Seller Sessions 100 Special – Amazon Heavy Hitters (Round Table)


The Amazon Heavy Hitters show with Anthony Lee, Sean Smith, Kevin King and Liran who join Danny for our 100th show.

The A10 Algorithm

  • It’s not a real thing – it’s fabricated as a click bait article
  • Really not a thing
  • There was even a pie chart based on the A10 fake algorithm
  • It’s just the A9 algorithm – nothing else

Branding

  • It’s important and we should grow it
  • Outside Amazon Basics and Anker I struggle to name any other brands that are Amazon Heavy Hitters
  • Lots of consultants sell ‘branding services’ but they are not measurable
  • If the buyer doesn’t remember who you are after they buy your product then where’s the value?
  • Effort should not just go into branding but also focussing on getting your product in search and getting PPC right
  • Getting ancillary products and extending around your good selling product
  • Don’t put ALL your focus on just ‘branding’ – just thinking up the brand name can take a lot of your focus away
  • Look at the Chinese Sellers and their brand names – doesn’t seem to stop their sales giving the Amazon Heavy Hitters a run for their money!
  • Branding is creating an emotion or a feeling when they look at your product – take a lot of money and years to build
  • 70% of buyers don’t care about the brands – that’s why Amazon is so great, brands don’t matter so much and the level playing field
  • Shouldn’t spend a lot of time working on the branding

Brand vs Cashflow

  • Scott Galloway – youtube video, fall of the big brands because people are searching by keywords not brand names
  • Anthony has an alternative view – don’t fall in love with a brand
  • Focus on cashflow as that’s the big opportunity on Amazon
  • Most shoppers are open to accepting unknown brands, brand recognition is important to on-line shoppers
  • The big brands (Amazon Heavy Hitters) still win the majority of sales in most big categories
  • Look up ‘baby carrier’ and Amazon is the brand on every product on the main page
  • The average person doesn’t have the dollars to keep up with these brands

Remembering Brands

  • Grillholics – Anthony was blown away by their presentation, packaging and service
  • So much so he remembered his brand
  • This is a small seller who made this happen

Amazon Brands – value

  • Amazon brands were selling for x1.5 to x2 multiples at most as no guarantee that it will survive and it’s only selling on Amazon
  • A non-Amazon brand sold for x8 value because it has Brand Assets (Instagram following, Facebook followers)
  • The VC guys saw the second as a real brand that they could see on shelves outside of Amazon
  • Distinction between an ‘audience’ and an ‘asset’ – spend the effort on building an audience but you’re not going to spend on a national TV add or headline ads at 800% ACoS or Google ads for a year to build brand would be a waste
  • Until you get to a certain maturity of your business there’s no point wasting effort on Branding

Sell your Amazon Business

  • Getting the packaging upto scratch is important as Buyers “eat with their eyes”
  • This is probably the best time to sell your Amazon business – the next couple of years will be the sweet spot
  • The multiples are all over the place for Amazon businesses even the Amazon heavy hitters
  • The bigger sellers at $10-30m sales are at x6 to x10 multiples
  • If you can grow 305 of your sales off Amazon, there is a value put on it by the VC guys in buying your business
  • If you have 30-40% of your sales off-Amazon then it’s a big plus
  • You have to get to $150k-200k/month before you think about going off-Amazon to build sites and your acquisition path
  • Also consumable products means you acquire the customer once

Venture Capital and ROI

  • VCs are liking Amazon businesses currently as they can buy them and roll them up for higher multiples
  • You have to have quarterly and annual goals for the business
  • Bigger brands are putting in a lot of hours and a lot of money, a lot of them have given up equity as well
  • Building a bigger business like that is a serious consideration
  • Amazon Sellers find the ROI on Amazon Search is a lot better than off-Amazon
  • Conversion rate of 8.3 across the board on Amazon but eCommerce is like 2%
  • On a website having a 0.5% conversion rate is pretty good
  • Amazon can make 40% conversion in some brands
  • Kevin did direct mail but conversion rate was maybe 2%

Dropshippers & Facebook Ads

  • Many dropshippers will be using Facebook Ads and selling $200k a month
  • They knowhow to flip the switch on these Facebook ads and make sales
  • These dropshippers select niches off-Amazon and can dominate
  • But many PL sellers find a niche ‘on Amazon’ but when they come off they are not in a similar space
  • Amazon is not the be-all and end-all
  • There is plenty of money to be made off-Amazon but it’s a very different skill and approach
  • You should be at the six-figure range before you consider coming off-Amazon
  • The product-research for off-Amazon is more of a Facebook focus and something that’s more of an emotion rather than what people are ‘searching’ for
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