Last week was a special occasion for Amazon Sellers: an opportunity to pick Greg’s brain via a Reddit Ask Me Anything. It was a great opportunity to get the inside scoop on Greg’s approach to selling on Amazon FBA, doing product research with Jungle Scout, building Jungle Scout and Review Kick, and much more. It was a great dialogue, as you’d expect from the Reddit community. You can read through the whole thread here, but I thought it would be helpful to pull out some of the questions and comments that would be helpful in general.
On Greg’s Business:
Q: How many different products do you currently sell on Amazon?
Greg Mercer: I currently have about 200 items for sale on Amazon but only about 40 are PL products.
Q: Do you make more money from selling on Amazon, Jungle Scout or Review Kick? 🙂
GM: I reinvest 100% of revenue from JS back into the software. Considering RK is free, I lose a LOT of money on it 🙂 Amazon is still what keeps the lights on 🙂
Q: How did you learn FBA? Did you take a course like ASM?
GM: I didn't take any courses because when I started selling, I don't think any existed! If I were to start today, I would just listen to Scott Voelkers podcast – The Amazing Seller.
Q: If someone wants to sell more than one product, do you recommend selling in one niche only or exploring as many different niches as possible?
GM: I sell in a bunch of different niches. I don't think it's really that big of an advantage to only sell in one niche. I just go with the best opportunities.
General Advice on Selling on Amazon:
Q: Do you suggest selling on Amazon for a newbie who has zero experience selling anything?
GM: Amazon is very newbie friendly, however, I would certainly recommend doing your homework before getting started. You could check out our series where I publicly launch a product if you would like: https://www.junglescout.com/collaborative-launch/
Q: Do you have any advice for those starting out? What mistakes did you make?
GM: The biggest mistake when starting out is picking a product that is TOO competitive. When in doubt, I would recommend going with something with smaller demand but lower competition. My $0.02
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Q: Private label seems to be where it is really at. After you find a niche market you like, how do you go about getting it from concept to product on Amazon? What is required for private label? Where do you source your packing materials? What is required from a legal standpoint to get a SKU up and running.
GM: Yea, PL is a great opportunity right now. After selecting a product, I find a factory to make it for me on Alibaba or Global Sources. Required to PL? Essentially there are only 2 things – 1) a product and a factory to make it with your brand on it 2)a listing on Amazon.
Of course, there are a lot of details but that’s the big picture. From a legal standpoint, a LLC is good but not required, and that's about it. If you want to find out more details, you can follow along on my public product launch.
On Product Research:
Q: What is something you believe about the process of picking a good product to sell that “no one” or very few other people believe?
GM: This only holds true for private label goods, but I LIKE to compete against products that AMZ sells (not Fulfilled by Amazon/FBA or Fulfilled by Merchant/FBM). A lot of people are scared to compete against them because it’s Amazon’s own platform. I haven't seen anything to make be believe that they favor their own products over FBA products (keep in mind, they make $$ off each FBA product sold too). Amazon doesn't do sponsored ads for their own products, they don't do giveaways and their listings are usually pretty terrible.
Q: When I initially found a good product opportunity there were only a few sellers, not many reviews, some sellers were merchants, etc….Now I am about to purchase my first shipment. When I checked the latest stats on the product there are a few more sellers, more reviews, and some have dropped their prices considerably…to the point that there is an add-on item button next to their listing. Would you go ahead and move forward with the product?
GM: Tough to say, if it still met all my criteria, I would move forward with it, however, it doesn't sound like it would. This is my personal criteria: *:
- simple, not easily breakable
- small and lightweight (fit in a shoebox)
- demand of at least 3000 products in the whole niche
- not too competitive (multiple sellers with under 100 reviews)
- depth in market (not just 1 seller making all the sales)
Q: What's the ideal net profit (dollar amount) per unit (after COGS, Amazon Fees, Shipping, Tax etc)
GM: I shoot for 100% ROI on all my products. If the landed cost (ie manufacturing cost plus shipping costs to get it to Amazon’s warehouse) is $10, I try and make $10 profit.
Q: What is a general number you look for on the product BSR? (eg. under >5,000)
GM: I don't have a general BSR I look for because it varies so wildly in different categories. For example, in appliances, 1500 only sells 1/day where in Home and Kitchen that would probably sell like 50/day. I would recommend checking out this chart here: https://www.junglescout.com/ranktable/
Q: What were the main factors that helped you move from being a typical FBA seller to 6 figure per month FBA rockstar?
GM: It’s not as hard as most people think to start selling a lot on Amazon. Once you figure out how to sell $5,000/month, you just do that with 20 products and all of a sudden you're selling $100,00/month 🙂
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Q: Can you talk a bit more about reasons to track products? What information can I glean by tracking products on your database vs camel?
About not including shipping costs in the price, can you explain why people prefer that? I am thinking of a scenario where the buybox is shared between competitor A (FBA $20) and competitor B(MF $12 + $8 shipping) average shows 16 instead of 20.
GM: Sure! Check out this screenshot I just took of a product that I am personally selling (marshmallow sticks):
It can do this for any product in Amazon's catalog, both my competitors or my own. It gives me insight on daily inventory, sales and rank. Before actually pulling the trigger on a new product, I usually monitor my competitors to make sure they are really making good sales over a long term basis, not just for a day or two from a promotion. As far as not including the shipping costs, for anyone who doesn't have prime and if the item is under $35, they'll need to pay shipping even for an FBA item. I can see how some people would prefer it both ways.
Q: I'm new to JS and the FBA scene. At first I loved the information and would surf amazon for hours. Recently I listed my first product and got 2 promo sales which were free. I hit JS to see what it would say and it estimated 126 sales with $1400 revenue. This shocked me and really hurt the trust I had in the information JS provides. Could you shed some light on what may have happened?
GM: Sure! So let’s start by talking about how the extension gets its sales estimates. It uses an items sales rank, then estimates based off some algorithms we calculate, shown here.. When a product is brand new and only had a few sales, the sales rank jumps around like crazy. After its been making some consistent sales for a week or two, the rank settles down and stays a lot more steady. I think you'll find if you check again in a week or two, it’s pretty accurate. This is another reason I think the extension is great for quick estimates, however, before pulling the trigger on ordering a product, I would recommend tracking it in our web app for a few weeks.
Q: Given that everyone seems to be using Jungle Scout, everyone can find the same opportunities, and will start sourcing the same products, causing a flood of similar private label products, quickly eroding the opportunity. I've seen this with 2 products I'm sourcing. What can you recommend to JS users who want to avoid this problem? Is there something in the tool that can be done to address this?
GM: Even though it seems everyone may be using Jungle Scout, our user base is actually super tiny compared to the millions of sellers on Amazon. Like %0.0001… 🙂 I wouldn't worry about it too much and just push forward. If you want to move towards items that less people are doing, you could try more expensive, larger or more complex items (maybe electronics)?
Q: I was wondering about some items that I am considering to private label, but there are products out there on Amazon that are literally identical to it and they have some reviews already (50-200). Is there any point to ordering an identical product to what others are selling already, and just slapping my label on it? What is the point of being just “another” seller of an already widely available product? I somehow feel that in order to be successful at PL you have to be unique in some way, shape, or form. What do you say?
GM: I prefer to have some kind of differentiating factor, for example, with my marshmallow sticks, I did a pack of 110 instead of my competitors 100. It’s simple but gave me the extra edge… we can now advertise it as 10% more! That being said, it’s possible to just sell the exact same thing its just a little more competitive.
Q: When you say demand of at least 3000 products in the whole niche…………..do you mean if I do a product search and use the chrome JS, and add up all of the units sold to equal 3,000 or more?
GM: Yep, I usually add up about the top 10, shown here:
Q: what do you think of going into a highly competitive market with a differentiated product? E.G. boxers, but your product is branded, made and packaged as a “luxury” item. Any hope there?
GM: The biggest difficulty with going into a highly competitive market, even if your product is differentiated, is getting ranked on the first page of keywords so that you're actually making sales. If you choose to do it, I would plan on giving away a lot of units to get ranked well.
On Product Sourcing:
Q: What do you think is a good initial quantity to test my first product?
GM: Personally, I usually start with 1000 pcs but feel free to order less if you don't feel comfortable with that yet.
Q: It seems everyone suggests only working with one product at a time. I can't anticipate the problem of trying to launch 3 or 4 products at once. Can you tell me if there is a good reason to avoid launching multiple products?
GM: If you feel comfortable launching a bunch of products at once than go for it! I personally usually launch in batches but that's just because I'll get real busy for a while and not have time to work on it, then work on it for a week, get busy again, etc. 🙂
Q: In your experience, if you receive a bad shipment (low quality, broken items, etc…), how willing are factories to replace those items/the whole order if you have quality standards written in your contract with them?
GM: This depends, how good of a customer do they think you will be? If they only think you're going to be placing an order of 200 a few times a year they don't really care about you. If they're under the impression you're going to be ordering containers each month, they'll likely take pretty good care of you. Most of us fall somewhere in between. Contracts help but aren't the end all be all in China.
Q: Have you ever sourced from the US? Or does it just kill the margins….? Looking specifically at an item that goes into your body, cook with, etc.
GM: Personally, No, I have never sourced a product from the States. However, if I was going to do a product that either went on or in my body, I would definitely go with a US company. If the numbers make sense, go for it 🙂
Q: You mentioned a company called V-Trust that I believe you said people use for quality testing. Do you have them perform inspections through the whole production process or just at the end to make sure the products are OK before shipping them to Amazon's warehouses?
GM: To be honest, an inspection of the first unit off the assembly line is best because after a factory creates and entire order, they will not want to go back and fix everyone. 1 inspection at the end is better than nothing, multiple inspections it better than 1. At some point you have to weigh the risk/cost as well.
Q: When getting a shipping quote from a factory from mainland China, do you find the Amazon warehouse address through Amazon when you list the product, or can you just pick one of their warehouse locations?
GM: For your first order, I would just ship it to your place so you can inspect it. For your next order, you'll have the listing in seller central so you can create a shipment beforehand and AMZ will tell you which warehouse(s) you'll need to ship to.
Q: 1st shipment from China should go to me or straight to Amazon Warehouse and why? Do you use an inspection service to inspect your products at the Chinese manufacturing facility before they are shipped to ensure product quality?
GM: I would go straight to you so you so that you can inspect it and see the first shipment yourself. I have used an inspection service before, but honestly, I'm probably a lot more lackadaisical about this than I should be… I rarely use one but one of these days it will probably bite me in the butt!
Q: On re orders what is the wait time average for shipments? Also how low do you allow your current inventory deplete before reordering? 2. Starting out is there any advantage to having the products shipped to myself instead of AMZ? 3. Can you summarize the Time Line for procuring products to sell for private labeling? (order > Mfg > shipment >AMZ) Thank you!
GM: Most of my factories take 30-40 days for manufacturing, ocean shipping takes about a month or air takes about 5 days. When starting out, I think you should ship it to yourself instead of AMZ so you can inspect it before sending it in. If I'm shipping by ocean, I usually re-order when I have about 90 days of inventory left. From the day I place an order (again, if shipping by Ocean) to the day it lands at AMZ, it usually takes about 75 days. If I'm shipping by Air, it usually takes about 45-55 days.
Q: I've been watching a lot of videos on the process of importing. They all seem to calculate the total costs as including costs of getting the products to the buyer for inspection, but not including the costs of getting the products shipped to Amazon. Can you tell me why this is or how to calculate this?
GM: Amazon's rates with UPS are pretty dirt cheap and you can print those labels straight out of seller central. If you're shipping to a DC across the country it will cost roughly $0.75/pound. If you're shipping to a DC in your same region it may only cost half that.
On Selling Via Amazon:
Q: What would you do to optimize (financially) an inherently low cost (i.e., low margin) product?
GM: Increasing order quantity (from the factory) or sending via ocean freight could probably save you some money. Maybe cheaper packaging? Those silver foil looking bags are almost as cheap as plastic bags and look a lot nicer. You could also try to create Amazon shipments on a few different days of the week to hopefully get one where you can ship to DC's close to your location 😉
Q: Can you explain all about pictures. Like on Amazon, Alibaba. Can you get photos from sellers . Please tell all about Amazon ads and hot to get products to look professional.
GM: As far as pictures, I hire the people at http://www.productphotography.com/ to do mine. They do a great job taking professional photos at a reasonable price. We actually just wrote an in depth blog post that talks all about amazon PPC, I would encourage you to check it out here: https://www.junglescout.com/blog/amazon-ppc-best-practices/
Q: Has bundling proven successful for you in the past? Taking a product that is selling well and then making a bundle at a better deal?
GM: Certainly, it works well if you have 2 items that complement each other really nicely. It’s also a good way to differentiate yourself.
Q: I am in the middle of importing my first product and need to finalize packaging. I'm new to the Brand Registry on Amazon and I understand I need to have a physical product of mine to take a picture of to get approved, then I can get the FNSKU. How do I do this when I want to provide the FNSKU as part of my packaging? Seems like I'm in a chicken-egg scenario.
GM: You don't need to do brand registry right away, first just focus on getting the product ordered and into Amazon. To get the FNSKU, just set up the listing with no/fake picture just so you can download the FNSKU. It won't be listed on Amazon because you won't have any inventory. Of course, put up the real picture before actually starting to sell it.
On Promotions and Reviews:
Q: On Review Kick, Do you find that Amazon removes the reviews if the item is discounted too much? Or if they get too many reviews from the website?
GM: Personally, No, I don't think Amazon has ever removed any of my reviews that I gave away for free or $0.01 IF they had the disclaimer. If you start giving away products for free without a disclaimer than I think it could be likely those would get taken down. Want to see something cool? Review Kick now tracks the number of reviews you have each day so you can monitor this yourself, check it out:
Q: Regarding PPC, can your competitors abuse the system by spam clicking your sponsored link, leaving you with extremely high charges to deter you from using the service?
GM: Amazon has means to protect against, they'll automatically credit your account back, no need to worry about this.
Q: I'm getting ready to place my first order a product and am in discussions regarding packaging. I debated on adding a piece of cardboard with a design for branding and also to have somewhere to place a UPC. I've decided to just go without it for first order and go with the standard vacuum packaging. With this I can have the manufacturer apply the UPC to the plastic packaging. Are there any issues with this? Also I'm not entirely sure whether I need to include a UPC or FNSKU. I know SKU is specific to Amazon while UPC is generic right?
GM: Sounds like you know what you're doing. Yes, you can ask you factory to print or sticker the bar code onto the packaging. I prefer to put the FNSKU on there but the UPC will work too. If you do the UPC, I would choose commingled (I only recommend commingled for PL products) when I send it in so you don't have to sticker each one.
On the Future of Amazon:
Q: What do make of this news [that Amazon can ship by ocean freight directly from China]? do you think it will help or hinder FBA sellers outside China?
GM: I'm stoked about it 🙂 How awesome would that be if I could go straight to Amazon in China instead of using a freight forwarder to get it to the states! I think some people worry that factories are going to start taking over Amazon but I think that’s crazy talk. Factories are good at a lot of things (making large quantities of stuff, bothering me on skype, spamming my email, etc.) but marketing is not one of them! Haha, I'm not worried about them selling on Amazon. The listing description would probably be similar to those instructions they write 😉
Q: If you were to do it all over again for your products, would you expand to international or expand your product line?
GM: Expand you product line. The international marketplaces don't excite me too much yet. That answer will likely change in about another year, but for now I vote expand your line in the .com store.
Q: Where do you see FBA going in the next five years? Do you see it going the way of ebay?
GM: Excellent Question 🙂 And if I could predict the future I would be a rich man! IMO, I think 5 years from now FBA will still be super strong. Bezos continues to invest in their logistics and delivery, I imagine in 5 years most people will be able to get same day delivery, if not same hour (+1 vote for drones).
Q: What are your projections about the relationship between Amazon and FBA sellers? Do you think they will eventually close the marketplace and control all the products?
GM: I actually think the opposite! The trend is currently that more and more 3rd party sellers are getting on and AMZ is controlling less and less. I think this trend will continue, they'll move more towards just the marketplace and fulfillment network. I can't find the link at this moment but I have seen some reputable stats to back this up 🙂
Q: Do you see saturation in the Amazon market?
GM: Is it getting more competitive? Yes. Do I think its saturated? Not really, I think there are still a ton of opportunities you just need to just be a little more creative. Silicon spatulas, bear claw meat shredders, yoga mats, etc are no longer good opportunities, you need to think outside the box a little more (or use the JS Web App 😉 )
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Fun Random Questions:
Q: I think I heard in an interview that you moved to Bali, and I was wondering if you've had any struggles working from a different country than you're selling in? Also, what's the Bali lifestyle like?
GM: Bali is incredible, probably my favorite place on earth. I'm no longer there though, currently in Rio 🙂 I had some really solid systems set up before I left so that made it pretty easy. That being said, I know a handful of people that are selling on amazon.com (US) and have never been to the states or seen their product.
Q: What are the plans to leverage the data you're building with your SaaS platform in your Chrome extension or vice versa? Any timelines?
GM: No really sure the plans at this point. We try and collect as much data as possible so we can do some really exciting things in the future. That being said, to protect the privacy of our users, we don't store any of the information the extensions pull in or anything they track in their accounts, etc. Only the stuff our own servers are tracking 🙂
Q: When do you usually go about trademarking your private label? Do you wait to see if it's a success?
GM: Personally, I don't have any of my private labels trademarked. I don't think it’s really necessary.
Q: How long did it take before you expanded your operations to include additional team members/your wife etc
GM: I started to expand as soon as I wanted to scale faster than my hours in the day would allow, I think I was somewhere around 60-80k/month and decided I wanted to take things to the next level.
Q: How long did it take before you became location independent? I think it is great that lately every-time I see something from you I think you are hanging out somewhere else.
GM: As soon as you start making like $2k/month you can become location independent. That part is easy 🙂 Just start by quitting your job and moving somewhere thats cheap to live. Personally, I would recommend SE Asia, but central America or Eastern Europe have some nice places that are cheap as well 🙂
Q: Question on use of virtual assistant(U.S. or Offshore). JS help me find more products to expend, but I don't want to give up my job just yet. I want to use virtual assistant to help me expend. How do you narrow down who you would chose as your virtual assistant? How do you separate the job tasks so they help you but don't become your competitors? Thank you!
GM: I'm probably not the best person to ask this question because I've only had like 1/10 virtual assistants work out for me, I'm either really bad at hiring them or really bad a training them. I wouldn't worry too much about them becoming your competitors, however, a noncompete should be able to ease any fears you have. What are you most time consuming tasks (communicating with suppliers, shipping, finding new products)? It seems simple but those are the things I would give to them first 🙂
Q: I am located in Canada and have physical products to sell- Do you recommend to send it to FBA CANADA Rather than outsourcing it out to another Canadian Fulfillment house? Its rather costly to use UPS in Canada and we do not have the luxury of getting a shipping discount in Canada either, it’s 1 per lbs atlas when shipping to Canada FBA. Also, when will Jungle Scout have more data for Canada sales etc.
GM: I would recommend sending everything to the FBA warehouses just so the whole process is more streamlined and likely a better experience for the customer. You could also consider selling on the .com marketplace where there is a lot more demand. Unfortunately I'm not quite sure when we'll have more Canada data but we'll be sure to let everyone know when we do.
Q: I was wondering if you could only give one piece of advice to a new FBA seller to ensure success what would that be?
GM: My one tip would be to not get discouraged by all the little bumps along the way and keep pushing forward. Its easy to get down when a few things go wrong, just keep you head high, learn from it and keep moving forward 🙂
That wraps up a very fun and informative conversation touching on many aspects of the Amazon sales process. The conversation is equally as lively and helpful at our Facebook group, Amazon FBA Competitive Edge. make sure to drop by and join, as you can get your specific questions answered by Greg and the rest of the supportive sellers there. Or just drop your comments in the comments section below!