108: How John Rampton Lost His 7 Figure Amazon Business

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How John Lost His 7 Figure Business By Getting Banned From Amazon

Today I’m thrilled to have John Rampton with me on the show. John is someone who I met at FinCon 2 years ago and he’s got an amazing story to share with you today.

In fact, his story is almost unreal. 10 years ago, he was working in construction when he had his legs crushed in a freak accident.

He didn’t think he could walk again and during that time when he was bed ridden, he studied business, marketing and selling online 16-20 hours a day.

Fast forward to today, he’s started a bunch of 7 figure companies. He writes for Forbes, Entrepreneur, Huffington Post and he the founder of his current company Due.com which provides simple online invoicing and time tracking for freelancers and businesses.

Anyway, the reason I decided to have John on the podcast is because 1, he’s awesome and 2, I wanted him to talk about his former 7 figure Amazon business.

That’s right. John used to sell on Amazon and made a lot of money doing it too until one day he was banned and lost it all.

What You’ll Learn

  • Why John got his Amazon account banned
  • How he could have prevented getting banned
  • How he tried to get his account back
  • What he did with all of his inventory.
  • Recommendations for Amazon sellers on how to avoid getting banned.
  • Whether John recommends creating an Amazon business today
  • How he bounced back with his new venture

Other Resources And Books

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Transcript

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Steve: You are listening to the My Wife Quit Her Job podcast, and if you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning and delve deeply into the exact strategies they used early on to gain traction for their businesses.

If you enjoy this podcast, please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free six day mini-course where I show you how my wife and I managed to make over 100,000K in profit in our first year in business. So go to mywifequitherjob.com, sign up right there on the front page and I’ll send you the mini-course right away via email.

Before we begin I’m happy to announce that I’m holding my own ecommerce conference on May19th in Miami Florida this year called the Sellers Summit. Instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture a small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com and watch the video.

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Welcome to The My Wife Quit Her Job podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here’s your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I’m thrilled to have John Rampton with me on the show. John is someone who I met at Fincon two years ago, and he’s got an amazing story to share with you today. In fact his story is almost unreal. But ten years ago he was working in construction when he had his legs crushed in a very freak accident. He didn’t think that he could walk again.

During that time when he was bedridden, he actually studied upon business; marketing and selling online pretty much 16 to 20 hours a day, and fast forward to today he’s started a bunch of seven figure companies. He writes for Forbes, Entrepreneur, Huffington Post. He’s the founder of his current company due.com which provides simple online invoicing and time tracking for freelancers and businesses.

The reason I decided to have John on the podcast today is because one, he’s awesome and two I wanted him to talk about his former 7 figure Amazon business. So that’s right, John used to sell on Amazon and he made a lot of money doing it until one day he was banned and lost it all. With that, welcome to the show John. How are you doing today man?

Rampton: Hey doing very well? Thanks for having me.

Steve: Tell us about your back story. I mean I kind of glossed upon it in the intro, but how did you become the serial entrepreneur that you are today, and how did that freak accident shape who you are?

Rampton: I’ve always kind of been an entrepreneur. From a young age, I really loved money. I like making money. I like what it can do, but more importantly I kind of like when it just builds up in your bank account, and you could see that number just growing.

Steve: It is fun.

Rampton: Yeah, it’s a lot of fun seeing that number grow. From a young age, I started the candy stand, did this and working. After and I guess during college as you mentioned I got in a freak accident. I was working at a construction site. I got ran over. It crushed my right leg, completely just crushed it. The doctor said I’ll never walk like ever, ever walk again.

I spent the next however many years it was. It was about a year I spent in bed. I had to be– I mean to the point of I was sponge bathed and had– I couldn’t get out of bed for nine months. During that time, you still have bills to pay even though I was a college student. At the time I was with my parents living there. I still had a car payment, I still had this payment, I still– you still have bills. So I had to find a way to make money from my bed. That’s kind of when I got in into the whole marketing thing is I had no other choice. That’s what I had to do.

Steve: Amazon wasn’t your first venture then, right?

Rampton: No. I originally worked at real estate startup. We were helping people, helping real estate agents sell their homes online and…

Steve: This is from your bed or?

Rampton: Yeah, I was working pre bed and post bed. I mean if you can imagine that. So I got hurt. I was working a side job on the side, and decided I was going to make some extra money on the side, that’s when I got hurt. Basically what happened is I worked at this job and every time I made a sale I got paid like $8. I found this, when I got hurt and even while I was at my job, you can only call so many people every single day as a sales person. There’s only so many calls you can make. So then I started doing other things. I got into affiliate marketing. I got into tax marketing. I started finding there are better ways to sell than to just sit and call people on the phone.

I went on Craigslist and I said for $6 per sale, I will pay anybody who can sell what this is for $6. I was making a $2 cut. I was the top sales rep at the time, and I was getting like ten sales a day. Then I started having other people sell for me, and just playing the middle man and that, and I started getting really good at people and getting to know people and having men sell for me. My top sales day there was 540 sales, and the next higher sales rep was like 11.

Steve: That’s crazy.

Rampton: I was– one I was making great money, but two, I really learned how to sell online. And if you are going to get in to like ecommerce and selling on Amazon, and doing that type of stuff, you need to find what works and find ways to make money online. And as a business owner, you can’t just be like, “Oh I’m going to sell this way, or oh my customers are going to come to me.” You have to go out there and find those ways.

Steve: Okay, and so how did you transition from this real estate company to selling physical products on Amazon?

Rampton: That was kind of a weird transition. I actually left that company that I was working at and I started a competitor about a year and a half or about two years. Technically we launched like two years to the day after I left there. So we launched this company. It went very, very well. We sold it. We made some money. We ended up taking that money and pouring it directly into an ecommerce company located in Southern California called organize.com. We bought organize.com…

Steve: That an amazing domain by the way.

Rampton: Oh yeah, it was a great domain, and had existing sales. We had this very, very large warehouse with about 56,000 skews. We were selling pretty decent amount of things, of product. Had a little team and I came in there and I was like you know, I’m really good at this online stuff. I can triple the sales. We came in and I started applying my methods and stuff. We started really getting into ecommerce.

Some of the things that you can do in ecommerce and especially on Amazon, there’s a couple different tools you can use that for example they go on Amazon and they say, “Hey here’s your product, and here’s” — there’s twenty other products on Amazon just like yours. So you can say, “Hey I want my product to be 8% lower than the lowest price, but here’s the lowest I’m willing to go.” We went and did that for most of our products. Immediately we started, we almost doubled our revenue in a couple of weeks. We were selling a lot more. We weren’t as profitable, but we were selling just massive amounts. I mean …

Steve: Can we back a little bit. Why did you think you could triple revenues as soon you went in there? What things were the companies not doing when you got there?

Rampton: Well first of all, I analyzed the numbers and I’m like, man first of all traffic perspective. They were only converting at about a half a percent.

Steve: Oh my goodness, okay that’s really little, okay.

Rampton: So I look at that and I’m like man, there is one way I can triple. Second I went in there and most ecommerce companies have this problem. What happens with large ecommerce companies that have been around for a while is they are not up to date on current methods and practices. For example, when an order came in for us, we printed off a piece of paper. That paper then was taken over and manually entered into our system.

Then another then taken, they stamped it, take it back to the warehouse where the person would pick the stuff, ship it, mark right on there the shipping address, and then we would have to manually go enter that into Amazon.

Steve: Oh my goodness.

Rampton: Once that was entered into Amazon we take the reference number and enter it into Quick Books. That sadly is how a lot of ecommerce companies today are.

Steve: Was this a purely Amazon business when you got there or was it…

Rampton: It was Amazon. Their own website did about 10%, 12% of all things and there were a couple of other things, but it was primarily Amazon.

Steve: So it wasn’t FBA, it was self fulfilled Amazon?

Rampton: Correct.

Steve: Okay got it.

Rampton: Yup. When you have that many skews you really can’t – it’s really hard to do FBA. FBA for those who don’t know is fulfilled by Amazon where they fulfill the orders for you. If you’re– FBA has to have a good profit margin for them. You pay them a lot more and the skews have to sell very, very quickly. They don’t like inventory sitting on their shelves. Most of our things were ones to two Zs. We did have a lot, but we wanted the actual profit margin.

Steve: So these were other people’s branded products or were they your own branded products?

Rampton: They were other people’s products. All we did was sell other people’s products.

Steve: Okay, and so the margins probably weren’t high enough to make FBA worthwhile?

Rampton: I mean, they were, but the problem with FBA, and if you have somebody else’s products is – I mean one reason why we left FBA is if they are not your products, they will find the original person, and take you out of the equation. Amazon did that several times, and that’s how they ruin a lot of companies, middlemen, like ourselves. If you are going down that route and FBA will– if you put in there, they’ll go direct.

Steve: Okay. So this business was already there when you had acquired it.

Rampton: Correct, yeah.

Steve: They were selling organizational products?

Rampton: Correct. Like picture the container store online. We are probably their largest competitor online.

Steve: I see. So what was the differentiating factor? Were you just selling similar products in container store, or did you kind of have like a — what was your value preposition is what I’m trying to get at?

Rampton: I mean one the trust. I mean people just go online and they say what’s the lowest price, and we were usually the lowest price. So that was our biggest value differentiator. We sell the exact same products as container store. All container store is us with a different marketing. There’s a million other stores out there too that have these products and sell them online.

Steve: Okay and then so you went in there and you found I guess in the fulfilling side, there were a lot of inefficiencies, but how did you increase your sales on Amazon? You mentioned you used some automated pricing tool where you reduced prices by X number of percent. Was there anything else that you did to kind of scale this?

Rampton: I mean instead of like when you direct people to Amazon, there’s a couple SEO techniques. For example if your emailing out a list and you are saying, “Hey, buy this product on Amazon.” We usually say, “Hey go search this specific name,” and we direct people through the funnel instead of directing them to the end of the funnel. It doesn’t help you out as much on direct sales at that moment, but if you can direct people down the funnel that you know the majority of people are doing and everybody goes to you, Amazon’s algorithm is set to make it so that you come up a little higher in their search results.

We did this on two or three different occasions, one for example on a Christmas tree storage box. We said go type in Amazon Christmas tree storage. We were on page two. At the time we sent like– our email list was like 600,000 customers. We had a very, very large email list, but we directed probably like 50,000 clicks, people going towards this. They all typed in Christmas tree storage and they wanted the lowest price, and they know that ours is the lowest price because they could search it really easily.

They search that, and then they go to page two and they find us and they purchase us. Well over the course of one week we went from page two to page one, and that increased our sales on that one product by like 2000% because all of a sudden anyone who types Christmas tree storage is now, we are number one. And we are the lowest cost, so they are always going to purchase that. So we got– I mean we had one day where we had almost 6000 orders of that product.

Steve: Let me ask you this, how did you develop that 600,000 email list when Amazon doesn’t give you emails?

Rampton: Those were actually from our own site. We do get significant orders. We do have a lot of people ordering from our own site. Amazon also used to give you the email addresses. They don’t anymore.

Steve: Okay, what year was this by the way just for context?

Rampton: This was in 2014.

Steve: Oh, so it was just last year?

Rampton: Yeah, 2013, sorry.

Steve: Okay. So you were building emails based on your website sales which were about 10% of the over all.

Rampton: 10%, maybe 15% of the overall.

Steve: And then at the same time Amazon was giving you emails which you added to your part of your email addresses.

Rampton: Correct, yeah.

Steve: And then just to summarize for everyone listening, you’d have someone do a search and then you take that URL with the search term in it, and then drive traffic to that.

Rampton: We would actually drive them to Amazon and say to like Amazon.com, or to the category page, and we would say search this term. Like look for us.

Steve: Oh I see. You would have them do the search.

Rampton: Yeah, we would have them do a search. We won’t direct them through the search. We would direct them to the search. Again we lost a lot of money doing this, because we are directing people to our competitors. But we found that whenever we did this, people would search out our product, and find that one, we were still the lowest price. That’s in most worlds that’s the most important thing is having the lowest price. But we would direct them and we would say here is how you find us, here is how you do this and it worked, very, very well.

Steve: That’s interesting, because I’m just curious what the math look like, versus directing that traffic directly to the buy button on your own site, and I imagine your margins are a lot higher.

Rampton: We did a split test where we sent 25%. We originally started with 50-50, but then we switched. We always did 25% to our own website. The rest to Amazon, but on our own site people would do that, and we got usually a very high significant, literally when we sent that email out, we probably of the 25% versus 75%, we probably made equal revenue between the two.

Steve: Oh wow, okay.

Rampton: I mean it hurt us a lot. Having, from it taking us from page two to page one, or– we didn’t tell people what to type in either. We just said, whatever, and people used their own keywords, their own prices. We did say, type in Christmas tree storage or whatever you are looking for on the storage and find us there, because we have lots of products. People– so all of our search terms, now you type in that, and we were number one on all of them.

Steve: That is interesting. So that was just like a long term…

Rampton: The short term result within seven business days, they broke even, both of them 50-50. The longer term thing is we noticed the week after, like our sales improved by like 10, 15% a week.

Steve: That’s crazy.

Rampton: Like Intel was like, holy cow, we are getting– like I said we had one day where we had like over 4,000 or 5000 orders of one product.

Steve: That’s interesting. Do you recommend that strategy today?

Rampton: Yeah, it works. I mean don’t like bet all your chips on that, never put all your chips in one basket. We will get into that a little bit later.

Steve: Yeah we will.

Rampton: But like that was a very, very strong technique that worked very, very well for us. Again it hurt us in the short term; it helped us in the long term.

Steve: So can you talk a little bit about FBA, because you didn’t have the prime monitor next to your product, right?

Rampton: Correct, no we did not.

Steve: Were there any competitors with prime that were competing against you?

Rampton: We still beat them. The prime versus non prime, it still comes down to a pricing issue. If they can get it, if a person has to wait one additional day, they are already waiting– online shoppers are actually really, really good shoppers. They know what they are looking for and they are willing to wait. If they are not willing to wait, just go down to WalMart and buy it, or go down the container store and buy it.

Those are for people who have to have it now and impulse shoppers. Online shoppers are typically online impulse shoppers, but they are willing to wait. They are willing to wait a couple of days. The difference between getting the package in two days versus getting a package in three days is not that big of a deal.

Steve: Interesting. Okay and you still think that holds true today?

Rampton: Oh yeah. I mean, did it hurt us? Yes. I’m sure it hurt us. I’m sure there’s a percentage of people that say effort. I want in two days or I’d rather pay a $1.50 more to get prime. Overall I would say the majority of online shoppers are really, really, like price conscious, that’s why they are going online and not running over to WalMart. It’s a price issue for them.

Steve: So I was going to ask out this question, if you saw an FBA you said Amazon would seek out the true supplier. Did that imply that you do not recommend selling FBA for products that are non-branded to your own name?

Rampton: Correct.

Steve: Okay, so anyone selling other people’s products you don’t want to use FBA and sell much and fulfill to take advantage of the actual profits.

Rampton: Correct, if you are selling others, I don’t recommend it. Again if it’s small and you are doing ones and twos numbers, it’s just fine. If you are a stay at home mum and you are making $3,000, $4,000 a month, they are not going to go after you. But when we were making–when we were doing– I mean we had one product that netted us probably $2 million in one month. They are going to go after that.

Steve: Okay. And when you are selling other people’s– okay, so you basically out strategize all your competitors by getting it to rank in Amazon?

Rampton: Correct.

Steve: Okay, got it. I want to transition us a little bit, did you ever have any problems with Amazon going forward. I mentioned earlier that you got banned, was this just like a total surprise, or did you see it coming?

Rampton: Amazon is a little hard to work with. It’s a good thing and it’s a bad thing. What happens with Amazon is Amazon wants you to have a certain satisfaction rate and shipping rate and on time rate. When you are selling other people’s products and for example we did some drop shipping, which a lot people listening to this are probably going to be drop shipping.

It’s really, really hard if the drop shipper runs out of products. So you are last on the totem pole to get that. For example, that one product that we sold 5,000 in one day, we preordered 100,000 units in our thing. But within about 30 days we’d already blown through almost 100,000 units.

When we were selling those and when you are selling things, if you run out of something all of a sudden your shipping date gets kind of screwed, which forces you to fall below. They have a very high, I think it’s 96% customer satisfaction, 94% shipping rate, and 95% on time shipping. So you have to ship it by a certain day, and it has to be received by a certain day.

Then all the customers have to be happy. Around Christmas time and in high demand times, that’s very hard on any company. During that time, we were getting again, a minimum of a 1,000 orders of a couple of products a day, and when somebody runs out and you– we got probably on average like 3,000 orders a day.

Steve: Crazy.

Rampton: Yeah, we were getting massive volumes. It was great. Whatever that is, if you are getting 3 orders a day and one of those three orders is behind, that all of a sudden causes all your numbers to be skewed.

Steve: You can’t just cancel the order?

Rampton: Well, that hurts your customer satisfaction, because that is not good customer service to cancel orders.

Steve: I see.

Rampton: You can’t cancel up to like 3% of orders without it hurting you– but after that, for every like 1% of your total volume, I’m not sure what the exact is, but I’m kind of mixing this up, but for everyone 1% of your total order volume that you cancel, you go down 1% in customer satisfaction.

At the time when they canceled that and they told us, so they told us two days after they run out. And we’d run out as well. They are like it’s going to be a week and a half. And we are like all my work. By that time, by the time we paused that, we had 7,000 pending orders.

Steve: Oh my goodness.

Rampton: When you are only having 3,000 orders a day, and you have 7,000 pending orders I mean even for an entire month, that’s 10% of all your orders. You are screwed.

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Steve: How big is this operation, how many employees did you have?

Rampton: At the time we had like 14.

Steve: 14, that’s it. Okay. This kind of…

Rampton: We had most of our things were dropped shipped. 70% of all of our items were drop shipped. 30% were in-house.

Steve: So given that inventory is so crucial when using merchant fulfilled, you really had to have a very strong tie to your drop shipper’s databases.

Rampton: Correct, yup.

Steve: Okay, and so you had this one…

Rampton: For all of you wondering, that’s called EDI.

Steve: Yes, I think that’s a little advanced for the listeners, but yeah.

Rampton: Yeah.

Steve: So this one order basically screwed you guys over or this one product?

Rampton: This one product screwed us over. It was actually a combination. We had this a couple of times. This actually happened twice. So what happens in Amazon is you’ll get paused and then you’ll say, oh sorry we are improving this, then you have 30 days to make it better. But if all those orders are still like screwed, I mean it kills you overnight.

We got turned back on and then this happened again like three months later, whereas if somebody didn’t turn it off and it really, really hurt our company, and we ended up getting shut off permanently by Amazon. The first time they’ll kind of get back with you, the second time, like we tried everything. We contacted every person. I know every person I knew at the company and LinkedIn friend request them, everything. They would not turn us back on.

Steve: At this point you had a track record of doing lots of business with Amazon, right? It’s not like you were some pull down seller.

Rampton: Yeah, we had hundreds of thousands; I mean we had 100,000 reviews.

Steve: Crazy. And so that kind of implies that Amazon doesn’t really care even if you are making them a crap load of money. You fall below their standards and they’ll ban you.

Rampton: Correct. They just look at it as, oh, that product was making us a lot of money, but there’s still three other people selling that. Oh well. Or even if it’s your own product, they are like we are willing to take that, because we don’t want this perceived bad reputation.

Steve: I see. Could this have been prevented in your eyes looking back?

Rampton: I mean, automation, if we would have automated like if a person has a certain amount of orders that are outstanding, we automatically shut them off, but it’s really hard when you are getting massive amounts of orders for things. We could have preordered more. I mean we did preorder 100,000 or so units of one product. You figure that’s enough, but it’s not. In my eyes, there are little things we could do here, little things that we could do there, but overall there wasn’t much we could do to get over that problem.

Steve: I’m just thinking like this business model that you had doesn’t seem– it seems like you are going to get banned sooner or later.

Rampton: Most people, I would say yes. If they’re not your own product, yeah.

Steve: Just looking back also do you kind of still think that drop shipping this way is still a viable model?

Rampton: Yeah, I mean, I think it’s a very, very good model as long as you have good products that you can market that you know will go out, and you know your suppliers are not going to run out of.

Steve: Let me ask you this, the drop shippers, what’s their incentive not to list their own stuff on Amazon?

Rampton: Sometimes they just don’t want to deal with it. I mean we did have, we had like 4 or 5 customer service people. At times people from the warehouse and like our office staff had to come in and we had 8 people in customer service on the phone.

Steve: I see.

Rampton: A lot of companies don’t want to have to deal with that. They’re like hey, we make this product; we make a 20% margin on it no matter who we sell it to. Let’s just be good at that and sell that product, and there’re thousands of companies like that. They just don’t want to deal with it. To make an extra like 15% would increase their cost significantly; versus we have a thousand other products that we’re selling, so we can do that customer service.

You have to figure 1 to 3% of all orders will be coming back to you. It doesn’t matter if you have the best product in the entire world. 1 to 3 are going to be coming back, and most of the time the ones that come back are damaged or broken and problems like that. Again a lot of people don’t want to deal with that.

Steve: Even with FBA these companies– because you’re essentially outsourcing all that.

Rampton: I experienced the exact same thing like especially when you’re shipping containers and organizational stuff, like breakable items, a lot of these things just get broken in the mail and sure like, okay, it’s FedEx’s fault, or it’s UPS’s fault, but you still have a customer service, you stop to send out a new item, you still have to file that request. You still have to do all that. That requires a human body. For a $20 item, it’s going to take a person 20-30 minutes of time to get a refund on that item. Does that make sense?

Steve: It does, it does, so I’m thinking these people as like pure distributors. They don’t want to deal with anything consumer-facing, right?

Rampton: Correct. We are the consumers, the resellers.

Steve: I’m just curious logistically, when you got banned the first time,, were there any special steps that you took to get reinstated that first time?

Rampton: They make you go through a very, very strict process. Usually when you get banned you’ll get an email, you’ll have to log on, you’ll have to put together a reconsideration letter and send that back to them. It’s very process-driven and process-oriented. They do that because I’m sure they ban a lot of people.

Again we were a major account for them, but it wasn’t major enough to really have any direct people. I think that they could up their game in that, and really improve their company 10 fold by really caring about people like us, but again they don’t.

Steve: How long were you down for that first time?

Rampton: The first time we were down for 18 hours.

Steve:Okay. Oh okay, that’s not terrible.

Rampton: No, it wasn’t bad at all. I mean that still is a day, and a couple of hundred thousand dollars in sales, but yes.

Steve: Then the second time it was permanent. You were expecting that to happen then?

Rampton: No. We weren’t. We kind of got shut off. I mean we were tittering the line, but at the same time it was during our peak, peak, peak season. We were like okay, we understand this. We understand that we’re tittering the line, but we were a little bit over on the line towards the positive side. We were actually doing well.

Steve: You get that letter and then what happens?

Rampton: We got the email and our [inaudible 00:34:44] came in and she’s like, ah expressitory word, and I was like, well let’s get it back on. She’s like, okay I’m trying. I’ve already done this, this, this. The next day they didn’t respond, and the next day we submitted something and they were like we’ll be back to you within 24 hours. 4 days later we were like, okay. We started adding every person. We started calling every person, trying to make it work.

Steve: Did you shut down after that point?

Rampton: Yeah. It was like 2 weeks later, because I mean, our site sustains a lot, but it doesn’t sustain that many people, and in the ecommerce business we’re used to playing the numbers game. We have at any given time we had half a million dollars out like in accounts payable. We did have at the time like $180,000, maybe $200,000 in accounts receivable like coming from Amazon, coming from a couple different places, but that doesn’t make up for the half a million plus a good $50,000, $60,000 in payroll.

At that point I was like, we got to just nip this in the bud. There were a few little factors in there. I don’t really want to get too much on this, because it gets into details a lot more like on the thing. There were a bunch of other factors where we were just like, man this isn’t worth it to keep this alive.

Steve: Because I was just thinking, what I want to ask you was looking back would you have focused more efforts on your own site in marketing, or would you have still done the same thing and gone more or less selling on Amazon?

Rampton: I would have focused around, towards the end when we got cut off by them, we had never gone on Overstock, or [inaudible 00:36:50], eBay or other places. We put all of our skews on eBay, and we started selling like 200 units immediately. Then we put them on Overstock and we’re selling another 100 units a day. We made up for about 20 and maybe even 30% of that within a week, and we were like okay well damn it, why didn’t we do this originally, because that would have improved our margins and had us a lot more profitable and made us been able to sell more and stuff like that.

My recommendation for people getting into this business is don’t have 100% or 90% or even 80% of your revenue all from one place. If 50% plus of your revenue is coming from one source, you need to start working on other sources to get in revenue. If we would have done a lot earlier– eBay limits you in the beginning to how many products you can sell, same with Amazon, same with all of them. If we would have focused on that a lot sooner, we would have had a lot better of an ability to make a lot more profit earlier on which would have helped us through this time.

We were two and half, three weeks after Amazon shut us off before we were at actually live in Overstock. House was another one. They were another market place and we were selling like 10-15 units a day on their thing. If we had had all these other things along the way, and we’d been shut off, we would have been like, oh shoot there goes 40% of our revenue. We’ve got to lay off a couple of people, but not close down shop because it doesn’t make sense. We just didn’t have the time at working at those to really make sure that it would work.

Steve: Basically there wasn’t enough cash in the bank to kind of pay all the bills for a couple of months. Is that correct?

Rampton: Correct.

Steve: Okay. You decided to shut that down may be like a month later it sounds like?

Rampton: Correct.

Steve: What happened after that? Did you immediately start your next venture?

Rampton: Yeah. I started my next venture a little while after that, again kind of going back to the other thing that actually ended in a lawsuit. It was with the previous owner so part of us closing it down was it didn’t make sense knowing that a couple of things were not disclosed when we purchased the business a year prior. We actually ended up filing a lawsuit and winning that lawsuit about a year and a half later. It wasn’t that long ago.

Those were other reasons and any person needs to make sure that they weigh all their options. Like I wasn’t everyone to be like, oh my word I just want to shut this business down next. Like there were so many factors in this where I’m like, it doesn’t make sense for me and my family to do this, so we shut it down. I kind of tucked my tail, lost tons, and tons of money, but you know this happens in life. You have successes, you have failures.

I then went back to marketing which is my thing. I started advising some companies, I started building my own personal brand. I got a couple odds and ends jobs. I got a couple of consulting gigs where I was helping different companies in search, and I was paying my bills. I started basically building up that cash flow. My wife and I live very, very humble lives. We don’t spend so much money. We pay for cash for like everything.

These are things that helped us the couple of crashes that we’ve had in our lives. To know that like, sure like I live in Palo Alto California, one of the most expensive places in the world to live. What most people don’t realize is I rent out my basement. That covers all my expenses. My entire living expenses is covered by me airbnbeing [ph] my basement every month, literally everything, the entire mortgage covers it. We do things like that and that allowed us to get back on our feet and start saving up money for the next venture.

Steve: Which is dew.com?

Rampton: Which is dew.com. About a year and a half after that collapsed, I was able to go purchase dew.com. Dew.com is an online invoicing thing. Firstly we kind of did the same thing. We found a really good URL and I purchased it and then I went and I was like well I need something to do with this. I went and bought an invoicing company. I was just like, hey here’s a good invoicing company, and I put it on Dew.com.

Steve: I’m just curious; you seem to like purchasing existing companies as opposed to starting them from scratch. Is that just a personal preference?

Rampton: Yes. I realized that I am not the best product person in the world, but I’m an amazing marketer. I always say that nobody can market products better than me out there, nobody. I can market products better than anybody else out there. But actually building a good product that people like, I’m not the best at. One tip for people is know what you’re good at.

If you find what you’re good at, don’t try and be good at something else. Be really, really good at one thing and okay at everything else. I realized I’m really, really good at marketing, but I’m okay at products, so I went and bought a good product, a really good product. Now I can market the hell out of it.

Steve: I’m just curious, is there a reason why you avoided ecommerce the second time around?

Rampton: I was really burnt out and I hate Amazon right now, like I still hate them. I think eventually I’ll get back to that, but right now, I just haven’t.

Steve: The things that you learned about marketing you learned while you were in bed during your injury?

Rampton: I learned a lot while I was in bed during my injury, but I learned a lot along the way, like just trial and error. I’m the guy that takes chances on everything. I’m the guy willing to jump off a cliff, and see if I can build a parachute or build the wings on the way down. That’s my experience. It’s trial by fire.

Steve: What I wanted to ask you was, when you’re a brand new online store and you sell physical products, what would be your first steps on the marketing side to get your first couple of sales?

Rampton: My first steps on a marketing side is probably research. I would research and make sure that you compete. There are a lot of other people out there who have been doing this for a long, long time, and if you can’t compete with them and you don’t know, you’ll never go anywhere.

If you want to sell a product, even if it’s your own product, if you go to the market place just saying, here’s what I’m going to charge, because somebody said online that they’d pay me that much. It’s great, but if you’re an ecommerce store and there’s other people that are a lot cheaper than you, you’re never going to sell anything, or it’s going to be onesy twosies. I would say a lot of research. That’s the first thing I would do to market my product, it’s research online.

Next find tools that can different price matching thing, so you’re actually when people search for a product you are the lowest price. Start getting a reputation for yourself. After you start getting a reputation you can up that price a little bit.

Steve: It sounds like in our conversations a lot of what you’re talking about is price-based, which seems to imply that brand and quality don’t factor as much if you’re not well known. It always comes down to the lowest common denominator which is price. Is that …

Rampton: I would say that is pretty true. I would say in that I was never selling a bad product, or a non-reputable product. I have always sold very, very high end products; I’m just the lowest priced of the high end.

Steve: I see. If you were to do an ecommerce thing all over again, would you sell other people’s products, or would you try to develop your own at this point in time?

Rampton: I would sell in mixture.

Steve: You’re saying you’re in drop shipping as well?

Rampton: I would just make sure I get in bed with the right drop shipping partners, and make sure that I take priority.

Steve: How do you get into bed with a good drop shipper if you have nothing, if you’re a beginner?

Rampton: Trial and error, trial by fire. Go find 20 of them and start working with them and start selling, and really get to know– I would really find a company that works on EDI, because that means their inventory is live updated. You want to find people who are online, who know what their inventory is.

EDI updates on like a true second, every one to two seconds. Like it updates your database, their database and then in turn updates Amazon, eBay, all the other places. You know what your live inventory is, and that would eliminate the problem all together.

Steve: Unless someone screws up on their end?

Rampton: Unless somebody screws up on their end, but the likelihood of that happening with EDI is very, very hard, because they have to physically scan in every product, and when products go in, unless they’re defective which is one thing, but when products are purchased somewhere else or by another vendor, that’s automatically taken out of the system, so you don’t have to worry about that.

Steve: I also want to give you an opportunity to talk about due.com, and what some of your value propositions are for your new business.

Rampton: We are due.com. We’re an online invoicing and time tracking company. Some of our competitors are FreshBooks, Xero, Cutlass, there’s a lot of them. Some of our value propositions; one you can bill people online, you can get paid online. We’re trying to make it a lot cheaper for people. You can integrate it with your own site, so you don’t have to go to a third party site to bill. It can basically all be done internally on your own site. When somebody gets your bill, they’ll come to your site to pay it. Those are some of the things…

Steve: Hope you enjoyed that episode. John’s story just goes to show that you should never, ever depend on a single channel for all of your income for your business. If I lost a seven-figure business overnight, I’d probably go and start crying in the corner and swear off entrepreneurship forever. What’s incredible though is that John has bounced back and has created another successful business, because he is the man. For more information about this episode go to mywifequitherjob.com/episode108.

Once gain I want to thank FameBit for sponsoring this episode. As I mentioned earlier, FameBit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online, and it works. One of my podcast guests, Emmanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing, and it costs as low as $50 to start. And the best part is if you to use the coupon code ‘mywife’ at famebit.com you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products.

Finally, if you’re interested in starting your own online business, be sure to sign up for my free six-day mini course, where I show you how my wife and I managed to make over $100,000 in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. Thanks for listening.

Thanks for listening to My Wife Quit Her Job podcast where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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9 thoughts on “108: How John Rampton Lost His 7 Figure Amazon Business”

  1. jason says:

    hi – can you not put the transcript in a scrolling window? makes it impossible to read on ipad. love the site and great content. if you can make this twak to make it more mobile friendly that would be great!

    1. I’m reading this transcript on my ipad as we speak. Why is it impossible to read?

  2. Mr. Clever says:

    Never rely on just one revenue source.
    Never make your business dependant from amazon.
    Amazon is evil!

  3. Mark says:

    Steve,

    I may not be a 7 figure seller on Amazon but I know that drop shipping on Amazon is extremely dangerous which is clearly illustrated by your guest.

    One key to help FBAers especially small FBAers is to sell other people’s products but bundle several together and offer a unique value add to the bundle that cannot be duplicated by other sellers.

    Thanks for sharing the podcast!!!

    Sincerely,
    Mark

  4. Jay says:

    Why couldn’t he just manage someone else’s amazon account? like his wife’s or fiend’s? i don’t get it?

  5. Matt C says:

    Steve,

    In the description of this podcast you say “In fact, his story is almost unreal”. Of all the podcast’s I’ve listened to the past 5 years on eCommerce topics, I can honestly say, something about this podcast episode with John is fishy.

    I know you always put on high quality guests and great podcasts to listen and learn from, but something doesn’t feel quite right about his story and the lack of details or expertise/ knowledge he shares. For instance – “Nobody can market products better then me” When asked what his first steps on the marketing side would be for store owners: “Research that your price is competitive” “Find tools that can price match, so your the lowest price”. (Are you kidding me?)

    I never ever comment or give feedback, but I just wanted you to know my feelings on this episode. The vibe I got from John Rampton is like when your scrolling though Facebook and see an Ad with a guy posing next to a Ferrari that isn’t his – selling some passive income non-sense.

    Just my two cents for what it’s worth.

    1. Michael J says:

      I’ll second that statement.

      Made me feel uncomfortable so I stopped listening after 9 minutes.

  6. its my Passion about Product SEO in eCommerce site. Take a look on Amazon Product Optimization

  7. beth says:

    Hey Steve,

    even if a dropshipper is using an EDI system (which is good advice), isn’t the buyer at the mercy of the dropshipper’s business process? e.g., there’s still a manual scan that happens to get the data into the system, THEN it’s automagically updated every few seconds.. You don’t know if the manual processes are squared away until you’ve been through a trial and error. How do you vet dropshippers for reliability with the e2e process in mind (not just the tech part)?

    thanks

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