Stay-at-home mom makes $700 a day selling candles on Amazon.
Two college kids hit a million dollars of revenue selling motorcycle gloves.
Cab driver sells enough fidget spinners online to quit his job and become a full-time seller.
We’ve all heard success stories like these. At this point, they’re a dime a dozen and there’s new ones every day all thanks to a little thing called FBA.
For those on the scene, the FBA revolution has been the goldrush of the modern era. Amazon have effectively democratised ecommerce, tearing down traditional barriers to entry by opening up their massive customer base and nationwide distribution infrastructure to the public through FBA.
I’m a big FBA fan – you probably are too. I love hearing these success stories and I’ll tell anyone who’ll listen how Amazon, FBA are changing the world.
Got no product to sell? Head to Alibaba, come up with a brand, and now you’ve got one.
No money to spend on marketing to customers? Put it up on Amazon and get it in front of 180 million customers every month.
Don’t have the time or financial resources to develop the infrastructure required to deliver to customers in an efficient and scalable way? Send it to Amazon FBA, they’ll do all of that for you.
6 months to a year later and now things are really cooking. Your product is a hit and you’re selling hundreds of units a day all across the country.
It’s the Amazon first model that has gifted so many newbie sellers with overnight success, often in the absence of any prior marketing or retail experience.
And while the road there are countless blueprints and roadmaps to lead this type of merchant from side-hustle to self-sufficiency, there’s inevitably a point for all Amazon first sellers where they are forced to ask – what’s next?
You’ve followed all the steps, sourced and launched a successful product and earned enough in the process to quit your job and become a full time online entrepreneur. This is where the guidebooks end and you find yourself at the inevitable ‘what’s next’ point.
Usually it’s at this point where countless sellers fall down. It’s the decisions you make at the ‘what’s next’ moment that separate the sellers that become successful global brands from those that will never be more than just a case study on ‘How to Hit Six Figures in Year One’.
Your goal at this point should be to shake the confines of being just an FBA seller, and become a real brand. Here are some of the things you should be thinking about, and pitfalls you should avoid.
Don’t Beat a Dead Horse
The day you sold your first unit your revenue increased infinity percent. For the first few months your sales doubled every week. At the six-month mark, your figures were still averaging 50% month on month. But it’s been a year now and that momentum has come to a halt.
At this point, your emotionally invested in your product and you’ve probably grown used to that double-digit growth – you’ll do anything to get it back. This is a common pitfall for sellers and one that can easily lead you down the wrong path.
All products have a life cycle. The meteoric rise, the petering out, a gradual decline into a slow death. In short – what goes up, must come down. It’s a fact of life for retail, but you’re an Amazon seller – you don’t play by the same rules as the old-hat bricks and mortar type. That approach may have served you well up until this point, because the nature of your lean-start up model keeps you somewhat insulated from the forces that govern the bigger brands, but eventually you will want to move from start-up, to being a grown-up brand. And grown-ups have to know the rules.
Accepting the life-cycle of your product doesn’t mean giving up on it, but rather accepting that it’s growth is slowing down, and there might be better ways to increase your revenue than beating a dead horse, such as…
Your product – and all the work that went into sourcing and branding it – is an asset. You don’t want to let it go to waste, but as we’ve established you don’t want to keep throwing money at it to achieve growth that just isn’t there. At least not on amazon.com (if that’s where you’ve been selling so far).
Make your product – your asset – work for you by putting it to use in new regions. If you’re a .com seller, extend to the rest of the North American block – adding Mexico and Canada increases the size of your market with little or no extra investment.
Don’t stop there – your matured product might be slowing down in the US, but if you jump across the pond and start selling on .co.uk your sales have nowhere to go but up. Expand into the entire European block too. Amazon Germany has a huge addressable market, but thanks to geographical and language barriers intimidating smaller sellers (which shouldn’t scare you – you’re a pro now!) the level of competition is much lower.
Think back over the last year or so and ask yourself ‘what is the single act that has brought me the most return on my investment?’. Odds are, it was the simple act of listing your product on Amazon. So do it again – globally!
So many Amazon First sellers get what I call ‘marketplace myopia’. They only see the opportunity on Amazon, and they immerse themselves in the FBA culture so much they miss the wealth of opportunity that lies just a few clicks away.
Even if you’re selling model is reliant on FBA, Amazon’s Multichannel Fulfilment plugs in directly to eBay, Shopify and just about any ecommerce platform or marketplace, so there’s nothing stopping you from going multichannel other than you.
In addition to eBay there are a ton of smaller, niche driven marketplaces that might be the perfect fit for you, so do your research.
Chances are you’ve started your own online store – maybe with Shopify or WooCommerce – as part of the Brand Registry process and you’ve let it sit there, collecting dust. It’s time to go back to it – nothing is more important for a real brand than having a good online presence and it all starts with your online storefront.
If you have ambitions of becoming a real brand, and more than just a generic product on Amazon, you need to get your product in front of more customers, in more places, starting with your own, well developed and successful online storefront.
It’s all part of developing your…
Grown-up Business Strategy
The beauty of being an Amazon seller is that you don’t need to have a degree in marketing or experience in retail to get started. But if you’re at the ‘What’s Next’ point, you can no longer avoid the kind of thinking and strategy that big brands rely on, and it all starts with having a real strategy for your brand.
At the start of your journey, you were imagining what your product would look like with a ‘best-seller’ tag in your category. It’s time to dream bigger. Start to imagine what your brand would look like in retail stores, on billboards, in your own dedicated flagship story.
Now you need to start to form some real strategy. Does your brand follow a price-leadership or differentiation strategy? By that I mean, should I buy your product because it’s the cheapest, or because it has better features than the rest?
How will you position your product in the market? So far you’ve relied on Amazon searches – people looking for products like yours. They come looking for the product you sell, they choose to buy your brand; your waiting for the customers to come to you. If you’re going to be a real brand, you need to position your brand and your products so that you can bring them to the customer.
Up to now you may have been sourcing generic products to private label, leaving only price to worry about. Now you’re ready to become a real brand, do you want to continue selling generic products and leveraging economies of scale to keep prices low and margins high? Or should you start devoting more resources to customising your products, maybe even designing your own – you don’t have to stay on Alibaba forever after all.
This kind of strategy requires a lot more thought, research and in some cases expertise than just sourcing generic products, so consider bringing in outside help – either consultants, agencies or by hiring a dedicated brand manager.
Market Your Brand, Not Your Product
At the start, your marketing efforts went into getting that all-important sales history on Amazon. And that’s fine. But moving forward, if you want to become a real brand, you need a marketing strategy that does just that.
If you want to be more than just a seller of generic products though, you need to start investing in your brand.
The first step is once again devoting some attention to your online store. This is the centre of your brand. At this stage in your ecommerce journey, sales through your online store are more valuable than your Amazon sales because they allow you to create a real brand experience and bring a customer into your marketing ecosystem – not Amazon’s.
From here, marketing activities like paid search advertising, social media and hiring influencers should all be devoted to telling your brand story, building your audience and increasing your brand awareness. It’s a slow burn, and a lot harder to get right, but if you’re going to become a real brand it’s a necessary investment. Again, if you don’t know the game outside help is a must.
For most sellers, all of the above will be useless if you stick to the one or two FBA products that you’ve been selling. If you’re going to be a real brand, you need to sell a range of products in your niche.
You also need to change your product sourcing mindset. In the Amazon First model, you find products that you can source and sell at margin on Amazon. If a product isn’t profitable, you’ll move on to the next one. But when you’re building a brand, you need to look at your product range as more than the sum of its parts.
You may have heard the term ‘Brand Halo Effect’. It’s a fancy term, but really it just means that positive experiences with any product you sell will result in a positive experience with your brand. It’s the basis for starting to think about your brand, your product range and your customer experience as more than just profit margins on your products. When building a brand, there is value in every customer who ends up with your products in their hands. If you’re selling fry pans on Amazon, it might not be worth selling spatulas – there’s too many competitors and the margins are too thin. But if you’re trying to become a brand, you’re going to need a full kitchen range. The spatula might just be the perfect low-cost product to sell to people as their first positive brand experience. You might not make much off the spatula sale, but play your cards right and you have a potential repeat customer, brand ambassador and someday soon – one more sold fry pan.
Diversifying your product range isn’t just about brand building though, it’s a good way to avoid what we said before about beating a dead horse. It’s the last yard that’s hardest to run (the clichés just keep coming) and so many sellers keep investing time and money into reenergising a matured product, time and money much better spent on finding your next one.
If you’re a successful Amazon seller, your talents and experience don’t necessarily lie in marketing and growth hacking. The skills you’ve honed are in identifying gaps in the market and sourcing products to fill them, so do what you’re good at – it will be the quickest way to recapture that early revenue growth.
Whether you decide to try an international marketplace, start growing your online store, expand your product range or do everything, the important thing is that you shake things up. Recognise that there comes a point for every seller where the road that got you to where you are might not take you any further, and it’s time to start to think outside the box if you want to keep growing.e
If you are running your online store from Shopify, WooCommerce or Magento – or thinking of using an ecommerce platform to manage all your marketplaces from one location – Codisto LINQ’s integration software can make it easier to reach more customers, in more global marketplaces.
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