Podcast: Download (Duration: 49:15 — 45.4MB)
I met Nemo Chu randomly at one of Noah Kagan’s entrepreneurship events and I’m happy that I did. Turns out that Nemo is a genius when it comes to analytics and he has a pretty cool strategy with which he uses to find products to sell online.
In just a single year, Nemo has managed to create a 7 figure ecommerce business which is pretty darn amazing. This episode is chock full of information so be sure you check it out.
Also, you can sign up for Nemo’s newsletter here.
Get My Free Mini Course On How To Start A Successful Ecommerce Store
If you are interested in starting an ecommerce business, I put together a comprehensive package of resources that will help you launch your own online store from complete scratch. Be sure to grab it before you leave!
What You’ll Learn
- Why real estate didn’t work out for Nemo and how he found ecommerce
- How to use Ebay to find out what is selling and where to look for inefficiencies in the market
- Why he uses the American Express Plum Card
- Why Nemo tries to sell stuff that weighs less than 13 oz
- Tips on how to use Ebay and Amazon to do research
Other Resources And Books
- Terapeak.com – An EBay research tool
- Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
- Scientific Advertising: Complete and Unabridged
- Being Direct Making Advertising Pay
- Influence: The Psychology of Persuasion (Collins Business Essentials)
- Nemo’s Site
She said, ‘In talking with Steve one on one, I quickly learnt that he is experienced and extremely knowledgeable on starting online retail sites. Steve and I discussed a few different ideas with this analytical approach and market place knowledge combined, it was much more clear which idea would be the most logical to pursue. I came to our consultation with a laundry list of questions and he was able to fire back responses.
Steve is extremely experienced and strategic in what he does. Talking to him for just thirty minutes probably saved me weeks, maybe even months of pursuing my online store from the correct angle. For more information about this contest, go to MyWifeQuitHerJob.com/contest and if you are 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 a 100K in profit in our first year of business. Go to www.mywifequitherjob.com for more information. Now onto the show.
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 we are going to be talking to my brother from another mother, Nemo Chu. Now, we might have similar last names but we actually aren’t related but we both do ecommerce and we do it well. Now, Nemo used to be a director of marketing at KISSmetrics until he stumbled upon ecommerce and like myself, he worked on his ecommerce stores while working a full time job, except that Nemo managed to make over seven figures with his ecommerce endeavors in a single year. Now, today Nemo is semi-retired, spends his time volunteering for young life at a local high school, and what’s cool is that Nemo and I have somewhat different strategies when it comes to ecommerce. So, it’ll be very interesting today to hear how Nemo does it. So, welcome to the show Nemo. Great to have you.
Nemo: Hi, thank you so much. That’s a very nice intro.
Steve: So, for all these people who actually don’t know who you are and I actually scoured the net looking for information about you and the information is quite scarce so, can you give us a good brief intro on how you got into ecommerce and exactly what you sell.
Nemo: Sure, so you know, I got into ecommerce thanks to a book actually. I like to read, I read a lot and one of the people that I respect, he was my old boss. We built a company together, he introduced me to a book called “Rich Dad Poor Dad” and up until that point the term financial independence wasn’t really in my vocabulary. I mean, I understood about retirement, I get what that is but that’s what you know, people do in their 65 and have a nest of grey, at least that’s what I thought and from a conservative Chinese family, that was kind of the norm.
So, after reading that book my mind was completely open to this idea where you know, there’s a new goal of financial independence and that’s when I started kind of digging around and framing my life around that goal. To make a long story short…
Steve: So hold on, let’s back up, why ecommerce and not like real estate for example which is Rich Dad Poor Dad…
Nemo: Yea, that’s true, that’s true. So, I really delved into real estate for wild reading, and it’s like they make it sound easy, but then when you start reading it you realize that it’s not easy. At least for me and I’m not very smart and I’ll tell you straight on I’m not smart– actually t-scores are not that [laughs] high. It’s like a 1240 when we were doing 1600.
Steve: [laughs] That’s heresy for Asian parents.
Nemo: I know, I know. I still feel hurt about that. You don’t have to podcast that one.
Steve: I am revoking your Asian card right now.
Nemo: But the real story of the ecommerce is a friend showed me the business model and so he–Chris Thinken, I love that guy to death– he came to join the company which was eventually sold that’s the one that I say we built a company together. He was another wonderful person and he showed me how a person– he was in his like early or mid 30’s okay or early 30’s. Hope he didn’t hear me say mid 30’s [laughs] and he actually built the online stores while working a fulltime job, doing sales at I believe a call centre. That’s where it started.
Eventually he was making so much money that you know, he didn’t need to do that call centre job. He ended up still continuing the stores while joining two friends in building a marketing agency from scratch to– I think in five years they went from three people to 120 employees. They were Inc. 500 firm, and he did that as a co-founder which to me is amazing because I was never really a co-founder, I was just an early employee but he did that as a co-founder while doing the online stores. So as I rubbed shoulders with this guy, and worked for him it became clear to me that this is a business model where if you are smart about it you don’t have to spend a lot of time.
It’s not hard and if you stay focused, there is a healthy return, and it’s worth your time. And so that’s what really intrigued me about ecommerce plus you know my skill set, I used to build websites for people. People would pay me, I was like 16, 17 at the time and I would make these little websites. So I had technical ability to build and use the internet to my advantage and my early jobs growing up were all internet marketing related. So it was you know– that’s all different from real estate right? I don’t have a real estate background at all.
Steve: Okay, so you actually got me really curious now. So let’s talk about this awesome business model where you can sell on the side while working.
Nemo: Okay, sure.
Steve: So, first of all, what do you sell?
Nemo: I sell a lot of nutritional supplements and I also sell some consumer electronics, some beauty products and one line of children’s drum set which is fun for me since I play drums.
Steve: So that’s interesting. So I teach a class on this subject and in general, I try to steer students away from kind of common goods, so to speak, so beauty supplies and that sort of thing so it’s going to be quite interesting to hear how you manage to choose what you sell. So why don’t we just pick one of those products that you sell and just kind of walk me through how you decide to go about selling it.
Nemo: Yeah, sure. So, let me pick– what’s the product that’d be interesting? So since you mentioned beauty products, I’ll talk about a product that I used to sell.
Nemo: It was– it’s from Joan Rivers or is it Joan Rivers? I don’t know how to pronounce her name, but even as celebrity she makes a beauty product that I think you use on your hair, and it will hide the white roots if you dye your hair, forgot the exact name of that product but it’s just a compact with a brush and a mirror built into the compact. That’s it.
What– how I found it was actually using a tool called terapeak. And so Terapeak– T-e-r-a-p-e-a-k.com is a data company which mines the data on eBay, and they’re a part of eBay’s then they service the data in these pretty charts and graphs that are relevant for people like me who are looking to find products that sell. So you can basically look up categories inside eBay and see–Oh look! In the health and beauty category which is huge, these are some of the best sellers, this are their sell through rate, this is the amount of revenue in the last seven days that have sold etcetera, and from that you can start picking things that may interest you.
It’s kind of like working for low hanging fruit, like one product might sell one unit every seven days. That’s not nearly as interesting unless you know, there’s a massive profit margin as a product that sells maybe a hundred times in seven days and so Terapeak will help me know what’s hot and what’s not and trust me, I’m not an affiliate of Terapeak’s, I don’t make any money from saying this, I just find it to be a fun tool and I actually got to meet some of their guys at a conference and they are really nice.
So I found Joan Rivers through that– the product, and then what I did was, I figured out okay well, it it’s selling well on eBay, it’s got to sell well on the other ecommerce sites out there. There’s Amazon of course, you can also build your own store nowadays it’s not too difficult and it can rank in Google with paid ads if you need to, or if you want to do the organic ranking game you can take some time and slowly move your way up through the rankings if there is room, [inaudible] [00:09:29] is there and I discovered on Amazon there was– there was competition, there was someone already selling it but the competition was thin, and I know I can beat it and I’ll give you an example on how you can beat competition.
If someone is selling one unit of that product so it’s a one pack, what’s stopping me from selling a two pack? There are always people out there who buy in bulk right, especially in beauty products where you have your favorites and you buy them over and over again and you want to save some money. And so I can then list a two pack on Amazon and still make money that way, and so you kind of go around your competition instead of going head to head in which case you and the competitor will have your prices driven so low that nobody is making money, and that’s kind of pointless, right? So, that’s one very concrete example of how I approached my business.
Steve: Okay, so let’s back up a little bit, so how did you get these compacts also once you decided that you wanted to sell them?
Nemo: That’s funny, I bought them on eBay.
Nemo: Yeah, I actually bought the product on eBay in bulk, and I sold that on Amazon and I made money on the difference and there was just a big enough difference to make it worth my while. To make it worth my while– to make it more worth my while– pardon my English I emailed the seller on eBay and asked for a bulk discount for larger quantities, and so there’s just a little bit negotiation and one trick I learnt with negotiation is you know, always ask after the– make the other person state the first price and then after they state the price always ask, you know what, can you do better than that price? And ask that three times– can you do better? I mean not like can you do better? Can you do better? Can– you can kind of rephrase it but you get the general idea and often times people will budge on their first price.
Steve: Yes, I’m giving you back your Asian card because these are standard Asian negotiation tactics. Every time I go to china I use these, yes.
Nemo: Thank you– thank you for that.
Steve: Yes, okay–so, when you were look at these products on eBay then, so what is an acceptable margin for you?
Nemo: 20%, 10 or 20%. It really depends on say the virtual profit per unit. I’ll take 10% if I make like a 100 dollars of profit for every unit sold; a really large, large ticket item.
Steve: So, let’s take these Joan Rivers things, how much do they sell for?
Nemo: I think at the time– I think– I think they sold for like 24.99 or 50 bucks for a two pack.
Steve: And you were buying them for 25% less or?
Nemo: You know what? I can get my notes out.
Steve: It doesn’t have to be exact, I’ll just borrow a pack, it’s fine.
Nemo: It’s something like that. I keep a lot of notes on these products. My notes are so messy on that. That was a long time ago.
Steve: So just taking an idea there, how many did you buy in bulk?
Nemo: I bought like over a hundred something like that.
Steve: Over a hundred, okay so not too many so we’re talking [inaudible] [00:12:24].
Nemo: I was testing out the market because I knew that– this is how I typically approach things right, the first time around I just, I’m just trying to figure out if there’s traction. If people are actually buying, and then I want to know the velocity of sales. I’m I selling one unit per day, 10 units per day or more? And then once I know that I’m better able to make a decision on, okay–how much do I want to commit to this product line? How much risk do I want to take and usually I’ll buy about a maximum of one month’s worth of inventory. I actually used to buy in half months so I’ll buy half month’s inventory. I make two buys, one at the beginning of the month, one halfway through the month and that’s just to avoid cash crunches and things like that, and also because my financing is purely offered by American Express Plum Card which is a great card for anyone getting into ecommerce. Check it out; I’m not paid to endorse them.
Steve: Yes so, just a real quick aside; so the Plum Card allows you to defer your payment for 60 days as opposed to the regular 30 right?
Nemo: I believe so, yes. You get to pick either the deferment option or you can pick the– I think its 1% or 1.5% cash pack.
Steve: Okay, so in a way what you’re doing is that you are buying off of credit and then you’re selling off the goods for a profit before you even have to pay the bill off the credit card bill.
Nemo: That’s right, that’s right. And the benefit– one huge benefit for that card is the no limit nature of it. I mean, they don’t say it’s no limit, they say it’s like no preset spending limit or something like that and they will cut you if you spend an inordinately large amount of money, but you can basically work your way up so that you can be spending tens of thousands of dollars on your card and for those of us who’ve gone into credit cards and have tried to get a large credit line on credit cards, it’s really tough to get something that’s north of 30,000-40,000 unless you have a very extensive credit history. You know, I’m 26 years old so my credit history is not tremendous.
Nemo: So, yeah.
Steve: Okay, so you mentioned that you like to buy half month’s worth of inventory. How do you even know what a half month’s worth of inventory is?
Nemo: That’s when I have to rely on my test. So with the Joan Rivers product I bought a bunch on eBay. That’s the easiest way to get some product and I actually bought only a handful at first. I bought like three of four just to sell and see if it sold and they sold out like, right away, in one day. So that gives me an idea of the velocity and I go okay, well if I am a conservative with my estimate then let’s say three to four per day for the next, you know, 15 days, how many units is that? Do I want to commit to that, and so I go for it.
Steve: So, are you still selling this on Amazon right?
Nemo: Yeah, for that product I sold it on Amazon.
Steve: So, those are– are you using the fulfillment program by Amazon or–?
Nemo: It depends– I use the fulfillment program if it helps me get an edge on my competitors or win the buy box– how are you– is your audience familiar with the buy box?
Steve: No, you should talk about that a little bit.
Nemo: So in Amazon if you look at any product, and you look on the top right where there is the buy button; you will see a little box. I think it’s usually shaded in blue and that’s the buy box, okay, and so the seller that wins the buy box wins like 99.9% of sales pretty much. And so the game for most Amazon sellers is winning that buy box for that product page. Keep in mind that there are multiple product pages sometimes for the same product.
Sometimes all products are consolidated into one product page working to the winds of Amazon, but that won’t matter if you want to jump into this and so to win the buy box, it’s not just about having the lowest price, there is also seller history and at the end of the day it’s a secret algorithm of course that drives Amazon’s decisions on who wins the buy box and no one can game it. I’ve learnt that– and they make it very clear, if you use Amazon’s fulfillment program, you are more likely to win the buy box.
Nemo: And so when there is tense competition I will pick– I will consider using fulfillment by Amazon to win the buy box.
Steve: Okay, so of course there is a bunch of fees that are incurred in selling on Amazon, so are you looking for like an even higher profit margin when you buy on eBay accounting for all these Amazon fees or? I’m just trying to get an idea of what your margin threshold is when you are deciding something to sell.
Nemo: Yeah, so it’s always around 10, 20%, often times my best selling products are north of that so we’re talking about 30, 40, 50% even, but earlier on when I start, I’m happy with the 10, 20% and then over time I can grow my margin by negotiating directly with the manufacturer for large quantities, like at first I bought Joan Rivers at eBay seller, that was a northern manufacturer so if it sold a lot I can approach the manufacturer and go “Hey, I’m interested in buying X hundred X thousand units, can we talk about that”? And depending on whether or not they have the wholesale program, they might talk with you or they might not.
Steve: I see, so can you walk me through product where you actually did do that? Did you do that with the Joan Rivers product or?
Nemo: I tried to and I learnt that the Joan Rivers folks did not have a wholesale program and they seemed to have an arrangement with QBC and QBC seemed to have an exclusive and they weren’t giving out products at wholesale prices. I’m sure that if I dug deeper at some point I could talk to someone who would get me some kind of wholesale deal. I just didn’t bother. It wasn’t the lowest hanging fruit for me. I have a lot of products that I’m working on.
Steve: Yeah, so let’s talk about that, so, how many do you have– how many products do you have [inaudible] [00:17:53] at any given time?
Nemo: I might have– oh cheese– several dozen in play.
Steve: Several dozen in play, okay and how long does it last before you feel like you can’t sell as many as you did initially?
Nemo: It might be too early to tell for that one because some have sold for like years and others will sell for half a year and then the competition becomes too crazy where it’s not worth my time any more. So it’s really tough to answer that question.
Steve: I guess what I’m trying to ask is you don’t really have set suppliers for these goods, right?
Nemo: Some of them like do like the ones I’ve sold for years, I work with the same person, the same people over and over again, it’s often times the manufacturer at that point.
Steve: Okay so, walk me through why someone on eBay won’t list on Amazon as well or vice versa.
Nemo: I don’t know, I don’t know why people on eBay don’t list on Amazon.
Nemo: It’s too bad I mean, I hope they continue not to because that gives me opportunities.
Steve: Right! Okay, okay, I think…
Nemo: Don’t spread the word too far [Laughs].
Steve: [laughs] I won’t post this interview don’t worry. Okay, so let’s– let’s go on a little bit more depth since it sounds like the secret source to your method is figuring out which product that you want to sell, right?
Steve: So let’s go over some guidelines here, so what are some guidelines? Walk me through any one of your products, it doesn’t matter which, it could be something that you haven’t sold in a while or what not but, walk me through the process.
Nemo: Guidelines– so I’ll probably pick nutritional supplements because it’s the closest thing to subscription, that isn’t subscription, because it’s consumer product that is, you know. People finish their supplements and usually a bottle is 30 days worth so then at the end of the 30 days they will buy again, and so there is repeat customers and us marketers know that it’s always easier to keep a customer than to acquire a brand new one. So I can always re-market to my same customers and get more sales if I want to, I can put in the work to actually do subscription. Supplements will often– in the industry anyway they often sell something called auto delivery. It’s kind of like you sign up, you pay a monthly fee and every month a new bottle arrives at your doorstep.
Nemo: If I were to put in the work that could be an option. Another thing about supplements that are great or just anything that I try to sell– I try to sell small items that weigh less than 13 ounces. Now why 13 ounces? First class mail baby.
Steve: That’s right.
Nemo: That’s the threshold. Now you can actually move that up to 15 ounces if you have high volume and you talk to US parcel, you negotiate something. So that’s the little benefits as you sell more and more over time, but for most beginners, 13 ounces. Keep it small. Also the size of it, make sure it fits in a nice little packing envelope and that way you can buy the same size envelope for everything.
You know, I have– I’ve been using the same size envelopes for a very, very long time. This padded mail that’s from Jiffy. They’re called jiffy mail number four. That’s the one! So those are all conveniences that save me money downstream because I don’t have to train my employee on you know, “Oh! This time use this one, then use that one”. That just makes things more difficult for people, right.
I want to have a business that runs smoothly and the people who happen to help me out can pick everything up really quickly. That saves me time right, which saves me money. Those are kind of the main things that I look for up front. Of course you mentioned the margin, there must be margin, that’s going to be key and I also sometimes will look for products that happen to be backed by advertising.
I don’t watch a lot of TV or listen to a lot of radio but I know I should because I know some of my products are marketed through those channels and what happens is, these companies will talk about their product on TV, they might use infomercials or just use straight up 30 seconds commercials. And then people will call in to buy the product but some people won’t want to call in, instead they’ll kind of add it to their shopping list and the next time they are on Amazon they’ll buy it there, which benefits me. So, having that advertiser– having the manufacturer advertise the product for you, that takes a lot of work off, off of me.
In fact, I’ve reached a point where I don’t even bother advertising my own products. It’s a requirement of mine to only sell products that are being advertised already, that are being searched for already, because I don’t want to spend the time to do all that. That takes a lot of effort and I’ve done it before. So…
Steve: I see, okay– so, and then the secret to getting the buy box on Amazon, you get a little bit creative with the packaging.
Nemo: That’s one way, that’s right.
Steve: Okay. Are there other ways that you care to share?
Nemo: There’s another way, for example sometimes if you go and look at a product, you go to the product page and maybe it’s a bottle of– I don’t know, like some bottle of pills, like vitamins or whatever. You’ll see that the page defaults to a one pack and it’s on the same product detail page. And then under– it’s going to be like underneath the price, you’ll see these little square boxes that will say two bottles, three bottles, four bottles and you can click on those little boxes, you stay on the same page; which is important and then the price changes in the buy box.
That’s actually a little bit different than creating another product page which features only the two pack. It’s like merging the two pages together if that makes any sense and it’s an important detail actually. When that happens you know there’s an opportunity because some people– some products only sell one version a price so one pack and you actually inject that additional little box that’s a two pack onto the same page which is already trafficked and searched for by a lot of people and then if you inject yourself in there, you’re the only seller and you can make money that way too. To do that you often have to contact Amazon’s customer support.
Steve: Okay, so let me– you said a lot there, so let me just back up here, so, you look for an already trafficked page for a product and then you try to offer something unique to create this little box on that page that will steer the person away to your product page.
Nemo: That’s, that’s basically right except that the last part where I said steers people away to my product page, that’s not true, it’s– my product page is that product page.
Nemo: It’s just like another face to it, which dynamically appears when people click on that little box.
Steve: But then you get the buy box at that point.
Nemo: Exactly, but then now I win the buy box because I’m the only seller for that. It’s interesting; the Amazon world has all these little new answers where if you look at the pages a lot over time you will pick up little tips. Another one is, people have a new model out and then, I bumped into this not that long ago. There’s a product the consumer electronics product, and a new version of it came out, but the Amazon page was still selling the old version. So, what do I do? Every– all the traffic is going to that page. That page is the one that ranks well in Google already, so you want to take advantage of the traffic going through that page, but there’s a new version and you can’t sell the new version on the page featuring the old version.
You kind of camp but you take a risk because people might really want the old version so what do you do? Well, it turns out Amazon if you contact customer support will let you plant a little image with a price tag next to it and a title that says a new version of this product is available and it appears a bit further below the price and you can get that there which then points into a completely new product page if you talk to support. So that helps you take advantage of the traffic and it helps you own a product page just for yourself.
Steve: I see, and this is in addition to actually creating a brand new product page with this new product as well, right?
Nemo: Yes! That’s right.
Nemo: That’s right you have to create a new product page as well to do– to make that play work.
Steve: I see, so do you actually sell any products on your own site or is it primarily through Amazon?
Nemo: Yeah, I do. I do sell some of products on my own site– sites rather it’s plural and its plural because I don’t want to become the next WallMart.com or GNC.com that’s not my goal. I will often just create little mini sites that sell only one product.
Steve: Okay, so that’s like sales pages essentially.
Nemo: Yeah, kind of like sales pages. That’s right.
Nemo: Great, I’m glad your audience is familiar with that. So you have little sales pages or little micro sites and it really depends on whether or not that play might actually work and to know if it actually works you just kind of study the Google search results page for the product that you want to sell so if the product is back to Joan Rivers right, if people type in Joan Rivers hair– I forgot the exact model, but like call it hair 3000, for crying out loud okay, Joan Rivers Hair 3000.
You search that yourself in Google and look at the results page and you might see oh! Look, Amazon takes an ad out for that page already and I know right away oh! That means a lot of people actually buy from Amazon. It’s hard to compete with Amazon, right, but if Amazon hasn’t taken out an ad and Amazon is not appearing organically then I go, oh wait! Okay, so I can maybe buy an ad and beat out the other person who’s bought the ad who’s like from you know, ArkMepillWarehouse.com [phonetic]. They’re not hard to beat right? So I could just beat them by making a better ad, not too difficult.
Steve: So what– so you mentioned buying ads, so which platforms do you use? And what have you tried?
Nemo: I use adwords and I use Bing, so the Bing ads. Over time I only do the Bing ads for products that are searched a lot because if a product is searched a lot on Google then there will be some searches in Bing and so it’s just easy and the cost is low for Bing.
Steve: Okay, have you tried Facebook or anything else?
Nemo: Yeah, I’ve done Facebook actually not for my own products but in the past when I was a marketer at a software company, at two different software companies. We used Facebook quite a bit and back in the day when I had my own t-shirt business, I did Facebook ads as well, yeah. It’s just– I know that Facebook ads can work very well for the nutritional supplement space, I had the benefit of being at a marketing analytics company and so our clients, some of them were nutritional supplements companies. I could see kind of– I heard from talking with them you kind of know how it’s working and so I know that it can work. I just know that to make it work, you might have to use like videos, you might have to use some long copy, it’s just a lot of work.
Steve: Right, okay.
Nemo: Again, back to the nature of what I do, every minute counts and so I don’t want to spend too much time on those things. I just want to get the lower hanging fruit.
Steve: Okay, so it sounds like since you’re shipping stuff yourself you kind of have to hold some inventory right?
Steve: So have you ever had any products that just didn’t sell and resulted in a bunch of stuff lying around in your garage or whatever?
Nemo: It has happened where I’ll buy like a hundred units of something and it sells for a little while then some competitor creeps up, and decides to try to cut me out, and then things get difficult, and then I just focus on something else because its lower hanging fruit and I’m making more money there and I still have 70 bottles of whatever sitting. To me It’s kind of its crappy when that happens, right?
At the end of the day though I recognize that overall revenue growth and overall profit growth is more important than that one product line and so I just focus on where the low hanging fruit is. I know that if I need to blow out that inventory I can either sell it at a slight loss and just kind of recoup my cash, at least what’s left of it, or I can really work hard to check out some other channels to sell it. Maybe it’s, maybe I’m squeezed out of Amazon, well, what if eBay still has an opportunity, maybe I’ll push that product in eBay but…
Steve: I see.
Nemo: It’s just– It’s all effort.
Steve: So all of the products that you sell, you actually don’t use or sometimes you haven’t even really played around with them. Is that– is that accurate?
Nemo: That’s very accurate outside of like one of the consumer electronics products which is a portable battery pack for your laptop. Other than that I don’t really use any of them.
Steve: So everything is purely data driven– all of your decisions?
Nemo: That’s right, as data driven as possible because data doesn’t have emotions, data will get me high or low, data is very objective and it can help quite a bit when used appropriately.
Steve: It also sounds to me that your interest also is not in building a brand for your shop. These are all just straight arbitrage plays you know, from either the manufacturer or eBay and selling at Amazon, and that sort of thing.
Nemo: Yeah that’s– it’s really the easiest play possible and it’s often arbitrage. I know from experience having helped build a couple of different software brands, I just know how much work it takes to build a brand and how much capital it takes to build a brand. Now, of course there are niche brands and [inaudible][00:31:22] it’s, it’s just one of those things where I choose not to get too involved lest I be sucked into it and waste a bunch of time.
Steve: Okay, so I know after hearing this podcast interview, I know a lot of people are going to want to actually try what you are doing. So if you could just– for– let’s say I’m brand new to this, what advice would you give to someone who actually wants to try to do what you do online, and what tools and what software and what not would you recommend to help them out? So, okay, so earlier on you mentioned Terapeak right? Is that still a piece software that you– would you recommend people look on eBay first or use it?
Nemo: I recommend– so if you don’t want to pay for Terapeak, one thing you can do is when you are on eBay if you want to know if a product is actually selling, there’s a little box on the left side part, this is completed listings. They added a new one called sold listings. I like to look at completed listings because they will show me which listings sold or didn’t sell, and that gives you an idea of how successful that product is on eBay, right? It gives you the dates, when they sold, if they sold and the dates if they didn’t sell and so very quickly you can see from like literally red and green because they color code it, how much traction there can be on eBay.
Now, Terapeak you know, you can obviously go in and use a seven day free trial and play around with that too. That gives you that stuff and more. So that’s definitely an opportunity. I know that the Google keyword planner is a tool I use quite a bit.
Often times marketers run will into the question of, “Hey look! Samsung”, all right? I’m just staring at the Samsung TV right now. Okay, Samsung! That’s a brand. I wonder how many people search for Samsung and so you go to Google Keyword planner, you type Samsung into there, you might even use some little brackets or things to get the exact match, I’m getting very specific right now but then you click the button and the Google keyword planner will spit out the number of average monthly searches for Samsung. Like globally and I think even within the US. Very quickly you can determine whether or not Samsung is searched for by a lot of people or not a lot of people, and it helps you determine whether or not it’s low hanging fruit for you. Now…
Steve: So, what are some of your guidelines in that respect in terms of number of searches before you go on?
Nemo: Yeah, so for my business model, I know that it’s not really worth my time if there are fewer than 380 monthly searches. So I draw a line there, at 380 monthly searches.
Steve: That’s really low actually.
Nemo: Yeah, that is really low. However, I’ve learnt that from the channels that I sell on, it can still be worth my time. Some of my best sellers though are at like 9700 average monthly searches–
Nemo: 7,000 monthly searches, so you can kind of quickly know what’s low hang or not and focus your efforts accordingly.
Steve: Okay, okay so go on, so okay, you use the keyword planner, Terapeak, eBay if they want and then, how do you validate the product?
Nemo: So let’s say I’m making my play on Amazon, right? And there are a lot of products there. If I look on Amazon, and I don’t see the product I want to sell, that can just be a massive opportunity where people are actively looking for this product on Google, which also means they are looking for them Amazon, because Amazon captures I think there is some data like 30% of shopping traffic, I don’t know how you quantify that to be honest, but you know, I think it makes sense.
So if it’s searched for in Google, it’s searched for on Amazon. Unfortunately, those on Amazon are seeing nothing, so I should just list something on Amazon and it will sell and that’s often the case. Now, if there’re already is someone selling that product, that’s helpful for me because I can look at the product page, scroll down and look for the Amazon seller ranking. I think that’s what it is, Amazon seller ranking. Next to it there will be a number and if it is over say– if it’s higher than say 12,000 for nutritional supplements because it’s category specific okay, keep that in mind.
Nemo: For nutritional supplements I know that if it’s more than– if it’s higher than 12,000 so, between one to 12,000 it’s worth my time. I used to have– I used to still work with products that were ranking like 40,000 but just because of number of products that I have and I’ve worked through, I have to pick and choose now.
Steve: So this ranking is just number of transactions or…?
Nemo: Basically I know that if it’s 12,000 searches, sorry– if it’s ranked around 12,000 and the competition is thin, that will roughly equate to maybe two or three sales per day for me.
Nemo: And if the margin is sad enough, that can be worth my time right?
Steve: That implies that the seller rating– the seller rating is determining the sales I suppose of the product itself? I didn’t– I must have missed something there.
Nemo: Yes, I’ll– I’ll just repeat. The Amazon best seller ranking will appear on every product page in Amazon– almost every, there’re some that don’t have it and I don’t know why.
Nemo: If it appears, it’ll– it’ll be lower down the page, you have to scroll down to see it and you will– it’ll tell you– it’s like a relative ranking system, right? Something that’s has an Amazon best ranking of 1,000 sells at a much higher velocity than a different product selling at say 12,000 ranking right?
Steve: Okay, I think I understand now. So, that number is not just really a seller’s rating in terms of how many transactions they’ve done. It really is a rating that determines how fast that particular category of products moves. Is that– is that accurate?
Nemo: Yeah, oh! Not category but it’s that actual product that…
Steve: That actual product, okay got it.
Nemo: Yeah, and you just learn over time that if it’s at 12,000 that means it’s roughly three sales per day, if it’s at 1,000 then it’s X.
Steve: Okay, so one question I have in my mind at least is it sounds like you can kind of snatch the buy box on a daily basis like little minute tricks that you make and snatch the buy box from time to time so, is it a lot of management to make sure that you are always having the buy box?
Nemo: Every morning, I’ll check and in on OSX machine on a Mac computer, you can use your dash board and create what’s called the web clips. It’s a safari and dashboard kind of hybrid where you can move to your dashboard, inside your Mac computer and immediately, you can basically see a bunch of little browser windows highlighted onto wherever you want to be. For me, it’s my products, so it’s like a one glance there’re all my products selling on Amazon, who’s winning the buy box right now? I can see that.
That’s a little trick. If you really want to get into it you can use repricing software, there’s a lot–there’re a lot of them out there. I honestly tried them for a little bit and I realized that I can just eyeball, I don’t have to pay extra to buy repricing software.
And what repricing software does, is it’s kind of like a robot that keeps an eye on the page and if you lose the buy box, the robot will change the price for you automatically with pre-programmed instructions that you kind of put in ahead of time. You kind of set like a floor and– you don’t really set a ceiling, I mean, it’s– you can kind of let it sell for a little higher price if you want to, but you can kind of control that and then it will try to win the buy box for you as often as possible. It can get really complicated inside repricing software, like all these rules that you can set into it. I’m sure you know, there’re people out there who– who’ll get a kick out of that and it is a lot of fun.
Steve: That sounds dangerous, like I would just lower my price for like 10 seconds to see what everyone’s low threshold is and then just kind of raise it back up. I don’t know.
Nemo: That’s clever, see that– that can help you probe and see if your competitors are using repricing software, right, great way to do it.
Steve: And get an idea what their margins are actually.
Nemo: Yeah, and what their floor is, and if their floor is so low that you can’t make any money, don’t spend thousands of dollars buying a half month’s worth of inventory right, at least if you’re going to stick with that play because it’s going to be a pain for you.
Steve: So here’s a question I have since I’ve noticed this on Amazon that there’s a lot of people selling products at like ridiculously low prices, why does that actually occur on Amazon?
Nemo: So, some people especially the book section, will actually sell books for very, very low price and they might even lose money because they’re boosting their ranking all right? As a seller, you have a transaction history and you have ratings; like five star, four star, you know, one star, also you have the number of transactions or the number of ratings that you’ve collected. All of those things factor into– all those things factor into your account’s ability to win the buy box, right?
Steve: I see, so it’s not price, it’s just some more complicated formula that’s a combination of your rating plus price plus…
Steve: Whatever makes them more money most likely right?
Nemo: Probably, it’s a secret you know, but there’re some things that kind of make sense right? It’s kind of like common sense says that if someone has only sold one thing on Amazon ever and lists a product for the same price as someone else who’s sold products for years and you know, I’ve sold tens of thousands of products, guess who’s going to probably win the buy box right? Who– who’s– Amazon is probably going to give it to the person who has a longer track record and who’s delighted more customers.
Steve: So, what do you recommend starting out? Do you recommend just building up this rating initially?
Nemo: Unless you have a lot of money, right, because that takes every– if you want to build up rating fast, one of the quick ways is to lose money on every sale. I mean it’s not– if you’re smart about it you might not do it that way, you can find something that is profitable, but that’s the quick way and if you have a lot of money, sure go for it.
If you don’t have a lot of money, I’d just say, you find a niche, kind of like what I said, maybe something is searched for in Google, some product– some particular product model or whatever and then look on it on Amazon. If it isn’t sold on Amazon, guess what? Chances are people are actually searching for that product on Amazon, they’re just finding nothing. If you list that, then they’ll find you and they’ll buy from you.
Steve: It seems like there should be a tool that will help you do this. Is there– are there any tools that you use that just do the direct correlation for you between Google and Amazon?
Nemo: Not that I’m aware of, Terapeak is getting close, they’re building in some things, some Amazon features now because they were– they started out on– in eBay. They just mine eBay data, and it’s great for that and they’re kind of diving into Amazon a little bit. So if– then again I’m not– I’m not like an expert in the tools out there for this since I have a very specific strategy and a very specific play, but for those who might want a short cut, Terapeak could be a good start.
Steve: Okay, and so it sound like with your business model that you literally can just start making right away, right? You’re just buying something and you’re just listing it. There’s no real set– you don’t have to start a website or anything, right?
Nemo: Usually not, you don’t have to raise money either, you don’t have to go from– to friends and family you know, collect the whole bunch of money before you get started, it’s pretty straight forward.
Steve: And you just really need your plum card and then you just buy a certain inventory and then okay.
Nemo: Yeah or your existing credit card, right?
Steve: Yeah, okay that’s a pretty unique business model, I’m just curious how things are going to play out as more and more people start doing this, and kind of start squeezing the margins but I guess you can always find some low hanging fruit out there.
Nemo: That’s right, I think– I think when that happens, when there’s more and more people because it’s not a matter of if it’s a matter of when, I just recognize that my edge will be my ability to find products quickly. The benefit of kind of this society that we’re living is– and the entrepreneurs out there is, there are always new products coming out. So, that’s fine for me because I’ll always find another hot product, another new product that’s hot or whatever and then I’ll be the first to list that, or the second to list that or find an opportunity somewhere. So I’m not too concerned.
Steve: Okay, so in any given month, how much time do you actually spend looking for new products as opposed to managing your existing ones?
Nemo: I kind of go with sparks when I feel like it, I try to be disciplined though so let’s say in the last month I probably spent two full days, invested two full eight hour work days, working through my process for finding new products and testing them out.
Steve: Okay then as products kind of stop selling you just find new ones to replace them and that’s just kind of how the cycle goes.
Nemo: Yeah, usually I mean, I try to put up a fight at first because you can still get pretty far just by defending your position, and you know, that’s where the marketing experience that I have comes in really, really handy. So I defend and I defend and if there– I just get squeezed out, then, all right that’s fine. I have other products.
Steve: Okay, okay. That’s pretty unique. So in a way you’re kind of diversified with just all the breadth of products that you sell.
Nemo: Yeah, I’ve probably rotated through, I mean right now like I said I have dozens of products in play, I’d say less than 100 in play but I’ve rotated through maybe 300 some products.
Steve: Wow! Okay.
Steve: And how long have you been doing this?
Nemo: Think I’ve been really focused on this for like a year and a half now.
Steve: Okay, okay so not even that long.
Steve: Okay. Cool, Nemo we’re coming up on 45 minutes, I don’t want to take up too much of your time. Can you recommend– you already mentioned Rich Dad poor Dad, are there any other books that you recommend to just kind of instill that entrepreneurship spirit in some of my listeners?
Nemo: I’ll be honest, I don’t read too many entrepreneurship books, I tend to read books that are on the fundamentals of marketing, so the signs of marketing or the nut and bolts of marketing. So I can recommend a free book out there called ‘Scientific Advertising’ by Claude Hopkins, you can Google that. It’s an old book and I think it hit the public domain.
There’s another book which is just fun, it’s the Biography– I think autobiography of one the world’s best direct marketers, left by the name of the guy is Lester Wunderman, and the name of the book is called ‘Being Direct’. It’s a story of this person who basically invented the ‘1-800 number’, he invented the ‘Columbia Record Club’. He’s the reason why American Express actually has cards– credit cards rather than traveler’s cheques. So, wonderful marketer, great stories, that also helps you understand what it takes as a marketer to grow some really fast growth businesses.
Another book that I like which is based on the signs of persuasion and marketing is ‘Influence’ by Robert Cialdini.
Steve: That’s a good one.
Nemo: Yeah, that’s a fun one, and then for those who value time management and– yeah who value time management and personal productivity, I recommend anything by Brian Tracy. I actually– you can buy the books from and by Brian Tracy, just kind of search I think time and Brian Tracy. I know it’s not super specific for you, I can probably just email you something later.
Steve: Yeah, I’ll put those in the show notes yeah.
Nemo: Yeah, I’ll find the one that I really like because often times I just YouTube these titles and I’ll listen to the audio book because many of them are free on YouTube.
Steve: Okay, and lastly Nemo, where can people find you online?
Nemo: They can usually find me on LinkedIn, Nemo Chu, or if you want like my little about.me website just go to about.me/nemochu
Steve: Awesome, well thanks a lot for your time Nemo, I know personally I learnt a lot, and I’m sure the listeners have as well.
Nemo: No problem Steve, thanks for having me.
Steve: All right man thanks a lot.
Nemo: Yeah, good luck everyone.
Steve: All right, take care.
I don’t know about you but I learnt a ton from Nemo today, and what’s cool is that Nemo’s strategy is very different from my own. By leveraging his background in analytics, he is able to quickly find and test profitable products to sell online. For more information about this episode, go to MyWifeQuitHerJob.com/episode21. And also, if you enjoyed listening to this podcast please go to iTunes and leave me a review.
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7 thoughts on “021: Nemo Chu On How To Create A 7 Figure Ecommerce Business In Just A Year”
I really loved the interview with Nemo. You cracked me up over the comment about the Asian card! 🙂
The most important things I walked away with was to leverage existing skills even if that’s not your passion so that you can fund your passion projects.
Its amazing that he has accomplished this at such a young age! I am curious to hear about his volunteer efforts.
Really good actual case study/interview. Information we can take away and learn from while implementing some of the ideas ourselves.
Great interview! Definitely some amazing tips in there (of course worth nothing if no action is taken). Time to research some products and email suppliers!
As an Asian-American myself it was really interesting to hear Nemo’s story. I’m not doing 7 figures yet, but I’ve been pretty successful starting a six figure store and LOVE having my own business. It’s been exactly a year since I started but I’m super happy with the results so far.
This was a very good interview. I had to listen to it twice because there were so many good tips.
I need your help badly I have four online stores and for the efforts that we put in, the returns are minimum. What are we doing wrong. We have an etsy store, amazon, ebay, facebook and our own website
hmm, very interesting.
personally not interested in this model of business, but it is a good one if you have the energy.
also his strategy can be applied to many different areas.
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