March 31, 2017
There’s a ton of hype in the Amazon FBA space right now.
If you listen to the course creators and affiliates they’d have you believe EVERYONE is having success in the Amazon FBA space right now.
But – is that true?
It’s tough to say. Both Joe and I have friends and peers that have built businesses with Amazon FBA that are worth millions (in profit/value). Still…the hype machine would have you believe that almost “anyone can do it”.
We wanted to dig into Amazon FBA a little deeper, so we had our friend Scott Voelker from theamazingseller.com on the show to help us get to the bottom of what’s going on.
Scott walks us through his strategy for building an Amazon FBA business from scratch, his tips for potentially purchasing an FBA business, and his 80/20 approach to expanding an established FBA business.
If you’ve been curious about the Amazon FBA space, but wanted to get past the hype and hear what’s really going on, this is the episode for you.
Direct Download – Right Click, Save As
“You’ve got to be creative when it comes to money lending in this space..” – Scott – Tweet This!
So glad Scott was willing to go into so much details with us here. Did you dig this episode? Let us know in the comments!
Justin: Welcome to The Empire Podcast Episode 168. The Amazon FBA business model’s been explosive in recent years. We’ve started to see these businesses pop up for sale. With only one FBA listing in 2015 to selling nearly a dozen of these businesses in 2016, the next few years growth in this niche should continue. One of the leading voices in the space is our friend Scott Voelker from theamazingseller.com. So we decided to have him on the show to discuss his thoughts on starting an FBA business, his criteria for buying a FBA business and his growth strategies for those who have already purchased an FBA company. So stick with us. You’ll find the show notes for this episode at empireflippers.com/fbaexpert. All right let’s do this.
Speaker 2: Sick of listening to entrepreneurial advice from guys with day jobs? Want to hear about the real successes and failures that come with building an online empire? You are not alone. From San Diego to Tokyo, New York to Bangkok. Join thousands of entrepreneurs and investors who are prioritizing wealth and personal freedom over the oppression of an office cubicle. Check out The Empire Podcast. And now your host Justin and Joe.
Justin: All right Joe. So there’s been a ton of hype and hooplah around FBA businesses as so many people are looking to cash in on the trend. But I do have good friends that have built million dollar and even multi-million dollar businesses on the back of FBA. Do you think some of this hype is just hype? Or do you think I just know some lucky entrepreneurs?
Joe: Well I’m gonna the number of people being successful in FBA it would unwise to call them all lucky. And whenever you hitch your wagon to a successful company like Amazon. While there are definitely some big drawbacks, there are some big pluses as well. And I think that’s what we’re seeing here.
Justin: Yeah. There’s a lot of people that have gotten into FBA. Right? And they’ve done it through a lot of the courses, through a lot of the podcasts, a lot of the people in the space like Scott. Right? That are kind of talking about and talking about kind of some of the successes they have had and some of the successes they have seen. And because there’s so many people in it there are gonna be a lot more success stories. People that have done well. Right? And I think we saw the same thing a few years ago with drop shipping. Right? There was a lot of hype around drop shipping, a lot people getting in. And there are, there were and there still are a lot of success stories. But with like a ton of new people in the industry, there are people that fizzle out that kind of fade out.
And you don’t hear a lot of those stories in FBA right now.
Joe: Yeah you don’t. But I’m sure they have to be there as well. You know it’s always the successes tend to pop out a lot more than failures. At the same time Amazon is in the business of trying to make people successful. I mean, they don’t want people to fail. So they’re gonna do everything that they can to make it an easy platform to sell on.
Justin: Yeah I like your point about hitching your wagon to a very successful company. And Amazon to be that. Right? There are some risks that come with obviously. Amazon can change things. They just changed things with the Amazon associates program and they reserve the right to do that with FBA as well. But I mean FBA is a big part of Amazon success. So trying to promote their success I think is to Amazon’s benefit. I mean the truth of the matter is, I hear this a lot too. That oh, drop shipping is dead, FBA’s hot. Right? In a couple of the years everything will be saying, FBA’s dead, whatever’s new is hot. And there are still gonna be successful FBA businesses around in a few years. There are still gonna be successful drop shipping businesses now and there will be in a few years.
So any business model or monetization type can be successful. It doesn’t necessarily mean that it will be successful for you. But it can be and there are people that do well with it. And i think that’s an interesting point. You know we were told, Joe, when we starting off. What? Ad sense is dead. Right?
Joe: Yeah. And I think that just getting back to drop shipping I mean we have a good customer of ours who recently took one of his businesses and multiplied it by a very large number. So drop shipping still works and all of these business models. Ad sense still works. I’ve seen some very big ad sense sits come out there in just recent years. I think what tends to happen is perhaps things get a little saturated and it doesn’t become as easy to become successful. So a lot of people start to say, oh it’s dead. But if you stick with, most fundamentally sound business models should still work.
Justin: Yeah it’s dead for all the people that are looking for the easy meal ticket or they can just jump into and immediately find success. But the people that are in the business and want to do this long term, you’re much better off building a moat around your castle or finding ways to level up your business. So that you’re not competing with the newbies. As more and more people get in the space that competition heats up and you’re kind of stuck at the same type of business you had when you started. And you’re gonna be dealing and facing the heat of all that competition, all those other newbies getting involved.
You should be leveling up so that you’re not competing for the same products, for the same customers that they are. Otherwise they could pass you by or just split the customers enough to where it hurts your business. Joe what do you like best about Amazon FBA? What’s something that kind of gets you fired up about it?
Joe: Man I think the fact that it’s a physical product business. And I know that you know eCommerce or drop ship sites or physical product businesses as well. But the fact that it’s a physical product business where you don’t have to focus on how you’re going to deliver there physical products to customers you can focus more on the sourcing and figuring out the best type of product to have. And you know that pretty much the market’s gonna be there because if the market’s not there on Amazon, it’s not gonna be there anywhere else.
So if you’re the kind of guy that’s a product designer or somebody that’s really into the fundamentals of making a better mouse trap, I think FBA’s a good place for you to get your feet wet. And I think also if you have the kind of, you want to just make small little wins, you can definitely do that with FBA right now, as long as you can get past some of the inventory concerns and general costs.
Justin: Yeah I like the physical product aspect. I think that’s interesting without having to do the hands on stuff, without having to actually touch or deal with or ship the products. That’s nice. I also like the explosive growth factor where I know people that have gotten in FBA and they’re just sucking down their products right there. Just like running out of inventory and raising there prices so they don’t run out of inventory. The bad side of that is that it’s a cash flow hog. You’re constantly dumping cash flow into growth. But it’s one of those good problems to have. If you’re spending a bunch of money because you’re growing so quickly. Uh, is thy really a bad thing? I think it’s probably good for you.
Joe: Yeah. I mean you should just, you find a WY to solve that. There are plenty of places out there that will give you more money. And even Amazon themselves has a lending arm. So, definitely ways to figure that part out of it when you get to that cash crunch scenario.
Justin: Yup. So we’ve known Scott Voellker for quite a while. We have a bunch of mutual friends. We’ve never actually connected. So it was great to talk to him over the last couple of months and have the connections. I was recently on his podcast and we’re having him on ours. I mean he’s run and been involved in quite a few successful FBA businesses. And now he’s actually like partially involved in a bunch with people in his audience. So we’re gonna talk about that on the show. I think it’s just really interesting.
But he’s really open and honest. And he’s open and honest on his show as well. So ewe wanted to take some of that that he shares with his audience and see if we can like 80/20 it for the Empire Flippers podcast. I think we did that for you. But before we get to the interview, let’s talk about our featured listing of the week. Joe, what do you got for us?
Joe: Well we have a FBA listing. What a surprise. It’s listing number 40857. A business created back in July 2015 in the outdoors accessory niche. Been around for a little while here. Has had some very consistent numbers over the years. It’s making just around $7500 a month net profit and we have it listed for just over $194,000.
Justin: [inaudible 00:08:10] I was looking at the graph on this one and it crushed it in June. June last year it was a really big. And then December wasn’t nearly as big as you would expect. As you would expect for most Amazon FBA businesses. Is that because it’s in the outdoor accessory niche? Is it related to the niche of the industry?
Joe: Yeah definitely gonna say that look, whenever there’s an outdoor niche you’re gonna have some seasonality involved and June is going to be a perfect example of that because in the Northern hemisphere obviously that’s the Summer time. So yes. But that said, it still did fairly well in the other months. It’s not like dipped below the average or anything like that. So it’s been consistently a good performer and I expect the summer months that it’s coming into right now for it to have another spike.
Justin: All right buddy. That’s enough paying the bills. Let’s dig into the heart of this week’s episode.
Speaker 2: Now for the heart of this week’s episode.
Justin: I’m really excited today to have Scott from The Amazing Seller on the podcast. What’s going on Scott?
Scott: I’m doing well man. Thanks so much for having me.
Justin: Yeah it’s really, I’m excited to have you on. We’ve been doing a lot of FBA businesses. FBA businesses have been just super popular in the last year or two. And so we got a ton of questions about how to grow them, what to look for in buying them, how to expand them once you purchase them. So I think it’ll be some great conversations here. First of can tell people a little bit about your online business background and then specifically how you got into FBA.
Scott: Yeah. Absolutely. Well first off I’m just a regular guy, I have to put that out there because a lot of people that get into business think that they got have like this big Master’s degree or something. That’s not me. So anyway let’s get that out of the way. I’ve been basically working with my wife for years. You and I talked a little bit off air about this but I just started out as a contractor out of high school. Built myself up in that line of work and was building homes and stuff for people and learned a lot about brick and mortar business.
But soon after that we started our own photography business, again brick and mortar. But then I started hearing about this thing, online selling and stuff. So I said, “You know what? I’m gonna give this thing a go.” And at the time I was doing a lot of Photoshop stuff in my business. So I started to teach that stuff and started to sell templates and started on eBay really. And then I guess that taste buds going for the whole online revenue that could be generated and that’s going way back. And then we built, added to a six figure business and learned a lot through that process. And then again as just being an entrepreneur, I’m always looking for other revenue streams and I start hearing about this FBA business.
I actually started hearing about RA which is retail arbitrage. I tried it, I’m not even kidding Justin I tried it for like 20 minutes and then I stopped. Because I was like, “Damn that thing, that’s a lot of work.” Because at the time I didn’t need it. So it wasn’t one of those where I was like I’m gonna make this thing. I would of if I needed it ’cause it is a pretty great model. [crosstalk 00:10:52]
Justin: Explain what you call a retail arbitrages. What do you mean by that?
Scott: Yeah. Absolutely. And actually I’ve got a little, it’s like a little beta group right now I’m going through this with. ‘Cause I’ve met people that are doing it and they’re very successful at it. But really what it is is just imagine yourself going into a big box store, you go the clearance rack or whatever and you see that they have stuff that’s discounted for 70% off. You take that product, brand name stuff, you go to Amazon, you list it on that listing for that brand. And then you sell it, you make the difference and you put money in your pocket. It’s literally that easy of a business model.
Although you still have to know what to look for in the stores and what sells, how to look at the numbers inside of Amazon, the BSR, the best seller rank. Which we can talk a little bit about that in a little while. But like those different things. So there’s criteria in any business just like an ad sense site that you’re building. It doesn’t matter, there’s still criteria that you have to have. So really just going in there and scanning items and then seeing if there going to be able to be sold in the next 30, 60 days.
And then you just ship those into Amazon, still use FBA fulfilled by Amazon and they’ll fulfill them for you. And you just start building up this little inventory of all of these random products that could sell now or in 30 or 60 days and you just keep that going. The problem with that for me personally was that I always had to go out and find new products. With private labeling what interested me is that I could go find a product, kind of like a digital product. Like I looked at it like, if I’m gonna put all the work into getting this thing to really get some legs I want to be able to continually order.
And with digital products I found that with my Photoshop stuff is I can create like a lesson and a template and then I could sell it. But then I could sell it again, and again, and again and have to worry about it. So same thing with private labeling. Once we establish the market, establish the product, the niche, whatever you want to do and you get some legs on that thing. Then you can start really focusing on it. Now you just reorder.
Justin: Yeah the retail arbitrage is something. That’s a hustle. Like that’s not even like a business. I guess it could be turned into a business. But really it’s like … And in terms of like requiring all kinds of skills to get started, you got nothing. Like very little. So that is something people will like on their spare time on the side to kind of like just test the waters. But yeah, it’s just hard to see how that can actually become a business. Whereas if you’re actually sourcing products and shipping them to Amazon and selling through Amazon. That’s obviously more sustainable and we can turn it into a real business I’d say.
Justin: Getting people started with Amazon FBA is something that you’re particularly good at. People go to your site and all, I’ll put a link in the show notes. But your [inaudible 00:13:13] site, you’ve got like the start here page. Where you kind of like guide them if they’re new to everything that you’re talking about. You can of guide them through the process. Since then though, you’ve done what? 300 something podcast episodes on Amazon. That’s interviews with very successful FBA entrepreneurs and all kinds of stuff. So like when you started the podcast there wasn’t much out there. Right?
Scott: No and honestly Justin, the reason why I created the podcast was really for myself. So I could reach out and start interviewing people that were not just successful but they’d been through it or they’d been at different stages in the business and then I can learn from that. I’ve also always noticed that I learn better when I teach what I’ve learned. It’s like I learn it and then I teach it. Same thing when I was going back in the construction field. I’d learn a trade and then I would teach it to my employees and then I would learn it more by me teaching it.
Justin: It forces you to.
Scott: And then just … It forces you to have to understand it. And really I just … For me I got a little bit of success in the beginning and that’s what kind of got me excited about it. But I’m like man, I was listening to one little episode over here that someone would post and I’d listen to another little one of an interview over here. And I was like, I want to get like nuts and bolts like all the way through. So I want to put this out there for myself but also share it with other people. And that’s where it kind of took on kind of, I guess the podcast is kind of where it started.
And I never knew it would blow up into what it is today. But yeah, I mean we’ve helped thousands of people now. But yeah it’s really just to me I wanted to create that resource for people to have and then just kind of go through the process. And it’s funny you say like I’ve interviewed a lot of successful people. But I’ve also interviewed people that are just regular, everyday people that started and now they’re making $10,000 a month. And yes that’s successful but there’s some people that are making $100,000 a month. It’s like, yeah, just different levels.
But I love the ones where people are like, “Scott I started listening and then six months later I’m making $5000 a month revenue. And I wasn’t making anything and now …” They email me back six months, “I’m making an additional five” or whatever. Like those are the stories that really, really get me excited.
Justin: Yeah, it worked, I’m making some money I make through this. Well one thing that I guess I can say it bothers me. Is like with FBA in particular, I’ve talked to so many people and some of them are … They’re hustlers, they’re good entrepreneurs, they’re on their way anyway. So they’re gonna do well and they happen to do well with FBA. But six months in they’re like, “Oh yeah, we’re doing 50,000 sales a month.” And just everyone’s crushing it. And I don’t hear anyone that’s not crushing it. Like everyone’s just crushing it with this business model.
And I was like look that just can’t be true. And this is when we first started looking at and hearing about FBA a couple years ago. We’re like, “This just can’t be true.” And we looked into some of the issues with it and there are some. From your perspective what are some of the challenges or concerns with building FBAs? For anyone who’s looking at this with a skeptical eye. Like what are the legitimate concern? What are the legitimate things where it could be problematic?
Scott: Well I think with any business there’s always those. Right? It’s like you gotta think about what the risk. Like there’s always gonna be risk. No matter what you do. But yeah, I would say the biggest thing and kind of going back to it. And I’ll be totally transparent here on your show. I know you guys love transparency. Like I came out of the gate like on fire. Like I came out in the first 90 days and did over 40K in revenue. And I’m like, it’s like wow this thing is awesome. This thing works. And it validated it for me. Got me excited. And then from there we did 118,000 in six months.
So these numbers were really. So I’m like on track to do probably close to 250,000 my first year. We did over that. We did over 300. But now the second year I started to see some of these issues starting to come up. And what those issues were is really my first product, actually my first two products were really just going after the product that everyone is going after. And I think that’s one of the big things. If you’re going after the sexy product or the one that everyone’s riding the new trend, that’s dangerous. You’re gonna get some success probably in the beginning. I’m not gonna lie. Depending on how competitive it is, maybe if you’re first one to market.
But then you’re gonna 100 other people come in and doing the same exact garlic press that everyone else is launching. So I think the biggest problem I see people is going so shallow as far as they don’t dig deep enough into a niche. For example, don’t just look at the silicon case for the iPhone or the new device. Look for the hinges that hold the barn door on. Like those are the things to me that people are missing. Because you know what? It’s only doing 300 sales a month but you’re making $10 profit per set of hinges. Right?
Justin: And it’s boring.
Scott: Yeah you’re not gonna brag to, “Hey Justin I’m selling these hinges.” It’s like cool man. No I’m selling these iPhone cases and they do this and they do that. Like I don’t know.
Justin: Boring niches make a lot of money man. I’ve talked to people to that are either in or around like the sanitation industry, they’re in or around plumbing and like they just make a lot of money. And you’re like that doesn’t sound. Like it’s not the one you brag to your friends about a cocktail parties. But it’s just repeatable cash and that’s helpful.
Scott: It totally is and I do want to stress that. Because I want people to dig deeper when they start to look at products. Anybody that asks me like, “What kind of products do I go for?” I’m like number one, yes tools are great and there’s a lot of them. And you’ve had Greg Mercer on the show, love Greg. Him and I are great buds and like we hang out, it’s awesome. And he’s got a great tool suite. He’s got awesome tools. But I always tell people before you even use the tool just start digging in your own personal life or people that are around you. And you’ll be amazed at what you’ll discover. And then those tools can help you drill down to see, yes there are products in this niche.
And oh there’s these accessories that go with that could make sense. I’m not gonna sell the Dyson vacuum cleaner but I’m gonna sell the filters or the brushes for that Dyson.
Scott: You know what I mean? Like dig deeper into that. And don’t just rely … Everyone wants the tool to give them the product. Like you gotta start somewhere. Right? I had a guy, actually we were doing a workshop and we were just going through live. Just kind of like skimming through like what Jungle Scout the web app was bringing back to us. And we seen these little gumball cases that hold the gumballs. It’s like the one with the plastic cap in the bottom and it snaps together. And I’m like, okay everyone’s seeing this inside the web app. Everybody’s gonna go after this one product. Well let’s drill into that niche.
Well we could sell gumball machines, vending machines accessories, all of these different things around this market that aren’t necessarily showing up in the web app because they’re only selling 250 a month. People are looking at the ones that are selling 500 a month or more. I like the ones that are making 300 a month, 10 a day and then making $10 profit. Hopefully making $100. Like that’s it for me.
Justin: Yeah. It’s for sure [inaudible 00:19:29] like the long tail. You’re going after long tail stuff. Right?
Scott: Exactly. Yeah you know all about that. Right?
Justin: So one of the things that I found which is like a problem, it’s one of those good problems to have. Right? Is a lot of successful Amazon FBA businesses or FBA businesses, they’re growing very quickly and it’s a cash flow issue. So the more profit they make they’re like constantly dumping that into more product, more inventory, finding new products. And so like everybody can actually there using credit cards, they’re using credit to do whatever they can to grow out their business. Because those early stages, the first year, two years, you really wanna grow. You’re like, I don’t care about profit I’ll put that off.
Just I knew I what I need to survive but I’ll put it off for now while I grow big. And that was a problem in terms of like people having the cash to kind of grow. Is that being solved now in the FBA space? Are people … Are there easier ways to find cash to fund inventory and to keep up?
Scott: I’ve heard of a couple services out there. I’m not gonna menton them ’cause I haven’t really used them. But there are services out there that will kind of work with you on getting your cash quicker is one way. So instead of you having to wait ’til Amazon gives you the money, you can get it two weeks early. Those types of things. So those I’ve heard of-
Justin: Almost like a payday loan. I hate to say that but it sounds like-
Scott: Yup. Yeah. It’s exactly what it is which is kind of eh I don’t know. And so there’s that. But you’re 100% right. Like Amazon will also give you, if you have a history they’ll actually give you a really good rate on money to invest in the product because they know the product’s selling. So they’ll in turn, right in your dashboard. Like you’ll see, “Hey Scott we’ve got $25,000 available for at 1.9% for the first six months. After that it goes to 11.9” or whatever. So they make that available too because they’re sure that it’s selling because it’s … Because if they wanna make that product sell again, they can. All they gotta do is give it more exposure and they’re gonna be able to get their money back.
So it’s an easy win for them.
Justin: Well Amazon seems to be in the best position to lend that money because they know for sure what’s selling, what is working. They can do it through the dashboard, they know your history. I think though for some of our listeners, particularly the investors like that is an interesting opportunity. How do you fund inventory? How can you do that? So I think there are opportunities from an investor’s perspective to get into that. And there are … I know a bunch of FBA guys and gals that are running their FBA businesses that are cash strapped only when they are growing it.
Now they get to some point and I’m sure you did too, where you were like, okay well now I can collect my due. I can start getting paid on these businesses.
Scott: At least something.
Justin: When does that normally happen? Is it like two years in, three years in?
Scott: I think it is going to depend and I know everyone loves that answer. But it really is gonna depend. I mean I also think that you should almost create yourself as a bill. It’s kind of like pay yourself first. There’s a book out there, I forget who wrote that one. I’ve read it before it’s kind of like profit first.
Justin: Yeah. Mm-hmm (affirmative).
Scott: You know what I mean? So I do believe in that mindset. Because if not you’re never gonna pay yourself. You gotta act as like you’re part of the business. And it doesn’t have to be much. Maybe it’s $500 a month. Whatever it is. And then you’ll find a way to get the money to reinvest into that inventory if you have to. So I think I’m a big fan of that. But I do think that I’m seeing like generally after like a year, year and a half is generally a good rule of thumb. But again going back to investors, and I’m kind of in this situation right now. And I know we’ll talk a little bit about this too. But it’s like it is a great opportunity for someone that wants to put some money in and get a good return back.
Like as an investor and not touch the business. Like I think that’s a great … Like honestly, you can’t go and invest your money in a business and get that kind of return. Now obviously you have to have things written up, you gotta be on the up and up with that. Because you don’t want to hand over 30 grand and then be like, oh you’re gonna give me 10% and then all of a sudden it’s gone. So you wanna cover yourself. But there’s a great opportunity for partnerships. I’m actually working with a brand right now that I actually now that obviously ’cause I have the podcast stuff I have some good connections. But I have a guy right now who’s willing, I mean 50 grand at my disposal.
Like all I gotta do is just let him know and we’ll invest 50 grand into a product. He’ll trust me. You know what I mean?
Scott: So if you have that whether it’s a family member which eh, sometimes that’s a little risky. But if you have someone that knows the business somewhat or at least you can tell them, explain to them and say “Hey I’ve already done this. I’m gonna launch two more products. This is what I plan on them to do. You’re gonna have this.” Or maybe even create maybe some type of ownership, kind of like a 5% ownership or something like that. Or … You know what I mean? You gotta be creative. I think you and I talked about this on our podcast when you ere on mine. It’s kind of like you gotta be creative when it’s about money lending in this type of world.
Justin: I think it’s interesting because you have like the right audience for that too. So in terms of you getting involved in funding inventory or putting together an investment group that funds that inventory. You’d be in a great position to do that. I don’t know, I’m guessing there’s enough margin in there. I’m guessing there’s enough money in it. I don’t know, it’d have to get … I don’t know if there’s enough for you. How do you carve it out? How do you make it make sense? But you’d be in a great position to do that. You know what I mean? Like you’re in the space.
Scott: I know. My only problem is with that is because I am so involved if I go in that, again it’s that time issue. It’s like, yes I could lend the money over but then all of a sudden it’s like … I don’t know maybe it’s just me but I like to kind of see what’s happening, so I know that it’s moving along. So I can-
Justin: Yeah. It’d be hard to involved.
Scott: Be sure. Yeah. I want to involved. So it’s kind of hard. And right now I am in a good position because I’ve kind of went away from even my own brand in a sense. Because like I said in the beginning I … And it’s still, this thing did over 250,000 last year just from doing nothing, that’s only got three products. And I’ve kind of, like I told you it’s like I’m just kind of letting it sit. But we did a test brand. We did over 100 grand with a test brand with only $15 products. And then there’s another brand that I’m working with right now that’s … Again I’m just as like, I’m an investor/advisor. And I like that because all the day to day stuff that’s being done.
It’s like with everything else that I’m doing it’s just hard to do but it gives me more opportunity to kind of get my hands in more businesses.
Justin: Yeah. And you could expand your reach that way. So if your be able to advise a group of people. This person here, that person there. Even bring them together and like kind of talk about strategy and stuff. Like it’s a way for you to get a piece of lots of different businesses and I think expand your reach in your business. Right? You’re building your empire. That’s a way for you to do that which makes sense. One of the concerns as people are building these FBA businesses and they get larger and larger. Let’s say they get to the awesome five figure a month mark in profits.
So they break $10,000 a month in profit, break 15, break 20, break 30. And they’re like, okay well what if Amazon just shuts me down? Right? What if I log into my account one day and I realize Amazon pulled the plug? What are some risk mitigation factors for people worried about Amazon pulling the plug on them?
Scott: And that’s a big concern. It’s a big concern for me today. I think anyone that’s starting these businesses it’s a concern. Because you’re right. I mean one message to you could be like, “Listen” … And I’ve seen it happen. Not to myself but people that I’ve interviewed. I had this one guy was doing like 60K a month and probably 30% margin. And with I think it was like two claims that it was a violation of a patent or something. And it wasn’t. But because of that, it shut him down for like six weeks.
Scott: That’s ton of lost revenue and it was a headache and all that stuff. But it is, it’s a concern. So my thing really is as soon … It’s funny ’cause I’m right in the beginning stages right now of working with a brand and we’re gonna build this thing out like almost from scratch. And it’s like I’m starting to go through that process in my head. Like okay, what are the building blocks to make sure that we set this thing up right? And really it is about building out your external stuff. Almost beforehand in the sense of where at least you laid the groundwork. So email list, number one. Like that has to start day one in my book. And now that I have the experience, not just in the Amazon world but in my other digital products world and all that stuff it’s like I know the power of that.
So that’s our first thing. Like okay, what’s gonna be our thing and how are we gonna get emails and then how are we gonna drive them to our first product when we launch it on Amazon?
Justin: So you’re saying look, take advantage of all the value that Amazon brings by bringing you the customers, bringing you the sales. You get all of that but you should be working to build your brand off of Amazon as well. Have a business that’s, lives outside of Amazon. With that though, ’cause I see this all the time. Where let’s say that someone’s doing 50,000 a month in sales, they’ve got the 30% margin or something and they’re crushing it. And they’re doing $3,000 in sales on their website. It’s tough because we’re like look expand your website. And they’re like but if I put more 10 hours a week more in and why would I not put it in a FBA business? Because that’s the one that’s crushing it for me.
If I go up by 20% there it’s a way better return than even messing with my website. Like that’s a struggle.
Scott: It is. It is. And here’s what I want to say to that. Honestly someone that is … You and I have talked about this a little bit privately too it’s kind of like it’s the Amazon crack. It’s like you get on that Amazon crack and all of a sudden it’s so good. I mean I got a guy right now who went through my class, he’s doing over 200,000 a month in revenue. And I asked him the other day, well not the other day it was about a month ago. Maybe two months ago now. And I said, “Hey have you started to build that external stuff?” He goes, “No.” And he said to me, he goes, “It’s the Amazon crack.” He literally what he said.
Because it’s so good. But it’s so risky. It’s like you better be banking right now. And then you hope to heck you don’t have a ton of inventory that’s locked up in there. Because now what do you do? So you’re absolutely right. It’s like where do you go from, okay well I’m doing so good on Amazon. But my thing is is and I know this for a fact because well you know. I don’t know if you know [Mike Jacknis 00:28:38].
Scott: He’s got a brand called [Color It 00:28:40] and he started that from pretty much scratch. Built that into a seven figure business but not all of his sales, I would say over 50% of his sales is coming from his own channel. And his own channel isn’t just a website. And this is where I think the big aha moment should go on for anyone right now. Is it’s the sales funnel outside of Amazon, not just website traffic. So when you can take someone and bring them into your world, do a little retargeting, ad to them, bring them to a piece of content, educate them, whatever then bring them back.
Like create that whole-
Justin: My email list, my YouTube channel, my Facebook page, my-
Scott: Everything. And then everything is driving them back to more content and then always back to an offer. Like that to me is a seven figure business all on it’s own without even Amazon being involved. But it takes work. It takes figuring that out, it takes the strategy, it takes setting up these different pages. But so many people think, okay I put a Shopify store, I get some SCO or maybe I drive some ads to a certain thing. And then I’m gonna get a ton of business like I’m getting on Amazon and that’s just not gonna happen. You have to know how to do that and drive people through your own sales cycle.
Justin: One of the questions I get from FBA sellers is let’s say they’ve been working on a particular product, they’ve been trying to sell it for three months, six months. They got their FBA business. What’s the sign that they’re on the right track? Like what’s a sign that they should drop their product, move on to something else? What’s the sign that it seems like it has roots and it’s gonna make it?
Scott: Yeah. That’s a great question. My first thing is always like number one it’s always product research. So if you’ve not done your product research properly where you really dig deep. And actually there’s one episode that I will tell you to link up if you can, it’s episode 189, it’s theamazingseller.com/189. And that one there I go through the process, even in the video. I do a podcast but I also do a video talking about like these different filters that I used to kind of go and dig through and also prove the numbers. Like don’t just look at the surface numbers and then say, oh what happened? You gotta go deeper than that.
Is it a trend? Is it seasonal? Like all these things. Because once you launch, you want your best chance of getting that thing sold. And to me a good test is if you launch the product, you’ve done good optimization, you got good images, you got all that stuff lined up. And you’ve done the product research and you turn on pay per click, you should start getting a few sales trickling in. If you do not, something’s wrong. Like that’s my test. Literally no reviews, no nothing. If you can put a product up and start driving some pay per click and start getting some sales. I mean not a ton just a few [crosstalk 00:31:00]-
Justin: Doesn’t mean an amazing ROI or anything but people have to be buying stuff.
Justin: If you’re paying they should be buying.
Scott: Exactly. If people are paying to buy that product that’s a good sign. Because we know that, okay we’ve done our homework, we’ve got that. When we haven’t even really dialed in the pay per click which is a whole ‘nother conversation. So yeah, that would be a good sign. The bad sign would be you did that and it didn’t work. Or maybe you went out there and you maybe did a promo, you gave 100 units at a discount to hopefully spike your sales and that’s didn’t work. And actually there was a guy recently, right now I’ll share this story with. Who actually reached out to me and we actually just did a hot seat session with him.
But he was wondering, he was like, “Why isn’t my product working? I followed everything that you said and it’s just not working.” And so I said, “Well give me all your stuff, let me take a look at it and I’ll go through it.” So we jumped in and the one big thing and this is a big lesson for a lot of people. Is let’s say for example he was selling a silver garlic press. He thought one day it would be really cool to be different to sell a brass one. Well no one wants a brass one. So when they’re scrolling for a stainless steel garlic press, do you think brass is going to show them or someone that’s looking for a stainless steel?
Stainless steel in my head is silver. So the minute … I mean not that it has to be but it is. So when they’re scrolling through they’re not gonna click on his. So all of a sudden just because he thought he invented this new thing in a sense. He came up, he was creative. But no one said it. Now you can flip that around and say, well okay. What if you were doing research and part of the research is you’re digging into some reviews of your competitors. And they sell a silver one and everyone’s saying they want a red one and then you come out with a red one. That’s the right way to do it.
But you can’t just guess. You can’t say, “Well I’m gonna throw one out there and see what happens.”
Justin: Yeah. There was a group, years ago I read about them. Couple guys in New York and they built this huge [inaudible 00:32:40] of people and part of their research into the niche was looking for product reviews that were slightly negative. And looking for changes they want to make. This is like the consumer electronics industry and they look for like slight changes or features and then they would put a whole team on it, they would a product and they would put it out in the market. And they were just hammering. They did super well with that strategy too.
Scott: Yeah there’s a post that was written, it’s called the whisperer. And I believe that’s probably who you’re talking about.
Justin: Yeah. A couple of brother or something?
Scott: Yeah the Amazon whisperer. If you Google that you’ll find him. Might even want to drop that in the show notes. That’ll be a good one for people to look at because it’s incredible, you’re exactly right. He had a full team. Now you don’t have to have a full team. But you literally just go through the reviews and you’ll see people are saying, “Well the garlic press smeared. The garlic doesn’t clean well. It’s not dishwasher safe.” This, that and the other thing. You fix those problems, bring that to the market, call out the problems that are fixed. Now all of a sudden you’ve got a better product.
Justin: All right so let’s talk to people that are looking to potentially buy FBA businesses. We’ve, I think 2015 in December we had our first FBA listing. It was a FBA business listing. And then sold around a dozen last year for a couple million dollars. So like did a ton of FBA business in 2016. I see the same thing in 2017. We’re seeing a lot of businesses listed, we’re seeing a lot of businesses sold. So I see it being kind of a hot market for that right now. Have you bought FBA businesses? I know you’ve been on the market. Have you bought some? Like what was your experience there?
Scott: Yeah. I have not. I’m still in the market though Justin. I still am. And I’m constantly looking at the site. And I’ve got a few other, again, resources that can, I always like to say “Hey if something comes across your desk let me know.” But yeah, definitely in the market, have not done that. Our good friend [John Haver 00:34:13] has done that and he was successful in doing that. And his business model is very similar to what I would be doing too which we can discuss. But I haven’t done it, I want to do it. Again it’s like you don’t want to always put all your eggs in one basket. So that’s why I like to diversify. Even if I’m just going after FBA businesses. I’d like to diversify and have a few different ones going on, or at least my hands in.
So this way here I’m not relying on just that one seller’s account. ‘Cause that one seller’s account goes down, we’re in trouble. But yeah, I’m in the market.
Justin: Yeah. So this is something you’re actually looking at right now. So you’re thinking about, this is on your mind.
Scott: Yup. On my mind.
Justin: What’s your general criteria? Is there anything too large, too small? Any like obvious no’s or like I would never do it if it had x?
Scott: Yeah. I’m personally not looking at the ones right now that are over like 250 or 300,000. And I’ll tell you why. I don’t want to necessarily just take over a brand that’s already kind of doing well. I want to take one that I can see that I can expand upon, that I can build and make better and build it bigger. I want to see holes in it in a sense, to where I can come in and fix them or add more product to that to make that better. I want to add maybe build out the external channel that’s not already there. Maybe hook up with an influencer that can help to push the brand. Like I’m looking at that because then I can come back to you and go, “Hey Justin, I got this site now. Let’s go ahead and list it and let me exit out of here.” And we can go ahead and get the 30x multiple.
So that’s kind of what I’m looking at. I’m not looking at the one that you have for sale that’s a million dollars because it’s so successful like right now. I’m not looking at those.
Justin: You know what though Scott? I’ll tell you, like what you’re saying is generally true. So if it’s selling for 1.5 million, as a general rule they’ve expanded to more channels. They have in terms of traffic and sales channels, they’ve got some social media, they’re definitely on the paid traffic. Then going usually that’s the case. But it’s not necessarily the case. Like there are businesses where it’s high volume, maybe it’s lower margins or something. Like there are problem businesses or I guess opportunity businesses that are larger too. So you may want to open your scope but still have set criteria you’re looking at in terms of it only has, I don’t know, between three and 50 products or something. You know what I mean?
Justin: Like make sure it’s limited, it’s only, it’s not selling in Amazon Europe or Amazon UK or whatever.
Scott: Well and I think the other challenge with that for me though too right now, and again it’s not that I couldn’t do it. It would be just more work. Is that then from there, if I go over something like that, personally, I’m not gonna throw my money in all at that. I’d probably bring in a partner or two. You know what I mean? So now we kind of gotta look at how we’re gonna divvy this up.
Justin: Yeah. Other people and …
Scott: And we got other people. And I come from like I said, back in the contractors world I was managing a lot of different people. And I swore I would never have employees again in my life. So I’m trying to stick by that if I can.
Justin: Do you not have employees?
Scott: I don’t have any employees. I have VAs. I have people that work on my team. But they’re not an employee. I don’t have to worry about all the stuff that comes along with having an employee. But yeah, I have virtual assistants and stuff and people on my team that help me. For sure.
Justin: Cool. Where are your VAs located? Philippines? India? Are they in the US?
Scott: No. I can’t say no. I’ve got four on my team right now that more of my immediate team and those will then, I have one that will actually, they kind of go out and find the VAs to fill the certain roles. So it’s kind of like I’m on top kind of looking. And then I’m like, okay what do we have to get done? We gotta get graphics done. So we need to find a graphic designer or social media poster. So where are we gonna find them? And then they’ll go find them, vet them out, get them trained and then we kind of have them on the staffs kind of thing. So we do have some in the Philippines.
Justin: This is a little off script a bit but I’m wondering. Like in terms of hiring people, do you have a script for hiring people? Do you let other people hire or do you make that decision? In terms of VAs and contractors.
Scott: To me personally that’s one less thing that I want to do so basically and I trust everyone that’s on my team. And it’s funny how … If you want I can tell you how the team kind of got built.
Justin: Yeah, I’m interested. Yeah.
Scott: So okay, when I started this whole thing I got into a little, I started … And anyone out there that’s want to kind of start their own little mini mastermind. Just go out there and reach out to people that you feel like you’re gonna resonate with. In any group, Facebook, forums, whatever you want to do ’cause that’s what I did. I went out and I seen this guy that was posting on there and we were kind of helping each other through some different questions. Before I even had the podcast. And I say, “Hey you want to get together? Like maybe once a month we can kind of share ideas.” Yeah, yeah, yeah.
So we did that. And we become really good friends and now he’s a business partner within The Amazing Seller in a sense. Where he helps me with training and helps me with all kinds of stuff and he’s really smart. So we kind of formed that. And then from there he already was working with a consulting team of his. ‘Cause that’s what he does. He does a lot of consulting. And so he was able to bring those guys in. And then now they’re part of my team. And now those guys had skill sets that were really good. Like fusion soft or whether it’s hiring VAs which I don’t really know how to do and don’t really want to do.
So they already had these skill sets and really just kind of came to me and said, “This is what we have, this is what we can do, this is our process. What do you need?” This is what I need. And then they would find it and they would come back and do some test stuff. And hey, if the images looked good then great. Scott, are these good, are these within brand? Yes they are. Okay, cool. Then that’s good to know. We gotta tweak them. So I would just kind of give the high level stuff and then would do all the refining.
Justin: Awesome. So you actually found your partner in the business through a mastermind?
Scott: Yeah. Just again, just by reaching out and we hit it off and I mean we’re good friends now too. So we developed a really good friendship and now his partner, who is in that consulting business, is now a really good friend. And so it really worked out. We’re really tight as a group now and that really helps too ’cause I can be honest and I don’t have to worry about hurting people’s feelings and all that stuff.
Justin: Yeah. It’s fun early on. Like you’re talking to these entrepreneurs and some of them like do really, really well. Some of them don’t do really well. But you kind of come up together. You know what I mean?
Justin: So you learn all this stuff together. And you watch each other become successful. Some do really, really well or have like growth spurts. And you’re like, oh you’re crushing it now. It’s great.
Scott: Yup. It’s cool.
Justin: Let’s get back to the buying FBA business. A little bit with your, kind of like what your requirements are. Like do you look for a particular number of products? I mean you’re looking for businesses that are under utilized. What does that mean to you?
Scott: Well again, and again I have already reviewed a handful. And it always come down to really for me though it’s like the one thing that kind of stood out to me. There was one I was looking at, I think it was like maybe 70 grand, maybe 80 grand. It wasn’t that expensive and I looked at it. And I’m like, okay cool. It’s doing like 2500 a month or something like that, net. But I looked at the numbers and the thing that I look at too is I look at fourth quarter. And if you’re doing 2500 or maybe 1500 and then fourth quarter you did 9500 and then that’s your average. That to me is a little alarming, personally. Because now I’m like, okay well those numbers are great. But I’m gonna buy the business now, it’s not fourth quarter and I’m gonna be doing 1500.
Like I’m gonna have to wait ’til next fourth quarter and hope that 20 other competitors didn’t come in on this one product. ‘Cause that’s all it was. It was one product. I’m like eh. And that’s not good for me.
Justin: It’s like a Halloween business or something. Like oh my god, we better have a good Halloween next year.
Scott: Yeah. So I’m like, no. That’s not gonna work for me. Unless I was able to see it and then go okay, immediately I’ve got three products that we can roll out. Or maybe it’s already aligned with one of the other brands that I have. That’s the other thing I look at. I’m like, okay, this here we can bolt this on to here and then we can almost like be our own competition with each other. That’s actually a good strategy.
Justin: Do you try and do the math? Like let’s say it’s a bolt on and parallel to another product that you have. Do you … If you’re like, okay I’ve got an email list for this. Do you try and do the math there? And say I think I could sell to x amount of these customers and then like try to figure out what the value is. Like what the value to you based on that.
Scott: Kind of.
Justin: Or is that just kind of a guessing game?
Scott: Yeah. It’s kind of a guessing game. And I also look at like, okay. If I was to send this out to an email list that we have now that we’ve built for 10,000. Of 10,000 subscribers in whatever, the barbecue niche or whatever. Am I able to now push that product? Or does that product really not align 100%? So yes I would definitely take that into consideration for sure. But the other thing is though is I don’t always look at just the FBA businesses. What I’m gonna do, what I generally do is I’ll look at the businesses that are generating Amazon associates commissions. Because now what I look at it is I go, okay let’s see. I’ll take that garlic press that they’re selling and they’re getting six, to seven, to eight percent commission.
Whatever they’re at for their level. And now I can swap out that link with my garlic press and I’ll make 30, 40%. And all I really gotta do is swap that out. But it has to make sense. So that’s another thing. Because now I can buy that thing low and almost instantly, once I get a product to market, I can almost take my revenue and double it.
Justin: Double dip. Yeah. For sure.
Scott: Yeah. For sure. So that’s another one. That actually excites me more than already business that’s selling on FBA, to be honest.
Justin: Yeah I was gonna say-
Scott: Because this way. Yeah.
Justin: With an FBA business you’ve got the skills to create products and come up with products and do all that. Like why would you buy an FBA business at all? Like why don’t you just focus on the products? And why spend the cash and just put the cash into growing out the business? Is it a time thing? You’re trying to save your time?
Scott: Yeah. It really is time. But it’s also just, it’s gotta be no brainer to me. You know what I mean? It’s like … And a couple of them I was kind of playing in my head. I’m like, ah that’s one looks good. I know I could probably do this, it gets a ton of traffic. But this one here has a private blog network that’s driving the links. Maybe that’s gonna go away. I don’t know, I don’t know if I wanna do that. I know about that. I don’t … I don’t think I wanna do that. They got 50,000 uniques a day but if that PBN gets taken down, we’re in trouble. Maybe we’re gonna lose our SCO overnight. I don’t know. You know what I mean?
So there’s those things. Or I’ve also seen a couple that it’s like, great numbers. Maybe you buy it for 50 grand and you know that you could probably build it out. But it’s got one product and it’s selling on click bank or something. And I’m like, eh I don’t know man. You know?
Justin: It’s gotta be … How you asked that it reminds me of [Derrik Severus 00:43:38] and his hell yes or no strategy.
Justin: Like in terms of you can get involved in anything. It’s either a hell yes or a nope, gonna pass. And when you start to get really busy and your time’s limited, that’s not a bad strategy to apply to a bunch of different things.
Scott: Yeah. I think it comes down to though it’s like, I don’t need to do it. I just want to. It’s like I want to do this, not even just for the revenue. I think the revenue will be great. But it’s almost like one of those things like once you start doing this stuff too, it’s almost like you just constantly want to be like growing and building things out. And it’s like me in the construction world, when I build a house. It’s like you start from nothing, you build a house. You’re like oh that’s really cool, that’s nice.
Justin: Scott I got a question for you. You were talking about Greg Mercer from [inaudible 00:44:14] and you guys are buddies. And I know him, I like him, I’m a fan of what he’s doing. One thing that’s interesting to me about him is the fact that he or the fact that at least it seems to me, not knowing his business as closely as you do, I’m sure. But it seems to me that he’s kind of a shoot from the hip like kind of make quick decisions. Like change on a dime kind of entrepreneur. Like he’ll hire someone kind of quick on a first meeting kind of thing. It seems like he moves super fast. He’s got a business that’s larger, to where I could see that becoming more challenging.
But it’s very successful for him. And I know another guy like that, a friend of mine named Travis has been that way too and he operates that way. And I look at Joe and I, and we’re much more methodical in our approach. And I wonder … I think ours works, I’m happy with it. But I don’t even understand how those guys operate and you seem like you might be one of those guys.
Scott: I am a very like let’s just get to it, like [crosstalk 00:45:08].
Justin: Explain that to me. How do you not agonize over your decisions as an entrepreneur? Going like, oh is this really the right choice? How do you not do that? You just don’t bother you think?
Scott: Yeah. I don’t know. I mean I do limit the risk in my mind I guess. That’s funny on episode 300 of mine I went through my whole story and I told it. And I was asked a question ’cause I actually I had my partner, Chris [Schaeffer 00:45:29] actually at, he interviewed me on the show. And he asked me, “So what is the thing with the … How do you just continually do these things? Like what do you think is different from you to then someone else?” And I’m like, “You know I haven’t really thought about it. But now that I do think about it, I think it’s I create these mental safety nets.” Like in my own head, like what’s the worst that’s gonna happen?
And if it does happen, what am I gonna do? So I almost have like a backup plan already in place. But I can see like with Greg, with him, he’s just like, I gotta hire someone. Let’s hire just hire them, see what happens. If it doesn’t work I cut them and I move on to the next. It’s kind of like products. It’s funny because we’re actually testing out this whole process we’re calling it … It’s kind of like a … And Greg does this. We call it an open brand. You have a brand like let’s say you have just a Walmart store and you sell multiple products in multiple niches. There’s no one focus.
And this way you can rapidly test products and then double down on the ones that are working. And we’re actually going through that process right now and it’s working pretty well actually. But it does require some wins and some losses and some frustrations. But I’m a very like … It’s funny, I just got a quote this morning from one of the brands that I’m working with. And she’s like, “Yeah it’s gonna be about a 50 day turnaround before they can create this mold.” A sample. “And then from there it’s gonna take another 60 days.” I’m like, damn that’s too long. That’s way too long. Like we gotta get product to market like in a month. Like I want it there.
You know what I mean? They gotta do better. So I am, I’m very much, I’m high energy and it’s like I want results yesterday.
Justin: I know people who are not successful that way. So you’re saying that you think that the way you look at it, the way you think about it is that you’ve already kind of thought in your head the worst case scenario. The worst thing that’s gonna happen.
Justin: I get how that’s helpful. Joe and I have been through a few, in our business we’ve been through like tough times. Things went to shit, quite honestly. And so it was helpful to know what that rock bottom entrepreneurship looks like. Like it’s not that bad. Right? I’m not homeless. I’m not screwed. It turns out okay. So at least I think it made me less risk adverse and willing to make, I think, bigger moves. But I know people that are kind of shoot from the hip and will make quick decisions that they’re bad decisions and they don’t work out for them.
So how do you know if you’re that type of person versus …
Scott: That’s a … yeah. That’s a tough question. Yeah, no, it’s good. I mean it’s totally … I get what you’re saying because I would never want someone to listen to my podcast and just go out there and just hastily going out there and just making a decision. And picking a product and ordering five thousand units. It’s like, I wouldn’t do that. Like me personally, like I’m all about testing before. But what I mean by that is like I’m gonna try to get a minimum order in. Let’s say that they want me to send a thousand units in or to order a thousand units. I’m gonna try to get them down to 250. But I’m gonna still get those 250 in as quick as I possibly can. You see I-
Justin: So instead of 60 days, I want it in 30 days and just move quicker. Get it over quicker.
Scott: Yeah. I move quicker and I ask. You know what I mean? And I try to get it down so my risk is less. I’m not putting in my last dollar to see if this thing’s gonna work. Like I’m not gonna throw $70,000 on a website that I’m gonna buy for your site and if it doesn’t work I’m gonna be homeless. Like it’s just, I’m not working that way. I would never work that way. I’m very like aggressive when it comes to like, you know what let’s throw 10 grand at it and see what happens. Like I’m at level where I can do that. That’s okay. But it’s not gonna be my last. And if that didn’t work then I’d have to take a step back. All right everybody just chill for a minute. Let’s kind of see what happened here.
But yeah, I’m totally that way. Sometimes it’s frustrating because I want things faster than I can get them done. But I don’t want to compromise quality either.
Scott: I am a big guy on quality even going back to my days at the construction world. It’s like I’m not a hacker. I want quality but I want it when I want it, kind of thing.
Justin: Let’s talk Scott, let’s talk a little bit about people that have bought FBA businesses. Right? They looked at it, they said, “Oh there’s room for growth here.” It’s weak in areas that I’m strong which is always a good reason to purchase.
Justin: They saw a plan for the business and they started implementing it. In terms of expanding a purchase or you growing out a site they bought or a business, not a site, the business they’ve bought. What are some additional channels that maybe they hadn’t considered? Or how can you expand an FBA business that could really help it grow?
Scott: Well I mean I think the first thing is you gotta look at, okay, all of what’s on the table. Like where are the sales coming from? ‘Cause if we’re talking only on Amazon, then my first thing very, very first thing would be I’d go right to eBay. Like if you’re not listed on eBay … Like eBay is still doing a lot of revenue, a lot of money, a lot of sales. They’ve got a lot of customers and you can sell your product there. So that would be the first one, it’s an easy one. Now you don’t have to necessarily even ship your product because you can connect even through and I don’t know all of the logistics. But you can connect it now to where your inventory is still an FBA and Amazon will ship to your eBay customers.
You just have to set it up properly. And same with your own website. You can do the same exact things. You don’t have to worry about multiple locations. You don’t have to worry about packing like you would if it’s a one off. But if you want to test eBay you could do it that way.
Justin: I’ve know guys that did that and they actually would try to list things on eBay. Like not even their own product.
Justin: That was a hustle people were doing.
Justin: ‘Cause it sells for more on eBay for whatever reason. There’s older customers there or something. I don’t know.
Scott: Yeah. Well it’s kind of like the RA model. You’re kind of do, what they call the OA, it’s online arbitrage. Where you’re buying something online, low price, then reselling it on Amazon.
Justin: All right. So eBay is the first option. What’s next?
Scott: I would say eBay’s the first option. The second one is definitely if you don’t have your own website, you gotta have your website. Like I mean that’s a must because you need a home base. And you probably already have that but you definitely need that. Your own email list, I think, has gotta be in that equation. Before I would even entertain going to another marketplace. And I mean another marketplace like going to maybe you’re gonna go to Germany and you want to start selling in Germany. Like I wouldn’t do any of those until you’ve got those other things in place. ‘Cause again it’s a low hanging fruit. Like why go through that before … And this is just me.
There’s a lot of guys that would be like, I’m gonna go right off the bat, I’m gonna go and list them on all those marketplaces. The thing is when you do all those marketplaces you gotta have that inventory into another location. So now you got two different pieces of-
Justin: Cash flow.
Scott: Or two different chunks. Yeah. Two different chunks of inventory stored in two different locations and now all of a sudden you gotta fund, you gotta manage that.
Justin: Hard balance that out. You have a lot of money tied up in inventory in different parts of the world.
Scott: Yeah. So I would try to do everything here while I could. Until I felt like, all right I’ve already maxed that out. I would also look at all the listings optimization, I would look at conversions, I would look at my pay per click. Like I would look at all that stuff. I’d look at, again, trying to build my own sales funnel. I would go out and find my customers. I’d lead them back to content. And then from there I’d re target them onto, whether it’s buying it on Amazon or buying it out of my own platform. Like I would really double down on that because I think that’s a missing piece that a lot of people don’t want to do just because it’s work.
So I would definitely do that. The other thing is is if it’s not-
Justin: So real quick.
Justin: So you’re saying that they don’t do that because it’s work. I think that’s interesting. Like a lot of times people are looking for shortcuts and they’re looking for that, kind of the short, the quickest way to the cash. And we generally say like look, look for the longer route. Look for the harder route ’cause that’s the one that people don’t take. And it tends to be … There’s a lot of lush profits in there. So you’re saying by doing the work that other people won’t do, that tend to be a better strategy for you.
Scott: Totally. Yeah. Absolutely. I mean think about that though, if I told someone that’s brand new and I said, “Listen. Here’s what I want you to do. I want you to go out and create a blog, I want you to start getting content on there. Then I want you to take your product, embed in there but then create content around it. And then I want you to put a retargeting pixel on there and then I want you to tag you Facebook ads, create a lookalike audience. I want …” They’re gonna be like, “What did you just say?” Like it’s a lot of different things.
And even when I think about it, unless I draw it out it’s a lot of different steps. But once you create this thing and it starts to produce cash on the back end. Now it’s putting in a dollar and getting two out or more, you can totally do that. And like I said, Mike Jaknis, good friend of mine, has done that with his company Color It. And totally [Steve Chew 00:53:05]. You know Steve Chew. He’s done the same thing. He’s done it with his wedding handkerchiefs and business and stuff. Like they’ve done that before Amazon was even around. I actually … Jaknis started with both but he also knew that he wanted to double down on the external stuff because he didn’t want to be at risk of Amazon happening.
So it’s a lot of work and steps and pages and autoresponder and messages and tracking and all this stuff. But once you get it dialed in, it’s literally a machine that could work. And I also think if you can find someone that can be the forefront of the business, if you have a product that supports that. So if you have a product that could lend itself to an influencer, I mean you can attach that to it. That’s game over. Like that’s game over all day long. You’re gonna build a really successful business. And that’s sometimes a challenge.
Justin: I know someone with a watch company that did that recently with a well known model and they just got a ton of traction with that. Like she posted wearing the watch or … No, the glasses, sunglasses.
Scott: Sunglasses. Yeah.
Justin: She posted wearing the glasses and like it just went crazy for them. Yeah.
Scott: It can totally work. But it’s again, it’s another thing. Right? You gotta find someone. Do they understand the model? If they don’t understand the model then you gotta coach them through all the different steps. I need to create video. Are they good on video? I don’t know. Like all of these different things come into the equation. And you don’t realize it until you start going through all pieces of what you need to make this happen. But if you figure that out, if you map it out, I’m telling you that is one thing that I would focus. Because then I’m not relying on Amazon for even those external like Amazon channels like internationally.
I’m focusing on stuff that I can control ’cause now all I gotta do is turn on the faucet of traffic and it’s gonna run through my sales cycles or my sales funnel.
Justin: It’s interesting that you mention like eBay and then you mentioned like building your own site and selling directly if you had your [inaudible 00:54:45] whatever. You mentioned that over expanding into additional product lines. Like are you assuming that you’re just doing that as well? Or is that not the first [inaudible 00:54:55]? Do you try to maximize a particular product before you expand?
Scott: No. I guess I was assuming too that they probably had three or four products.
Justin: Gotcha. Yeah.
Scott: ‘Cause I think that you could do really, really well with three or four products that work well together. ‘Cause now we have things that we can add additionally to an order just like Go Daddy does every single day and Vista Print. It’s like you have those other things that you get to offer. Or even if you have a product that you can say okay, you bought one of them. Now you can get three more for the price of two or something. Right? So you have already in that sequence. You can’t do that on Amazon. Like Amazon’s, they’re gonna target them the way that they want to target them. They might show your product, they might show someone else’s product that has more sales than your secondary product.
Now there’s ways that you can build that into your listing but people don’t usually scroll down to where that section is. But if someone buys, when they click on one of my ads and then they come to my landing page or whatever. They get in, they buy it. The next thing I can put something up on my thank you page. Go hey, thank you so much. Oh here’s a special one time offer for you. Like you’re not gonna convert everybody.
Justin: You need more control of that. Yeah.
Scott: Yeah. You have so much more control over that cycle and that flow. And then you can also say, well here’s the other one. What if they abandon the cart? You know how many people abandon a shopping cart because they got busy or maybe they didn’t see something on there that was gonna make them feel comfortable? And now all of sudden you can focus on figuring on getting the people to buy that hadn’t bought on that page ’cause they abandoned it.
Justin: Yeah. We had a-
Scott: But that’s another huge thing.
Justin: We had a guest post on abandoned cart emails and why you absolutely should, how to do them whatever. It was a really popular post.
Scott: I bet.
Justin: Got a lot of traction. ‘Caus there’s a lot of missed opportunity, a lot of missed money there.
Justin: And I think that’s almost as lost as your [inaudible 00:56:28], I guess. If you see that with an eCommerce business and they don’t have … Like check it, go buy the product. If you’re vetting a business, you’re going through due diligence, go buy the product and see if they don’t see have cart abandon [inaudible 00:56:38].
Scott: Go through the whole site.
Justin: That’s a great opportunity for you. Right?
Scott: Totally. I love all those things ’cause those are all like little things that you don’t think about. Like different sequences of like, okay this person did this. So let’s send them this. Or this person didn’t do this, let’s send them this. And I’m not saying send them an offer every time. I’m saying like they clicked on this one ad that led to a blog post about this. Right? So they’re obviously interested about this. Well tomorrow send them something else that’s related to that other blog post and then send to them another blog post or video or something. And then that gets them back to your site. It also … You build that content around the products that you offer. And then you might make a little offer at the middle or the end of that post.
Scott: There’s 100 different ways you can do it.
Justin: It’s fun when you’re hearing about all these. Like okay, well you can do this. This is a great [inaudible 00:57:19] strategy or great channel for you. It just gives you due diligence things. Okay, now I’m gonna start looking for this. Oh they don’t have that? Great, I’m gonna add that to my checklist of things I do with this business when I buy it. So Scott it’s been really fun having you on man. I really appreciate it. If anyone’s at all interested in FBA, they absolutely need to be listening to your podcast, should go check out your site theamazingseller.com. Where else do you hang out man? Are you a Twitter guy? Are you Facebook? What do you do?
Scott: I’m a Facebook guy. We’ve got a nice little community over there. I think we got over 41,000 in our group now. It’s a private group technically. You gotta request to join. But we’ll let you in if you’re cool which you probably will be if you’re listening to this show. But yeah you can go to theamazingseller.com/FB and that’ll take you right to our group there. And we got a lot of great people in there. Lot of people sharing good advice and just sharing the journey. But yeah, that’s pretty much where I hang out there and I hang out on the podcast. And yeah, I’m usually around.
But yeah, Twitter not so much. Periscope, I’m playing with that. Facebook Live, so that’s kind of where I’m hanging out.
Justin: Cool man. Well Scott, thank you so much for hanging out with us today and giving us some advice on Amazon FBA. I really appreciate it.
Scott: Justin I appreciate it and thank you so much.
Speaker 2: You’ve been listening to The Empire Podcast. Now some news and updates.
Justin: All right Joe, time for some news and updates. First up we’ve got three new customer service specialists joining us in Saigon this week. And I’m really excited about them. One of them is coming from the US, one is coming from Canada and one is coming all the way from the UK. And they all arrive at varying times this weekend. Right?
Joe: Yeah. I’m looking forward to it as well. Always good to bring some new blood on board. Get those guys hazed and trained up.
Justin: Hazed, man. The Empire Flippers hazing program. We’re not gonna go into all the details there. It’s kind of secret. Has some proprietary business stuff we got going on there. But their in for a treat. Hope they don’t hear this before they get here. I talked to Andrew about this a little bit. One thing that’s exciting, bring on new people is the man hours. ‘Cause their gonna be working for Andrew to start. And I was, “Look man, I mean basically let’s assume 50 hour work week or whatever. We’re talking 150 man hours a week.” This is a blank slate.
These guys are doing nothing right now. Right? And we get 50 hours per person, that’s 150 man hours per week to knock shit out. That’s exciting.
Joe: Yeah. I love that opportunity to, like you said, blank slate it and kind of give them stuff not only just to deal with. But looking in the coming months, maybe three, four months down the line, stuff for them to run with. And that’s really the most exciting part of bringing new people on board for me.
Justin: Yeah. One of the temptations as a manager, as a business owner is to, I’ve got all this stuff on my plate that I don’t really like or that just is really time consuming. Let me just pass it to them. And sometimes that’s a good idea, but I think whenever you pass things on to these new people, this 150 man hours a week we got coming on. You want to make sure it’s not an inefficient process or that it’s something that’s not doesn’t really need to be done. And we all that work. Right? I mean I have that work. Joe, you have that work. Where you’re like, I do it but maybe it’s not as valuable.
Let me just dump this on someone else. Well, no, no. Your first option you should look at is getting rid of it completely. If I completely got rid of this would that be fine? And if it would be or if it seems like it wouldn’t be that bad, then probably not passing it on to them is a good idea. What you don’t want is this 150 hours to get filled up with stuff that’s not important to the business.
Joe: Yeah. I would agree. You definitely have to have your processes down. But I think on the customer service side of things, while there’s plenty of room for improvement, we do have a lot of procedures in place that these guys can explore and use at least initially. I think you’re gonna be surprised at how much quicker we can bring new people new people on board as opposed to maybe two years ago.
Justin: Yeah. I think that’s totally true. And we’ve seen that kind of like decrease over time. The time it takes to get someone up to speed. Whereas now we can even say maybe two months or so, they start to provide some value. We used to say it takes about 12 months to break even. I think that’s probably shorter Joe. Maybe somewhere in the eight or nine month range now. Maybe even as low as six. But we’ll … I’m gonna hold off on that ’til we get them on board and get them trained up.
A part of this, bringing them out here is because we have our manager meet up in Saigon. Here in Saigon, I should say, in April. So we’re having them come out to Saigon along with the rest of our management team. So they’re gonna get to meet and work with everyone while we’re here which I think it’d be great. So if any of our listeners are in Saigon in April, definitely reach out. We’d love to meet up with you and they’ll be a bunch of us here. They’ll be the Empire Flippers team taking over Saigon for the month. So definitely let us know.
Joe: I’ll be there on Friday.
Justin: Yeah buddy. For our birthday weekend bash we got coming up this weekend. Another thing, we are speaking in Hong Kong at the Global Sources Summit from April 17th to 19th in Hong Kong. It’s actually [Mike Frankovich 01:02:09] who will be the speaker. I’m gonna be tagging along, hanging out and meeting and greeting people at the conference. We will be talking about selling your business, particularly looking at FBA businesses. So if you happen to be in or around Hong Kong or your planning on going to the Global Sources Summit, we’ll be there. We’d love to meet up with you. Let us know and let us buy you a drink, beer, a lunch, a coffee, something like that.
Another bit of news, all Amazon associate listings have now been updated on the Empire Flippers marketplace. With the change to Amazon associates we’ve gone through all of those listings and changed the to match what their future earnings will be based on the category that they’re in. All there is to say is there was a change in the Amazon associates program, mostly negative. Although we had one or two sites that actually went up in price a little bit. But mostly, most of them went down a bit. The reason for them decreasing is because of the change to the Amazon associates program. But all the listings on Empire Flippers have been updated and all future listings will match what their current earnings will be based on that change.
Joe: Yeah. You know Justin, I think that definitely people who are interested should check out the blog post that has the exact terms and how we’re changing all this stuff. But I think that we’re one of the only guys out there that went ahead and proactively made this change based on historic data. So that people can have a good idea that the value that they’re getting for the business is what they can expect with the new percentages.
Justin: Yeah. You know, make no guarantees in terms of future earnings. It is what it is. But we want our buyers to have a reasonable expectations of earnings. And we’re basing on what they were previously earning at the tiers and the categories they were earning. And if we know that’s not true in the future, that’s not really accurate. So we did make those changes. Previous earnings will still show differing numbers though. So because that’s based on what they were at. So just be aware of that when you’re looking at the listings. The last bit of information I want to put out here and we’re gonna put a link for this in the show notes.
Is that we need your input on content. So we want to hear from you what types of podcasts, episodes you like to hear? What type of blog posts? What’s interesting you in the space right now? And what you think we could help with. Where you think we can provide value. So we’re gonna put a link to a form you can fill out in the comments of this show. If you’re interested in helping us out or you’d like to hear something from us, you can just write in your information there and we’d love to do a show or do a blog post on it.
Next up we’ve got the listener shout section, also known as the indulgent ego boosting social proof segment. First of buddy, we’ve got a new five star iTunes reviews from [jwbbrown 01:04:32]. Five stars, says “Love the fact that they talk about failures along with the successes. I’ve learned the most from those. Thanks guys.” Well thank you so much for the review. If you’re listening to this and you dig this show, we’d really appreciate it if you head over to iTunes and give us a five star review. Or I guess a four star or three star although we don’t appreciate those quite as much. But either way we’d appreciate a review from you to let us know that you like what we’re hearing and you’d love to hear more.
On Twitter buddy, got a mention from [mattalan 01:04:59]. Said, “Easily the best post I’ve seen on PBNs. What are the rewards and risks of PBNs?” And a link to the PBN post we did recently titled, what are the rewards and risk of PBNs? We’ve got a lot of good and a lot of bad from that post. We got some people that were liking it. Some people that were not liking it so much. And so kind of the disagreements were particularly interesting. And so if you disagree or you agree with that post, definitely head over to the comment section and let us know.
If you’re interested in kind of like a rebuttal, if you disagree with it and would like to make an argument or a case there, let us know in the comments. Kind of like what your points are and if it’s particularly interesting we’d love to maybe either interview you on the podcast or have you write a guest post kind of arguing. I think that’d be really, really fun and really interesting.
Joe: Yeah. I mean I think that we try to be as fair as we could. There are definitely some risks associated with PBNs but there are definitely some good things as well. Especially if you’re an experienced buyer. And I think that this article addresses that well. So I always want to hear feedback from our listeners though. And if you come and leave a comment, we’ll definitely be sure to respond.
Justin: Yeah fat shout to Greg by the way. I think he did an absolutely fantastic job on that post. It was really, really good. Got a mention from [greatpawndesign 01:06:09] on Twitter. Said, “Empire Flippers do you guys consider social media followings when doing your evaluations? Thanks.” We do consider social media in terms of how many followers you have, how many email subscribers you have. Only in the fact that they’re adding revenue and ultimately profit. So if you’ve got let’s say 1.3 million Twitter followers and they’re active, hungry followers. They like what you say, they’re engaged in what you’re saying. I’m gonna assume that those Twitter followers are adding to the bottom line of the business.
You should be using them to draw a profit. And if you’re not, what are you doing? You should start using that list or you should start using your social media following to drive the bottom line. So if you’re not doing that, start doing that so that you can increase your earnings and increase the [inaudible 01:06:57] on your business. Now aside from that, do we attach any value only to a social media following? Like let’s say that you had 1.3 million Twitter followers and no business. So it was making nothing. But you had a ton of followers. Is that valuable? The answer is no. So simply having followers isn’t valuable.
And most people understand this because there are a gazillion ways to fake Twitter followers, to fake your social media accounts of a really unengaged audience. Even to fake engagement. So if you have a really large following it should be adding to the business’ bottom line. Now are there probably Twitter accounts there that aren’t monetized that are valuable? Sure. But that’s not the case in 99% of the cases which is why we don’t add additional value for those alone.
Joe: Yeah. It’s definitely something we have on our evaluation tool and something we’ll take into consideration. But like Justin said, has to be legitimately part of the business and contributing some way to the revenue.
Justin: Yup. [Thehappyhustler 01:07:52] on Twitter asked, “Justin do you guys sell any publishing or Kindle businesses?” The answer is yes, we do. We’ve sold some Kindle businesses. We have some specific requirements. So like it can’t be, I don’t know Joe, smutty?
Joe: Yeah. It can’t be risque. Let’s say. We’ve seen a couple Kindle businesses come our way where it was the typical-
Justin: Super dirty. Like no super dirty books.
Joe: Yeah. Well, yeah, it was super dirty romance books. And that’s how they were making their money. And honestly we’re just not interested in getting involved in those kind of, as you would say, smutty businesses.
Justin: Which is funny ’cause I don’t have any moral issue with it. Why do we do that Joe? Like why … I mean, I’ll just say this. That there was a time with our outsourcing company, at one point where there was an escort company that wanted our agents to take phone calls and vet and set appointments for the escort agency. Right? And at that point we were like, we actually needed the business Joe. But we ended up saying no and our reasoning was it’s like, I don’t have a problem with that. Whatever. I would do that personally.
I would work for a company that did that. But I don’t want to subject employees to that. Like what if they have a problem with that. I just don’t think that’s appropriate to ask them to do as employees and have them risk losing their job because they don’t want to do that or they have a problem with that. I just don’t think that’s cool.
Joe: Yeah. I mean I think you have to draw the line somewhere. We’ve drawn the line at explicit sexual content and explicit violence and explicit hate speech. I don’t think we would sell sites that were neo-Nazi oriented and talking and they were run by in some ad affiliate program based on guns. We wouldn’t sell that site. So we’ve drawn a line. It’s our marketplace. We feel that we want to make the best sites available. We want those sites to be distinguished from other types of sites.
We feel that’s where the line is in our business. And I think we do do a good job of it. Could that line change in the future? Perhaps. But we’ve been pretty consistent about it over the years.
Justin: It’s interesting. I think that might change if we actually owned the market. Like if we were the monopoly type business. If were the only ones to go to. I would probably open that up a bit because I wouldn’t want to … I would just think that if they have no where else to go, like we’re the arbiter on that. I might be a bit more open. Because we don’t have to be or we’re not, we don’t have to be so [inaudible 01:10:16]. I mean we could do quite a porn businesses. We get asked about that pretty often. We could help sell porn businesses. But it’s something we’ve chosen not to do.
Joe: Yeah. I mean I think it’s a, joking aside, it’s a sticky business.
Justin: Oh god Joe. Don’t go there buddy. Don’t go there.
Joe: Unfortunately is has, not everyone, but it can have close relationships with some shady individuals out there. And I think that’s one of the reasons that we’ve decided to take that line. I mean I think there are other types of hacker type sites that we wouldn’t sell as well.
Justin: That’s true.
Joe: And that’s the other reason. Is we don’t want to be involved with those types of individuals. And we don’t want those individuals involved with our buyers. And if our buyers want that, they can go other places and buy those types of businesses.
Justin: Fair enough Joe. Last thing I want to mention. There was an interesting blog post over at thelifestylemarketer.co. It’s actually a site from a guy named [Mark Thompson 01:11:11]. He did a really interesting in-depth report on how much various sites and monetization types sell for on the Empire Flippers marketplace. So I’ll put a link to that in the show notes eventually. But he broke them down by type and you can kind of see like which ones sell for more, which multiples. It’s really interesting study of marketplace listings we’ve sold.
And so hopefully you can take a look at that and hopefully you get some [inaudible 01:11:36] out of it.
Joe: Yeah. I love when people use our data to a make a case study. It’s pretty awesome.
Justin: That’s it for episode 168 of The Empire Podcast. Thanks for sticking with us. We’ll be back soon with another show. You can find the show notes for this episode and more at empireflippers.com/fbaexpert. And make sure to follow us on Twitter at empireflippers. See you next time.
Joe: Bye bye everybody.
Speaker 2: Hope you enjoyed this episode of The Empire Podcast with Justin and Joe. Hit up empireflippers.com for more. That’s empireflippers.com. Thanks for listening.