Your Amazon Vision
Do you have a vision for your Amazon business? In this episode, we share how Jeff Bezos’ vision might help you take your business to that next level.
We take a look at a letter to the shareholders that Jeff recently released and talk about some of the highlights of that. How can we apply what he wrote in our own businesses? How can you use it to really improve your own business by taking a good look into the future?
But first Andy will share our business update:
Private Label Mastermind Retreat – Orlando, Florida
Last weekend, the three of us had the opportunity to host our semi-annual mastermind retreat in sunny Orlando, Florida. (photos courtesy of Paul Macapagal)
We host this retreat 2 times a year, so look for information in the summer about a possible retreat again in October.
Andy: Our retreat weekends are my favorite weekends out of the entire year because of the comradery it builds. We rent a huge 15,000 square foot mansion in Orlando, Fl. It has 14 bedrooms – each bedroom has a master bedroom in it. We also hire a world-class chef who comes and prepares every meal. He’s actually an Amazon seller now. He used to be the former executive chef at Morimoto’s in NYC. His name is EJ Kaga and he is just masterful. He prepares different meals each time.
So every morning, every afternoon for lunch, and then every evening we have dinner together in the dining room. The dining room seats 30 people.
In between our enjoyable meals and fellowship, we deep dive into all things Amazon and private label. So it really is like a huge braindump of myself, Liran, and Nathan.
At the beginning of the weekend on Friday, everyone is super excited to learn and by the time that we leave Monday morning, we just have a boatload of information to really go and take action on.
One of the highlights for me is always talking individually to the various sellers that attend. During this past retreat, we had folks that were brand new and just starting to sell on Amazon. As well as veteran sellers who had private label businesses that are selling in the 4-5 million dollars a year range.
We also invited a number of guest experts to attend as well.
Paul Miller, who we post often about on Facebook, has a phenomenal brand that he sells on Amazon. So he shared with us about licensing his private label product. He recently inked the deal with Nickelodeon which is very exciting. This is a great way to differentiate your product. Then we had a number of other folks that have been private labeling for a while attend and they shared and spent time with all the attendees.
A number of highlights occurred last weekend. One, in particular, took place on Sunday morning. An attendee came to me and had already taken the information from the previous day’s seminars, dug into the Amazon catalog, and found a product. During his research, he learned that there is only 1 seller on Amazon. The average price point for the product is above $125. And to top that off, you could source it on Alibaba for under $10 so he was super excited. That is the goal of the retreat–we really want to challenge the folks that are there. If they have a private label product idea that they would dig in, research, and find one even while we are there at the retreat.
There is another attendee who actually ordered a sample while we were there. On the last night that we were there, which is Sunday night, we really pushed that the information that they get over the weekend they’re going to take action on. So another member on the plane ride home had a list of 50 things that he was going to take action on, directly related to what he learned over the weekend. So if you’ve never attended a high-level, intimate, mastermind-type retreat like that, I highly encourage you to. Now obviously, I’m biased, I think that we put on the best mastermind private label retreat that is in the Amazon seller space.
We really spare no expense, as well as while we were there, we meet with every single attendee who wants to meet with us to look at their business. As well as to help them source products. It’s a tremendous time, there’s really nothing in my life that I can compare to the intimacy and the knowledge, the learning, and the synergy that happens at those events that we had. And this one was the fourth one that we have hosted.
Interested in attending our next retreat?
Nathan: Yep, this was our fourth one. We’re actually not sure whether or not we’re going to host another one in 2018. It might just depend on the interest of some of our inner circle members and anyone else that wants to attend. If you’re listening to this, and you think that this is something that you would enjoy attending that would be beneficial to your business. Just go to amazingfreedom.com/retreat and just sign up as an interested party, and you will be notified first.
The last time we actually released the offer to attend the retreat it sold out very quickly. Much faster than we were expecting and faster than it had in the past. Probably because a lot of people realized from other people who attended in the past, how beneficial it has been for them. So if you do want to get notified first, you can go to amazingfreedom.com/retreat but again we’re not sure whether or not we’ll do one later in this year. We weren’t planning to, but we did have a number of people ask us if we would so it’s up in the air. We might do something a little bit different, so more information that would come out but if you are interested, you can go to that link.
One of my highlights of the retreat, along with everything that Andy just said, was having Casey Gauss of Viral Launch speaking during the retreat. This is the second retreat that he’s come to and just hearing him talk about his journey. He sees so many things within the Viral Launch business. So hearing him talk about ranking, and keywords and being aggressive on Amazon was really valuable. Like Andy mentioned, having some of these guest experts there was extremely beneficial. Not only for the attendees but for the three of us as well.
Jeff Bezo’s Letter to His Shareholders
We will talk now about how you can make some of the success of Amazon over the last 15 plus years. How does that apply that to your own business? Or even how to use some of the strategies and some of the mindset that Amazon CEO Jeff Bezos uses.
Nathan: Liran, you actually have opened the recent letter to the shareholder of Amazon and we wanted to just talk about some of the recent milestones. I think it’s really important to put in perspective the opportunity that we have when it comes to selling on Amazon. I know we talk about it all the time, but just hearing some of the numbers really puts things into perspective. We also want to talk about some of the mindset stuff that Jeff Bezos looks at and even in our own small to medium-sized businesses. How we can use that same mindset and strategies to push ourselves forward. So that someday our businesses might have shareholders, right? Or have people, teams that we’re building and people that we can be responsible over.
Liran, if you want to first go over those milestones and kind of just discuss them as we go and make this one a little informal. Why don’t we just talk about it and see how what you’re reading applies to our own businesses.
Liran: So about this letter to the shareholders this year. It’s always interesting to read the letter to the shareholders from Jeff Bezos. This year is particularly interesting because Jeff Bezos and Amazon reveal some numbers that they haven’t shared with shareholders in the past. Probably because they have been waiting to hit certain milestones.
Prime Membership – Vision Realized
So for the first time, you used to see in the past, Amazon talk about Prime membership but never talked about how many Prime members they have. This was like a secret within the company but in the letter to shareholders, they write that “13 years post-launch we’ve exceeded a hundred million paid Prime members globally. This is not hundred million Prime members in the US. But it is impressive that there are a hundred million Prime members throughout the world. I would think the majority of that is in the US market.
They say that in 2017 Amazon shipped more than 5 billion items with Prime worldwide. And more new members joined Prime than in any previous years both worldwide and in the US. It’s really interesting to see that 13 years after they introduced this there’s already so many Prime customers. Amazon still added more Prime customers in 2017 in the US market than in any other year before. Which shows us really what the Amazon opportunity is all about. Because people will talk about the market being saturated, too many sellers, not enough opportunity for products. But what’s happening on the other side of that is that there are more new customers being added every single year. Especially Prime shoppers, which are I would say higher income. They don’t shop around as much so really great to see Amazon actually talk about the actual numbers.
What this means for our businesses:
Nathan: When people are talking about the number of new sellers that are coming into the marketplace, one of your responses to that has basically been the number of increased customers as well. I don’t know if you have the statistic on that right in front of you. But I know I’ve seen before that the average Prime customers compared to a non-Prime customer spends 10 times more a year.
Liran: Yes, that is an opportunity that a lot of us don’t think about because from the seller perspective, we are always thinking “Oh man, more and more sellers are entering the marketplace. But there are also more and more buyers. Prime shoppers are not as concerned with price. Prime shoppers care about quality products. They care about convenient fast shipping. So I think if you have the components of a great listing, you could still be higher priced than other people. And compete and differentiate your product and still get sales. Because you’re dealing with a more sophisticated or more educated shopper who’s not just looking at price. They are looking at a variety of factors including quality, including reviews.
Third-Party Sellers – Vision Realized
Liran: Kind of connected to that is the next thing they talk about: “In 2017 for the first time in our history, more than half of the units sold on Amazon worldwide were from our third-party sellers. Including small and medium-sized businesses. Over 300,000 US-based small and medium-sized businesses started selling on Amazon 2017. And fulfillment by Amazon shipped billions of items for small-medium sized businesses worldwide. Customers ordered more than 40 million items from small-medium sized businesses worldwide during Prime Day 2017. Increasing sales by more than 60% over Prime Day 2016”.
What this means for our businesses:
I think this is the testament of Amazon really supporting small businesses. If you haven’t seen it, Andy went on a video rant the other day talking about how Trump has been criticizing Amazon in the news lately and on Twitter. About the shipping and how this big company is like a monopoly. But in reality what most people don’t realize and maybe to our advantage is that when they order from Amazon, they are ordering from small-medium sized businesses. And we look like we’re a big business when people order from Amazon and that’s why they have that trust. But in reality, over 50% of orders are coming to I would say small “mom and pop” type businesses that are taking advantage of the Amazon platform. Pretty exciting to see that.
Nathan: That makes total sense and it’s cool that Amazon is releasing some of these numbers once they are hitting their milestones. And just like we talk about all the time, the opportunity that we have.
Keeping High Standards – Vision Realized
The next part that the letter to the shareholder talks about is “keeping high standards and what the Amazon philosophy is and what has helped them grow over the years”. Jeff Bezos talks about, once you have the success, how do you in the E-commerce world and retail, keep high-quality standards?
Liran, how do you think this applies to you as multi-million dollar seller yourself, but a still relatively small business? How does this apply to you and in your own mindset when you think about growing your business and potentially being able to sell your business someday? How do the principles that Jeff Bezos talks about apply to your business and our listeners?
Liran: One of the things discussed in this letter to the shareholders is “Having high standards”. It’s not that easy because he says, “One thing I love about customers is that they are divinely discontent. Their expectations are never static, they go up, it’s human nature. Amazon introduces Prime and then customers don’t want 2-day shipping anymore, they want 1-day shipping. And then they want Prime now and being able to get products within a few hours. So as a company, Amazon keeps raising the bar on their high standards.
The same thing is true about attracting team members or if you’re building out. Some of us have smaller teams, some of us have bigger teams. But if you’re building out even with VA’s if you’re building out a team, he says, “How do you stay ahead of ever-rising customer expectations? There’s no single way to do it, it’s a combination of many things. Our high standards are certainly a big part of it. We’ve had some success over the years in our quest to meet the high expectations of the customers.
Attracting the Right Talent – Vision Realized
He also talks about how they’ve had billions of dollars worth of failures and learned along the way” but he says “are high standards, eccentric or teachable?” Talking about how they attract talent. So he says “You can take me on your basketball team, you can teach me many things but you can’t teach me to be taller. We first and foremost need to select for high standards people. If so, this letter would need to be mostly about hiring practices but I don’t think so. I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bringing a new person into a high standards team and they’ll quickly adapt.
The opposite is also true, low standards prevailed, those too will quickly spread. And though exposure works well to teach high standards, I believe you can accelerate the rate of learning by articulating a few core principles of high standards which I hope to do in this letter”.
What this means for our businesses:
What he is saying is and I think I have experienced this when I was managing people working at a bank. Or when I was an employee reporting to other people is that you can have this one person that’s constantly negative. And that type of person in an environment can really bring people down. I’m sure at Amazon and hopefully, you don’t have this on your team. I’m sure at Amazon, that’s somebody they try to manage out really quickly. Because that’s like cancer within your team of being able to bring other people down and the opposite is true too. When you have people that have the drive and have high standards and you bring somebody new to the team, that person is quickly going to say, “Wow, I really need to step up my game”. And that’s what Amazon really tries to do.
I think these are the same standards that we should be using in our business, we should be using with our listings. We start out a listing today, it starts to do well, a month from now I’m going to upgrade my listing with better images. I’m going to hire a better copywriter to write my listings. Next month, I might be improving my packaging. I’m going to continuously look for ways to improve my team, improve my listing, improve my products over time. That’s something that I think is within the Amazon way that we should all follow.
What we teach in our courses, retreats, and groups…
Liran, after the retreat going back to that, we had a couple of guest experts there. Like you said that have been selling for a number of years now. Not super long but 4-5 years plus. And at least one of them mentioned that and I know you talked about this. Selling private label products in 2018 is not the same as it was in 2014. I think some of it goes back to what you just said. I think the standards of Amazon, in general, has increased. The customer expectations increased. Competition has increased. So to be better than the competition you have to basically do everything that you just talked about. Improve your listings and your products over time.
Back in 2014, 2013 and before that, you could bring a very similar bad product to the Amazon marketplace and do very well with it. Just because that’s just how things worked. But I know now after the retreat. We stressed this in our inner circle we stress this in the private label course. You really need a way to differentiate your product. To improve your product or you’re basically going to fall behind on Amazon standards. When it comes to reviews which are so important. I think that was a big talking point at the retreat was just how important it is to make your products better.
One of the ways that you can actually find products is to discover products that aren’t basically meeting customer’s expectations and improve upon them. Andy, I wanna ask you cuz I know this has been a big part of one of your most successful products is basically, we’ve talked about this before but you’ve discovered a product that was selling very well on Amazon but was not meeting customers expectations. Maybe you can just talk about again how your level of quality of this product has really made a big difference when it has come to the success of it.
How You Can Take Action…
Andy: One of the things we stress early on to folks who join our course, or who are just getting started in private labeling is that their product has to be quality. This is one of the challenges that we still experience even with products that we’ve been importing for a while. Sometimes factories will attempt to cut corners which could ultimately hurt the quality of the product. Our challenge is when you identify and find a potential product is finding a manufacturer to produce a quality product. The reason why that’s so important is a few things. If you don’t have a quality product and:
- You go through all the work of importing it,
- Creating great images,
- Spending a lot of time in creating great copy that’s gonna sell,
- And you get it into the Amazon warehouse and customers start to buy it…
If the product is not quality, you’re gonna start seeing negative reviews on your listing and negative reviews will kill your conversion.
We cannot stress it enough that as you begin to private label if you’re just getting started you have to have a product that has excellent quality. Amazon shoppers are definitely on the higher end when it comes to purchasing products and they expect quality. They’ve become very accustomed to leaving negative reviews.
Be Truthful in Your Advertising
Another thing that we don’t talk about a lot, you need to have truth in advertising. If you try to oversell your product in the copy you’re gonna set up unrealistic expectations for your customers. Yes, your copy needs to be good and you need to have good sales technique in there. But the backbone that’s gonna leave those positive reviews is that your product is going to meet those expectations that you set up. I’ve seen folks that bring products to Amazon and they set up unrealistic expectations. If you want to call it lying or they’re writing copy that isn’t true to their product, then Amazon customers are going to tell on you through those negative reviews.
So, at the end of the day, one of the reasons why I have a product that’s doing as well as it’s doing is we beat our competition in the quality space. What they do is they actually import the product from China, and they send it directly to the Amazon warehouse. What we do is we go an extra step and we actually inspect every single unit when it lands here in the USA. There is about a 12 – 15 percent failure rate in the product niche that we’re selling. So that’s up to us to be able to reduce our failure rate to only 1 – 2 percent. This means the positive reviews on our listings show up those of our competitors. We go the extra step.
Liran: Yeah, well I think first when you’re sourcing a product, you need to make sure that the initial sample they get is the quality that you want. That sample becomes the comparison for how the final inspection is done. So getting a final inspection of your products should be mandatory. It shouldn’t be an optional thing. You should do an inspection of every single product. You don’t need to inspect every single unit, but you need to have an inspection done. If the inspection fails, I will make the factory pay for that inspection or credit me for the final order. Then I’ll do another inspection. And again, it can be random units to fix the issue.
I recently paid $1,000 for a 2-man 2-day inspection to check every single unit of a product after the initial inspection failed. This time the inspection passed because the factory knew that I was serious about the quality and I was going to check every single unit.
Protect Your Brand Vision
Liran: Yes, so I might not need to do that going forward on every order. So initially, let’s say on my next order, I’m going to do a random inspection. But the factory now knows that I’m really serious. And if that random inspection fails, they know they’re gonna pay for it again. So I expect the quality to be better. But I’m still going to do an inspection at least, checking 10% of the units or something that might cost me $200 instead of a thousand.
Nathan: But the bottom line, is that you’re willing to not cut corners. You’re willing to spend additional money, all in the name of quality and potential review issues. Basically for your overall brand vision, and how you want your brand to be perceived. I know for your products, especially you have more of a high end, premium product. Which a lot of people want to come into that space. Sto all this kind of leads to you trying to protect your brand. Also your quality and basically your vision for your company. It’s a long-term approach, not a short-term approach.
Don’t cut corners.
In my experience, I’ve run into issues where I’ve tried to cut corners. I’ve had somebody ask me, do you want this version or the next version that’s 10 cents more per unit that’s more quality? And I was like, this isn’t my first product, so just go with the lower one. And of course, it ended up causing me a lot of issues.
One of the people in the retreat, said, when you’re working your budget for your product, you want to potentially save even like a third of your budget for marketing costs. And potential issues and unforeseen costs that would come. I think that if you’re completely tapped out on your budget, it might not even be a matter of whether you’re willing to spend that extra few pennies per product, you might not just be able to, maybe you can talk about that, and then continue on with what you’re saying.
Liran: Yeah, I think folks are saying that having good quality is one of the most important things you can do in sourcing a product. And going the extra mile to make sure that you have good quality. If good quality was easy, then every product on Amazon would have 5 stars, right? But they don’t. There are categories of products that you see that will have 3 stars and that’s normal within that category because getting a really high-quality product maybe it’s just not that easy.
So I would say go the extra mile and make sure you give quality because those reviews like Andy was talking about, will do the selling for you. If you have negative reviews they are going to kill your conversion rate. So focus on the customer experience–on packaging, on inserts, and how the customer could contact you if there’s an issue. Focus on all those aspects of the business.
Nathan: Yeah, makes sense. Alright, so let’s tie it out together as far as your Amazon vision and what this kind of letter to the shareholders of Amazon for Jeff Bezos maybe meets you Liran. So maybe if you can just say after reading this letter, does it add a little bit of perspective of your entire business? How would you take this letter and try to apply some of the principles of your Amazon business over the next maybe 3 to 5 years?
Amazon’s Long-term Vision
Liran: Yes, so for me, one of the things that I see Amazon doing is Amazon always has a long-term vision. So I think that’s something that you need to take into account for your business. It doesn’t go super fast overnight. But you wanna take a long-term approach to your business. And Amazon is looking into increasingly improving and become more customer-obsessed than they already are. And continue to innovate. I think those are things that you need to do in your business to continually improve your products. Continually improve your listings, and improve the quality of what you do. And again also look towards the long term.