060: Brad DeGraw On How To Maximize Your Sales On Amazon

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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 is your host Steve Chou.

Steve: Welcome to the My Wife Quit her Job Podcast. Today I’m thrilled to have Brad DeGraw on the show. Now Brad is someone who I met at the Ecommerce Fuel live conference and I’m really happy to have met the guy. Brad is probably the most knowledgeable person I know when it comes to selling on Amazon.

Now, not only has he published a successful book on the topic called The FBA Hot List piece also well know as an Amazon selling coach, and today he’s actually going to tell us his story and educate us on how to take a product and sell it on Amazon successfully. And with that welcome to the show, Brad, super happy to have you today.

Brad: Thanks Steve, thanks for having me.

Steve: Yeah, and so Brad, you know, tell us the back story because I actually looked online for it and I couldn’t find it. How did you get into E-commerce and how did you get into this whole Amazon selling game.

Brad: So for me I had no background in online sales when I got started. I made my money on the phone. I did phone sales, I sold buildings over the phone, and that’s a real thing, you can sell buildings over the phone with people you’ve never met before.

Steve: Interesting, cold calling a regular person to sell a building?

Brad: Yeah, it was warmly.

Steve: Okay.

Brad: So, we have in bound calls and ironically the buildings we sold didn’t even exist. It was not a scam, we sold them pre-engineered buildings. So they came to us with an idea, we took the idea, we got them hot and bothered, and we sold them a future building.
Steve: Okay.

Brad: And after getting fired from that I took my hand with selling consultant over the phone, so business consulting, and that was fantastic again until I got fired.

Steve: So I get trend here, Brad.

Brad: That’s when the light bulb went off, it’s– I know how to provide value for people. I know how to bring in revenue; I just maybe don’t know how to get along with the owner and sometimes the owner’s wives. Maybe I should just be the owner.

So that’s how I got my start in Ecommerce, you know I read a book and I just got started with a $100 and a Wi-Fi connection said, if I’m going to fail I’ll probably fail within the first two weeks and it’s only going to cost me a $100, and it worked. Sure enough you can buy– at the time I was doing arbitrage, which is buying low and selling high.

Steve: Okay.

Brad: So I sold other peoples brands and that worked, made great money, did that for a few years and realized, you know what it’s time to really start selling my own brands. I don’t like to compete and price erosion just doesn’t work for me.

Steve: Aha.

Brad: And that’s when I learned that I could sell my own brand of products. First I started bundling other people’s products to create unique skews, and then I went out to the manufactures. They were happy to sell me things directly with my label on it.

Steve: Uhh.

Brad: And now we make most of our money working directly with manufactures.

Steve: Okay, and this is all on Amazon that you’ve mentioned so far, right?

Brad: And this is all on Amazon.

Steve: Okay.

Brad: It’s the easiest place to get started. It’s not that you can’t make fantastic money beyond Amazon, but it’s the best place to get started.

Steve: Okay, so the motivations for just selling on Amazon was, that was your primary source of income at the time because you got fired from your jobs, is that?

Brad: Yeah, exactly.

Steve: Okay.

Brad: The thing is I didn’t know how to build websites and put together hosting and auto responders. None of that, I’m not very technical.

Steve: Okay.

Brad: So this was the place where I could simply upload the information, the pictures on Amazon. If you are selling other peoples brands, everything is already there. You just enter your quantity and your price and you make money. Now…

Steve: Okay so– oh sorry go on.

Brad: Well, it gets more complicated than that once you are launching your own brands, but that was an easy place to get some traction.

Steve: So is that a place where you recommend that people get started selling other peoples products first on Amazon, or do you recommend that they just kind of jump into selling their own stuff?

Brad: It depends on your budget, if you only have a 100 dollars and a Wi-Fi connection, go ahead and start with what we call arbitrage, buying low selling high. Go to any drug store, hit the clearance aisle, buy something for 90% off, sell it for four retailer more. That’s an easy way to get started. However if you already have a few thousand dollars, that you can get started, go ahead and start looking to sell your own brands.

Steve: Okay, and then just as an example so I run a class and often times they get hung up on what they want to sell so I thought it would be useful to go over some of the stuff that you’ve sold and how you’ve come up with the idea to sell those specific products

Brad: Sure and can I just tweak the question a bit is because when I find when people come to me and say that they don’t know what to sell, what that really means is that I don’t really understand my market. Because when you really understand your market, then the products are easy.

So if we take it back one step and no one is teaching this, which is a shame, we teach how to have a market based business rather than a product based business. What that means is that a market is a group of people who are passionate about spending money on a particular problem or product. That’s worth writing down.

When you have your market, and a market can be Moms. So I’m a Dad and it’s almost like saying. I’ll spend any amount of money that shows and proves that I’m the best Dad. For example, I spent 180 dollars to buy flash cards to help my son read. At six months, he could read elephant. And it wasn’t so much that he could read elephant, it was that I paid 180 dollars because only the best Dad in the world would spend that kind of money. I could have easily printed out the flash cards on my printer.

A couple other good markets to target come to mind, Moms, Dads, kids, pet owners. People with health issues. People who want their straight hair to be curly and vice versa.

Steve: Could I ask you a side question before we continue? How does mixing selling on Amazon versus having your own online store website come together in the way you’ve advised people to do things.

Brad: Well, it really depends on your resources. For me I didn’t know how to build websites.

Steve: Okay.

Brad: Or drive traffic, so I stuck with Amazon longer. Now if you already have a background in building websites, and hosting and traffic methods, then you may go ahead and make the transition sooner, but here is what I teach.

Steve: Okay.

Brad: We show people first build your empire on Amazon and then as soon as you have something worth protecting, you need that Amazon proof your market. So use Amazon because it comes with all the traffic and credibility and then you can build your own in parallel to that. So as soon as it’s worth protecting, and it’s covering your bills and then some, go ahead and start diversifying.

Steve: Excellent, that’s actually a strategy that I’m transitioning to in my class. It will be very interesting; we’ll get into that a little bit later.

Brad: Awesome.

Steve: Sorry I interrupted you though. So we were still talking about finding a market and then products that serve that market. So what is kind of– what are some of your guidelines in doing so?

Brad: So first thing is, you want to make sure that there is already money being spent there.

Steve: Okay.

Brad: It’s– we are trying to compress time, some of the values that we teach is you have to compress time, minimize your risk and then scale up on your winners. If you are following that system, then the first thing you need to do is figure out your market, after that you figure out maybe it’s pet owners.

Steve: Okay.

Brad: Then you figure out where they are spending their money online. So you can type in if– let’s see, Chihuahua owners.

Steve: Okay.

Brad: So you just type in Chihuahua on Amazon and see what comes up, or Chihuahua, color, pet, products, and you see what are the best selling products there. Now that you see the best selling Chihuahua color, you read the one, two, and three star reviews, and again we are teaching something here that’s a little bit against the traditional thought, but is the most effective way to do it.

Steve: Okay.

Brad: After you find the number one best selling products, you do not make a me too product, you do not copy it. What you do is you read those one, two, and three star reviews and you find out how can you build a better mouse trap? Where are people’s missed expectations? And when you understand where their missed expectations are, you can make a better product. Does that make sense?

Steve: It does, absolutely. That also implies however that you would need to be able to manufacture your own products, is that accurate?

Brad: Yes and no, I don’t own any manufacturing equipment. Most products with name brands on them, those companies don’t own their manufacturing equipments either. You have a manufacturing market and you put your branding on it or you can even put your branding in on it afterwards, put it on the packaging.

Steve: Okay, it’s just in my experience, when you want to make customizations to a product that you are having manufactured overseas, for example, the minimum order quantities tend to be a lot higher. So using your methodology, what would be some– what would be the estimated order investment that you would have to make to describe the methodology that you outlined?

Brad: Well, and if you haven’t notice by now, I’m a little bit of a contrarian.

Steve: Okay

Brad: When everyone else says start overseas manufacturing, I do the opposite, I say start domestic. If you are selling product here in the States, you probably need to have a manufacturing care in the states and the same goes with Europe.

Steve: Okay.

Brad: If you are selling in Europe, have it made in Europe and your minimal orders go down. You don’t have to have a palette or a shipping container. So half the products I’ve ever gotten start with were under a 1,000 dollars and the other half were beyond 35,000. So-

Steve: That’s very interesting Brad, yeah.

Brad: It’s not that big of a deal financial wise. The reason why you want to start domestic, and again this goes against a lot of the gurus out there. One, your minimums can be much lower. Your communication is much easier, but most importantly, the size of your shipping time is much-much less. You can ship it ground and it’s a lot cheaper than shipping it air. You can build the relationship, it’s easier to build a relationship with folks here in the same time zones, in the same culture, it’s much-much easier, and that relationship will save your neck. It’s not all about the margin; you have to make money, but building that relationship will save you more often that you can imagine.

Steve: I would tend to agree with you Brad. So a lot of times what we do know is we actually have prototypes made in the US just because the whole designing, communication process will be really miserable doing that with someone overseas, and then once we have that prototype then we actually go on and actually have something made.

Brad: Excellent, Yap.

Steve: So, just curious though, where do you find your vendors in the US?

Brad: We use a service called reference USA, it’s free if you have a library card or you can pay for it, it’s called info USA, is the pay version.

Steve: Okay.

Brad: And what that is, is that’s a data base of data bases. You can find anything there. So if you want a plastic bottle manufacturer, you type in plastic bottle manufacturer and you can search by region, by state, by area, and you’d be surprised at how many manufacturers are in the United States and want to have your business, it’s insane.

Steve: And then what– this is going to be a very vague question, but what is the order of– what is the difference in price typically between getting something made in the US versus something equivalent in Asia with higher minimum order quantities?

Brad: It really depends on the labor. The labor is where you are going to see, the big cost differential.

Steve: Okay.

Brad: So plastic is plastic, all over the world is basically the same price.

Steve: Okay.

Brad: It’s how much labor that goes into it is your real increase in cost, so if you could on your first few products, try to find something that there is not a lot of moving products and pieces to it, there is not a lot of technology, it’s a real low risk winner.

Steve: Okay.

Brad: And then as you scale up then you can have more complicated, more labor intense products.

Steve: Okay, do you have any example of that that you could you use to illustrate?

Brad: Sure, you know Rocco & Roxie is a product I like to put out as a sacrificial lamb.

Steve: Okay.

Brad: That’s not one of my products; it’s not one of my clients. With dealers it’s a pet odor spray, so your dog has a little accident in the house, you spray this and you know it doesn’t stink and the stains come out. So there is not a lot to it, it’s basically a disinfectant perfume in a bottle, no moving parts and well, the sprayer is a moving part of the piece, but it’s a bottle, it’s a sprayer and it’s fluid.

Steve: Okay.

Brad: Not a lot to it, you can’t fail.

Steve: And is that fluid– is that something they design themselves or is that a white label product?

Brad: I don’t think I’m letting any cats out of the bag when I say most the products have the same ingredients and formulas.

Steve: Okay.

Brad: So yeah, what you do is– on this example you’d read the one, two and three star reviews, you’d find out that people hate the smell of this particular product, you call the manufacturers and you say, hey listen, I know you do pet odor sprays, I’d like one that smells like lemons or anything. I want it to smell like apple cider, can you do that? And chances are they do, the already have that technology, they already have a research and development department and it’s just a matter of saying, that’s what I want and they’ll do that for you.

Steve: Okay, so you are saying that I could actually contact the makers of that odor spray and then have them formulate my own concoction for sale?

Brad: Absolutely.

Steve: Okay, and what would be hypothetically some of the minimum order quantities I would have to purchase for something like that?

Brad: Most of the time I’m able to get it under 200, 250.

Steve: Okay.

Brad: So it depends on how many fit in a case, what the configuration is. Worst case scenario you are looking at 500 units, but I can’t remember the last time I had to order 500 units for a minimum first order.

Steve: Okay, and this all in the US so it could just be delivered with ground shipping, right?

Brad: Exactly, and so that’s much-much affordable. They probably have their own account or you can use your account.

Steve: Okay, and so now that I have my product and I have– so hypothetically speaking I have already done the research on Amazon that this pet order spray is a good selling product, and I have gone through the one or two star reviews and I have found out that people don’t like the odor so the I formulate my own concoction, what is the next step?

Brad: Next step is create your Amazon listing.

Steve: Okay.

Brad: So you want to make sure the listing can be seen, and there is two dances that you are doing. One is with the search box and the other is with the actual human eye balls. You have to be appealing to both.

Steve: So we want to have great images, high quality, professionally taken– don’t use your iPhone, actually have a photographer do it. You want a title that is key worked rich, and when I say key word rich don’t duplicate it, don’t put that odor-odor-odor-odor. Once is enough.

In Amazon key word density doesn’t mean anything, so don’t duplicate your key words, put most of your high end relevant traffic key words at the front of the title, don’t put your brand on trial, Brads pet owner because that’s– no one is looking for that, the search posts will think you are invisible.

Steve: Okay.

Brad: And then hire a copy writer, if you are not one hire one, that’s the easiest way to do it. You are looking at two to three hundred bucks there. They’ll put your title, they’ll put your description, your bullets, all the benefits, it’s huge, it’s worth it. This is going to encourage your conversion rates.

Steve: Okay, I have actually been experimenting with different product descriptions and what not with some of my listings. I noticed that by far, I think the photos make the biggest difference for conversions, because the description is kind of buried down below.

Brad: Yeah, I totally agree. Amazon customers have been trained. They are hungry buyers, they want to do a key word search, whatever is in the top half the first page, they click through based on the image, your click through rate is based on the images. So not only do you want to have a good looking image, it needs to be compelling, and when I say compelling, it can’t just be a hero shot just with the product standing there with its chest popped out. You need to tell a little bit of a story.

Steve: Okay.

Brad: So open a loop is another way to put it. Have a story started so if it’s something that can be worn, have a person– have it on a person, have the person in motion using it, have a compelling look on her face. It could be disgusted, it could be excitement, it could be curiosity, get them to click through.

Steve: Interesting, so in this case of pet odor spray would you have something stinky maybe in the picture and then I don’t know, human with their facial expressions, I don’t know.

Brad: Well, I found that humor doesn’t necessarily compel people to buy.

Steve: Okay.

Brad: We’ve tested that, but pictures of pets and babies do really-really well.

Steve: Okay.

Brad: So you could have a picture of the pet looking all sad, you can have them looking all happy. Have an emotional pet there and of course a picture of the product, so you can have it as if you are spraying right behind the dog, yeah definitely.

Steve: So I was just curious you know, Amazon has some guidelines through their photos, words just suppose to be their product on a white background, how do you get around those guidelines?

Brad: So, some of the things we teach are what we call grey hat, and just so every one hears this very-very clear, white hats are the good help cowboys and the bad cowboys are the ones who wear the black hats. White hat means every rule is followed not just to the letter but also to the intent of the rules. Black hat is where people get deceived, we don’t do black hat, we don’t teach it, we run away from it and try to correct people every time we can. Amazon’s cardinal rule is no customer should ever feel deceived, whether you meant it or not, if someone feels deceived you could loose your entire business.

Steve: Okay.

Brad: So we stay away from that. But a grey hat is where we like to play and that’s where we do go against the Amazon terms of service, but we stay within the intent. Amazon’s intent is to match up people who want to buy stuff with people who want to sell stuff, that’s all Amazon is, it’s a search engine. So we will do things like make compelling images, we will do things like put line spacing in the product description, or bolding the fonts, technically those are against the rules but we do it because it helps the buying experience.

Steve: Okay, So what are some of your tips or your grey hat tips when it comes to writing compelling product descriptions?

Brad: So product descriptions, forget about the technical things. No one cares that it is 32 ounces, no one wakes up and says man, I really wish I had 32 ounces, they wish they had the solution. So whatever you are selling sell the experience, sell the emotions. So there is three ways to market a product, you have what the thing is, what the thing does, and then who it’s for.

Steve: Okay.

Brad: If you are taking notes you need to write that down, what the thing is, what the thing does and who it is for. Your key word strategy is your copy; everything needs to fall into one of these three categories, because you have to be consistent.

Now what we found is the third option is where the premium sales are. Nobody cares that salt is salt, nobody cares that salt is salty, but what they do want is to enhance their culinary experience, and so we talk about their day to day issues, about what is going on in this persons life. Why they would even need this product and where they are from where they want to be. We bridge that gap and that’s why the transactions comes in so frequently, is because helping people live a whole new life from where they are in real life to where they want to be on Facebook, that’s where our product comes in.

Steve: Do you have…

Brad: Does that make sense?

Steve: Yeah, absolutely. Do you have any examples, maybe if you don’t have these on hand I could just post links to them maybe after we are done, just as an example of very compelling copy that creates an experience.

Brad: Yeah, just pull out the Rocco & Roxie example.

Steve: Okay, I’ll definitely link to that.

Brad: They are doing a really compelling day to day. They are not talking about this once in a life time thing that happened. It’s just a day to day– oh man, it’s Friday the boss made your work late and you got stuck in traffic and all these things happen, and your best friend had an accident in the house, don’t worry we are here to save the day, boom. So yes, they don’t care what it’s made out of, they don’t care, they just care that it saves the day.

Steve: Awesome. So let’s assume now that we have the photos down, we have a compelling product description, it’s still at this point just a brand new listing on Amazon. So are there any tips that you have to drive traffic and then how does kind of the whole pricing thing come into play. Do you play any tricks with pricing at all?

Brad: Oh, yeah, pricing is a fun game to play and you are never done.

Steve: Okay.

Brad: So what we found is changing the price helps conversions and that may sound strange but it works, test it and you will see that it works for you, and it doesn’t matter whether we go up or down, changing the price works. So you can go up or down pennies or tens of dollars, it doesn’t matter, you will see an increase in conversion.

Steve: Can you elaborate on that a little bit, it just…

Brad: So yeah, let’s say you are selling the product at 20 bucks 19.99, lowering it to 19.95 on Sunday and raising it to 19.99 on Wednesday you will see a spiking conversions, and it’s because people put it in their cart and it’s also called cart abandonment. The door bell rings, the dog barks, the baby cries, something happens and they are not able to complete the transaction and then they are there later looking you know, they should be working on something and they are distracted shopping on Amazon, Amazon says wow, the price on this changed, do you want to buy this, and that little, that little inspiration, that little input forces some people to buy and others not to, but you will see in overall conversion in– increase in conversion just because of that.

Steve: That is very interesting, I’ll have to go and try that, okay. Now– oh, sorry go on.

Brad: One more thing on pricing, we’ve tested the last digits, so 99, 95, 88, 77 and 50 are the best converting prices, so, if you are going to compare $35 flat to 35.99, 35.99 will outsell 35 flat.

Steve: Interesting, what about the 88 and the 77 and the 50?

Brad: Those all convert really well and those will also exceed the flat numbers or random like 35.23, 35.50 will still out sell it.

Steve: Okay, and do you actually recommend pricing your products very low in the beginning to generate some quick sales and reviews?

Brad: I like to keep my prices high and then do promotion codes.

Steve: Uh okay, can you walk me through that process?

Brad: So yeah, let’s say you are selling a product for $40, something to get free shipping. So between 35 and 40 dollars is kind of a sweet spot. I want to say, even if I could afford to sell it at $20 and make a healthy margin, I want to sell it at 40, I want to go for premium, because you have already done this homework and if this is truly a product that has an emotional response from people and you are tying in to that emotional response, the price doesn’t even matter, it really doesn’t.

So start high and then reach out to your network, maybe it’s your friends, your families, your– the other coaching students that you are working with, do a promotion, you can do it at half off, you can do it for a dollar, you can do it for free. Get some sales, get some verified reviews. This is important for your credibility. You want user generated content. So those could be reviews, those could be customer questions and answers, those could be votes, those could be customer images. Make sure that you get some user content before you go and start running ads.

Steve: Okay.

Brad: And then as you get some traction, Amazon will understand what your product is and who it it’s for because of the traffic. Amazon algorithms is sensitive to traffic patterns. This is huge, so what you can do is once you have few reviews and this looks like a product people want to buy, you can click on the number one bestselling product and then back to yours. It doesn’t have to be the same competing product, it can be irrelevant. If you are dealing punching gloves, click on the number one bestselling punching bag and then over to your listing and the hardware and the magazines and the foot wares and the pants back to your product, and now Amazon algorithms starts to recognize that.

Steve: Does that imply then that if I were to include a link to one of my Amazon products for example in one of my email new letters that goes out, and I just had a whole bunch of traffic over to my Amazon listing, would that affect the search results?

Brad: It depends on what kind of link you sent.

Steve: Okay.

Brad: We call it Amazon’s magic tail, so if you do a search on Amazon, the key word search and then you get to your page and you use that entire URL, the whole thing, it includes on the far right it says REF equals, and then it’ll have page number, position number, unique time stamps, key words, equal, patch plus order plus fray. If you use that whole thing yes, that would be huge, you got great value out there, now if just copied and paste, if you were in seller central and you clicked on it through there, you lose all of amazons magic tail, you lose that tracking code, that REF equals. REF equals is the bread crumbs of how did we get here, does that make sense?

Steve: Okay so to summarize basically, you are taking the key word portion of the search query in Amazon, and you are driving traffic to that to kind of tell Amazon that people are using that key word to find your product.

Brad: Yes, they look super organic.

Steve: And does the conversion rate matter? I would think that if you drove a bunch of traffic that way and people didn’t buy that would reflect negatively on your listing, right.

Brad: Honestly there is this myth that conversion rate is a big deal for the algorithm. We’ve tested it to the X factor. We went way overboard testing this and we found that that’s just a myth, conversion rate does not affect your search position.

Steve: Interesting, okay. So Brad so just try and focus the discussion here, so I got a brand new product, I put it on, is the first thing that you do is you put some promotional codes on and get some reviews, is that the first step?

Brad: Yeah, get some reviews on it, verified purchase reviews, you can’t tell people what to say, but tell them that you are looking for an honest review and if there is an issue to contact you privately and directly. So this is still legitimate, this is still within Amazon’s terms of service.

Steve: We have the listing looking sexy. Any human eye ball that sees it, it say man why wouldn’t I buy this, why wouldn’t I buy two. Now it’s also time to also use Amazon ads, responsive listings.

Steve: Okay.

Brad: Amazon ads are really-really cheap, I mean we are talking nickels and dimes and they convert really well, double digits conversion. Then it’s also time to go ahead and go beyond Amazon, go ahead and see what your natural plateau is on the Amazon for a week or two and then move in to Facebook, Pintrest, anywhere else that you can get some traction.

Steve: Okay.

Brad: I like the deal sites, that wallet, slick deals.

Steve: Aha, okay.

Brad: Those are nice and so that’s another place for you to put it for like half off. Do another half off code and you can– not with your personal account, have someone else do it on their account, make it look organic, don’t just the first post on day one brand new user put up there. Season that account a little bit, like some other stuff, put some key mark clients deal up there, really try to make this look as organic as possible.

Steve: Okay.

Brad: And you will be amazed at what you can get from these deal sites, it will be insane, and that brings us to another thing, don’t sell out of your inventory, do not run out of stock. Raise your price through the roof, buy that at 10X if you have to, just don’t run out of inventory.

Steve: Uh, okay, and so, regarding the Amazon ads, that’s paper click, is that correct?

Brad: Yes, yap.

Steve: And you are saying that the– it’s just like on the order of nickels and dimes per click and the then conversion rate is really high, so it’s really a no brainer to run those.

Brad: It’s a no brainer. That’s– we call it day two activities, it could be week two for you but don’t just put a listing and stop, these are the things that you do on the next day when you show up to work. So you’ll get your hands on ads going, you’ll do your traffic patterns, you make sure that you have some engineers– engineered reviews and again you are not writing the reviews, but you are just making sure friendly people who are willing do to it are the first in line.

Steve: Okay, got it, and at some point there is enough inertia that the sales will start generating their own organic reviews, is it?

Brad: Absolutely, you can do a few things, there are, there are services, Feedback Five is one of them, Feedback Genius is another. They will do your Amazon messages for you, so for examples we do a three message campaign. So as soon as someone orders we say hey, thanks for your order, you are smart, you are safe, it’s okay, welcome to the family, because the moment someone clicks the button all they know is they spend money, but they don’t have anything to show for it, so there is a little bit of vulnerability.

Steve: Okay.

Brad: And the whole thing we are trying to do with Ecommerce, is eliminate that feeling of vulnerability, we are trying to build that trust. So we let them know here is your order number, it’s going to be shipped to you right away, welcome to the family, you are going to be so happy, by the way if you need anything, reach out for our store record. That is message one. We are not asking for anything. Message two is hey, your product is about to deliver or just delivered, either way you want to set it up; it’s about the same process.

Steve: Okay.

Brad: If you have any issues, if the box is damaged, if it’s not exactly what you expected and more, please reach out to us, and again it’s just service-service-service.

Steve: Okay.

Brad: And then the third one if they are happy you can ask for a review, you can ask for referrals, you can really put your acts together by the third one, but you really want to show service first.

Steve: Okay, and typically in practice, what percentage of the people who buy actually bother to leave a review?

Brad: It’s low.

Steve: Okay.

Brad: Single digits.

Steve: Okay, single digits, okay-okay. That’s what I’m getting, I think it’s like 1% or something so I was just curious if that was on…

Brad: It really depends on the market and their motivation for buying. You know if you are doing something, sex toys that maybe they don’t want their minister to see their review, they may not be so willing to do it but yeah, you are going to look at single digits, somewhere between one and five is realistic.

Steve: Okay-okay, and then, okay so we’ve done that we are starting to go through the deal sites, at some point when in this whole process do you start creating your own site? Like when do you start protecting your moat like we talked about earlier?

Brad: Once it’s something you start to brag to your friends about, hey listen, I’ve got a business that pays for my boat, or whenever it’s something you would cry for, if it would make you cry that you lost it, now it’s time to protect it.

Steve: Okay.

Brad: So now you can do a few a things, you can– you don’t have any website experience and you are not comfortable there, go ahead and start your next platform as e-Bay or Open Sky or Racket Top. Go ahead and start maybe shifting to other platforms, so you are a little bit Amazon resilient. If you do have some website experience, just go ahead and do, I mean there is Shopify and Bigcommerce, there is not a lot, it’s just plug and play right there. You can do this without a whole lot of stress.

Steve: And is there like a way that you can actually somehow get your Amazon customers over to your own property?

Brad: That is a sensitive topic, the answer is yes, but you have to thread the needle. So you could do that with– the old school way is registering the product, hey we will give you a lifetime warranty, you just need to register, or we will give you a free refill just you know, give us your information. We will give you a bonus, a free E-book, a recipe guide, a care kit, just come over here. So you can do that with QR codes and the images are products, inserts are fantastic, put it in a box. Nobody has to see about the customer, following up with them by mail, by phone and discreetly by Amazon message service is an option.

Steve: Okay. How do you get their phone information and what not.

Brad: Amazon gives that to you in the orders.

Steve: Okay.

Brad: You just click on the orders and you will have their phone numbers.

Steve: Uh okay, I guess I have not tried that yet.

Brad: And again be very-very discreet depending on what your product is. If it’s a pregnancy issue, the teenage daughter may have got it, it might not be a legitimate, just be very-very conscious of who the people are and why they bought it because you– if you are not very-very cautious, you can make some people very upset.

Steve: Okay. It’s hilarious Brad, these examples you keep bringing up kind of implies that you sold products, like a wide variety of products that are really random.

Brad: Yes-yes, I have learned all these the hard way so.

Steve: All right cool, so at that point things are going smooth and then we started on site and we were just kind of steering stuff over, what are some other tactics that you use to kind of further extend your moat, your Amazon moat?

Brad: Well, you’ve done what you need to do now, now you’ve proven your market and like you said it’s about compressing time, eliminating risk, now it’s time to scale up because as you have your own sites and other platforms, you are going to have better margins now. So now you scale up, buy traffic, hire professionals, don’t just go take another F course on how to do Facebook ads. Just hire someone to do it as long as it’s profitable, you are in the money.

Steve: Okay, and then you have a couple of options. We like to– once we get into the top 20, we knock off our own brands, so we will be our own competitions. So now we take up half of the top 20 rather that just focusing on the number one spot.

So you can duplicate your own success or you can pivot and do relevant products. If you are doing baby products, well those babies turn into infants and those infants turn into preschoolers and as preschoolers turn into schoolers and just chase that market, because whatever the market is, whatever that problem or fantasy, it doesn’t go away. Throughout life they are always going to have that. So keep selling it.

Steve: So given– you mentioned margins, given that Amazon takes a pretty hefty fee especially if you use fulfilled buy, what are some of the margins that you recommend before even thinking about selling on Amazon.

Brad: Minimum five X, so when I say five X that means if you bought it for five dollars, you need to be selling it for twenty five dollars.

Steve: Okay.

Brad: And ideally you’d aim more for 10X, so if you buy it for five you are selling it for 50. That’s a healthy place to be because now you can scale the business. If you can’t afford to advertise, then you don’t have a scalable business, which means you probably can’t sell it; it’s not worth a whole lot to anyone else but you.

Steve: Okay.

Brad: And by the time it shrinks, if you have new competition that comes in and it erodes the prices, by the time you get to three X, it’s time to look at moving on.

Steve: Interesting, okay, and so manufacturing stuff in the US you can still see those margins?

Brad: Absolutely.

Steve: Okay.

Brad: And another thing, just to dial into this is a concern I hear all the time, you know I’m not making enough time, you know. I’m not making enough money if I start with that, it’s okay, your first production run is just to eliminate the risk. I have made stuff for $16 a unit and sold it for five on the first production run, and that’s losing money, a lot of money, but I wanted to prove the market because I knew as I could scale, that I could maximize my margin on the next production runs, it’s that important.

Steve: Okay, and then along the way you are garnering reviews, I mean you are still getting value out of your sales, right?

Brad: Exactly.

Steve: So, Okay. Let’s see, what else is there to talk about? I had a couple of questions for you just on Amazon fraud.

Brad: Sure.

Steve: A lot of people are copying listings, copying photos, and what not, how do you combat all those things?

Brad: Well the first thing we do is we send them a scary letter, so that works about a third of the time, hey you are a bad guy, this is against the rules, this is against the law, this is against whatever. That will work, one in three will actually disappear, and they will stop bothering you. That other two out of three times we go ahead and buy out their inventory and then we complain to Amazon saying, listen, I’m highly concerned that this inventory may not be legitimate and for the customer’s best interest. Amazon only cares about the customer and in the customers best interest I’d love you to look into it, we’ve already bought the inventory and we’ll be sending you an update, I just wanted to get the case– the ball rolling and the case started now.

So document everything and then one of two things is going to happen, you are going to see that the inventory is exactly what it was supposed to be, which case you have a leak at your manufacturing level, or it’s something completely different, and now you have a legitimate case against them. So either way you just kind of follow up with whatever your reality is once the merchandize gets delivered.

Steve: How important is it to register your brand on Amazon?

Brad: Very, that’s another day two or week two activity. So once you have a product up, go ahead, and get registered. It may be three or four emails back and forth to Amazon, that’s what we found. It doesn’t matter what shift, who it is, they will always ask for something a little bit different but by the fourth time we say is this everything you need? Normally by about the fourth time they approve it.

Steve: Okay, I have just noticed some stories on some of the Amazon forums that despite having your brand, people still manage to use you know, use your skill and try to hijack your listing as well, but I imagine the safe guards are a little higher once you have your brand registered, right?

Brad: Well, yeah. What it is, is I make it difficult for the people who are going to hitch hike on my listing. So if I’m selling at two buck and they are going to hitch hike on, as soon as I sell that inventory I’ll have a sale, I’ll blow through my inventory, and I’ll ship this in as a three pack, update the images and the description, and then I will let them know hey, this is a three pack, you are selling a two pack, you are about to have some serious problems and especially if other customers are saying hey, this is a three pack and they gave me a two pack.

They have to ship all that inventory back to themselves and make it a three pack and then ship it all in, and if they do it again and they are messing with the price and the sales, then I’ll sell through that inventory and I’ll make it a four pack.

Steve: Interesting.

Brad: And I just make it so ridiculous for them to follow along and ride on my cocktails that it’s just easier to go bother someone else, because knuckle heads will always be knuckle heads, I just make it difficult for them to bother me.

Steve: Okay, okay, yeah, that sounds like a good strategy and what are your views on using fulfilled by Amazon versus self-fulfilled. Are you FBA all the way?

Brad: Yeah, all the way. You could do this yourself; however you are missing out on Amazon’s prime customers. Prime customers pay a membership fee so that they can get a few extra perks, but the main thing that they do is that they want it yesterday.

Amazon prime members have an option and Amazons skews the search results to show FBA merchandize first. So you will be missing out on Amazon’s best premium customers if you don’t put it in Amazon’s ware house, plus it’s not that much extra money, a dollar or two here or there to not have the headaches, it just makes it, it makes it a no brainer.

Steve: I completely agree, cool. So Brad, we’ve been chatting for quite a while, I did want a couple of words and motivation for the listeners out there. If they want to get started selling on Amazon, you have a couple of words to say to motivate these people to give things a try?

Brad: Absolutely, you can do this, you just have to make up your mind that this is something you are willing to do, and then also before you get started you need to look at why you are doing it. Are you doing it to increase your lifestyle? Are you doing it to save the whales? Are you doing it to improve the lifestyle of your family? Figure out why you are doing it, and tell yourself why you are doing it every single day, because you will have bad days and if you know your why, you will be able to get through those bad days. Things will happen that you didn’t understand, you couldn’t have planned for. Knowing your why will get you over those bad days.

Steve: Awesome, thanks so much for that Brad and more importantly where can people actually find you if they have questions about selling on Amazon and where can they find the product or get some coaching from you.

Brad: Oh, yeah. Check us out, our site is Amazonsherpa.com. We are the Amazon Sherpa because we will take you Amazon business to the next level. We have all kinds of tips, stories, news, what’s working right now on Amazon because things change from time to time. So yeah, go over there, check us out, sign up for the newsletter.

Steve: Sounds good Brad, hey thanks a lot for stopping by in the show, there is a lot of tips you shared today on Amazon that I did not know and thank you for that.

Brad: Thanks for having me, we’ll talk again soon.

Steve: All right take care, Brad.

Brad: Thanks, bye.

Steve: I hope you enjoyed that episode; Brad DeGraw is actually my go to guy when it comes to selling on Amazon, and he’s got a ton of experience and he has a bag full of tips and tricks on how to make more sales on the platform. He also knows enough to give an exclusive lecture to the students of my ‘Create a profitable online store’ course, and for that I’m very grateful.

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