On June 12th, Exceed hosted its Amazon “The Store In The Sky” event. The goal of the sellout evening was to educate and inspire current and future Amazon entrepreneurs. The event featured a panel of Amazon experts including Joey Tabush, Amazon power seller and founder of Lucky 21 Partners, Lesley Hensell, Amazon compliance expert and partner at Riverbend Consulting, Lenny Ash, Amazon e-commerce logistics specialist and partner at MMX Distribution and Services, as well as Nathan Slamans, Amazon power seller and lead consultant at Amazing Freedom. The panel was moderated by Joe Zalta, CEO of Riverbend Consulting.
Zalta, an Amazon expert himself, started the event by showing just how large Amazon is but also how much room there is for growth in the e-commerce space. “Amazon represented 36% of all retail growth- online and other- in 2017. Yet, while Amazon did over $486 billion in business in 2017, a staggering number, overall e-commerce sales make up just 13% of all retail business. Even with Amazon, eBay and thousands of other online stores, we aren’t even close to the cap of what we can do online. That’s where you come in.”
After assuring the crowd that Amazon drone delivery is very real and will result in delivery just hours after orders are placed, Zalta opened the panel by asking Nathan Slamans about identifying the right product on Amazon.
“That’s the number one question we get” said Slamans. “At Amazing Freedom, we say that 80% to 90% of success in private label sales depends on finding the right product. Without that, even with the best marketing, it won’t matter.”
There are two types of sellers on Amazon- private label and resellers. Private label sellers sell their own products while resellers sell other companies’ products.
“As many of us know, reviews are critical on Amazon,” continued Slamans. “If you get a few one star reviews immediately, it’s a very bad sign and there isn’t much you can do. The right product and a good product are both critical and not often the same thing. When looking for a new product to sell, most private labels think light, cheap, can fit in a shoe box and doesn’t break easily. The problem is, 99% of private label sellers are doing just that, so keep your eyes and ears open to the trends but also to those products that people might be missing.”
To transition to the next panelist, Zalta shared a stark and simple insight. “Sales,” said Zalta. “That’s the most important word on Amazon. As a sales based platform, the more sales you have, the more they love you and the higher they rank you. But sales aren’t everything to a seller.”
To help further understand sales on Amazon, Joey Tabush dove deep into the metrics and data offered by Amazon.
“I have been a seller on Amazon since 2012 and in the beginning, while I did a good amount of volume, I wasn’t seeing much profit- sales went up but at the end of the year, the profit wasn’t there. A few years ago I started to focus, to really read the data. The thing I love about Amazon for entrepreneurs is the ease of growth and the amount of data they give you for free. When opening a retail store you need staff, merchandise, a space, and so much more. But with Amazon you have no rent, you can start with one product at a time, hire staff as you need them, and you’re walking into the largest customer base in the world. But as you grow, you need to focus on profitability. And the first way to do that is to establish that you have a profitable business model.” Tabush then shared how important the FBA (Fulfilment By Amazon) calculator is to tally all of the hidden costs a business owner might miss as well as the importance of returns. “I call returns the silent killer,” said Tabush. “Returns result in return fees, bad product reviews, reduced sales ranks and unsellable products. Individually or combined, these can all kill your business.”
“So, how do we avoid getting blindsided by having many sales but little profit?” asked Tabush. “Don’t sell junk, don’t mislead your customers and always calculate the cost of returns into your initial FBA analysis.”
The panel then moved to Lesley Hensell, Joe Zalta’s partner and an Amazon fulfillment expert. “They call me the bad news girl” said Hensell. “When Amazon steals your inventory or your account has been suspended, that’s where I come in.” Hensell then explained that the biggest mistake new sellers make is thinking that their idea of authentic inventory is the same as Amazon’s. “Amazon wants to see paid receipts, invoices and anything that can authenticate the merchandise. Even if it is real but you don’t have the proper paperwork for it, your account can be suspended.” Hensell then laid out exactly how Amazon feels about their sellers. “Amazon has one priority- their customers. Their sellers mean very little to them so they have no issue cancelling an account, even if it is worth millions of dollars. It is vital to follow Amazon’s protocol to the letter.”
The final panelist, Lenny Ash, discussed fulfillment, a major concern for first time Amazon sellers. Ash explained in detail the difference, advantages and disadvantages of FBA versus FBM. “FBA, or Fulfill By Amazon, has many advantages, including the Prime badge, two day shipping, and Amazon picking and shipping your orders. With FBA, Amazon is a public warehouse that will do everything for you. FBM, or, Fulfill By Merchant, is when the merchant picks, packs and ships all orders.” Ash then highlighted that, while FBA is a favorite of first time sellers, there are also many hidden fees and further restrictions that can cut into time, cost and even result in a cancelation of a merchant’s account if they do not abide by Amazon’s rules. Amazon also charges a long-term storage fee, so if your product isn’t sold within a few months, you will be charged a long-term storage fee, just one more cost that will eat into your bottom line. “Ultimately” said Ash, “for many vendors a mix of FBM and FBA is a great choice, especially when starting out.”