RMRB 9: Why Sell So Many SKUs?

This Amazon FBA and dropshipping business sells products in the health supplements niche, and has also managed to get on several other marketplaces. Selling an astounding 85+ products, Zachary sells on Walmart and Jet as well. With less SKUs available on Amazon than the other marketplaces, he must be doing something right because he’s making $12k/month in profit after only a year. 

Find more businesses like this one on our marketplace: http://bit.ly/2oFS2Pa

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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&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. Today I’m going to be taking a look at an Amazon FBA business along with a lot of other different marketplaces including Walmart, Jet and its own storefront on its own website, and I got to sit down with the owner today to figure out how exactly he is making about $10,000 every single month.

                                Zachary, thank you so much for taking the time today. How are you doing?

Zachary:               Very good. How are you doing today?

Speaker 1:           I am doing quite well. Thank you for taking the time to get on with me today.

Zachary:               Yeah, my pleasure. I’m happy to be here.

Speaker 1:           Before we get to the questions that I have for you, I want to go ahead and run through a little quick summary of the business.

Zachary:               Sure.

Speaker 1:           Again, the business was built in January of 2016, has a monthly revenue of $85,121 expenses of $72,933 to make for a net profit of $12,189 which is generated on a 12 month average. Included in sale of this business are the Amazon seller’s central account, domain, site content and files, social media accounts, email list, subscribe and savers list, scope and Google analytics account.

                                Zachary, can you tell us a little bit about your background in building and running online businesses?

Zachary:               Yeah, no problem. Basically when we got started, it was just me and my partner just looking for ways to make money online. We saw a lot of people doing well on Amazon. So we found a course called Amazing Selling Machine and we invested in it, and we just followed the criteria that they were suggesting and to all their students. And we found our first product, which was in the beauty niche, just the metal of the criteria that they have described for us.

                                We stuck with that one product for a long time. It was what you would call a home run product. We did really well with it for about almost two years. So about a year ago, well in the end of 2016-ish, we got into selling health supplements because we wanted to keep everything inside the US so we didn’t have to deal with the headache of dealing with the Chinese sellers and the time difference, communication barriers and the shipping and Chinese New Year, so whatever.

                                So we just wanted to find something in the US and we found health supplements and we thought that it was a very good option because on top of it being light for shipping and everything being made in the US so we don’t have any of those external risks involved, it’s just health supplements. So that means if we can turn on subscribe and save, which we can now can get repeat customers. So when you get a subscribe and saver, every sale, which if it wasn’t a health supplement, would be one sale.

                                But now if they subscribe, it’s really 12 sales for the year because they’re getting that every single month. So you move at 12 times the speed, and we thought that was very … we were fascinated by that concept.

Speaker 1:           Since this is your first online business and you’ve obviously put a lot of time into it, why have you decided to sell the business today?

Zachary:               Okay. We decided to sell the business for a few reasons. One is that I, while doing this business, I started that full time, but I switched to part-time because we wanted to invest as much as we can into the business. So we didn’t wanna take any money out of the business. So I got a full time job so I didn’t have to worry about taking money out of the business.

                                Now, so I do it now at nights instead of after my full time job, my 9:00 to 5:00, which I stay, whatever. It’s really longer, but after my 9:00 to 5:00, I come home and then I work on the business for about an hour, one to two hours. So it’s really not that bad, but it’s difficult because I am married with three children and it’s hard to have a regular life. So I’m looking to sell now to get some of my time back. I’m out of the house for 16 to 17 hours of the day and it’s just not a healthy lifestyle. So I’m trying to just normalize my life and I’m losing energy and focus and I don’t have all the efforts I can to put into the business the way that it can be done or it should be done.

Speaker 1:           Yeah. And that definitely makes sense and is a fair reason. So when you take a look back over the last year, you see back last spring, spring of 2017, the numbers were about $15,000 in net profit and then it dipped a little lower for the summer and then had a big spike in November, December. Can you just talk about why was there that little bit of a downturn and what caused the spike?

Zachary:               Yeah, absolutely. So when we were doing well back in the beginning or earlier where, like you mentioned, we were investing a lot. We’re going to go into marketing a little bit. We were investing heavily into giveaways to help us with keyword ranking. That’s a lot of investment up front in exchange for returns down the road. So that’s what we were doing, and we invested heavily in that.

                                Once we invested so much in that, that we needed to take a break because it wasn’t … we had to balance it out. We needed the time to recoup our money. So when we were doing really well, it’s cause we’re doing a lot of giveaways, ranking for a lot of keywords and then we just coasted for a very long time.

                                While we were recouping our money, we … Right, so we got the money and we instead of investing it back in the business, we wanted to just take a moment and we … perhaps not the right move, but we’ve decided to pay ourselves. So that was perhaps not the right move looking back on it. Then that’s when sales started to go down because we didn’t have enough money then to invest more into our giveaways. But it did last a long time for our give it a rankings, and then we coasted for a while, and we just didn’t have the money now to put back into the giveaways, which is one of the other reasons why we are looking to sell because it can be done. Again, if somebody comes in with the right mindset and the right resources.

Speaker 1:           Then I mean, and obviously if you’re putting in less time and money into the marketing side of things, it makes sense in that it went a little bit slower and you were just coasting. Yeah, which totally makes sense. And obviously if someone were to come in, put those resources back in, as you said, it’d be easy to get that back up. But what caused the November, December spike? Was it just the holidays?

Zachary:               Yeah, so it’s the holidays. Our first product, that home run product I was describing and the beauty product, so that, it turns out that’s super popular for the holidays. So it does really, really well.

                                In fact, we are able to about double our price and sell a lot more during those holidays. So that’s a great time for us to make a lot of money back. And we do, and then it happened for every November, December so far. And it’s great. And there’s lots of holiday keywords that we invest into for PPC and ranking and they’re under a lot of people’s radar, so they’re very easy to get traffic to and it’s a very high return on those keywords.

Speaker 1:           What exactly are you doing nowadays in terms of marketing?

Zachary:               We are currently still coasting. We’re running some Amazon PPC but mainly coasting. So we’re not doing as much as we used to because we’re … the money is tight for us.

Speaker 1:           When you say that you get home after your day job and go to work on the business, what do you typically do during that time?

Zachary:               So during that time, I’m doing a few things. One, I’m investing in my education, so I spend a lot of time watching lots of trainings on different ways to expand the business, grow the business in different ways other than giveaways because we’re looking for different avenues. We’ve tried some, but nothing has been … we didn’t find anything that was as successful as those giveaways. So pretty much just jumping from trying something else to something else and we’re doing a lot of that.

                                So it’s a lot of, I spend a lot, about half the time doing research and then half the time trying to put it into action with a … We have a VA so I let them know what to do and then did they take action upon it. We invested a lot in our website and we tried to, and we built up our email subscribers and it works and it helps, but it’s just not the same as the giveaway strategy.

Speaker 1:           What exactly does the VA do to help with the business?

Zachary:               Everything that I used to do. So she does all the day to day operations. She takes care of all the Amazon PPC and the customer service and she’s in charge of managing our inventory. Also, our social media accounts and our website and just all the day to day operations that come up.

Speaker 1:           How exactly does she feel about continuing to work with the business when a new owner takes over?

Zachary:               She is a very high level executive from the Philippines so she’s very good at training. She personally will not be moving with the new owner, but she is very available for training the new owner and any VA is that they hire. She’s very good at training and she will record every training so they can go back and reference it. She’s very helpful and thorough in that way.

Speaker 1:           The email list that the business has, how many subscribers do you have?

Zachary:               Somewhere between, it’s over 6,000 but I don’t know if it’s 7,000.

Speaker 1:           Do you utilize that email list with constant email marketing?

Zachary:               We did make a run for it. It’s not consistent, so we tried it for two to four months or something like that. We were putting out content. We even hired a email copywriter and it was working, and we got some traction, but we were looking for a faster return on investment and it took time to find the right guy and we ended up not even finding the right guy. So we put it on the side and we did not revisit it yet.

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.

                                What are some of the big opportunities for growth that you see a new owner being able to take advantage of?

Zachary:               Well for growth on Amazon to, if they have the resources to put back into the giveaways, that is a very logical and next step thing to do because we’ve already shown that that works very well. Then outside of Amazon though, an excellent thing to do, which is what we wanted to do if I had time, the Facebook groups. We would started a Facebook group for health supplements and you would want to have yourself as the authority of the group and you’re going to be the owner of the group. I would recommend doing Facebook lives and answering everybody’s questions. There are different ways to advertise that group to acquire new members of it to it. That would be a way to get a loyal following.

                                Remember everybody for health supplements, if they see you as an authority and they know that your products are quality, which they all are, and they can easily become subscribe and savers and now you need a very small group that you can make a lot of money with this small amount of people because they’re coming back every month.

Speaker 1:           Have you looked at expanding into other marketplaces like maybe instead of just Amazon US, maybe Amazon UK or other places in Europe? Have you looked at that?

Zachary:               We have considered it. We never acted upon it because we felt that we could maximize more within the US before we branch out. That’s the reason why we didn’t, but you just reminded me, we also expanded onto Walmart and we’ve been doing some good sales over there as well.

Speaker 1:           Are you on any other platforms other than Amazon and Walmart and then your own website?

Zachary:               Just recently started on Jet, but it’s not utilized yet. So we’ve gotten a few sales on Jet, a few sales on our website, but mainly Amazon. Then secondary would be Walmart. Yeah.

Speaker 1:           Do you feel like there are any significant risks with this business that a new owner should be aware of?

Zachary:               I mean, with the Amazon business in general is just you run the risk of, it’s not your platform, so you play by their rules. So Amazon updates everything all the time. So it’s just a matter of staying on top of the things and staying on top of all the rules and doing the right things. But again, Amazon is, they could change on a whim. So it’s just difficult to … I mean, it doesn’t have the same risk as any other company that’s selling on Amazon though. So it’s no greater of a risk. That would be it though.

Speaker 1:           Would you commit to a noncompete?

Zachary:               Yes, because yeah, I want to focus on my full time job right now, the one that I have that’s a 9:00 to 5:00 and it’s just I’m part … I joined, I’m part of a large company that’s growing very rapidly and there’s lots of room for growth. It’s easier for me to just focus on one thing. I’ve tried to multitask for, it’s been almost a year and a half now. I’m not cut out for it for long periods of time.

Speaker 1:           I know that you mentioned that the VA is willing to assist with the transition period despite not wanting to work going forward, she’ll go ahead and help the new owner and if they hire a new VA, get them up to speed. But is there anything specific that you would want to do to help a new owner with the transition period?

Zachary:               Yeah, I would be more than happy to help with anything that they need. I’m available by phone every evening and I’m available by email with any questions. Yeah, I mean I’m happy to step in and help with anything that they need. It’s just the VA knows everything I know so because I trained her to do everything that I’ve been doing because again, I don’t really have a lot of time to … I don’t have all day like I used to.

Speaker 1:           Would you be willing to discuss something like an earn out?

Zachary:               Yes.

Speaker 1:           Awesome. Zach, thank you so much for the time today. I do have one final question for you, but before we get to that, I’m going to go ahead and run through that quick summary of the business again.

Zachary:               Okay.

Speaker 1:           The business was built in January of 2016. Has a monthly revenue of $85,121 expenses of $72,933 to make for a net profit of $12,189 which is generated on a 12 month average. Included in some of this business or the Amazon seller’s central account, domain, site content and files, social media profiles, email list, subscriber and savers list, scope and Google analytics account. Zachary, can you just kind of recap everything and in your own words give me your best 30 second pitch on why someone should purchase this business.

Zachary:               Yes, Amazon is growing year over year, and we are an established brand on amazon.com and we have a subscribe and savers of over 750 and we have lots of traction so it would be very easy to launch new products because we already have our brand name behind it.

                                We also sell on Walmart, which is a drop shipping model which you don’t have paper inventory for it and there’s a tremendous run there as well. With the right resources and the right buyer, this could be a tremendous opportunity for them.

Speaker 1:           And if nothing else, there is definitely the opportunity to start up the giveaways again and that could definitely boost sales because as you’ve already shown, that strategy works.

Zachary:               Absolutely. Yes, that has been shown to work time and again. Yes.

Speaker 1:           Zachary, thank you so much for the time today.

Zachary:               You’re very welcome. I’m happy to be here.

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.