January 22, 2019
This week, Jake spoke with Mario about his Amazon FBA business created in October 2014 in the kitchen & dining niche. His business sells 33 SKUs, several of which are ‘Amazon’s Choice’ and ‘Amazon Best Seller’ with many high reviews. The products listings are optimized and rank for the target keywords. The products are sold across several Amazon Marketplaces including the US and all of Europe.
Find more businesses like this one on our marketplace: http://bit.ly/2EZwGWw
Speaker 1: What if you could cut through the noise in the online business world and learn from someone who has built a real business? We verified the numbers and combed through the P and L. This is not only a real business, but a real asset that people want to buy. We’re going to pull the curtain back and give you the insights this entrepreneur has discovered that you can use to level up your knowledge, whether you’re looking to buy a business or looking for inspiration to take your current business to the next level.
Hey, listeners, welcome back to the Real Money Real Business podcast. This week I got the chance to speak with Mario about his Amazon FBA business that is selling 33 skews in the kitchen and dining niche. The business has several skews that are Amazon’s choice and Amazon’s bestsellers with many high reviews and is making over $30,000 every single month. Mario, thank you for taking the time to speak with me today. How are you doing?
Mario: I’m doing great. How are you?
Speaker 1: I’m doing fantastic. Thank you for taking the time. I really do appreciate it. I get the opportunity to sit down with you and discuss this $850,000 business here, which is remarkable and very excited about it and excited to look at some of the decisions you’ve made. But before we get to the questions I have, I want to go ahead and run through a little quick summary of the business.
Mario: Sure, no problem.
Speaker 1: Again, the business was built in October of 2014, has a monthly revenue of $162,305, expenses of $132,041 to make for a net profit of $30,264, which is generated on a 10 month average. Included in the sale of this business are 33 skews, the Amazon seller to central account, social media accounts, branded website and domain, Squarespace account, customer lists, SOPs trademarks, product and prototype files, professional product video and photography. Please note the inventory’s not normally included in the list price. Further details can be provided to active depositors. Mario, can you tell us a little bit about your background in building and running online businesses?
Mario: Yes. Well actually I didn’t have much of a background at all until I built this business. The only other thing that I’ve done online was really dabbled into kindle publishing for a year or so. So essentially I went into this with no formal knowledge or experience in e-commerce. I do have a business and marketing background and I’m a professional accountant by trade, so I did have some of the business knowledge, but nothing really tied into e-commerce itself. So this was relatively all new to me when I started.
Speaker 1: Since this was the first business that you’ve started here really in the online space, why did you settle upon the Amazon FBA model?
Mario: Well, at the time, because I was in the kindle niche, basically I had a lot of marketing emails and I got this email about this course, this high price course I was being offered at the time, and the people promoting the course were basically sending off these quick videos explaining the FBA model. So after watching the five … I think it was five videos, free videos explaining the FBA model, I thought to myself, “Well I could possibly do this. It doesn’t seem to be that difficult.” But I was kind of leery. I didn’t really believe that it was that easy to do. So I just basically did a small investment, did some product research, found a good product, sourced it and basically put it on Amazon FBA and it was a hit. So in a sense, I guess it was just good timing at the time. Basically I found the right product, positioned properly, and just ran with it.
Speaker 1: So when you say you did product research, does that mean that you picked this niche and these products purely because of the research and that turned out that this would be a potentially successful product?
Mario: Yup. Yeah, exactly. When most people were running away from specific brands, like if it was a top brand or well known brand, they would run away from them. I basically identified this pretty well known brand of products and I basically thought to myself I could probably do a better job marketing it and I basically just launched in the same niche and just out-branded them.
Speaker 1: Why have you decided to sell your business today?
Mario: Well, I just currently started a new brand, so basically it’s a totally different niche. It’s higher price products, which means a higher cost products, which means I have to have more capital. So I’m essentially looking at selling to free up some capital. I also want to move away a little bit from the e-commerce side and go into real estate. So I want to start dabbling into real estate. And I guess the big driving factor right now is that I still work a full time job, believe it or not. So I basically want to free up some capital so that I can finally quit my nine to five and just focus on e-commerce.
Speaker 1: When you look back over the last year at the numbers, you notice this gigantic spike in December. Is that due to the holidays?
Mario: Yes. Typically my products perform very well during the holiday season, so you’ll notice a spike starting in late October. Then it spikes even more in November and then it hits a plateau in December, so yeah. It’s one of those products that does extremely well during Christmas, but it’s not necessarily a seasonal product. It does well throughout the entire year. It’s just that Christmas normally outperforms every other month.
Speaker 1: And that’s something that you’ve noticed year on year and you look to see again this coming year?
Mario: Oh yes, definitely. Yeah. Yeah, definitely. I have to plan early actually every … For the fourth quarter, so I currently have everything lined up for Christmas season already. So I’m just waiting for the fourth quarter to kick in.
Speaker 1: You have a branded websites set up, correct?
Mario: That is correct, yes.
Speaker 1: Do you get any revenue for the business from that website or is it purely from Amazon?
Mario: I do get sales off of my website and that’s one of the things I’d like to have more time to focus on because I see there is a lot of potential with driving external traffic directly to my branded website. Unfortunately because I do work a full time job still. It’s one of those things that I can’t devote a lot of time and attention to, and there’s also a different knowledge base that’s required to successfully drive external traffic, so I do get sales. They’re negligible compared to what I do through FBA, of course, but I do have brand awareness. So some people do directly go to my website to purchase instead of going through Amazon FBA.
Speaker 1: And then you are also on the US, Canada, UK and other various European marketplaces for Amazon, correct?
Mario: That is correct. I expanded into Canada, UK, Italy, Spain, France and Germany. I believe it was late 2015 or early 2016. and I’m also approved to sell in the Australian market, but I’m still waiting for it to pick up a little bit before I actually send some inventory in there.
Speaker 1: Which territory does the majority of traffic come from?
Mario: Oh, definitely the US. The US marketplace is by far. It’s a monster as far as the population and the amount of people actually shopping on Amazon.com. It’s incredible, but the other marketplaces are performing quite well. Some are surprising my expectations. For example, Canada has been a solid performer for me. I would say Germany is also one of my best marketplaces. And the UK. Although it’s a little bit more competitive, especially for my type of product, it’s been performing relatively well.
Speaker 1: Mario, you say that you don’t have a lot of time to be able to spend on the business and working on this business, so how much time do you work on it?
Mario: Currently? Not a lot. Unless I’m planning to launch a new product, which is where I’d be putting a lot more time in product research, keyword research, launching strategy, unless I’m doing those types of activities, my time basically … Essentially what I do is, because of my professional background, I do the bookkeeping and I basically look at the stats. I look at the conversions, keyword ranking. Other than that, I have my wife that works in the business. She takes care mostly of the customer support. So she’ll do the feedback and the review monitoring. She’ll handle returns, refunds, replacements. She does the PPC optimization on a weekly basis, but most of that is also all automated. So we do use software to automate our PPC sponsored ad campaigns.
So she spends maybe 15 to 30 minutes a week doing PPC optimization and it’s just staying on top of inventory. So basically making sure that we don’t run out of stock. So keeping a close eye on our inventory level, which can be a little bit tricky, but again, this could be automated as well. But it’s a little bit trickier when you’re operating in different marketplaces, so you have to be cognizant of what you’re holding in inventory in Canada, UK, Germany, and everywhere else you’re selling. But that’s essentially it. So at the current time, the businesses is pretty much on cruise control. We don’t spend a lot of time on it anymore.
Speaker 1: You mentioned that you think a potential opportunity would be driving some external traffic toward your own website. That does make me wonder then, do you currently drive traffic from outside of Amazon to the Amazon marketplace?
Mario: Not currently. See, in 2017 I did try some Facebook ads. I did drive some external traffic, but this success … It could be successful. It’s all about targeting. But I find that basically at at the present time, just using Amazon sponsored ads has been the best method to use, and until I basically really plateau and meet the limits as to what sponsored ads can do for me, I think that that’s where the focus should be, at least in my position. So no, currently basically the only thing we do is we’re lucky we have a lot of … All of our products are ranked quite high for all the major keywords, so it’s just a question of keeping the Amazon sponsored ads optimized.
We also use sponsored ad displays and product displays through Amazon marketing services, so we essentially only use the Amazon advertising platform right now. So if we notice that the keyword ranking is dropping for certain keywords, we just play around with the bids on our sponsored ads just to kind of boost those keywords back up and we use coupons. Amazon coupons, which has been very successful for our brand.
Speaker 1: Hey listeners, do you want to find a business that is just right for you? Head on over to Empire Flippers and have a look at our marketplace, where you can see you real businesses making real money just like the one we’re looking at today. In fact, don’t miss out. Head over now, share your email address and we’ll send you hot, fresh new listings of successful businesses every week to your inbox. Now, back to the interview.
Other than growing the branded website you have, what are some of the other opportunities for growth that you see a new owner being able to take advantage of with this business?
Mario: Well, we have a very strong customer base and we have lots of return customers as well. Our product’s kind of catered towards some professionals and basically there’s so many complimentary products that could be launched to meet the needs of those specific customers. And because of the large customer base that we do have, I do export all the customers from our Amazon account and we do create Facebook custom audiences, although we don’t actually advertise on Facebook yet, but there is a huge amount of potential customers that would be willing to buy a complimentary product. So basically one of the biggest lines of growth would be launching complimentary products to either upsell or cross sell.
We’re also currently making a lot of modifications to our bestselling products in the hopes to have a patent put on them and to basically build this moat to protect ourselves so that we’re not just a me too product, that we’re actually the market leader and we were offering something that nobody else is offering. So we do have one product that has essentially been modified. It’s got a specific component that’s unique to us and we’re currently doing some major modifications to our bestselling product to absolutely be different from everything else in the marketplace.
Now as far as other growth or opportunities, there is Walmart, Jet, Wayfairer, all these external or other platforms. At one point we were selling on Walmart, unfortunately because we’re an international seller, there was some more requirements that we needed to meet in order to sell in Walmart’s, so at this time we weren’t able to meet all their requirements, so we basically started delisting our products off of Walmart. But that’s also another growth opportunity. Again, it was something that I wasn’t able to put a lot of focus on unfortunately, but it is definitely a potential growth opportunity for the brand.
Speaker 1: Do you feel like there are any potential risks associated with this business that a potential new owner should be aware of?
Mario: Well, of course there’s always the risk of being an Amazon FBA seller. You’re playing in Amazon’s sandbox. So there’s always risk in that respect. But our business has been playing within the rules and we’ve always been terms of service compliant, so we’ve never done anything that’s considered black hat or that could put our account in jeopardy. We’ve also mitigated a lot of the risk by selling high quality products and we do have strict quality controls in place. We have good relationships with all our manufacturers and we do have third party inspection services looking at the products before they actually leave the manufacturer. So we take quality very seriously.
We also have strong seller feedback. We have over 9,000 seller feedback right now with a rating of 4.9. so we have a very strong account and we have strong product reviews ranging from anywhere between 4.2 to 4.7. And our best selling product has over 4,000 reviews with a 4.7 rating. So we have high quality products, we play within the rules, we haven’t done anything to basically put our account in jeopardy. So we’ve mitigated the risk as much as possible.
Speaker 1: What advice would you have that you would give to someone starting out and … Really though, what advice do you wish you had been told when you were starting out with this business?
Mario: To constantly learn. To always make sure that you’re always on top of the best and newest practices as far as selecting products, the best way to launch a product, the best way to rank the product for keywords. You can never have enough teaching opportunities. Basically you have to learn as much as you can in order to really maintain your competitive advantage.
And you also need to offer outstanding customer service because, at the end, the customer is what it’s going to make or break your business. And we’ve always made a point of listening to what our customers have to say. And this has resulted in us basically finding where our products we’re falling short and how to basically modify them to meet the needs of our customers. And it also allows us to listen to see what else can we be offering our customers. And I think that that’s what really has helped us become successful. And it would have been something too that I would have loved to have known at the beginning. So it would have kind of eased the learning curve a little bit. But definitely learning as much as you can is definitely critical and listening to your customer is definitely critical to running a successful business.
Speaker 1: Would you commit to a noncompete?
Mario: Yes, yes. No problems. As I said earlier, we are currently working on a new brand, me and my wife, and it’s in a totally different niche. So yeah, noncompete wouldn’t be a problem.
Speaker 1: How much support are you willing to offer a new owner during the transition period?
Mario: Essentially as much as necessary. I have no problems with offering at least three months of support to make sure that there’s a smooth transition, but if … Again, everything is negotiable. If more time is necessary, I’m open to offering as much time as needed to make sure that the new owners have a smooth transition into the business.
Speaker 1: Are you willing to negotiate on something like an earn-out?
Mario: Yeah, essentially everything is negotiable. So I’m open to any type of deal structure as long as it makes sense for my current circumstance. Definitely everything is on the table.
Speaker 1: Awesome. Mario, thank you so much. I do have one final question for you, but before we get to that I want to go ahead and run through that little quick summary of the business again. The business was built in October of 2014, has a monthly revenue of $162,305, expenses of $132,041 to make for a net profit of $30,264 which is generated on a 10 month average. Included in the sale of this business are 33 skews, Amazon’s [inaudible 00:17:31] central account, social media accounts, branded website and domain, Squarespace account, customer lists, SOPs, trademarks, product and prototype files and professional product video and photography. Please note that inventory is not normally included in the list price. Further details can be provided to acted depositors. Mario, why do you feel like this is a business worth buying?
Mario: Well, I think a position to business in a particular way where it could be very attractive to two different types of potential buyers. Currently it is on cruise control, as I mentioned earlier. So with very little time and very little effort, it can generate consistent revenues, but it also has a lot of potential for growth. We do have lots of brand awareness and we have a lot of possibility for expansion into complimentary products and we have taken all these steps to make sure that we stay in front of all our competition by making those modifications to our products and making them absolutely unique. So there’s an incredible growth potential in terms of the existing product line and in terms of expanding into different complimentary products. And also if you want to spend more time focusing on external traffic sources, it’s an open opportunity right there too. If you have that kind of knowledge and you want to expand into ad words or Facebook ads, everything’s open. And there’s also expansion into different marketplaces. So I think it’s an opportunity for both somebody looking for passive income as well as somebody who wants to expand a very good brand.
Speaker 1: Mario, thank you so much for taking the time to discuss this business with me today.
Mario: Thank you very much for the opportunity.
Speaker 1: You’ve just learned how this business works, and I want to give you the opportunity to learn more about what you can do to buy real online businesses just like this one. If you want to find out more about businesses making real money, head over to empireflippers.com and sign up for our mailing list. There is an entire world of people quietly investing their money into online businesses and seeing great returns. Now we want to help you do the same thing.