The Amazon Method: Buying Hot Products from Alibaba & Selling them on Amazon under your Own Brand.
FYI: The Amazing Selling Machine is an online masters course that costs $3500 to enroll that teaches how to sell hot products on Amazon. Our friends here in Chiang Mai are enrolled so we learned with them. It’s a bunch of videos and PDF’s that walks you thru everything. (Update: you really don’t need this course tho, it’s really not that complicated relative to other businesses, and there are plenty of free resources and podcasts online that go over every possible question. And you can ask me! X)
BTW: There is a chapter in The 4-Hour Workweek on private labeling/importing, I prefer the audiobook. (secret download link) … if you have not read it, GET THE BOOK OR AUDIOBOOK NOW! This book is the BIBLE in SEAsia for online people and travelers around the world! It starts with the right mindset! And knowing what’s possible! ….
You can also follow my page on Instagram for bite-sized 4HWW-mindset nuggets of wisdom:) Instagram https://instagram.com/4hwwmindset/
UPDATE! – October 18, 2015: After launching our first product in July, we are selling 10-15 units a day on Amazon right now (about net $10 profit per sale after the cost of the unit, shipping to US and amazon fees), and we just placed our second 1000 unit order for this one, and our first 1000 unit order for our second product launching soon!
Here is our sales volume from the past month (our product sells at $39.99) and units ordered in the past week (10/15/2015)
As you can see, we make between 10-15 sales a day right now on Amazon, and it’s only halfway thru the day on Saturday right now.
UPDATE SHOPPING SEASON 2015 – DEC 20th: Sold 149 units in one day! (Biggest day, Sunday before Christmas)
Here we are working in a café slash co-working place called NEST the other day in Ho Chi Minh City Aka Saigon, Vietnam. We came here after Chiang Mai cuz it’s another digital nomad hotspot. Read more about why here: http://www.createandbereal.com/travel/
Ok, on with the blog post I originally wrote back in April when we were learning this whole thing.
The Amazon Philosophy:
Amazon.com is the biggest store in America. Think of all the people inside every Costco in the US put together, more people than that are on Amazon.com shopping for stuff every day. There’s SO much volume going through each day, that all you have to be is one of the top 10 sellers or so of a hot selling item, and that amounts to thousands in profit each month.
We know several guys in Chiang Mai right now that are crushing with this, meaning doing more than 4k in profit a month. A few are doing more than 10k a month in less than a year. It’s more automated than selling off your own website because Amazon handles everything – warehousing, orders, shipping, and even customer service.
All you have to focus on is an awesome product listing page in a hot selling market. We’re just jumping into an existing waterfall of sales and just getting our slice of pie. There’s so much volume that there’s plenty to go around.
1) Product Research
FINDING WHAT TO BUY&SELL: The Hardest (and Longest) Part
This is the longest and most difficult part. It takes weeks of combing thru Amazon.com and Alibaba.com to find a product opportunity.
This should take at least a month in my opinion!
“Creating demand is hard. Filling demand is easier. Find a market – then find or develop a product for them.” – Tim Ferriss, The 4-Hour Workweek
RESOURCES I USE:
- Product research spreadsheet template that I made that you can download here (download as .xls file then re-upload to Google sheets to edit it.
- Unicorn Smasher – Free sales data analyzer http://www.unicornsmasher.com/
- MerchantWords.com – $30/mo Amazon search term volume estimator.
Product Criteria:
- $19.99-$49.99 range – this is the ‘impulse buy’ price range for shoppers. (IMO, selling in the upper range of this is better.)
- Something ranked high in the top 1000 in Best-sellers in a Top-Level Category (e.g. Sports & Outdoors, Home & Kitchen)
- Top sellers have ideally less than 400 reviews (not too dominating)
- Competitors are selling a lot (have high BSR, best-seller ranking) but relatively low number of sellers with over 400 reviews or so
- Opportunity to overtake the competition in number of reviews
- Picture yourself around 100 reviews – do you sell 10/day
- Aiming for 10 sales a day (at LEAST)
- Lightweight and easy to print your logo on it
- The goal is to double your money: e.g. $10 to buy & ship each unit -> $20 payout from Amazon per sale. (Amazon takes around 25-30% per sale, so aim to sell at $29.99 if your product+shipping cost is $10.
How to comb thru Amazon looking for Product Opportunities (the shitty and boring part):
Go to the ‘Amazon Best Sellers’ page to find the Hottest Products to sell.
The journey starts on this famous page! –> https://www.amazon.com/Best-Sellers/zgbs
- Click on the categories that interest you first and browse the top 100 best sellers in each. (It’s more fun if it’s something you have used before or resonates with you, but that won’t always be the case)
- Go thru the sub-categories to dig deeper below the top 100
- When you find a product you like that fits the criteria, search the main keyword for it in the Amazon search bar.
- If the first page of results doesn’t look too dominated by 3 or more listings with 1000+ reviews, or more than 5 with 400+ reviews…
- Use the Free Unicorn Smasher Chrome Extension to gather estimated sales data for that first page. (unicornsmasher.com)
- Trying to find the sweet spot between the # of reviews, revenue, & monthly sales volume.
- You are looking for niches that have listings selling over 300 in Est Sales with LESS than 100 reviews.
- Picture yourself at 100 reviews off the bat after your $1 coupon review blasts… Will you be selling 10+/day? If no one is selling 300/mo with under 100 reviews, then there’s not enough sales volume in that category… Move on!
- 10+ sales/day is the GOAL. (Est sales 300+)
- In a google spreadsheet, keep track of the data
- I have a spreadsheet template that I made that you can download here
- AVOID these categories: (Says the ASM guys)
- Automotive & Powersports
- Apps
- Books, e-books
- Clothing, Accessories & Luggage
- Collectible Books
- Entertainment Collectibles
- Gift Cards
- Industrial & Scientific
- Jewelry
- Magazines
- MP3’s
- Shoes, Handbags & Sunglasses
- Sports Collectibles
- Toys & Games (holiday approval products only)
- Watches
2) Buy in bulk from Alibaba.com
The ‘Wholesale Amazon’ – direct from factories in China
After you have found a top-ranked product that has relatively medium competition (every product will have competition, but competition is good in this method), but the top few guys have relatively low reviews, and there’s potential to get yours up there into the top 10 best ones, at least.
We source from Alibaba.com – it’s surprisingly easy.
- You are chatting or emailing with one Chinese girl, preferably from your business email as the CEO/Lead Buyer of a big US company, intending to do serious volume.
- You order a test sample to your house
- You have them print your logo on it, and possibly on the packaging too
- You place a minimum ‘test’ order of whatever you can afford (usually around 100-500 units depending on how cheap it is), which is usually much less than their official ‘MOQ’, but you call it a ‘test’ order.
- They ship the box directly to Amazon, and they warehouse and ship everything out automatically.
- Take the photos with a friend’s camera on a white backdrop, pay for 3D digital renditions and/or send your final product to a pro photographer on on Fiverr/Upwork.
3) Get quick reviews to get in the game
HOW WE COMPETE OFF THE BAT: THE BLAST STRATEGY
AMAZON IS THE LARGEST SHOPPING SEARCH ENGINE IN THE WORLD.
Amazon wants to show you the best possible product for what you are searching for. What shows up on the first page is based on REVIEWS and SALES VELOCITY (Sales in the past 24 hours, aka how Hot the product is).
How we get reviews and sales fast, to quickly appear high in search rankings:
*New Review Policy: As of October 2016*
DISCOUNTED ORDERS are NO LONGER ELIGIBLE to REVIEW PRODUCTS.
So… We used to do the 95% off coupon method. But now, it’s plausible that sellers will start using the FLASH DEAL method. Instead of offering coupons to your small group of reviewers that opted in to review your product via a Facebook Review Group, you will just lower the listing price to 95% off for a short period of time, say 3o minutes, and inform your reviewers of that ‘secret deal time’. We haven’t tried it yet, but we are speculating that this may be a possible method.
Overall, I’m not worried about this little change. In the grand scheme of things, someone will find the next best way to get quick verified reviews, and everyone will start adapting that. We’ll just have to wait and see what’s working best after Q4 and adapt it.
- Immediately give away some units *VIA 30-min FLASH DEALS* for 95% off,
- Post your product in FACEBOOK REVIEW GROUPS to line up reviewers
- This will also count as a flood of sales in Amazon, so your ranking will rise fast.
- The goal is to get to 15+ reviews ASAP FIRST WEEK, then turn on PPC. (15 reviews is the minimum ‘social proof’ needed to sell at a decent conversion rate – so no need to pay for extra clicks until you’re converting at 10%).
- If you start with a 200 unit test order, give away 30 to get 30 reviews ASAP.
- After a successful test order (hitting 10 sales/day) and you order 1000, give away another 100 to cross 100 reviews ASAP. (It looks good in shoppers’ minds to have triple-digit reviews – it will increase conversion rate).
The Strategy: Make your Listing SEXY & Stand Out
Product Listing Strategy: Be Different to Stand Out
- Catchy and unique LONG title with tons of keywords and sales copy
- Sexy and unique images (sexy models?)
- Hard-selling exciting bullet points with major points in CAPS
- Include free extras / e-book
- Hard-sell the lifetime guarantee
- Sexy packaging image (even if it’s not the actual packaging at first)
- Higher price point than competitors – we’re positioning ourselves as the PREMIUM product
Other (obvious) Marketing stuff: (that we don’t do any of but worth a test)
- Press releases
- Social media
- Get bloggers to blog about your shit
Examples of ‘Amazon Method’-type Product Listings
Example: Our Product
January 20th: Invested $2000 in 300 units
May: Got a loan for $16,000 to order 1,000 units – Launched July 6th.
Our product sells at $39.99.
Margins: Amazon takes 25%, or about $10
= so we are paid out about $30 per sale
Product cost = $16 (each unit from Alibaba was $12 + import shipping $4 per unit, about $2/kg typically via Express UPS Air from China to US)
So each sale $39.99 sale gets us about a $30 payout, minus the $16 product we bought = $14 … (but let’s say also $1.00 in PPC ads per sale…. it’s less than that because not every sale comes from a sponsored click, but just to be conservative, lets subtract $1 from the profit from each sale)= about $13 profit per sale
So $13 profit / off a $40 sale = about 33% profit of sale price (…or $13/$30 = 43% profit per payout)
*Amazon Ads are necessary when starting out – and we keep them on all the time, because it makes money – it makes your product show up on the side or the bottom of the first search page as ‘Sponsored’ – and can $1.00 per click or up to $3.00 a click for the really competitive niches, so keep this in mind if you are going into a really competitive niche! It could shave a few bucks off your margin!
Breakdown of Amazon’s FBA fees: in the ‘FBA Calculator’ just type in any product ASIN and they tell you the fees. This is our product below.
Well below is a snapshot of a recent transaction… Looks like we actually get $29.59 per sale:)
Below is a screenshot of our bi-weekly payouts from 2016 so far: These are BI-WEEKLY payouts….
So I did the math, and the average bi-weekly payout so far in 2016 has been $5,543.145… x 2 weeks = $11,086.29 avg monthly payout. (not counting the last payout b/c we actually got approved for a $12,000 AmazonLending loan so that’s why it says an 18k payout last week on September 13th 🙂
So we get on Average $11,086.29 back from Amazon each month… x 43% profit per payout = $4,767.10 avg. profit per month 🙂
We each pay ourselves a $1,500 monthly living salary for us 2 owners ($3,000 total) = so about $1,767.10 of the profit is saved each month towards new products… So every 6 months we have $10,600 to invest in a new product:) … See, if we didn’t have to pay ourselves we could do that every 2-3 months! 😝)
The rest of that ~11k in payouts each month (about $6,300) stays in the account to re-up on existing product inventory.
The Amazon Method Philosophy:
- BUILD Something You OWN.
- Building an ASSET that you can sell in the future
- Not someone else’s product you are just an affiliate of
- It’s like a building a rental property! Or a physical store!
- You invest in the real estate, the materials to build it, and the inventory, customers come there to shop, you can sell the store any time.
- Ryan Moran sold his Amazon business / brand for $1 MILLION after a few years. This is the overall goal of The Amazon Method. https://www.youtube.com/playlist?list=PLIsHX7vpse9loebbUy45LGooLV6-G1U89
- Be DIFFERENT – STAND OUT.
- Add a feature that makes your product UNIQUE
- Avoid having the same exact product as another seller
- There are always shoppers looking for exactly what you have, that nobody else has.
- Go ABOVE AND BEYOND with your listing: BETTER, SEXIER product images, more EXCITING copy, CLEANER graphics, and overall SMARTER marketing will set you apart. Most sellers on Amazon don’t do the extra stuff to stand out.
- Adding accessories: The Bundle Method – worked for us (more on that in my course)
- Add a feature that makes your product UNIQUE
- Build a BRAND of related products.
- Start with one product
- Use your profits to start another product in the same category, same target customer
- Also use profits to buy more and more inventory at a time, increasing margins
- Keep adding products until your monthly cash-flow goals are met
- AUTOMATE your Income. FREE up your Life.
- If this wasn’t an automated Cash-Flow business, we wouldn’t be doing it. Automation is the whole point.
- It’s about freeing your time to do what you want – travel long-term, start a passion business, sleep in, whatever.
- After the first year you can outsource customer messages to a VA in the Philippines – this is not meant to be a time-consuming business – it’s a lifestyle business. All you need to focus on is the Marketing, Managing inventory orders, and Adding New Products.
The 2-5 Year Vision
After your first product is up and running smoothly, you then launch another related product under the same brand. Then launch another, and another.
You are building an actual brand that you can sell in a few years, or build up huge if you want.
Our 2-5 year plan: SELL OUR SMALL BRAND FOR A MILLION BUCKS.
Ryan Moran did it with ZenActive Yoga Mats. https://www.youtube.com/watch?v=-Y35mxePPCc&list=PLIsHX7vpse9loebbUy45LGooLV6-G1U89
You OWN a brand-name. That’s the beauty of it. Build a popular enough brand-name and you’re home free.
In summary: This strategy is essentially just jumping into a flood of sales of a product that is already selling off the shelves, and just catching a piece of the pie. There’s so much volume done on Amazon every day, theres plenty of thousands in revenue to go around. The top selling items on Amazon make millions per year.
Aside from getting the startup capital, the hardest part is picking a product opportunity b/c there are so many options, which is why I think its better to just go with something you’re interested in or would personally buy/use.
FAQ:
Can you do this in Australia?
Yes. You can do this from any country as far as I know, as long as you can set up a US bank account to open your Amazon Seller Account. I have a few Aussie friends that do this, on Amazon.com.
Did you have doubts about Amazon?
Seeing friends succeed is believing, so, not really…. It’s a relatively safe investment. Even if your product doesn’t sell as hot as expected, it will eventually sell out and you will get your investment back. Even the worst listings on page 15 still sell. How fast you will make your return on investment is up to your market research and marketing.
How much money did you invest, product, advertising etc?
$2,000 initial investment for 300 units, then got a business loan from a family friend for $16,000 for 1000 units. Also have $1000 for PPC payments for your first month (PPC ad clicks cost are taken every few days directly from your credit card, not deducted from your payout balance, so make sure you have extra cash your first month for that).
Duration till profitable?
- 3 months til we made our investment back (selling avg 10-15 units a day)
- We launched mid July, made 17k back from amazon by the end of October (minus PPC spend, maybe a few grand)
- Holiday season is 2 – 10x the sales
- Sold 10/day after 2 months, 15/day after 3 months
How long to set it all up?
- Give yourself around 4 – 6 months from idea to launch
- We researched our first product opportunity for 1 month, starting December 2014 launched 3 months later in March 2015 (our first prototype test order). Second product launched in 4 months from idea to launch.
Other than money, what else is needed to get started?
- Ideally, like minded people to do it with
- People around you on the same mission makes it easier
- A deep desire to make a location-independent automated income
- I’m not an online marketing expert by any means. I knew nothing about SEO or internet marketing or importing before October 2014. But I DID really fuckin want to travel long term and not have a job.
Is is a secret? – Eric (how to pick a winning product)
No. There’s no secret to what will sell. You just have to learn from the mistakes of others. Our second try failed because it was not UNIQUE enough. It was the SAME as other products out there. I can’t hammer that home enough.
How safe is Alibaba.com? You or your friends had any negative experience with the Sellers?
Alibaba.com is perfectly safe… It’s just like the Amazon.com for wholesale… Sellers are very professional. You message them within Alibaba.com initially and then take it to emailing back and forth and Skype messenger. They are usually very responsive. Use as many pictures and diagrams as possible when explaining packaging/logo placement/design stuff. I haven’t heard of anything crazy like the supplier never delivered an order or anything like that. It’s actually relatively straightforward.
Riley, I love your videos and I truly appreciate that you are posting them, but why do you do it? Wouldn’t you want to have less competition? – Rosjalee
I’ve been asked this a few times:) The reality is, there are tens of thousands of product niches, so everyone selling on Amazon is not competing. There’s room for all of us .. (there’s actually very few of us ecommerce ppl in the grand scheme of things anyway;) ..I got into the online game from other bloggers introducing me to what was possible, and I am truly grateful for that. It has given me so much happiness to be able to live my daily life on my own terms and start off my dream of world travel – so if I could help others feel that same sense of happiness / freedom / adventure, then it would make me happy to spread the happiness – that I’ve received via the knowledge of other bloggers – so i feel like I’m just doing what i’m supposed to do, doing my part in passing on life-changing knowledge, aka spreading the love;) ..And making the world a happier place in the end is the ultimate goal in life. Right? 😎
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~Riley aka Pliez
Leave a comment and ask questions PLEASE! My mission is to help as many people as possible do what we’ve done so we can all just travel and do dope shit and really live life instead of slaving away at shitty jobs! XD
