RMRB 42: Standing Out In a Competitive Niche

Jake:
Hey listeners, welcome back the Empire Flippers podcast. This week I’m going to be taking a look at an Amazon FBA business in a very common and popular niche, the baby care niche. With a lot of competition, Shirine has really made his products be able to stand out through very detailed and professional looking listings. Shirine, thank you for coming on here today to talk about your business with me. How are you doing?

Shirine:
Oh, I’m doing well. Thanks for having me. I appreciate it.

Jake:
It’s my pleasure and I’m very excited to discuss this business with you. Before we dive into the questions that I have for you I want to go ahead and run through a little quick summary of the business. Again, it was built in August of 2014, has a monthly revenue of $18,581, expenses of $3,184, to make for a net profit of $5,398, which is generated on a 12-month average. Included in the sale of this business are the Sellar Central account with five SKUs, domaine and outside content and files, Social Media accounts, trademarks, and content relating to brand. Please note that inventory is not normally included in the list price. Further details can be provided to active depositors. Shirine, can you tell us a little bit about your background in building and running online businesses.

Shirine:
Sure. Actually I do this business, this FBA business, on the side. I’m actually a chiropractor. What got me interested in doing, or selling, on Amazon back in 2014 was just from the success we had with selling products related to our niche and our business here in terms of selling low back supports and cervical pillows, which are neck pillows, knee braces, what have you related to conditions that could actually help my patients. We found that selling on Amazon was very successful, so my wife and I thought it might be a good idea to look into other things, too, because we do have young children. We thought get into something that we know and that we’re experience with and that we could help other young parents in learning about. So, we started selling products in the baby niche and took it from there.

Jake:
You’ve been very successful building this business, as you said, on the side here. So why have you decided to sell it today?

Shirine:
Well, it’s because my other business, my chiropractic business, is also exploding, and we’re planning on opening up another two practices. Just right now I want to focus on that and keep the efforts towards building this business, which is kind of who I am, I’m a chiropractor, and really focus on that.

Jake:
Well congrats. I’m glad that your medical practice is going well for you. This business definitely has been going well. If you look over the last several years you notice the general trend has been upward. With that said, there are a little up and down throughout the last year, namely in quarter four of last year. Can you explain what happened there at the end of the year?

Shirine:
Sure. We had to deal with a lot of changes in terms of we’re establishing who in general was going to take care of our overseas shipments and our freight forwarding, and dealing with the new imposed tax tariffs and things like that. So, there was a little bit of uncertainty going forward in terms of what was going to stick and what was just talk, and what was just politics. We decided to figure all that out and focus on figuring that out first before we started reordering products again, dealing with inventory and all that. Back in the beginning of 2019, we established what the rules were going to be, what was moving forward, what did tariffs actually meant and what we were getting taxed on. That was the major obstacle, to answer your original question, was dealing with the tariffs and dealing with, “Okay, if we can’t handle these tariffs and be profitable there’s no sense of doing this business.” So, we figured out that that’s not the case at all and we understood what the tariffs were and how it related to managing our costs. We’re right back in business.

Jake:
Clearly, because you turned around and had a killer January. Things are like, I mentioned before, looking up. So, can you explain the current state of the business and what it takes from you, the owner of the business, to run it?

Shirine:
You know, Jake, it’s really interesting, because it doesn’t really take much time at all. We don’t spend any time on this business. It’s kind of a reactionary business to be honest with you, because like I said before I’m focused on my other business more than anything, and doing all the things that I should be doing for this FBA business, which is Instagram marketing and Facebook Ads, all kinds of different content creation, which we have done and implemented into our FBA listings. But, to really answer your question, what we focused on is, like I said, reactionary business. So, for example we react to when we get a good review. We react when we get a negative review and understand why we get a negative review if it’s not warranted.

Shirine:
If it doesn’t make any sense then, as most people know on Amazon, Amazon is very focused on the buyer’s satisfaction rather than the seller’s satisfaction. But, if you do things the right way and you can navigate through Seller Central very efficiently and talk to the right people in Seller Central Customer Service, then you could pretty much get all of the things you need and all the problems solved pretty quickly and pretty efficiently. So, one of the things that we do, I pretty much spend five hours a week, is if I see a review come in I thank the person for providing a review and I valued their business because they did purchase from us and then try to figure out if it’s a negative review, or not a five-star review, how we can fix the problem. We do that through looking at the review and seeing if we can identify their name and pulling it through up another software that we use that’s called ManageByStats. Through, ManageByStats they are able to pull up their name and order number and click on a link and then we can actually directly contact them through Seller Central.

Shirine:
That’s one part that we do. We don’t do that every day, because we don’t get reviews every day. It’s whenever they come in. Mostly it’s positive reviews that come in, so there’s not much to do when you get a positive review. You just accept that and move on. Also, what we have learned to do is when we get seller feedback on the delivery of the item and how that went. Did it arrive on time? Was it packaged cleanly? Was there any damaged items or anything like that? We have a pretty clean 5.0 rating there for five years, which is pretty stellar, mainly because we’re FBA and Amazon is responsible for fulfilling all of our deliveries and returns and all that kind of stuff.

Shirine:
But, another part of what we do actively is when we do get a product review as a sellar feedback we try to encourage that the person who is writing the product review actually switched that over to the product review page, because they’ve actually written a product review rather than comment on delivery of the item and how effective and efficient was communicating with the seller and all that kind of stuff, which is what seller feedback is for. But, some people, customers, get confused and they provide a review for the product. We try to encourage them to transfer their words without asking them to do it directly. We have to do it in a certain way so they can give us a product review, obviously with people who are happy with the product. Some of them respond. Some of them don’t. It’s definitely worth the effort.

Shirine:
Everything else that we do is just related to reordering stock when we’re out of inventory. That’s pretty much all we do. That’s not every quarter, or whenever we’re at that time where we have to reorder inventory so we don’t run out. That’s pretty much it. Sometimes there are other random things that come up that, basically, require seller knowledge of Seller Central and navigating through certain issues that are, I think, beyond the scope of this interview. There’s just so much to know. But, other than that if we spend five hours a week, that’s if, it’s just those things basically.

Jake:
And it’s very clear from everything that you were talking about that you’re very concerned with providing a good experience for your customers and having good communication there. You would, just to clarify, to put a number on it you’d say no more than five hours per week on this business?

Shirine:
I mean that’s being aggressive. Sometimes, I mean, it’s more than that, during certain times. If you’re dealing with your suppliers and trying to get shipments straight. That time with the business is always a little bit more involved. However, on the day-to-day aspect you just kind of watch things sell and that’s it really. There’s really not much to do, because we’ve built this business really solidly in terms of it’s foundation. You look at every single listing … Like you mentioned before, Jake, everything is trademarked, which allows us to get the enhanced brand registry 2.0, which is the most advanced enhanced brand registry through Amazon. What that allows a seller to do is to add extra content, images and even, most recently, now you can put video on there.

Shirine:
I mean, we took special attention to copywriting and writing really well, and clear, and explaining what the product is all about, and adhering to our customer base and trying to help as much as possible so no confusion, to really describe our product and why it stands out, why it’s special, why it would really help them, and really become problem solvers. Because we’re parents, too. Everybody in our company we were all parents, my wife and I. So, we know kind of first hand what a lot of these potential customers are already thinking and what their problems are, and what they struggled with, and what makes their lives miserable, as it did ours with our children. So, from things as common as potty training and sleeping and the basic things that every parent deals with we tried to hone in on those issues and bring products to the table that focus on those major milestones, what have you, infant and toddler stage.

Shirine:
It’s always easier for the parent to look at a listing and watch a video and try to understand without really trying to study it and see, “Hey, what’s going on with [inaudible 00:10:59]? What does it do? How can it help me? We lay that out very clear with so much content that eliminates, essentially, any confusion. Images are professional. The videos are professional. The copyright is well thought out and organized. Like you said, in terms of the other communication, as well, we really try to communicate, make the customer really happy, and satisfied, and comfortable with their purpose and dealing with us. That’s why we’ve been so successful.

Jake:
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 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.

Jake:
You’ve built this business on such a strong foundation, as you said, so what do you feel are the major opportunities for growth here that you would focus on if you were to keep it?

Shirine:
Oh, man, there’s so much opportunity for growth. Because we picked a great product it sort of sells itself, but I think that we only selling to the Amazon community and customers, I mean pretty much the Amazon community can be reached through any social portal. I’m taking about Facebook Ads. I’m talking about Instagram advertising. Social Media in general we haven’t really done at all. It’s because, like I said, I have my other profession. The Social Media part is what actually is going to add time to the five hours, or whatever we’re doing right now which, frankly, any new buyer would really, if they honed on that could blow this up and really make it much more than it is right and now. The big part of that is building a customer base, which would mean establishing a solid email list and doing that through Facebook advertising, Instagram advertising, just promoting the company and the business in general, and the fundamentals of everything we established.

Shirine:
There are so many ideas and fundamentals about the different stages and milestones in the toddler and infant stage that we implement in our content that there’s just so much information that could be thrown out to the public, that they could not just … I mean, even if they choose not to buy they could just learn, and we’d be just a trusted brand. In that sense when you become that trusted brand and build that email list it’s almost like an easy way to launch even newer products if they choose to, because of that trusted brand, because we’re giving away free valuable information through our content and through Facebook Ads, and through what have you. So, I think if you look at it from that sense, which we haven’t done except with our content, our Amazon listings, there is a massive opportunity and potential.

Shirine:
In addition, you know, everybody shops on Amazon for everything. The Amazon model that you go on there and you’re looking for any item, any everyday item, any household item, and you’ll find big company sellers. You’ll find companies that you’ve never heard of. You’ll always see companies that you’re not familiar with. We really take this business very seriously. We take the quality of our products seriously. We take the integrity of our products seriously. We take and value our customer’s opinion. We just want to make sure that they know, and they understand, that they’re buying high-quality products from a legitimate invested company.

Shirine:
So, we built a really nice website that is also a potential opportunity. We built it on a Shopify platform, and it’s actually a theme … It’s built on a theme, the same theme that one of the top Shopify stores in the world that’s making, I think they made about 30 million dollars in their store last year. I think they’re a 60 million dollar business, and we have a copy of their theme, of course with their permission, and we took a course with them and all of that kind of stuff. We learned how to put the best possible functioning website theme for highest profitability, highest reorder value, and customer acquisition, and we sent zero traffic to that website. It’s also integrated with Amazon, as well, by the way. So if you wanted to have people pay for their products through the Amazon portal that’s another discussion I can go over with any potential sellar how that works. But, we sent zero traffic to that website.

Shirine:
An additional way that this business can be blown up is just by using that website. Also tied to that website is a very elaborate Google analytics platform, which we also incorporated with this website and got from this 60 million dollar business top Shopify store. So, we took a course, basically, and they showed us their blueprint, their Google analytics blueprint, their set up. We copy and pasted everything, so the reports are elaborate. They’re very easy to understand where your customers are on your website, what they’re clicking on, how much time they spend. Everything about their experience with this elaborate website so you can understand how to make changes, what to do in terms of understanding their behavior. So, understanding their behavior is a big part of editing your website and making changes. They’ve done that to a T, and that’s why it’s built upon customer behavior and the ultimate way of increasing your profits, and making the maximum value per transaction and per purchase. So, this website is a huge, huge asset and part of this business and will really do well once it’s used in a right way and once traffic is sent to it.

Jake:
Do you feel like there are any potential risks associated with owning this business that a new owner should be aware of?

Shirine:
Not really, not that I’m aware of or that I can comment on, because just like our business … I mean, everybody knows that the Amazon platform you can’t get higher traffic from any other source on the planet. I mean, since it’s inception … I think it started around in 1994 as an online bookstore, in 1998, something like that. They’ve grown exponentially, not just year to year but quarter to quarter. It seems like they just can’t be stopped. So, in terms of if this place gets the most traffic and you put your stuff in front of people’s eyes where most of the traffic on Earth is the risk is very low. It’s a very high-value proposition to do that. As far as I’m aware of, there is no risk.

Jake:
You know, as you mentioned, Amazon is the largest buying pool that’s pretty much ever existed. You’re kind of right on the nose right there.

Shirine:
I mean, in addition to that with what we’ve experienced is repeat buyers in terms of is there a risk specifically with our niche and our business, our FBA business? We’ve noticed that we get a lot of repeat buyers because of our products that parents would possibly need multiples of, and then they refer other parents because, frankly when you discover something that helps you while you’re raising your children through those different very difficult and challenging stages, your just going to keep talking about it. Your going to refer your friends and family, coworkers, what have you to sort of grab onto your success and make it easy for them. So, in that sense it’s been also the wheel kind of turns itself and the risk is also very low, because the baby niche is always going to be something that you could always advertise to parents and make their lives easier. I don’t want to say this outright, but parents are almost willing to buy anything, young parents, to make their lives easier, especially young mothers we’ve noticed.

Jake:
And the baby niche will always be around, too. Would you commit to a noncompete?

Shirine:
Yes.

Jake:
How much support are you willing to offer a new owner during the transition period?

Shirine:
It depends. I mean, I’m willing to provide maybe a Skype phone call or two, and 30 days of email support.

Jake:
Are you open to negotiating on something like an earn out where potentially a percentage of the proceeds from the sale would be paid out in the next coming months rather than all of it up front?

Shirine:
No.

Jake:
Thank you very much, Shirine, for taking the time with me today. My final question for you. If you were looking at this business from the perspective of a potential buyer, why would you feel like it’s an asset worth buying?

Shirine:
Just like we’ve been talking about. The baby niche will never go away. Amazon is super, super strong right now and for the foreseeable future. If you look around on Amazon and look at every listing that’s available with whatever you’re buying, whether it’s from a big brand or a brand like ours, or any medium to small-sized business brand, it will be very, very difficult … I would almost challenge anybody to find a listing as clean and professional, and elaborate as our listening with enhanced brand content and the kind of copyright we have, and images, and video. I mean, all of our listings are just professional and super stellar, A+. So, in that sense, when you put even more traffic with Social Media and that foundation in front of people, it’s really hard to lose. It’s a win/win situation. That’s what I would say.

Jake:
Absolutely. Shirine, thank you very much. For taking the time with me today. I really appreciate it.

Shirine:
Hey, no problem, Jake. Thanks for interviewing me. I appreciate that.