Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into the strategies they use to grow their businesses. Today I’m thrilled to have my friend Brad Moss back on the show, if you don’t remember him, he is the former head of seller central and today he’s going to give us an update on what’s working with Amazon today.

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Intro: Welcome to the My Wife Quit Her Job Podcast where we will teach you how to create a business that suits your lifestyle so can spend more time with your family focus on doing the things that you love. Here’s your host Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Brad Moss back on the show. He’s the former head of Seller Central at Amazon and as a result, he has intimate knowledge of how Amazon works from the inside. He’s also the founder of productlabs.net where he helps Amazon sellers blow up their businesses.

This year, Brad is speaking at my conference, The Sellers Summit for the 3rd straight year, and his presentations are always well received. And in fact, Brad is one of my go to guys when it comes to Amazon and today, we’re going to talk about the latest Amazon strategies and sale. And with that welcome to the Brad, how are you doing today?

Brad: I’m doing great, thanks Steve thanks for having me. I’m really happy to be on your show again.

Steve: So Brad, we haven’t spoken I guess since the last seller Summit what’s been going on with product labs? And what are some of the biggest changes that you’ve seen with Amazon in the past year?

Brad: Yeah it’s kind of a loaded question there so much that goes on every single year you know I’ve actually noticed a trend I think during the end of February beginning of March. Amazon belong to some new big thing for sellers last year it was they got rid of vendor central our vendor express on vendor central.

Steve: Yeah.

Brad: This year now, they’ve recently just kicked off. Well not in this a kicked off its not fulfilled POs for over 10,000 different vendors outside the platform

Steve: That came without warning right?

Brad: Yeah, It came without warning and it was a lot of confusion some vendors were getting notices of all there’s a problem in our system other ones were saying, yep. We’re just not reordering from you anymore.

Steve: So what are those? I don’t know if you’ve been in contact with any of those vendors what recourse do they have?

Brad: I know they don’t have anything in particular, Amazon’s acting like a retailer, right? so they have the right to order from you or not but these people who are depending upon these order from Amazon or no longer getting, it’s just, which is a little, spooked a lot of people and it’s also going to speak on how. In general, how much control Amazon has over these things but they do make policy changes as they said and they review them and sometimes they make adjustments.

Now, the kind of silver lining here is that there is there’s another way of selling for these vendors it’s just they’re going to have to spend some time in shifting their business model over to two or three P the market place side has a lot of benefits that I think these be seven or double we’ll see as they jump into it.

Steve: I mean will they be competing against their own vendor central listings, though?
Brad: Not necessarily, so once Amazon ships out the last of their goods then inside so essential if they have an account set up they actually can jump in and have control again over some of their aces and there listings inside of Amazon.

Steve: Okay I didn’t know that, so they’re basically taking over their listings their vendor central listings and turning them into third party seller listings.

Brad: Yeah there’s some complexity there and how to do it but in general Amazon is selling your product through vendor you cannot change anything about it through 3P but once they’re out of inventory and we help clients sometimes even buy back all their inventory from Amazon because soon as themselves out then we can go through and start making adjustments on the three P side of the other listing.

Steve: I see and that’s assuming that Amazon’s knocking a reorder again though, right?

Brad: Yeah or it’s assuming you may just not fulfill the PO even if they do re order because it’s all done through systems right? And that’s the that’s the hardest parts of the vendor model is that it serves the very large companies very well but it doesn’t serve the mid-sized or smaller companies very well.

I mean, I got buddies over there who are running you know five hundred thousand SKUs right? so how are they are they giving you or even more? But how are they giving you any attention for your you know kind of SKUs or your even a couple thousand SKUs.

However, you need that much attention and so that’s what’s so hard that model the doesn’t scale very well from the vendor side because they have to spend so much time on each one so they have systems that are doing these things and so Amazon and systems are doing kind of predictive reordering of their products and goods and when you’re relying the whole thing your entire business on that was on the system you don’t have any control over the intimate you know, knowledge that you have in your business saying, “Hey look springtime’s coming I know our sales are gonna be bumping up an extra thirty percent”.

Amazon’s now ordering an extra thirty percent for me and I can’t get a hold my mentor manager to tell him to order an extra thirty percent or whatever. it might be and that that’s one of the beauties of three P side. as you have full control over what you’re doing with your business on Amazon and really the customer sees no difference if you’re selling prime then there’s no different to that to the consumer.

Steve: It sounds like just say no to vendor central at this point.

Brad: I don’t necessarily want to. There’s different there’s different businesses that work different ways. And I always say it’s more like vendor Central’s like putting the plane on autopilot. Seller Central is more like jumping in there and having full control over all the knobs and wages of what’s going on with your business. and for us and you know, I think my perspective for us who have such a deep intimate knowledge of how to run these businesses inside of Amazon from the third party side. We love it more because we have more control.

There’s so many more knobs that we can adjust and to get more out of the business versus some companies are just large enough that it doesn’t matter for them. They say this is fine. I wasn’t just another channel. So let’s just set this whole thing on autopilot. We don’t need to squeeze out an extra 10% or 50% out of Amazon.

Steve: I mean I guess from the perspective of the listeners of this podcast I would say three P is the way to go right?

Brad: Yeah yeah I think I think you’re probably right.

Steve: So what are some of the most effective ways of selling today and have the metrics change at all like the past year in terms of strategies or what not?

Brad: So I think what’s happening, and this we predicted this several years ago when you look at the general market place you know there was when I first was at Amazon talk about this a little bit. I was inside Amazon I was looking at all these numbers in these categories and saying well there’s so many holes in the system and then this is back in 2014 when I was inside Amazon and looking at this stuff.
So many holes here.

Say, well there’s a lot of opportunity right with Amazon and then did the guys down a couple people down from me, he created the whole brand idea inside of Amazon. And launched that whole component and then mixed with Alibaba. you know created this kind of brand revolution you know that the new brand private label movement essentially that’s come on Amazon.

Now, since then, what’s happened is the market is starting to get full. it used to be a land grab and now the land’s there and now it’s more real estate development right?

Steve: Yeah.

Brad: Dealing with what’s going on and so it’s the people and the business are more and more sophisticated. they are the ones who are winning out now and so you used to be able to put the product up and sell it. Now instead, you have to start using more and more of your analytics and looking more and more deeply at the market of what’s going on with your competition to make sure you’re staying in business staying healthy and not just relying on and not and you get to know your numbers you’re not relying on top line that you’re acting as your bottom line also.

And so all this kind of wraps into being more more sophisticated. And how you’re selling so you can make sure you stay alive. And then also, so that you can start climbing various different categories knowing what your limit is. You know a lot of people came to us in the early days “Hey here’s a switch and I want to sell a million dollars worth of it”. And the market wasn’t there.

And so, but they didn’t know that, we did we had to do the research and looking into Amazon and “hey your markets only big enough for you to sell five hundred thousand”, not a million dollars for this product. And so it’s understanding your limits on the various different products, kind of have the full category is and then using various techniques to kind of grow your ranking position inside of that.

Steve: Can we talk about some of these metrics? You know in more depth.

Brad: Yeah. So.

Steve: So let’s say someone comes at you with the product what are some things that you look up?

Brad: So, we don’t, we take a look at who are the top sellers inside of Amazon. Kind of what the estimated search volume is for the key words for those top sellers. A lot of it’s straight up math right? so if I’m going to look at, if I’m going to look up paper towels, that’s kind of a lame example.

Steve: It’s okay doesn’t matter what the examples listed as the mechanical pencils.

Brad: Okay. Sure. So I’m going to look for mechanical pencils. I got a look at the key word by a mechanical pencil right?

Steve: Right.

Brad: And if I’m looking at the total volume of that key word it might be say fifty thousand searches a month. You want to look at the whole landscape and see okay, well who are of the competitors this mechanical pencil? How powerful are these competitors? And socially, how may refuse to they have? How well is there, are other listings developed? You know sometimes, there’s listings I just need a lot of help but they’re the top sellers. So that might be an opportunity for you to come in.

And with all those very factors, we I mean, we create internally kind of like a string to string factor of how competitive this category is.

Steve: Can we talk about the components of that strength factor? I mean, like how many reviews is too strong for example?

Brad: Yeah it’s. So. Reviews my view on reviews our view is different from a lot of people out there. We consider reviews one of four key input into your conversion rate. And so, review is reviews are one thing. The price is another the key inputs. Your images, you have on your listing is another input. And the last one is the text you have on the screen. So those four things make up your conversion rate.

And so if you have no reviews you can still sell product and do well, for example, we had a client come in launched a brand new product in a category that was really old. I had a lot of old big brands in it and we got them to over a million dollar run rate with zero reviews on that product. And I only bring that up because to make the, to emphasize the point the reviews are one of four main inputs.

Steve: Can we use that example that you just gave? Like, what are some of the things that you did that allowed it to sell so much even without the social proof of reviews?

Brad: Yeah exactly yes, so what it was, was we came in we had a much better image. So our listing was a lot better than all the other competitors, I guess. It was a little bit older guard inside this brand. There were some really old brands that were there but they just didn’t do a great job with their listings, right?

Steve: Okay.

Brad: Amazon was selling their products and so they might have had like two pictures or three pictures. We came in and it all nice you know six or nine pictures for these products and then we had a really nice description. Product description, people appointed that spoke to the consumers need for these products and those things like we said those are four different inputs back to make their conversion rate go up or down. And those things are powerful enough to overcome any idea of reviews of needing refused to sell that particular product.

Steve: How did you get the visible in the first place was it just sponsored content ads.

Brad: So, this an interesting one like, yeah, we get just a little bit of sponsor product content. But we had done a really good job with the key word research in getting them indexed for the right key words for their for their category. And there’s another interesting point here, in this product was American made and said made in America versus all the other competitors were made overseas. And so and in this particular category people care about. And so, that I think that also had a factor there. But because of those things we actually need to push too much marketing into this at the very beginning. And I know it’s kind of counter to what the general strategies are from our people out there.

And I like to bring this up because I will work for one thing. There’s no silver bullet and these things right and want to bring that up but a lot of people believes there is a silver bullet. But there is no silver bullet, it’s really taking a closer look at all the different strategies and factors that you need to consider for your business.

Steve: When you’re doing their key word research, especially on search volumes, what would you say like you would estimate your conversion rate would be? Assuming you fully optimize the listing.

Brad: So a couple different things. There’s a click through rate since one is on the search results. That’s how like you’re going to get that click on the convert from that key word. And then once you’re on the page, there’s the conversion rate of one someone then your detail page, how often are they convert. The general number that we like is around ten percent conversion rate. One, some of on your page. Now that’s an Amazon, that’s a general one. Based on all categories, there some categories are smaller some that are much bigger.

Steve: Sure.

Brad: So, I am not much higher general ECOM right? ECOM is closer to three percent conversion rate. Now, taking a half step back on to the click through rate. So you’re, someone types in mechanical pencil and I show up. How many of those clicks? You know, if there’s fifty thousand clicks on mechanical pencil. How many does can I allocate to my particular product? That’s a little it’s a little trickier, but we do like to look into that. And the General numbers are the top three listings, are going to get between 40 and 60% of that traffic. The top three listings on that keyword.

Steve: Hmm-mmm

Brad: And so if you’re number three, if we’re saying, okay, we’re going to try and get you to number three. So we’re going to estimate, we can get 15% maybe 20% of the of that volume of the 50,000 volume. Like that would be the ideal position to be for this product. So then we take you know, take those numbers or say with 10% just for easy math, right 10% of the 50,000. So you get 5,000 clicks once your number three, so that’s 5,000 clicks. And now in the conversion rate once they’re into your product is 10%. So now we’re going to say, okay you’re selling 500 units.

Steve: Okay.

Brad: Your product, based on that one keyword, right? And so there’s probably a list of 25 to 50 keywords that you could be could be doing this on but that’s I mean that’s so that’s the general approach. We start taking into it when we really look. Closely at the numbers.

Steve: And In terms of actually getting that product visible initially though, what did you do, cause in the beginning you get no reviews, nothing. And you said you ran limited sponsored product ads how did you actually drive product ads into the listings?

Brad: So, for that one, that, strategy worked. I would say in general using the sponsored product ads are the way to go.

Steve: Okay.

Brad: We used to get the product team with the sponsored product ads and you’re trying out this key words right? So you have the list of your fifty key words, that would be the most important key words to you and you want to start putting money against those ones on the sponsored product ads and then you want to be tracking your ranking because to us, It’s more important than getting your return on that ad. You want to be moving up your organic ranking on those key words also, and so that’s the, it’s the most, it’s the purest, most authentic way growing your organic ranking inside Amazon is to use Amazon systems to just do it.

We know in our world all of the various different “hacks” out there to try to increase the ranking and all of those things. And the ones that Amazon likes the ones they frown upon. So in short, it’s the most authentic way to use the Amazon systems to do it the right way.

Steve: Okay.

Brad: In using the advertising systems.

Steve: Let me ask you this, you know, In your listings, in your key words tab of you listing, there are a variety of fields like intended use subject matter and that sort of things, how much do those field do actually take into account in the rankings for key words?

Brad: So in the rankings for key words, very little.

Steve: Okay.

Brad:They do take, they to matter certain parts of Amazon’s back end. So they’re trying to map different categories and different use cases with the really complex back-end network of things. But when clients talk to me about it, it really comes down to more of a, it’s like creating just the keywords, because someone people so many people search through keywords. And so the vast majority of all searches are through keywords because that’s the case adding. The rest of those fields is more like is more like saying, hey, we’ve got 95 or maybe even 98% of this listing complete. Doing all the rest of that stuff is like filling the last two percent right? To make the rest of it complete.

So it’s more of saying hey, what’s our biggest priority if we want to make sure everything is listings done a hundred percent great, but that last five percent or two percent could take you know, double the time of doing everything else on the you know on the listing.

Steve: The only reason why I’m asking this question is because there had been rumors floating around that the subject matter field you know, which I can’t really confirm or deny with my own account. That the subject matter keywords are very important. I don’t know how people came to that conclusion. I was just curious you talked with a lot of you work with a lot of Amazon sellers. So I was wondering what your opinion was.

Brad: Yeah. I mean they also very important subjective term, right?

Steve: Yeah.

Brad: So it’s like I said, there’s value in all of them. It’s just questions of what’s the highest value that you’re going to get? And I wouldn’t deny that someone might, you know, there might be one or two examples of someone finding “Hey, I actually put this in in my keywords or in my fields” and all sudden, I’ve seen some growth and that happens a few times. But in the vast general landscape, it’s looking at you know, the core keywords that you’re putting in are what mattered the most from what we’ve seen.

Steve: Okay, okay, what are your views on some of the other services? So we’ve been kind of chatting about, you know prior to this interview about customer demographics and getting a hold of their customer data outside of Amazon. What are your views on like email a pin services and what are some techniques for data mining?

Brad: Yeah. So I think one of the one of the most valuable things that we try and help our clients understand, general businesses understand is that a lot of people inside of Amazon because Amazon posts up that big A cost number and even many third-party software’s are built on top of that idea of the a cost number. A lot of people are really focused on the A costs, right?

Steve: Yep.

Brad: And which is the advertising cost of sale and what that number is telling you is that it’s telling you how much I spent on ads and then how many sales resulted from those ads. And so what that’s not taking into account, so say my a cost is 50 percent right, which a lot of people be like.

Steve: Gosh that’s so high.

Brad: But if you’re spending money on the right keywords and you’re moving up the organic ranking, you’re going to also see a bunch of organic sales that come along because you’re doing so well on your advertising. And your actual your total what we call your ad spend over sales is the real number that matter. So what’s your total marketing budget, divided by what your total sales are that’s it. I mean, that’s the simple math. Let’s say, my total marketing budget was $30,000 this month and my total sales were a hundred thousand dollars. So my total ads been over sales is was 30% that’s actually high. But in my example, we could say $200,000, 30 to $200,000 So it’s 15 percent.

Steve: So that’s the number that you primarily look at? Instead of a cost? Because I guess it’s all intertwined right?

Brad: Yep. It is and we do look at that because that matters so much more. I mean someone saying “hey I’m going to do a giveaway”, right? And I’m going to give away, you know, $10,000 worth of product and my margin on that $10,000 with the product is going to be, I’m only getting 10% of that and so I’m now giving away nine thousand dollars in advertising essentially by doing a promotion. You should take that put that in your marketing budget and say okay. I just spent $9,000 to do a giveaway to try and rank on something. Is that more valuable? In spending nine thousand dollars on ads to also to rank through Amazon for the exact same keyword.

Steve: I guess the problem arises though, when you start lumping a whole bunch of other stuff in there, right? Like I could run and spend 50% on Facebook ads, but the Facebook ads are in fact driving any sales, right? and then it wouldn’t show up.

Brad: Yeah. So that’s why you got that’s the complexity and some of this is trying to take all of your marketing budgets and add them all together and to giving you a true or number there because the a cost is really useful or the account has a sales is really useful when you’re looking at a campaign by campaign metric of how well is this one campaign doing versus this other campaign? And so are you using those relations there? That’s it’s really used to I mean, it’s like the key metric you got to be looking at but if I’m looking at my business, I’m taking a step back from my business and say okay how well is this generally working for my business or how well is this product working? The entire catalog of Amazon I have to take into account what my SEO, what the Amazon SEO is doing. Because the advertising that I’m running also.

And a lot of people don’t know that because Google is different. In that Google, it doesn’t matter, the Google SEO algorithms are totally different than Amazon. Amazon, it’s hey, who’s number one when I’m looking at mechanical pencil, the guy who’s number one, guess what? He’s the guy who has the most sales right now on mechanical pencils. And so if I have more sales on a particular keyword that I’m going to be moving up that SEO ranking. Make sense?

Steve: Yes as far as you know Brad, is there a way to figure out which keywords organically are translating in a sales?

Brad: We have our own algorithms that are backing into that. There is no way Amazon’s not giving any data, any of that data to people and that’s all close. So we’ve actually come up with several algorithms internally that look at that.

Steve: Okay.

Brad: It’s a really complicated takes a lot of a lot of math to try and back figured that out.

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Steve: Based on what you are saying. I think Amazon advertising is you can lump the ad spend over your total sales for that because the sponsor product ads you’re bidding on keywords and those keywords directly attribute those sales will affect your rankings for those keywords?

Brad: Yes.

Steve: So for that it’s probably okay for the other stuff. It might not be okay to lump in?

Brad: Yeah, I mean.

Steve: Was that?

Brad: Yeah. Yeah, I mean perhaps yeah, it’s what we look at it on a product basis and then on a business basis, so I would say from a business perspective you still should be looking you should love everything in and look at it from an entire business perspective. But if it’s are you looking at on a project by project basis and then are you looking at on a campaign by campaign basis. From, so campaign by campaign, Is that a cost the product or product, you do the ads over sales for those and then from a business, you should probably won’t be in all the advertising activities and see how that’s working. Because it’s your margin in the end. Right?

Steve: Sure.

Brad: So after giving Amazon 15% that’s 15% out of my margin and by spending 10% on all add activities great as 10% out of my margin. That’s how you to operate a business.

Steve: So what are some external traffic strategies that you’re employing for your clients or that you’re using?

Brad: Yeah, so externally some really interesting stuff that we’ve been getting into as looking at lifetime value of customers repeat purchases repeat purchase rates and starting to figure out who are these customers. Because Amazon in general doesn’t want you to have a relationship with your customers. That’s how Amazon is treats it. They like to have a relationship and they don’t like to share it but in the end they are your customers and there’s some data inside of Amazon that you can start looking at. At least understanding generally who these customers are and what the repeat that repurchase rates are the life and values are.

And so what we’ve done is we go through and we creating some ways of finding who some of your customers are. As you mentioned, there’s some email append Services. We have some stuff that’s kind of taking another step deeper that we do internally.

Steve: Tell me.

Brad: So if someone saw that our work that the software that we’re working on and we’re still debating whether we’re going to launch it external or not or just keep it for our clients.

Steve: I mean strictly turned against terms of service, right? So I would imagine you might have some conflicts with Amazon if you were to release it.

Brad: Yeah, that’s some of the fine details that right?

Steve: Okay.

Brad: But what people can do actually, I mean I want to offer information people can just go use so, you know, you can go in and download your Amazon shipping reports and find some of that information who you’re shipping to and then use some of that with inside of Facebook. Of say, create some groups of who you want to target at like groups. Not those people but, people like those groups and we’ve done that before and found some really discounted. Well, our ads used to be like a buck 20 per ad and once we started finding these groups and refining the group’s it dropped it to like 40 cents per click or even 20 cents per click on some of them. So we’ve been able to find some Facebook ad efficiencies by grabbing some this information from who your customers are and just grabbing some similar target groups through Facebook’s systems.

Steve: Right. And that is generally not risky at all, right? B=Because it’s not like you’re targeting the exact Amazon customer.

Brad: No, no, you’re not you’re just finding like people and saying here’s general people who order from us and it’s either an a Facebook has their own algorithms that say it they have a whole little upload portal that you can say. “Hey you want to find a light group to the current group of people?” upload information about them here. And we’ve done that and create some really efficient Facebook advertising that way.

Steve: So when you’re doing your analysis on who to create these look like audiences from, what are some of your metrics?

Brad: So, we look at repeat purchasers. So if you grab everyone I would say, you know, we don’t like describing everyone who’s ordered from you. We like people who have purchased from you more than once. We actually look at geographic information as well and start looking at which regions are these are people purchasing from me is really interesting. We had a brand that was selling jewelry. And this is just a fun example, a brand that was selling jewelry and another brand that was selling athletic socks. And we compare the two and the price point was the same there around 20 dollars each for the products. But the jewelry was over-indexing which means, in relation to the population more people are buying it in Florida for the jewelry. And the athletic socks, it was under indexing in Florida. And so, I don’t know that speaks about Florida but.

Steve: But they don’t wear socks, they probably won’t wear flip-flops. So hot there, right?

Brad: They love it. Yeah, exactly and but ever they want to wear some bling right? Some really good jewelry. So it was just interesting looking these exact same price points, but there’s a different distribution of the geography and both of those were kind of generic brands. There’s some brands that are specific to a region. So we see over indexing in specific States and the U.S of the region say, hey this was over-indexing in California because it’s a West Coast brand. This one’s over indexing in New York. It’s an East Coast brand and what not, but that just gives you some higher-level insight into your business it right? And how you might want to think about it, or even if you’re looking for retail strategies. Some estate is useful there, of talking would read it with retail buyers now, I don’t know how many of your listeners actually are.

Steve: So, so how does that affect your bidding? So that Florida case did you just not run ads in Florida for those socks?

Brad: For those socks the experiments we did there. I don’t think I can fully answer your question where you’d like me to. To satisfy you, but.

Steve: Let me re ask a question after you’re done. Yeah, go for it.

Brad: Okay. No, but I think it’s in Florida. We didn’t use geography to be to be doing those Facebook targeting ads. We used more of specific individual profile information.

Steve: Okay.

Brad: Yeah demographic information and send Geographic.

Steve: The way I was going to refine that question was you know, how useful is that Geographic data? Because most of our sales and most of the sales for anyone happened in the large the larger metropolitan areas, right? California, New York, Florida, is one of those Texas is one of those States. And so, isn’t just creating a look-alike audience. Doesn’t that just kind of circumvent that whole thing?

Brad: Yeah, I guess your point. You can circumvent it by just doing the look-alikes. Now the Geographic, I think you’d have to think kind of one step up is saying how is my brand position in these areas and these regions or are there things about the people in those areas or their Lifestyles that I’m really kidding or not hitting.

Steve: I see.

Brad: We’re selling we are selling a for another example. We’re selling a water aquatic product and it was selling really well in the Great Lakes area, but not very well in the coasts. And so some of the information they took back to the manufacturer. Well they were the manufacturer actually, they’re saying okay, well, these are all these are more targeted towards specific Lake people and people who like to go to lakes and hang out on lakes all day long. Versus people who like to you know, be really active in not seem like people aren’t active. I’m an active like person myself, but you know versus people who are on the coast and might be more of like an ocean kind of water aquatic products.

Steve: Okay.

Brad: So with that they took it back in the kind of double down. They actually went after a license for their products. That was really, that would target that Great Lakes area and it was really heavy in that Great Lakes area. And they’re now launching, they got the license and now they’re going to be launching a big thing that’s going to push heavy to the people in the Great Lakes area for The Aquatic products. I mean, it’s a perfect example.

Steve: I can see how that effect copy and marketing strategy. Can we switch gears a little bit? And just kind of talk about, you mentioned, in the early days it was a land grab now. It’s about building up your real estate. So when we are competing against sellers in China who might have a pricing Advantage what are some things that you’ve been doing with your clients to kind of combat this?

Brad: I think one thing we still in, I think when you say, we you probably more referring to people here in the in the states were selling these things. Is that right?

Steve: Basically, anywhere that’s not in Asia

Brad: That’s not China?

Steve: Yeah. Basically, yeah.

Brad: So there’s, actually we found some pretty fascinating manufacturers locally that are all in the state. There’s over 300,000 manufacturers in the United States. Did you know that?

Steve: I did not know that.

Brad: There’s a lot and so most people, I think it’s just we have access to overseas manufacturing so easily through Alibaba. But there is, you can make some really good advantages locally in the states. I mean, that goes the back to your supply chain, right? As saying well are there other options in the States. But in terms of, you know, what to do with where you are now, where most of these sellers might be now, there’s a whole concept that I think, speaking to, knowing your customer is extremely valuable and extremely important. So I would double down on how well, you know, your customer and making it, making your experience that much better. Because if you’re living in the states you speak the language, you know how to perhaps market and brand your product to them, price matters somewhat. But again, it’s one of four different inputs into your conversion rate, right? And so how well can you treat your customers that really do love your product.

We have another brand where we’re actually selling it for twice the cost that Amazon selling it for. And we’re still out selling Amazon with the product. And the cost is I think it’s up to $16 versus Amazon’s $8. The exact same product, but it’s much better branded has better reviews better, just the detail page and the whole experience is better.

And I like to bring up these outliers to just give people hope too and saying well, you know, you know, I’m not falling into all these just general boxes, but there’s plenty of outliers out there that are that show that you can do it. If you, if you kind of hit if you really focus on the key things that you have an advantage for. So the question is, what is your business? How’s your business differentiate itself from other people’s businesses? Are you just going to do a land grab? Just do a me to hey, we’re grabbing, we’re going to grab our own bit fidget spinner and put our own twist on it. Or we’re just, we’re just going to be a me to fidget spinner company, right? You know that strategy, that’s not a strategy. That’s just trying to move product. But if you’re building the brand and focusing on what are you building as part of this? Then you can, there are unique angles and that’s the create, that’s the creative side that you know, people like to deploy and get really good at.

Steve: So using that example that you just talked about. Is that an Amazon only brand or are they doing a lot of things outside of Amazon?

Brad: This is an Amazon only brand.

Steve: Interesting.

Brad: Only on Amazon.

Steve: So it was just purely based on their listing that they

Brad: Yeah.

Steve: Okay.

Brad: And good and really good customer service. So we had some people who didn’t like the product or had some problem with it and you know, they reached out to him like the day, you know, the day something happened reached out to them sent them some free product and try to get on the phone with them and even talk with them. I know that’s not, they did that, we didn’t encourage that. But it really took the customer service to the next level of trying to make people happy with their product and their brand. And they you know, they built it in a really good clean way and it’s been it’s still been very successful for that.

Steve: It’s funny that you say customer service. I just think of that as like par for the course, right? Someone complains you just give them a refund. I mean, I feel like almost everyone’s doing that already like

Brad: Yeah.

Steve: It seems like it’d be really hard. To stand out from that perspective.

Brad: Yeah, it can be but I guess versus and maybe it’s just unique for this category, right? As is versus the other people in their category. They’re doing better.

Steve: Okay.

Brad: On that and then so again, it’s a question of how do you stand out versus your competitors too? And you might be right, It might be customer service. You can’t do anything unique in customer service in a certain category because everyone else is doing an A+ job. And so it’s well, you know, what else can you do that differentiate yourself?

Steve: I just saw this question just now. In terms of enhanced brand content, based on the clients that you’ve seen, what has been the lift for doing a good job there?

Brad: We have seen a minimal lift.

Steve: Okay.

Brad: What it is it just gives, it my opinion, I think it gives a little extra confidence in the brand. But we have never seen any huge changes in conversion rates. And I think some of that speaks to over 60% of people looking at product or doing it on their mobile devices. And your enhance credit on content is squashed in a mobile device. You’re seeing one picture and like one small snippet of information there on your mobile device. And so it’s still the hero pictures, the hero are one two or three pictures that people are looking through on mobile.

Steve: Okay, that makes sense.

Brad: Now out the minority of sales still come from mobile from what I understand. It’s people look at it on mobile put it in their car and they buy it eventually on their desktops. That’s General the behavior in general right now.

Steve: I also wanted to get your opinion real quick on, you know, Amazon developing their own brands, and I know for a certain listings where I’ve done a search for like glad trash bags for example. And then all of a sudden Amazon has this gigantic pop up that fills up like a third of the screen that says, you know, their own brand the same quality as the Glad bags for like almost half the price.

Brad: Yeah.

Steve: And it just seems like those are unfair tactics that Amazon is employing to compete against their, the third-party sellers. Are you seeing more and more of that and how do you fight against that?

Brad: I think we can agree that we are extremely frustrated with that kind of behavior. I’m very frustrated Amazon’s kind of behavior. And it’s just them we have multiple examples of how they’ve done stuff that only they can do, they only they have access to and their squishing out all the other sellers. I know there’s been some articles written. I’m not sure what to do about it because some of us try drives me crazy, honestly.

Steve: Okay

Brad: Honestly, with what they’re doing. Now, I think some of the interesting things they’re trying to do, so you got to think the other side to is Amazon, there’s a whole section of Amazon that loves their customer loves their sellers and they really want sellers to do well. So there is, you know, they’ve started opening up more and more information to sellers now. It’s just lagged, right? So, you know something that we saw, you know an ad spot that was there for Amazon a year ago, finally is coming out for a 3rd party seller can do the same thing now and it’s lag.

So, yes, they have a first mover advantage of advantage and all of these things but there’s a side of everything. I think that really really cares about their sellers and are trying to get these tools in these spots open for their sellers also. And so I don’t want to just come out and say Amazon’s the devil because they’re not. They’re doing, there’s a lot of good stuff that they’re doing but I think there are certain groups inside of Amazon that are taking advantage of their space a little bit too much and it’s driving drives us crazy when they do.

But some of the new brand stuff that’s come out. It’s interesting. They’re talking to date now in this seller and the advertising portals, at least in the ads. You can see how many people are coming that are new to your brand, versus people who haven’t seen your brand name or that’s really cool. That’s really good information. You have more control now in the market in the advertising of where your product placement. With the called.

Steve: Yup.

Brad: Is your placement. Now, on that piece of you want to say, you know, certain people start talking about hacks and everything there. There’s no hacks. It’s just it’s just how the system works. And Amazon’s now giving you access to bid extra if you want to be on the first page or if you want to build a product pages of the rest of search results.

And there’s some extreme, some people saying, hey just do everything for the first page. I would say that’s short-sighted and that you should look at your A cost between those three placements and try and balance those. That’s a kind of a side tangent. But I think that’s a you know, again, it’s many times new stuff comes out people find a little a little trick that works. It’s the whole ecosystems, you’d be able to adjust a little bit better right now with these new features, so.

Steve: Okay, well that’s good to know. So Brad, we’ve been chatting for quite a while. I wanted to also give the listeners a chance to kind of know a little bit more about product labs and what you’re up to. So anyway, they can get it get ahold of you.

Brad:
Yeah, so come to our website at any point at productlabs.net or productlabs.ai actually. We have both domains that we are some interesting things were trying to do there. Check out what we do as a service that we do, many times clients will come to us and say hey my business is too big or I want to grow I want to get a little bit more sophisticated what I’m doing. We do full on operations. So we’ll take over the whole Amazon channel for our clients, but we add a whole level of strategic analysis and strategy and analytics of everything that we’re doing.

So myself and Tim my business partner, we will become from more formal business backgrounds. And so we believe in setting out long-term 6 months, 12-month plans for our clients or even longer. S couple of year plans. And we look at the marketplace. And so we a lot of the value that aside from the core operations that we do for our clients is looking at this this whole strategic piece that we’re putting into play for them. And so they can understand for the Strategic level what to expect and what our goals are and everything. And so we got, we have some larger companies that come to us. We also have some business that are growing and they want to just off load everything on Amazon on to a team which allows them to do more stuff or allows them to maybe go find more product or focus on off Amazon tactics and things that they want to do there.

So that’s you know, that’s kind of the core offering that we do but the fun stuff that we’re doing for me is, well, aside from growing businesses, it’s always super fun to grow businesses for our clients and see all the success. But the technology that we keep developing. We like, you know, my background I worked inside and ran the other Central platform built the Amazon seller app. So there’s a Tech in my background and we just have a lot of cool Tech that we have going on. And it’s all kept under the hood at this point, and some point will let in more and more people see it in the light of day. But it’s just been doing really well for us internally and so.

Steve: Cool.

Brad: We’re building lots of cool Technologies. Some of these things that we’ve been talking about that’s been really good for our clients.

Steve: And I know there’s like a signup form on your site. If you want to be a part of the beta program too, right?

Brad: Yep. Yeah and do that and that’s the group we’re going to go to first when we launch. Something that people can take a look at and start using. I think, in general, we have a very different approach to what from what we found is this whole community. And when we launch something, you’ll be able to see that. It will be pretty evident of our whole different approach of how we look at a business and look at how you want to grow your business inside of Amazon. or even operate your business inside of Amazon.

Steve: Cool. And Brad is also going to be speaking at the seller Summit this year again, I’m saying this little late because all the tickets are sold out. I was going to say go buy your ticket, but I mean if you already got one, great. You’ll see Brad there. He’s very knowledgeable and he’s a lot of data. So if you are at the summit, be sure to flag him down and ask him your questions.

Brad: Cool.

Steve: So Brad, thanks a lot for coming on the show man.

Brad: Yeah. Thanks a lot Steve. I appreciate it.

Steve:
Hope you enjoyed that episode. Now Brad is one of those guys who is always up-to-date with Amazon. And if you need help with your Amazon business and you’re in the seven to eight figure range, then he is your guy for more information about this episode go to mywifequitherjob.com episode 264.

And once again, I want to thank Klaviyo for sponsoring this episode. Klaviyo is my email marketing platform of choice for e-commerce Merchants. You can easily put together automated flows like an abandoned cart sequence it post purchase flow win back campaign. Basically, all these sequences that will make you money on autopilot. So, head on over to mywifequitherjob.com/klaviyo. Once again, that’s mywifequitherjob.com/klaviyo.

I also want to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture exit and sectarian tools and make it super simple as well and I like Privy because it is so powerful and you can basically trigger custom pop-ups for any parameter that is closely tied to your Ecommerce store. Now, if you want to give it a try it is free. So, head on over to privy.com/steve. Once again, that’s privy.com/steve.

Now I talked about how I use these tools in my blog and if you’re interested in starting your own e-commerce store headed over to mywifequitjob.com and sign up for my free 6 day mini-course. Just type in your email and I’ll send you the course right away. Thanks for listening.

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

Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and dig deep into what strategies they use to grow their businesses. Now today, I’m thrilled to have my friend Kevin Williams back on the show. And the last time I had Kevin on; his business was flying high and growing at an exponential rate. But this past year, a group of malicious Amazon sellers basically came close to destroying his entire multimillion dollar business. And in this interview, we’re going to talk about what happened and what you can do to fight the counterfeits.

But before we begin, I want to give a quick shout out to Privy who is a sponsor of the show. Privy is the tool that I use to build my email list for both my blog and my online store. And right now I’m using Privy to display a cool Wheel of Fortune pop up. Basically a user gives their email for a chance to win valuable prizes in our store. And customers love the gamification aspect of this and when I implemented this form email signups increased by 131%.

You can also use Privy to reduce cart abandonment with cart saver pops and abandoned cart email sequences as well at one super low price that is much cheaper than using a full blown email marketing solution. So, bottom line, Privy allows me to turn visitors into email subscribers and recover lost sales. So, head on over to Privy.com/Steve and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ for 15% off. Once again, that’s P-R-I-V-Y.com/Steve.

I also want to give a quick shout out to Klaviyo who is also a sponsor of the show. Whether you’re getting your business off the ground or looking for new ways to scale, Klaviyo offers fast, simple and repeatable ways to grow. And with Klaviyo you can personalize your marketing, build your customer relationships and automate your online sales. And it is now easier than ever to create amazing email and advertising experiences. So I just want to introduce Klaviyo’s new entrepreneur growth guide. It is packed with must read blog posts, case studies and getting started content and this guide will help you prioritize what you need to do to maximize revenue growth.

Now moving to a new marketing platform can be intimidating. But Klaviyo helps you get up and going fast with proven technology and countless support resources. Now you can explore this free content now over at Klaviyo.com/mywife. Once again, that’s K-L-A-V-I-Y-O.com/mywife, now on to the show.

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

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really excited to have Kevin Williams back on the show. And Kevin runs a site BrushHero.com where he sells a power cleaning brush that hooks up to your hose and spins with a lot of torque to clean up hard to clean objects like wheels, bikes, boats, and more. Anyways, last time we spoke on episode 209, Kevin’s company was kicking butt, they had just been on Shark Tank, sales were going like gangbusters. But last year, things took a sharp turn due to an unfortunate sequence of events involving IP theft and piracy. And I want to let Kevin talk about what happened. And with that welcome to the show Kevin, how are you doing today?

Kevin: I’m doing great, Steve, how about yourself?

Steve: I’m doing well. And you sound great by the way.

Kevin: So last time we talked was…

Steve: Six to eight months ago I want to say right.

Kevin: Yes, six or eight months, February or March last year. Our Shark Tank episode aired right at the end of January, which to be honest, was a little sub optimal for a water power clean brush. But still all the anecdotes you hear about Shark Tank are pretty much true. We got a bunch of media attention, we got a surge in sales, real high levels of morale. And then we realized that the judges and the American public weren’t the only people that were watching Shark Tank. It turns out that a lot of Chinese manufacturers were watching Shark Tank as well.

Steve: Why is it always the Chinese manufacturers? I mean, you could have just said manufacturers. But I guess they were…

Kevin: No, it was Chinese manufacturers.

Steve: Oh they were, okay right.

Kevin: It’s true. It’s true that it is — it could easily have been Bangladeshi or…

Steve: I’m just giving you a hard time sorry, go on.

Kevin: But it is a good question, it really is. And I think the answer in my case is that because it’s an injection molded product, and China is the land of injection molded products. For clarity, I produce my product in the UK and then assemble it in the US. So I don’t actually do Chinese injection molding. But China is the source of all things plastic, generally speaking.

Steve: That’s correct.

Kevin: Anyway, so we’re doing well, we’re selling a lot of units, even though it was cold and dank outside. And then right around the end of April and the beginning of May, we started to see fakes pop up. And the way that we just discovered it was truly unfortunate. We started to get calls into our customer service department saying, hey, my brush popped off or the turbine just broke, or hey, this thing is just a piece of junk. Or most disturbingly, why does it say made in China on the box? That raised all kinds of red flags.

So we had some really well-meaning customers send in their packaging and it turned out that not only did we have knockoffs, but they were true fakes. They were using all of our images, including images of me, they put our patent numbers and our customer service phone number right on their fake box. So after they sold the product, and people had trouble, those customers rightfully dialed that customer service number and it was absolutely devastating for us.

Steve: Are you sure the – so how did this affect sales? So first of all what were your numbers in profit? I guess the last time we talked and what happened immediately after that happened?

Kevin: Well, we were on a big upswing anyway. Before Shark Tank, we had both Walmart and Costco retail distribution heading our way. So we were – oh gosh, in 2017 we were heading towards $3 million. After Shark Tank in 2018, we were projecting hitting about five and a half million dollars all things considered. Remember, this is early in our season. Our season really hits its stride somewhere in April, May, June somewhere, but we absolutely started to see some sales impacts because first there was one and then there were two and then there were five and then there were dozens and dozens and dozens.

First day really popped up on eBay. Then they popped up on the Amazon EU marketplaces, we sell in most of the Amazon marketplaces. It actually lagged a little bit with Amazon US because due to a quirk of fate, we had brand restriction or brand gating in the US, which prevented sellers from selling on our listing.

Steve: How do you get brand new gating by the way? What did you have to go through to get that?

Kevin: You have to know the right people. No, that’s not true. Brand restriction, which is the actual term that Amazon uses, we all say brand gating. Amazon doesn’t really like that term. But brand restriction is granted on a case by case basis. And it’s rarely, rarely granted. My supposition is often it’s granted these days as a result of arbitration or litigation of some kind. In my case, our brand was a very early participant in something called the Launchpad program. And the Launchpad program was what Amazon was terming an incubator for little brands to help them grow.

And I think that our rep at some point, just basically flipped the switch on the back end, we didn’t get any proactive notice about it. We didn’t even know it had happened until we had an authorized reseller try and list the product and bump into the gating screen or restriction screen, which says, hey, you need written permission in order to sell this brand. Honestly, there was a ton of rejoicing in our ranks when we found that. We were like, yay, we’re gated, we’re safe, it’s good. And then gating went away.

Steve: They took it away?

Kevin: They didn’t take it away. As best as we can figure, there was a big upgrade in the Amazon Brand Registry system in May, April, May of last year to Brand Registry 2.0 which offers a whole bunch of new IP enforcement tools to sellers, which is great. But when we upgraded it, we think it did something on the back end of Amazon that just refreshed our records. Amazon has zero record of us ever being restricted but we totally were. In retrospect, I really wish that we’d taken screenshots and had some sort of proof that we had restriction in place because once it went away, Amazon just said, no, you weren’t. We had really no way to do anything about it.

So basically, hours after gating went away, we had our first hijacker on Amazon. And for your audience, the difference between a hijacker and say an imitator is that the hijacker actually lifts on your listing. So they undercut your price and they sell a counterfeit or alternate version of your product. And they steal the Amazon buy box, which gives you the best opportunity for sale. This is different from somebody just listing and another product that similar or even a counterfeit of your product in parallel.

And it’s much more damaging because the listing that we had established over several years of operations had 1,200 reviews, it had over a four star ranking. It had keyword relevance all over the map. We were pushing traffic to it externally through media activities like Shark Tank and our own Facebook activities. So it was horrifying because we had all of these dollars that were floating around there in marketing and all of those dollars were basically going to Chinese fakes.

Steve: So these fakes, these are the guys that were copying your packaging, everything, your customer service numbers, everything exactly, except it was made in China.

Kevin: Except it was made in China. Well, it was all inferior quality. I like to quip that had they done a better job with the counterfeit, everything would it be a lot better for everybody because the counterfeit was such low quality that it just didn’t work. My device is — it is a little complicated as far as a spinning brush, and they just sort of slapped it together. So my brand was then on a product that just didn’t function very well. So the next thing that happened is because it was being sold on my listing on Amazon, I got just a flood of one star reviews. So I had something like 150 one star reviews in a row, just it was funk, a POS etc.

Steve: So those who weren’t malicious right, those were legit one star reviews.

Kevin: Oh yeah, that wasn’t one of these scenarios where somebody is like paying to hurt me. These are real customers who thought they were buying my product and instead got a fake version that was a piece of junk. And they got on the internet and they told the world. That was a giant deal. So we went from number one in the number of categories to just off the first page, sales plummeted by 50% plus on those listings, and that’s not even including the issues that we had with the hijackers.

Steve: How did they get the buy box? Were they just drastically undercutting the price? Is that what happened?

Kevin: Sure, yeah. We had both FBM, so fulfilled by merchant hijackers at extremely low prices that were shipping direct from China. And we had FBA hijackers, who were either directly placing their inventory in Amazon under their own seller name, or they were commingling their inventory in Amazon based on just the UPC.

Steve: Let’s talk a little bit about that. So first of all, if you wouldn’t mind defining commingling for the audience, that’d be great.

Kevin: So commingling is seems to me that it’s on the way out. But a few years ago, Amazon, it was really hard to the idea that you could have what you call fungible inventory. So we all know what a UPC is, the labels in individual product. Well, from Amazon’s perspective, if two products have the same UPC, they’re the same product. So if you Steve in California are selling let’s just say a coke, and I’m in Utah selling a coke and they both have the same UPC, and we’re selling it on Amazon, from the consumers’ perspective, as long as those products are identical. It doesn’t matter if Amazon grabs your piece of inventory or my piece of inventory, because they’re fungible, they’re the same thing right?

Steve: Yeah.

Kevin: That breaks badly when you have a counterfeit situation. Because in the vast fulfillment centers of Amazon, what happened was, we ended up with a boatload of products that had our UPC on them, but were fakes. So I would end up selling a product to someone that totally legit, I’d have the buy box, but an Amazon fulfillment center would grab a fake off the rack, and then they’d ship that to that customer. So now the customer gets a fake that I actually sold. And then they go back and they write a one star review.

Now, I go back to Amazon and say, hey Amazon, you know we’re having a fake problem, a counterfeit problem, help me out here, this one star review is clearly related to it. And Amazon says no way. Look here, this buyer Steve is connected to one of your orders. And since they’re connected to your order, you sold it to them and go on, prove to us that the inventory we shipped is fake, and just can’t. The flip side is the fake seller would occasionally sell a real unit to their people. So somebody would buy a real Brush Hero for 9.99 or 12.99, and get my real product.

Steve: So what’s confusing to me is I remember, you were featured in Inc. Magazine recently and it said that you are the only seller of your product. So what are the chances that someone else would be selling it and so what advantage did you have on commingling your inventory?

Kevin: It was encouraged by Amazon early on in that from an Amazon fulfillment efficiency perspective a lot of my inventory tends to go to Stockton, the Stockton fulfillment center for whatever reason. But if I have an East Coast customer and some East Coast seller of the product had the product and inventory over there, they’d far rather be able to give the amazon customer one day delivery than two or three day delivery by having to airfreight it from Stockton.

Imagine what that would cost if all my inventory was in Stockton, and I had a New York customer and Amazon needs to meet their prime promise for New York, yeah, a New York customer, they’re going to have to fly that thing all the way across the country. And they’ll do it so they can satisfy that customer. But when they analyzed it, they thought oh well, inventory is inventory, all the UPCs are the same. So why not just pick the one from New York? It also saved some complexity in my warehouse. Most of my volume actually comes off Amazon. It is from retail and from my direct channels. So if I’m having to sticker Amazon inventory with FN SKUs, it just adds complexity, it adds a little cost etc. In retrospect, it was a huge mistake. So if you take one thing away from this Amazon sellers, don’t ever commingle your inventory, don’t do it.

Steve: So what you just said implies that you have resellers that are actually selling your product legitimately, right?

Kevin: No, I don’t. I have pretty tight channel control. In various times that has happened. It’s not something we encourage, it’s not any part of our strategy. And in our reseller agreements, we actually prohibit it now. But for a brief time, we thought that it might be a good idea. That’s also a horrible idea. If you can control Amazon, you should control Amazon.

Steve: Okay. All right. So in terms of – all right, so obviously, you complained to Amazon. And what happened after that? First of all, what is Amazon’s takedown policy for this sort of thing?

Kevin: So we have three different types of protection in Amazon. We have well, three different types of intellectual property protection in general. We have utility patents, US and some international utility patents, we have our trademarks which are registered with a USPTO and we have general copyright protection. In Amazon land, in excess of 85% of our successful take downs, actually just at large, 85% of our successful take downs are related to copyrights. And the reason why is there is something called the Digital Millennium Copyright Act, which requires marketplaces like eBay, Amazon, even Google or others to make a reasonable effort to remove infringing copyright material once it’s reported.

So they’re pretty clean and clear reporting mechanisms and Amazon for saying, hey, this is clearly our image. Where it gets really complicated is when a seller who may or may not be in your listing by the way, a lot of these copyright claims are, they’re not hijacking our listing, they’re actually creating a parallel listing, and then they steal our images. So there’s a picture of me standing there cleaning my neighbor’s dog, literally. And that’s something that’s in one of our listings. And it’s pretty obvious that it’s me, and we can point to the copyright and Amazon will take that down, sometimes in as little as 12 hours, 24 hours, 48 hours, not a big deal.

Where it really stinks is when there’s a hijacker or there’s somebody who’s not superficially using copyrighted material. You actually have to purchase the item, and demonstrate the copyright or trademark infringement. So again, my brand is Brush Hero. So I bet if you looked on one of the Amazons right now, you’d find something called 360 brush cleaner. And 360 brush cleaner at this point has done away with stealing my images but they’re still using the box. So I have to buy the product, have it shipped from China, which can take two or three weeks and then photograph the box, which always still includes pictures of me, and then report the box. Meanwhile, that listing has been sitting up and active for two or three weeks, and it’s been siphoning off small amounts of my traffic the whole time.

The most insidious example of this was over Black Friday, Cyber Monday weekend. I was on — you should never go on vacation that particular weekend. Yeah, in e-commerce world, you pretty much give up Thanksgiving. But I was in San Francisco with my family. And right around four o’clock on Thanksgiving afternoon, we had seven hijackers pop up on our listing, because they knew full well that it being a US holiday, followed by Black Friday, followed by a weekend followed by Cyber Monday, it wasn’t likely that Amazon was going to be able to take down those listings.

So even though we reported them by 4:30 on Thanksgiving, it took until Tuesday or Wednesday for them to go down. So on one of the biggest sales weekends of the year, and this was just a few months ago, we didn’t own our buy box for significant portions of the time. And that could have directly cost us $30,000 over that weekend. It’s sort of hard to quantify. But they’re smart. They know what they’re doing. They know how the system works, and they know how to work it.

Steve: All right, so you just presented two problems. So it sounds like the parallel listings are not really a problem. Is that accurate?

Kevin: No, they are definitely a problem. They’re out there. They look a lot like our product. They generally have low star rankings.

Steve: But they’re not pretending to be you. It’s just like another piece of competition from your perspective, right?

Steve: Yeah. Yeah, at this point, it’s less of a problem now because we’ve been very effective in our whack a mole efforts. I looked last evening, and we have 7,200 individual intellectual property actions since May.

Steve: Oh my gosh, okay. Do you automate this process or is it just like a real manual process?

Kevin: We use — last year, when it was really starting to ramp up, at one point we employed three different intellectual property whack a mole firms. I mean, that really is the best way to describe them. These are firms that specialize in identifying keywords, images, multilingual references to your product in market places all over the world. And they’ve established API, or in some cases manual reporting mechanisms through those. And just every single day, they’re refining and reporting more.

I also have a virtual assistant who spends a chunk of every day doing our own internal checks and then adding those to the firm we use, which the firm that we landed on is one called Pointer Brand, which is out of the Netherlands. They’ve been a very good partner. And we now have a lot of data as far as who these people are, where they’re coming from, what the countries are, etc.

Steve: Okay, so you went to Amazon and there’s this process for getting them taken down. So presumably, once you actually get the product in hand, you take a picture, and they’ll take it down, right. But obviously more pop up faster than you can take them down. So what can you do about that?

Kevin: Well, we are a participant in the transparency program; it hasn’t fully kicked in yet. But that’s an individual unit labeling program that provides a born on date, and basically a unique identity for each unit. So if you were to use your Amazon consumer app and scan one of these little QR codes on the back of my product, it would say built in Salt Lake City in November of 2018 because that’s when we initiated that particular production run that the stickers are using. Amazon is supposed to prohibit units that don’t have the transparency code affixed to them from entering circulation. But we have yet to see that kick in. It’s in process, I have faith in it, but it hasn’t fully kicked in yet.

Similarly, there’s an FBM version that requires fulfilled by merchant sellers to demonstrate that they have the QR codes through photographic evidence. But that is in beta and hasn’t fully rolled out yet either, so other ways to prevent this from happening.

Steve: So before it came back up on the transparency program, why hasn’t it kicked in yet exactly, or what hasn’t kicked in yet?

Kevin: It’s a big rollout for Amazon, and they’re still basically trying to figure it out. We enrolled in transparency in mid-2018 and it has, it’s still rolling out. The fulfillment centers are still dealing with how to find these codes and identify them and scan them accurately etc.

Steve: Are you paying money for this right now?

Kevin: So yes, you pay five cents a code plus you have the sticker itself, which is it can be a center too and then you have to adhere it. So I would say I’m spending 10 cents a unit to make this happen. There’s no subscription fee, there’s no recurring fee that’s tied to it. Given the issues I’ve had and the sort of financial impact we’ve had, to me it was a no brainer to at least give it a try to see if it would work.

Steve: It’s really new so I’m not sure what the procedure is. So let’s say someone gets a fake, are you supposed to have that customer report that code to Amazon?

Kevin: So they wouldn’t be able to have a code. It should never make it into the Amazon system. These things are — they look like little QR codes, and like a data matrix and every single one of them is unique. Unlike an FN SKU which is the Amazon unit identifier within the fulfillment system, you can print those right on a box and it’s not going to change. Every single unit I have has a slightly different QR matrix that is machine readable. Theoretically, those are encrypted and it would be very, very difficult for somebody to spoof them. They can spoof one and copy it over and over again but Amazon is supposed to pick up on that.

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Right, okay, and that infrastructure is not in place yet right, the detection and enforcement?

Kevin: It is in place. It’s just it doesn’t feel like it’s at full force yet. We know that we still have hijackers, and we know that we still have fakes. This is one of — I feel pretty positive about this program. And I feel that Amazon will get it under control, they will recognize this issue. This is one of the ways that they have to mitigate it. And I absolutely see down the road, everyone who’s in any sort of sensitive category, like toys or nutraceuticals or high counterfeit items, you’ll see Amazon pushing everybody towards this program, I’m sure.

Steve: So that actually solves a problem at the end customer. But is there anything that you can do at the source to like shut down the manufacturers themselves?

Kevin: So we have — in 2018, we filed for a pile of Chinese intellectual property documents. So we filed for utility patents, for trademark protection, for copyrights, etc. Those are all going through the Chinese patents in the intellectual property system right now. And had we had the trademark in particular filed in China, we would have had a lot more teeth. Alibaba has been a decent partner as far as taking down trademark violations because they recognize the bad press it creates, but some of the others less so. And they want to see that there’s actually a Chinese violation. In my opinion, the Chinese tend to respect Chinese law a little bit more than they do other laws. So had I had those pieces in place before, I may have been able to stem the tide.

Steve: Did they register the trademark in China though?

Kevin: They did.

Steve: Oh my god. Okay.

Kevin: So they registered my patents, they registered my trademarks; they even tried to register some of my copyrights. We’ve won some of the trademark battles; we’re probably going to lose the patent battles. But we’re actually trying at this point just to invalidate their patents based on the fact that there was prior art as in the product is already out there. So you don’t get to patent it. But it’s expensive. And I think this is it’s a good point to be made. People say, oh, what do you wish you’d done differently? Well, the company was headed towards $3 million in revenue.

Had I known what was going to happen to me at that sort of scale, it probably would have made sense for me to file for the Chinese trademarks then. And it’s ended up costing me almost $50,000 to do that. So that’s not an easy thing to do for a small company that’s growing really rapidly. I would way rather spend that $50,000 on most of a new person or a new product or whatever. But instead, I’ve been playing whack a mole. So before we went on Shark Tank, which that was never a sure thing, right. It’s not like you know you’re going to go and you know you’re going to air. But we were on an upswing, things were going in the right direction. So it would have been smart for us to invest in that sort of protection before we grow.

Steve: So trademark is $50,000 in China?

Kevin: Well, but by the time you go through a reputable firm and register for multiple categories, and in our case, we had to battle down the previous filers of our trademark. So there was some back and forth, not necessarily litigation, but there was a lot of administrative process that we had to go through. Had we filed before there was anyone, it would have been quite a bit less than that. I don’t have a particularly good number. We also went through a large US law firm DLA Piper, because at that point we just needed to make it happen and make it happen right. I’m positive that if you found local council, you could pay a lot less.

Steve: But once you have the trademark, I guess your point is you could have shut these people down?

Kevin: Faster and easier. It would have stemmed the tide. Just picture it like a funnel at the very top of the funnel, it’s like an inverted funnel are the manufacturers. And as far as we know, we had at least five distinct manufacturers making the product. And that comes from an analysis of the fakes that we’ve seen and their mold lines and things like that. They’re all slightly different from each other. And if those guys are getting battered down when they’re doing their first test runs, they may decide not to proceed with the run. But we also think that they made hundreds of thousands of units.

And although we’ve been very successful in battling them, they’re still out there, and they’re still out there in big piles, and they’re devalued because their customers don’t want to buy them because they know that we as the brand are going to go after them with vigor. So now they’re pretty much dumping the inventory. We’re seeing listings popping up. Yesterday we had one pop up in Bangladesh; we see them in like Bolivia, and really crazy places. Those of you who backpack and travel, you might well see my product in like third world market places, because the Chinese are now selling them at a loss just to get rid of the inventory.

Steve: I want to talk a little bit about I guess the value of a patent. I mean, I can’t even imagine how much money, it sounds expensive everything that you’ve done. I don’t know if you have a number for that. But when you get a patent, which you had both the trademark and a patent like how truly valuable is that?

Kevin: So when I tell people what I do, I’m really not just Brush Hero, we own a couple of different patent lines, or we have licenses for a couple of different patent lines. And that was what we built our business on this idea that we could test products, figure out what works, license the patents or acquire the patents and then grow from there and the patent would give us some level of protection. In those 7,200 take downs, I think at last count we had something like 23 that were patent related. So 7,200 intellectual property take downs and 23 the grounds were patent.

And we suspect those were basically accidents. Somebody like Alibaba just — we claim whatever we can, and Alibaba maybe clicked the box that said patent. And the reason why is the big platforms aren’t in the business of arbitrating patents. You just think about Amazon and one garlic press versus another garlic press, one has a patent in one doesn’t, how the heck is Amazon supposed to make the difference between them. So if you pursue a patent action in Amazon, they say that’s great, show us the court order. And pursuing a court decision for patents can cost you $100,000 each.

It’s also sort of worthless, because given the whack a mole aspect of this, if you were to get one amazon seller shut down under a patent, it’s pretty easy for them to just shift their inventory to another seller name, and you take down lanky one and then two days later, you’ve got lanky two who pops up. And guess what, that’s a different seller. So now you have to go through the court order again. That is enormously frustrating. So for superficial, tactical, intellectual property enforcement, the patents have not been useful to us.

Steve: Okay, so I guess the next question is, should that be a priority for someone?

Kevin: Well, think of it this way. We are — now we have pretty broad distribution in these big retailers. And we are establishing this category of the hose power water brush, right. And if we didn’t have the patent, all of this work that we’ve done could easily be replicated by people who are real and big and can just crush us. So I’m not saying they would do this. But imagine somebody like AutoZone, who runs a lot of their own private label products. If we didn’t have a patent on this, we spent all of these dollars developing the category. And it would be pretty easy for them to go out and make their own version of it, and basically shut us down.

Steve: I guess that’s the case for people that play by the rules, right? But let’s say someone in China decided to create a better mousetrap than you did and sell it. It doesn’t sound like there’s much you could do, right?

Kevin: No, there’s really not much I can do.

Steve: So it’s basically a projection.

Kevin: [Overlapping 00:33:50] small scale.

Steve: Yeah, it basically protects you from people who play by the rules, which I guess is like US manufacturers or whoever obeys those laws, right?

Kevin: Sure. At the end of the day, that’s what the big business is, right? So I’m growing past the point of these kind of little transactional issues and now I’m gaining attention of big players. And my business was definitely hurt by the Chinese but my business could be ended if someone really big decided just to eat my lunch.

Steve: I’m kind of curious how you recovered off of that Amazon listing. So you’re getting 150 or whatever negative one star reviews and I imagine they’re just coming in on a regular basis. What do you do at that point, or what did you do at that point?

Kevin: This was a rough week; we eventually shut down that listing. And this was a listing that was doing seven figures a year, and was first in a number of keywords and a number of categories. And for the Amazon sellers out there they know how valuable that is. But once Amazon declined to help us with removing the reviews, we just couldn’t let it sit there with a 3.6 rating. It was having huge impact on the rest of our business. We would go visit a big retailer and the first thing the retailer would do is they go look at Amazon and they’d see 150 one star reviews.

So it wasn’t just about our direct sales. It was actually just it was hurting our brand everywhere. So we shut down the listing. We happened to have vendor central listing or vendor Express listing from our days in Launchpad that was a similar product that could be adapted. And we revived that one which had more like 150 reviews. And honestly, its stars weren’t awesome for other reasons, but it was way better than what we were looking at. So we shut down the awesome listing with 1,200 reviews, and we relaunched another one with 150. And to date we have not recovered our ranking. We have not recovered our velocity, we have we have less keyword relevance, etc.

Steve: What’s to stop the hijackers from finding this new listing and starting this process all over again?

Kevin: Oh, they have.

Steve: Oh they have, okay.

Kevin: Absolutely, they found it within days. We did get Amazon to fully close the old listing, which impaired the inventory that all the hijackers had and the fakes had. So they had to re-sticker everything, they had to call back inventory that probably hurt them a little bit. But as soon as the new listing was there, they re-stickered for this listing and sent it back in. But we were more geared up to fight them. So we take down seven or eight a day at this point.

Steve: Oh my God, that’s crazy.

Kevin: And it’s not just Amazon that’s everywhere, eBay is the worst, eBay makes up probably 90% of the claims. But yeah, we take down a bunch every single day. And we’re just faster about it and we’re better about it. If you were to do some brand search on us, you’d also see that we make clear that there are counterfeits out there. It’s painful, because I will end up with fakes in Google PLAs, which are product listing ads as well. So most of our direct to consumer sales come through Facebook advertising, which then leads to Google searches for our brand, which can yield a non-Amazon fake, say a Shopify store or a drop shipper, who has — they’re undercutting us in the PLA. So we have to fight that too.

Steve: So Kevin, I kind of want to, we talked about a bunch of stuff in this interview, I just want to kind of turn it into like a little summary of if you had to start all over again and you knew you were going to get on Shark Tank, for example, or you were going to get mass exposure, what are the steps that you would have taken ahead of time to mitigate this disaster?

Kevin: I think one, I would have been being more aware of international intellectual property, particularly in China. So I would have spent the money early on to get the protection that I need in China.

Steve: Which includes what, sorry?

Kevin: Trademark in particular, copyright filings, I would have filed for registered copyrights. This is something we haven’t touched on yet. But when at the bottom of your website, you put copyright My Wife Quit Her Job 2019; you are claiming the rights to the imagery and the copy on your website. But you’re not actually registering that. And in order to have any teeth in court, you need to register your copyright. You can do this pro se which means on your own with the USPTO. It’s actually a really simple process to take your website, to download a PDF version of it and submit the whole website to the USPTO as an actual registered work.

At the end of the day, after eight to 12 months, you receive a registration number. And that means that as opposed to reaching out to someone and saying, hey, you’re infringing, take it down, you can now reach out and say, hey, you’re infringing on this specific copyright registration. And that entitles us to statutory damages, which can be 10X per incident, actually, something like $30,000 per incident. So if you’ve taken six of my images, the statutory damage can be $180,000 for just the number of incidents, plus loss of income plus whatever you took in plus some sort of multiplier, it has a lot of teeth. But it takes a long time. So I would have done that. I would have filed…

Steve: So the regular copyright is not worth very much is that what you’re saying?

Kevin: Oh, it’s good as a tool for takedowns but you can’t really go to court and sue…

Steve: For damages.

Kevin: For damages with it.

Steve: Got it okay.

Kevin: It’s just a tool you can use to take down and obviously have everything copyrighted. Another thing that we do now that I wish we’d done is we do very tiny watermarks in all of our images, because a lot of the platforms are highly automated. So imagine if there’s a image of my brush that is 45 degrees to the right, it’s pretty easy in Photoshop just to flip that. So it’s 45 degrees to the left, and the sort of dumb AIs that are behind the reporting systems. I won’t pick that up necessarily. So what we do is we bury pixel level watermarks. They’re not obvious, but they’re pixel level watermarks in the images. So even if it’s skewed or distorted, we can point to that mark and say no, no, no, no, this is a derivative of our original work.

Steve: I see. So even manipulating the image and receiving in Photoshop, the watermark still gets preserved.

Kevin: Unless they know how to find it. And most of them are pretty lazy to be honest.

Steve: Okay.

Kevin: I’m trying to think of other things that we may have done. Transparency wasn’t there?

Steve: Well, okay. How about — I mean, assuming today, right?

Kevin: Yeah, transparency? Oh, yeah, I’d absolutely do transparency. That’s super important.

Steve: Where does – so if we could just prioritize all these steps, it seems like trademark is probably the most important one. Where does the transparency program fall into that?

Kevin: Well, I would say registering your copyrights. Even though that seems it’s just so easy to do and it has a long timeline to it. It costs $135 to file something like that, 150, whatever it is, but it takes eight to 12 months. Next, I would say the trademarks in China. And again, it would just be estimating, but 15 to $20,000, in multiple categories to file original trademarks, and figure that will take a year right. Transparency, because well, our experience with transparency is it’s taken six, eight months to happen. But we were one of the first companies, as far as I know to start down that road. I suspect if you started transparency now, it could be live in even a matter of two or three months. So think of it as far as timelines of things that you need to do and dependencies that you need to do.

Steve: Where does filing a patent internationally fall into this in terms of priority?

Kevin: Well, for me my business model is predicated on those patents. So patents can take a long time, and they can be very, very expensive to maintain. You want to know that you have some sort of commercial value in your product before you are going to spend all of that money. For me, that would be lightweight testing of a concept. Basically, minimum viable product stuff where you have the concept, you have the idea, put up a landing page, see if anybody cares. And if I’m really excited about it, and I’m going to invest in it, at that point, I would probably pursue the patent path. But to be clear, I license existing patents so I don’t have to do that.

Steve: Got it, no, no. Okay. That’s clear. What about your hijacker strategy now? Like let’s say, I’m sure a lot of people listening out there have hijackers and piggy backers. What is your strategy for getting them off right now? It sounds like it’s an automated — it’s not automated, but you have like a procedure for it now, right?

Kevin: So given the volume of my problems, I’m using one of these IP monitoring firms has been really useful for me. But that’s about $24,000 a year we’re paying the firm to help hold our hand. Once you understand how the process works, and how the Brand Registry reporting process works, it’s pretty straightforward to develop SOPs that you could implement internally. We just haven’t done it yet. But you can do it yourself based on scale. What you’re not going to catch yourself are the crazy things that are appearing in other countries, like the Bangladeshi listing like I would — I actually did catch that one. But generally speaking, you are going to be focused on the marketplaces where you sell. And meanwhile, your brand is being trounced in Brazil or other places. So you might find five years down the line that your brand reputation is ruined, because you haven’t been monitoring in these other countries.

Steve: Okay. But within the US, it’s as simple as going on the Amazon Brand Registry site for your brand and then reporting a violation there.

Kevin: Yes, the piece that’s really painful is the recognition that you have to buy the fake and a lot of people get stuck in this rut where they’re like, well, it’s obviously a fake. And Amazon says, well prove it. I actually had an Amazon employee telling me once that it was possible that I had shipped bulk product to some retailer in China who is now shipping it back from China one at a time at a quarter of the price that I was charging.

Steve: Crazy.

Kevin: Crazy. So, you can’t really fight the gorilla, you have to learn the rules of the Amazon jungle. And one of them is if you have a hijacker, do not try and fight them and prove to them that it’s a fake, you actually have to buy it. And we just hit this point, we buy them, we expedite them, we get them as fast as we can, we take pictures of them and then turn those around and submit those to Amazon. Super, super frustrating in the case of FBM from China, because of the time lag involved.

Steve: And I have a higher level question for you, Kevin. Has this been worth all the stress? I mean, that the Amazon Marketplace for your product?

Kevin: Oh, that’s a good question. I had a good life before. Yes, I mean, I am an entrepreneur. This is a neat brand. We’ve done neat things with it, we continue to grow. Even in the middle of this, we grew by 80% year over year. We could have grown by a lot more. This cost me the ability to acquire a new brand or invest in a new brand or develop new employees. But I am bullish on Amazon. I think there are big changes afoot as Amazon realizes the impact on their own brand of counterfeits, and you can see it coming.

There were big actions in vendor central just a couple of weeks ago, the implementation of this project zero thing that they’ve announced, which will, in my opinion, end up being the universal adoption of transparency codes. Amazon is not going away anytime soon, and the naysayers out there like if you just walk away and you don’t participate, you’re leaving a lot of money on the table. So for me, it is worth it. It’s agonizing and it’s painful. And boy, it really was like waking up every day and getting kicked in the shins, but I’d probably do it again.

Steve: Okay. One thing I really appreciate about you, Kevin, is you actually decided to fight this. Not only did you fight it on your own, but you also got press coverage in Inc. Magazine, which I will link to underneath this interview. And I’m just kind of curious, I know there’s a lot of people who are getting violated out there. How did you manage to get Inc. to take your article and take your story live in public?

Kevin: So obviously, this was a huge mess for us. I had more faith than I should have in the Amazon system. And we contacted so many well-meaning awesome Amazon employees who absolutely could help us. We hit the director level within the transparency program. And even that person was at the end of the day only able to basically toss the information over a fence with a no reply email, he couldn’t make anything happen. So we decided that maybe the way to do this was to shine a light on the issue.

And so we put together a press release, telling our whole story, the Shark Tank thing, sort of American, this American entrepreneurial journey that we’ve had, and the fact that Amazon basically didn’t care at the end of the day. And then we targeted major media outlets that we thought might care. And more importantly, we thought that they might be read by Amazon people. Inc. was three or four down on that list. We solicited The Wall Street Journal, New York Times, LA Times, and Money, Fortune, etc. And Inc. was the first one that bid. A reporter actually a bureau chief of San Francisco reached out to me. And it turned into a many week affair as far as interviews and back and forth, and me serving his background, making sure that there’s — there are a lot of anecdotes about that.

I’ve had a lot of Amazon adventures. But there are things I know that have happened to other people within our e-commerce community that haven’t happened to me directly. So I was then a resource for the reporter to go find those people and interview those people so that he could get directly quotable information about things like false positive reviews, or review dumping or some of the black hat stuff that’s floating around out there. And I just tried to collaborate with them as much as possible. I had no idea where it was going to go. They did get an exclusive on the story.

So once they picked up on it, we couldn’t solicit the story to others. But I didn’t really know if it was going to get published or what was going to happen. And then they announced that they were flying a photographer out from LA to Salt Lake City to meet with me. At that point, I realized, well heck, this is actually going to be a real story if they’re going to spend that sort of money to do that. And we did a whole photo shoot at our 3PL in Salt Lake, and they had me look pensively into the distance.

Steve: That was a really good shot actually; you look like the president of the United States.

Kevin: My kids love it. My staff thinks it’s hilarious, smiley, happy guy. And the photographer was like, dude, stop smacking, you’re supposed to be pensive.

Steve: Well, Kevin, I am very happy to spread the word about the article, and all the experiences that you’ve had. And it’s important that anyone who’s selling on Amazon to be aware that these things can happen, especially if you get media attention for your product.

Kevin: Absolutely, yeah.

Steve: So Kevin, where can people find you online if they have any other questions, or if any other press outlets want to get a hold of you?

Kevin: So BrushHero.com is our major retail site. I’m on LinkedIn under Kevin Williams. I’m pretty easy to find out there as well. I’m happy to help out as much as possible. I’m definitely seeking more media attention if we can get it. I think the story is an interesting one to tell. And it’s important that people actually understand this sort of dark side of Amazon and e-commerce.

Steve: Cool. Well, Kevin, I appreciate your time. Thanks for coming on.

Kevin: All right, Steve. Cool.

Steve: All right, take care.

Hope you enjoyed that episode. Now even though Amazon is doing their best to fight the counterfeits on their platform, it’s a fairly large problem that is going to be very difficult for them to solve. For more information about this episode, go to Mywifequitherjob.com/episode262.

And once again I want to thank Klaviyo for sponsoring this episode. Klaviyo is my email marketing platform of choice for e-commerce merchants and you can easily put together automated flows like an abandoned cart sequence, a post-purchase flow, a win-back campaign, basically all these sequences that will make you money on autopilot. So, head on over to Mywifequitherjob.com/K-L-A-V-I-Y-O, once again that’s Mywifequitherjob.com/K-L-A-V-I-Y-O.

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Now, I talk about how I use all these tools on my blog, and if you’re interested in starting your own e-commerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email, and I’ll send you the course right away, thanks for listening.

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