“…I think under a million dollars, personally. I don’t think that you should be trying to ‘squeeze that lemon’ much harder until you’ve re ally optimized Amazon. I think once you get beyond a million dollars, give or take, in sales that’s when you really need to start looking at other sales channels, whether its outside of Amazon.com and other marketplaces within Amazon or other sales channels totally outside of Amazon.”- Dave Bryant on evaluating when an ecommerce business should diversify and get sales off of Amazon US
Amazon US is widely regarded as the ecommerce platform to be in for sellers online. However, an ecommerce business that’s growing at a steady pace will eventually be confronted with the need to expand and diversify outside of Amazon US.
Dave and I both agree that ecommerce businesses below the million dollar mark should not jump into diversification too quickly. “I think under a million dollars, personally. I don’t think that you should be trying to ‘squeeze that lemon’ much harder until you’ve really optimized Amazon. I think once you get beyond a million dollars, give or take, in sales that’s when you really need to start looking at other sales channels, whether its outside of Amazon.com and other marketplaces within Amazon, or other sales channels totally outside of Amazon.,” Dave says.
However, that’s not to say that online entrepreneurs earning below seven figures should not do anything to boost their Amazon profile. List building off of Amazon and having an intuitive and user-friendly website can go a long way in increasing sales.
If you have reached that threshold, however; then it’s time to rethink your strategy. Having all your eggs in the Amazon.com basket can be risky, especially since your account can easily be suspended for one reason or the other. If this happens, you will need to have another way to liquidate inventory.
On that note, ecommerce businesses may also do well to explore one or two of the following verticals:
The platforms above have been ranked according to a number of factors — dealing with taxes, ability to do Fulfillment by Amazon, cost of shipping.
Other resources mentioned:
How to Lose Money Chasing Champagne Dreams of Retail Distribution
Thanks for listening to this episode! If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Mike: This is Mike, and welcome to 156th edition of the EcomCrew Podcast. So glad you guys could join us today. And of course today I have my trusty partner in crime David Bryant on the show with me. It's awesome again having him on Pacific Coast time, getting to do a bunch of these. And we were talking earlier this month about some podcast topics, and it feels like a lot of the things we talk about are so Amazon centric.
Even though Amazon is not the “be all end all” of our business, it's still is a large portion of our business. No matter how hard I try, it still manages to be two thirds of our business. And so naturally a lot of things that we talk about do revolve around Amazon and they are kind of the 800 pound gorilla in e-commerce. But today we wanted to talk about things you could do away from Amazon US at least.
And the thing that's ironic is one of the things that comes up here still is Amazon platforms internationally, but at least it helps you diversify off of Amazon US. So that's today's topic, things you can be doing in your e-commerce business to diversify away from Amazon US. We're going to get right into that after the intro, talk to you then.
Dave: This is Dave.
Mike: And this is Mike and welcome to this edition of the EcomCrew Podcast. Today we're going to be talking about growth opportunities outside of Amazon.com US. One of the things that I actually got a comment from, or maybe Dave was the one that read it and mentioned it to me, but someone was basically saying, like, all you guys talk about these days is Amazon. And that isn't our goal by any means. I can say that Amazon does make up two thirds of our business. And I think Dave, as of right now; it's basically 100% of your business, right?
Dave: Yeah. Pretty close to 95%. Coming from my previous business so where I was closer to 60%. That's kind of an academy of the trend, the way things are going that in two years gone from basically 60% at a previous company to 90% plus in the new company.
Mike: Yeah. And I think this is like a perfect setup for the question I have here which is when do you think that you should start evaluating this whole like I need to diversify and get sales off Amazon US?
Dave: Yeah, I mean, it's a great question and we always kind of [inaudible 00:03:55] because we're always kind of joking that you're trying to squeeze the lemon so hard to get every last juice out of that lemon and trying all these different sales channels, and you're probably at a point now where you should be squeezing that lemon a little bit harder. But I don't think — I think under a million dollars personally, I don't think that you should be trying to squeeze that lemon much harder until you’ve really optimized Amazon.
I think once you get beyond a million dollars give or take in sales, that's when you really need to start looking at other sales channels, whether it's outside of Amazon.com and other marketplaces within Amazon, or other sales channels totally outside of Amazon.
Mike: Yeah, and for once we actually — we did not talk about this beforehand, but we actually agree on a number of like to the penny because I also a million dollars is the same thing I had in my mind. And let me just kind of run through why that is and why I think that's important. I mean, I think that diversification is a very important component of business and in life and like your personal investments or finances or whatever, whatever way you want to look at it.
But you don't need to diversify if you have $10. I mean, you just put $10 in the bank and spend it when you need it. It becomes a thing when you get to a certain point, you're going to want to diversify to protect what you have, and not have all your eggs in one basket. But at a certain level, when you start chasing two birds, or ducks, or whatever the saying is two rabbits, like they both get away.
And when you're a solopreneur, you only have so much time, and conceivably like I mean, not conceivably like I think definitively you could run a $1 million Amazon US business like by yourself without having to be involved in all these other channels. And at some point then it becomes well holy crap, like I have all of my eggs in this Amazon US basket and if something were to happen, and there's a whole list of things we could talk about that could happen, my business would go completely be gone and I would have nothing left.
So at some point, you need to diversify, not only for yourself, but for me, I also look at it for our employees, because I'm always worried about them as well. So that's kind of the way that I've looked at it. And as we're approaching $10 million this year, or next year, whenever we get there, we’re certainly on that path, to me, like having all of that come from just Amazon US would like keep me wide open or wide awake at night.
Dave: Yeah, and I think that's one of the things actually that you enlightened me to about a year ago. I always said, well, who really cares outside of Amazon, you don't really get many sales from there. So you notice you can aggressively go after Amazon, but like you had mentioned to me, if Amazon ever suspends your account or anything, sure your business probably can't survive without Amazon, but you need a way to liquidate that inventory because otherwise, you're going to lose your business and you're going to lose all that capital that you have invested in inventory.
So you need to have some way to liquidate that inventory. And if you're trying to sell on eBay, eBay always — everybody always jokes about eBay that oh, I’ll just liquidate the inventory on there. But if you don't have a footprint on eBay right now and if your Amazon account goes bust tomorrow, you're not going to be able to liquidate that inventory on eBay because first and foremost, you don't have a sales record on eBay. So they're going to suppress your listings just like they do on Amazon. So one way or the other, you need some way to liquidate that inventory just in case crap ever hit the fan and you lose all your Amazon sales.
Mike: Yeah, no, I definitely think that that's the other big component here. I mean, when we were doing affiliate marketing, I've had a couple times where like I woke up and my business was gone. And it's definitely painful, but all that I had to do was walk away. It's a big difference when it's Amazon or an inventory based business. And you also have a bunch of inventory in a warehouse somewhere that you now are stuck with. That can be pretty painful.
Dave: Yeah, so outside of — so I guess if you're kind of were going down for the lowest hanging fruit up to the highest hanging fruit, everyone, you get your products in you start on Amazon. What's the next one that people should do?
Mike: Yeah, can I just throw one more thing real quick before we get into that?
Mike: And I definitely want to get right into that after this. The one thing I do want to mention because we talk a lot about like off Amazon list building and stuff like that, that component of it I think like is a necessary component even pre $1 million. I think to compete in this Amazon landscape, you need some sort of off Amazon list, and however you go about doing that, we’ve talked about a bunch of different strategies and we're not going to get into them deeply here. But like I do think that that component is really necessary.
You're not looking to then take that list and sell someplace else besides Amazon US, but you're using that to help bolster and drive your Amazon US business, and then that also that asset as you grow can be dialed to email people and say, go buy it from over here instead. So if something did happen, that asset helps with that as well.
Dave: Yeah, and we were talking about it before starting off that you should just focus on Amazon. But like you mentioned, there's two things I think that you need to support your Amazon sales to really boost your conversion rates and keep your sales on Amazon going steady. And like you mentioned an off Amazon email list and also a website. Because people when they do find your products, they are going to research your brand, they're going to pull up your website, a good chance that they're going to do that. They're going to actually research your products off Amazon.
And I know me personally, as a consumer, if I find a private label product on Amazon, I immediately, I go look for that brand. And if I can't find that brand off of Amazon, like if I can't find a website or something, I know the chances are good that the private label brand, the owner, the company is not very invested into the brand. And if I have any problems with that product, I'm not going to have any more than like I'm not going to have any venue to get a solution for that problem.
And if they don't have an off Amazon presence, that probably means that they're more or less a fly by night operation and the quality might not be there for the products. So I am, I'm looking as a consumer to make sure they have some type of investment outside of Amazon because as a somewhat educated Amazon seller, I know if all your eggs are in the Amazon basket, you're probably not that invested in your brand and the quality and everything that goes with it as somebody who has a lot of other sales channels and presence outside of Amazon. So that's why I think having definitely a website, an off Amazon email list, these are two critical components to have even if you're focusing strictly on Amazon sales.
Mike: Yeah, I couldn't agree more. All right, so let's jump into lowest hanging fruit, we’ll kind of try to do this in order. We can debate this back and forth. But I think that to me the lowest hanging fruit by far and away is going to be some sort of a channel that has its own existing traffic. So it's not going to be like your own Shopify store or your own BigCommerce store.
To me, that is definitely not the lowest hanging fruit. It's going to be another platform like an eBay, a Houzz, and Etsy etc, we can kind of go through these lists. But I think that some other platform that already has eyeballs there where you're not having to figure out a way to get those people to your website is going to be that first avenue.
But for me, I would say, the lowest hanging fruit after like all the things that we've done at this point, I think it's Amazon Canada. You're talking about it's more Amazon and here's why Dave. I mean, first of all, like the platform is exactly the same, so there's no learning curve of how to get set up on there and all that. The learning curve is how to deal with international taxes and all that. It's really not that bad. But the platform itself is pretty simple to learn. So it's the exact same platform.
Dave: Yeah, there's like you mentioned the biggest hurdle is simply the taxation and the business setup part of doing business in Amazon.ca and Europe too which we'll get to I guess in a few minutes. But like you mentioned it's the same back end, especially with Amazon North America. It's all what they call — what do they call it? The global Amazon network or I forget what their fancy is but either way, Mexico, Canada and America are all connected in one backend.
Mike: Right? Yeah. So I mean we've thrown all of our stuff up in Amazon Canada FBA and we've just had like great results with it. I mean, everyone basically told us that you should expect about 10% of your sales that you do in the US to happen in Canada. So basically like every $100,000 we do in Amazon US, we see about $10,000 in Amazon Canada. And that's been ringing pretty true for us. But the profitability is actually higher because the ACOS on ads is like way the heck…
Dave: I know it's crazy.
Mike: It's nuts. It's like sub 10%.
Dave: I'm looking at my account right now and it's 3% for Amazon Canada, 3.5 to be fair.
Mike: I mean, we're like around 10 because like we're just spending aggressively which sounds crazy to even say out loud. So yeah I mean it's been good. And the other thing that's good about it is that like the stuff gets there super quick, getting set up with like Amazon Canada or just a Canadian tax ID number I should say is relatively simple. We use a third party company for that. You can contact us and we can make an introduction for you if you want support at EcomCrew.com.
We don't get a referral or anything from it, but they've done good for us, helping us get that all set up and also get the — they also do the shipments for us which are relatively cheap and fast compared to Amazon UK which we'll talk about at some point down this list. But for me, like I look at Amazon Canada as just a great opportunity. It helps us expand our interests around the world. The account is completely separate from Amazon US.
So like if something doomsday scenario did happen in the US, it wouldn’t shut down our Canadian account. So for me, I will put that as number one, like first thing outside of Amazon USA. I'm curious if you agree with that or not?
Dave: Yeah, I mean, I totally agree. The funny thing is, we'll get students from EcomCrew, and there'll be Canadians. And they'll be like, okay, where should I sell? How do I get my shipments into Amazon. com? How do I compete there? I’m like, well, you have a Canadian business, you have everything set up in Canada, focus on Canada first. And the same thing goes true, if you're in England or Britain and you're looking for places to sell, well, focus on where you already have that tax registration, that business registration first, because that's going to be extremely easy, even easier than selling a dot com.
But like you mentioned, even as an American setting up in Canada, especially compared to Europe is pretty straightforward. It's probably going to cost you a few hundred bucks and different registration fees, but the filing for GST/ HST is very straightforward, especially compared to some of the requirements in the US and especially compared to Europe.
Mike: Yeah. So let's talk about Europe for a second. For me it's definitely not number two. So [overlapping 00:15:05] because yeah I mean it's definitely on the list and we're working on continuing to grow that. But yeah it's definitely not number two for me. For me number two would be eBay. I’m curious if that's your number two as well or if we're going to split here.
Dave: So eBay is a funny one because eBay is so industry dependent. I'm selling automotive products, previously I sold boating products and eBay, believe it or not, this is going to come as a shock to anybody not selling boating products or automotive products. eBay Motors is actually still really, really powerful. Right now for my new business offloading.com, if I wasn't as what they call below standard on eBay, eBay would be close to 10% of our sales. My previous company, the building company, it was around 15 to 20%. For the longest time though, eBay was well over 50% of our sales.
And eBay Motors, absolutely critical, almost as important as Amazon.com if you're selling on eBay Motors. Now the other categories, if you're not selling used or some type of collectible, I think it's really only a channel for kind of liquidating your used refurbished merchandise.
Mike: Yeah. And we do that on eBay. We actually started doing that on Amazon by the way, and had some pretty good success, just selling a used version like our returns. We just throw them up on Amazon now. And that’s because there's actually a status of used on Amazon. People do buy them, that seems to be working as well. So they're both on eBay and Amazon. And it makes it easy because we already have the listing on Amazon and you just make a second skew under that listing. And you just have a used version and you can just send out the used version.
But eBay does well for us. I mean, it isn't like 20% of our revenue, but it does move the needle and it's relatively easy and you can fulfill eBay orders with your Amazon inventory, which is what we do. And it seems very simple. And it seems like why wouldn't you be on eBay to me? And maybe it's just because I have a background on eBay. So, I knew they had kind of gravitated there. I mean, I was a power seller in the last millennium. That's how old I am. Literally, like in the 90s I was a eBay power seller. It's embarrassing.
But yeah, so I mean, it certainly isn't what it once was. In fact, actually in some ways, it is what it once was because it seems like the platform hasn't changed at all. It's phenomenal. Like I don’t know how they made it like 20 something years and like never updated the interface or the look and feel of it because it still looks like it's from the 90s.
Dave: The funny thing with eBay is I did a blog article on eBay and kind of comparing it to Amazon. And we think that eBay has kind of gone down and down. Well no, eBay hasn't gone down. Their revenues are exactly the same as they were five years ago, but they haven't moved at all. I think they're 7 billion dollars a year or something. In that same time frame, Amazon has gone from about, I think 20 billion up to 120 billion. So…
Mike: The rest of the world has passed them by.
Mike: Yeah, it's crazy. It's so much sad sometimes to see these examples because there's like a lot of these things in history, especially in the tech industry. And the first one that comes to mind for me is Yahoo because I mean Yahoo was like the most relevant search engine of its time. And not only was it a good search engine, but there was like all this other news and stock stuff and all this stuff I used to use it for, and then like Google just like yeah ha, ha like we're passing you and you're not relevant anymore. And it just continues to happen time after time in technology.
Dave: Yeah. As an aside, I have no idea why Marissa Meyer ever took on that battle of trying to regroup Yahoo. A little bit of a career mistake on her definitely. That was a quickly sinking boat.
Mike: It worked out well, actually sarcasm. All right so getting back on track here. I mean, it sounds like we're both in agreement I think on eBay then is the next one here.
Dave: Yeah. I mean, are you actually selling any new products on eBay?
Dave: You are?
Mike: Yeah. That's actually, well, I shouldn’t say it's all we do. But yes, we do sell new products on eBay. We want to actually expand. It's a part of our initiative here is to get like more stuff. Like we just basically at one point we were selling every skew that we ever have was on eBay. And as we got bigger and busier, for some reason, we just stopped thinking about it for I don't know why, because again, it does move the needle. But we definitely want to get all that stuff back up there again, and it’s just a matter of time. The thing I will say is that the average, just being stereotypical, the average eBay customer is kind of a little bit of a pain in the butt.
Dave: You think.
Mike: Yeah, I mean, again, just being stereotypical, I mean the average, on average there's more touch points with an eBay customer than there is with like an Amazon or Shopify customer. Well first of all, you can’t even do this on Amazon but like a lot of them will ask for a discount, will just be like will you sell this to me for less. That happens a lot on eBay and like [inaudible 00:20:14] talking like 50 cents less sometimes or just like looking for a deal so they can feel like they got a deal.
But they seem to complain a little bit more as well. Like I didn't get this or it was damaged or something. I mean we keep the stats and the eBay customer tends to be disproportionately like complaining about the stuff more, but it's still worth doing it there I mean with all that.
Dave: My contrarian view to that is that eBay customers are complaining less because you see them, but the return rates are much lower than Amazon. So with Amazon okay, I don't want it, I used that pair of shoes for a month, I want to get a new pair, I'm just going to return it. I'm going to file an ABC claim. So Amazon customers are disproportionately returning items and a lot of times abusing the return system.
eBay customers returning items a lot less, but when they do return items, you actually have to handle it. You're going to hear from them. And so it's more visible. Yeah. But it's as a percentage I think it's far less than Amazon. And actually, I know for a fact in my businesses, eBay customers are being close to a quarter of the returns of Amazon customers.
Mike: Interesting, interesting. Cool, I let…
Dave: Like you said, you hear about them — you hear from them a lot more.
Mike: Yeah you definitely hear from them more because you have the interface with them versus on Amazon. It's just kind of the Wizard of Oz taking care of it.
Dave: Amazon returns everything and they say hey, you worry about that.
Mike: Yeah. All right, so the next thing here down the list, let's go to number three. I don't have a strong number three. I do think this is where the industry that you're in will depend on a path that you take care of because, I guess fortunately or unfortunately however everyone look at it, I have exposure to a bunch of different industries.
We've sold treadmills and cutting boards, and hot and cold packs and baby products and tactical stuff and coloring stuff. I mean we have exposure across many different verticals, and one of those platforms that's worked incredibly well for us is Houzz, but like obviously only in home and bath and kitchen and just something that goes in the house basically.
And cutting board does like phenomenally well with Houzz, and I know one of our friends that used to work with a company that sold like bathtubs and sinks and did incredibly well with Houzz. I think that it was like a quarter of their business.
Dave: No I think it was over half.
Mike: Over half, wow okay I didn't want to overstate it, but I knew it was a big number. So there's a lot of these niche platforms out there that there's other ones out there too. I think like Zulily might be one of them that I think they focus on clothes. I'm a little bit ignorant, so I had to apologize but there's a lot of these like niche type platforms of home and bath or clothing or whatever it might be that if you're in a niche, if you're lucky enough to have a niche that fits that stuff I would definitely be looking at those platforms at this juncture.
Dave: Yeah I think Houzz is by far kind of the elephant in the room outside of Amazon and eBay and your own website. But like you mentioned, the only thing that Houzz really applies for is if you are in the home decor niche, and that's a pretty wide niche actually. I mean it's anything fashion obviously for your house, gardening, patio, anything on that kind of realm Houzz is applicable for.
And yeah, I know multiple people who are getting close to 50% or more of all their revenue through Houzz, and it's just because it's still a relatively untapped platform. I feel like everybody is focusing on those channels that we've talked about already. But if you're in that niche, that home decor niche, Houzz can be absolutely huge because you have such a monopoly on the market.
Mike: Yeah. Yeah, I agree. So I guess again, Houzz is kind of, for me befitting here as an aspect of do you have home decor. And then again, there's a couple other niche platforms. Unfortunately, it's kind of sucks. Like, we don't have a niche platform for coloring or for tactical gear and or hot and cold therapy. So we don't really have this avenue for that. But for the cutting board stuff, it works great. I mean, especially with something like the products that we are selling on cuttingboard.com, I mean, they're like these high end furniture type pieces a lot of them that I mean, like I just want 20 of them in my own home.
But I don’t know what the hell to do with them all because we don't have a lot of cupboard space. But they're really beautiful, like works of art type pieces. And those do really well on something like Houzz because the majority of the people that are in there are like are interior designer type people that are designing stuff for very affluent type people and money is no object which is always a cruel customer base to have.
Dave: I've been in that niche with boating.
Mike: Yeah exactly like I mean most boaters like just don't care about money. And in fact I think that that's a prerequisite, you can't care about money and on a boat. It’s like those two things — and that's why I had to sell my boat because I was sick and I would feel about getting into the ocean throwing cash in the ocean.
Dave: On the water that sucks money.
Mike: Yeah, yep. Okay, so the next thing down the line that I have here, I think we've kind of come to the Amazon Europe and or Wal-Mart is the other one I had written down here. Both of these are kind of like you plug your nose and do it for me. I feel like is the answer but even as frustrating as Amazon Europe or I should say, UK — we've only got into the UK and we're about to work on the European Union part. As frustrating as it's been, it's still been more successful than Wal-Mart. In fact, we've kind of just given up on Wal-Mart at this point.
We will revisit it because I've heard some people that are starting to finally get some traction on Wal-Mart, but it's a problem for us because Wal-Mart will not let you use Fulfillment by Amazon to fulfill, and we kind of switched our entire business model to use Fulfillment by Amazon to do everything. And for that reason, we're really hesitant to like tip our toe back into this Wal-Mart thing because that means that we then have to stock any skew that we sell on WalMart.com back in our warehouse again and have someone here to deal with that, which is probably the bigger issue.
For me, like I'd have no problem with it. Like if Wal-Mart produce let's say, a million dollars a year in sales just to throw a number out where it could keep one person in our warehouse busy full time that's like their entire job, that's great. But what ends up happening is in business that the exceptions are the gotcha type things are what really can like burry a business like ours where like you need like a quarter time person to do something.
Then it's like well you're hiring them, it's like what else are they going to do, and then you got to like start inventing crap for them to do that they might not be very good at, or like you don't even really need that in your business. It's not like a critical thing in your business and you start wasting money on these types of things. So for me, like the Wal-Mart thing is tough because of that.
Dave: Yeah, yeah, I've actually tried registering for Wal-Mart multiple times. And it's funny as a Canadian business it may have changed this year, but they will not even touch anybody international. So you have to actually like have a business registered, not even just an employer ID number in the US, like an actual physical business in the US to even open a Wal-Mart account. And so, for us it has been a total deal breaker for the last three or four years actually.
Mike: But you're not missing anything. So no need to move back, not mission setback [ph], but no need to move to the US to get all that set up just for Wal-Mart, because it hasn't really been that lucrative. But we were there early. I mean, we are approved to sell in Wal-Mart. I mean, we just stopped doing it. We got one sale here and there like our backend inventory management software handle Wal-Mart, so having it wasn't really a big burden for us.
But when they switched to like you can't do Amazon fulfillment we just stopped and didn't look back. And that was like over a year ago now. So again for us to revisit that, I'd had to have a bunch of my friends in this industry show me that they're doing seven figures on Wal-Mart and then I would definitely figure out a way to do it at that point.
Dave: Yeah and I think we're kind of in the same boat there too where we're trying to use Amazon fulfillment even for off Amazon orders. And yeah, if you can't use Amazon fulfillment, that's a deal breaker because Amazon, their fulfillment is so good even for where they call it multi channel fulfillment. It's so great just for the two day shipping. It's dirt cheap, it's obviously reliable. And yeah, if you can't use Amazon fulfillment for shipping an order to Wal-Mart, then it’s totally deal breaker.
With eBay it's kind of the — actually eBay is kind of in the same boat where they now want tracking within 24 hours and unfortunately Amazon multi channel fulfillment, they normally won’t send you tracking until the day before it ships because Amazon for whatever reason they tend to ship everything overnight or two day Express even if you select ground shipping, the five to seven day standard shipping, they still just delay the shipment and wait five days to ship it. And then they ship it one or two days before fulfillment.
And by that time eBay said hey, where's the tracking for this and it can really screw up your metrics there. So eBay still you can kind of get around it. They don't punish you too badly for not having tracking, but if they ever do kind of crack down on that and they want tracking within 24 hours, and they really penalize you if you don't, then even eBay can start to be an issue if you're trying to fulfill everything from Amazon.
Mike: Yeah I agree. I mean, one way to get around that, it's not very cost effective, but you can do the expedited Amazon Fulfillment and that does give you a tracking number relatively quickly. And so it depends on the product but a lot of them we are just doing expedited just to not have to deal with the support case, because I figure if one out of five people ask where my tracking number is, then that's the $10 we're saving because like everything is time is money, and I’d rather not get that support ticket.
Dave: Yeah and also if you’re selling feature two on eBay you can advertise two day shipping, free two day shipping.
Mike: Right yep. All right so with the last remaining three minutes that we have here, let's talk about Amazon Europe, UK first and then the rest of Europe. First of all, are you selling there yet, or have you sold on Amazon Europe earlier?
Dave: No I haven't. I've looked into it and I cannot figure out how to do it effectively for small shipments. Unless you're shipping in pallets and pallets of products I cannot figure out how to make it work because I know Amazon Europe is going to be probably comparable to Canada or less and shipping is going to be astronomically more than shipping to Canada. So I can't figure out how to make it work given their volume that I know I'm going to get from Europe.
Mike: Yeah. So shipping is a problem. And so I can speak from my experience. First of all, I mean, just getting set up over there is expedentially more difficult than Canada. We use the company called SimplyVAT, they've been great. They help you get your VAT numbers and do all your filings and everything, but it's still more complicated and more expensive. Just the baseline like I want to come play the game just to sign up the cost more and is more difficult. The shipping time to get from the US over to the UK is about the same as like getting it or more from like getting your shipments from China to the US. It just takes seemingly forever to get there.
The shipping is incredibly expensive compared to like getting it to Canada. So we had to build that into our price. And I think the reason we've been struggling a little bit is because we've had a build in the shipping costs, Exchange Rate Variance, we put like a 10% buffer in there for that. And the fact that, like, the exchange rate is not favorable to begin with. So, like your pricing stuff, that's more than a comparable item that someone is just a UK seller but natively, it just becomes more difficult.
And so our ACOS is much higher, it's like 40%. So I mean, it's just — we've been…
Mike: It's been tough. I mean, it's definitely we're making some sales; we've only had two brands. They're like the brands that we have exclusivity for to sell on Amazon but we got started with there. So we have like all of our other stuff in route now and we're hoping that that stuff will do well, that that stop being ColorIt stuff. We actually normally everything happens with ColorIt first, but in this case it didn't work out that way. All the ColorIt stuff is in Canada and doing well there just as an aside.
But the only thing that's frustrating with the UK is they have different regulations. So we have hot and cold gel packs, they denied half of them, because they’re medical devices or whatever and we're like why are these size gel packs different than these sides gel packs? And no good answer, these are not medical devices, but so there's other things you got to worry about there from that perspective too. And yeah, it just it hasn't been — I talked about this in my 2018 goals thing; just it hasn't been the magic pill that I was hoping it would be.
I was hoping that it would increase our sales by one third just based on like doing all the AU. I don't think that we're going to get there, we’re not even close. So it's definitely hurt our sales forecast. We were expecting to do seven figures in Europe this year. I don't think that's going to happen. So I think it's going to hurt us getting to our eight figure goal this year. So it's just been brutal like all around, and we haven't given up on it by any means. We're going to continue to — we actually like I said, we have more stuff in route there as I'm recording this, but it hasn't been like as easy as I was hoping.
Dave: Yeah and you're only selling in the UK, you're not under I guess what they call the Pan EU FBA arrangement that they have?
Mike: We're not and we've talked to a lot more people about this that are doing seven figures in the EU. And they've all advised like not doing the Pan EU program until you absolutely have to. So basically when you get to a certain volume it makes sense, but and we don't have time to get into it because we're running low on time with this podcast. But there's this thing called distance selling rule. So you can ship stuff from the UK to Germany, to France, to Spain, whatever and every country has a threshold of X thousands or tens of thousands of dollars per year before you need to start paying VAT.
So basically until you get to that level, you don't need to worry about this. And so we're just — we have all our inventory in the UK, we're going to start selling on Germany first, be the first foreign language one that we do. And we've been told by a lot of people that Germany is by far away the biggest platform outside the US. So we do expect good things there. But it's in German. It's just like another thing for us to have to figure out and deal with. But until we hit that selling threshold, we're not going to land inventory in Germany or get to that number.
Dave: Yeah, yeah. My understanding too is that Amazon Europe right now is really Amazon UK and Amazon Germany. And now there's a million other countries in Europe, but really, that's kind of where the heavy hitting is coming from is Germany and the UK?
Mike: Yeah. All right, well, as I was mentioning, we're kind of out of time. I would like to talk about this a little bit more. There's a couple of other platforms. One of them I do want to mention, just real quick. We ran out of time to get into detail with it, but don't forget about Groupon. I know a lot of people that are having a lot of success on Groupon. The reason it's down the list here is because it's like a luck of the draw thing. In order to be really successful on Groupon, you need a buyer and they're tough to get ahold of.
So it's kind of like guerrilla warfare where you're like you're having to like either know someone that knows somebody or do like LinkedIn introductions and send them gifts and chocolates or whatever or flowers and try to woo them over. It's kind of a weird backdoor thing. But people that are selling on Groupon that have these relationships, Groupon is still very relevant and doing quite well for them. So I wanted to mention Groupon as well. And I think the other ones that we have on the list here Dave, you mentioned trade shows, Craigslist, and wholesale.
Dave: I think just all specifically off non e-commerce. I think a lot of us with private label products, we're kind of we’re always thinking in our minds, geez, if I can just get a Wal-Mart order or a Costco order. There's a really good episode with Bill D'alessandro, episode 114 I think. If you are thinking about wholesale, I definitely recommend go to EcomCrew.com/114 and read about some of the pitfalls about chasing retail dreams as Bill called it. I know from my experience, I did the exact same thing five years chasing retail dreams. In the end, it's probably not the best use of your time or your effort.
So that's something to consider. And in terms of trade shows, trade shows I've actually had a lot of success with. Those are kind of a nice in between, between going off of e-commerce but still kind of controlling your sales channels, so something to look into. I think there might be a couple of posts on EcomCrew too about actually selling on trade shows. So that's something definitely to consider. But if you are considering wholesale and retail selling for your products, again I definitely recommend checking out that episode 114 with Bill D'alessandro.
Mike: Cool, great way to end it. Appreciate you coming on today Dave, and we'll talk soon.
Dave: Good, talk to you guys soon.
Mike: And that's a wrap folks. That is 156 episodes of the EcomCrew Podcast in the books. You can go to EcomCrew.com/156 to get to the show notes and comments for this podcast episode. Again, we want to thank you guys for listening. It means a lot to us. If you have a chance to go to iTunes and leave a review, that is also super helpful. We're getting very close to 100 reviews. We'd love to crack that mark sometime this month.
So if you have a minute, if you've been enjoying the EcomCrew Podcast, go over there, leave a review. Or if you hate our podcast, go over there and say that too I guess, and let us know what we could be doing better. But we really appreciate the reviews if you take a moment to go do that. And besides that, guys, I hope you guys are having a great week. And until the next episode, happy selling and we'll talk to you then.