The 7 Deadly Sins of Launching
The 7 deadly sins of launching! Are you guilty of sourcing or launching products that fall into one or all of these 7 categories? You’re about to find out in this episode of The Amazon Seller Podcast.
Nathan: You’re listening to the Amazon Seller Podcast. Today we share absolutely critical criteria that you should be looking at when bringing a new product to Amazon. We have created some of the best ways to help you with your images and listings. We also help with your Amazon sponsored ads, account management and, our ongoing informational needs. You can check out all of our services at amazingfreedom.com/resources. Our services are among the best in the industry. And we’re constantly looking for ways to help sellers just like you in the same ways that we needed help in our own Amazon businesses. Which is why we have created these services.
Today we will be talking about What Not to Launch on Amazon. This is a topic that we talk about often here. But it’s something that is so important that we actually decided to recently create a show that is specifically called “What not to Launch!” And if you’re interested in watching this show, we are planning to do it on Monday nights live on Facebook. Then have it on YouTube. These are the kinds of products that some people initially think are good. And it’s because they check off some of the criteria in some of those big courses or training programs or Youtube videos. But when it comes down to it for 99% of people that are going to launch these products, it’s going to fail.
So, Andy, I want to start with you.
This is a topic that you have talked about for a while because you actually made a video. I think it’s been at least 2 years ago now in our Facebook group. I’m trying to remember exactly what you titled those. Maybe you can talk about your experience with people launching incorrect products in our first episode that we did of “What not to Launch” the other day.
Maybe you can talk about one of the first products that you launch that was kind of like a “me too” product? Talk about that and why you’re so passionate about this new show that we’re doing called “What not to Launch!”
Andy: You know one of our main concerns as coaches and trainers is the success of our students. Sometimes, we cringe when we see new folks who are learning how to private label. Those sellers learning how to import, who have not entered into our course. We cringe when we see the products that they are bringing in and try to private label. We’ve shared this story before.
There was a gentleman that came up to Liran and me when we were at a conference. He had $8,000 worth of dead inventory that was sitting at Amazon. He wasn’t able to sell it. It was his first product and I believe it was the salad spinner or a mandolin slicer, something like that. It’s a product that is so saturated on Amazon, he should have never attempted to private label that product when he did.
Our greatest concern is as more folks come into the Amazon seller space that more folks start to understand the process.
Amazon actually went over 1 trillion dollars I believe in their evaluation so they get more and more press. Our concern is we believe that this is a huge business opportunity but at the same time, we want folks to do it the right way.
And the absolute worst thing is like when that gentleman that walked up to us after we had just spoken on stage. Telling about the process that we go through and how we train and coach our students. And his words to us were “Man, I wish I would have joined your course. It would have saved me over $8,000”.
That’s what we are excited about, being able to present these products and I think when you see the mistakes that other people make or you begin to train your eye on products that you shouldn’t private labeling and import, it’s going to help you understand better products that you should.
Nathan: Awesome! So this is a show that again we’re going to be doing every week. It’s going to be video. It’s going to be screen sharing.
So for most of our listeners that are used to the podcast setting, it might be a kind of fun, exciting change of phase. We’re still planning to do the podcast every week as well but this is an additional show that we want to do. That we think is going to be really valuable for anyone who is in the process of finding new private label products.
Maybe you’re trying to avoid a mistake like Andy just mentioned. An $8,000 plus mistake by launching the wrong products. Or maybe you’ve been doing this for a while. And you feel like things are just getting tougher. And you’re not sure the type of products that you launched 2-3 years ago might not be a good idea today. We’re going to be covering these topics. Going over what kind of products not to launch and using real specific examples.
Some of these examples, we’re actually going to go to some of the launch services that are out there. So that we see products that are getting launched on these launch services in real time. Within a few days of when we see them. And we’re going to monitor their performance. We’re going to see if it’s the kind of product that probably not going to do that well.
Then we’ll pick some products that we’re not sure about, maybe they won’t do well, maybe they will.
We’ll monitor their performance and we think it’s going to be really exciting. If you’re interested in that, you can go to whatnottolaunch.com. We created a little domain for that it’s just going to send you to a page where you can sign up to get notified when we go live each week. And you can join us live and we want to make it interactive. So ask questions and join in the fun as Andy and Liran try to guess different thing as part of the segments, it’ll be a lot of fun, whatnottolaunch.com, make sure you join that.
And what we want to do in this episode is actually go over 7 different pieces of criteria that we use whenever we are evaluating the members of our inner circle group. Their evaluation guides, we allow them to submit, unlimited evaluation guides. As long as you are a member of our inner circle group. If you’re interested in that it’s for our course members. So Andy and Liran, I want to go back and forth with you guys. I want to ask you about each of these pieces of criteria. Why it’s so important, what you look at specifically when you are trying to evaluate this. And I think it’s going to be really helpful for our listeners.
Liran, let’s start with you. Tip #1 or criteria #1 that we look at is the reviews on the first page of search. Can you just go over what that means exactly and what you’re looking for?
Liran: Reviews are really really important on Amazon more than any other platform. More than any E-commerce platform for a number of reasons. But we all know reviews are the social proof when you see a product, 2 products next to each other. One has 20 reviews and the one next to it has a thousand reviews. It tells you, “Hey, a lot more people are buying this product!”
So I want to kind of go with the crowd, It’s one of the psychological triggers of influence. When I see a page on Amazon, a keyword that I’m thinking about targeting and the first 3-4 sellers have a thousand reviews or more, I know it’s going to be very very difficult for me to compete for that keyword and get market share from those sellers. What I want to look for is I want to see is sellers on the first page that are selling while with less than 50 reviews or a hundred reviews. That will give me a little bit of insight into whether or not I can compete.
But generally, if the top few sellers have thousands of reviews, I’m probably not going to target that keyword. It may not be that I won’t launch that product if and as long as there are other keywords that have good search volumes that don’t look like that. That don’t have the competition on top having thousands of reviews. That’s definitely a criterion that I look for and the less you differentiate your product the more of a problem that becomes.
Nathan: Awesome! that makes sense.
#1 – The first criteria that we’re looking at are the reviews on the first page.
How many different listings have lots and lots of reviews? Are the reviews good? Reviews are definitely something you want to look at.
Alright Andy, criteria #2 that we are looking at is basically the number of similar listings and the number of pages of similar listings on Amazon.
So, Andy, this is actually something that you preach on whenever you’re talking about it. The number of similar listings on Amazon. Why don’t you tell us why this is so important to you and how people can basically evaluate this criterion?
Andy: This one’s really easy to do, I’ll give you a perfect example. You always want to look at your potential product in the eyes of the customer. And so you want to go to Amazon. You want to put in what you think is the most searched for term in the Amazon search bar. So for example, if you go to Amazon right now. And you type in posture corrector you’ll see it’s going to bring up 10-11 pages of the exact same product.
That’s a product that you do not want to bring to Amazon for a number of reasons. But the biggest one being that there are 10 pages probably close to 200 listings of the exact same thing.
Nathan: That makes sense, the more pages of similar products, you might be able to launch and get ahead of them. But chances are many of these listings are private label sellers that are going to be trying to compete with you on PPC. And they might be doing their own launches. It kind is a compound effect that more similar listings typically the harder it is going to be for you to compete.
Criteria #3 is – Are you able to differentiate the product? If there are a lot of same listings, however, you can differentiate. Is that going to help you, Liran? And what are you looking for when you’re differentiating a product?
Liran: If a competitor next to me has a thousand reviews. And I have the same product and I have zero reviews. Then the only thing left for me to compete is just on my listing quality. My images and my price. I really would prefer not to compete on price or compete on listing quality. Because any seller can improve their listing quality at any time. Then I don’t have a point of differentiation. I think really differentiating your product and offering more value or improving upon other people’s products is really the key. When you are competing with sellers that have more reviews than you have and have been in the niche longer than you have.
One of the mistakes I see people doing is that they’re trying to compete with differentiation. That’s not real differentiation.
What I mean is that they’ll bundle something. Somebody’s selling a cellphone case and they’re going to bundle a cell phone case with a screen protector. Now, if I’m looking for a cell phone case I may not care about the screen protector. I might already have a screen protector. Maybe that’s not something I really care about. And I’m not going to buy that product that has a lot less review, social proof etc. And really it’s not going to make a difference to me.
I see people trying to differentiate in the wrong ways and not really improving upon products. Not really improving upon packaging and what the customer experience would be. I think real differentiation is reading all the negative reviews that your competition has. And then really seeing if you can improve upon it. What I mean by that is that you know there could be just a challenge with that product overall. You really need to do your research and see can you really improve upon a product enough that it allows you to sort of eliminate the review game.
Nathan: All great points and for #4 and 5 here I’m going to stay with you Liran.
Criteria #4 – Is there enough sales revenue on the first page of search? And not only sales revenue but enough search volume for the keyword that you’re targeting. Can you go over both of those points as part 4?
Liran: One area we spoke about is when things are really too competitive. There are a lot of listings on Amazon. The other side of it is that you may find a competitor. You may find a product that does $15,000 a month. And you say “Hey I’m going to come into this space because I can compete for market share, there isn’t a lot of competition.”
But the missing piece a lot of the times is that there might not be enough demand for 2 or 3 or 6 products in that niche. When you’re looking at the sales on the target keyword you might see where the top 2 or 3 products have good revenue, let’s say over $10,000 a month. And that the rest of the product in the page has less than 5,000 a month revenue. That should be a red flag to you to say “maybe there isn’t enough depth. Maybe there’s not enough customer demand.”
And especially if that competitor has good reviews like 4-1/2 star or better and good price, good listing. And you are not doing much in the way of differentiation than there just might not be enough customer demand. You really want to find that sweet spot between products that are hyper-competitive and products that are not competitive at all. And find a niche that you can get into that has room, that’s growing and that has the potential for more listings to come in.
Nathan: Makes sense and as far as search volume goes for the keyword, is there a minimum amount of search volume that you’re looking for per month for a certain main keyword?
Liran: Ideally, I like to see like 10,000 searches a month for that keyword. Now, there are some products that have 4-5 main keywords. And if each of those have 4-5 thousand searches a month then I think the cumulative effect could be okay. But if my main keyword has 2 or 3 thousand searches, that’s not really enough.
When somebody says keyword has 4,000 searches a month, let’s really break that down. If I take 4,000 searches a month and I’m going to divide that by 30 days. Then that means there are 133 people a day searching for that product. Now, not all those people are buying. What’s the conversion rate of people that are actually searching and end up buying a product? Well, I don’t know maybe it’s 20% or 30% on Amazon.
Let’s say, there may be even 50 sales a day, now that’s going to be spread out across everybody who sells that product. And to me, that’s not really enough if I want to sell 10, 15, 20 units a day. To me, that’s not enough. I want to have instead of 133 searches a day, I want to have a thousand searches a day so that I have more opportunity to sell.
Nathan: And Liran, let me ask you something. What would you say to someone that says “Alright Liran but you’re an Amazon superstar ” you have multiple brands that are doing 7 figures.
So maybe your criteria for a new product is higher than someone listening who is okay doing just a couple thousand dollars in sales a month? I mean that could still be life-changing to them. Is there a little bit of that too? Is your criteria a little bit different than someone else’s? Or do you think there’s kind of like a minimum threshold?
Liran: No, I mean I think you can find with the same amount of time you spend in money and effort on finding a product that can do $2,000 a month for you. You can probably spend the same time and effort on a product that could do $10,000 a month for you. I don’t think the criteria should be different at the same time, you can have a strategy of launching multiple products that each does 2 or 3,000 a month. But in my opinion, it’s more SKUs to manage and more products that you have to put capital into and focus on. I’d rather have 5 products doing 10,000 a month than 20 products equaling the same amount of revenue because just more listings to manage. More images, it’s just a lot more work.
Nathan: Makes sense, so those are the first 4 criteria we’re looking at, I’m going to go to you for number 5 Liran and then I’m going to go back to Andy for number 6.
Criteria #5 is the sales to review ratio.
And one of the really cool things about again the show “What Not to Launch” that we’re planning to do every week is that we can actually show things through a screen share. So in the podcast, we have to kind of talk about these things like point #4 there, the sales revenue and the search volume. But in the show “What Not to Launch” we’re actually going to be able to use Market Intelligence, we can pull down the revenue numbers, we can look at the search volume for keywords and we can look at the sales to review ratio. So if that’s something that interests you, to see that real time as we’re pulling up these products, I think it definitely takes it to the next level than just hearing the audio and hearing about it which can be valuable.
Liran, can you just talk to us about the sales to review ratio and why it’s something that you look at as a piece of criteria?
Liran: Yes, let’s first explain what Sales to Review Ratio is. If I’m looking on a listing on Amazon and it has a thousand reviews and it’s selling a thousand units a month, that’s going to have a sales to review ratio of 1. And if I look at another listing or another product on Amazon that has a thousand reviews but is getting 2,000 sales a month that’s going to have a sales to review ratio of 2. And you want to ask yourself “Which is better?” Obviously, the product that has a thousand reviews and selling 2,000 units a month is better than the thousand reviews and a thousand units a month.
One of the things you want to look at is how many reviews do I need to get to x sales in terms of what the competition is doing? If I’m looking at one niche and the average sales to review ratio let’s say is a 4, that means products that have a hundred reviews are selling about 400 units a month. Generally, that’s kind of the average, products that have 300 reviews are selling 1200 units a month, it’s a multiple of four, that’s going to be a whole lot better than looking at niches where their ratio is a 1.
That means it’s going to take me a lot more reviews to get sales within that niche or within that keyword. I want to look for sales to review ratios generally that are higher than a 2 multiple, 3, 4, 5 even better. Market Intelligence extension shows you that so you definitely want to avoid niches that have less than a 2 generally across the page. I think it’s a really important criteria to look at when approaching a new product niche.
Nathan: Great! So those are 5 criteria. Andy, can you go over criteria number 6 here?
Criteria #6 is the price of the average product in this niche or the product that you’re trying to target and specifically, typically we’re trying to avoid products that are really cheap or low margin and maybe you can talk about why we tend to avoid those.
Andy: Going back to the original example of the posture corrector. I believe the price points on there right now are like 8.99 all the way up to 16.99, that is just too simple of a product at too low a price point. So you’re going to have a lot of newer sellers that are going to go for that. Because their barrier to entry is relatively low. The bad part of that is your margins are not going to be that great. If you’re selling it at 8.99 maybe you’re making 1 or $2 on that product. Our counsel is always you want to go for higher price products that are going to offer you a lot better margin.
I’ll give you an example of one I was just searching for a couple of weeks ago. I’m into fitness and I was looking for an outdoor fitness power tower. One that I could place outside and that’s not going to rust. The only one on Amazon right now goes for $253. That’s a really high price point and a lot of people will look at that and they would think “Man, there’s no way I could sell that cuz it’s going to cost me a fortune to import it.”
And that’s not necessarily the case. Now I haven’t researched this one any further but I’m guessing you could probably import that for $50-$75 and the sales price right now on Amazon is $250. And by the way, this is a pro tip. That product I purchased is now actually out of stock. And so it’s a pretty good sign that it’s selling well at a $250 price point.
Again, you have to use tools like we recommend. Viral Launch and go on and do your own due diligence. But I think potentially, there could be a market, an opportunity for outdoor fitness type products that are not going to rust. Because frankly people are running out of space in their house and obviously you got warm weather states like Florida, California where you can place fitness equipment like that outside. s=So that’s why you want to go for a higher price point products, you’re going to have a lot less competition.
Nathan: And I know that’s something that you definitely try to do is go after higher price products. Not only is the competition less, but you have to consider things when it’s really cheap.
Low margin product, those products are going to be more sensitive to fees. More sensitive to any kind of changes on Amazon if you’re using FBA and the fees go up. Then those low price products are going to get hit harder margin wise than a more expensive product.
You also have to consider things like PPC. If you have a product that’s only netting you between $2 to $5 per unit sale and then you have to factor in PPC. Which might be a dollar or 2, a couple dollars right? A lot of times the per click spend of a cheap product and an expensive product might be actually really similar, right?
Andy, I know in your products, you sell for quite a bit of money. And your per click spend is less than some of your other products that are not even a fifth of the price. So that’s a much higher percentage of the margin being taken by PPC fees, those kinds of things. So those cheap products that you always hear about in all the courses under $20, all that kind of stuff. We typically are trying to look for the opposite.
Criteria #7 – If it sounds too good to be true…it probably is!
When a lot of people who are just getting started, hear about cheap products, small products, products that you can airship. Products that he can fit in your hand, fit in a shoe box, these criteria together kind of make the perfect storm for a really competitive, a lot of times product that will wreck a new seller.
Liran: What I see a lot of new sellers sourcing and launching are these exact criteria. And the reason is when you have a cheap product that cost you less than $5 for you to source. And it’s small so you can airship it. Then it kind of fits the criteria of what somebody new might want to do. And the reason is somebody who’s new probably doesn’t have a customs bond. They probably have never done boat shipping before.
It’s much easier to tell your supplier, “Hey just airship it to me directly or to Amazon door to door. ” It’s very simple and easy. The supplier can arrange it, you don’t need a freight forwarder if the products are small and cheap. That means I can get 500 units, let’s say 3 bucks a unit, I’m spending $1500 plus shipping, right? It’s very easy for me to sort of test out if Amazon is going to work for me.
When you are sourcing products that fit those criteria, you’re competing with just a lot more people who are tire kickers. Testing to see if this Amazon thing can work without putting a lot of effort or money into it.
Now, if you’re going to go source a product that’s going to cost you $10 and you wanted 500 units well no that’s $5000, a more significant investment. Think about how many people you’re weeding out when you get to a $20 price point, just so much more and now take that $20 product and now you have to ship it by boat and you need a freight forwarder, it’s going to be a different type of seller, a more experienced seller and it’s just going to be less competitive so when you make the barrier to entry, super easy than your competition can come very easily also.
One of the questions that you should be asking yourself is “How easy is it for somebody else to launch this product?”
And think about the amount of money you’re spending. How you’re shipping the product, the amount of work that you’ve done. What you put into the packaging. Are you bundling anything, are you using multiple suppliers? All these questions are questions that you should ask yourself. It doesn’t mean that if competition can come in that it’s a bad idea but the easier, the less barrier to entry on a product, the more generic that product is. The easier it’s going to be for you to have a lot of competition very very quickly.
We constantly see in groups, in fact somebody posted this in our group yesterday, a newer seller that said “I look at product and I look to source them and then by the time I get the products in, the price has gone down on Amazon.” That’s because you’re sourcing the wrong product. You’re sourcing this generic, small, cheap products that a lot of other people are looking at the same time. That is maybe starting to trend. That is coming up on the results of the various tools out there. And you’re not doing the extra work it takes to differentiate, to do better packaging and then what happens is that you’re going to see over 90-120 day sort of trend is you’re going to see the price going down on these products just like the posture corrector, right? that Andy is talking about.
Nathan: All great points and if you are struggling with this, if you would like our individual personal specific help with evaluating your products, you can join our Inner Circle group. This is the group where we answer every single question of our members. We hold monthly live trainings and we allow you to send unlimited evaluation guides of potential products to us.
And if you’re interested in seeing the show where we actually cover each of these criteria where we pick 3, 4, 5 products every week to look at. We will tell you not to launch because they are just over saturated or they don’t hit them rather then you can go to whatnottolaunch.com, we’re going to be doing weekly live shows on that.
If you go to whatnottolaunch.com you can get signed up to be notified when a new episode is about to go live. Hopefully you find those 7 tips helpful, these are the kind of things that we look at every week and that you should be looking at every time you’re thinking about bringing a new product to Amazon, go to whatnottolaunch.com, make sure you subscribe and we’ll catch you on the next episode of the Amazon Seller Podcast.