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

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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 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

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

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 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

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

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%

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