Episode Summary
In episode 13 of the 7 Figures and Beyond podcast, hosts Greg Shuey and guest Matson Tolman, CEO of Evolve Commerce, delve into the intricacies of selling on Amazon in 2024, discussing the utilization of AI, navigating escalating competition, and managing the increasing costs associated with selling on the platform. Tolman shares insights from his journey in e-commerce, highlighting the evolution of Evolved Commerce from its early days of experimenting with Amazon to becoming a specialist agency that helps brands amplify their sales and presence on Amazon. The episode covers practical strategies for leveraging AI for content creation and market research, emphasizing the importance of adapting to the competitive landscape of Amazon and exploring other sales channels to build a resilient brand. The conversation also addresses the financial aspects of selling on Amazon, including fees, the importance of understanding one’s margins, and the strategic use of ad campaigns and external traffic to enhance product visibility and sales.
Key Takeaways
- AI Integration: Utilizing AI, such as Amazon Generative AI and external tools like ChatGPT, can significantly improve content creation for product listings and aid in market research, enabling sellers to stay competitive and efficient.
- Navigating Competition: Adapting to Amazon’s competitive environment requires a strategic approach, including targeting niche keywords and utilizing external traffic sources like TikTok ads to improve product visibility and sales.
- Financial Management: Sellers must be mindful of Amazon’s fees, including the 15% commission and additional costs for Fulfillment by Amazon (FBA), making it crucial to understand and manage margins carefully.
- Brand Building: Success on Amazon increasingly depends on building a strong brand presence both on and off the platform, leveraging multiple sales channels, and maintaining a diversified marketing strategy.
- Adaptability and Innovation: Staying ahead in the dynamic e-commerce landscape necessitates ongoing innovation, including experimenting with emerging platforms and revisiting traditional methods like email marketing to engage customers effectively.
Links
Greg Shuey LinkedIn: https://www.linkedin.com/in/greg-shuey/
Matson Tolman LinkedIn: https://www.linkedin.com/in/matson-tolman-9840458/
Evolved Commerce: https://evolvedcommerce.com/
ZonGuru: https://www.zonguru.com/
Episode Transcript
Greg Shuey: 0:26
Greg Shuey. All right, hey everyone, welcome to episode 13 of the 7 Figures and Beyond podcast. Today our discussion is going to be around selling on Amazon First time we’ve had this discussion on the podcast. I’m super stoked. A lot of brands that I talk to these days are asking about Amazon. They’re wondering if they should sell there. They’re wondering how it’s going to impact their website sales because, I mean, we do a lot of D2C direct to the website. They’re wondering how does Amazon affect that Then? How can they get the upper hand quickly, since there are so many sellers on Amazon these days?
Greg Shuey: 1:08
Today we’re going to talk with Matson Tolamn. He’s the CEO of Evolve Commerce. We’re going to be discussing some of the big issues sellers are facing on Amazon in 2024 and how to navigate them. A few of the things we’re going to discuss are AI usage in selling on Amazon, how to combat escalating competition and the rising costs of selling on the platform. It’s going to be an awesome discussion. I shared a couple of texts with Matson this morning and he said, and I quote I could not sleep. That’s how stoked I am for today. He’s pretty pumped. Before we dive in, matt, would you just take a few minutes and introduce yourselves to our listeners and share a little bit about your personal story and how you’ve gotten to where you are today.
Matson Tolman: 1:56
Yeah, yeah Again. Thanks for having me Super excited to be on the podcast. Like Greg said, my name is Matson Tolman. I’m the CEO of a company called Evolved Commerce. We started in 2012. We’ve been around 12 years.
Matson Tolman: 2:11
It’ll be 12 years this August. Prior to that, that’s how Greg and I knew each other. We met at a company called SEO.com. It was the big cheese over there. I was just a lowly sales guy doing a side hustle. That’s what I’m saying. I got into Amazon. I had a good friend of mine named Joe Hansen. Joe Hansen and I. Joe, actually was already very successful in Amazon. He had a company called Flirty Aprons he’s like women’s designer aprons. Sure, yeah, I remember those Flirty Aprons. He did really really well but had ended up selling that company.
Matson Tolman: 2:54
He and I started doing Amazon side stuff. We’re trying to find products over in China, sourcing I’m getting them over here and just doing our little side hustle. We got really good at selling products on Amazon. We weren’t great at sourcing products at the time. We had some issues there that segwayed into us having conversations with companies here locally on how to best grow their brands on Amazon.
Matson Tolman: 3:23
Amazon was still fairly newish. It was in that transition from mostly books to the everything online. We hit that phase really really well timing-wise. That started what we’re doing now. We focused mainly on helping brands grow their sales and their brand awareness and their distribution on Amazon. We handle it as an agency model where we won’t touch any of your inventory. Our job is just to grow your brand and your sales. We also have the side of the company where we will do a distribution model. We have a lot of clients that don’t want to deal with Amazon at all. They’re mainly D to C or, sorry, B to B. They don’t want to go to distribution networks only. We will buy their inventory and we grow their brands for them. Amazon’s awesome. Like Greg said, it’s a crazy place. It’s a lot of fun. It’s getting more and more competitive. That’s why we are excited. We’ll talk more about some of the other channels out there that we’re excited and focused on. Still the 1,000-pound gorilla in the room, if you want to make a splash on any third-party e-commerce sites.
Greg Shuey: 4:43
That’s awesome. That’s a great background, yeah, cool. Thank you for sharing. I had no idea you were running Amazon stuff on the site while we were working together. Yeah, that’s where it all started. That’s awesome, nice, cool, cool, all right. Well, I’ve prepared a couple of questions today to guide our conversation. Let’s jump in. Let’s start with AI, because that’s really the hot topic right now. It doesn’t matter what kind of marketing you do, it doesn’t matter what kind of business you have. Everyone’s talking about AI. Until recently, you know, when I had our initial conversation about you joining the podcast, I had no idea that AI was used for Amazon. So how does that work and what are the different tools that our listeners should be Thinking about, researching and possibly using to help with their Amazon?
Matson Tolman: 5:35
Yeah, I think that. I mean, obviously, artificial intelligence is the Big splash word and phrase right now everywhere. It has been on Amazon for a while and selling on Amazon and I think the best, biggest misconception of Using AI is that that people are trying to use AI to take over everything right.
Greg Shuey: 5:57
Basically replace humans and take.
Matson Tolman: 6:01
So most sellers right now are over complicating the usage of AI. I and We’ll start with a couple of things. So so Amazon is themselves are fully engaged in the AI space, both as from a consumer standpoint and also as a seller standpoint. So the biggest area of usage for AI for sellers right now is content generation. Right is helping sellers Create and deliver a better quality content for their customers. So Amazon has actually come out with their own tool called Amazon Generative AI. So when you’re creating a listing, you can go use their Amazon Generative AI tool and basically what you’ll do is you’ll put in like your website URL or you’ll put in Specifics about your product and then Amazon will come back and regenerate, help you regenerate product descriptions, product bullet points, content like that. That’s a little bit more polished than what, what you’re used to right, or what are you happy to spend the time to to build it out. On that same note, that’s where the vast majority, that’s where we use it all the time. So we use we do use the Amazon Generative AI tool. We also use we still use chat gpt like crazy. So, yeah, the vast majority of our listings are chat gpt generated bullet points, descriptions and and content just to again, not only to Make it sound a little bit better, and then we’ll a b test it using AI, but it’s also so much faster. We’re able this to produce so much more content, so much quicker for ourselves and for our clients just by using chat, gpt, yep.
Matson Tolman: 7:57
The other big aspect of AI right now is also then then like product research and then advertising right. So there’s a couple of really really good tools. One of the best tools out there is a company called Zunguru and Z O N G U R U. Zunguru is awesome, so they have they have a handful of softwares that help sellers kind of accelerate their seller experience. They have from like an advertising portal to Product research tools. There’s a couple. There’s a lot of really good ones out there. Heavium 10s are really good one. Jungle scouts are good now yeah, but right now Zunguru is has created their. They’ve actually partnered with open AI To create a really cool product research tool.
Matson Tolman: 8:55
So if you’re if you’re either new to the game or You’re trying to build your brand on Amazon or build your brand in general, they’ve created a really cool AI tool that allows you to put in whatever constraints, so say you know you’re selling a bottle opener or whatever. You start describing your products and then the products that you Technically or potentially want to go into if you’re trying to build similar products, and it will take that information and say, okay, here’s another handful of products that you can potentially go after, and then it starts breaking down the market on Amazon, from revenue to Competition, to how some of your competitors have been on the channel, and then from there, it’ll actually even start creating out their content. So, how good is their content? How good are their listings? And basically give you a competition score. Okay, this is actually a pretty decent space to jump into, or it’s pretty competitive. I’d stay away from it. It’s all coming from an AI standpoint, really cool.
Greg Shuey: 10:02
Yeah, that is way cool. We’ll make sure to put that in the in the show notes so that everyone has access to it. Is it a fairly expensive tool?
Matson Tolman: 10:09
No, so there I think they’re For their individual seller. It’s like 50 bucks a month.
Greg Shuey: 10:17
Wow, yeah, that’s awesome.
Speaker 1: 10:20
It’s really, I would assume.
Greg Shuey: 10:21
I would assume some of those metrics like competition wise. If it’s pretty saturated on Amazon, that probably translates to just D2C in general. Right, you can take some of that and use it from a market intelligence standpoint.
Matson Tolman: 10:35
Well, at the same time, like we’ll talk about competition on Amazon, I think the days of low competition on Amazon are somewhat gone, right, obviously, there’s products and niches that that pop up, but Because of tools like this, because of tools like Jungle Scout, huey and Tan Zanguru, you’re, if you find a space that is high revenue, low competition, it’s. It’s gonna be short lived, right. So you cannot be that way for long, long and and I think that’s really frustrating to sellers, but it also it also is a point of where you’ve got it up your game and understand that that’s the reality of trying to sell on Amazon, because there’s so many of these tools that can, that can scrub and Find data on what’s what’s selling. Well, yeah, that it’s. It’s not gonna be long-lasting. That’s why you have to adapt. Is we have that mentality going in you? You can’t adapt and stay ahead of it. It’s. It’s the one when everyone’s caught flat-footed and all of a sudden, they’re taking away that. You can get Past really fast.
Greg Shuey: 11:48
Yeah, got it, okay, cool. Well, that kind of dovetails into our next question where we talk about competition, right, yeah, it feels to me like there are just so many brands and sellers out there that sell the same thing I would. I would think that most consumers feel that way. You go, do a search for something, you’ve got pages and pages and pages and pages of sellers. I even have a buddy who sells a little tiny pry bar that can go on a key ring. He was the first person to sell this on Amazon. He designed it, patent it and within a few short months he had a bunch of knockoffs likely probably some Chinese companies right that have knocked off the product that are going into Amazon selling really hard. And it’s just crazy. It’s crazy to me how fast the competition can grow. So how can sellers combat this? I mean, I would. I would assume that it’s one of the things that scares people away from even selling on Amazon.
Matson Tolman: 12:46
Yeah, and it does. And I think the first battle is a mental battle, is to expect it. That’s the first way of overcoming this whole fear.
Matson Tolman: 13:01
It’s going to be hard, it’s going to happen and that’s the cool thing about you finding a really cool product right. The reality is and this is the horror story of dealing with China is the vast majority of the manufacturers that that are sellers that we use, that your customers are going to use, are watching your sales Right and if they see things take off, they will throw the exact same thing on on Amazon.
Matson Tolman: 13:33
Almost every major manufacturer has their own selling channel on Amazon and they’re knocking off your products Like, oh my gosh. It’s the reality of dealing with, with, with, with Chinese manufacturers.
Greg Shuey: 13:48
They’ve got full. It’s just researching and watching and 100%.
Matson Tolman: 13:56
But so we look at it in a handful ways and, again, it shouldn’t be scary. It just means you have to adapt and work on growing your brand right, because we kind of break it up into three phases for our clients. It’s, you know, phase one. We’ll focus on phase one. Phase one is is basically market visibility and growth. So, first and foremost, understanding that is your market, a valid market on Amazon. So take, for example, your buddy that was selling the it was a pry bar key chain. Most of those are very low cost, low barrier to entry, getting on Amazon. That’s probably a super cheap product you can get from China for, you know, pennies on the dollar, right, and so his opportunity cost in launching on Amazon is probably fairly cheap, right, he probably didn’t have to spend. He wasn’t spending tens of thousands of dollars to launch a brand. He may have spent a couple of grand if that, to get these products and launch them on Amazon. So the first thing is is, when you’re testing that market on Amazon, understanding if it starts to take off, you have to adapt very, very quickly, right, and I think most of our clients and he was probably, he still probably is the exception where we still see a handful of clients that will come in with a fairly new product and, for whatever reason, their products will just take off, right, yeah. The vast majority, though, is it’s going to be a little bit of a bang your head against the wall situation where, you know, I actually first started the company a huge portion of our brands that we would launch on Amazon, we would say three to four months three to four months and we would have really good or decent revenues and now we’re like it’s more search engine timeframes, we’re like eight to 10 months, and you’ll start to break even, right, wow, okay. So that’s where there’s just been this mind shift of let’s test your market in the beginning. If you start seeing revenue, then great. You know, if you’re starting to see some decent revenues in the first three to four months, then we’re. Now we’re starting to grow and develop a brand. So that’s kind of our.
Matson Tolman: 16:19
Phase one is market visibility and growth. Let’s understand making sure that our product is viable, and if we are seeing sales, we are seeing really good reviews. Again, reviews are going to tell us a lot about our product, and then we pour the gasoline on it right From there. It’s market expansion. So and we’ll talk more about some market visibility and growth. But the biggest area that customers start to neglect is and it ties back to your world which is search engine optimization, because Amazon is a relevancy engine, right, so meaning they’re going to put the most relevant products at the top of the search result, and relevancy for them is traffic that converts to a sale. So you drive all the traffic in the world you want to your product listing. If it doesn’t convert, it’s going to actually negatively impact your keyword rankings, because Amazon is going to say, like I’m getting a?
Greg Shuey: 17:22
no one wants it.
Matson Tolman: 17:24
No one wants this product right, so they’ll start to force you backwards. And so again on Amazon. We basically call it. We have there’s two types of traffic. We have organic search right, where no one knows or care that you exist. They’re just looking for a pry bar can or opener keychain right.
Greg Shuey: 17:45
They’re just looking for a keychain for a solution to their problem. They don’t care who the brand is.
Matson Tolman: 17:50
They don’t care who the brand is. On the flip side, we do have branded search right, where they know and they love your brand, and most people overstate their branded search right. Most people think they get more branded search than they do unless you’re a really big, big brand. And branded search is really, really important. And that’s kind of where we get into our phase three, where most people are missing. But first and foremost is focusing on so for your, your buddy, the biggest mistake a lot of sellers will make is they say, okay, I’m going to create a really cool listing. We have really great imagery, great title, content is all on par with with everybody else. That’s out there, right. And then they kind of sit and wait. They they’re like sales should be coming any day, right. And again, the reality is on Amazon. Let’s say, there’s 99 other pry bar keychains on there, your number 100 when you launched that listing. So Amazon does not care about you, they’re not going to put you in search results. So the job is then to drive traffic, right. So the biggest way to drive traffic is through ad campaigns or, if you have a social media presence, start driving outside traffic, yeah, but and most people understand that, as they have to, to drive traffic. But what they don’t understand is they have to drive traffic that’s relevant to their product quality, quality and cheap, right, yeah, because a lot of our clients will be like again going back to the key chain, the pry bar, keychain. They’re like all right, let’s go after key chains. I’m like you’re not going after key chains, right, like there’s, there’s.
Matson Tolman: 19:35
And again, looking at Amazon, if it’s a relevancy engine and the reason, you know keychain whoever’s ranking in the top 10 Organically for keychain is getting a ton of traffic and they’re getting a ton of sales. That’s so to try to knock off that guy, we’re going to have to spend a ton of money To get that same amount of traffic and there’s no way you’re going to get that that same conversion rate into sales Because you don’t have the reviews and you don’t have the history. So my job is okay. Don’t worry about, you know, don’t worry about Keychain traffic. Let’s go after stainless steel pry bar keychain traffic.
Matson Tolman: 20:15
Like there might only be 20 searches a month for that, if that right, or 10 surveys a month, but I’m going to own those 10 searches and we’re going to flood the market and try to take those 10 searches and Hopefully to get five to six of those sales would be great, right, yeah, and and again. Just like in your world, that’s one of the biggest mistakes our clients make is a, they, they, they swing for the fences, right, they burn their budget because they have no traffic, so they know they have to drive traffic, so they’re just going to start at camp and they go for these, these big generic keywords. I want there’s number one for baby crib.
Greg Shuey: 20:53
Well, there are thousands of baby crib sellers, so come on.
Matson Tolman: 20:58
And those guys are spending tens of thousands of dollars a month in ads to stay right. And again, our ultimate goal is to have only 30 of our revenues coming from ad campaigns and 70 percent coming from organic. So so the goal is ranking in a top five to ten position for baby crib, but also for hundreds of other keywords that that are going to drive incremental traffic. Baby crib is like two years down the road right, or keychain is if, if ever, right. I don’t really care to rank for baby crib or keychain because it might not convert as well it might be, as it could be super expensive. But our most successful brands understand that they need to rank for hundreds of keywords that are super long tail, high converting and and relatively cheap. So I’m sure you guys see that all the time in the nico world. It’s crazy, yeah.
Greg Shuey: 21:55
So I’ve got a follow-up question before you, kind of talk. We’re on phase three, right, we’re gonna talk about three, phase three next. So do you supplement your amazon ads with like google ads as well? Are you going and buying super niche um, you know exact match keywords to try to juice that as well?
Matson Tolman: 22:16
Yes, if we can. So Phase three is is basically building a brand, right. So we have, we’ve, we’re super hyper focused on amazon, making sure that we get a stable ground on amazon and that we get really good keywords that rank organically, not just paying, and again, that takes time, um. So with time. Again going back to that example of I’m in the keychain world or the pry bar keychain, I’m not worried about number one, I’m worried about number 99. So I just need to drive enough traffic to knock number 99 off and then make sure that I’m cultivating reviews, um, to increase my conversion rates, right, and then we stack those, we get a ton of those and so we get a really good solid foundation on amazon. And that’s also how you compact the competitors jumping in and knocking, you know, coming in at a lower price point, rank for hundreds of keywords, not just the main keyword. It still generates traffic, um, but amazon. So once you have a really solid foundation of really good organic traffic, good ads traffic and good conversion rates, you’re converting at a high rate.
Matson Tolman: 23:28
Then amazon loves outside sources of traffic, right, they love when. They obviously love when you’re, when you’re converting native traffic on amazon, but they really love when you’re pulling in people from the outside, especially when it’s keyword targeted. So, yeah, if, if, um, the hard part with google ads is sometimes it’s it’s really expensive, right, yeah, but amazon ads are now getting really, really expensive. All ads are getting, so we’ll we’ll pull ads from any outside source, from social media instagram, facebook. Facebook’s been a little tricky um. Tiktok ads are actually probably um our hottest hitter right now is we’ll run tiktok, especially if you have a demographic um that’s 35 and under right. Tiktok ads are are by far our best performing platform outside of.
Greg Shuey: 24:29
And especially, which probably wasn’t the case 12 months ago right.
Matson Tolman: 24:32
No, no, no, and it’s actually. The interesting thing is, all of a sudden tiktok ads are now starting to convert really well for the next age demographic, that 35 to 45, when it was non-existent 12 months ago, like non-existent, huh. So tiktoks um, tiktoks interesting. Obviously there’s some you know news about tiktok potentially having some, yes, some, government ramifications. But Disagree or agree with that, it’s, it’s, it’s a really good source of traffic right now and if that happens, obviously you got Amazon loves outside sources of traffic. Um, so that’s one of the biggest ways we combat this. Competition on amazon is our healthiest. Brands on amazon will have Multiple streams of traffic where the vast majority of these chinese brands, these knockoff brands, only have amazon. They’re, they’re mainly focused on Just trying to dump amazon. When you have outside sources of traffic coming in, you can still price may get. Vast majority of our clients have, have, are on the upper echelon of pricing in their competitive realm, meaning their products are priced higher than the majority there.
Greg Shuey: 25:49
They’re. They don’t feel the need to go out and match what’s coming out of china not be.
Matson Tolman: 25:55
Usually, sometimes in the beginning we do right. So if if we’re launching, we’ll play with our prices, we’ll do run coupons, run discounts, just because I need traffic and I need sales. We’re not worried about profitability, we’re worried about continuing the the the campaign and getting to the point where we raise our prices back up. And now we’re just got it traffic.
Matson Tolman: 26:18
So, again, a lot of your, your clients, will have to have that mentality is coming in, um, and and that’s one of the biggest hindrances to a really good amazon campaign, just like search, where they feel the need to be profitable and making money right away it’s not gonna, it’s more than likely not gonna happen. There’s still, it still does happen, right, yeah, but it is rare when a product will just take off and you’re super profitable from the beginning and that’s that’s any business right?
Matson Tolman: 26:48
I mean you think when you started to try it there’s not a lot of paychecks those first few years, right? Yep, and that’s how you know our clients have to look at. They could launch in amazon or or any spaces. Don’t expect to take a paycheck, but the reward is is in the future and and it did, cannon should pay off if you do it correctly.
Greg Shuey: 27:13
Yeah, I like that cool. Well, that kind of ties back into my last question for you today is back to money. Right, like it’s expensive. It is expensive to sell on Amazon. Not only do you have the ad costs and costs of hiring someone to help you with it, but Amazon takes a percentage of sales and I hear it gets more expensive every year. The number I keep hearing is 40%. Is that? First, is that number real? Like, do they really take 40% of your sales? And second, how do you make it worth it?
Matson Tolman: 27:46
Great question. And yeah, it’s expensive and it’s getting. It’s getting worse, it’s not. It’s not really getting better. So I’ll kind of break that down. So Amazon charges on. On average, they charge a straight 15% commission, right, for the vast majority of their categories.
Matson Tolman: 28:05
You’re getting a 15% commission off of your retail price Now there are there are some categories like consumer electronics, camera and photo that are in 8% commission, just because those margins are a little bit tighter for a lot of those lines. And then you have the flip side where if you’re selling clothes on Amazon it’s 17%. So they take a little bit of it, yeah so clothes on it.
Greg Shuey: 28:33
They’re just taking advantage of you. They’re like that’s a high margin product, we’re gonna jack that up.
Matson Tolman: 28:39
It’s tough. So that’s just a sell, that’s just the commission. So if you, then if you want to use fulfill by Amazon, fba and for you know the listeners that don’t know what FBA is that’s where we will send in the products to an Amazon warehouse. Then Amazon fulfills it for us. So we’ll send pallets, a product or how you can you send however many you want, but then that’s how you get the prime badge, that’s how you get the two-day shipping. So it’s it’s very hard to to sell on Amazon successfully and not fulfilled by Amazon, right, they’ve. They’ve obviously made that by interest right now. Fulfilled by Amazon doesn’t have. It’s not a percentage, it’s a, it’s a flat fee based on your the dimensions of your product. Right, so you can sell a thousand dollar product and it’s still the same FBA fee as a $20 product. It’s just based on size. So so the value, because it’s the same, it’s all dimensions in size is how they calculate that and that varies.
Matson Tolman: 29:45
It averages, you know, from four bucks to seven bucks is kind of the common fulfillment price per unit and so if you have a really low priced item, so 20 to 30 dollars is kind of the anything sub 20. Sometimes it has to better be really small, otherwise you’re getting easily 40 percent. You’re getting 50 to 60 percent taken because of that FBA. It’s a lot, yeah, it’s a lot. On average we do see 30 to 35 percent is is a typical cut that Amazon will take and that’s before ads, that’s before, so it gets even more expensive to calculate at least an additional 10 percent for ad spend right per unit.
Matson Tolman: 30:37
Dang, you’re 45 percent out the door. So, um, a, make sure you have really good margins. Right, that’s good, the first and foremost. Make sure you have good margins, um, yeah. And then you have to understand your, your, your people, understanding their costs. Is is wild how many companies and brands that we work with that don’t understand their cost. It’s, it’s crazy same for us.
Greg Shuey: 31:10
It’s insane.
Matson Tolman: 31:11
They don’t know their numbers yeah, they don’t know their numbers. So, huge proponent of these small business owners, understand every aspect of your number, right?
Greg Shuey: 31:22
or hire a fractional CFO who knows e-commerce and put them on a monthly retainer to help you know your numbers. You have to, you have to do it it’s.
Matson Tolman: 31:34
I’m still shocked at how many of these quote, unquote these CEOs, these these guys that are running these companies and we’ll ask what’s your margin?
Greg Shuey: 31:45
they’re like I got me like, wait, you don’t know what’s where are we at it’s 80, and then when you get into the numbers you’re like, uh, it’s more like 40.
Matson Tolman: 31:58
And that’s also obviously them Killing the business later because they have no money. So, sure, and, and what we have found is, if you chunk this up into phases, understanding that If you go into this with the mentality that you’re just trying to break even and keep, keep sales turning, those first six to eight months, um, you can work on your margins a little bit later, especially with with, with a lot of manufacturers, as you increase your right year Um minimum order quantities, those prices will decrease as you kind of get. You know, as you scale out the business, as you start to build some scale. Yeah, a lot of times your margins will increase. But again, make sure you know your margins.
Matson Tolman: 32:44
That the tough part with amazon. That’s why amazon’s we actually they just launched a new fee to sending in your products. It used to be amazon’s really really cheap to send your products into fulfill by amazon centers. We get you get access to their discount partner carries. Most of it’s like ups. But, for example, I sent in I was like six pallets of product yesterday, which is 6 000 units, and it ended up costing me like 2 cents per unit to send to a fulfillment. Wow, super cheap. It’s really really cheap.
Matson Tolman: 33:21
But you can make up a lot of your costs which I I wouldn’t be able to fulfill that to the customer for what amazon’s Fulfilling it with with the fba fee. So if you throw that three dollars back in that they’re charging me to back and ship it, I wouldn’t be able to do that out of my own warehouse, right it’s. There’s no way. No, I don’t get those postage rates that that amazon does. So there is a silver lining there to where amazon is try tries to offset those costs to make it more Valuable to you as a as a seller, to to use their services. They are. They are even increasing those a little bit. They launched Increase in price as well there and and they do charge you for storage.
Matson Tolman: 34:06
So if you have a product that you send into amazon, a fulfillment center, and it sits there forever, you’re going to get hammered with storage fees, right again. Just something to be mindful of. On that same note, what we are Seeing is that there’s there’s a sliver of hope with these other third-party platforms like walmart, like target. Um, ebay is kind of dead, you know first. Sure it still does okay for some sellers, but we were really hopeful with ebay about eight years ago and it’s just not. But walmart awesome, and what those do is obviously it just had Plugs competition into the system, right, and hopefully will alleviate some of the pressures that are we’re getting put on by amazon, because we love walmart. Walmart it’s great. It’s still not. It’s a trickle of the sales compared to amazon, but it’s. We kind of look at it as amazon 10 years ago.
Matson Tolman: 35:11
There’s a lot less competition, there are a lot less buyers, but we are seeing a decent amount of sales coming through Through walmart and most of walmart, you do have to fulfill yourself like they don’t have the fulfillment infrastructure, unless you’re already in walmart, unless you’re in their big box stores, um, you do need to fulfill the vast majority of yourselves themselves. But that’s also changing here somewhat soon is where they will start doing fulfillment centers and interest we. That’s also a huge part of our. Phase three Is the biggest way to combat the competition on amazon is to build a brand. You have to build a brand. Yeah, um, where again 10 years ago you could survive as being a native amazon only product and make a lot of money, right, just selling on amazon? It doesn’t our by far our most successful amazon Clients. Our most successful clients have a big brand outside Of amazon. Right, they may have started just on. They’ve got their dvc website.
Matson Tolman: 36:19
They’ve got their social profiles that are built out huge and yeah so take the revenues that you’re building on amazon and start dumping them into other channels, because if you rely solely on amazon, you’ve got a two to three year window and you’re smooth.
Matson Tolman: 36:34
That’s that’s like almost I can time it with our clients when they take, I will be like you have two years and you’re set. The clock is to, yeah, to start to dramatically decrease. If you’re only native to amazon and if they don’t, just it’s without question two years there’s so much competition You’re gonna come in and take them out that if they don’t, if they don’t expand and jump on again walmart, you could. You just keep going the to the, the big box stores, right, get a, get a presence outside of online. Um, those are the clients that do really, really, really well, uh, on amazon and in general, they just have that More mature mentality about building. This is a business, it’s not just a. If it’s a side gig, then it’s a side gig and you’re just gonna be chasing products right and we do have those kind of churn products all the time. If you want to do that, great, but understand that that’s what you’re gonna have to do. If you don’t want to expand outside of, outside of amazon, yeah, I love that.
Greg Shuey: 37:43
It’s one of the things that we push really hard as well. Right, it’s like we’re not just building Traffic to a website, like we’ve got to build a brand. Right, we have to build that brand credibility out there and that’s how you make just d2c successful in general. So I love that we’re able to kind of Hit it home with that build a brand doesn’t matter what platform we’re selling on are you guys seeing the same thing where it’s?
Matson Tolman: 38:09
I mean, google has been around, search has been around forever. Is it about the same? Are we seeing less traffic on google? Is the competition Static? I’m sure it’s not no, I mean it.
Greg Shuey: 38:22
It gets more fierce every day. Competition wise, ad costs are through the roof. Um, you know, we’re seeing brands kind of Shift over to mobile apps as well as a way to be able to capture customers and build a nurture community. I think that that Is like a real opportunity for brands going forward. It’s mobile, yeah, as, as you know, what am I trying to say here? Facebook, as facebook like gets harder and more expensive, as, um, you know, email gets harder to hit inboxes. I. I think that you know mobile and amazon has a fantastic mobile app, right. You sell on amazon your mobile, right. So I see that as a really big opportunity for brands. You know, this year and beyond is is you’ve got to build that community, you’ve got to build that brand and you’ve got to rally the troops behind you, regardless of where you’re selling online.
Matson Tolman: 39:23
We’ve actually had a lot of success. Going back to email, which is crazy, right, interesting, by building your brand on email, right. So A lot of our clients and and we do it ourselves we have this pretty robust email campaigns and email lists that if we’re giving them really good quality content Again not the fluff it kind of went. We had a really hard time with email for six to seven years where nobody was opening up emails, it was all getting spam filtered. Yeah, back over two years, us and our clients have had really really good success with email. I think for us as a company, it’s probably 40% of our Our leads are actually coming from email now, so it’s awesome.
Greg is the founder and CEO of Stryde and a seasoned digital marketer who has worked with thousands of businesses, large and small, to generate more revenue via online marketing strategy and execution. Greg has written hundreds of blog posts as well as spoken at many events about online marketing strategy. You can follow Greg on Twitter and connect with him on LinkedIn.
