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.

Q4 Is Closer Than You Think: A Guide to Selling Seasonal Products (Follow the Data Ep. 30)

Q4 Is Closer Than You Think: A Guide to Selling Seasonal Products (Follow the Data Ep. 30)

It’s never too early to start thinking about Q4. And with Q2 already under way, we’re one quarter closer to the holiday season. As Q4 approaches, you may want to consider sourcing a seasonal product. Seasonal products aren’t for everyone, and they certainly aren’t for the faint of heart. But if you choose to take the risk, there’s potential for huge reward.

Show Notes

  • Find a seasonal product to sell using Product Discovery. Use filters like Best Sales Period to look at seasonal products to jump on now.
  • Serious about planning ahead for Q4? Check out our Q4 Prep Guide.
  • Successful seasonal product have successfully written listings. Make sure yours is optimized whether with Keyword Research or a professionally written listing
  • Don’t forget your product photos. You can always ask your supplier to send a production quality sample ahead of your inventory to make sure your photos are ready to go before you launch.
  • Once you have a seasonal product in FBA, you need to get ranking quickly.  Set up a launch the right way with the help of an Amazon Seller Coach. Contact one today at service@viral-launch.com
  • Wondering how Keyword Research works? Let Amazon expert, Cameron Yoder, walk you through the tool.
  • Give us a call, and you could be featured on the podcast. Our number is (317) 721-6590

Podcast Transcript

CAMERON YODER:
Nice.

CASEY GAUSS:
Did you see my fact checking on George from MerchantWords?

CAMERON YODER:
Yeah, I did. That was funny, dude. Come on. Did you put that – yeah, you put that in –

CASEY GAUSS:
The marketing chat.

CAMERON YODER:
– in the marketing chat. That –

CASEY GAUSS:
I’m just a fact checker. BS caller on that.

CAMERON YODER:
[Unintelligible 0:00:17.8] just because no product is selling more than 30 units per month on average. Swinger anklets.

CASEY GAUSS:
Come on.

CAMERON YODER:
Wife. Anklets, oh man.

CASEY GAUSS:
Hot wife anklets. Nobody is searching that, bro.

CAMERON YODER:
Dude. Wait. How did you – oh, no, never mind. That dude –

CASEY GAUSS:
Get the heck out of here.

CAMERON YODER:
Come on, man. Swinger anklets. Are you kidding me? Ugh, man.

CASEY GAUSS:
Good?
CAMERON YODER:
Yeah.

CASEY GAUSS:
Ready?

CAMERON YODER:
Yep.

CASEY GAUSS:
It’s never too early to start thinking about Q4, and with Q2 already underway we’re one quarter closer to the holiday season.

CAMERON YODER:
As Q4 approaches you may want to consider sourcing a seasonal product. Seasonal products aren’t for everyone, and they certainly are not for the faint of heart. But if you choose to – oh, whoa, to the – but if you choose to take the risk there’s potential for huge reward. I’m Cameron Yoder.

CASEY GAUSS:
And I’m Casey Gauss, 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 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.

CAMERON YODER:
In this episode we are going to walk you through the timeline for sourcing a seasonal product using a Q4 example. You’ll see it’s not too early to start your product research if you’re serious about selling a holiday, quote, hotcake. We’ll also talk you through basic inventory planning so you can stay in stock all season and outsell the competition. Let’s get started.

CASEY GAUSS:
Let’s find those hotcakes, Cam.

CAMERON YODER:
Hotcakes. Let’s get us some – let’s get some holiday hotcakes in here. It’s almost comparable to bread.

CASEY GAUSS:
Yeah, no pun intended – pun intended.

CAMERON YODER:
No pun intended, yes.

CASEY GAUSS:
All right. What’s up guys? So Q1 just got done. Early April, you know, it’s like April 10th today, so first third of the first month of the second quarter of the year. So you know, when Cam and Becca came to me with this idea I was like guys, it seems a little bit early for that, but Cam was walking me through kind of the timelines and, you know, I don’t know if we’ve talked about just how great seasonal items can be or, you know, a lot of people – I think a lot of the kind of traditional sourcing gurus say stay away from seasonal products. I 100% understand why. The problem is that there is so much opportunity for seasonal products. We see some guys just absolutely killing it. I don’t have the stats, but there’s this guy, Justin Ligeri. If you want to check him out he claims to be the seller to have the first one million-dollar day. I almost want to say that he had a two million-dollar day, but anyways, he at one point had the largest two-week payout. I mean this guy is just killing it because he focuses, I think, almost exclusively on seasonal items, and it’s because people come in, and they spend an insane amount of money for Halloween. I think that’s his biggest month, or his biggest season. People spend just crazy amounts of money on these seasonal items, and there is so much opportunity. The downside is that it is seasonal, right? So if you are selling Santa hats you’re probably not selling Santa hats very well in July. So if you say, you know, I’m going to sell 500 Santa hats a month and you plan out, you know, six months of inventory, 12 months of inventory, you’re going to be sadly mistaken come, you know, July, June, you know, August or whatever, like when sales aren’t there. So if you are doing this you need to take a very data-driven approach so that you are making the right decisions.

CAMERON YODER:
Yeah, I really think that seasonal products in general – and seasonal does not – also, I don’t want you to necessarily think that seasonal means just in December, or just Christmas, because again, seasonal can mean, or does mean, a spike at really any point in time in the year that’s consistent, that follows a trend.

CASEY GAUSS:
Valentine’s Day-related products.

CAMERON YODER:
Or like Halloween.

CASEY GAUSS:
Pool floats.

CAMERON YODER:
Pool floats, yeah, yeah, Christmas, whatever, something that’s seasonal, spikes consistently at some point in time in the year. Like – seasonal products tend to follow the mantra of like high risk, high reward, right? And in this case you can use data to decrease the risk that you’re taking and really be smart and intentional about your decision. At the same time really the big risk – the goal of a seasonal product, not with everybody, but typically is to have enough inventory in Amazon, get to Page 1 for the primary search terms and sell your inventory during the full period of time, during typically the spike month or spike – whatever period of time that spike is, and then maybe not hold onto that inventory the rest of the year because that’s going to cost you money. So the challenge and the risk becomes ordering enough inventory at the right time, getting in Amazon at the right time, ranking for that item or those items at the right time, and having enough inventory, being in the right spot to capture those spike sales. That is – it’s a lot to think about, and I actually know just like – and Casey you probably know a lot of people that do pretty well with seasonal items. I actually know someone who has been selling seasonally and is actually trying to get out of selling seasonal items.

CASEY GAUSS:
Oh, why is that?

CAMERON YODER:
He is – according to him, he doesn’t really like the stress that comes with it.

CASEY GAUSS:
I see.

CAMERON YODER:
And it takes a lot of – and that’s not to deter you at all it. It just takes – for him, at least, it takes a lot of upkeep. Like he has to be really intentional, and it takes a lot to be intentional about ordering the right amount of inventory or knowing which market to go into. And so this, again like we said from the intro, is not for the faint of heart. However, it can get very profitable for you. And so okay, let’s actually talk through maybe just even the basic timeline of what you should expect when even just starting to think about a seasonal product. So when you’re starting – let’s say – let’s use – if you – actually, if you’re in a good spot to bring out your calendars on your phone, go ahead and bring out your calendar. We’re going to –

CASEY GAUSS:
If you guys are still into the physical calendars, you need to pull that off your wall.

CAMERON YODER:
Desk calendar also.

CASEY GAUSS:
Desk calendars.

CAMERON YODER:
Whiteboard calendars.

CASEY GAUSS:
Pocketbook calendars.

CAMERON YODER:
There are no excuses here. You should be able to find a calendar somewhere. Pull out your calendars. Let’s use December as our, let’s say, peak month. Let’s say we’re going, or we want to source a seasonal item in December, okay? If you’re sourcing a seasonal item in December and you don’t know what that seasonal item is, I am suggesting – we are suggesting that you start thinking about, you start researching seasonal items in April, which is this month, okay, and May. So that means that you should start researching your product, or you should start thinking about sourcing a seasonal product now and over the next – over the next month and over May itself.

CASEY GAUSS:
And I know – I do this as well – I know you’re all thinking. Oh no, I have plenty of time. Seasonal, like Q4 products, you know, really start picking up in December, late November so I have plenty, plenty of time. And if you’re that person I imagine you may have gotten hit with the Chinese New Year and maybe ran out of stock or, you know, maybe you had some issues and missed out on money because of that. Guys, first off, if you are finding the right products it is going to pay off like nothing you’ve ever seen before, hopefully, and anyways, now is the time. This is why we’re having this episode so early.

CAMERON YODER:
You really want a five- to six-month lead time for something like a December, a December-specific seasonal item. Now there are a couple different factors that go into that. Again, one of those is just kind of extended communication with manufacturers. You want to make sure that you’re finding the right product and also shipment times are extended, take a little bit longer leading up to the Christmas month or months just because a large majority of a bunch of sellers are trying to get their inventory into Amazon. So just to clarify, you do want – again, you want that five- to six-month lead time. However, that five- to six-month lead time should be – you want to give yourself basically five to six months before your inventory needs to be in Amazon. And I’m talking like the day that it gets into FBA. And if your – we’re going to speak a lot about in generalities for this episode. Like each market is going to be different, right? However, for most products that peak – most seasonal products that peak in December, typically sales start to pick up from kind of a low trend around October or November, typically maybe the second half of October.

CASEY GAUSS:
It really depends on your product.

CAMERON YODER:
It does. It does. And again, we’re just speaking in general.

CASEY GAUSS:
Candy canes I think pick up like end of September, like early October or something like that.

CAMERON YODER:
Yes, yes, and we’re going to talk about like maybe more specifically how to kind of catch that upswing. But generally let’s just say October is when your products should be in Amazon. So count five months back from October. One, two, three, four, five. That’s May. Six would be April, okay? So April-May is when you should start researching your seasonal products for December in order to get them in in October. So let’s break down – let’s break down these months, okay? April and May. This is what we’re suggesting that you’re performing all of your thought process, your maybe financial – you’re looking at your finances. You’re looking at your finances to see what you’re capable of, and you’re using something like a product research tool like Market Intelligence or Product Discovery to kind of try and find at least a list, or a list of options for products for you to source in December, okay?

June and July, those next two months, these would be basically – these would be months where you are contacting the manufacturers. So in this case you are – you found your products, right, and you’ve gone to something like Alibaba and you try to find a manufacturer for your seasonal product. And again, this is June and July. Ideally, ideally, again, every market is different, right, but ideally by the end of July you would be placing your order, right? And that means that you maybe pay your initial payment on something like Alibaba and you start production for whatever the number is going to be for your seasonal product. And that gives August and September and even some of October as a lead time for your products to be produced and ship, again, by – this is taking sea freight into consideration – and get them into Amazon hopefully by the end of October. And all things considered best case scenario you even maybe get your products in at the beginning of October or even a little bit before that. Like that month, having those products in that month will not hurt you. It’s always – in this case it’s better to have it in as early as possible I think but not too early, and that’s why kind of September and October are good months for you to get your products into Amazon. Once they’re in – oh, go ahead, Casey.

CASEY GAUSS:
Yeah, so the only thing with that is I believe October-something is when they have long-term storage fees. So they’ll really hit you with the storage fees. So like Cam was saying, you absolutely have to make sure that you understand when sales start coming in. And even like, so let’s say it’s at the very beginning of October but you want to, you know, avoid as many of those long-term storage fees as possible. Start using a third-party warehouse. This is something that we’re planning on talking about a bit more here coming up. But anyways, like be really strategic about it. Don’t necessarily just send it into Amazon. This is kind of as a side note. Or let’s say sales really pick up in November but you want to make sure that you’re able to get your inventory in, send it to, you know, a third-party warehouse or something like that.

CAMERON YODER:
There’s actually – a side side note – there actually is another option for people, and you need to check with your manufacturer to see if they can do this. But I know there’s a couple sellers who will produce – they’ll manufacture their items in the manufacturer’s place in China, and the manufacturer will store the items for them for a pretty low fee, or actually for free sometimes –

CASEY GAUSS:
Gotcha.

CAMERON YODER:
– until they need it to ship.

CASEY GAUSS:
Gotcha.

CAMERON YODER:
So if you can do that, I mean just even start that process as early as possible, and – well, whichever makes sense for you. It costs [money 0:13:29.8].

CASEY GAUSS:
Yeah, you also have to think from like capital gain tied up and everything.

CAMERON YODER:
But that’s just another option for you to consider as you’re producing items for seasonal products or even just in general. I know a lot of sellers who do that themselves. So we talked about – we talked about, we talked about – so again, generally, just generally, generally speaking, April this month like right now do your product research. May, do your product research. Maybe start conversations around the end of May, or June, or July, and then get your products ordered around July, maybe the end of July. Have them ship around that time, or like ordered – your order is in. Maybe they’re being manufactured and produced and shipped hopefully right after that period of time to get in around October.

CASEY GAUSS:
Yeah, and a lot of people are like okay, I need to sell the products that are going to kill it in for the Christmas period. What about Thanksgiving? What about October? What about all the other holidays that come through that? What about all the lesser-known holidays that are coming through those times? Like definitely – again, there is so much money to be made for those Christmas sales, but there’s so much money to be made for every other holiday. So just want to keep reminding you not to – like for the example, it’s a lot easier for us to use like Christmas as that example, but there’s so much option – so many options out there.

CAMERON YODER:
It’s really important that you find what you’re lead time is going to be specifically for that product or that market that you’re interested in because that’s going to give you the most accurate representation. But let’s say – let’s go to – let’s talk about ranking.

CASEY GAUSS:
Okay, yeah.

CAMERON YODER:
Let’s talk about ranking. So getting your inventory into Amazon is one thing, but also we want to make sure that you are ranking your product on Page 1 at the opportune time. So Casey maybe talk about like when the most opportune time is for that.

CASEY GAUSS:
Yeah, and the reason we want to kind of talk about this now is one, just so you understand the process; two, so that you understand how easy it can actually be to seize the sales that are coming up because there may be some questions in your mind around like well, you know, will I have enough reviews? Will I actually be ranking by the time the sales come? Like will I miss it? And then, you know, three, we also want to make sure that you are ordering enough inventory so that when it comes time for that season you’re able to run the promotion because you have the inventory necessary to doing it.

So if you take this approach, so I don’t have specific numbers, but I was at an event late December, I believe, CapCon, Capitalism Conference in Austin by Ryan Moran, one of my favorite conferences to go to. Just a lot of my friends or, you know, clients or whatever, are part of that audience. So it’s always cool to catch up with them. But a friend of mine, he’s been selling, I don’t know, for at least a couple of years. He also just spoke at Amazing’s conference. SellerCon is what it was called. Anyways, this guy came to me and he was like dude, your – I had a podcast recently, or I had a podcast right before then, and he’s like dude, your podcast kind of changed my whole Q4. And I was like oh really, why? Like you didn’t tell me that. And it was because we gave him this tip on how to run promotions coming up to Q4, and he like absolutely killed it before. And so it’s very simple concept once you understand it, but if you haven’t thought of it I think we covered it in a different podcast, but essentially what it is is going, using Market Intelligence to see, or some tool where you’re able to see historical sales, where you’re able to see, okay, over the course of a year when does – when do sales really start to spike for this particular keyword or for this particular product? So let’s take candy canes. So yeah, let’s say sales start to increase, you know, in October, but let’s say every year right around the first week of November – let’s say second week of November is when sales really start to spike. So what you need to do is you need to go to November 1st, you know, a week before that, 10 days before that, 12 days before that, and you need to start your promotion. And through that promotion you’re going to be driving extra sales to drive that keyword ranking. And so by that second week of November your product’s ranking at the top of Page 1. And when all that additional traffic starts coming through they’re finding your ASIN. They’re buying it. And now you get to ride that wave of traffic.

And so essentially what we see is you get on top of the wave. You get to ride it up as more and more traffic comes through. You maintain your rank because everyone’s coming and buying yours versus what we see some people do, and I had people come up and say you know they didn’t have that great of a Q4 because they didn’t get their inventory in time – true story – they didn’t get their inventory in time and so they tried to ride, or they tried to swim up from underneath that wave all holiday season, and they just missed out on a ton of sales and spent a lot of money. And what that looks like is they didn’t get their inventory in until the second week of November, third week of November, and sales had already boosted, and now they were running promotions trying to catch up to everybody else. But the sales were so much higher organically than what they were willing to do in their promotion, and it was just a mess.

CAMERON YODER:
Yeah, so the thought process of having inventory in, in this case, by October is, again, generally speaking when those sales for a lot of December-specific products start to increase. And if you have your inventory in by around the middle to end of October, that’s when you have your inventory in. That’s when you start promotions because, like Casey said, when that traffic starts to pick up it becomes more difficult for you to rank in those positions. It takes a little bit more. And the goal here is not to get in too early, and it’s not to get in too late. It’s to get it right at the right time, run a promotion, get to Page 1, and then organically just write it up.

CASEY GAUSS:
Yep.

CAMERON YODER:
And that’s what in this case, again, generally speaking, if you have a seasonal product in December having your inventory in by October or early November, depending on your market, will allow you to start a promotion seven days before that increase to get at the top and to ride the wave up into the heavens.

CASEY GAUSS:
Unfortunately you can’t see Cam demonstrating it with his –

CAMERON YODER:
My hands are – I’m doing a reverse dab right now.

CASEY GAUSS:
Yep. Not to be confused with a reverse ASIN.

CAMERON YODER:
Not the reverse ASIN, but the dab.

CASEY GAUSS:
Oh man.

CAMERON YODER:
What should we talk about? Numbers specifically, do you think we should give exact numbers, number of units? Like what if people are asking –

CASEY GAUSS:
How long has this gone?
CAMERON YODER:
This is 6:14? Oh, dang, I don’t know the time. I think like 20, 20 to 30 minutes I think.

CASEY GAUSS:
Maybe that’s enough just to get people thinking.

CAMERON YODER:
Just to get people to think. Yeah, yeah.

CASEY GAUSS:
Maybe we can just cover like make sure that the – did you already say the trick is to get just enough inventory? You don’t want to get too much?

CAMERON YODER:
Right.

CASEY GAUSS:
Because now you’re stuck?

CAMERON YODER:
I did, but we should iterate – we should reiterate that point.

CASEY GAUSS:
Okay.

CAMERON YODER:
Okay, do you want to do it?

CASEY GAUSS:
Yeah. Yeah, just as a reminder – we can’t put enough emphasis on this – so I think why Cam’s friend he was talking about at the beginning of the episode is so stressed during this period is, again, if you don’t get your inventory in time and you miss out on riding the wave up, you’re going to be left with so much excess inventory because you’re not hitting the sales volume that you were anticipating. So you don’t want that to happen. You also don’t want to order, you know, 1000 units. But you sell through that thousand units a week before the peak season even, or you know, peak sales even get there, meaning you left so much money on the table. So the real trick is using data to understand how much inventory you should have, being able, being willing to plan for a best-case scenario, worst-case scenario, and on both sides. Worst-case scenario that we didn’t order enough inventory, worst-case scenario that we ordered far too much. Then try to figure out what each of those look like. Do some kind of risk/reward calculation. If we order too little inventory, here is what that means. You know, we’re only going to be able to profit, you know, two grand or something for this month, or on this product for that month, or for the season, whatever. If we order to much inventory well, if we order five – let’s say if we order 5000 units we know we can at least sell 3000, but the extra 2000, like that would eat up all of our margin if we’re not able to sell it for the next, you know, couple months. And there’s ways that you can liquidate that to try to get some of your money back. But anyways, really try to figure out what is the goal of this? What do you think is the best-case scenario potential, and trying to work back from there. Okay, we’re okay if we had an extra 500 units, are we okay if we ended up having an extra 1000 units or whatever, so that you understand what kind of risk you should be taking with your inventory.

And, like I said, if you’re taking a data-driven approach, something like Market Intelligence, you can go back and you can look at historical sales. How long did that – when did that spike start? You know, what is kind of the volume underneath that curve? So what were the sales through that peak week and then descending down so oh, it looks like, you know, sellers were selling 5000 units over that brief period of time. So now you know, okay, I should be ordering somewhere around 5000 units, maybe I’ll order 6000 just in case because the margin would absolutely be there. I’d much rather bet on potentially making more than losing the, whatever, money on the thousand units. So anyways, Cam can probably recap better than that.

CAMERON YODER:
No, no, I think that’s good. The bottom line in this episode we just want to get the idea in your guys’ mind to start thinking about Q4, Q4 seasonal products right now because right now is the time to start doing your research if you’re not sure or if you’re not sure which product you want to pick and/or if you had a product last year that might be good this year and/or might not be as good this year. So just start thinking about it. Start doing your research now and really start digging into possible seasonal products for you to source. Oh, I start. Well, that is all for this week. Thank you again 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 products please leave us a review and/or rating. Guys, we all know how tough reviews are on Amazon and also how critical they are. Same is true here. Reviews help other people to find our podcast and hopefully give them deeper insights, better data so that they can make better decisions in their Amazon business. If you’re listening on SoundCloud leave us a comment. We appreciate all the feedback for the show and everything that you – dang it.

CAMERON YODER:
That was good.

CASEY GAUSS:
We appreciate all the feedback for the show so much. This show really is for you all, and your input helps us understand how we can do it better at what you guys are looking for, how can we help you essentially.

CAMERON YODER:
And also, 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. We want to be a resource for sellers and the information source in this space, so please tell your friends, tell your family, spread the word and share the show.

CASEY GAUSS:
Thanks again for listening, and 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. Until next time, remember, the data is out there.

CAMERON YODER:
Got ‘em.

CASEY GAUSS:
Kevin David messaged me.

Hiring the Right People with Viral Launch Director of Talent, Matt Henry (Follow the Data Ep. 29)

Hiring the Right People with Viral Launch Director of Talent, Matt Henry (Follow the Data Ep. 29)

Hiring the right people at the right time is critical to the success of a growing business. As a CEO, it’s your job to make sure you’re getting the right people on the bus. First hires can boost you to a strong start or snowball into a string of unconfident hiring decisions and wasted resources. Join host and CEO Casey Gauss for a conversation about hiring with Viral Launch Director of Talent, Matt Henry.

Listen on iTunes   Listen on Stitcher 

Our Guest

Matt Henry is the Director of Talent at Viral Launch. From GE to the Healthcare industry to Angie’s List and now Viral Launch, Matt has an incredible depth of knowledge when it comes to finding, hiring, training, and (when necessary) firing employees. He has hired for highly technical roles across various industries and knows exactly how to pinpoint talent. 

 

Follow the Data Show Notes

Podcast Transcript

CASEY GAUSS: As a business grows hiring the right people at the right time is critical to success but not a simple task. How do you find the right people. What should an interview look like and what are the right and wrong questions to ask. Who should be involved in the process.

If you’re currently running your Amazon business or planning on getting started anytime soon as a CEO it’s your job to make sure you’re getting the right people on the bus. First hires can either boost you to a strong start or it can snowball down a slippery slope of unconfident hiring decisions and wasted resources.

I’m Casey Gauss your host for Follow The Data, your journey to Amazon FBA success in the show we leverage the data we’ve accumulated up Viral Launch from over 30.000 product launches and experience working with over 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.

So Cam is still in China so we have another guest with us this week Matt Henry, our Director of Talent here at Viral Launch. Last week we talked to sellers Anthony Nick and Fernando about their experience building teams for their businesses. So this week we wanted to talk about kind of the same topic but just from the Viral Launch perspective. And so Matt welcome to the podcast.

MATT HENRY: Hey guys. Thanks for inviting me to join today, Casey. I’m pretty excited to talk about how we’re building our crew here at our Viral Launch and how we go about our recruiting and vetting of candidates. So you obviously making good hiring decisions as critical as companies grow from start-up and continue to scale. So as the saying goes, making a bad hiring decision will cost the company more in the long run than taking time and diligence to make the right hire the first time.

CASEY GAUSS: Absolutely. So, Matt, if you could just help everybody get to understand you a little bit better what is your background. I think it’s pretty impressive but I’d like for the people to hear it themselves.

MATT HENRY: So my first job was an internship with General Motors when I was in college. I got to have the experience recruiting and hiring other college students who were primarily engineering majors to participate in internships that would eventually lead them to a full time offers, when they did graduate. And then I also experience in health care HR – it’s sort of its own kind of animal. I did everything from payroll to recruiting nursing aids to doing training and compliance and then most recently before Viral Launch I was at Angie’s List. So a tech company here local to Indianapolis I did high volume recruiting for sales teams. I’ve done operational recruiting so that would be roles like finance and marketing and then highly technical roles like software engineering and data science. While I was there I did a stint as an HR information systems analyst so I know your software and analytics pretty well and how those can contribute to the business. And then my last assignment was a HR partner to the organization. So involved pretty much any and everything or that leadership or employees would need throughout that organization.

CASEY GAUSS: So does I. I imagine this is so – does every person have their number? Of how many people they’ve hired.

MATT HENRY: I kind of do. I’ve kind of forgotten because I’ve been so busy – I haven’t been tracking it as much lately. But I do know in one month it was January of 2017. I hired gosh I think it was like 29 software engineering people, in just one month.

CASEY GAUSS: Wow. So if you had to ballpark is it in the order of you know a couple hundred?

MATT HENRY: No it’s probably at Angie’s List it was probably over 600.

CASEY GAUSS: Holy cow. OK. So as you guys can hear this guy has tons of experience. One of my favorite qualities of Matt the one thing that I admire the most is this guy knows how to say everything so in any particular situation he knows how to very strategically ask a question to get the result that he’s looking for or he knows exactly how to you know push a candidate to accept the offer now even though they want to later or maybe in an uncomfortable situation when he has to address some of the things that you know fall under HR this role he absolutely knows the perfect words. He has a perfect like vocal inflections I mean it’s amazing so I’m really trying to pick up on what this guy is doing and how he talks. So yeah a lot of the times when I have a particular question I have to go deal with this particular situation. I’ll first pull Matt into a room and say Matt – OK what words should I use or how should I say this. I really appreciate that Matt.

MATT HENRY: I might be blushing a little bit.

CASEY GAUSS: OK so just to get into some basic questions are job descriptions important? So when you put up a listing for a candidates actually first: where is the best place to post jobs? Where are you finding these people?

MATT HENRY: Yeah well I want to take you back to job description for just a second. The only reason I say that is you can’t hire the right person if you don’t know what the responsibilities will be you’ll just spin your wheels talking to all sorts of different people so take the time first to outline what the job is actually going to be. And then once you get that figured out you can move about posting the jobs. So there’s ZipRecruiter, Indeed, LinkedIn – those are all pretty popular and your own career site is definitely a place you want to make sure you have it posted and that brings me kind of to a side point a company career site is key. So people who know about you and want to be part of what you’re doing will often go searching your site for information. So if you don’t have that specific career page showcasing your culture and listing out of your jobs there’s a pretty good chance you could miss that person that was just the right fit for the job. So back to job postings they’re certainly you know probably one of the most popular ways to hire but I would also argue that networking is the most effective way. So even that might be out of your comfort zone, get out there and meet people. I met you guys at a networking event and look what happened.

CASEY GAUSS: Yeah. So we met Matt at a networking event here in Indianapolis. And it just so happened that he was in the market for a job and we got you started around October I think. Recording this April just got started and how many people have hired at Viral Launch, like 15 or so?

MATT HENRY: It’s been 15 just this year and there were a couple the end of last year.

CASEY GAUSS: Yeah. So Matt has really been stepping on the gas which has been amazing – some of our best hires have come already from Matt. And he just has everything in the pipeline. So going back to some basic questions resumes are coming in. What are you looking at?

MATT HENRY: Yeah I mean you first have to kind of look at those skills. You know how does what they’ve done in the past contribute to what you have. So can kind of relate that back to the job description or what you envision that job to be. Once that looks good you know set aside those people and if you need to rank them so that you’re not spending too much time on the individual interview process. Do that and go with your first couple candidates first. You probably want to spend some time on the phone know before you go through the struggle of bringing all these people in because you can learn quite a bit on the phone screen.

CASEY GAUSS: So speaking of phone screens – you know how do you approach those? How long are they supposed to last? What kind of questions are you asking? What are you looking for?

MATT HENRY: Yeah. So screening candidates on the phone is going to help eliminate the need to do interview after interview so that’s why I consider it pretty important. The candidate looks good on paper. That’s only half the battle. So spending some time on the phone can certainly give you a good feeling for how they align with the position. And then also how are they going to contribute to the culture of the company. You can kind of hear that through the phone or you can ask some questions centered around that as well.

CASEY GAUSS: So sorry to take it a step back and try to take a pretty actionable approach for those who are listening. So if I am writing my first job description where should I be looking. You know how do I come up with the concept for this job description?

MATT HENRY: Well generally most most jobs that anyone think of have been posted it out there by other companies. So one of the best resources is to just do the search as if you’re the candidate. Gather some of those descriptions put it together and then you know kind of specialize it for what your needs are. So it might involve taking some from one of them from another. And then also help you come up with some other points that might be valid for your description.

CASEY GAUSS: Nice. Yeah I love that. And then. OK. You’ve gone through I can’t even imagine how many thousands of resumes. So what are some of your tips or tricks for going through those quick enough where you can throw some out and keep the ones that really matter?

MATT HENRY: Well you know formatting is a big key as someone’s resume is trash. This doesn’t look good. That kind of can go to the quality of work that they’re going to produce for you. So I generally eliminate those people pretty quick. And then there are a lot of people who just apply for any and everything even if they have no skills to match the reading through the resume you can see that you know if you’re if you’ve got someone who has been a customer service representative and they’re applying for data science you can quickly put that aside too.

CASEY GAUSS: Hear Viral Launch we don’t care if you have a degree so much. I mean definitely can help weed things out but we really focused on your ability to produce results. And so obviously the way that your resume looks is a reflection of that. So after the phone screen. First off before we dive into the specifics more can you can you just walk us through the process so you look at resumes. You filter them out then a phone screen. What does that whole process look like?

MATT HENRY: Yeah so after the phone screen. You know you’ve got a pretty good selection of candidates you might have four or five sort of fit the mold and then you can move forward with setting up interviews. And typically when it comes to an interview there are a couple of ways you can set those up. But I would recommend that at minimum, you obviously want to have them meet with the person who’s going to be managing them from day to day.

CASEY GAUSS: Yeah. So if you have a product manager or maybe you have a marketing manager or just a general project manager, then make sure that they’re going to get along that they’re going to mesh well. Then also I think it’s important to take that person’s opinion of how well this candidate will be able to perform the job or whatever into account. So Matt here for some of our roles we do skills assessments. Can you walk us through why we do these skills assessment and where those fall in the interviewing process?

MATT HENRY: Yeah so skills assessments. You know it really depends on the role. So I always recommend them for highly technical roles – in fact it’s almost a must. It’s easy for a candidate to sort of spout off definitions and talk pretty intelligently about a topic. But can they actually apply it. So here at Viral Launch we use an interactive coding test for our software engineering roles and it’s proven to be pretty highly effective piece of the interviewing puzzle. If you can pass that, chances are you’re going to be very good at working on our platform.

CASEY GAUSS: Yeah. So guys I cannot stress this enough. So we’ve hired maybe 51, 52 people or so and we’ve had to let some people go because we you know I put full blame on us. We made some bad hiring decisions. And so I think it’s inevitable that you hiring is so tough in probably the area I’m or one of the areas I’m most intimidated on when it comes to business and growing a business. One reason I’m so thankful to Matt here but I mean you guys are going to make mistakes. I don’t like if you are over analyzing. If you are afraid to move forward because you are afraid of making these mistakes you’re really doing a disservice to your business and your potential customers. I think you have to be taking those steps I think you have to be putting those foot those feet forward because you to learn so much through that entire process. Every hire that we made that we shouldn’t have made was simply a function of we just weren’t paying attention to the right things or we were paying attention to the wrong things. And yet anyways hiring very important. Very tough. So I imagine people are intimidated. I think one of the most common questions I hear is you know I am a perfectionist and I know people who will not be doing the job as good as myself. So I think there’s there’s two potential answers here. One your business is very its growth potential is very limited if you are the bottleneck here so you absolutely have to be hiring. Two, if you are doing a good enough job hiring you should be finding people that are doing whatever these tasks are whatever these projects are much better than yourself. So obviously there will be time to ramp them up bring them up to speed. But assuming that they are good at whatever it is coding, product research, project management, customer service, these people should be better at that than you are they should be able to do it at scale. So I cannot encourage you enough to get out and start making those decisions. This is one of the biggest reasons I see people not reaching their full potential on Amazon is honestly they’re just too afraid to hire or they’re not willing to take the time and sometimes you have to take one step back so you can take three steps forward four steps forward. Sometimes if you’re hiring the right people, especially in these early stages it can have major growth potential. So. Anyways going back to Matt and some of these questions. One I think favorite question is: What is your best your favorite interview questions?

MATT HENRY: So I think it kind of goes two-fold when it comes interview questions. There can be the one role that you don’t really have the skillset to hire for. So it’s just too far above you. So one of the things that I recommend before I go into necessarily my favorite questions is to figure out someone out in the community that can be sort of that person to help evaluate candidates. You can do your research to kind of understand the skill set better. But it’s kind of going to lead me back to when we were talking about networking earlier. Oftentimes people we meet through networking have that sort of ability to help help hone some interview questions for you or even maybe we’ll spend some few minutes on the phone with the candidate that you’ve identified to make sure that pass that technical side of things and then we go to the whole like how does that candidate work how are they going to fit into the environment. So for that I usually like to focus on behavior based questions. Those are the types of questions that tell me about a time or what would you do when or describe this for me. These questions are great to understand just how has the candidate behaved in the past because as we all know past behavior is more often than not an indicator of future performance. While these qualities may help you eliminate candidates I wouldn’t necessarily say that’s the goal of these questions because they can also help you understand areas that you might need to help new employees grow in. So maybe they pass all the technical skills and they do pretty well with these behavior based questions. But one of those questions you know put up a little flag that this is something that might be something that I need to work on with the candidate. I also caution you you know we hear a lot about we want people who are team oriented. So you’re going to have a lot of candidates that use the word we a lot. So it definitely shows the teamwork aspect. But I want to understand how accountable someone is the specifically. So was it that the team did all the work or I’ve sat wondering before you know someone told me that that we have accomplished all these things. But I don’t really understand how they contributed. Do they just go along for the ride? So I force them into giving specifics about themselves even if you have to directly ask them how did you specifically contribute to the project you were just talking about.

CASEY GAUSS: Nice. Yeah so going back to an example of using someone that is very tech savvy within the particular domain where you may not have the expertise. Maybe it is an operations person to come in and make a handle facilitating working with suppliers bringing that inventory into Amazon you know whatever. So here at Viral Launch have been trying to hide a data scientist for seems like forever. And so we we’ve made friends with the chief data scientist at one of the incubators and VC funds here in Indianapolis. And so whenever a data scientist candidate makes it past like our technical test then he will come in and test them out. And so he’s really saved us so there is a guy pass our technical test. He’s actually one of like 30 some people or so that I’ve actually passed our technical test. We brought him in we interviewed him we are super excited about him. Then we had Mark this chief data scientist come in to interview them and they were speaking data science at like high level or whatever. And we absolutely he came in and said you know this guy is absolutely not your guy. And I do not think that you should hire him and so that was kind of scary for us because we definitely would have jumped in and made that decision if he wasn’t helping us so as Matt said make sure you’re building those those connections. I mean it will payoff so much more than just hiring. But that’s one quick example of how that has helped us. I didn’t want to give a specific example on some technical tests that we’ve done so for photographers for example. We send them a couple of products we ask them to do some studio shots some lifestyle shots. They have to go and figure out what that means exactly. We want to understand their creativity through that process. We don’t give them you know a specific shortlist or anything we want to understand how creative are you. We want to make it most like a real life scenario. And so whatever they come back with if they do a good job of that then they move on to that final stage of hiring or you know we are hiring like a director of finance or a controller here. So then we sent them you know a couple of anonymized months of transactions and we asked them to categorize them pull some put together some correlations you know help us that according to GAAP scheduling GAAP accounting sorry. And then he comes in and he presents it so he or she. So anyways those are just a couple of examples of skills base tests. So Matt bad hires performance like how do you manage performance especially. I don’t know if you have too much experience with this but especially in a like a remote scenario. One question is how productive are these people being? You know do I need to be big brother and monitor every single mouse move of theirs? How do you handle that?

MATT HENRY: I mean I think you have to look at what do you have someone on site produce. So if we have someone working remotely are they contributing just as much as the person sitting right next to us? And that’s pretty measurable so software engineer for instance they are either coding or they aren’t. If we have someone and are listening department working remote they either are finishing listings or they are not. It’s pretty black and white when it comes to making sure they are contributing. So I definitely don’t think it’s a big brother situation but I think it comes down to setting expectations so when this person comes on board explain to them exactly what their job is going to be and what it looks like and what performance metrics you expect expect out of them.

CASEY GAUSS: Yeah we’re going to I will make sure that we post in the show notes a link to Netflix’s culture deck. So if you’re really looking to build a team and I think that you should absolutely be carrying about culture we do here at Viral Launch a ton. I view it as one of my top responsibilities to make sure that we’re providing and fostering the culture to push people make sure people are loving what’s going on here. Just really excited about the mission that we have here of our launch. So anyways I want to post this Netflix culture deck. I mean really they are so focused on hiring the right people hiring responsible people that you don’t need to have all of this you know screen capture software whatever to watch okay what pages are my employees visiting when on billable hours. I like working a lot more on a project basis where there are clearly defined expectations and goals and then just allow them that creativity assuming that you’re hiring you know smart people who are capable of thinking creatively and making good decisions. Anyways just sending them that project and then watching what they come back with. Obviously setting expectations in terms of timeline and then from there is just about really kind of pushing them to complete it faster do it better and then moving on to kind of that next project and so through that without the big brother-esque of watching their screen or having you know these time punches of you know you’re on this website at this time or whatever. I think it allows them to just think about the job completely differently and just be very creative. You know some people still think that here at Viral Launch I’m the one dictating every single thing and aware of every single thing that’s going on. I mean we have you know forty five employees or whatever here and I’m not like we’re just really focus on hiring creative smart people that genuinely care about others. And basically it’s my job to help everybody understand what the mission is the goals are so that everybody can march accordingly and we can all work together in our own creative respects to fulfill the mission which is helping you guys. So yeah anyways just a little branch off of where are going. I think that’s pretty much it. Matt anything else – any final words of wisdom?

MATT HENRY: I mean just to go off the bad hires thing there’s nothing worse than bringing a bad hire onto the organization. So I would caution you they can be the cancer that can result in lost productivity negative vibes across your team and pretty much the whole culture down. So I would advocate that you don’t just hire you know based on skills. If someone can do the job that’s great but they lack certain values. You know we spend a lot of time talking about our values and how people fit to our core values. If someone doesn’t fit that value just because we have the skills to do the job doesn’t mean they’re going to work out. It can be a problem. And in the end in the end you’ll find yourself spending more time cleaning up the mess that they leave behind. You can implement corrective action and all that HR speak but it comes down to making sure that you found the right person that fits both the skills and a certain set of values that you want to exemplify in your organization.

CASEY GAUSS: So sorry I went on a tangent just before that so I do want to talk a bit more about that hires. So pretty quickly we’ve been able to discern yes this person does or does not fit within the culture. And yes or no they are not ambitious enough to to really help us achieve what we’re trying to achieve and so kind of the winding down process or when we do identify that you know we don’t think someone is performing as well as they could be or what our expectations are for that role. Essentially we’ll bring them in for more of a laid back talk to really just make sure that you know. A lot of the times in these scenarios, I view it as I am not doing a good enough job setting my expectations or helping them to understand what my expectations are. So talk number one we’ll be sitting down. I don’t even know if Matt would be involved at this point. Or maybe it would just be Matt but it’s really just about setting expectations and letting them know. Okay. You know this is what we’ve noticed in the first week or this is what we’ve noticed in the first couple of weeks. Here’s kind of what we were expecting. You know how can I do a better job of helping you to get there right. And then you know what Matt, like a week or two after that if if we’re still not liking what’s going on then we’ll have a more specific talk.

MATT HENRY: Yeah I think everyone deserves a second chance so certainly comes about that first that first discussion to make sure they’re aware of it. They may not they may not understand what they’re doing that isn’t working right. Maybe we haven’t set the right expectation which is why you know we’ve worked a lot on building that out as we continue to grow. But you know given that second chance and if it’s still not clicking with them you can’t afford to drag your whole organization down just for someone to be sort of sitting there not performing not contributing. So you know it might be time in that relationship.

CASEY GAUSS: So when we usually put together because we want to have everything you know as buttoned up as possible. When is it that we put together the kind of like written. OK. This is what I’m expecting to see kind of thing.

MATT HENRY: Yeah I mean I think you have that first discussion and you know the follow up that next week and if there still are some specific things happening you have that written document ready to say here’s what needs to happen. And you know I think you know we unfortunately have an opportunity for two people to do better. And there had to be a change made. We gave them the chance. But I’m proud to say because we’ve taken the steps up front to make sure we’ve got good hires. We haven’t had any since that time yeah.

CASEY GAUSS: Yeah. Those hires all came before Matt was here actually so to Matt’s credit. But yeah. And you know I think it’s so easy to kind of you know demonize people or think like oh you know they just are lazy and don’t want to work. Like a lot of the time initially it will just be again misunderstanding the expectation. So make sure that you’re setting those robustly upfront and then from there in terms of actually letting people go. I’ve also heard stories of well you know we just couldn’t do it. I couldn’t do it so we just let them continue on. I mean here’s the thing, you are putting everybody else’s job you know in jeopardy or you know you’re pulling the entire company down by having someone you know you’re listening to this podcast you probably don’t have thousands of employees or hundreds of employees at that at that. And so each person on your team should be critical in driving significant value to the company and if they’re not that’s a big waste of resources. And also that’s a spot that should be replaced with somebody that can be very impactful and then you know what I’ve noticed so one guy that we let go we’re kind of friends in college. That’s not why we hired them I was not involved in the hiring process and we brought him on and you know he was really trying really trying. And it just wasn’t working out. And he kind of understood that. And so we ended up letting him go. It really really sucked at first. But I saw him maybe a month later at a wedding and he was like you know thank you so much. I definitely think that you know it was God that had that happen because now I’m in my perfect job. I’m thriving. I’m being very effective. I’m loving what’s going on and the company is loving what’s going on. You know if they’re not a good fit for the company then they probably don’t feel comfortable. They’re probably not excited about what’s going on and you know it’s up to you kind of to help them realize that or to really part ways and so at least that’s how I can justify letting people go I guess.

MATT HENRY: I think sometimes it’s you know we facilitate the next opportunity. Finding the right thing is not here so move on to the next place and we can help that.

CASEY GAUSS: Awesome. OK I. Yeah I think that is it for this week guys. Matt thanks so much for joining us. Hopefully a ton of value if you guys have any more specific questions please. We are posting the show notes on our blog and we’d love any feedback in the comments. We’d love to answer any questions or even specific questions around hiring. So that’s all for this week. Thanks so much for joining us on Follow The Data for more insights into reliable information about how to grow your Amazon business. Subscribe to the podcast and check us out on YouTube. We have tutorial videos for all of our tools as well as webinars that go more in-depth with pro tips for how to really get the most out of the tools. If you’re listening to us on iTunes don’t forget to leave review and rate the show. If you’re listening on another platform like SoundCloud, leave us a comment. We’d love to hear your thoughts your suggestions for future episodes. We want to make sure that we’re driving as much value as possible on this podcast. Help us extract the knowledge of the data the experience we have to help you better succeed in your business. If you know a fellow seller who is trying to grow their Amazon business tell them just check out the series and the rest of the Follow The Data episodes. We want to be a resource for sellers and the information source in the space. So please tell your friends spread the word and share the show. Thanks again for listening. And as always if you want to be featured on the show have an Amazon related question, have an idea for an episode, feel free to leave us a voicemail. Our number is: (317) 721-6590. Until next time remember: the data is out there.

Building a Team with Sellers Anthony Bui-Tran, Fernando Cruz, and Nick Young (Follow the Data Ep. 28)

Building a Team with Sellers Anthony Bui-Tran, Fernando Cruz, and Nick Young (Follow the Data Ep. 28)

In this episode, Anthony, Nick, and Fernando all share about their experience building teams for their businesses: how they knew they needed to hire, how they prioritized talent according to their business goals, and how they found the right people to grow.

Listen on iTunes   Listen on Stitcher 

 

Our Guests

Anthony Bui-Tran is an ambitious entrepreneur who built a million-dollar business at the age of 23 through manufacturing and importing consumer goods. Since discovering this opportunity he has been empowering others to design their ideal lifestyles through building location-independent businesses through his Facebook group and YouTube channel, Seller Tradecraft. In the near future Anthony plans to expand his one-on-one coaching to a digital course that will enable him to reach and help more people achieve their goals. In his free time he enjoys traveling, surfing and working out. When reaching out to Anthony you’ll find yourself asking, where are you now?

Fernando Cruz is a serial entrepreneur who builds brands on online marketplaces. He has an aptitude for growth and in less than three years he has been able to generate over $10 million in revenue per year, grossing $20 million cumulatively. His expertise in Amazon strategy, product selection and business development has led to the introduction of over 200 products to the market.

 

Nick Young is an e-commerce entrepreneur who specializes in developing private label brands on marketplaces with a focus on process, team building and grit, he has scaled his pure play private label business to over eight figures in revenue within three years, grossing $20 million cumulatively. Prior to starting his business Nick worked in tech where he helped grow early-stage companies. Nick and Fernando are also both partners at Seller Tradecraft, an online community and digital education program for both new and experienced sellers. 

 

 

 

Follow the Data Show Notes

Podcast Transcript

CASEY GAUSS:
Deciding to invest in your business by building a team is a major decision. How do you know if it’s the right move for you? How much revenue should you have before making your first hire? Who should that first hire be, and how do you grow profit when taking on the cost of employees?

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 over 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.

Cam is in China this week, our normal host. So today filling in for him is our producer, Becca Longenecker. In this episode Anthony, Nick and Fernando will all share about their experience building teams for their businesses, how they knew they needed to hire, how they prioritized talent according to their business goals, and how they found the right people to grow. Let’s get started.

BECCA LONGENECKER:
Hey, guys. What’s up? This episode is the first in a series of episodes that we are doing with sellers Anthony Bui-Tran, Fernando Cruz and Nick Young. In this series we’re focusing specifically on what it takes to scale your FBA business. A little introduction for who these guys are. Anthony is an ambitious entrepreneur who built a million-dollar business at the age of 23 through manufacturing and importing consumer goods. Since discovering this opportunity he has been empowering others to design their ideal lifestyles through building location-independent businesses through his Facebook group and YouTube channel, Seller Tradecraft. In the near future Anthony plans to expand his one-on-one coaching to a digital course that will enable him to reach and help more people achieve their goals. In his free time he enjoys traveling, surfing and working out. When reaching out to Anthony you’ll find yourself asking, where are you now?

Fernando Cruz is a serial entrepreneur who builds brands on online marketplaces. He has an aptitude for growth and in less than three years he has been able to generate over $10 million in revenue per year, grossing $20 million cumulatively. His expertise in Amazon strategy, product selection and business development has led to the introduction of over 200 products to the market.

Nick Young is an e-commerce entrepreneur who specializes in developing private label brands on marketplaces with a focus on process, team building and grit, he has scaled his pure play private label business to over eight figures in revenue within three years, grossing $20 million cumulatively. Prior to starting his business Nick worked in tech where he helped grow early-stage companies. Nick and Fernando are also both partners at Seller Tradecraft, an online community and digital education program for both new and experienced sellers.

ANTHONY BUI-TRAN:
My name is Anthony. I basically am a Amazon seller of three years. So is Nick and Fernando. But the three of us basically met through a mastermind group online, a Facebook mastermind group of million-dollar sellers and up. And then most recently I just like temporarily relocated to LA to kind of learn from these guys because they’re at the eight-figure level, and I’m at the seven-figure level. So I thought one of the cool things that we can talk about is like perspective of building a team to a seven-figure level and then like building a team to an eight-figure level, and then what kind of like perspective or mind shift differences that maybe like I have versus like them when it comes to building a team because I think that’s like a very big mental mind shift that I learned from just like being out here and like talking to them a little bit more about like how they’re scaling their team, and how they have like advisors, and how they really have like, you know, like more structured like systems and processes in place versus like my business.

BECCA LONGENECKER:
So then how many people do each of you, like how many hires have you each made?

ANTHONY BUI-TRAN:
I personally have seven part-time, and then –

NICK YOUNG:
Yeah, we have, in total, about like 20 people.

BECCA LONGENECKER:
Okay, nice.

NICK YOUNG:
Yeah. And those are full-time.

BECCA LONGENECKER:
Well, I guess I’ll just jump in and ask the first question. So the first thing I was wondering is if you could, Anthony and Nick and Fernando, if you want to start [technical difficulty 0:04:59.0]

ANTHONY BUI-TRAN:
Okay, yeah. I have an interesting one. So when I started thinking about outsourcing it really stemmed from like The 4-Hour Work Week. So I was reading that book while I was working my corporate job. So I knew in order to scale my business I had to make more time, right? And I knew that I couldn’t physically like free up more time in my schedule in terms of like balancing work, gym and then my social life. So I realized I was like, oh, I can just pay someone and buy their time, right, and leverage that. And then The 4-Hour Work Week was one of those ways that I realized that you could, you know, get work help overseas, and I looked into it a little bit more, and then I realized that, you know, balancing my full-time job with a VA, like I would have them do a lot of Amazon stuff and then some very, very minor work stuff for me, and balancing that out in my personal life. And that was just basically like the first, very first start of getting a hire. And then after that successful experience with my first hire – and he’s been with me ever since – I just really wanted to build out more and more.

FERNANDO CRUZ:
Yeah, so for Nick and I, I would say this was about like six months in, and it was probably honestly too late because I think we were doing like probably around like 80, 90 grand in revenue at the time, I guess for perspective.

ANTHONY BUI-TRAN:
And it was just you two?

FERNANDO CRUZ:
And it was just us two. And then the first person was like kind of a customer support, kind of administrative person. She’s still with us today. It’s like pretty amazing. And she actually ended up bringing her husband on to the team as well, which was pretty cool, like a few months later. But yeah, I would say that it was probably too late. I think in retrospect it would have been better to make that hire earlier, like thinking about like how you value your time, and let’s say $100 an hour or $200 an hour, and then thinking about how you’re spending like a majority of your time, and whether you can outsource those specific like tasks at a lower rate than what you’re valuing your time at. And so yeah, whether it’s like, you know, sourcing, or customer support or graphic design, like all that kind of stuff, I would have definitely done it earlier now in retrospect.

NICK YOUNG:
Yeah, yeah. And I think, you know, it’s constantly a struggle. I mean I think every entrepreneur when they’re first starting out, especially for me, I know I struggled with the, you know, trying to be a perfectionist with how everything was done. Naturally when you own a business you never think anyone is going to care as much as you do. So I always felt like I wanted to delegate, and when I did delegate it had to be the way that I wanted to do it. But you know, I think quickly we realized as we scaled that, you know, if you hire the right person they’re going to do a better job than you will because naturally they’re going to be dedicating more time to it, assuming that they’re smart enough. And I think that’s really the process of how we need to learn as entrepreneurs to let go. And it came down to just hiring the right people and not hiring people that could only take delegation, and instead finding people who could actually think on their own, and that was really a crucial shift for us, being able to let go and find the right people to kind of let it go to, if that makes sense.

CASEY GAUSS:
So guys, to give everybody some context, would you guys mind sharing kind of how many people you’ve hired over what period of time, what those hires look like, just giving everybody some context around what’s going on in your guys’ business so they understand where all this advice is coming from?

ANTHONY BUI-TRAN:
Okay. Yeah, for me, starting out essentially, to get to the point where I was, or I am now as a seven-figure seller, the first thing I ever outsourced was customer service because in my opinion that was like one of the things that I just didn’t really enjoy doing because I mean it always comes down to the same example, like someone would ask me like what color like the shirt is, or what color an item is, but you know the listing obviously says it’s like black. The picture looks like it’s black, and then like when a customer asks me that, for some reason I personally get a little frustrated with that because I feel like it’s a very obvious answer. But at the end of the day, like you want to hire someone that cares in responding to like customer questions like that more than I guess I would in that situation. And then I realized that I’m wanted to reduce the amount of decisions I was making in my business because those really like kind of wear on, I guess, like my mental energy. So customer service was like the first thing I outsourced.

And then down the line it got to I would outsource like random different project [tasks 0:09:50.0] versus getting a full time VA. So I would get some like listing optimization done, product photography I would outsource that to like certain people and then just compare really, right? Because I started doing it in-house, and then I realized I was like okay, I don’t want to invest in all this equipment when I can just pay someone to do it professionally and they’ll get it done the right way because I was spending too much time researching. I would say okay, this is how I should make like a perfect like lightbox. And I was like how often am I going to use this thing? Maybe like, I don’t know, a couple times a month. Maybe I’d have to edit it. And then it got to the point where I wanted to also focus more on I guess like YouTube and my Facebook group. And so some of the other hires were just like video editors.

And then it was mainly working with my first VA. He was kind of like a jack of all trades, which is what I really like about him, and he’s just – he, I wouldn’t say he knows everything, but he knows how to like Google. And I think that’s probably one of the most important traits, having someone on your team that is like their ability to just learn things on their own. That’s probably more important than – I mean of course like you want to find people that are experienced, but when there’s always going to be new things to learn in business, and I think if, you know, someone on your team just like has ability just to learn on their own or just knows like when to reach out, or knows how to reach out effectively, like one of the things like I always ask my team is if they have a question they’ll ask me. They’ll like say like, should I respond to this customer this way? And they’re like, instead of asking me how do I do this, they’re like I think I should respond like this, and they provide an example. And then I’ll tell them like yes or no, or I’ll give them suggestions of like hey, like I think you could just add some more details here, some more context here, and like training them to just think on their own like that has been like invaluable for my business.

FERNANDO CRUZ:
Yeah, so for us in the US we probably hired like overall maybe eight people in the US. We’re down to five now here in the US, and then we’ve hired at least 25 overseas I think. But our overall team now covers a little over 20, and I would say that we’ve pretty much like been able to build like a team to manage like every aspect of the business. I think the one that we hold probably a little bit, the most close to our chest is like kind of product selection. But we have someone that’s in charge of like finding the products that we approve of. We have new inventory planning, logistics, support, you know, marketplace management, like wholesale and retail. Pretty much like everything is actually done mostly overseas now.

ANTHONY BUI-TRAN:
What was your first hires for you guys?

FERNANDO CRUZ:
Support and admin.

NICK YOUNG:
Yeah, definitely support and admin. Yeah, for sure.

FERNANDO CRUZ:
And you know what we found is like as we – you know, I think it’s always like when you’re first starting out naturally you’re going to do it based off of like what’s taking up most of your time. But we found like as we’ve grown to scale we really had to gain a lot of thinking towards how we’re breaking out the organization, especially as we approached the eight figure mark, you know, we realized that we had to start breaking out the business into business units, too, so that, you know, we could structure each business unit to have like, you know, it’s own P&L, its own way of tracking the effectiveness of it. And that just started to make more sense as we grew, you know, the different channels we were selling on and also the amount of products that we had. And so I think that has really allowed us to have a lot more efficiency and structure in terms of how we collaborate with one another and, you know, as we’ve grown. And that’s something that I think, you know, we’ve really tried to put a lot more thought into more recently.

CASEY GAUSS:
Awesome. So when you guys made that first hire, Fernando and Nick, what size company were you? What was going through your mind? What were your hesitations, and how did you overcome those?

FERNANDO CRUZ:
Yeah, I don’t know if we had too much hesitation. So we both had outsourced specific like roles, or like I guess tasks in previous companies, like previous startups that we had worked at. But yeah, they were in charge of like basically – I mean at the time we probably had about like eight products maybe, eight, 10 products. And so we were just building out like a lot of like – a lot of like inquiry in terms of like product questions and like, you know, following up for like reviews and all that kind of stuff. And so I think all like the really like tedious parts, I mean the beautiful thing about Amazon is they take, you know, a huge percentage of the customer support. But anything that did kind of come through, they kind of oversaw all of that I would say.

NICK YOUNG:
Yeah, I would say that what we really, you know, did was, you know, the model was new to us at the time, right, so when we just started. So we really wanted to trail blaze and it just make sure that we understood all parts of the process to begin with. You know, I’m a believer that you do have to delegate what you understand first. And so, you know, I remember answering customer support questions. And you know Fernando was like, look, you shouldn’t be doing this. And I was like yeah, you’re right. You’re totally right; I shouldn’t. And so that’s when we made our first hire. And then as we had this additional resource, you know, we realized okay, well she has extra time. She can go ahead and copy this. She can follow up a customer review. She can do all these things that we realized that were on our list but we just didn’t get time to, you know, handle because we were limited on time since, you know, we wanted to focus our time on growth. But we always found ourselves hampered by supporting the operation, and that’s when we realized okay, we need to, you know, push this off to, you know, that support person. And eventually, you know, we started to structure the tasks as like this is that type of role, this is that type of role, as they just became more frequent.

BECCA LONGENECKER:
How did you guys find your first hires? Where did you look for people?

NICK YOUNG:
I would say online jobs.ph is a great one. You know, there’s a lot of people who are really familiar with remote work. A lot of people actually have Amazon experience. That’s where we first started. And we also, you know, we mentioned that Fernando and I, we both came from companies that deal with outsourcing. I actually came from a company that did outsourcing for a lot of big internet companies. So I had, you know, someone that I worked with there before, and I just got a referral. So she was actually like, you know, the sister-in-law to someone I worked with closely in the Philippines over there. So that, you know, that was, you know, how we first got started. And then she brought in her husband. But eventually as we wanted more, you know, we also created a referral system internally for people that they trusted that they could bring in, and that worked up to a certain point until we needed actually more employees than they could find for us.

FERNANDO CRUZ:
Yeah, I mean it’s now, I have to say, we just recently brought on like a recruiting HR person. So they’re in charge of building out your own applicant tracking system. And this is a – Anthony’s laughing because this is like a huge hire for me. Like I was really excited about it because I spent like a ton of my time doing interviews for new hires, and, but yeah, I mean she’s been amazing. And I think one of the really interesting things is that like I think a lot of people would just kind of go to Upwork or OnlineJobs because it’s really easy. You make a post, and then, you know, you get a ton of like submissions, and then you kind of choose. But I think one of the big changes we made maybe like eight months ago was actually treating hires overseas, like in terms of recruiting, the exact same way as if they were like a US hire, and so investing the same amount of time, same amount of interviews, like the same type of process in terms of, you know, doing like quick phone screenings, actually like a reaching – doing like kind of outbound or outreach like [unintelligible 0:17:33.9], maybe taking out a job [unintelligible 0:17:36.3] the need to like really investing the time because we’ve made some like incredible, incredible hires overseas. And like now we’re just kind of like raising that bar in terms of like I think in the beginning it was just like oh, we’re going to pay them like$4.00 an hour. It’s like fine. Like, they’re smart enough. But now we’re kind of holding out, like especially for like these like really like crucial roles to our organization, like inventory planning, we wanted to make sure that we had like the best, like the smartest person that we possibly can in this specific role because it’s such a crucial part to our business.

BECCA LONGENECKER:
Yeah.

ANTHONY BUI-TRAN:
Who was that last hire you had? What was like her background? The one for inventory planning?

FERNANDO CRUZ:
Well, it’s a guy.

ANTHONY BUI-TRAN:
Or a guy, yeah.

FERNANDO CRUZ:
Yeah, I mean he came from like the Harvard of the Philippines, was like in charge of inventory planning for like a grocery store with like, I don’t know, a 98% like confidence interval. I mean it was just like way more sophisticated than what we had been doing in the past. Like his spreadsheets right now are so beautiful, like I kind of – I tear up a little bit. It’s really nice.

BECCA LONGENECKER:
That’s awesome. Yeah, so making the right hire sounds like definitely has been part of your success. But I’m also wondering how, especially with teams like overseas, how do you guys motivate your teams and ensure like a standard of quality for your work that your employees are doing?

NICK YOUNG:
Yeah, I mean I think one of the important things is – I mean first off, you know, I think you have to be clear on the KPIs. You have to be clear about what you – what their goals are for their role and how you measure them by. You know we implemented this thing called OKRs, which is something that Google has implemented. So it’s objective key results, and it basically – it’s set from the top down. So you know, you set an objective key results for the company as a whole, and it kind of cascades down across each department. And they have something that kind of goes into that, you know, key result. So you want to make sure everyone is aligned. But I think on top of that, I think, you know, one of the main things that helps people when they’re working on a team is seeing the level of work of the other people they’re working with, right? So you know, we want to make sure that like every person when they come on, that they’re working a team. But also they want – we want to make sure that the team members that they’re working with have, you know, produce high-level and high-quality work. And I think that’s really important because then they’ll realize that they’re accountable to people who really depend on their work. And you know, all their peers are really producing and performing well, and it becomes exciting because everyone is really caring about what they’re producing, and everyone feels like they’re elevated to their highest ability, if that makes sense.
So I think making sure that you have that team environment, making sure that they’re collaborating with one another, is really important. And when you hire the right people they enjoy working with other top-tier people. And I think, you know, that’s something that we don’t necessarily have to be involved in day-to-day. They’re just aware of it because they see the level of work that’s produced.

FERNANDO CRUZ:
One other aspect of like motivation I would say is like really – is like the kind of communication and having them fully integrated. I mean like we hear of like a lot of other sellers will kind of refer to their team as kind of VAs, and like you know they’re kind of like part time. They’re looking for a bunch of different companies. I think our approach is a little bit different, where we bring people on like full-time onto like our staff. They’re included in all of our communication. They have their own email. They have like, you know, kind of welcome training. They have like a buddy. Like I mean they’re – they’re just really well-integrated into our team. Like the same kind of red carpet, if you will, as if they were like here in LA with us. And I think that is like a really big kind of like mindset shift for them is that, you know, we’re paying them every two weeks like we would pay employees here, and like we’re really just investing in them. We’ll pay for monitors and like technical equipment that they need. Like we really want to make sure that they feel included. And then so that as the team grows and it becomes like more and more distributed, that they are always feeling like they’re like really a part of it. And part of the responsibility for our new like HR and recruiting team is to build out like kind of teambuilding and different types of kind of ways of building [unintelligible 0:21:49.4] for a team that’s like scattered all across the world.

ANTHONY BUI-TRAN:
And then just to add onto that, my little tidbit is like me and my team, we use a lot of – we use this Google Chrome extension called Loom, L-o-o-m, and basically it records your screen, and it records you talking at the same time. So like whenever like I’m trying to explain things, or someone on our team is trying to explain things, explains or explained their question, like it’s feels a little bit more personable. Just like seeing someone’s mouse move across the screen, and you see like their face talking as they answer questions. And that’s how like we relate and send a lot of messages back to each other, especially if they’re long. And my team, like we don’t always enjoy – well, I don’t enjoy typing a lot of times, so I enjoy making like these videos. So I’m like okay, like this is how you do this and that, and then they’ll like create out like the SOPs and everything. But when I’m making those videos I try to be a little bit more enthusiastic and happy, and I’ll just like maybe tell them like one tidbit about like me, or like I’ll tell them like hey, you’re doing a good job on this, like just some quick feedback because I think in a very virtual setting you don’t always get that much of like an intimate setting because some of my team members, like most of the time we just like talk through like Slack. And we don’t always like hop on voice calls. Like I’ll go on like maybe – there are some people on my team I haven’t like talked to like on Skype via voice call in maybe like two months or so. Some people are just Slack. So I just try to be more intimate and personal whenever possible, just in like a virtual team environment.

BECCA LONGENECKER:
Yep.

CASEY GAUSS:
Nice. Fernando and Nick, for your people in the US, do you guys have an office, or are they remote as well?

FERNANDO CRUZ:
Oh, so we do have an office here in LA. So four of us work here regularly. One person kind of comes in and out, kind of our developer that’s building like all our internal tools. But yeah, for the most part we are here in LA.

CASEY GAUSS:
Nice. So I imagine you guys have made mistakes in the hiring process. I know we have at Viral Launch.

FERNANDO CRUZ:
No, we have 100%.

CASEY GAUSS:
What are some of those – what are some of those mistakes, if you want to share? And then like what have you learned from that?

NICK YOUNG:
That’s a great question.

FERNANDO CRUZ:
Yeah. So one of the things that we recently added – so like I guess a mistake was not doing this, but we actually recently added like a case study into our process. So we kind of – Nick and I will sit down. We’re like okay, we’re going to hire an inventory like planner. Like okay, what do you think is like the most difficult part? Maybe it’s like the forecasting and managing so many SKUs. So we will come up with a case study, like specifically like using like our own a data, and we’ll just like kind of export it out. And then like here’s an issue where we like kind of ran out of stock, and then just see like how they would like plan it. So we’d send them like a bunch of raw data with like a quick like Word doc just saying like hey, you know, here’s the situation for this SKU, like how would you handle it based on like, you know, here’s your production time, here’s your lead time, like all that kind of stuff. And then we see what they send back in terms of like kind of a report on our analysis. And then in the next interview we actually have them like walk through it. And then so we’ll ask questions that were both on that assignment, and then other, like other questions that were not included there, just to see like their critical thinking and like their understanding of the subject. And I think you could do that pretty much for any role that I’ve seen, that we ‘ve – at least that we’ve hired so far. And I think that’s been like probably one of the best ways that we can just see like where people, like where their understanding is of the subject matter before even going through like a lot of the, of like the personality and culture like parts of the interview.

CASEY GAUSS:
Nice. So have you guys had to let people go then?

FERNANDO CRUZ:
Yeah, yeah, definitely.

NICK YOUNG:
Yeah, I mean, you know, we’ve had to let some people go, for sure, and that’s always not fun. I think if someone is, you know, remote it’s definitely, you know, a little easier than doing it in person. We’ve done both. But yeah, I would say, you know, ultimately it comes down to performance, and I think we’re always very clear about performance. I mean, I know Fernando and I, we always make sure to communicate exactly what it is that we’re looking from them and where they’re missing the mark. And then what we do is we actually create a performance plan. So we’ll say look, you have like 30 days. Or you know, let’s say 60 days. These are the things that, you know, we’ve been asking for and we haven’t gotten from you. And I need you to create steps to figure out how you’re going to, you know, fix this problem. And so you know, it gives, you know, employees opportunity to figure it out. And they know that their job is on the line. And I think sometimes, you know it works, and sometimes it doesn’t. Sometimes it gives them exactly the fire that they need under their butt to realize okay, crap, like I have been underperforming. I need to figure it out. And in other instances it just makes it clear, if they don’t fix it, that that’s exactly like why we’re letting them go. So I think, you know, having that clear communication has always been kind of the foundation of how we work with employees so that they fully understand where they stand with us. And we always – you know, well we try our best. I would say, you know, it’s hard to deal with this, but we try to do like quarterly reviews with our team members, and if not quarterly, then we do it semiannually, for sure.

CASEY GAUSS:
Nice.

BECCA LONGENECKER:
So can you talk about what the advantage is to having like a team as opposed to kind of like a scattered network of freelancers and how you feel that has like given your business a competitive advantage?

FERNANDO CRUZ:
Yeah, so I mean I think it really depends on the stage that you’re at. I think in the beginning like a scattered team of freelancers can work. But I think the competitive advantage of having like a dedicated team, at least in my opinion, is that people are going to start taking more ownership. I think naturally if you’re like a freelancer then you’re a little bit less invested in any one company because you’re spreading time with, you know, several companies. And I think for us having these like dedicated people that are like, you know, in charge of logistics or in charge of, you know, product selection, like they work with us closer. They’re like – they’re in all of our communication, and so in terms of like being able to step up and take ownership, that I don’t know if we would get as much with like a freelancer. For instance, we made a hire that was in charge of like all of our systems, and she came in and put together like all of our supply chain from like our purchase orders, to our orders in production, and to like our shipment monitoring and then tied it all the way into finance, all in a software called like Ragic, all from scratch. But like she was able to do it really quickly, like within a month, without me being as involved because we had someone that was in charge of all the purchase orders. We had one person that was in charge of logistics. So she was able to like do one-on-ones with them. They’re all internal. And then to kind of brainstorm, like okay, well how does this need to look? Like where are the sticking points like right now, and then being able to put that all together within 30 days just because we had internal people that like had invested interest in this process being smoother.

NICK YOUNG:
Right. And you know, Anthony mentioned The 4-Hour Work Week. You know, that’s also been super influential for me and Fernando. And I think realistically, like having a team of freelancers, I think it makes it more difficult for your business to exist outside of you. You know, it’s always going to be centralized. You’re always going to be the body that knows the most about your business. And I think, you know, for me and Fernando I can probably – I mean I’m sure Fernando can say this as well, but like there are parts of our business that we don’t know like how it happens, but it does happen, and I think it’s because we have people in charge of making those things happen. You know, we’re focused on the results, and we have the key indicators that tell us if something isn’t working. But ultimately it falls on those people. And so, you know, if we’re training someone and they come into business, having a team allows, you know, there to be multiple experts within the company that people can learn from. And so I can easily just say hey, talk to this person, talk to that person, and they’ll be able to get that body of knowledge without us having to be directly involved. And I think that’s kind of the efficacy of having, you know, something that exists outside of you as the entrepreneur and the business owner. And I think it allows it to kind of organically grow and [breathe 0:30:27.1] outside of you.

ANTHONY BUI-TRAN:
Yeah, and then for me, I guess my favorite thing is there is all this stuff – I feel like – I don’t know of this is like a real phrase or not, but I like to always say that I’m a first time entrepreneur. So this is my first time running my own business, like really like handling like everything, making all these hiring decisions. But in terms of like perspective of like running a business, I’ve never done it prior to this point. And after meeting with Nick and Fernando I realized like okay, like to get to where they’re at versus where I’m at, it’s like they had like department heads, and it’s like okay, like I don’t have that in my business. So that’s like, you know, along the way, like as a smaller seller, I’m like okay, like these are things that I’m happy that I know like are on kind of like a roadmap to do. So just like having department heads, having full-time hires, like for the exact reasons that they were talking about. But it wasn’t until I like really met them and started networking with other sellers that were bigger than me that I realized that these were like the moves that you need to make in order to like 10 X your business, really. And that was like one of the biggest like mantras for me, you know, just like their whole hiring process is like really, really in depth compared to like mine. I know for like some of their like hires they’ll go like what do you guys do like 20, 25 interviews? Like when they told me that, when Fernando told me that, I was like what? I was like 20 to 25 interviews? And then so I’ve been with like Nick and Fernando like for the past three months. And like all at the , time like from the outside looking in it’s like they’re always like on – they’re always on like a hiring call like every single day. They’re always trying to hire like this other person, or they’re trying to find like the perfect candidate. And that brings me back to like what they were saying about like building like the A team, right?

When I’m hiring people what I’m currently doing is like I’ll look at – you know, I’ll get the applicants from like Upwork or OnlineJobs.ph, and I’ll like kind of choose like the top five, and I’ll narrow it down. Like I’ll interview like those guys, and I’ll just like pick the best out of that. But I feel like I don’t dive down as much as like they do in their business to like find like the exact perfect hire that’s, you know, for like say their supply chains, like you know, someone who’s like managed like grocery stores and like make sure like bananas were always on the shelf, you know? Like for me it’s like okay, like this person is good enough. You know, I didn’t realize that – you know, and now like my perspective has changed to where it’s like I want like the best person, like, you know, like maybe you have to wait a little longer. And I’ve heard multiple people say this, but you know, a bad hire is going to cost more than a good hire.

FERNANDO CRUZ:
Right.

ANTHONY BUI-TRAN:
So you know, like invest that money into like – and what they also do is like besides OnlineJobs, you know, sometimes they would use like LinkedIn from what I understand, or like their referral networks. Some of my other friends, you know, like Facebook ads, or they’ll like go find like Facebook groups, like specifically for certain positions. And for me, like I just don’t go that far out of my way to really find the perfect hires. And that’s why like I’m excited that they got an HR person because I know like a day in and day out they’re always like on all these different calls. So like I know like how impactful – like I never really realized how impactful an HR department or team was until like just like hearing about all this. I was like oh man, it makes like such the biggest difference, especially with like you can free up so much time like figuring out like which candidates to like just hop on a call with versus like screening like, you know, 20 people, like and they can really help with that stuff.

NICK YOUNG:
Yeah, I didn’t realize the importance of that until five days ago when she started. Yeah, I mean, you know, Fernando has been saying that we need to do it, and I was like I’m not sure. And then she went on and she did this awesome thing where she implemented like a – what’s it called?

FERNANDO CRUZ:
BirthdayBot?

NICK YOUNG:
No, no. Well, that’s cool, the BirthdayBot, but implemented this tool that basically pulls all of our employees of like their satisfaction and different degrees of, you know, parts of their business like autonomy and ambassadorship or whatever. And then it was really cool to see it. So everyone responded, and they’re all anonymous feedback. And so it was really cool to see that like
everyone was really happy with their jobs, you know, and to see that like everyone, you know, felt like everyone else was talented. I mean, it kind of confirmed like our initial, you know, belief and I guess what we had inferred from our experience that like we were going the right route. But to be able to see that and have a pulse on the company and to realize that like hey, you know, what we’re doing is working really, really was helpful and impactful. So yeah.

CASEY GAUSS:
What is the birthday thing?

FERNANDO CRUZ:
Oh, it’s like a – so now we get notifications like for everybody’s birthing on the team. So we can do some kind of celebration thing, or if they’re maybe overseas we can do some like, some kind of like gift or, you know, something like to just, to acknowledge like hey, it’s your birthday, you know?

ANTHONY BUI-TRAN:
Yeah, a little thanks.

FERNANDO CRUZ:
And it’s all automated, which is really nice because it’s all through Slack.

CASEY GAUSS:
So as you guys start hiring like logistics people, HR, I imagine some of them you aren’t as comfortable in or have less knowledge, so how do you properly – this is something that I’ve been experiencing, so we’ve just started hiring at the director levels. We just hired a Director of Engineering, Director of Marketing, Director of Customer Success, Director of Product, like all these positions that, you know, I don’t have that much experience in. So I don’t know what the ideal candidate looks like. Have you guys run into this, and if so, how do you get over that to then finally making that hiring decision?

ANTHONY BUI-TRAN:
Well, I – just from the outside looking in – I asked Fernando this like the other week. And I was like how do you like hire for like – how do you know they’re a good supply-chain person? And he says like when he screens all of them, like he learns from like each interview, you know? So he picked up different tidbits on like what each person, each candidate like has done in like experience, and then also like you look up some stuff on your own, but usually he can kind of like get a lot from the interviews from what I understand.

NICK YOUNG:
I think that’s always constantly a challenge, for sure. I mean I definitely think it’s something we rub up against for sure, especially for senior hires. Like how do you know if you’ve never done it before? I mean, I think one of the things that, you know, we really try doing a better job of is getting advisors, so people who are really excellent at what they do in a specific role at a company we admire. And so now, you know, we realize like the value it adds is great, and we’ll regularly get dinners with them. And we’ll also include them in part of our hiring process if it’s a major role. So I think, you know, to leverage their expertise is great because they understand what we’re looking for. They know us, and they’re willing to lend their expertise in terms of, you know, whether they think this person is credible or not.

FERNANDO CRUZ:
Yeah, I mean two other things. I guess one is kind of like a feeling. Like if it’s – yeah, someone that’s really crucial to the business like a director, you know, like you’re paying like a higher salary, all that kind of stuff, I think about after, like after the interview how do I feel? Like I’m not like really excited about this like person joining because I know that they can like quickly, you know, if you have like a good Director of Marketing, like they will pay for themselves and like and more like, you know, within their first like let’s say six months. And so if I have that like feeling this person really knows like their stuff, then like I think that’s one big piece. And then the second piece is we’ll find a friend that’s in like a similar role, so like again like the Director of Marketing, or like a VP of Marketing at another kind of consumer products company and ask them to do the interview. And I think that’s been really helpful. Like I know for us like finance is like something we like understand but we’re not like as technical as someone who is a Director of Finance. So we’ll ask one of our friends that’s in that specific role to do the technical interview for us. And that’s been really, really helpful in terms of asking questions we would have never thought of.

CASEY GAUSS:
Nice. Can you walk us through what your typical hiring process is, everywhere from where are you putting out these job postings? Okay, someone puts in their resume. What do you do there, all the way up to okay, now it’s day one, day two at the company?

FERNANDO CRUZ:
Yeah. So this process has been really interesting especially since we’ve had a recruiting person for all of like 10 days now. But basically so now all the candidates are coming through actually are Airtable where they fill out like a pretty long survey, which is –

ANTHONY BUI-TRAN:
Tell them what Airtable is.

FERNANDO CRUZ:
Huh?

ANTHONY BUI-TRAN:
Tell them what Airtable is.

FERNANDO CRUZ:
Oh, so Airtable is like this really cool platform. It’s kind of like a really powerful Excel that can pull from different like, different areas. But we use it both for like our analytics of our products so we can see like our weekly profitability, but it also has like other kind of templated forms that can – kind of similar to like kind of Google surveys and stuff like that. But it makes it really easy for a candidate to upload their resume, you know, include their Skype, like you know, where they’re located. You can have them like answer specific questions related to their job so that you just see like do they really – are they actually putting time in to fill out this like application for us or not really. And versus like OnlineJobs you can kind of just like click, copy and paste your normal paragraph and then submit and then move on to the next application. But yeah, I mean in terms of like okay, so where we’re gathering the applications is for sure OnlineJobs. We’ll do outbound outreach through LinkedIn. We just started doing kind of like Facebook where it’s kind of like what Anthony was mentioning. If there’s like a specific type of Facebook group for that, you know, particular industry or like type of role.

And then I would say that’s pretty much it. We’ve tested – we tested ZipRecruiter and like a little bit of LinkedIn ads. But like, but those main three, OnlineJobs, outbound outreach and then Facebook groups have been like the best like ROI so far in terms of like time spent. And then so now as a – now that we have the full-time recruiting person, that we’ll have a meeting with her before and to get like all the job recs, like what is the most important parts of the role, like what are the hours they’re going to need to work, like what are the main things that we’re looking for. And then she’ll actually do all the resume screening and the first round of phone screening for all of our candidates. And then those kind of finalist candidates will get passed on to Nick or I, depending on which department it is or to the department head, I guess. And then it will go through that kind of like gauntlet of like talking to the department head, then talking to Nick, and then to me. And then if it’s like a really important role or one that we’re not as comfortable hiring completely on our own, then they’ll also go through a technical round with a friend of ours.

CASEY GAUSS:
Nice. Do you guys look at references at all?

FERNANDO CRUZ:
We used to. We kind of stopped to be honest.

NICK YOUNG:
I think it depends. You know, I think in the Philippines, like it was overseas. I don’t think it really works well, to be honest, because I think just culture-wise, you know, they tend to be very, you know, non-confrontational, so you know, they’re going to be nice no matter what, you know? I think overseas is hard to really understand that reference thing. But I think if it’s in the US, yeah, I think we’ll definitely call references, especially since there’s more on the line. You know you’re paying them a salary. We’re based in California, so we have to pay a lot of taxes and that kind of stuff. And I think also when you’re screening references in the US, you know, you can have a more in-depth conversation with them and really dig into their experiences. And if it’s anything less than an A+ then that’s kind of a red flag, you know, because naturally they’re going to choose people, you know, who are going to be in their best favor. So we’re looking for any reason why, you know, the person might not be giving them a full-fledged recommendation.

FERNANDO CRUZ:
Yeah. Actually one of the things that we do is kind of like a top grading kind of tactic that I recently learned about, which is, again, for US hires we will mention in the first interview that we will be checking references. And like the theory behind it is that if you kind of mention that like at the beginning of the interview, then they call it like truth serum where that candidate is much more likely, since you kind of set that ground-floor, like okay, we’re going to be checking references and validating things that you said, that they are more likely to tell the truth in the interview versus if you didn’t –

BECCA LONGENECKER:
If you could do anything differently, if you could go back and do anything differently would you? And then also, who would you recommend – for like FBA sellers – who would you recommend build a team? I’m thinking like for some of our newer sellers who are listening who might be thinking like this is something for them later. Yeah, what kind of person?

NICK YOUNG:
To hire?

ANTHONY BUI-TRAN:
Yeah, I think, I mean the first hire, in my opinion, should be like an admin person. Once you get to the point where you know your time could be better spent elsewhere and you are bringing in income, it does make a lot of sense, in my opinion, to get that first hire to do your admin stuff, kind of like what we were saying earlier about like customer service, following up on reviews, things like that. But in terms of like if I had to start over and like really do this whole process again, like what would I do and what I? So if I could start over, yes, I would totally love that cheat code. And based on like what I know now, but basically like the biggest thing would be to find mentors, right? Just find people bigger than you because like for me – I always say this, but there’s things you know. There’s things you know you don’t know, and then the biggest part of this whole pie is the stuff you don’t know you don’t know. And like the last like three months for me have just like been like tapping into the stuff that I don’t know that I don’t know. And like in terms of like, you know, businesses having like advisors, like I knew that was like a thing, but I just didn’t think like people in the Amazon business like started doing that really because the sellers I felt like I was surrounding myself with didn’t think on that level. So it also kind of depends on what your goals are, right? So if you want to get to a certain mark, find sellers that are already at that mark because then he can really just like, you know, just dissect like what they did to get there and like – you know, people don’t mind like giving advice. And it’s cool for, I think, other sellers to like really reflect back on their journey and really understand like hey, these are like some pivotal moves that like got me to this point, or like this is what’s really working in my business, you know?

BECCA LONGENECKER:
Right.

ANTHONY BUI-TRAN:
So that’s what I think, yeah.
NICK YOUNG:
Yeah, I think for us like I mean ultimately I’m a firm believer that, you know, you have to go through an experience to really learn from it, and you know, you have to have moments of crisis in order to recover and just be stronger. So I mean I think if I could change things I would definitely like do that. That would be awesome. But I’m really grateful for those experiences. But I would think probably the main thing I would hone in on is know your numbers and really understanding like on a per SKU basis how much money you’re making or losing after ads, after all of the fees because I don’t think a lot of sellers look at that. They’re just looking at the top line revenue, and that’s something that we were focused on for a long time, and I think it – you know, it really put us in crisis point where we just weren’t able to manage our cash flow effectively, and we had to kind of work ourselves out of that hole.

And so I think having clear direct numbers around what, you know, what, you know, what guidelines you’re going to set to say okay, I’m going to keep this product or I’m going to let go of the product, and being really stringent about that. I think people get too married to a product, and we definitely had that. And then ultimately it ends up bringing your business down because you’re not managing your cash flow effectively. You know, those SKUs are taking up a lot of cash for you to keep up. But you’re really not making much money. So learning to let go of those bad products and reinvest into the good ones, and ultimately I think that’s, you know, that’s something that I wish we had done earlier. But you know, I think, again, without going through that experience we wouldn’t have known.

FERNANDO CRUZ:
Yeah, and I guess to reiterate kind of points that we made earlier, I guess if I were to do things differently I would hold our like overseas team, like in terms of the interviewing process at a higher standard, like you know looking at them like as if they should be like equal or not more talented in this specific area than me or than who I would have hired in the US because I think that has elevated like the average ability of our team, and I think that was like a really big thing. And then also just like learning to delegate like earlier. I think yeah, we kind of held onto like certain tasks, like oh you know, this is too important, or you know, inventory planning, like you know, it’s too – like we can’t be out of stock. We need to like hold onto this. And then like realizing that there was just people out there that are way better that have been doing this for years, and like this is like their dedicated focus versus like us trying to do everything and holding certain aspects of our business to our chest. I think those are probably the two things I would do differently. And then in terms of hires, like yeah, either for sure like the first one for me would either be like a customer support person or admin, or this kind of like jack of all trades that can handle that as one aspect, but can help with like, you know, finding new products and like handling asking for reviews and all that kind of stuff as part of – as like kind of like a right-hand person I would say.

NICK YOUNG:
Yeah. I think communication is going to be really key, especially if it’s like a remote person. So someone who is willing to, you know, speaks English really well or speaks your language really well, you know, is very – over-communicates rather than under-communicates. That’s going to be major because you know, you’re going to be sending them all this stuff. They’re going to have to ask questions. They’re also probably going to have to give you updates. You know, when you don’t see them in person there’s a lot of stuff that’s missing. So you know I think that jack of all trades or customer support person needs to be very, very proactive about communicating.

BECCA LONGENECKER:
Well, thank you guys so much. That was so educational.

NICK YOUNG:
Thank you guys for having us.

BECCA LONGENECKER:
That’s all for this week. Thanks for joining us on Follow the Data. For more insights and reliable information about how to grow your Amazon business, subscribe to the podcast and check us out on YouTube. We have tutorial videos for all of our tools, as well as webinars that go more in depth with pro tips for how to really get the most out of the tool.

CASEY GAUSS:
If you’re listening to us on iTunes don’t forget to leave a review and rate the show. If you’re an Amazon seller you know how difficult reviews can be, and you know how important and critical they can be to your success. Same is kind of true here on iTunes or wherever you’re listening to this, so we’d love it if you could leave us a comment if you’re listening on SoundCloud, leave a review if you’re listening on iTunes. Overall, we love feedback, and we’d love to know how we can improve the show for future episodes for you. And if you know a fellow seller who is trying to build their FBA business, tell them to check out this series and the rest of the Follow the Data episodes. We want to be a resource for sellers and the information source in the space, so please tell your friends, spread the word and share the data.

BECCA LONGENECKER:
Thanks again for listening, and 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. Until next time, remember, the data is out there.

Why Not to Use Search Volume to Determine Giveaway Units (Follow the Data Ep. 27)

Why Not Use Search Volume to Determine Giveaway Units (Follow the Data Ep. 27)

When you’re running a launch, you need to match the daily sales of your top competitors. But how do you determine how many units to give away? Some sellers look at search volume. But this episode, we’re going to let you in on a secret: using search volume to estimate the number of giveaway units needed to drive keyword ranking is an extremely flawed method.

 

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Follow the Data Show Notes

Podcast Transcript

CAMERON YODER:
Keywords are extremely important when it comes to building a successful Amazon business.

CASEY GAUSS:
This week we’re going to dispel a new but ever-growing myth that you can use search volume to determine the correct number of units to use when running promotions to drive keyword ranking or estimating the number of units customers are selling through a particular keyword. 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 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. This episode is an in-depth look at one really important aspect of product promotions, number of units for a giveaway. We’ll make the case for why using search volume specifically is mathematically flawed and talk you through current best practices based on what has worked for our clients specifically.

CASEY GAUSS:
A significant number of sellers are running promotions and giving far too many units in their promotions. When asked, many cite their keyword tool as a source of the suggestion and, as a result, they’re wasting hundreds to thousands of dollars in extra inventory.

CAMERON YODER:
Let’s jump in. So we’re back from Vegas. It’s been – it was a good trip.

CASEY GAUSS:
It was a good trip, and we are not in between some bunk beds recording on a mobile mic, and hopefully, I can guarantee this, but much better analogies will be coming your way than the half a piece of bread.

CAMERON YODER:
Listen, if you haven’t yet, go back to the previous episode right now, go to about six minutes and 15 seconds. I remember it specifically. It was hilarious. Just go listen to Casey’s analogy of bread, and you’ll be blown away.

CASEY GAUSS:
Yeah, analogies can be very powerful, but sometimes a little tricky. And if you don’t get them right, then it’s just, it’s embarrassing.

CAMERON YODER:
Casey, what did you think of Vegas, just really briefly? I just want to get your opinion. What do you think of Vegas, the trip and the conferences?

CASEY GAUSS:
Yeah, overall I mean conferences like – one reason we love going to conferences and bringing additional people, you know, we usually try to bring five people including Cam and I, is it’s really great for other people on the team just to hear the feedback that we get. You know, so many people come up to us excited about what Viral Launch has done, you know, for them and for their business. And so I love seeing that feedback in person. It’s so much different getting it in person than, you know, over email. And then you also just get a lot of really good candid feedback. You know, unfortunately I was thinking back. I feel like we didn’t get enough candid feedback on Keyword Research. So if you guys have that, we would love to hear it. But anyways, yeah, went really well, very exhausting. If you’ve ever been to a conference in general there’s very little sleep involved, especially if you have obligations back home or, you know, in the office or whatever. But yeah, what about you, Cam?

CAMERON YODER:
Yeah, no, I think you hit it on the head. Really it’s just so good to go, and we said this last week, but to go and to meet everyone, just put a face to a name, really I would encourage you if you ever see us in public or at a conference, just say hey. It’s always good to talk to everyone here, and again, to put a face to a name and to hear what you guys are going through and what advice you want or need and just say hey. So yeah, if you see us at a conference or just in general, feel absolutely free to say hey.

All right. So anyway, getting back to the podcast episode, we’re touching on search volume and why not to use search volume to determine the amount of units that you need to give away for something like a launch or a promotion. Casey, what do you think?

CASEY GAUSS:
Yeah, and honestly, so taking it a step further back, I mean a lot of people, the real question – so to be honest the real question is not what is search volume for this keyword; it’s what is sales volume for this keyword? You know, again, like the main driver of rank, which is where a ton of organic sales traffic is coming from, is coming from keywords. And so the question – and how well you rank for those keywords. And so the question is not how many people ran a search for this, or how many times was this keyword searched, but how many sales actually came to this keyword? If there were a trillion searches for omega-3 but there were 10 sales that came through that keyword, then that would not be a good keyword. It would look good because there’s high search volume, but what you really need to understand is what is the sales volume? This will inform your strategy around what keywords are most important to rank for because you want to be where the sales are, not necessarily where the searches are, and then further so if I want to drive ranking for this keyword, then how many units do I need to give away? Again, it does not matter how many people are searching for your product. It is not number of sessions that is driving your ranking. It’s the number of sales that are driving your ranking.

And so, again, you should really – the real question is sales volume. We don’t have sales volume, so as a proxy for that we’re using search volume. But because now you kind of understand it is not – it’s sales volume that you do want, you can’t use search volume in a number of ways. And so the main thing that we’re talking about here, primarily because we help with product promotions and driving keyword ranking is that we see so many people using search volume as a way to estimate number of units to give in a product promotion or, you know, drive external traffic, whatever, to drive keyword ranking. And we see a lot of people wasting, you know, thousands of dollars by doing this. We just really want to kind of dispel the myth, right? Like we are a company that has a ton of data, and we love using that data to help you make better decisions. And so that’s – I mean Follow the Data. That’s the name of the podcast, and that’s why we’re here.

CAMERON YODER:
That’s what we even see – so just to iterate that again, it’s really important for listeners to understand that it’s not search volume. Again, you need to base these numbers that’s something like a giveaway number, off of sales, sales that are attributing to keyword ranking. And even in some cases people are using different tools that are even just using search estimations, right, estimation volume, not even sales estimation but search estimation. In that case, again, what we’re seeing is a lot of people giving away more units than they should or way more units than they need to to actually gain rank. And so we want to help. We want to help the people that are listening and people that are planning for promotions in the future. We just basically want to help people with their business to make sure that they’re not losing on money that they don’t need to lose on.

CASEY GAUSS:
Yeah, so this is not directed towards a particular tool. We see people using this. There are tools that are suggesting number of units to give specifically based off of sales volume. We see that, but then we also see people using maybe even Keyword Research to look at search volume to then estimate number of units to give. And so we just want to dispel this whole concept as a whole. So we’ll jump into it if that’s okay, Cam.

CAMERON YODER:
Yep. So there are two major flaws. Major flaw number one is conversion rate. Casey, talk about conversion rate.

CASEY GAUSS:
Yeah, so I think a real insight here is we’ve had some, you know, special Amazon data that we’ve gotten. So we’re – like this is just, you know, one report, let’s say, and we’re not building anything off of this one report, but it’s definitely helped us make better decisions. And so basically what we’ve seen is, you know, we get this report that shows us what the search volume is for a particular keyword, what the click – number of clicks into a listing, number of add to carts through that keyword, and number of purchases, again, through that keyword.

So let’s take omega-3, again, as an example. We would see the number of searches, then from there the number of clicks into a listing, then from there the number of add to carts and then the number of purchases. So we are able to see what is the conversion rate from search to add to cart? What is the conversion rate from search to purchase? So looking through, you know, this list of words we were trying to figure out, okay, what is the average – what is the average conversion rate from search to purchase? Because again, we care about purchases, not searches. And the problem is that there wasn’t a good average. The range is [immense 0:08:28.8]. And so the range was literally anywhere from 50% – so that means if there was 10,000 searches there were 5,000 sales, let’s say, and all the way to .01%. So if there’s 10,000 searches –

CAMERON YODER:
And that’s conversion.

CASEY GAUSS:
Yeah, yeah, sorry.

CAMERON YODER:
50%, to .01% conversion.

CASEY GAUSS:
Yeah, conversion. So that would mean if there’s 10,000 searches there’s literally 10 sales. I mean that’s insane, right? So there’s 10,000 searches for a keyword. There’s anywhere from 5,000 actual sales to 10 sales. And so you know, no tool, nothing like that on the market is able to estimate what the conversion rate is for these particular keywords. And so, again, if you tried to take an average, let’s say you’re like okay, well I’ll just shoot for the middle, and let’s call the middle 25%. Well, so if you give away 2500 units that’s, you know, 2490 more units than you would need to give in order to match the .01% conversion, right? But if you give away 2500 units that’s only half the units you would need to give to hit the $5,000 mark or the 5,000 sales mark, the 50% conversion mark. And so it’s so hard. It’s really just a shot in the dark if you’re guessing at any particular conversion rate. So again, I could care less if there’s a trillion searches for omega-3 or, you know, any keyword if the sales volume is only, you know, 10 sales, or 100 sales, or 1000 sales. So flaw number one, conversion rate.

CAMERON YODER:
I think a simple way that – something simple that people can use to remember or to just like get this flaw into perspective is just because someone is searching for something does not mean that they’re buying it, and that goes back to keyword, keyword ranking being attributed through sales. Just because someone is searching for something does not mean they’re buying it, and that’s shown specifically with the data that we have between that 50% and .01% conversion.

CASEY GAUSS:
Yeah, and I mean just think of all the people that are doing keyword research to sell on Amazon, or like you’re just looking at prices, or you’re trying to do research and you think Amazon is a place to do it, probably not, but anyways, so what we’re seeing is, again, just a ton of searches that are not converting to purchases. So flaw number two, sales distribution. So this one is a little bit harder to conceptualize or to explain without visuals.

CAMERON YODER:
If you have a piece of paper and a pen that would help, but it’s not necessary.

CASEY GAUSS:
Yeah, nor am I going to be good enough at walking you through this for you to, you know, really draw it out. So we do have a blog post on this where we did try to provide some visuals to really help you understand. I’m going to try to do my best. Cam is always better at summarizing and really helping you to understand.

CAMERON YODER:
I’ll see what I can do.

CASEY GAUSS:
Yeah, let’s see what Cam can do. So anyways, flaw number two is sales distribution. So what sales distribution is referring to is what percentage of shoppers that are searching or purchasing. Let’s say you search omega-3. What percentage of the shoppers are buying the first product, what percentage are buying the second product, you know, the fifth product? What percentage are going to page 2 and then buying the top ranking product there? Like sales distribution is referring to, again, who is buying what product where and, you know, what percentage. And so if you, let’s say that 100% – this is very unlikely I would imagine – but let’s say 100%. Let’s take Instant Pot, right? So I would imagine sales distribution for Instant Pot searches are pretty high towards the top. If you see the Instant Pot then you are going to be buying, right? Same with let’s say AA batteries. If you search AA batteries you don’t need to scroll through, you know, pages of results. You probably don’t need to scroll past, you know, number three, or you know, number five, before you find out what you want because there’s not that much variation there. So you’re probably buying the first, second or third product, let’s say, that shows up in the results. But a more stylized product or a broader search, let’s say, you know, gifts for men or Valentine’s Day gifts, or Father’s Day gifts, I mean the results are much more broad. You probably don’t even have in mind exactly what you want, and so you’re probably scrolling through the results. You may hit page 2. You may scroll through to try to figure out what you want, and you may end up buying, you know, that whiskey decanter or something like that that’s, you know, number 15. Or you may end up buying this tie that’s ranking number 25. And so sales distribution for a word that has a bit more style or kind of different bundles or whatever, I would imagine sales distribution is much higher.

And so again, we are trying to figure out how many units is the sell – let’s say we want to rank in the top five for omega-3. So what we’re trying to figure out is what is the sales volume to the products ranking number one, number two, number three, number four and number five, and then we need to match that in per day sales to rank alongside them. So we’ll try to go with an example. Let’s say we want to rank in the top five. There’s 2,000 sales through this keyword, and sales distribution is 100% to the top five listings, right? So the top five listings are seeing all 2,000 of the sales coming through this keyword. And let’s say it’s evenly distributed, meaning so it’s 2,000 divided by 5, which is 400. And so each listing is seeing 400 sales. So number one, number two, number three, number four, number five, all 400 sales. And you want to be able to match them in per day sales. So basically, again, you have to hit that $400 – or sorry, 400 sales mark. But let’s say that sales are evenly distributed among the top 20 results. So position number one sees as many sales as position, you know, number 20. And so then sales are 100 per day. And so giving away – basically the giveaways will be – could be significantly different depending on what the sales distribution is, and these are very simple examples. I imagine it’s something, you know, for one keyword sales distribution for Instant Pot is 80% to position number one and then, you know, evenly distributed through – or like the next 10% is through positions two through four. So I think it becomes very, very confusing or is very complex, and every single keyword is so different. So if you’re wanting to rank position number five it’s going to require a totally different percentage of the sales from the conversion percentage from the search. So you can see the math really starts to add up, right? And so, and it’s so different depending on each keyword. Basically if you wanted to use search volume to estimate number of units to give you would have to know the conversion rate or approximate the conversion rate from search to purchase. And then depending on where you wanted to rank you would need to understand what the sales distribution from this word to position – let’s say you want to rank position between positions five and 10. You would need to know the sales distribution from that sales would be between those positions so that you can match in per day sales those competitors.

And so there’s so many approximations that really what existing tools are doing, or what most people are doing is just saying like, you know, let’s just take a percentage of search volume and say that’s how many units you need to give away per day in order to rank for this particular keyword. And what we see on the flipside is so many people are coming to use Viral Launch to run these promotions or whatever, and they’re trying to give away sometimes, you know, five times as many units as we would expect. And if, you know, we were suggesting 100 and you’re saying you think you need to give away 500, I mean that is a significant amount of inventory that you’re giving away. And so I do think that continuing to build the best sales history is great. I think that like overkill is not the worst thing, but I do want to make sure that people are well aware of this because if you have a limited budget and you’re spending that limited budget on excess inventory and these promotions where in reality you could be targeting additional keywords, or you could be using it to ramp up your sponsored ad costs, or your AMS campaigns, or whatever, I just want to make sure that you’re spending – you are knowledgeably spending your money as efficiently and as effectively as possible.

CAMERON YODER:
Let’s see if I can – let me see if I can summarize sales distribution a little bit. All right, so it’s really important to go back to what we said at the beginning where keyword ranking is attributed through a sale, right, not a search, but a specific sale. A launch or a promotion for something like a keyword is – it’s not rocket science, right? The entire goal of a promotion like this, or of a launch, is to get you to somewhere on page 1 where you want for that search term. In this case let’s say it’s omega-3. I want to get to page 1 for omega-3. So I need to look at the sales, the sales numbers that are going on on page 1 in order to match those per day with something like a launch or a promotion. So to do that I need to see those sales numbers, those sales estimates, instead of seeing the search volume. Number one, those sales estimates aren’t really even available on certain tools like other tools, right? The search volume is. That’s not what we want. What we want are sales estimations and accurate sales estimations, right?
So let’s say I type in omega-3 into Amazon, and I see the spread, right, and on the top five are a ridiculous amount of sales. Now in order to reach that top five – again, also maybe taking into account something like your sales history, but at this time let’s just use the sales velocity or something like a launch or a promotion as a factor for getting to page 1. So you typed in omega-3, and your goal is to be in top five. So you look at the sales and you see that the average is around like – you’re going to need around 2,000 units, or maybe not 2,000 units, something like 500 units to give away. And you’re like, yikes, that’s a lot of units. I’m not a big business man in omega-3 yet, so I can’t get there. So you go down. Let’s say you look at the top 10. And so you look at the sales distribution, again, just the sales numbers spread out across the top 10. It’s going to take less, typically – it depends on the market. Again, it’s going to take – it might take less for you to get to the top 10 than it will for you to get to the top five. But again, the entire goal of a launch or a promotion is to simply match the number of sales that are going on in whichever range you’re going for. That is the idea of sales distribution being applied to something like keyword ranking. And that’s why it doesn’t work for search volume because search volume, again, it’s not – it does not involve the sales volume. And search volume cannot show you the spread of where sales are going. That’s my summary. That’s my simple summary.

CASEY GAUSS:
Well done, cam. There’s an example in the blog post where we go over, so let’s say a keyword gets – this is kind of in a little bit of an exaggerated example, but I think sometimes these, you know, exaggerated examples really help to help you understand what we’re – the point that we’re trying to get across. So let’s say a keyword gets 100,000 searches per month. The conversion rate from search to purchase is 2.5%, meaning 2,500 sales across this keyword per month. And then let’s say sales distribution, 80% go to the top five listings. That means the top five listings see 2,000 of those 2,500 sales per month, and after top five 500 sales. Let’s say you want to rank between positions six through 15, and that’s where the rest of the sales are happening, so 20% of that 2,500 is 500 sales. And so 500 sales evenly distributed among those 10 products, let’s say, means each product is really only seeing 50 units per month in sales through this keyword. So if you need to rank in position six through 10 then you only need to give away two units per day. So 100,000 searches down to two units per day, and these estimates that we’ve used are completely arbitrary but are not out of the realm of possibility. And so that just goes to quickly show you, you know, that’s 100,000 searches. We could easily show you the math where 10,000 searches you need to be giving away, you know, much, much more.

CAMERON YODER:
Your goal, pick a target, pick a target for a keyword, look at the sales numbers for that target and match it with a launch or a promotion.

CASEY GAUSS:
Yeah, so real quick we’re just going to go over how we’re estimating number of units to give. You know, in an ideal scenario we’re able to do some data science or whatever to really give some good estimates in terms of sales volume, leveraging both search volume and Market Intelligence data. But right now we’re not able to do that. We’re not aware of anybody that can realistically do that, even if maybe someone can say they do. I don’t know of anybody, but I’ve heard – recently I’ve heard some people that are like, you know, we do data science. And it’s like they have insanely terrible answers. And so I think it’s one thing to be aware of. You know, I think you should always be questioning the authenticity of something. You should always be using, you know, your best judgment, logic. You should always be testing everything because too often do we see people – and this is one reason we wanted to start this podcast – but too often we see people in a place of power, people that may have, you know, an audience for one reason or another mislead people, not necessarily out of intention, but maybe just out of, you know, ignorance, or I don’t know. And we see people, you know, we do data science so you should trust what we’re doing. And it’s like, you know, you could have the most technically amazing whatever, but if you’re getting, you know, bad results, then data science is worthless.

CAMERON YODER:
Yikes.

CASEY GAUSS:
Anyways, how are we estimating number of units to give at Viral Launch? So like we said at the top, you know, we’ve – again, this is not a plug to use Viral Launch or anything. We just, again, want you to make good decisions around running your promotions for ranking, estimating number of units that are being sold through a keyword. Again, we just want to dispel this myth.

CAMERON YODER:
This is simply what we’ve seen work directly.

CASEY GAUSS:
So 30,000 product launches later this is what we’re doing. So first obviously you have to know your main keywords. The best proxy for this is using something like Keyword Research or using some tool that has good search volume estimates so that you can see, okay, what are the most popular keywords? It’s very important to know. So many times we have someone come to us and they think, you know, I don’t have a funny example – high heels for dogs is a good keyword for high heels because their keyword tool told them that. And in reality obviously it’s not. That is a real result in a keyword tool. Anyways, so people will think, you know, this keyword blue 32-ounce insulated water bottle is a good keyword for their insulated water bottle, and in reality it’s not, and we see people so focused on ranking for it, and they’re wasting their money. So know your main keywords.

Next up, know your budget. So again, if you’re going for a high-volume keyword, again, you can use search volume as a proxy here, but if you’re going for these high-volume keywords then make sure that you have the budget to give the units away necessary to drive the sales necessary, and then just to have the inventory needed so that when you are ranking for this keyword and you’re increasing your sales you won’t run out of stock immediately after. And so if you have a smaller budget, again, everything is relative here, smaller, bigger. If you have a smaller budget compared to your market you have to go after these keywords that are appearing to get lower volume sales, and we’ll show you how to estimate that.

And yeah, so then step three is determine estimated sales volume for this select for your selected keywords or the keywords that you’re considering. So the way that we do that is we run Market Intelligence on these keywords. And so Market Intelligence is showing you the estimated sales volume for the products for every keyword that they’re ranking for, sponsored ads and so forth. So looking at sales volume for the products that are showing up for a particular keyword does not mean that the majority of the sales volume is coming through that keyword. And so one thing that we do is we like to go look at what is, you know, how many high-volume keywords are showing up for this particular product. So let’s take fish oil. Let’s say the only – let’s say there’s three high-volume keywords. Fish oil, omega-3, fish oil supplement. So what we would do is we would go, and assuming these keywords are relatively similar in volume, we would go and to be on the safe side we would look at the sales per month that we’re seeing in Market Intelligence and we would divide it by three. So if you’re seeing 1000 sales a month, then we’re guessing that you’re seeing around 33, 34 sales per day through this particular keyword. So now I know that if I want to run a promotion for seven days, then I would need to give away that 33 or 34 times 7.

And so if it’s a lower volume keyword then it’s a little bit more difficult. It’s, again, going to be your best guess, and I would rather err on the side of caution. I would rather give too many but not, you know, five times too many. So again, I would go and try to get a good feel of the landscape in terms of keywords. You should’ve done this already when you optimized your listing and when you were preparing to even sell this product because I think it’s important to understand how you’re going to drive sales before you even source a product. But again, I’m going to go get a feel for okay, there’s about 10 words that are the same volume as this. Again, the product is seeing a thousand sales a month. And so divide it by 10, and then you would just give away at that volume. So let’s say I’m going for this keyword. There’s 100 sales. We’re estimating 100 sales through this particular keyword. Divide that by 30, and so that’s basically, you know, three, four sales per day. And so I’m going to give away at the three to four sales per day to go after this particular keyword, or maybe not give away, run through external traffic, you know, however you’re running your launches, however you’re ranking products. I would go and target that number.

CAMERON YODER:
That’s good, Casey. I honestly, I just want to add, or I just want to iterate the importance of budget. Not everyone has the ability to automatically target the keyword with the highest search volume and sales volume, right? And in this case what I’ve seen work for individuals is actually to go for secondary or tertiary keywords where the targeting keywords that on average don’t have as many sales volume – as much sales volume – excuse me – or they automatically, right off the bat, they – I’ve seen people try to target – they want position one, right? I want – I’m targeting fish oil, and I want to get to position one on page 1. So let’s do it. And then they don’t have enough units to do it, and by the time they’re done with their promotions they just end up failing because they didn’t have the resources to get there in the first place. So it’s really important to recognize what you’re capable of doing. In this case I’ve seen people do really well once they recognize how many resources they have, or how much money, or how many units they have to give away for a promotion. They accept that fact, and then they go for something like, let’s use the fish oil example. Let’s say they wanted to get to page 1, or position one page 1 initially. They recognized they did not have the number of units available. So instead of going for position one they look at something like – let’s say they looked at position one, but even position one through eight, or one through – let’s just say one through six are out of their means. So then instead they look at positions seven through something like 15, and they say actually after position six the sales drop off decently, and while I want to gain as many sales as possible, I’m not capable of launching into positions one through six right now. So I’m actually just going to target – I’m going to bite the bullet for them. Maybe it’s their pride or something. I’m going to bite the bullet. I’m going to go for positions seven through 12 or something like that. So then they look at positions seven through 12. They look at the sales for – the sales estimates – again for those products in those positions, and they match those over a promotion time, something like seven days, right? And in that they get to page 1. They don’t – they did not give away more than they were able to give, and they got to page 1. And after that, if they stay there organically, if they’re able to continuously maintain rank, then I’ve seen people specifically do this, they get to position something like seven to 12 and they maintain that position and just organically, as they stay there, they move up the ranks because they’ve optimize their product well enough.

Bottom line, know your main keywords. Pick the right ones to target. Number two, determine your budget. Determine what you’re capable of doing, and determine what you want to do and if your budget and what you want to do align. And if not, then you might have to take it a step down. And number three, determine the monthly sales volume for that selected keyword and match it over something like a seven- to 12-day period of time.

The takeaway for today is base your projection for giveaway units on sales volume, not search volume. You can apply some of these techniques to your own promotions. No matter what traffic source you’re using, something like discounted promotions, or Amazon sponsored ads or Facebook promotions, in order to reach page 1 for your targeted keyword you’re going to need to match or exceed the average number of sales for that specific keyword that you want to target. Basing your estimates on something like search volume could honestly cost you a lot of money. I’ve personally seen it happen. Our team sees it happen, and we don’t want that to happen to you guys. Sales volume, not search volume.

Well hey, everybody, that is all for this week. Thank you again 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. I have a new walk-through up for Keyword Research on our channel. So if you want to check it out just search Viral Launch on YouTube. Go to our page, look for my face and the video titled, “How to use Keyword Research.” We’ll also link to the video in our show notes. Again, we’re just coming off of a couple conferences. We’re actually gearing up to go to a couple more over the next couple weeks, and we had such a good time meeting some of you, some of you listeners. So thank you. Thank you all so much. Feedback is really important to us, so if you’re listening on Apple Podcasts feel absolutely free to leave us a review and/or a rating. If you know of a fellow seller who is using suggestions from their keyword tool to determine how many units to give in their launches, please send them our way. Send them to this podcast. We want to be a resource for sellers and the information source in this space, trusted information source. So please tell your friends, spread the word and share the show.
So thank you again so much for listening, and 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. Don’t feel intimidated at all to call in. Really, we want to hear your voice. It will be a voicemail that pops up so you won’t have to talk to anybody directly. You’ll be able to just leave your opinion or leave a question. I feel like after talking to people at these conferences I recognize that maybe they were – or people listening are intimidated by calling in. So please call in. Feel free. Don’t be intimidated. We’d love to hear from you. Again, it’s 317-721-6590. So until next time, remember, the data is out there.

Feasting on Crumbs: How to Leverage Small Gains and Rank Higher on Amazon (Follow the Data Ep. 26)

Feasting on Crumbs: How to Leverage Small Gains and Rank Higher on Amazon (Follow the Data Ep. 26)

Understanding the nuances of Amazon customer search is what can really help you rank higher Amazon in the most efficient way possible. Just a handful of small opportunities that other sellers might consider crumbs, really add up. Join hosts Casey Gauss and Cameron Yoder for a conversation about how to feast on the crumbs of your product markets. 

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Follow the Data Show Notes

Episode Transcript

CAMERON YODER:
Hey, everybody, what’s up? My name is Cameron Yoder, and I’m here with Casey.

CASEY GAUSS:
Hey, guys.

CAMERON YODER:
And we’re actually in – we’re actually in Las Vegas right now. We hit up a couple conferences, a couple Amazon seller conferences. And it’s been a good time. We’ve had the opportunity to meet a lot of really awesome sellers, and Casey actually spoke at one of the conferences here. And it’s just been honestly a really good time to meet some of you, and to talk to some of you, and meet some people that we haven’t met before.

And as always, it’s just good to be in the community, you know, just meeting and talking with people. Anyway, so we’re actually going to dive into more about Keyword Research, not exactly specifically the tool that we introduced last week, or the tool that we just came out with, but we’re going to talk kind of deeper level strategy behind – or basically deeper level strategy that you as a seller can use when you’re researching keywords, the mentality that you should be developing. And we’re going to talk about, again, just deeper level strategies and strategies that you can implement today when it comes to research.

CASEY GAUSS:
Hey, guys. I do want to stipulate that, you know, we are not planning on – we’re not trying to shove Keyword Research down your throat. We really just think that, you know, there are some really cool opportunities that have to do with Keyword Research just in general that we really want you to be aware of because whether you’re in a high, highly-competitive market there is still so much opportunity.

Whether you’re in a low competition market, I imagine there’s tons of keywords that you’re not targeting. So yeah, we’ll jump into just high opportunity keywords. So one, you know, so there’s always people jumping into markets that they really have no business being in, or maybe you’ve just been in this market for a while, it’s just gotten so competitive, and you’ve kind of just lost market share.

Well, there’s still, from what we’re seeing, generally so much opportunity that’s out there. So let’s take the Garcinia cambogia market, for example. If you’ve been around for, you know, more than a year you probably know this product to be somewhat of a joke, right? So there’s a ton of products out there that everybody is sourcing, and everybody knows that everybody else has sourced it at some point. These are products like grill gloves, Garcinia cambogia, turmeric, fish oil, grill brushes, garlic press; you know there’s a number of these products.

And so Garcinia cambogia, like I mentioned, is one of them, a very, very competitive market. At one point it was insanely high-volume. I think it’s still pretty high-volume, but there’s definitely some more mature players in this market. So when we go and we run keyword research we find, you know, just quickly scanning through I found 10 words, each with at least 1000 searches a month in volume, all with over 900 opportunity score.

So the one keyword for this is luxury Garcinia cambogia. There’s over 2000 searches a month for it and 990 opportunity score. What this means is – to recap the opportunity score, basically what we’re doing is for each word we’re going to look at the top sellers for this word, and we’re trying to understand do they have this word in their listing. And if so, where do they have it, and how are they using that? The reason being is we are trying to help you understand how easy it would be to rank for a particular keyword. And so to understand how ranking works on Amazon it’s important to know that Amazon is paying attention to the very specifics of keywords and how they’re used in your listing.

So the rules of indexation and the rules of ranking are different. So if you put brush in your listing you will be indexed – meaning Amazon associates this keyword for the product – you will be indexed for, you know, the singular and plural form of that just by putting one version in. So if I put brush in my listing I’ll be indexed for brush and brushes. But one thing that is – and it, you know, generally doesn’t matter where you put that. You know there are limits in terms of back-end search terms. But regardless, you know, if you put it in the bullet points, you put in the title, it all is indexing the same.

But when it comes to keyword ranking, though, this is quite a bit different. And so, you know, basically Amazon is looking at the content of a listing at the time of a sale. So as a sale goes through they’re looking, okay, what words are in the title, what words are in the bullet points, what words are in the back-end, and so forth, to then boost them up in the search results. And so what we see is that words contained within the title get more rank power per sale than words found anywhere else in the listing.

And so this is a very important thing to note. We also see that the specifics are important. So if you only had brush in your title, but you had brushes, you know, in a bullet point, then each sale that happens the word brush is going to be getting higher ranking or moving up the ranks faster than the word brushes. And so these specifics, these nuances, are very important for you to understand how to build the best listing possible and get that advantage over the competitors.

So taking all of this into account plus a bit more, all the data that we have found through our 30,000+ launches, we’ve put into this opportunity score. So we’re looking at, okay, for luxury Garcinia cambogia, how are the top-ranking products using it in their listing? Is it found in the front end? If so, where and how? And so a thousand is the top opportunity, meaning that nobody has it in the front end of their listing in any form.

So for luxury Garcinia cambogia the opportunity score is 990 with 2000 searches a month. All that to say you’re selling Garcinia cambogia, this really competitive market, but there is plenty of opportunity for you to kind of, you know, get the crumbs. Like I said, I think there’s six words or something like that that combined have over 8000 searches per month. Each one has over 1000 searches individually and an opportunity score of 900. So collectively, you know, these crumbs add up to, you know, half of a piece of bread – or half of a loaf of bread.

CAMERON YODER:
A cookie.

CASEY GAUSS:
Adds up to – I don’t know what it adds up to, but I don’t know what the analogy is, but regardless, you know, you can add up these words. So for example, luxury Garcinia cambogia, misspellings as well, assuming that they do not auto complete within their search results. But here’s a word that has over 1000 searches a month, but is Cambodia Garcinia, but reviews on Garcinia cambogia, there’s over 1000 searches a month for that. So you could just prioritize the word review somewhere in your listing, and now start getting significantly more boost in the search results and another misspelling, Carcinia cambogia.

So if Amazon isn’t auto-completing these words you can throw them in your listing, throw them either in the front end or the back end. Misspellings probably belong in the back end, but it really kind of just depends on what your brand looks like and what the misspelling is to see if you can throw it in the front end. Again, the title provides a really distinct difference in terms of rank power that it is driving. So all this is saying is even in really competitive markets there’s tons of opportunity out there. Go position your product well. Make sure that you’re doing your keyword research to really understand where are the holes – where are the gaps in the market so that I can push my product in there?

CAMERON YODER:
I just want to add a little bit to that. I think high-level sellers might take this piece of information and think that there aren’t keywords that they haven’t seen yet, that they could apply to their listing. But this advice honestly applies to all people. I mean it’s not like every single person knows every word in the dictionary, right? And just because of that, you yourself cannot determine if there’s a group of people searching a word that you don’t know about.

And because of that I would really encourage you all, if you’re low, or if you’re a beginning – if you’re a beginning seller, or if you’re an advanced seller, to go and find – do keyword research with the purpose of finding those words that you haven’t seen yet because you will find them, and all of those added up, even if they’re small, to stick with the crumb analogy, can make a whole piece of bread or an entire cookie, whatever the end result of that analogy is.

CASEY GAUSS:
Yeah, another one that we were doing some demos here at one of the conferences and people, you know, could not believe that one, people, other top sellers for these words did not have these words in the front end of their listing, and then they were blown away that, you know, some of the most popular tools out there were just missing these really, really important words.

So another high opportunity keyword, if you search trash can you will find trash cans, the plural form, with over 10,000 searches a month, 1000 opportunity, meaning no one has the plural form of can in the front end of their listing, which is just insane to me. The fact that you don’t think to throw cans, the plural form, in your listing is crazy. But there’s over 10,000 searches a month. Easily just throw cans in your title and now you get all this additional traffic without doing much work at all.

So next up I think we are going to talk about horizontal markets. So horizontal markets, again, from kind of a technical perspective can be difficult to find. So there are some popular keyword tools out there that are missing a lot of these horizontal markets, and this is something that, you know, is really important. So one example is going back to trash can, you know this word, we keep using the word but it just has amazing examples.

For example, a horizontal market would be a word where there are no root words contained within this new word. So basically what that means is let’s say we are selling a trash can, a horizontal market would be kitchen garbage, or garbage bin, or waste bin, because you do not find trash or can anywhere within the word. And so there’s tons of these horizontal markets. They can be difficult to find. Another example would be, you know, let’s say you’re selling a first-aid kit and trauma bag would be that example for you. There’s so many of these horizontal markets. Again, make sure that you’re hitting them. A lot of tools that have existed on the market have not been doing us a good job of finding them. But there’s a ton of opportunity out there.

Next up, so this is talking more specifically about Keyword Research, our tool, but we do want to highlight some benefits of the integrations. This is one thing that, you know, I’m just really excited about. But I guess I get excited about a lot. So one benefit of Keyword Research being now integrated within Market Intelligence is too often we see someone going after a very, very niche market, and the sales on Market Intelligence look amazing.

So if you were – but you don’t really know in reality what keywords are driving those sales. So on Market Intelligence or any tool that, you know, this Chrome extension or whatever that’s showing you estimated sales, these sales are for the product as a whole independent of what words it is not ranking for and where. So people can get confused pretty easily.

So if we look at the water bottle market, let’s say someone searches 32 ounce insulated water bottle, and they think you know, the sales look amazing. The top seller is selling $230,000 a month, the third ranking product 100,000, and you know, 26,000 and 40,000 in between those. So it looks like sales are amazing, but if you look at the search results that are now showing within Market Intelligence you see there’s only 378 searches over the last 30 days for this.

So that is a clear indicator that wow, if there’s only 378 searches this revenue cannot be coming from this keyword. So then if you go and you look at insulated water bottle, what you’ll find is okay, there’s a lot more searches, almost 29,000 searches over the last month. And you can, again, see the revenue. If we were to go to water bottle I would imagine we would see a lot of these same products showing up and obviously much, much higher search volume. So basically what we’re hoping to do here with Market Intelligence is just to help you understand that you should, when doing your product research, you should be looking at the main keywords that are driving the sales. And what is the best indicator of that? That is search volume. Cam?

CAMERON YODER:
Yeah, I just want to maybe say this in a different way because I think without a visual picture it’s a little hard for listeners maybe to picture something like this. But I just want to give a picture. Again, let’s stick with the insulated water bottle. So you search 32 ounce insulated water bottle, and you see – you’re pulling up all the results and you’re looking at sales information, so monthly revenue, right? So if you pull up 32 ounce insulated water bottle, and I’m a seller looking to maybe get into the insulated water bottle market, I’m going to see all these huge, huge monthly revenue numbers, right?

And I’m going to think, well shoot, everyone is killing it in the 32 ounce insulated water bottle space, so I’m going to source insulated water bottle – or 32 ounce insulated water bottles. What I don’t know, however, is if those sales are being attributed through other keywords. In other words if someone else, or if other people are buying these insulated water bottles through a more primary keyword, such as insulated water bottle, or water bottle in general. So what I need to do is make sure that people are searching for that specific term or that specific market. And in some cases like this people can easily get tricked into buying a very specific product.

Maybe it’s something that’s a little bit of a longer tail keyword and they think it’s a great market when in actuality it’s actually those sales are being attributed through another keyword. And finding the primary keyword is going to give you a more accurate picture of that market, and it’s going to give you a more accurate picture of maybe what you’re stepping into, to either validate that idea or save you from stepping into a market that will underperform, basically.

CASEY GAUSS:
And last topic, integrations with product discovery. So this is something that I have been dreaming of for a while, and especially when I realized that we would be able to integrate keyword research data with product discovery. And this is – it’s because you cannot do this literally anywhere else in the world, and that is find underserved markets on Amazon. So what, you know, we did a webinar last night and we were walking through some examples, and you know, it just made perfect sense.

So basically what we mean with an integration with product discovery, which is a product finding tool, you know, we’re tracking coming up on 100 million products on Amazon. We’re tracking millions of keywords, brands and categories to help you identify, you know, great product ideas, great product opportunities, brands that are killing it so you can emulate their success or find, you know, what tactics or driving such.

Anyways, so if you go to the keyword search type in product discovery you can now put in search volume exact, and the search volume, again, is coming from Keyword Research, and here’s where this gets really cool. So basically by having search volume and sales volume we are able to find markets that are underserved. So what I mean by underserved is people are, you know, searching, you know, bachelorette or bridal shower gifts, let’s say.

So they’re searching bridal shower gifts, and they go there and they’re not finding anything that they want, and so they just end up not purchasing something. The opportunity here is for you to find these markets where people are running tons of searches but no one is buying because they aren’t finding what they want. And this gives you validation to understand people want this, no one’s finding – you know, there isn’t a good option available, so I can bring something totally new to the market that satisfies this need.

So one like amazing example that Cam has ahead, or up on the screen right now, is gender reveal. So people are searching gender reveal, and there’s over 25,000 searches a month for this, and there’s only $6000 in average revenues. Gender reveal party supplies, 33,000 searches, and the average product is doing $4,900 a month. So there is a ton of search volume. There’s very low revenue coming in on these products, and that is just one keyword.

If you were to go add up all of the keywords that were related to gender reveal, gender reveal party supplies and you were to look – because the revenue stays the same. The search volume just continues to add up. So anyways, these products are doing, you know, $5,000, $6,000 a month on average, but collectively you know there’s got to be well over, you know, 75,000 searches a month. So just a ton of volume, and basically people just are not buying what they, what they’re seeing.

And so this, you know, go see what’s out there. Obviously people are not super happy. Maybe read some reviews to see what people are really looking for. Go do your research. Go see what you can source, and then bring that to market because you know people are looking for these products. They’re just not finding what they’re looking for.

CAMERON YODER:
Yeah people, so people – it’s been very interesting for us to be in Vegas and to be talking to people here just about keyword research in general, not specifically about our tool, but talking to other people and how they use keyword research tools. It’s very interesting for them to use them to find untapped – or to find product ideas, right? So they’re using Keyword Research, other research tools, to find product markets. They’re using the tool for the purpose that they weren’t intended for, right?

And so they’ve asked us – people have asked us about, well should I use Keyword Research? Or can I use Keyword Research to find other markets that I am not in right now? And the answer is yes, you can because other markets are going to pop up. Like if you search trash can, something specific like another horizontal market will pop up or something like it, like mesh bin or something like that. That includes another marketplace for you to jump into. But the integration here with product discovery allows for full search of new product markets that you’re not in yet using Amazon keyword search volume.

So Casey, where we touched on searching for markets that have a high search volume and low sales because that’s indicative of a lot of people searching for a product but not buying, which is indicative of a market that people are not happy with necessarily, or an opportunity for you to make a better product in. On the other hand, let’s say you flip the – so we set a minimum search volume, and we set a max sales number, right, to limit the amount of sales that are popping up for these keyword markets.

Let’s flip that a little bit, and let’s search for markets that have a minimum search volume. So we’re searching for markets that have a high search volume, and we’re searching for markets that have a high revenue, whereas before we were capping the revenue. Now we’re finding markets that have a ton of sales, right, and a ton of search volume. At the same time we’re going to throw in one more metric here. We’re going to cap out the review count.

So we’re searching for markets that have high number of sales, high number of searches, but a capped out number of reviews, something like 100. This, this is a small – and I’m just keeping it simple for podcast’s sake, but this then is indicative of markets that are getting a lot of searches and a lot of sales but are still young, right, so the markets that are still opportune for entry, basically if a market has a lower number of reviews but a high number of sales that’s a better chance of you entering in and competing.

Well this pulls up markets that a lot of people are searching for, that a lot of people are buying in, but that not many other people are competing in, something like that. Our goal with this is to really challenge the mentality of people when it comes to keywords, when it comes to research, when it comes to product research and just keyword research in general. So I would honestly, honestly encourage each of you to begin to question the way that you think about keywords and begin to question yourselves with what you’re looking for, how you’re looking for it and maybe even how you can optimize your processes and your listing optimization.

Well, everybody, we wanted to – we want to thank you so much for sticking with us. We hope that you found some value with this, especially when it comes to just thinking about processes in a different way. That’s what we want to do. We want to challenge sellers to better themselves. We want to challenge sellers to improve and scale their businesses and honestly have fun while doing it. So we thank you so much for tuning in.

Thank you so much for listening. Again, if you have any questions feel free to send us an email, hit us up on Facebook. We would love to hear your feedback on the podcast or just any general questions that you have. Whether it be something about researching keywords or researching markets, we want to hear from you. So hit us up. Thank you so much. We do this for you. If you said hey this weekend, thank you so much for stopping by and saying hey. Hopefully we will see you all sometime in the near future. Anyway, thank you guys so much. Until next time, remember, the data is out there.