Will Mitchell from StartupBros.com did an AMA on Reddit yesterday and below is the information I found most helpful.

 

It seems a lot of people want to start an import business but have quite tight budgets – realistically, how viable do you think it is to start an import business with only $5k and no plans to fly to China?

 

Far beyond realistic my man! I’m BIG on minimizing risk and applying the lean startup methodology to any venture. Our process requires about $100 minimum to get started, but I recommend $250. With $250, you can get your first set of 5-10 samples in the door and get the ball rolling. Obviously, the higher your bankroll and risk tolerance – the quicker your business can ultimately grow. But we’ve had clients that start with $50 and hit $100k in sales within 3-months. It’s not at all unrealistic, you just need to know what you’re doing. This business can be expensive because so many people make the same few mistakes when starting out…

 

Its true you can get some samples for $100 – $250, but I’ve found that the real investment comes in marketing your product. Without 15+ reviews I find its a grind to get any sort of organic sales on your initial sample order. I’ve seen a lot of folks on here saying its more realistic to start with a couple thousand with most of that set aside for marketing and using things like Zonblast and bidding aggressively with PPC.

 

It’s all about how you grow. There are many things you can do in between the sample stage and marketing a new brand and a new product. I’d never recommend a client to make that jump so soon (and we make it very clear that differentiation of your product and creating a brand is much tougher). It’s all about starting simple-stupid and building more complexity into it as you go. Then it isn’t overwhelming…

I’d say my #1 job for StartupBros clients is to help them work on the right things at the right time. You can really Google yourself into an abyss with importing/FBA/ecommerce/arbitrage – especially if you’re not very clear on the differences before going in. There’s a lot of overlap, and it can be confusing (took me 3-5 years to fully grasp).

For product reviews, we actually have a very cool process – we have a private forum for our clients, and they sell each other their products at cost in exchange for reviews, feedback, help, etc. You can also do this with friends/family/your own network – just set up an Amazon coupon to sell the product at cost (of course set your product limits). There’s lots of little tricks (such as inserting keyword data into the URL you give those pseudo-buyers), but that’s the concept…

Just last week, we had a client take a brand new product (page 16) and after 5 of these pseudo-sales, he was on page 1 (8th position) for his main keyword. He sold his 30 remaining units to real customers within a few days.

Also – I haven’t used Zonblast. I have some clients who have been mentioning it lately, so it could be a useful tool – but I couldn’t say either way without trying it. I will say that I’ve seen several hundred of these ‘must-have’ tools come and go – and they are usually only useful to people who really understand these business principles/concepts first. They never help new people figure it out, you have to have the context to apply it to.

 

I’ve heard of amazon buying private label businesses. Do you have any idea what kind of metrics they are looking for or do you have any info from people who have sold their business to amazon?

 

I actually haven’t heard of this, I’ll definitely check it out. I know Amazon does their own private label products sometimes, but it’s usually been in short runs up until now. I know one person who sold Diapers.com and Soap.com to Amazon back in 2011, but that was a major deal ($545mm). I have heard of Amazon contacting suppliers to become a distributor, but haven’t heard of any straight up acquisitions. If Amazon was to acquire private label brands – I’d imagine they would be very focused on intangible assets (brand equity, customer list, etc) than anything they could not integrate directly into their system (your website, warehouse, employees, processes, etc)

 

Is there a surefire way to know if your product will sell? For example I found a product that has 294 reviews and reciently people are leaving 1-2 reviews a day or so. So if on average 1 out of 100 people leave reviews would it be adequate to assume this product is selling around 700 units a week? Basically the question is how do you determine if a product will sell? Looking at sales rank, reviews, etc? Thanks!!

 

Anybody who tells you there is a sure-fire way to find profitable product is not being honest. It’s like saying ‘How do I know if this startup idea will work’ – there’s no way to know without taking some risks and making shit happen. I will tell you that in the process we’ve developed for our clients, none of the metrics you mentioned play any factor at all. We cover our process in-depth (and even give out our client product research workbook for free) during our free training webinars – definitely worth watching a replay of that if you’re confused on product research (but I won’t link of course). I’m all about minimizing risks and the lean startup methodology – so I recommend clients start with what we call the sample-selling-process. Buying and selling a sample is what separate the winners from the losers in this business.

 

Any advice on haggling your first order prices?

 

For your samples, I would not recommend haggling at all. Big buyers are used to placing sample orders and just waiting for them to arrive. You can definitely make yourself seem like a small buyer by trying to negotiate on that first sample, or asking for tracking info the day after you order, etc. So be careful with that… Sample orders usually cost $40-150, and our clients typically make 80-200% of their money back on that first sample order (obviously this varies greatly if they’re giving away products for reviews, and their business strategy in general)

 

How about negotiating one the first bulk purchase of 1,000+ units? I’m working on this now and I want to squeeze as much of their margin as possible but I also don’t want to offend them or harm the relationship.

 

Negotiation is tough, it’s abstract, off the cuff, and very much based on the parties involved. One hack that we’ve come up with for our clients is to NEVER be the boss during negotiations. You always want to be a secretary, purchasing agent, etc. This will give you a lot of flexibility to leave the table (Ok, I’ll ask my boss and let you know tomorrow), or even be assertive without damaging the relationship (I know we’re friends, but my boss is saying these prices are just too high…) That’s one of our client’s favorites, but like I said – negotiation is an abstract and situational art. We have 6 or 7 different negotiation hacks, and an entire framework of communicating with suppliers – and still get tons of questions about it. It’s best to just get in there and start doing it.

 

Thanks for answering my last question! Here’s one more if you have time. I know a big reason for more and more people getting into PL products on Amazon is the advantage of owning the buy box 100% of the time. In other words not competing on price with 50 other sellers. (Getting your new listing to rank is a whole other topic.) But with so many people starting to PL products from China do you think Amazon will start cracking down on brands and their brand registry program so there aren’t 20 of the same products just branded different all having seperate listings? For example maybe requiring a certain level of sales for a brand before allowing it on Amazon under its own brand listing or something? I feel like this could be a concern for private labeling moving forward…

 

I haven’t thought about this before, but I’m glad you did! I think this is very possible – and all the more reason to get in NOW!

One thing we mention in our free training webinars – when I first got started in this business (2001), people were already screaming chicken little (or whatever the saying is). In pretty much every market, every situation – there are cynics and pessimists and lunatics and everything in between.

Anyways, people are still screaming about competition and saturation these days. But, I think that in 10-20-50 years from now, we will look back at 2014 and 2015 as the years that the eCommerce revolution really took hold. Mainstream America is JUST learning about how awesome Amazon is, and this trend isn’t going to stop. Retail’s death sentence is set in stone, and nothing is going to stop the flood of buyers going online over the next few decades.

Also – a really good mentality to develop – is who cares about the competition. Successful entrepreneurs are almost universally obsessed with winning. Tell me the rules of the game, and I will win it. Competition is what makes this fun, it’s what creates innovation and new ideas. So have some fun with it, and slap some of the less motivated competition around 🙂

 

hey will, my question is about Risk Free Guarantees for private label products on Amazon. I noticed some product pages explicitly say 60-day, 90-day and a few even say “lifetime warranty.” How important is this (my item is fairly indestructible) and in general how much of a warranty should you put in your description (if any at all)? Personally I’m planning for a 90-day warranty but that is just my hunch – not based on any data.

 

Your competitors are wondering the same thing…

Each product is going to be affected by a warranty more, so it’s something you learn more about as you develop a better understand of your customer, product, brand, and how they all fit together.Obviously, a lifetime warranty is going to have a much lesser effect on a rubber band than a pair of sunglasses. And then there are some products which customers will pay a premium for a warranty – Cars, tools, etc. So you need to experiment a bit and figure out the elasticity (so to speak) of it for your product/customer.

I would definitely encourage you to start on the low-end with your warranty, and experiment moving up from there. Reason being, if you have a new product and don’t know the defect rate/breakage tendencies/customer tendencies – a longer term warranty could potentially sink your company (if you’re at that very early stage)

 

What are some mistakes you see individuals who are new to private label consistently make?

 

By far the most common problem I see is a mindset one. So many people come to us from the internet marketing, get-rich-quick space – and much of our first couple weeks is dedicated to breaking down that mindset and instilling a more flexible/comprehensive/entrepreneurial one. Up until our 4th week with clients, we still see people making some mistakes from the ‘SEO days’ – e.g. only looking for niches, obsessing over keywords, things like that. We’ve gotten MUCH better at really forcing our clients out of this mindset though. It used to take us 4-6 weeks, now only 1-2…

All the mistakes really stem from this problem. But other things I see are people obsessing over the wrong things (what product to sell, rather than how to sell it). It’s extremely common to see people obsess about products. I obsess about selling. I think you can take pretty much any product and turn it into a success – it’s more about general business concepts/principles to live by… I see a lot of people get scared and just not have the risk tolerance to pull the trigger and try to make things happen – again a mindset issue. This is another one we’ve become extremely effective at breaking through…

 

 

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