Resources for Buying and Selling Online Businesses

Build a Real Business with Kevin King

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One of the mistakes people often make when starting their own e-commerce business is they try to make the business an extension of themselves. They don’t build out enough within that extension and therefore don’t build a real business. A real business that is going to be attractive to buyers. Some also make attempts to reject Amazon, feeling they can achieve success with Shopify, Walmart, and other E-commerce channels. Today we are talking with a true Amazon veteran and success story, getting to the truth behind building real e-commerce success, working to build a real and viable business, and why it pays to go to China.

Kevin King is an e-commerce entrepreneur’s advisement expert. He teaches to and works with seven to eight-figure companies and speaks at e-conferences all over the world – attending nearly twenty-six events in at least 10 countries in 2018 alone! He runs his own e-commerce site selling his Amazon products, and has developed and guided hundreds of products from inception to market. He’s been in the Amazon Private Label space since 2015. He’s here talking about the Amazon opportunity bubble and how he doesn’t see it popping anytime soon.

Episode Highlights:

  • The skyrocket of the Amazon business model and how that model has changed.
  • Kevin shares his tips for doing business right from the start and increasing chances for success.
  • The different ways to approach the Amazon model.
  • Kevin gives us a definition of Amazon Private Label.
  • The number one crucial skill you need to succeed on Amazon.
  • What you really need financially to start a real business.
  • How to find out where the demand is on Amazon.
  • Why being on top of your inventory is vital to your success and how often you should turn your inventory each year.
  • What it really means to build a brand and if brands mean anything to potential buyers.
  • Why Amazon is a great place to launch a product but not to build a brand.
  • Why product choice is the backbone to business success.
  • What to look at when choosing a product to sell.
  • Selling cheap easy turnover items versus high ticket items.
  • The most important thing to do to improve traffic on Amazon.
  • Unless it garners at least 20% of your revenue, multichannel sales don’t increase your chances of finding a buyer.
  • The international factor and branching out to other marketplaces.
  • Kevin’s golden rules for moving a product.
  • How many products are the right amount to have in your portfolio?
  • Where the money is really made in the Amazon space and the importance of how and where to source products.


Mark: Okay Joe I want to start this off with a question for you. Back when you owned Puristat how long did it take before you realized this is going to be able to grow into something and how long did it take before you turn it into kind of like a real business that could be scaled?

Joe: That’s a great question. I wish I had a really good prepared answer for it.

Mark: I got you completely unguarded with that.

Joe: Yeah. I’m one of those guys that built a business without knowing I could actually sell it. And as you and a lot of folks that know my history I started out on doing radio and direct response and did a TV infomercial and then eventually took it 100% online. But early on in my entrepreneurial career, I did have a sit down with a good friend … a family friend that slapped me upside the head in terms of accounting and I did have my ducks in a row in that sense. And I always built what was a real business so that if I got hit by a bus one of my head people could take over, my wife could take over things of that nature. But it never actually occurred to me until I was emotionally tired that I could sell the business. And then I reached out to a guy named Mark Daoust back in … gosh, 2010 right?

Mark: Way too long ago. I think one of the things … one of the problems I see and I’ve seen over the past 11 years with entrepreneurs is we make the business an extension of ourselves; an extension of our personality. And because of that sometimes we don’t really build the business in a way that can be sold and we don’t have intentionality of building something outside of ourselves. And I know you talked to Kevin King who had a lot of suggestions and tips as to how somebody should be building their business for that expansion and again for lack of a better term a real business.

Joe: Kevin used the term real business probably 10 times in the first five minutes and he is such an honest straightforward tell it like it is kind of guy that he says you got to build a real business. Grow up build a real business. Don’t be a … build a real business. And he just says it in a way that you just have to go okay he’s right, I need to stop messing around, grow up, and build a real business that is going to be really attractive to buyers when I’m ready to sell. Kevin is one of the few guys that is out there teaching, helping, coaching entrepreneurs build ecommerce businesses with a focus on an eventual exit. He’s got a four year plan in terms of … you know step 1, 2, 3, 4 in terms of year 1, 2, 3, 4 with an exit in mind not that you’re going to exit but that you’re in a position to exit in 48 months. Part of that is giving it enough time to mature and grow and gain value. And he’s a believer as many folks in his position are that a majority of the revenue that an entrepreneur gets to put in their bank account comes upon an exit and that’s a simple matter of math. We hear Scott Deetz talk about that a lot and he’s an advocate of that as well. But I tell you there are … the gurus are a dime a dozen and Kevin has been around a long time. He walks the walk, he talks the talk, he’s a guest podcast on lots of podcasts, AM PM Podcast co-host, and helps out a lot with Helium10. And now he is so sought after. He’s being asked to go and present and speak around the country … around the world and he’s being paid to do it. You and I have to … we have to say can we sponsor and by the way can we speak and we pay them to let us up on stage these people are actually paying Kevin to get up there and talk because the wisdom that he shares is so valuable.

Mark: That’s fantastic. I want to get to this, hear what he has to say. I was at a conference a few months ago and there’s a speaker who said … and I’m going to keep this PG even though he wasn’t PG but he said if you want to have a real business you have to do real business stuff. And it’s one of those truisms that is just kind of basic but good to hear once in a while. So I’m interested to hear what Kevin has to say about it and for those listening, I think it would be a good idea to listen to some of the specifics that he gives here and just measure up against what you’re doing right now. Are you doing these things? Have you been doing real business stuff within your business to actually build something that’s real and external?

Joe: Perfect let’s go to it.

Joe: Hey folks it’s Joe Valley with the Quiet Light Podcast and I have an amazing guest today. His name is Kevin King. Kevin, how are you today?

Kevin: I’m doing good Joe. How are you doing?

Joe: I’m good man. You’re kind of a legend in this industry now. You’re traveling all over the world speaking at events, getting paid to speak at events, helping 6, 7, 8 figure entrepreneurs build their Amazon businesses. That’s kind of the intro, why don’t you tell us who you are and what you’re all about so the people will understand it directly from you?

Kevin: Sure no problem. Yeah, I’ve been doing ecommerce since the 1990. So I go back about 20, 25 years or so since the days before there was even a Google. I’ve been selling ecommerce to my own websites. I started selling on Amazon on around the year 2000 or so and then I’ve been doing the FBA model which most people are familiar with now since 2015. I originally started out doing wholesaling, some arbitrage, and some other stuff on Amazon and still do that through another business. And then I’m also involved in a couple of different training things. So I teach advanced level sellers, 6, 7, 8 figure sellers in the Illuminati Mastermind which I’m mostly training. Like a 3 hour training [inaudible 00:05:54.2] these tactics and techniques for sellers and then we do a live event once a year. It’s a pretty high level live event and then also I have a course called the Freedom Ticket which trains new people on how to sell on Amazon as well as how to have a 7 figure Amazon Business that I do myself and then I’m partners with a couple of other people and a couple of other Amazon businesses. And then I … like you said I speak at a lot of events all over the world for Amazon sellers and ecommerce.

Joe: And why don’t you tell us how many you went to so far this year? This is being recorded in late 2018.

Kevin: Yeah in 2018 I’m at 26 events so far this year.

Joe: And say how many different countries.

Kevin: Oh man I haven’t added that up. The number of countries would probably be at least 10.

Joe: At least 10.

Kevin: So I would actually … it’s a … China, Hong Kong, let’s see … several United States including Hawaii and it’s not another country but Hawaii and then several and Germany, so Germany, London, Greece, Romania, Ukraine, man all over … all over the place.

Joe: That’s incredible. And you’re attending and speaking at these as well right?

Kevin: That’s correct yeah. Some of them I’m just an attendee but over half of them, I’m actually speaking at.

Joe: All right well let’s help the people that are listening, those that have Amazon businesses and those that don’t, those that want to get started. A lot of folks like you and me started off with our own websites and Google AdWords and content development and eventually morphed over to Amazon. I didn’t, I sold my business before you were selling in Amazon but before I realized that Amazon was a tool I could sell on. I sold in 2010. I look back and think man I wish I knew a Kevin King back then.

Kevin: Yeah the Amazon space is one of those that … it had a hot wave around 2012 or so. The guys over at kind of set this off where they turned it into a business model and started instead of getting rich in real estate let’s get rich in selling on Amazon. And so they started doing courses and it took off and since then there’s probably about 4 or 500 other people that came out with different courses. And to be frank, most of them suck. The guys at Amazing do a pretty good job and there’s three or four others. I’d like to think that mine is one of the better ones but most of them are people that either isn’t selling on Amazon or tried it and failed or they’re just not very good. So you have to be very very careful out there. It’s become a big industry that is … a lot of people realize they can make more money selling the show than they can selling the gold or whatever or that saying is you know. It’s teaching people how to do it rather than doing it. But the opportunity … so as a result of that a lot of people say hey is this selling on Amazon saturated? Is it too late? Did I miss the boat? I say absolutely not. I think it’s better than ever right now. The difference is it’s no longer an easy game where when 2, 3, 4 years ago it’s pretty easy to just go to find a product slap your name and logo on it and sell it on Amazon and those days are pretty much gone. It’s a real business now. So if you approach this as a real business and not a get rich quick scheme and not listen to a lot of these course guys that are saying you can quit your job tomorrow and sit on the beach drink margaritas and just check the app and watch the sales come in. But treat it like a real business and keep your job. Don’t quit your job maybe for a year as long as you got money … unless you have a lot of money in the bank saved up that you can live on. But if you treat this like a real business that you can reinvest it there’s no better business out there that has a better return right now. And Joe you know this, you guys broker a bunch of businesses so you see these numbers and you see the guys that do it wrong and the guys that do it right. And like I always say if you take $5,000 and you put that into the best mutual fund on Wall Street in about 3 years you’ll have about 7500 bucks or so roughly on average. If you put $5,000 on an Amazon business and do it right that $5,000 in 3 years can pretty easily turn into about $52,000. So the ROI is tremendous but you got to do it right, you got to treat it like a business. And I always tell people if you’re going to start in this business the thing that you need to do is … I say it’s like a 4 year plan. Year one you’re basically learning and you’re earning. Year two … whether that’s you taking a course from someone that you paid, you’re watching some YouTube videos or whatever you may be doing, you have to be careful though if you’re watching YouTube videos because some of that stuff is out of date or incorrect. So you’re learning and you’re earning. In the 2nd year, you’re optimizing. So maybe you’re adding additional products and additional variations. The 3rd year you’re preparing to sell. You’re getting all your ducks in a row. You’re getting all your financials correct. Hopefully, you’ve been doing this all along but you’re really optimizing your financials and in the 4th year you sell. The best opportunity in this business is not running the business; it’s in selling the business. Because when you sell an Amazon business typically that’s where you’re going to take in over half of your profits. Sometimes as much as 70 or 80% of what you’re going to walk away with from running the business. People would say why the heck would you sell a business if this is such a great opportunity Kevin why the heck would you even sell it? And I say well it’s leverage. I mean there’s no better … that’s how you get ahead. You know in real estate that’s how you get ahead and wherever it is leveraged. Even if you’re making $200,000 a year off this business if you can walk away in one year with a million bucks let’s say in your pocket, you can just turn around, pay off some bills, take a nice vacation, buy the wife a new car, whatever you want to do and then start over again. And I know a lot of people that are on their 3rd Amazon based business right now. I know a guy that sold his first one in a year for half a million. He sold his 2nd one for 7.5 million. Now it’s the third one. I know another couple, a really nice husband and wife team that just recently sold one for 4 million, got a multiple of almost 4.2 and their next goal is 2021 to sell it for 10 … the next one for 10 million. So it’s a great way to do that.

Joe: [inaudible 00:11:38.6] them the skill set. You know the folks that I talk to they build these and then we sell them for them. Once they’ve got that skill set they can go back to the well. They can go back to the Amazon well and build another brand because they understand it. But let’s throw some chips out there. You said you could turn 5,000 into 50 in 4 years. We’ve seen 5,000 turned into several million in 4 years. How much would you recommend to the newbies that are out there and what I want to do here is give some tips from you the expert. I get so much misinformation out there. I want you to talk about a few tips that newer folks should do so that it increases their success level. And then to those folks that are out there doing it now some of the things that you may be able to call from your travels and your experience that are new that are completely different than they were maybe even just 12 months ago. But how much money do you think somebody at a minimum should start off with and should they be focused on branding, wholesaling, arbitrage … what is your opinion on what they should do to get started and increase their chances of success so that they can have that big exit down the road?

Kevin: Well I can say this 11 different ways to skin the Amazon cat. You can make money off affiliate market by doing wholesale, by doing retail, arbitrage, online arbitrage and there are several other ways. The best way, in my opinion, is private label. It has the most opportunity and the best margin. So if you’re looking to maximize your return you should really look at the private label side.

Joe: Let’s define that if you would please?

Kevin: Sure.

Joe: Just for the new ones starting off.

Kevin: The private label is where you’re actually basically creating a brand … attempting to create a brand or you’re actually taking products that already exist, maybe modifying them slightly and putting your name on it. It’s kind of like if you go to the supermarket and you look at that ketchup, there’s Heinz ketchup which everybody knows that do all the advertising and right next to it is the local store brand, Safeway, Kroger,  whatever it may be brand of ketchup which often comes off the same factory. And it’s often the exact same materials they just has a different name on it usually at a slightly lower price.

Joe: Right.

Kevin: So that’s private label. So the idea behind the private label is to go onto Amazon use a lot of these tools, these 3rd party software tools, find the opportunities, and that could be either based on keywords or it could be based on complaints and customer reviews and you can fix the problem and you can come in and compete. The Amazon business itself is the number one most crucial skill you need to have is mass. This business is all about numbers and so if you’re not a numbers person you need someone on your team that is a numbers person. It’s not something where you get emotional and hey I built a better mousetrap or I’ve made a new invention. I mean there are opportunities there if you have a new invention or you have a new idea but there has to be the demand. And the beauty about Amazon and selling on Amazon is it’s a huge laboratory. I mean with 550 million or so products on there most of them with a review someone with thousands of reviews. It’s a great laboratory. I mean companies 10, 15 years ago used to have to do focused group marketing and all kinds of expensive research just to get this kind of feedback and it’s publicly freely available right now to anybody that wants it. So you can go in there and if you know how to mine this data you can find major opportunities. And so you want to look … it’s all about math. So back on how much should you start with you know that depends. I recommend you have at least 5 to $10,000. I mean you hear stories of people start with 100 bucks or 500 bucks but usually they may have started with 100 bucks but what they don’t tell you is that a week later they borrowed 50,000 from their rich uncle. They have these rags to riches story where they get terms from their supplier, there’s something else to it. You can’t start with it, I mean you could start arbitrage with a 100 bucks if you’re going to grow a real business you need money. You can start a business with a thousand or a hundred … hundred to a thousand but it’s going to be a really slow build. So the more you have the faster you can go. So what I always say is if you going to start this business how much do you need? You need 2 ½ times your initial inventory investment. So if your first round of products is going to cost you let’s say $4,000 to have made. So you’re buying 1,000 units of something. That means you can basically spend about $4 per unit landed cost. Landed cost means the cost to manufacture the item whether that’s in the United States or in China plus the cost to ship it and if you’re importing it all the taxes and shipping cost that’s basically landed in the Amazon warehouse. So you need 2 ½ times that. That means you need about $10,000 to start the business. If you don’t have $10,000 you need to find a different type of product to sell. If you only have 5,000 good, do the math and you have to find some things you can buy for about $2,000; your initial inventory.

Joe: So if you’re buying 1000 pieces at 4,000 bucks what’s the other 6,000 for?

Kevin: The other 6,000 is because in this business it’s a very cash intensive business. So if you’re successful you’re most likely going to have to be buying your 2nd round of inventory before you sold your 1st and probably before you’ve even paid for your 1st in full. So you’re going to need … the worst thing you can do on Amazon is to run out of stocks. If you run out of stocks on Amazon for more than a few days you’re basically starting over. That’s the death. Now 90% of people that start selling on Amazon fail or they take a course either they don’t launch or they fail because they don’t do the math right. They don’t plan it properly. They don’t pick products that are within their budget that they can maintain, that they can sustain. And in the other … you know in this case of the 4,000 so you might need another 4,000 to place your 2nd order and then the other 2,000 is for advertising cost. You might need some software, some other miscellaneous things. That’s the bare minimum. In my opinion, it’s better to have a better cushion than that but that would be the bare minimum. And then it’s all about math. It’s all about looking at keyword demand. It’s not trying to invent something new, that’s kick starter or that’s … you know there are other business models for if you have something that’s brand new that you want to do. But the best opportunity is to look at the demand on Amazon. Use these keyword tools. See what people are searching for, what they’re buying, what they’re complaining about, and go in and either make a slightly different product of that or fix the problem that people are complaining about and then come out with something. And so that that’s why I say it’s all math. It’s all about the financial side which most people are not good at and the forecasting and it’s all about the keyword and the demand side. And there are some great tools out there … 3rd party tools that have come a long way in the last 3 years that can really help you with it. But most people that even are paying for these tools … you know they’re paying 100 bucks for a tool like Helium 10 for example that’s one of the better tools out there. A lot of people don’t even know how to use the tools. It’s kind of like they have a nice race car with all these gizmos and buttons and all these kinds of things that they can do to really race down the track at 200 miles per hour but they’re just putting along at 40 miles an hour. So master these tools and learn these tools and you can do really well.

Joe: Okay and that’s the 1st year really the mastery of those types of tools and things of that nature.

Kevin: Correct.

Joe: Got you and we say a lot of the same things. I put myself on mute because I’m struggling because we’re doing … one of the things I’m always saying is that and I’m actually doing a presentation next week and its, if you want to increase the value of your business in the year before you sell, don’t run out of inventory. You know that it’s going to kill maybe certain things in terms of momentum on Amazon. I know that when you run out of inventory it reduces your revenue and your profit and that times your multiple is going to be the loss on your business value. I just said a lot. It probably doesn’t make sense to most but just don’t run out of inventory.  Do what you can; beg, borrow, steal, hillock, line of credit, credit cards, whatever it takes if you’ve got a good solid business. As far as the brand sell or the private label do you recommend and do you prefer seeing people picking a category, let’s say they’re going to … okay, I’m going to invent a new … I’m not going to invent, I’m going to build a better mousetrap and it’s a swimming pool cover and then all of the additional products evolve around swimming pools or do you think you find that great product there and then you do this search for the next great product and it may not be related at all?

Kevin: I think there are two different ways to do that. I mean one is if building a brand is difficult, building a brand it’s not just sticking your name and your label on something. A lot of people think that’s a brand. They think that if I create a logo and stick my name on my pool cover I, therefore, have a brand and I have a bunch of pool and that’s not true. Brand is an identity. It’s something that people relate to. It’s like … you know think of Apple, people are lining up to get the new iPhone. It’s a certain cool you know Apple came out with that thing differently you know that it’s almost like a … it’s hard to build a brand and I don’t think Amazon is the place to build a brand in my opinion. I think Amazon is a great launching … if building a brand is your strategy that’s awesome and Amazon can be a great place to launch because the marketplace is already there. The view about Amazon is they already have a huge audience and just all these cool tools that you can use to figure out how to reach them. If you go out and you build your own Shopify site or your own ecommerce store you’ve got to figure out how they bring the traffic there. You’ve got to start doing Facebook ads, email list, PR, whatever it may be to bring the traffic there versus on Amazon you don’t have to do that it’s already coming. You’ll only use outside traffic … if you have to use outside traffic to drive sales on Amazon you’re doing something wrong. In my opinion, the only time you should use outside traffic to drive sales on Amazon is when you’re doing a launch. If you’re launching a new product and you need it to kind of influence the algorithm, that makes perfect sense and you should do that. But if you’re heavily weighted on driving outside traffic from Facebook and you’re sending it to Amazon just to make sales on Amazon then you shouldn’t be doing it. You should have sent that to your own store because when you send someone from Facebook to Amazon they’re not … they don’t become your customer. They’re not identifying with your brand, they’re identifying with the Amazon brand. They’re buying because it’s Amazon, they get it in a day or two. They trust Amazon. They know that it’s easy to return blah blah blah. In most cases, they don’t really care about your brand. So if you’re trying to build a brand you need to drive it to your own store. But using Amazon as a launch pad because it has a built in traffic and then you could use the data you get from Amazon you can refine your product get it fixed get that good feedback and then take that data from Amazon even as a 3rd party seller you can create what’s called [inaudible 00:21:36.9] and all kinds of stuff on Facebook and then go out and build a brand that would identify more with you. And I think the best opportunity to build brands using Amazon is on consumables … on people … maybe it’s dog treats or supplements or something like that where people will come in over and over and over. But if you’re selling pool covers … building a brand is difficult so what I tell people is still trying to really build a brand initially that may come and evolve into that is more build … go after an avatar. So rather than just trying to be the guy doing all the pool supplies, to give yourself the best opportunity on Amazon so you’re not stuck in a niche. I mean if you go after the pool supplies and you’re doing pool covers and pool chemicals and pool everything else you’re kind of stuck there. You’re like okay what else can I find in a pool category versus if you go after an avatar and you pick a person … let’s say it’s a runner. I’m going to go after an athlete, people who love to run outdoors, then you can actually go across multiple categories and you can do something like something in electronics category that’s a fitness tracker or a band to hold your iPhone on your arm or whatever and you could do socks and you could do water bottles. You can get across over all these different categories and you open yourself up to more opportunity. Or you can just … you know some people they don’t care; it’s just the shotgun approach. It’s like I just find opportunities I don’t care it’s just cash flow. Typically if you have a brand it depends on the buyer. Some buyers actually really value that and they’ll pay a higher multiple for that if you’re planning on selling. Others don’t care they just want the cash flow. So it depends and so when you’re 1st starting you might just … I don’t know that you need to think about that because it’s going to evolve. Most people their 1st or 2nd product doesn’t succeed, it’s more of a learn … some people get lucky and it does but you can ask most big sellers that are doing 7, 8, 9 figures a year and they’ll say yeah my 1st one it just I don’t sell it anymore it didn’t work. So I would get too stuck at that in the beginning. I would just keep going and then it’s going to come to you. You’re going to start seeing the opportunities and you’ll be able to drive off.

Joe: I got you, great information. It totally makes sense, the avatar and being able to say okay I’ll do a running … people that are running. And it could be men, women, it could be kids. Again the products breath and depth is really really broad and deep as opposed to limiting to grilling products or swimming pool products.

Kevin: Not to say you can’t do that, I mean you can do that but I think the opportunity is better if you go towards an avatar rather than just a niche.

Joe: Yup, got it. I love it. Let’s talk about for those that are listening to this podcast Kevin obviously they can tell you know what you’re talking about. They probably already know your name and have seen your presentations. What things are you doing and are your 7 and 8 figure friends doing that is new and different and must be done to help take things to the next level? What kind of tidbits can you share there?

Kevin: Well the number one thing is to me the thing I’ve learned in this business is it’s not about profit; it’s about ROI if you’re trying to grow a business. When I 1st started I was looking at products that would have nice profit margins. You hear people sometimes on Facebook say I’ve got 40, 50, 60% profit margins and those cases do exist rarely but I used to say bullshit on most of those people. The average in a private label business is between about 20 and 30% if you’re doing things right.

Joe: Let’s call that seller’s discretionary earnings for everybody listening that’s … it’s you run a net profit and you run a profit loss in Quick Books you get net profit on the bottom then we’re going to add back those owner benefits like your salary like your meals and entertainment like your travel and things that nature that are not business related. So your net income plus your add backs equals your seller’s discretionary earnings that’s what we’re talking about.

Kevin: Now once you do your add backs that could go a little bit higher. I’m talking about just on the books you know when you when you are factoring it all your cost is about 20 to 30% on private label. On wholesale, it’s closer to the 10 to 15% range.

Joe: Right.

Kevin: And wholesale businesses are a little bit harder to sell because you don’t have really a brand. You’re just selling other people’s products. You don’t have anything proprietary so they’re a little bit harder to sell that’s why I also said private labels is one of the better ones. So let’s say it’s in that 20 to 30% that’s average, some people are higher than that some people are lower. But if you’re in that 20 or 30% net you’re doing okay for the most part. But what I used to do is when I was … it’s … this business is all about choosing products. The product is the backbone of it. That’s where it has a stone in a walk for a lot of people is they’re afraid to pull the trigger because they’re like I only have 5 grand or 10 grand to start, did I pick the right product. And sometimes they get paralysis by analysis and they just don’t move forward. But when you’re choosing a product I used to look at the profit margins. I’d find a crate maker for example as one of my old products and you know it had about a 40% margin from what I could buy it from landed and from what I was selling it from and I was like okay this is great but the problem was I was ordering … I ordered 1,000 of them and it took me about 6 months to sell those 1,000. And then I ordered another 1,000 and it took me about 5 months to sell the next thousand. So that’s a turnover a little over 2 times per year. So I had a great profit on it but it was tying up my cash tying up my money and so ROI to me is the most important by far number in this business as you want to look at when you’re sourcing products is what kind of return on investment. And that’s basically how fast can you get your money back. And so I looked for ROI’s of at least 150% or greater on everything I do now. And that basically means how many times … if I have and maybe a lower profit margin. Instead of the 40% profit margin, I may have a 25% profit margin. But if I have 150% ROI I’m working and turning that money and that inventory much much faster. And I can grow a lot quicker without having additional outside capital, without having to go into my RA or whatever it may be, or take expensive loans that are out there and you can grow your business faster. So by picking high ROI products, you have a greater chance to success. For example, I recommend you at least turn your inventory 4 times a year in an Amazon business. So it’s basically every 3 months you need to be turning your inventory. Ideally 6 to 8. Some people you know a supplements business are at 12 or more. Just by example Walmart stores, their average inventory turnover is 8.3. So 8.3 times per year they’re selling through their entire inventory. That’s a critical number when choosing products and when choosing things to do in my opinion. So one of the bigger opportunities right now in the space is in the high ticket expensive items because all these courses out there they teach you find something if it fits in a shoe box it’s lightweight weighs less, it’s cost less than $20, it’s easy to source you can buy in for a buck or 2 in China and sell them for 20 bucks on Amazon and the problem is that everybody is there. That’s where everybody goes, that’s where all the courses … everybody finds the same products, the same weighted blankets, the same barbecue gloves, the same stuff and only a few of those people succeed. And so if you go outside the box and look at the more expensive stuff maybe you don’t have to buy a thousand units of them, you only have to buy some things that sell 5 per day but they’re selling for $300 versus things that sell 50 per day and they’re selling it at $20. You could make a lot more money on these more expensive things. And some people shy away from that because sometimes it’s a little bit more of an investment to get into it. But there’s great great opportunity there. And the other problem right now is what’s happened with all the low end stuff is the Chinese hackers … most of them are Chinese, there are some that are Russian and Eastern European but the vast majority are Chinese and it’s crazy what’s happening out there. There are leaks inside of Amazon where these guys over in China can get the actual data straight from Amazon, the actual conversion data, the actual … they’re doing all kinds of crazy stuff; hardcore competition and its part of their culture to do this. And most people don’t … aren’t aware of what’s happening and your chances of competing on that lower end are getting harder and harder and harder because of all this.

Joe: So you recommend to start off that way or you’re thinking in terms of larger people … larger account owners to move into that category where its a larger ticket item and a high ROI?

Kevin: Both.

Joe: Both?

Kevin: Yeah, both.

Joe: Okay, you mentioned that if you’re sending traffic to your Amazon store from Facebook you’re doing something wrong on your Amazon … inside your Amazon seller account. What tools can be done what … and maybe it’s all basics, Kevin, maybe this isn’t anything new but what are the most important things to do to make sure you’re improving your traffic on Amazon as much as possible or is it a combination of a number of different things?

Kevin: I mean if you’re a brand that already exists up there Amazon should just be a channel for you. You already have your own store. You’re already selling in retail Amazon is just a channel so that’s a little bit different approach. But if Amazon … if you’re starting this business and Amazon is your primary focus at the beginning which is what most people are doing now that they’re doing FBA business, Amazon is their primary focus in the beginning and that’s great and people always say you shouldn’t be an Amazon only business. You should be off Amazon and I agree with that but … and you could probably tell me more about this but my experience Joe in the valuations people always say well I don’t want to just sell on Amazon. What if Amazon shuts my account down? Amazon likes to shoot 1st and ask questions later and then I’m screwed. I need to be selling on Walmart. I need to be selling on Jet. I need to have my own Shopify site. But most people, the vast majority of people that’s a very small percentage of their sales and from my experience, unless it’s 20 or 30% between … you know most people say about 30 % maybe you have a better number of your sales it doesn’t really add to your valuation. If you got a sale or a buyer coming in if you got 2% of your sales in Walmart or [inaudible 00:30:59.9] if you get shut down on Amazon so what you’re still screwed you got to fire everybody. And so most people it’s hard to make that adjustment so my advice is if you’re going to be starting on Amazon take advantage of the platform. There’s never been a better opportunity. It’s one of the best business opportunities in the last 100 years of business to start selling on Amazon. And like I said earlier if you’re trying to build a brand then use that data and there are ways to do that to then start going off Amazon especially if you’re on the consumables side. But I think you’re better off taking that same energy that you’re trying to put into building a Shopify site or trying to launch on Walmart to go expand to Canada, go expand to Europe, or go expand to Japan. You’re much better off. You’re going to get a better valuation. Canada is like 5% of my sales compared to the US but that’s 2 ½ times what my sales in Walmart are and it’s easy. It’s same format. I already know how to do it. It’s natural and most people are afraid to do that. They’re afraid of other countries or they’re afraid of other tax systems or they’re … whatever. And its ego based. I want to be saying I sold on Walmart or I had my own site … it’s bad.

Joe: Yeah a lot of the folks that you and I know that are buying up Amazon businesses; one of the 1st things they do is take them international. They buy them and take them overseas. Let’s talk about that for a minute-

Kevin: But a lot of people don’t do that because it’s … you’re basically doubling your investment. Let’s say you want to go to Europe-

Joe: They don’t have the capital.

Kevin: Most people in this business are cash strapped and that’s where the opportunity right now is it’s like the people that you just said that you know and that I know that are buying these, they’re coming in with money and they see the opportunity and they come into play. And at first most of these entrepreneurs they use their life savings or … and then some to try to build this and they’re cash strapped so they can’t … I mean to go over to Europe you’re basically okay now I got to buy all new inventory and float it and they can’t do it.

Joe: Yeah the people that are buying businesses like this that are coming into the entrepreneurial world for the 1st time say it’s great why in the world are they selling? And I always have to ask that question on what they need to understand and what they’re learning by going through the process is that most of these businesses whether it’s a Shopify store or an Amazon business even those that I’ve sold in the past that are a combination of both and have a utility patent. It’s still bootstrapped and most of the money being made is going back into inventory to keep up with growth. And they’re not able to pull a whole lot out and so they’re bootstrapping. And they don’t expand overseas because they don’t have any more places to dip into to pull more money. So somebody coming in from the outside that has that extra working capital and a mindset to take it beyond the 4 hour workweek and run it as you said a dozen times already as a real business and grow it into the different countries and take it beyond a one channel platform and beyond Amazon. You can take it to different countries and it’s going to increase your value; it is when you could take it beyond into building that brand off of Amazon into different platform it builds your value even more. But you’re got to be challenged. You got to look at that and say okay what … how long am I going to be in this game and how much am I going to invest in terms of time, energy, resources, risk into building a Shopify store and generating traffic to it. If you’re going to sell in 6 months for those that are listening and you hear Kevin’s advice you know multichannel he’s right but every story is different and unique. You don’t want to build a Shopify store and start driving traffic to it and investing a lot of money in breaking even or losing for 3 years down the road if you’re going to sell in 6 months. My advice is to do what you do and do it really well. Keep selling on Amazon and make that business strong and have some built in path to grow.

Kevin: Another one too besides Europe I mean like … or expanding to other market … I mean Amazon’s into what 13 marketplaces now? But besides expanding to other marketplaces the other opportunity that’s out there is … it goes again back again that gets cash strapped is retail. I mean retail is not dead. I mean there are all these stories about retail is dead and tears is going out of business and Radio Shack went out of business and blah, blah, blah. They didn’t adapt. Amazon is going into retail. They’ve bought whole foods. They’re opening retail Amazon Go’s. They’re opening these 4 star stores out. They’re going … retail is not dead. It’s still 90% of all sales out there and it’s going to probably remain at above 80% for the next several decades. I mean ecommerce is gaining on … it’s going to take a bigger share but so going into retail using Amazon as a proven ground is a great way to get into retail too.

Joe: How do you make that leap though in Amazon? How do you go okay I’m going to go into retail? Is there a Helium 10 for retail?

Kevin: No there’s not a Helium 10 for retail, it’s a whole different animal. You’re just saying about the opportunities outside of Amazon is I agree going to Amazon … other Amazon Marketplace is first should be your top priority if you can. But going into retail I know several people that have started on Amazon and now they’re crushing it in retail. But that’s … again that’s another cash flow thing you know you’ve got to … it’s a whole different animal. There’s people that teach … like Karen Waksman stuff that teaches actually people how to go from Amazon to retail and how to get into retail and how to use your Amazon reviews and sales and demographics. And you have this data like look you know I have a lot of people in New York or these areas and you have 27 Target stores right here you know you should be tearing my products. There’s a lot you can do there but it’s it takes again it’s another financial thing. You got to wait 60 days or more to get paid or you got to use factoring to factor invoices and brief purchase orders and so it’s a whole different animal but there’s great opportunity there too.

Joe: But it’s also as you’re saying it’s more cash but it’s also math figuring that out and pulling that data out of Amazon. A lot of people have trouble just pulling the data out.

Kevin: Yeah they can’t that’s why I said in the beginning, this is math. If you’re not good at math or data analysis you need someone on your team that is. This business is not about … I see so many people go like I improved the product, I made it better, I know my product is good people should just buy it. If the demand is not there, if the data doesn’t work, the analyst … there’s too much competition you can’t … you don’t have the margins you’ve got to bail. To me, people get too emotionally tied to products and then it becomes their little baby and they don’t want to abandon their child. Sometimes you’ve got to kick the kid out of the house. So many people won’t do that. I have a rule that after 6 months … I get a product 6 months that I launch. When I launch a new product under my account if within 6 months it’s not throwing off at least $2,000 a month in profit, I drop the product because I can deploy that capital in a better way. And so I have … you know some people their business models add, add, add products they got hundreds or thousands of products in their portfolio, mine is not that. I have about 15 to 20 and I do 7 figures so it’s manageable. And I kick out once that I replace them with something that can give me a better … it’s like stocks you know. I treat products like stocks. And I look at them like stocks, where can I get the best return? And get rid of the low performing ones and replace them, deploy that money into getting something that’s higher return.

Joe: Let’s talk about that just for a minute. We’re running a little short on time but I want to touch on new products and staying relevant. And it’s going to different for each one. But we’re talking now about again the people that are buying the Amazon businesses and one of the great things they can do if they’ve got capital is to expand to the other countries. What about launching new products is there any methodology to how often you should launch a new product? Or should you just adopt what you’ve talked about which is it needs to kick off this amount of profit or I get rid of it? And how many can you manage and the folks that you know that are doing … are they doing 10, 15, 20; what are they doing?

Kevin: It depends on your … I know people that have 800 products doing 9 figures a year and I know people … typically the people that are doing 9 figures a year have a lot of products. The people that are doing 6 and 7 figures typically … I mean some of them have a lot of products some of them has 50, 60, 70 products. That seems to be kind of a ballpark range. For these guys there in the million dollar figures, they typically are in the probably at least 40, 50 products and then some thousands of products. But as far as launching new products it’s all based on the more products you can launch the better you can grow, its cash flow and its opportunities. I see opportunities all the time when I’m doing keyword research and product research and I can’t act on it I just don’t have the money or I don’t have the resources. I’m a small team you know. Some people have 20 people and they could deploy faster. They’re sitting in their underwear in their house and it’s just them and a couple of VA’s. So you’re limited by that as well. So it depends on your strategy and your resources how fast you could deploy but as you see opportunities and they still exist out there and there are still new ones coming up every day is taking advantage of those depends on your cash and your team size. And the more of them you can take advantage of the faster you could grow and the more you could sell for. But the money in this business too, one of the important point I want to make is I truly believe that money is made in the sourcing, not on the selling. A lot of people always go what can I sell the product for? It’s not what you can sell it for it’s what you can source it for. Because you have more price … you’re more immune to price competition that way. If everybody is going to Alibaba or global sources or online Google and stuff and just by example you know I just went to China. I went to the Canton fair and there are some socks that a friend of mine sold last year and sold like six … $700,000 for these socks Christmas time and they were paying something like 2 bucks a pair for these socks. Well I found those exact same socks by just going to the Canton fair at 57 cents. You’re not going to find that online so most people that are out there doing Amazon they’re sourcing online. They’re using Alibaba, they’re using global sources, my saying is get on a freaking plane and go to China. Because going in face to face you can … it’s a big deal in their culture and you could find a lot of stuff that just doesn’t exist. I found one supplier of these like Christmas bags that I was like okay great you have a lot of bags I might want to sell these next year as a seasonal item. I said can I go to your website? He said no I don’t have a website, oh if you have a catalog … no, I don’t have a catalog. I said so how do I order from you? He said take pictures. He had 10,000 different types of bags. Take a picture of what you want here and I’ll give you a price, that and the prices were ridiculously low from what I could find on Alibaba.

Joe: Sounds like an awful and wonderful-

Kevin: So I’m like this is the best opportunity ever because nobody else is going to find this guy. His quality is good, the prices are ridiculous. So that’s what I mean the money is made in the sourcing. So if someone else … if I buy a box of socks for example if someone else … you know if I’m buying them at 57 cents and someone else comes in and I’m selling mine say for 10 bucks and all of a sudden someone comes in and starts selling them for 5 bucks. Well, I’m like shoot if I got to go to 4.99 to compete and I’m paying 2 bucks there what my margin maybe I’m going in the hole even after the Amazon fees and everything. Because typically it’s about a 3rd a 3rd a 3rd … I mean just as a … if you’re doing math, get math, ballpark math Amazon typically takes about a 3rd of the selling price, about a 3rd of the selling price is your cost of goods sold and other expenses, and about 3rd is your profit. So I don’t [inaudible 00:41:52.6] 5 bucks there went all my profit but if I’m at 57 cents I can still compete. So that’s what I mean the money is in the sourcing and so don’t be afraid to get on a plane and go to one of these big fairs in China. Go visit factories that can make a huge difference. And people that are selling, you know the biggest thing that they’re already successful the number one thing you can do is if you’re sourcing from China especially is get on a plane and go meet your factory. Go eat strange bugs and weird stuff and monkey hearts and whatever the hell else they eat crazy stuff over there and get drunk with the supplier and watch what happens to your pricing. Watch what happens to your terms. All of a sudden 30% down 70% on delivery all of a sudden maybe you get a 60 day terms or you get some other things that can make a huge difference in your business and the pricing is lower. Now you’re their buddy you get priority on the production line when it’s Christmas time or before Chinese New Year your stuff goes out first. It’s amazing what you can do on the sourcing side.

Joe: Wow Kevin that’s incredible stuff, a lot of tidbits there. Incredible; really, thank you. I understand why you’re traveling all over the world speaking and presenting here. If people want to reach out to you and find you how do they go about doing that?

Kevin: Yeah sure I mean the probably easiest way is to go to That’s A – M – Zed that just redirects to my Facebook page where you can … I don’t sell you anything there. It’s just where you can listen to all the different podcasts I’ve been on; a lot of free content. You might get some ideas or learn something. Or if you’re already selling at or if you’re new to the business and I always recommend this to people … if you’re new to the business or even if you’ve been selling for a while go to there’s a webinar there. It’s about a two hour webinar it’s … you could choose a date on auto replay. It’s not live right now but just watch that. You don’t have to buy the course if you don’t want to but just watch the first hour of that webinar and I think you’ll walk away from that. It’s not a sales pitch in the first hour. It’s a lot of hard core data on how to choose the keywords, how to do things right in this business and just … it’s hard core training and just watch that and that might help you understand some stuff.

Joe: That sounds great. I hope a lot of people will do that. Those people that are currently running their Amazon businesses and plan to exit someday and the people that are buying we want them to be successful and grow their businesses and come back and sell them someday so that’s awesome. Thanks so much, Kevin. I appreciate your time. I look forward to seeing you at the next event.

Kevin: Cool, I appreciate it. Thanks.

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