please send them our way via email, Facebook Messenger or voicemail, however you want to do that.  This week’s question, is there any black hat activity we did not mention you think we should be aware of?  If you do want to share, let us know if you do or do not want us to share it publicly.  We definitely appreciate confidentiality, and your feedback is so important to us.  If you’re listening on Apple Podcast please leave us a review and/or a rating.  And if you have a fellow seller who you think may be fighting against black hat SEO or any other black hat techniques, send them this podcast.  We want to be a valuable resource for sellers and the information source in this space, so please tell your friends, spread the word and share the show.

CAMERON YODER:

Thank you again so much for listening.  And as always, if you want to be featured on the show, again responding to the question on just black hat stuff, have an Amazon-related question or another idea for an episode even, please feel free to drop us a voicemail or simply shoot us a message on Facebook.  Our voicemail number is 3-1 – so get out your phones here – 317-721-6590.  Or again, just DM us, hit us up in the DMs, Instagram, Facebook, and give us your thoughts.  Until next –

CASEY GAUSS:

I get some pretty crazy DMs on my own Instagram, so wherever you need to reach out, we’re here.

CAMERON YODER:

Wherever.  Casey, maybe me.

CASEY GAUSS:

Cam.

CAMERON YODER:

Maybe not.

CASEY GAUSS:

Maybe the spaceman.

CAMERON YODER:

Maybe the spaceman.  Who knows?  Any DM, just any DM accessible to us.  Just remember –

CASEY GAUSS:

LinkedIn.

CAMERON YODER:

LinkedIn, fax, carrier pigeon.

CASEY GAUSS:

Carrier pigeon?  We do have a receptacle for carrier pigeons actually.

CAMERON YODER:

Yes, we do, we do.  Paper airplane, ship.

CASEY GAUSS:

Bitcoin.

CAMERON YODER:

Bitcoin message, all of the above.  You can hit us up.  Until then, until you do that, remember, the data is out there.

Finding The Amazon Products No One Is Thinking About (Follow The Data Ep. 33)

Finding The Amazon Products No One Is Thinking About (Follow The Data Ep. 33)

Finding new markets or products to source on Amazon can be a challenge. Expanding your search methods, however, may prove to be extremely beneficial. On this episode, Casey and Cameron talk about how to shift your mindset in order to find the products on Amazon that no one else is thinking of. Casey and Cameron talk through the state of the Amazon market, as well as some specifics when it comes to the hunt for these new markets.

Listen on iTunes   Listen on Stitcher

Podcast Transcript

CAMERON YODER:

Competition is increasing on Amazon.  New sellers are entering the space, and experienced sellers are doubling down on their efforts to increase revenue.

 

CASEY GAUSS:

Finding new markets is more challenging today than it was two years ago.  Even though it may seem like all the great opportunities have been taken and competition is too fierce, amazing opportunities are still out there, and they’re just waiting to be found.  The trick is knowing what to look for. I’m Casey Gauss.

 

CAMERON YODER:

And I’m Cameron Yoder, your hosts for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data that we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8000 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.

 

CASEY GAUSS:

In this episode we’ll show you how to find unique product ideas and markets that the majority of sellers are not trying to compete in.  Let’s get started.

 

CAMERON YODER:

Casey, today we’re talking about kind of the state of the market a little bit and kind of maybe how to react to that and how sellers should be reacting and maybe what they should be looking for when considering going into new markets.

 

CASEY GAUSS:

Yeah, so I think this is a perfect podcast to show off a couple of cool stats that Amazon just released in their letter to shareholders.  So it was released this week at the time of recording, and there’s two things I want to point out. One, in terms of competition increasing, Amazon said that in 2017 alone there were 300,000 new sellers entering the market on the marketplace side, on the third-party side.  So that doesn’t include major brands coming in and starting to sell as well. So if that doesn’t go to show you that competition is going to increase, you know, I don’t know what will. And to that what isn’t being shown here is more and more are we getting approached by private equities or, you know, people that are entering the Amazon space by coming in and purchasing these brands and trying to, you know, roll them up or really trying to put some money behind some of these brands or these Amazon businesses so that they can propel them forward with this new capital.  

 

And so from all sides, you know, the Chinese are becoming more sophisticated.  They’re doing, you know, greater degrees of black hat activity, like competition is coming from everywhere.  So this is why in every way that you operate your Amazon business you need to continue to increase the degree of sophistication with which you are running.  You need to be focused on higher-level strategies as well as these, you know, tactics that are data-driven, that are driving your results. No more can you just throw a bunch of stuff up against the wall and, you know, just work with whatever sticks.  You don’t understand the reason why. Like you really have to be dialed in.

 

CAMERON YODER:

It’s easy for – I think it’s easy to get lost in the idea that there aren’t new products or aren’t good markets anymore to find because you’re seeing all this competition entering the market and/or you’re seeing just a ton of black hat activity like crazy stuff happening in the market, and it seems like it’s almost impossible to enter, but it’s not.

 

CASEY GAUSS:

So stat number two, to Cam’s point, is that Amazon has exceeded 100 million paid Prime members globally.  So I don’t think that they share numbers in the US. I don’t remember the source, but I think last year there was an estimate that it was around 80 million in the US, which would be pretty insane.  

 

CAMERON YODER:

That’s a lot.  Geez.

 

CASEY GAUSS:

The US population is like 320 million, or so last that I knew.  So you know, that would be, less than a fourth– or that would be, you know, right around a quarter, and that’s individuals.  So this is people that are, you know, in preschool, people that are, you know, in nursing homes, whatever, so I don’t know the number of US households.  I think that’s the better number because last I knew the stat was somewhere around like 62% of American households have Prime. I’d be really curious to see what that is now.  But all that to say – oh, and sorry, along with that Amazon grew their Prime membership more in 2017 than they have in any years prior, I’m assuming from number of new people versus, you know, percentage-wise.  But regardless, that goes to show, yes, competition is increasing, yes, you have to be operating at a higher degree of sophistication. But at the same time Amazon is working very, very hard to open up or to increase your potential customer base.  So that means more potential revenue for you, and that means that you – the pie continues to get bigger and bigger, and it’s your job to take a larger piece of that.

 

CAMERON YODER:

And really there are kind of two ways to kind of double down on revenue or increase revenue, right?  Either you find a new product to sell, or you optimize what you’re currently selling. And in this episode we’re going to – we’re going to kind of try to just introduce a method of rethinking, rethinking how you see and think about different aspects on Amazon and maybe how you research for new products.  And this could apply also to optimizing your current products, but we’re going to talk today about changing mentality with entering new markets or discovering new markets to enter into.

 

CASEY GAUSS:

And the reason being is that, you know, just to provide context as to why this topic, again, is generally from what we see the fastest way to growing your top line revenue is by launching new products.  I was just talking with a friend last night. These guys have been in it from, you know, 2015 and I was asking them how things are going, and they said you know, things are good, but our revenue has just been stagnant at the $1 million to $1.2 million mark for a long time now, and we’re just really trying to figure out how to get past it.  And I know that they’ve actually been focused on a lot of like the Shopify and like building their brand, you know, diversifying, like all these hot topics that people like to talk about. But they haven’t been focused on launching new products, and you know, I said to him this is super common. I see this all the time, so you know, don’t beat yourself up over it.  A lot of people make this mistake, and I completely understand why. But there’s no way that if you weren’t focused on launching products in 2018 your revenue would stay at $1 million to $1.2 million. If you’re continuing to launch products that are doing another $20,000 to $50,000 a month, then there’s no way that launching 10 of those isn’t going to significantly increase your top line revenue.  

 

So with that, fastest way to grow your revenue is to launch products, assuming that you haven’t been doing a terrible job of that right now.  If that’s the case then okay, running a launch or, you know, running some sponsored ads or AMS or something like that would significantly increase your revenue.  All that to say product selection, super important. One of the best ways to grow revenue, especially if you’re in the, you know, seven-figure mark, then this is definitely the best way I think to grow your revenue.  And so we wanted to touch on okay, in 2018 as things continue to become more competitive how do you increase revenue? How do you find those opportunities in the market?

 

CAMERON YODER:

So we’re going to talk about two main mentalities here, two types of products, okay?  We’re going to break down what we’re going to call the quote unquote flawless product and the proxy product, okay?  So the flawless product is what most sellers typically tend to go for, what they, the aspect of a product, so like the price or the size of the product that most sellers tend to go for.  So that’s the flawless mentality, right, what most are going for. The proxy product is our suggestion to reconsider how you think about finding a product or the type of product that you’re looking for.  In this case, one quick one, which is we’ll go into the – go into each of these, but it’s like instead of going for like the $15 to $30 product go for the lower-priced or higher-priced item, stuff like that.

 

So we’re going to introduce different topics like this.  Just know the flawless, the flawless mentality is what most people are going for.  The proxy mentality, the proxy product is what we’re suggesting to reintroduce your thought patterns to match.  That’s not saying that you cannot find products or product markets in the flawless, quote unquote, area, right? We’re just suggesting to consider looking for proxy products and proxy markets.  So as a whole we’re going to touch on five, five main areas for products. It’s going to be price or margin, sales or revenue, reviews, size and seasonality, okay?

 

So let’s just jump in with – let’s do price first.  So the price, again, new markets, new products. Most people – the flawless mentality – most people tend to look for strictly like $15 to $30 items, right?  In this case we’re suggesting to reconsider. And some of these are no-brainers, but you would be surprised how many people are not intentional about thinking about finding proxy products or get into a pattern of sourcing flawless products.  So the proxy mentality, the proxy product in this case, would be either below – a less expensive product or a more expensive product, right? So with each of these a lower expensive product could mean higher volume. A more expensive product could mean higher or the same margin.  The risk that comes with having a proxy mentality with a lower price or a higher price is that more expensive products sometimes mean more moving parts. So manufacture mess-ups or misrepresentations of quality honestly could end up ruining you, ruining your product on Amazon. So the good thing that comes with like a lower-priced item or a really higher-priced item is that there aren’t as many sellers in those spaces.  However, there are trade-offs to risk. And competing on Amazon with high prices honestly can be difficult unless the market matches the average high price, right? So if you have a really good quality product that is more expensive, something like a $60 fidget spinner in a market that’s full of $10 fidget spinners, you will not be able to compete very well. You are less likely to compete very well.

 

So proxy, proxy mentality for price or margin is a lower price and/or a really higher price.  The next area that we want to touch on is sales or revenue, right? Most people, flawless mentality, tend to look for products that are pulling in something like – this kind of goes in conjunction with price, but $10,000-$20,000 in revenue, right, which means high – typically a high amount of sales.  So the proxy mentality here would be to look for something that has a lower revenue or a higher revenue. Ideally of course everyone wants to find a higher revenue.

 

CASEY GAUSS:

I think there’s two camps in the flawless.  Either $10,000 to $20,000 or they’re looking for those $100,000, $500,000 products.

 

CAMERON YODER:

Super high, yes, yes, yes.   And the mentality, what comes with really high revenue, which is what we want to talk about, what comes with really high revenue is really increased competition.  Typically it’s – of course everyone, if we had to choose, like if you had to pick between entering a market or making $10,000 a month and/$100,000 or a month of course you’d want to pick $100,000  a month. However, $100,000 a month takes a lot more resources, much more competitive. It’s going to take a lot more from you to enter. So looking for those more expensive markets is good. Just know the risk that comes with that is actually being able to financially support your decision to enter in a market like that.  And the risk that comes with something like a lower revenue is that you might have to source more products to match. Like let’s say your revenue goal is something like $15,000. Then maybe instead of just sourcing one product that makes $15,000 you’d have to find three smaller products each that are making or pulling in $5,000, right?  The end result is the same. You end up making the same amount if they add up to $15,000. You just need to source more products.

 

CASEY GAUSS:

Generally the big sellers are not willing to enter into these kinds of markets, and so a nice opportunity for you to enter markets where competition is low.  You don’t have people that can, you know, outspend you like crazy, people with budgets in the millions of dollars to outspend you. We have those types of clients, and it’s easy for them to come in and steamroll through markets because they can just spend as much money as they want on promotions on outside marketing to get sales, to get reviews.  They’re not buying reviews; they’re getting enough sales so that reviews happen, and they’re just able to steamroll through. And you just cannot compete with those guys because they understand the strategy and they have the budget. So finding – I’m all about finding these markets with low competition because we see the worst of the worst, you know?  Like people with the number one BSRs in, you know, some of the most competitive categories from cell phone cases, to beauty, to supplements, like it’s – we see it, and the amount of competition and the amount of fighting and resources literally spent just on battling competition is insane. And if you can avoid those, if you can find these markets literally even $5,000 if you could go in, spend no time getting it up there to doing $5,000 and just rinse repeat through tons and tons of products, yes, there’s overhead with managing them, but if you are comfortable with that, if you’re comfortable building out kind of the infrastructure, then there are so many things, so many headaches you’re eliminating by taking on that headache of more SKUs, essentially.

 

CAMERON YODER:

Exactly, exactly.

 

CASEY GAUSS:

And you’re so much better diversified.

 

CAMERON YODER:

Yes, yeah, you are well-diversified.  Even staying in a similar market and/or branching out in different markets, like just having more products helps you diversify, set yourself up for success if one of them were to fall, where you can just pick up another.  So that’s sales and revenue. Let’s move on to the aspect of reviews. Again, we touch on this a lot. Like most people – a really good review count to look for is something that’s low, right? Of course as low as possible, which you still should.  You still should look for a low review count when trying to find new products and new markets because that’s a sign of low competition, right? I do think, however, that a lot of sellers tend to get hung up on not even considering markets that are just even slightly above what they would consider really low.  What I’m saying now is not – I’m not telling you to go for markets that have really high review counts. I’m suggesting to even consider like bumping up your maximum, what you would consider your maximum review line. So if it’s like 100 maybe bumping it up to like 150 or 200. Even bumping it up to there, to something that you might not have even considered yourself able to enter into, you might find – you might, again, find more markets, more products that is just slightly – that review line is just lightly bumped up, slightly more competitive than the super, super low – basically I see sellers get hung up on trying to find markets that only have two, like an average of two or five reviews, which you still should be looking for.  However, if you increase that to like where the average is 50, that’s still as so much prime for entry than something like an average of two or five reviews. So I would say like maybe expand, and just expand your limits a little bit, just a little bit, on the review count to open up your eyes at the very least to maybe what other markets are out there or what other markets you have not found yet.

And last, let’s touch on size.  So we’re talking about size of a product.  Again, we talked about this before, and this is kind of a – this is an easy one to think about, but like the flawless mentality is I need to find a product that’s small and lightweight, the shoebox mentality, small, lightweight product, which is good, of course.  Like these are ideal scenarios, right, but we’re touching on things trying to get you, again, to just expand your thought process on what products to find and what products to pull up. In this case a proxy product would be something that’s, of course, large and/or heavy, right?  In this case most people, of course, tend to stay out of those because there’s just more logistics involved. However, if you haven’t yet, at least consider entering into a product or a product market that is heavier or has larger items.

 

CASEY GAUSS:

Yeah, at the end of the day, I mean, I think the focus needs to be on the profit margin that you’re willing to – the profit margin that you’re looking for, right?  So I see people say oh well shipping costs are so much higher for these products, and then it eats up all your margin. Well, actually a lot of times on these higher or larger products you are charging more.  So if you’re making more top line revenue and the margin actually comes out the same but competition is significantly lower, in reality you’re going to be spending a lot less. Yes, there’s more capital associated with getting those products into the US and then shipping them through Amazon, but at the end of the day like if the margin – if the numbers make sense, follow the data.

 

CAMERON YODER:

Yep, exactly.  And there are – there are five different categories of sizes to consider, small-large, small-oversize, medium-oversize and large-oversize.  So there are a lot of areas that people don’t – aren’t even aware of our haven’t even considered. So consider even just looking into those.  

 

So the last just kind of area maybe to focus on as a – with a proxy mentality is seasonality.  And we actually just did – we just did an episode talking about seasonality and how to plan for Q4 specifically.  But we run through just kind of a lot of strategy behind what goes into choosing a seasonal product over a typical or consistent product.  And most people in the space, the flawless mentality is to pick a typical product, maybe one that’s just consistent throughout the year or more so consistent throughout the year.  The proxy mentality would be to honestly go for something that is seasonal, and the risk, of course, with this is – and we go over this in the other episode – I’d really encourage you to check it out if you haven’t yet – is getting inventory right or basically not planning inventory well enough, which you could potentially lose out on money for.  It is more risky than something like a traditional or a consistent product, but the benefit is just overall less competition. You can have some quick wins there, and it could be honestly a cash cow to fund getting into more competitive markets.

 

CASEY GAUSS:

And just to remind people, seasonality does not specifically refer to Q4.  There is a season going on at pretty much every given time, whether it be the season of Easter, or Thanksgiving, or Valentine’s Day, or the summer, you know.  And again, like yes, it is more risky, but if you use a tool like Market Intelligence – not that I’m plugging Market Intelligence – but like if you use a tool like Market Intelligence or whatever to help you identify what the potential volume is, how long does that spike happen, then you can really get a good feel.  And maybe you, to play, if you really want to play it safe, then just undercut it. So you think that there is potential for, you know, 5,000 units to be moved over the course of two weeks for leading up to Valentine’s Day, then, you know, just source 2,500 or 3,000, and play the safe game. But you’ll still be able to make a lot of money.  So there’s so many – basically the root of all of this is that there’s so many different ways to like skin the cat or whatever is the saying, and basically like you’ve got to figure out which way you want to do it. And the more willing you are to venture outside of the norm, the more likely it is that you will avoid competition and be able to find this great niche that works really well for, you know, you, your business goals, like maybe your lifestyle, your budget, yeah.

 

CAMERON YODER:

Even combining some of these proxy mentality products will allow you to maybe even find markets that are even more niche.  So for example, if you find an oversized seasonal item, right?

 

CASEY GAUSS:

Yeah.

 

CAMERON YODER:

Like that’s – a seasonal item itself is kind of more of a niche thing, but when you go, when you take or put one more factor into that for consideration like an oversized seasonal item, you even kind of increase your chances of finding a market that other people are not in quite yet.

 

CASEY GAUSS:

Yeah, and again, just to remind everybody, the less the – for the proxy type products or venturing outside of the norm, I think it definitely requires a higher degree of due diligence in making sure that you are following the data to make sure you’re making the best decisions possible.  But it is definitely out there.

 

CAMERON YODER:

Yes.  There is one – there is one other aspect of products and markets that I want to touch on that honestly you might be really good for some people to enter into.  Casey, just like you said, it might take more diligence. This one does take more diligence, but it’s markets that are design-oriented. So markets that are design-oriented basically are products that the sales for the products vary heavily based on design for those products.  In this case if you have a design that is appealing to a lot of customers, then they’ll buy your product more. If you don’t, then you just won’t sell.

 

CASEY GAUSS:

My favorite example is 2015 baby bandanna bibs were popular.  And we ran, you know, somewhere to the degree of 10 different baby bandanna bibs we ran launches for.  And so it seemed like half of those baby bandanna bibs, we’d run a launch, they have good reviews, they have a good listing and so forth.  We’d get them ranking, and then they don’t sell well, and they continue to drop down the ranks. And then the other five, we get them up ranking.  They perform really well, and so it was at first such a mystery to me, you know, like these listings are great; why is this not working? The data, the data was showing us that it should be working.  But one thing that you can’t quantify is the quality of the style or how, you know, other people respond to this particular style. Well, I guess you can quantify them in terms of conversion rate and stuff like that, but just looking at them from the outside in without having, you know, conversion data or whatever, or conversion from search to click into a listing, you don’t have that data, and so it’s very tough, or very at least intimidating for me who likes to make safe bets based on data to say like okay, we’re going to enter a design-heavy market, and we’re going to do everything right, and it’s going to turn out because the problem is yes, you could do everything right, have the best listing possible, have the best photos possible, just kill it in ranking and have good reviews.  But if people don’t like your design people aren’t going to buy it. Or if, you know, the general population now doesn’t like this design, now the culture is appreciating this type of design, like –

 

CAMERON YODER:

The market – the market is the market is the market, right?  Like in the end you can – you can guess as much as you can or are able to on what you think people are going to buy, what design people are going to buy.  However in the end you cannot control the preference of the customers that are on Amazon looking for your design-oriented product.

 

CASEY GAUSS:

And I have seen plenty of instances – you know, there’s this one guy in the electronics space.  He just had a killer designer, and he was – he was great at understanding consumer tastes, and he was able to, you know, put together great products that looked amazing and that people loved.  And you know, I definitely applauded him because I’m more of a data person, not necessarily aesthetics.

 

CAMERON YODER:

And that’s – honestly I do see a ton of potential in design-oriented markets.  I would, however, I would consider you to find these markets and maybe even consider outsourcing design to someone that is good, right?

 

CASEY GAUSS:

Yeah, yeah, yeah.

 

CAMERON YODER:

So just because you’re thinking like oh well I’m not really a designer so I can’t do design products, no, you can absolutely outsource design, even on something like Upwork, to get a good design and increase your chances of selling something like that.  Again, it’s a risk, but it’s another area that I don’t think enough people have explored quite yet.

 

CASEY GAUSS:

Yeah, and if you are going the Upwork route just make sure that you are paying for quality.  Make sure that you are getting feedback from your customer – target customer demographic. Don’t – and that does not include friends and family unless – yeah, it doesn’t really include friends and family.  I think that’s an easy trap to fall into, but yeah, go spend the money on a great designer because it will pay off if you’re able to find, you know, these great market opportunities.

 

CAMERON YODER:

Overall just consider, consider expanding your product search parameters.  Maybe get outside your comfort zone just to do even a little bit of research.  We hear a lot of people say that they aren’t able to find new products or new markets right now.  But maybe they haven’t tried expanding some of their parameters or some of their methods to find these products, these markets.  Just kind of get out of that flawless mentality, get into the proxy mentality a little bit and see what you can find. You honestly might find a gold mine, a couple gold mines by looking in these expanded search parameter areas.

 

Hey, everybody, before we outro here I just wanted to share something new that we’re going to start with the podcast.  We’re going to feature a question of the day for each of you to give input or insight on. So a question based on the topic that we’re covering that day basically.  We want to hear from you, whether it be more questions on that topic or an answer to the question that we ask. We’ll read the question of the day at the end of each episode and answer one or a couple on next week’s episode.  We plan on coming out with more direct response methods later for you to respond to. But for now just shoot us a message, a direct message on Facebook with a response to that question. If you message us directly we’ll get back to you and feature your questions or responses on the show.  Also, also if you’d like to you can call in to leave a voicemail as a response. The number to call is 317-721-6590. Again, that’s 317-721-6590.

 

CASEY GAUSS:

So our question of the day is what is your biggest concern with selling on Amazon in 2018 amid all the changes in the market?  Essentially, what keeps you up at night? Again, shoot us a message on Facebook and/or call in to leave a voicemail as a response.

CAMERON YODER:

If you know anyone that needs to simply gain perspective on finding those products that other people are not thinking of, share this episode with them.  You can share directly from the podcast app if you’re on Apple, and literally like you can just text the link to someone. Our goal is just to provide valuable insight and data in regards to Amazon.  So please, tell your friends, tell your family, and let them know.

CASEY GAUSS:

Thanks again, and remember, the data is out there.

Licensing On Amazon: Another Avenue For Revenue with Paul Miller (Follow the Data Ep. 32)

Licensing On Amazon: Another Avenue For Revenue with Paul Miller (Follow the Data Ep. 32)

As an Amazon Seller, the hunt for great ways to expand your business never stops. Not many sellers in the Amazon community have considered, let alone heard of, licensing as a possibility. In this episode, we break down what licensing looks like and the great opportunity it holds as an addition to an Amazon storefront. Paul Miller, a successful licensor on Amazon, walks through how licensing has changed his business and how it can do the same for yours. Licensing isn’t for everyone, but simply considering it as an option is well worth the time.


 

Listen on iTunes   Listen on Stitcher 

Show Notes

  • Many sellers are looking for ways to expand their Amazon storefront. Some consider expanding their product line, others consolidate their product line to focus on true revenue-drivers. Not many have considered licensing as a viable option for expansion.
  • Paul Miller has experienced incredible growth due to licensing. Locking in a licensing deal with Nickelodeon has helped fuel this growth, as well as his drive to dig his heels even deeper into what licensing is able to provide.  
  • Licensing isn’t for everyone. There are a handful of factors to consider before jumping in.
  • Licensing is a great step for sellers that have driven into Private Label
  • Paul talks about the Licensing Expo as a great first step to get into licensing. Check it out!
  • Paul also offers a FREE course, walking you through licensing in greater detail. Head here to sign up.
  • Shoot us a response, question, or comment on Facebook for anything we talked about on today’s episode!Facebook
  • Give us a call, and you could be featured on the podcast. Our number is (317) 721-6590

Transcript:

CAMERON YODER:

The opportunity that Amazon’s FBA program provides is incredible, allowing so many people the financial freedom to live where they want, invest in their passions and spend more time with their families.  But the opportunity does not stop with private label products.  Licensing is its own incredible opportunity for Amazon sellers.  I’m Cameron Yoder, your host for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller.  In this episode Casey and I sit down to talk to Amazon seller, Paul Miller, about licensing and how it’s changed, honestly changed, his Amazon business.  Paul Miller has been expanding his e-commerce brand since 2015 and says the best piece of advice he’s ever received was to seek out licensing opportunities for his product.  He locked in a licensing deal with Nickelodeon in 2017, which had skyrocketed his brand and culminated in a global mass-market distribution deal, which is crazy.  Now Paul teaches others how to follow his path, growing their businesses to a size they’ve only dreamed of.  And he’s here to talk to us about how to reach new heights through the power of licensing.  Let’s jump in.

What’s up, everybody?  We have Paul Miller with us.  Paul, how are you doing today?

PAUL MILLER:

I’m outstanding.  Thank you.

CAMERON YODER:

Outstanding.  That is outstanding in itself.  Before we get started, before we get started with who you are, where you’re from, what you’re doing, can you just, since we’re talking about licensing today, can you tell the listeners what licensing is, just in general?

PAUL MILLER:

Sure, I’ll be happy to.  So licensing is when one party basically rents another party’s intellectual property to use on their product.  For example, a great example might be a kids’ play tent.  Let’s say you manufacture a kids’ play tent and you go to Disney and you license, or rent, the opportunity to put the Disney characters on your tent.  That’s a perfect example of licensing.

CAMERON YODER:

Okay, got it, got it.

CASEY GAUSS:

And what are the basic mechanics behind that?  Does Disney get the majority share of the sale, like just really basic mechanics so people can kind of understand?

PAUL MILLER:

It has to do with a licensing contract that you do negotiate with a licensor, or the, you know, intellectual property holder.  In this case talking about the Disney Princess, for example, that would be – the Disney Princess would be the property.  The property owner is Disney, and they’re going to negotiate a right with you to use that property.  And in general that royalty rate is negotiable, but it’s probably in the area of 8% to 12% of sales.

CASEY GAUSS:

So Paul, can you give us the specifics surrounding licensing?  Like what does the agreement look like?  Just for sellers to understand, maybe even before they start getting into it if they want to, what an agreement looks like.

PAUL MILLER:

Sure.  So I kind of call this the anatomy of a license, and I’m going to talk to you about a license from the licensee perspective.  That’s the one, us as product owners, we’re licensing someone else’s character or intellectual property to put on to our product.  So again, back in the case of the Disney play tent, we’ve got the play tent.  We’re going to license these images or characters from Disney.  Probably the first big consideration is what’s called the minimum guarantee, and that’s the minimum guarantee dollars that Disney would want from you over the lifetime of that contract, which may be three, four, five years that you have to deliver as basically a mandatory royalty.  So there is the minimum guarantee.

CAMERON YODER:

If you don’t fulfill that guarantee what happens?

PAUL MILLER:

You’ll probably get the sheriff knocking on your door one day. 

CAMERON YODER:

Okay.

PAUL MILLER:

No, it’s a – I mean it’s an obligation just like a long-term commercial lease is.  So it’s an enforceable contract.  Doesn’t matter if you, you know, fall on hard times and can’t produce the product.  That’s a contract.  You owe the minimum guarantee no matter what.  I mean unless there’s a clause in the contract that says, you know, the factory burned down or something like that.  But that’s an obligation that you need to take very seriously.  So there’s the minimum guarantee, and that minimum guarantee is based on the royalty rate.  So the royalty rate is typically a percentage of sales, and that percentage of sales, as I mentioned before, could be from 8% to 12%, could be 5%, depending on the sales channels that you’re selling in and how you’re selling it.  So if you’re selling for wholesale, which is typically 50% of retail, that royalty percentage may be different than if you’re selling direct to consumer.  So it’s 10% on wholesale 5% direct to consumer.  Then there is even FOB terms, for example.  If you’re selling your product FOB to some big retailer you may even have a different royalty percentage on that. 

So there’s advance – sorry, there’s the minimum guarantee, there’s a royalty, and then there’s the advance.  This just keeps getting more fun.  So the advance is usually the amount of money that the licensor wants when you sign the contract, and that’s a portion of the minimum guarantee paid up front upon signing of the contract.  Now that’s not in all contracts.  In my case it was, and I had to pay a third of my minimum guarantee up front.  Now you kind of earn that out in royalties later on.  So it goes against your total royalties, but they do want that as a basically a show of good faith from you and know that you have skin in the game and you’re not going to just sit on that license and not make it because that’s basically an asset that they have that’s not working with some other product.  It’s working with yours.  So they want to make sure that you have skin in the game through that advance. 

And then finally, I would say the other big kind of negotiable on this is the term of the agreement that is, you know, how long it’s going to be in effect for.  In my case it was three years.  And also, the different marketplaces that you have a right to sell in.  They’re not all going to be the same.  Some licensors, for example, may not want you selling in Amazon, and if that’s the case then that’s something you might want to reconsider.  Or at the same time you may be required to present that product to retail distributors in your contract.  So that’s another thing, sales channels that you definitely want to look at and make sure that those terms and conditions fit your business objectives.

CAMERON YODER:

So that is – I think that’s a pretty good base to establish even just a basic understanding of what licensing is before we get into more details around how it is involved with Amazon.  But before we get to all those details, Paul, can you tell us just a bit about yourself?  So basically tell us about you first, maybe where you are, where you’re at and how you started selling on Amazon.

PAUL MILLER:

Okay, great.  I am in Virginia, if that’s what you meant by where I’m at, but started selling on Amazon about three years ago.  I was actually a multi-store restaurant franchisee running a group of restaurants that were having hard times at the time.

CASEY GAUSS:

Paul, could you share what that restaurant was?

PAUL MILLER:

No, I’m not going to.  You know what it is, Casey.

CASEY GAUSS:

I know what it is, and it was really delicious.  I really loved that place.

PAUL MILLER:

I’m afraid I might be violating some sort of confidentiality agreement if I was to –

CASEY GAUSS:

Got it.  That’s okay.

PAUL MILLER:

  say what it was.

CASEY GAUSS:

So all you need to know is it was a delicious restaurant that I was very sad when it went away.

PAUL MILLER:

Yeah, that’s right.  So business got pretty tough for me.  I went from three restaurants down to one, and I was looking for a plan B, and that’s when I came across Ryan Moran’s basically podcast,  Smart Passive Income.  Heard him on that podcast, and from there signed up for his email list.  Eventually signed up for Amazing Selling Machine through his affiliate program.  Joined the tribe, his tribe, and developed my products over the past basically three years, and along my way I was given some very good advice to seek out licensing opportunities as a way to kind of protect and expand my products, and through that developed a level of expertise by hiring lots of consultants, spending lots of money and working with licensors.  So today I have a license with Nickelodeon representing about four of their properties, and it’s been an amazing, amazing part of my business.

CAMERON YODER:

Now so when you started, when you started even just thinking about Amazon the intent was to, I guess, drop your franchises, right, and maybe move into Amazon as something full-time.  Is that right?

PAUL MILLER:

Yeah, that’s right.  It really started as kind of a plan B as I was mentioning before.  I was really on my last leg with the restaurant business, had a restaurant 2 ½ hours from my home.  It had kind of been neglected over the years as I had opened others.  So we decided to close the other ones and then focus very much on that one.  And so I was really, you know, concerned that I wasn’t going to be able to make it in that store.  So I was really looking for some plan Bs and came across Amazon.  And you know, what was a plan B quickly turned into a plan A and probably the best, best plan A I could have imagined.

CAMERON YODER:

Now where – you mentioned that you kind of – you were given some great advice into moving into licensing.  I feel like most sellers maybe actually even haven’t really considered licensing.  Where were you at in your Amazon-specific journey when you even started, first started considering licensing as an option?

PAUL MILLER:

It was about a year into my Amazon business when I discovered a category on Amazon that was doing very well.  I basically took one product that was for one specific market and kind of redid it for children in another market.  And it was on fire, basically.  I was having great success with it, but I was kind of terrified that somebody was going to try to rip me off or duplicate what I was doing.  So I was seeking the advice of everybody I knew in the industry who could help me figure out how to grow and protect my brand, and I actually spoke to a guy called – or a guy named [Mark Hirsch 0:12:12.5], someone who I had known from a podcast, and Mark gave me the advice if I were you I’d look into licensing.  And at that time I had no idea what he was talking about.  It took me a while, took me some research to figure it out, and we just made great progress.

CAMERON YODER:

Can you tell us about how – can you tell us about your first licensing deal?  Like did it just kind of fall into place?  Did you have to work really hard for it?  Like what was that first one like, and then maybe how did the pieces fall into place after that?  Like was it really easy after you started establishing a licensing relationship, or do you still have to work really hard at it?  Like what was that kind of first spark like?

PAUL MILLER:

Well, I’m glad you asked that because licensing is not easy when you get into kind of major licenses.  But it can be easy if you start small.  And that takes me back to my first license.  Mark’s advice to me was to check out the licensing show in Las Vegas, and that was I think it was about this time of year then, about March, and the show was coming up in May.  That’s basically the world’s biggest conferences for licensing.  And I think if you look up Licensingexpo.com you can find out more about that show.  But what I did is went on and registered for that show and built a profile about my company, and they kind of have a matchmaking service there.  And I immediately matched up with an author of a kids’ book.  That kids’ book was called The Whatif Monster, and she reached out to me and asked me if I would be interested in licensing her character.  It was a perfect fit for our product.  So I basically immediately replied to her.  We got on the phone together.  She was a children’s book author with probably 30,000 fans.  And I had my product.  That was a very easy deal to do.  We put together a simple agreement, and that was a first licensed product.  So as a point of entry going with kind of a smaller property, a smaller influencer is a really nice way to start.

CAMERON YODER:

Real quick, do you think that same process with kind of how you entered into licensing, do you think other people can do the same thing, or do you think that competition has kind of increased in this space where maybe it’s a little more difficult, or they have to find other avenues to enter into?

PAUL MILLER:

Well, I think it’s absolutely a great way to enter, and it does depend on your product whether or not something like, you know, a children’s book author or a character would work for your product.  Licensing is dominated by children’s brands and entertainment brands, but it can also – you can also do licensing with an influencer, for example.  So let’s say that you have a kitchen product and you have a high-level influencer in the cooking space.  Well, that person may not be world-renowned, but also may have 100,000 folks on their YouTube channel.  And if you basically license their brand or their name, put it on that product, they’re going to be incentivized to go out there and market your product for you.

CAMERON YODER:

Interesting.  Now after your first licensing deal did everything just fall into place?  Like did you continue to just do that same process over and over again, or did you find it to be more difficult?

PAUL MILLER:

The first licensing deal, as I mentioned, was kind of a smaller level deal.  But it gave me a lot of experience, and it gave me some credibility in licensing.  So when I was contacted later on by a major licensor, a major property owner, I could show this license that we already had as a case study.  We didn’t end up doing a license with them, but just going through that negotiation process and understanding the different components helped me in my search for a better license.  And that’s kind of how we got to the stage of speaking with Nickelodeon.  It is a complex process, though, especially when you’re talking about, you know, working with a, you know, world-class company.

CASEY GAUSS:

So overall what would you say has been kind of the net effect or net benefit of licensing, in general?  It sounds like a lot, but the more I guess you could quantify it the easier it will be, I think, or the more tangible it will be for like our listeners.

PAUL MILLER:

The reason I’m talking about licensing is because we, as Amazon sellers, are always looking for a way to protect our products, differentiate our products and then reach new audiences.  So for me the net benefit is I have a unique product that has Nickelodeon characters on it, which even though I don’t have an exclusive, no one else can do that product without the license.  So competition-wise it makes for very good differentiation.  And again, it helps that audience who likes those products relate to my product.  And also from an IP protection standpoint, while people may have been willing to knock off my product from a little-known brand, they’re going to be much more leery of trying to knock off a product, you know, held by Nickelodeon.

CASEY GAUSS:

For sure.  And so can you kind of talk through what, you know, the launch process is on these products?  Like I just, from my perspective, if you have Nickelodeon characters on,  you know, whatever it is that you’re selling, it’s got to be so much easier to drive sales.  It’s got to be so much easier to, you know, get these products off the ground and really start moving them.  Would you say that’s the case?

PAUL MILLER:

Yes, I would say that’s the case.  Now while I love Viral Launch, it wasn’t necessary for this Nickelodeon product.  I actually was able to take, to launch the Nickelodeon product as variations of my well-selling products and just by having the visibility next to my, you know, Page 1-ranked products, they took off.  I was on Page 1 within a couple of weeks.

CASEY GAUSS:

Geez. 

CAMERON YODER:

Wow.

CASEY GAUSS:

Nice.

CAMERON YODER:

So during the Amazon seller journey would you say there is a point in time for a seller when he or she should most consider entering into something like licensing, or do you think anyone can start or enter into a licensing agreement at any point in time, like beginner to advanced?  Should they wait until a specific time, or can they even start thinking about potentially licensing with their first product?  What are your thoughts?

PAUL MILLER:

I think understanding licensing from the beginning is good to have in your pocket so that you know as you’re, you know, going through your Amazon journey that that’s one route that you can go.  But a licensor is looking for someone who has sales.  It’s going to be very unlikely that as a new seller, someone that doesn’t have sales on a product that you’ll be able to obtain a license because they are – they don’t want to tie up that property for someone who is already unproven.  So I would say the time to consider licensing is after you really are doing well in the marketplace and you have something unique because the licensors are always looking for that unique product to team their property with.

CASEY GAUSS:

So is there like a specific sales mark that means that you’re doing well enough to talk to this brand or whoever, or is there like, you know, you have to be number one in your market?

PAUL MILLER:

I would say that no, you certainly don’t have to be number one in your market.  And I think the level of sales that are required by the licensor depends on who you’re talking to.  Again, the folks who maybe have smaller brands or smaller properties are going to be much more willing to work with you than some giant.  I started working with Nickelodeon when we had about $2 million in sales.

CASEY GAUSS:

Gotcha.  $2 million in sales annual, over the course of a year, or in total?

PAUL MILLER:

That was about a year’s worth of sales.

CASEY GAUSS:

Okay, but you’re saying you don’t necessarily have to be at that level.  So if someone is doing $10,000 a month, let’s say, is that enough for them to now start talking with maybe some smaller brands, some maybe YouTube influencers like you had mentioned?

PAUL MILLER:

I would say absolutely, yes, and depending on who you’re working with on the licensor side, and you know, we spoke with Disney, Hasbro and Nickelodeon, the folks at Nickelodeon were much more entrepreneurial, and they could see the opportunity, and they were willing to embrace a unique product.  And they could really get the vision of, you know, what it would look like to combine their property with our product.  So it also depends on who you’re working with.

CAMERON YODER:

Has your experience as a whole with licensing, with licensees, been overall positive?  Like you talked about the difference between Nickelodeon and Disney, but even with smaller licensees, maybe in even your beginning, the beginning of your journey, would you say that everyone has been somewhat easy to work with or people are kind of gung-ho about it, or it’s just generally a mixture of appeal?

PAUL MILLER:

Well, for me it’s been an amazing, amazing story.  Even from – I still have a relationship with the author, Michelle, who we probably chat a couple times a week, and she really enjoys it when I send her a big fat royalty check.  And I really enjoy it when she’s promoting my brand to her audience.  So that has been amazing.  On the Nickelodeon side it really has opened up new doors for me.  Just to give you an example, very soon after our relationship, when our products were still in development, Nickelodeon invited me to an event out in Bentonville, Arkansas, you know, which you probably know is the home of Walmart.  And you know, we got to participate in this Walmart presentation, which was absolutely amazing for me.  How would I have been able to get to Walmart at that level without that license?  The licensors have an incentive to help you do well.  So a lot of times they’ll have teams who support Walmart, Target and big retailers, and their job is basically to try to get you into the door.  That’s pretty amazing.

CASEY GAUSS:

Yeah, yeah.  Oh, yeah.

CAMERON YODER:

Now what – let’s say – I mean we have a lot of different sellers at different points in their journey, right?  Different levels of selling on Amazon, so beginner to advanced level, right?  What information would you say, would you want to tell them to consider to decide whether licensing is right for them?  What information do people really need to know to consider licensing in general?

PAUL MILLER:

Well, you really need to understand the pros and cons before you jump in and spend a lot of time and energy because there is definitely a tremendous benefit to it, but there’s also a cost.  So on the cost side you have your time and energy, which is very important, shouldn’t be undervalued, but you also have attorneys’ time.  You have a completely different development cycle that you have to go through with approval of products.  Many times you’re going to have to – you may or may not have to hire a licensing consultant to help you along with that.  And you may even need some specialized design work.  So you need to understand both the benefits, as we talked about, and the costs that come along with it.

CAMERON YODER:

And where they’re at, their resources, their time, opportunity costs, right?

PAUL MILLER:

Exactly.

CAMERON YODER:

Yeah.

CASEY GAUSS:

So is there – maybe in your experience you’ve run into this.  Obviously you yourself have had a great experience.  Is licensing for everyone, or are there, you know, particular, I don’t know, categories, types of products, types of sellers where this just doesn’t make sense?

PAUL MILLER:

One of the ways that I teach people to think about licensing is take a walk through the store in your category.  Go to a big box store.  If you’re in outdoor, for example, walk the outdoor aisle and see what licenses are there.  And you’ll be surprised to see how many products in your category already have licenses on them.  So that’s one way to find out.  But there are some categories, certainly, that would be much more difficult to add a license to.  As I mentioned before, the, you know, children’s, entertainment is very big.  I think kitchen is also very big.  One of the pieces that I talk about in my course is the George Foreman grill, for example.  You know, kind of a really great example of a licensed product.  We all know that George doesn’t really make grills, but he does endorse them and put his name on them, and that’s, you know, that’s a famous, big licensing deal.

CASEY GAUSS:

Yeah, yeah.

CAMERON YODER:

Under what circumstances would you discourage someone from entering into licensing?

PAUL MILLER:

I would say that if you’re just getting started or if you’re really thin on resources it’s not really a good time to get started in licensing because, as I mentioned, it does take some other costs.  You really should have an attorney review your agreement.  One of the components of a license is a minimum guarantee, and that minimum guarantee is enforceable whether you sell zero products or a million products.

CAMERON YODER:

If listeners are listening and are feeling overwhelmed, because that is a lot, like licensing is an incredible opportunity, that’s a lot of – those are a lot of factors to consider for getting into licensing.

CASEY GAUSS:

Not to mention capital needed.

CAMERON YODER:

Of course, right, capital needed and everything else that goes with it.

PAUL MILLER:

Exactly.

CAMERON YODER:

If someone is feeling overwhelmed and just heard all of those things to take into consideration and just instantly says that’s too much; I can’t do it, what would you tell them if someone’s feeling overwhelmed?

PAUL MILLER:

I’d just say send a text message to Casey.  No, no, you know, it’s like anything else.  I didn’t know anything about licensing when I started, zero.  I showed up at the first Licensing Expo with not a clue.  In fact, I’m quite sure that some of the licensors that I talked to probably shook their head as I walked away going that guy doesn’t have a clue.  So I would say, you know, enter the world, jump in the water and start learning.  And you can learn by going to the Licensing Expo.  You can take my free course, which I’ll be happy to give you the URL to, start digging around, do some Google research.  It’s not that hard.  It gets more complicated as you go up the ladder of licensing with the big properties.  But again, starting out simple may be a great way to start.

CAMERON YODER:

Got it.  Paul, is there anything else that you would like to tell our listeners?

PAUL MILLER:

I would just go back and say that, once again, don’t be intimidated by it.  Look at the opportunity, understand the opportunity, and try to make a decision of whether or not that’s a good direction for your business to go in and see if it fits.  Understand the pros and cons before you take the commitment.

CASEY GAUSS:

Yeah, and off of that – I think Paul has mentioned this – you know, one thing that I don’t want to happen is that there’s always that get rich quick scheme just over the hill, right?  And so this is that, but isn’t that, and so in such that there is plenty of opportunity in licensing, but it may not be for everybody, or it is at the least not for everybody in their current state.  So please don’t see this as a hey, I’m going to get rich quick opportunity, but at the same time it may be just that.  So I think that it’s worth at least considering looking into and learning a lot more about.  But don’t, you know, if there’s – you have terrible photos, you know, you have a bad listing, you’re not ranking for you know any keywords, this is not going to be your saving grace.

PAUL MILLER:

I’m going to back you up on that 100%, Casey.  This is an advanced move, I would say, and not for the beginner and not for someone who is working on a shoestring.  It’s more of a strategic business move than anything else.

CASEY GAUSS:

Yeah, and you know, Paul had done like $2 million in a year on his product before he went through this.  So yeah.  Paul, thanks so much.

CAMERON YODER:

Yeah, thank you so much, Paul.

CASEY GAUSS:

And so you know, I want our listeners to know – I had forgotten that you had a course.  For those that may be interested in checking it out, you know, we’re obviously not getting any commissions nor would I want any commissions, but I do think it is a cool opportunity, so if people wanted to like learn more about the course, where would they do that?

PAUL MILLER:

Well, thanks.  Well, we don’t have to worry about commissions because I don’t have anything for sale yet. 

CASEY GAUSS:

Okay.

PAUL MILLER:

But I have been asked by so many folks in our sector, and you and I talked the other day about friends of ours who went with me to the licensing show last year and came out and actually executed licenses right out of the show.  And that was Liran Hirschkorn and Andy Slamans.  And you know, they really encouraged me to put a course together, so I did put together basically an intro to licensing completely free.  You will get on my emailing list, so when I do have something to sell I will hit you up.  But it’s at nextlevellicensing.com/followthedata.

CASEY GAUSS:

Oh, nice.  He was prepared.

PAUL MILLER:

How do you like that?  So we made a special landing page for you guys.

CASEY GAUSS:

Nice.

CAMERON YODER:

Awesome.

PAUL MILLER:

And just check it out.  It really is, I believe, licensing is the next level of private label, and that’s why we called it that.  I also have, you know, once you finish the course we have a private Facebook group where we’re putting together licensing people with product people, just trying to make people aware of the opportunity.  When you do sign up I’ll probably put some emails out about the licensing show, so looking forward to meeting a bunch of folks out there.  That’s coming up in about the middle of May.  And look forward to seeing people out there.

CAMERON YODER:

That sounds great.  We’ll put the link to that, to the course, in our show page, but hey, thanks, Paul, for being here, for answering questions, just for being available.

PAUL MILLER:

I appreciate it, guys.  Thanks a lot.

CASEY GAUSS:

All right.  Thanks, Paul.  Take care.

CAMERON YODER:

Thanks, Paul.

What’s up, everybody?  I hope you enjoyed that conversation with Paul.  I was actually pretty interested to dive into the conversation of licensing since I haven’t heard many other sellers even talking about it.  For any questions that you have for Paul or for us around licensing, we would love to hear from you feedback around licensing or feedback from the show.  To submit any questions or responses that you have, feel free to hit us up on Facebook to shoot us a direct message and/or you can also leave us a voicemail.  Our number is 317-721-6590.  We’ll answer a couple of the questions, or maybe even on the next show in next week’s episode or the week after.  Your feedback is super important to us, too, and if you’re listening on Apple Podcasts please feel free to leave us a review and/or rating.  We love to hear from you guys.  All you’ve got to do is head to our show page, scroll down to where it says ratings and reviews and tap the star rating you think that the show deserves.  Then if you’ve got a minute leave us a review and tell us what you think of the show.  And if you know a fellow seller who might be interested in licensing send them this episode and tell them about the show.  We want to be a resource for those people, for you, for sellers and the information source in this space specifically, so please tell your friends, spread the word and share the show.  Thanks again for listening.  Really, we appreciate all of you and appreciate your time.  Until next time, remember, the data is out there.

Busting The Myth: Amazon Just Wants To Make The Most Money

Busting The Myth: Amazon Just Wants To Make The Most Money (Ep. 31)

It’s time to bust another myth that has been passing around the Amazon community. Without digging into the data, it can be easy to think that in order to be successful on Amazon, you need to do whatever it takes to make Amazon the most money NOW. We’re seeing the opposite; Amazon taking steps to ensure that you stick around for the long-term. Join us as we dig into a couple specific examples to support this long-term mentality, and disprove the pervasive short-term money-making myth.

Show Notes

  • Change your mindset. Many sellers believe that they need to do whatever is making Amazon the most money NOW to ‘win’. Instead, what we’re seeing is that Amazon has steps in place that focus on the LONG term.
  • Long-term validation #1: Raising price too high causes you to lose the Buy Box. Low prices are critical for long-term success on Amazon’s platform, ensuring that consumers are coming to Amazon first to buy whatever they’re looking for.
  • Long-term validation #2: Lower prices lead to increased keyword ranking. Another encouragement for sellers to keep prices low.
  • Long-term validation #3: Number of units per order: The same keyword ranking is attributed for a single unit sold compared to multiple units sold in a single order.
  • When it comes to keyword ranking, Amazon is not focusing on the average units ordered, they are focusing instead on the number of orders.
  • At the end of the day, follow data. Question everything you’re hearing in the Amazon space – validate it with accurate and safe data.
  • Shoot us a response, question, or comment on Facebook!
  • Give us a call, and you could be featured on the podcast. Our number is (317) 721-6590

Podcast Transcript

CASEY GAUSS:

As we all know, rumors are pervasive in the world of Amazon FBA.  Occasionally these rumors are so blatantly untrue they become jokes that are easy to avoid.

CAMERON YODER:

Sometimes without expansive data sets and front row access to some of the most successful brands on Amazon to lead with truth, those rumors become law.  They become accepted as a daily part of your selling journey, inhibiting you from reaching your true potential.  Today we’re busting a myth and underlying philosophy that we see steering sellers to misinformed decisions, ultimately left chasing the wind.  I’m Cameron Yoder.

CASEY GAUSS:

And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success.  In this show we leverage the data we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with more than 8,000 brands to help you understand the big picture when it comes to Amazon, and more importantly, the best practices for success as an Amazon seller.

CAMERON YODER:

Let’s jump in.

CASEY GAUSS:

All right, Cam, so we are here today talking about another myth.  I think that, you know, we might as well just rename the podcast Myth Busters, Viral Myth Busters, Amazon Myth Busters.

CAMERON YODER:

I actually feel like – I actually feel like we’re kind of catching this myth, kind of nipping it in the bud.  I feel like some people might not even have heard of this myth, maybe.  There is a potential.

CASEY GAUSS:

Very true, but also, so I mean with Amazon there’s all different kinds of like niches or pockets of communities, and so this community, you know, believes wholeheartedly this, another community believes wholeheartedly this, this community only uses, you know, this ecosystem of tools.  So it’s all over the place, so yeah.  If you haven’t heard this, sorry, but now you know when you do.

CAMERON YODER:

But I do think, I guess maybe to expand on what maybe I should have said, I think people have this rumor – this rumor explains a mentality that I think a lot of sellers have, even subconsciously, without even knowing it, and the rumor that’s spreading right now really, I think, brings that subconscious thought process to life.  And we actually haven’t even said what the rumor is yet.

CASEY GAUSS:

It’s a secret. 

CAMERON YODER:

It’s a secret.  We’re not going to say the whole episode.  No, just kidding.  So Casey, tell us the rumor and talk about it little bit.

CASEY GAUSS:

So the rumor, or the kind of flawed philosophy behind a lot of the decisions being made around running your Amazon business, or when running your Amazon business, is that you need to do whatever makes Amazon the most money right now in the short term.  So yes, obviously Amazon is focused on long-term profit, making money long term.  But I think there is a distinct difference in how you think about everything from how you’re listing your product up on Amazon, what you’re selling, why you’re selling, how you’re selling, in thinking between the short term making Amazon the most money and long term making Amazon the most money.  So we have three main points that we just kind of want to talk over.  Really the intention of this podcast is to help you get in the right philosophical mindset, not necessarily to point out every example of this.  Granted, I imagine there are a lot, and I imagine a lot of you smart people that are listening have better examples than we do, but the intention here is to really illustrate hey, you don’t need to be thinking like this; actually you should be thinking like this.  And alongside that maybe, you know, a sister that to that is that at the end of the day you need to be following the data.  That’s what we try to be all about.  That’s why we named the podcast this, and you know, it’s this data that has helped us to see all these myths or to help us to build some of the most successful brands on Amazon.

CAMERON YODER:

As you’re listening to this episode I would encourage you to, instead of thinking about – try to switch your mindset or reframe your mindset to suit the idea that Amazon is playing the long game.  They’re not doing what people say in making a lot of money in the short term.  Casey, let’s start with our first example.  What do we got?

CASEY GAUSS:

Number one, the myth is, that comes from this method of thinking, is that the higher the price point, the higher the price point of your product the more love Amazon will give you in ranking or in their promoting of your product.  And I think logically, yes, it sounds like it makes sense, of course.  So if I’m charging a higher price and I’m getting good sales, that makes Amazon more money.  They’re getting a higher amount of money from their commission.  And the problem is that, all right, here is us easily busting this one, and that is if you raise your price too high you actually lose the buy box.  How many people – you know, we have people emailing in all the time.  I’ve seen it all over the Facebook groups.  People are like, what the heck?  I’m the only seller on my listing and I don’t have the buy box.  Why is that?  You know, 99% of the time it is because you have raised your price drastically or you have raised it past what Amazon believes to be an acceptable price range.

CAMERON YODER:

So in this case the myth, again, is do whatever benefits Amazon the most.  In this case, what would benefit Amazon the most in the short term would be raising the prices of your products.  In this case we see, and it’s well-known I think across Amazon, that if you raise your prices too much you will lose the buy box –

CASEY GAUSS:

Absolutely.

CAMERON YODER:

– which will not benefit you, which will not benefit Amazon in the long run.

CASEY GAUSS:

Right.  And here’s why it does not benefit Amazon in the long run.  In the long run Amazon, yes, is focused on making money, and they realize that to do that low prices are critical.  So the last thing they want to have happen is, you know, let’s say they were taking price into account or, yeah, so they appreciated higher prices.  So every grill brush on Amazon is $25, let’s just say.  Well, as a customer, as they come and search for grill brush on Amazon and they see $25, wow, I don’t want to pay that much.  Then they go check out Walmart, or they go check out Home Depot or Lowe’s or something like that, and they see oh wow, I can actually get this grill brush for much cheaper.  And so then they buy it from Walmart.  And then the next time they want to buy a product are they going to go to Walmart because well, they had lower prices last time, or are they going to go back to Amazon who they know now sometimes charges higher prices?  And so they know in order to retain this customer, in order to get this customer to be loyal, to be excited about the shopping experience on Amazon, and to make sure that they are doing as much of their online shopping on Amazon as possible they know that low prices are critical.

CAMERON YODER:

Just adding to that mentality, again, this is all about the long game of Amazon, and if right now, even if you just think about your buyer experience on Amazon, buying products, you know, you understand that going to Amazon you will be able to find products that are priced better than almost anywhere else.  If that is brought out of the equation, if your mentality starts to shift with that, then Amazon starts to lose market share, starts to lose you, and they want you in, again, the long term.

CASEY GAUSS:

Yeah, and like even thinking about it a little bit more, I mean what’s the NPS score on a low price versus, you know, a higher priced item?  So people are always, at least maybe – I’m not from aristocracy or like fancy people or anything like that, like people are always excited to brag about, you know, the cheap prices that they got something.  And so if someone ever says hey, nice tablecloth, or nice this, or that, or whatever, it’s like oh, I got it for like 12 bucks on Amazon.  Like people are really excited about that.  So now whether it’s consciously or subconsciously the next time that friend goes to purchase something, it’s like oh, I’ll check out Amazon because so-and-so got it at a low price.

CAMERON YODER:

By having that threshold set, then they’re able to keep that pervasive mentality of Amazon that you have, that everyone has of Amazon and low prices.

CASEY GAUSS:

Okay, so next up, or going alongside that is just giveaways.  And so we’re still able to drive keyword ranking at 90% off promotions.  I mean, again, Amazon is not making very much money or, you know, any money really, on these really low, low price sales.  But we’re still able to drive keyword ranking.  So again, if Amazon was focused on making the most money possible in the short term, it would absolutely not appreciate the giveaways, the coupon sales or anything like that.

CAMERON YODER:

Yeah, that’s good.  No, that’s good.  Okay, so first one, buy box price.  Let’s touch on number two.  Casey what do you got?

CASEY GAUSS:

Number two is that we see this not every single time, but a lot of the time we will see an increase in keyword ranking for a particular product when we lower the price point.  So this is not something that is happening because oh, we have a lower price so now we’re seeing an increase in sales because of that lower price, which is then increasing our keyword ranking.  We literally see when we are lowering our price point that we’re increasing in ranking, which again goes back to solidify Amazon is not paying attention or not focused on how much money can they make from a customer per sale right now.  It’s again, focused on providing the best customer experience across the board because they know that in the long run that’s what’s going to make them the most money.

CAMERON YODER:

I think this actually works in conjunction with point one a bit with how, you know, the – we’re talking about – we were talking about the buy box before.  But in this case, again, this is kind of a second, or just another method for Amazon to kind of keep control over prices without actually just like getting their fingers into everything and actually changing the price.  This is an encouragement for people to keep their price a little bit lower to, again, as we saw before, increase keyword ranking.  All right, we touched on one and two, points one and two for this topic.  Let’s touch on the third now.  Casey, what do you got?

CASEY GAUSS:

Number three is number of units per order, so again, increasing the average order value.  So we hear this a decent amount, and essentially the – and I can share the data that we have specifically on this, but essentially if Amazon were to focus on maximizing the amount of revenue per customer per sale in the short term, then they would definitely be weighting number of units per order.  And so essentially what this means is, you know, one – there’s two grill brushes.  One grill brush, you know, has – they’re selling one unit on average per order.  The other seller is selling, you know, 1.8 units per order, essentially.  And so you would think that the seller with 1.8 would be driving higher keyword ranking or would be ranking better all else equal simply because his average order value is higher.  But in reality we don’t tend to see this, and you know, one extreme example is there’s plenty of people in the past that have forgotten to set their max order quantity, or they set up their coupons wrong.  You know, a number of things happen

CAMERON YODER:

With something like a launch.

CASEY GAUSS:

Yeah, with something like a launch through Viral Launch.  Like you need to set your max order quantity so that a seller can, or a buyer can only buy one unit.  So there’s been instances where people have hundreds of products bought across, you know, a few different orders, and if that were the case, you know, now their average order is a couple hundred units.  Or in that period of time it’s extremely, extremely high, and in no way do we see significant improvements in rank.  Also from that I mean the data just shows that bestseller ranking is only concerned with number of orders, not number of units per order.  So Amazon, I don’t think in their systems of ranking, I know specifically in their systems of ranking bestseller rank they’re not paying attention to the number of units per order.  And again, if they were trying to maximize how much money they are making per sale in the short term, then they would be focused on this average units ordered.

CAMERON YODER:

So just to help summarize the concept a little bit because I think this idea can be a little bit confusing, it’s basically you would – one would think that if someone is buying multiple products with a single order that that would drive more keyword ranking.  However, what we’re seeing is that even if someone buys just a single unit as compared to two units in a single order, again, one order, one product that’s bought compared to something like two products that’s bought in that order, we are seeing the same amount of keyword ranking driven through both.  I think that was hopefully a good summary.

CASEY GAUSS:

Yeah.  No, sounds great.  I mean overall, again, these are not – all of the examples that we have essentially what we just wanted to do was help get you in the mindset of one, maybe dispelling that myth when you initially hear it.  I think that in any particular situation you need to be looking at the data for that particular situation, not just saying yes, this concept makes sense so therefore I am going to act accordingly, and overall helping you understand Amazon is not focused on maximizing value in the short term.  They’re focused on bringing the best customer experience over the long term, and that is how you should be building your business overall.

CAMERON YODER:

Yeah, I think this episode specifically is really all about mindset.  It’s about framing, framing how you sell in the right way.  And I mean if you look at the evidence, Amazon really is not even just these three points that we gave you.  Amazon is positioning themselves for the long run, I mean competing against big companies like, you know, like Walmart or other people in e-commerce.  This is just helping you frame your mind to kind of go along with Amazon and set you up for success in the long run, not just the short run.

CASEY GAUSS:

And as you can see, you know, we’re all about following the data.  We’re all about kind of busting these myths.  A lot of these myths are founded in, I would say, or I call it traditional business logic, or you know, these business principles that tend to logically make sense.  But in reality when you are looking at the data they just don’t.  And I think it’s very easy for these myths to start to propagate throughout the, you know, seller community simply because, again, they make logical sense.  So you’re like oh yeah, I can get behind that.  That totally makes sense.  And you don’t have the data of, you know, thousands of sellers, or thousands of launches, or whatever to really help to draw these solid correlations for you.  And so I completely understand.  What I’m upset about is the people that initiate these rumors where you know, they say that this is it simply because logically to them it sounds good and maybe they want some good content.  I see that happening quite often.  But you know, at the end of the day sometimes there are people that don’t have malicious intent or don’t have, you know, self-serving intent, and they did it one time.  They have one product that has, you know, an average order volume of 1.4 units, 1.5 units, and so they think that – and that product is ranking, and so therefore they think that like that is the cause.  So I totally get it.  The advantage I think that we have here at Viral Launch is just the breadth of perspective that we get so that we can bust those myths and we can really actually follow the data.

CAMERON YODER:

I really would encourage you, if you’re listening right now, wherever you are, to start establishing a mindset of questioning whatever you hear from anybody, from masterminds, from people that have been selling for a while, from just different resources, even us, even us.  Question, question what we tell you and really look at the data to back it up.  I mean that’s what we’re all about.  Like Casey said, we’re all about the data.  And so if you dig into what we’re saying, there is data to back it up.  But I’m telling you to, instead of just taking what someone says and accept it flat out, to really question it for yourself.  And if you have even those questions, or if you’re wondering like oh, this guy said this; I wonder if there’s data to back that up, seriously, shoot us an email.  Shoot us a message on Facebook or anything at all.  We would love to dig into the questions that you have or some question, if you’re questioning another person, what question maybe you have for us about them or what they’re talking about.  So just create a mindset, a frame of questioning what others are telling you. 

Well, that is all for this week.  Thank you so much for joining us here on Follow the Data.  For more insights and reliable information on how to succeed on Amazon, subscribe to the podcast and check us out on YouTube.

CASEY GAUSS:

If you’re listening on Apple Podcasts please leave us a review and/or a rating.  All you have to do is go to the show page for Follow the Data.  Scroll down to rating and reviews and tap on the stars to rate the show.  It’s that easy.  If you’re listening on SoundCloud, leave us a comment.  We appreciate all the feedback for the show so much.  This show really is for all of you, and your input helps us to make it better.

CAMERON YODER:

And if you know a fellow seller who is using suggestions from their keyword tool to determine how many units to give in their launches, send them our way, please.  We want to be a resource for sellers and the information source in the space.  And we want to help you, and we want to help them.  So please tell your friends, spread the word and share the show.

CASEY GAUSS:

Thanks again for listening.  As always, if you want to be featured on the show, have an Amazon-related question or an idea for an episode, feel free to leave us a voicemail.  Our number is 317-721-6590.

CAMERON YODER:

Seriously, any questions you have, let us know.  We want to help you.  We want to help whoever you’re listening with.  Let us know.

CASEY GAUSS:

Until next time, remember, the data is out there.