E211: Making a Case for Private Labelling in a Competitive NicheJanuary 3, 2019 in Ecom-Crew-Podcast
Happy New Year!
I’m here with Dave to bring you our very first episode in 2019. I wanted to start the year on a strong foot, so for this podcast, we’re doing something different.
Today’s podcast will focus on an email sent by one of our EcomCrew Premium members. His concern, I’m sure, reflects that of so many ecommerce entrepreneurs. In this world of unscrupulous Chinese sellers, does private labeling still make sense? Is there still a viable business for it in Amazon in 2019?
Is private labeling dead?
Dave and I both agree that private labeling is still very much alive. But we do go back and forth to expound on our answer. Here are some of the highlights of that discussion.
- There are many trends that impact private labeling today. For one, competition in this particular space has increased and gotten more intense.
- The Amazon marketplace is still rife with opportunity for new sellers.
- A sustainable launch strategy is critical for a private label brand.
- High-quality product imagery is another important factor because, in many cases, it can be what differentiates your product from all the competition out there.
- Complexity is the opportunity. The more effort you put into your product, it becomes more defensible.
- Creating and building content around your product will put you in an advantageous position over everyone else in your niche.
- E132: DROPSHIPPING VS. PRIVATE LABELING – A FRIENDLY DEBATE
- E129: HOW TO PICK THE PERFECT PRODUCT TO SELL IN ECOMMERCE
- HOW TO FIND THE PERFECT PRODUCT TO IMPORT FROM CHINA AND SELL ON AMAZON
Registration to EcomCrew Premium is closed indefinitely. But, you can still learn from us through our suite of free courses. You’ll find a total of 20 videos covering ecommerce topics like Importing from China and Building a 7-Figure Business.
Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.
If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Intro: This is Mike and welcome to episode number one of the EcomCrew Podcast, episode number one of 2019. We’re at 211 folks, episode 211 total, episode one of 2019. It’s a new year. It’s that time of year where everyone is excited to hit the ground running, the possibilities of what might happen in a new year like this. 2018 for me was full of a lot of ups and downs. It was a year of new heights in business, but in a personal sense it was a year of loss. I lost my grandma, I lost our dog of 13 years which is basically like my wife and I’s kid. Dad came down with some health problems we’re dealing with right now. Hopefully, that’ll be okay, but it might not be.
So it was a year in the family side that was a little bit rough, business we hit new heights. But I think everyone goes through years that are ups and downs. It’s hard to always be doing everything on the straight up line everything go perfectly. But whatever the case, I hope you guys have a great 2019. And hopefully, I will be in your year a little bit of that and make your life better on the business side somewhere along the way. Episode one of 2019, we’re going to try to do a whole bunch more of these this year. I haven’t set the goal yet. We’re going to do the goals episode later in January or early February.
We might do another 100 podcasts this year, but it’ll certainly be more than 50 and probably less than 100, something in that in that range. We’ll see how it goes. We have a lot to figure out between now and then. Enough about that, let’s get into today’s episode. I think that this might be the best podcast of 2019; we’ll see how it goes. I want to start the year out on a strong foot. This podcast started out with an email that came in from an EcomCrew Premium subscriber. And this is the first time we’ve done something like this where we took an email from a Premium subscriber and read it live here on the podcast.
In order to do that, we had to ask his permission obviously to make sure he was cool with that which he was, and then we had him listen to the episode as another level of just being sure. And he was a little bit skittish about the exact niche being mentioned in the podcast. So we’ve beat that out. Those are not curse words. We’re just beeping out the exact niche to protect his identity and what he’s done there. But that doesn’t make it any less of an impactful podcast because you can insert any niche in everything that we talked about here is applicable. So I think you guys are going to enjoy this.
This is one of these things where I think a lot of the people listening to this podcast have been at this moment where you felt like things weren’t going right and that you’re a failure and you didn’t know where to go from here, and maybe that you made the wrong decision even getting into this whole Amazon game to begin with. So if you’ve had any of those feelings ever, you’re going to love this podcast. And I want to thank our EcomCrew Premium member for allowing us to produce this piece of content. I hope you guys enjoy it and we’ll get started with my buddy Dave talking about this, right on the other side of this intro.
Dave: It’s basically like treasure hunting, you’re trying to find this great product where you have to do nothing. And you basically find this great product that has unlimited demand and there’s only one or two competitors selling it. And maybe you do find it, but by the time that you found it and a thousand other sellers have found it, too. And you have this law of two to three months where maybe there’s not that much competition. But before you know it, you’re just inundated with competition. And this comes out of nowhere.
Mike: Hey Dave, happy New Year, man.
Dave: Hey, happy New Year to you.
Mike: Yeah, so hope you had a great holiday season and I want to chit chat with you about all that good stuff. But we have a pretty heavy topic for today and I want to just basically jump right in because I don’t want to run too long today. But we’ll do some catching up maybe after the call but for the podcast here, I want to go over something with you. We had an email come in from an EcomCrew Premium member. And it’s the first thing we’re doing this. I want to turn his email into a podcast episode, and he gave us permission to do this. So I just want to make sure that that’s clear because we usually don’t share emails from Premium members with the public or even other Premium members but he did give us permission to do that. So I wanted to make sure that that was clear.
But let me read you what came in here Dave, and then we can have a little debate about this and see where we land.
Dave: Let’s do it.
Mike: All right, so he says, please pardon my question ahead of time, but I’m in the hole for quite a bit, having invested too much in time and resources into designs and now I have fully abandoned that investment. How realistic is it these days to find a great product to private label that will not likely end up in a race to the bottom due to Chinese sellers? My assumption is you have a broader view and context for what’s going on, and seeing the bigger picture and trends. Thank you for your advice and then he kind of just goes on to say thank you for a little bit more.
So I want to just real quick preface all. This gentleman signed up with us. As soon as he sent I was like, oh man, I’m worried about this particular niche because you can’t differentiate and all the other things I think that have put them in this position this race to the bottom which I do think is a big problem. But the real question here Dave, like the meat and potatoes of the question and I’m going to turn it over to you first, basically is private labeling dead? Is there still a viable business here on Amazon? Can you start today from scratch and still compete even though – with all the things that are going on, Chinese sellers are sending in the market, some other stuff that was just published recently in the Wall Street Journal and the Verge and all these places. They’re talking about all the dirty tricks that are going on. Is there still a viable business in 2019 doing this stuff?
Dave: Yeah. So this is kind of a follow up I guess, to a podcast that we did earlier in the year where we basically posed the question, is drop shipping dead? And after we did that podcast, we immediately proceeded to have all of our friends who run drop shipping businesses ridicule us for trying to even ask the question, is drop shipping dead? So now, we’re doing the same thing with posing the question, is private labeling dead? And the short answer is no, it’s not. But the more long winded answer is that there’s definitely trends which have taken place over the past few years.
And this goes on with any industry I suppose, different trends take effect which kind of change the business, and so private labeling is not unique in that regard. And I think some of the trends which have happened is number one like Pete talked about here in the email is, there’s more and more competition not just from Chinese sellers but everywhere. I think people really overemphasize the importance of Chinese sellers because people think, oh, these Chinese sellers in factories; they have a direct supply chain. They’re the ones making the products and how can I ever compete with them? Well, that’s not the case.
It’s not Chinese factories that they’re competing with, its kids like me and you in their Chinese parents basements competing with us. So it’s not the factories, they don’t have a direct line to the factory machines to get these products really cheap. So I don’t think that’s really an issue. The only difference between a Chinese seller and American seller is the color of their skin and there’s a lot of Chinese American sellers. So really, it’s there’s really no difference.
Mike: Yeah, and so starting off at a high level on my end as well. I absolutely do not think that private labeling is dead. And I think that Dave and I are both really good examples of that. I mean, Dave, you started a brand new private label business about 18 months ago, 14 months ago or something in that timeframe and have grown a seven figure business in that time doing private label products. For our parts, we grew 45, 50%, the numbers are still a little bit wet, start with the printing yet because it’s still early in the year here. But I mean we grew our private label business significantly last year by millions of dollars by mostly launching new products.
And I do see some other concerns in our business that we’ll talk about in other parts of the podcast in 2019. But I certainly do not think that private labeling is dead. I do think a certain aspect is dead and we’ll talk about that as this progresses, but by far and away I still think that there was an amazing business here. It’s a unique time in history that the opportunity is still millions upon millions of dollars. And while I do think that things have changed, I still think that the opportunity is way bigger than the concerns.
Dave: Yeah, absolutely. And when I sold my business in 2016, the big reason why I sold it was the fact that I figured, okay, this is a pretty replicable business model. I can recreate with a brand new business and basically exit the other business, get a nice return on my time and investment that I made and just recreate the same thing from scratch. And that’s more or less proven true. And of course, I have a little bit more knowledge and experience than some people, but I think it does more or less prove that the business model is sound. Now, like I was kind of talking about, there’s some couple of trends which I do think change things.
Number one, there’s more competition. But conversely, though, there’s also a lot more demand on Amazon. And I was looking at basically Amazon’s revenue charts over the last 10 years. And since 2014, Amazon has tripled in size in terms of revenue. Now of course not all that’s gone to third party sellers but a good chunk of that revenue growth is going to third party sellers. And I would estimate even that third party seller growth is even more than that three times growth of Amazon overall. I think third party sellers are probably, the revenue has probably grown four or five times in the last four or five years.
Mike: Yeah, I mean, I agree, definitely without a doubt. What I think basically has happened here, and why this gentleman ended up in the position he has, and along with a lot of other people is that for a number of years now, I mean, I would say a minimum of three years if not more, there have been dozens of people telling people how to sell on Amazon, and they all kind of fit in that same box. And I’m not going to pick on any of them because we’re also those people. We’ve been consuming that information. We’ve learned how to do it ourselves; we’ve been teaching people how to do a lot of this stuff. But we’ve kind of stayed out of that playground of like just follow what everyone else is doing and put it in this tight needy box, the Jungle Scout kind of effect of here’s how to go find products and just go sell them.
So what ends up happening is when you have a tool that everyone else has, and you’re putting in the same parameters that everyone else is, finding products the exact same way, this is inevitable. You’re going to have another person that’s going to discover the same thing the same time that you do, or multiple people. And people underestimate how, or maybe I should say actually, let me rephrase it. People overestimate how deep a particular niche is, or a search term is, the volume that’s happening, and the number of sales that can come out of that. And when you have three or four competing people all show up at the same time trying to solve the same widgets, you’re going to have this inevitable race to the bottom. Everyone is panicking trying to just get rid of their inventory.
Amazon is happy the entire way because there’s multiple people selling the same thing for cheaper, which is good for their customer base, and Amazon wins in the end and the private label company loses. So, I think the lesson here is and the things we want to talk about for the rest of the podcast episode is how to do things differently, how to do things in a way that you can win because following the same formula that everyone else is doing, I think is a recipe for disaster.
Dave: Yeah, and absolutely, I think that’s kind of the problem with people like you say, it’s the Jungle Scout effect. And what happens I think, and we all fall into this trap, I fall into this trap, I’m sure you have too where it’s basically like treasure hunting. You’re trying to find this great product where you have to do nothing and you basically find this great product that has unlimited demand, and there’s only one or two competitors selling it, and maybe you do find it, but by the time that you found it and Jungle Scout has helped you uncover it, a thousand other sellers have found it too. And you have this law of two to three months where maybe there’s not that much competition, but before you know it, you’re just inundated with competition and this comes out of nowhere.
Mike: Yeah, I’m sorry; I didn’t mean to cut you off. But I just want to repeat something you just said, quote unquote here; it’s a great product where you have to do nothing. And that’s the part I think that’s in trouble, and there definitely was a time where we were doing this. I mean this is what got me sucked into Amazon back in 2015. We could launch any product, basically do almost nothing and it would be successful because you could game the review system and you could game all kinds of other things basically before Amazon put an end to that.
And this is the part, it’s literally you just said and I wrote down those exact words. You’re looking for that great product where you have to do nothing. And I think that the shortcut approach or the get rich quick approach to all this is the part that’s going by the way of the dodo bird not the, I want to build a legitimate business part where I can have great success on Amazon.
Dave: Yeah, yeah. So what are some things then that people should do? So if you’re not looking necessarily for this product, which basically hasn’t been discovered, it just has this upward trend of demand, and there’s a lot of competition. What can you do though, if you’re just trying to do it the other way around and create a business, “real business” or basically build sustainable and differentiated products? What are some things that people should do and be looking for?
Mike: Yeah, I mean, and this is going to be depending on your business outlook. And this is — what I’m going to talk about here is how I look at things. And I realized that for me I’m more capitalized, I can take a longer term approach to things and that makes a difference. If you’re still in a job and you’re you got a couple of thousand dollars to invest, you might take a little bit different approach. But for me, I’m beginning with the end in mind, so I’m looking at what do I want at the end of the day? Do I want a bunch of random products so I’m just selling on Amazon and making money which is great, but that’s not really defensible?
So for me I’m thinking, I want to build a defensible brand and a company and a market a brand basically around whatever products I’m going to do. This is the approach that we took with something like ColorIt, same approach we’re taking with our Tactical brand. So we’re working hard on building list, traffic, community, off of Amazon to be able to fuel the Amazon fire. So there’s an upfront cost and effort that goes into building that up, but once we do we have this unfair advantage of everyone else on Amazon. So I mean, I want to stack the deck in my favor. And we started that process, that concept, years ago.
This was before we got to the current environment. But it was because I kind of foresaw some of this coming. I wanted to be able to have Amazon be just the channel and not the be all end all of our business, and be able to communicate with our customers in a way that when we launch a new product, they want it, they clamor for it, they’re looking to get that. And to do that, you have to have a consistent brand, look, and feel like all of our packaging looks the same. All the quality is the same, people know what to expect out of our products. And we were just looking at some of these stats at the end of the year last year.
We have a 45% repeat customer rate on Colorit.com. It’s fairly similar on Amazon, and our lifetime value of a customer looking at a cohort report like month by month, our average order value is around $30. And then in month two through 12, we also are producing average order values of $30 from a typical customer that purchases in month one. So I mean that’s the type of thing that I’m looking at building something around that. And there’s a lot of components that go into that as well. And I apologize for one winded response. But that’s the outlook that I’ve been taking.
Dave: Yeah. And I think if you simplify it a little bit, I think definitely having basically an audience, I think it comes down to some kind of a sustainable launch strategy. You need some way to consistently launch new products and get those first reviews. And I think having the audience and a big email list or a Facebook pixel audience that you can remarket to, that type of thing that really helps. I think simplifying it down to the product level too, I think just really simplifying this to one or two things, being able to have one or two things that you can talk about in your product and make those kind of a differentiating feature in your product imagery on Amazon, that is absolutely critical.
And aside from colors and sizes, because in such a competitive product category, there’s not a lot you can do. And that’s kind of I guess, where the problem comes in with a product like this. So at least when I’m developing products, I’m trying to look for something simple that I can differentiate this with. Again, it doesn’t have to be complicated or totally repurpose the product but it needs to be demonstrable. You need to be able to show that difference in a product image, because that’s the only way that we can really differentiate ourselves on Amazon is through our imagery. And so if you don’t have those one or two things that you can kind of highlight, then it’s a real uphill battle.
Mike: Yeah, and man I want to make this the — I just repeat what Dave says because you keep on bringing up some really great points. But I mean…
Dave: If that was a challenge that’d be good.
Mike: But it’s so true, what you said there is so important. And it has to be something that you can communicate. It can’t be like something that you believe is different or that you know is better because it has to be something people can see it on an image for a half a second or a second, like literally that click and be like, oh, I get it, that’s why that one’s better. And you’ve done that. I mean I’ve seen in the products you’ve been working going on with like, your tow rope is a great example, and I can visually look at that damn thing and go, oh, that one looks like it’s higher quality. Because the way that you put that red material on the end of it, so you can just see it’s kind of like reinforced and it comes with a bag.
And it’s same things that we’ve done with our gel pens. I mean, we took the time to put our names on all of them and put them in a case so people can see. When someone searches tow rope or someone searches gel pens and the results come up, and you’re looking at this see results on Amazon, can you make yours jump out off the page to somebody and be like, that’s the one I want to buy because it’s better obviously in XYZ way or at least I want to go click into that listing look at, I want to see more. And maybe it costs more money or whatever, but that one looks different than all the other ones out there.
When you type in American flag, every freaking American flag is going to look the same. They have 50 stars and some red stripes and some blue or red stripes, and some white stripes. And I mean, they all look the same. And I think that that’s really a big key to it and that’s why I just wanted to kind of reinforce what you just said there.
Dave: Yeah, absolutely. And again, it doesn’t have to be hard though, just something demonstrable that you can illustrate in a product image, ideally two things. That’s really as simple as it boils down to. One of the things I’ve always talked about the easiest way is to bundle things. Now that’s being — things are being bundled to death on Amazon now, go look at garlic presses, do a search for it and look at it, 19 of the 20 top search results all have now this garlic peeler thing buckled.
Mike: Peeler and blockade.
Dave: But there’s a million other products that don’t do this right now. Now, this kind of opportunity is going to go away probably in the next couple of years where everything is going to be bundled to death, but it’s still an easier opportunity, kind of the trend though, eventually things are getting to move in such a direction though where the bar is going to be raised a little bit, you need to do things more than opening a cookbook with your garlic press. You’re going to actually need to reinforce the handle or making a better garlic press.
But right now, it’s pretty easy things that you can do in most product categories.
Mike: Yeah. And that’s what stops the part here that Pete was mentioning where he’s concerned that he’s going to find something else to do, and by the time it gets to market, he’s going to be back in the exact same position. I look at the complexity is the opportunity to me. Like yes, it takes more time and it takes more effort and thought process and more back and forth with Chinese manufacturers that you’re having a hard time communicating with, because of the language barrier, and the time it takes to get samples back and forth and all these different things that are really frustrating.
But when you design something that is different and better, and like you said, you take one or two things. I mean, we try to do the same thing, that product is more defensible because someone can’t just go on Ali Baba and say, give me Mike Jackness’s gel pens, they don’t exist. It takes three manufacturers to put all that together. Some people will try to copy it now, but it’s taken multiple years. And meanwhile, we rank on the first page for gel pens which is one of the most competitive terms and we sell thousands upon thousands of these darn things a year. And we continue to stay there because I think once you’re at the top of the mountain on Amazon; it’s easier to stay there.
But we legitimately has something that’s differentiate. You do that search for gel pens, and it’s very obvious what our value proposition is. You do a search for tow rope and it’s very obvious what Dave’s value proposition is for that product. I can see in the results why I would want to click on that. And the things that he’s done there and the things that I’ve done are not easily copyable. Yeah, they’re copyable, I mean, Dave figured out how to do it, but the average person is looking to do exactly what you said Dave. They’re looking for a great product where you have to do nothing.
And most people aren’t willing to put that extra mile in. And I think if you are and you are diligent about it, and you’re realistic about what you can do that’s different that is defensible, and you put out a better product that people will want to tell other people about and they want to buy it again if it’s that type of product, and then you can sell them something else later when you go to your second or third product and start to build — get the basic Lego blocks together to build a brand like I’m talking about, this will put you in a long term winning position versus just doing a Jungle Scout search where you do these seven secret filters and find the product that is this Nirvana thing that you just order off Ali Baba and you make so much money you don’t know how to count it fast enough. That isn’t realistic.
Dave: So I guess getting into this question, what would we recommend to him to kind of pivot this business into something more sustainable?
Mike: I mean definitely not — because I think that…
Dave: We agreed though it is a garden niche good, it is top level niche.
Mike: Sure, absolutely.
Dave: Everybody maybe niches this down a little bit even more like to a sub niche within gardening because gardening is a huge niche.
Mike: Yeah. I love the gardening niche. I mean, he’s already gone through our modules but for the public that isn’t in EcomCrew Premium, there’s something we talk about here and there’s actually also a podcast, we’ll link — it was one of our top 10 most listened to podcast in 2018. I just did an episode about this that was how to find the perfect product. And so for me, at a very high level, these things are the typical stuff everyone talks about, small, light, easy to ship, doesn’t have a shelf life, blah, blah, blah, all those different things that everyone talks about.
What people don’t talk about enough are products around things that people are passionate about. People are very passionate about gardening, so check mark there. I think that’s a great niche. Sorry, I look for something that has a direct Facebook audience. Again, check mark, there’s tons of really great interest groups on Facebook where you can advertise this product off of Amazon. So, I always asked myself, would this be something that can make a Facebook ad, go to a landing page, and just sell someone this product? Yes or no? And I want the answer to be yes because that means that I can take outside traffic and drive at Amazon and give myself that unfair advantage. So gardening in that respect, check.
One of the other things that I look for is something that people are passionate about. So, are they going to on their own want to without even being prompted want to take pictures of the thing and put it on their own Facebook wall, and show all their friends and family the cool things that they’ve done? Like Absolutely. People that are in the gardening, whether it’s growing flowers on their front yard or vegetables in their backyard are very passionate about this stuff, and they’ll definitely share it on Instagram and Facebook. So, those are the other things.
And then the last thing is the product itself on individual product level consumable so they have to like buy more of that product because they’re running out of it, or can I sell them other products no brainer that are in the same niche that they’ll buy later or at the same time. And gardening has the same, definitely has yes, yes and yes to all these things because if you’re selling seeds, for instance, those are consumable.
But if you’re selling even the best gardening rake that you’ll never have to buy another one, because you have a lifetime warranty and it’s the best, they’re still going to want a hoe or some other tool, a spade, whatever, that they’re also going to want. So you can build a library of products, a catalog of products that work well together. So I think it’s a great niche to answer your question without getting too long winded on this particular subject.
Dave: Yeah, I do agree. I think even niching down a little bit within the garden niche would probably not be a bad strategy. There’s tons of different gardening that you can do. You can do vegetable gardening, flower gardening, all these different types of gardening, organic gardening. So that’s something to consider too, if I was Pete is to take kind of break off a little subsection of the gardening niche, something that’s a little bit easier to chew. And I think it just makes it a little bit easier to kind of focus your messaging because Home Depot and in Canada Canadian Tire, they all have these massive gardening sections which are just kind of one size fits all gardening sections.
So how do you kind of differentiate yourselves against a Home Depot? And I think that’s one thing to do is just focus on little sub nice. I know we have unique EcomCrew Premium members actually. He was a Premium member even before we used the word Premium and he basically targets towards like earthworm gardening or something along those lines. And he’s been doing it for years. And I think he’s actually going to be a guest on Under the Hood, but he has a great little business that he’s doing. And again, he’s just kind of targeted this niche within a niche. So I think that’s one thing that I would consider if I was Pete, just something a little bit smaller, easier to chew.
Mike: Yeah, one other thing I forgot to mention, I wrote down here, I forgot to bring it up. But the only thing that I look for is being able to write content around the subject. And this is another one of these niches that I mean, holy crap, you can write both write and do YouTube content like a madman around this, which is really important because this is the type of stuff that takes time. So in the beginning, it’s going to seem like you’re – and you’re, like you’re at the bottom of Mount Everest and it’s going to seem like this impossible climb. But once you start making some progress and all these different things kick in, you’re the one that’s looking at the poor soul that’s at the bottom like, oh my god, they’re never going to be able to catch me, and content is a big part of that.
So if you can be writing content around gardening or putting out YouTube content and start to develop a fan base that you can connect with people really so much easier through that content instead of through just an Amazon search box. I mean that’s very impersonal. Content is very personal. Everyone listening to this is like probably pretty attached to what we’re doing here and feels like they know us because they’ve been listening to the podcast for a long time. And you want to do something similar in the gardening niche I think if that’s where you want to be.
But it’s a great — this just happens to be one of these great examples of a niche that I love. I would love to start a business in this space versus ice packs which is boring. So I mean we do great with that, but you want to put yourself in a more unfair advantage position rather than just being another fish in the pond.
Dave: Yeah. One other thing I do too when I’m looking at new niches, I kind of actually start to create a content based only website just with WordPress on a really cheap hosting plan. And when I do that, I start building the category trees and I start building out the first 10 articles that I’m going to have on this website. And what you’ll find when you’re doing this is if you picked a too broad of a topic, it’s really hard to come up with focused articles, and they just seem to be all over the place. But once you kind of focus it in and really kind of have your target audience, your target customer avatar, when you’re designing a content only website and all the articles, they start becoming no brainers.
When you do that, there’s obviously very limited cost investment to making a content based website. And then all of a sudden, you open up all these possibilities for developing products and products take a lot of time and money. So, do that first step, just try to build a content only website. Even if you don’t actually build the website, doing it in a Word doc, just kind of build out the category trees, okay, what categories would I have on this website? What would be my top 10 articles?
And when you start to do this, it really makes generating product ideas a lot easier. And then you also start to see too what types of products people are using on a regular basis, what types of things people want, what things they don’t want, what things do they hate about existing products? And that type of exercise I found is really useful for trying to validate products and niches at the same time.
Mike: Yeah. I absolutely love that, and I would recommend instead of doing 10 I would say 12, and I would say just write one article a month. So at the end of the year, you have 12 articles on this brand new WordPress site about this niche or the sub niche that you’re doing. But make them the best article about that subject on the internet, like period hands down, it’s like you become the subject matter expert about that thing. And you’d be shocked over even just the course of one year of doing that, you’ll start to rank, you’ll start to get a following. By the time your products start that you’re talking about right now because you’re starting — you might start from scratch.
So by time that stuff even come to market or come to fruition, at the same time in parallel, that content site will start having traffic and you’ll be able to point some stuff over to your products on Amazon and have that unfair advantage and start to continue to build that community and following through that site. There’s a couple of really great examples of like really high powered websites out there that rank on the first page or even number one for a lot of ultra competitive terms that have like 20 pages or less on their website. You don’t need to be a content forum or manufacturer that puts out like the Washington Post or New York Times or something that’s like putting out 20 articles a day to rank well on Google. It just needs to be the best piece of content that’s ever been written on the internet about that subject by leaps and bounds over everything else.
And that’s easy to do if you’re already an expert in that field. And that’s another thing that I think is important, trying to find something that you have a personal interest and passion and that also coincides with all the things that Dave and I said, because then it becomes even easier to also write that content. And I promise you that over time, that content and that traffic will put you in a position like at the ultimate advantage over everyone else that isn’t putting that effort into it. We’ve been there ourselves; we’ve seen the results that it’s produced for us. It’s incredible. And you got to want to put the miles in.
Dave: Yeah, couldn’t agree more. Yeah, it’s just kind of the trend of the internet, I guess and e-commerce is having that audience that you can launch your products to. So yeah, you get that before your product. So be it.
Mike: So Dave, I want to circle back here, take back to the beginning of the question here, which is basically is private label dead. And I want to come at it with another angle that I think will also reinforce everything we’ve been talking about here, basically saying that I think we both agree private labeling is not dead. We’ve dedicated the last several years of our lives to doing this and built successful businesses. But we’re not the smartest guys in the room. Pretty much if there’s at least three people in the room, we’re not the smartest guys in the room.
When I look at where all the smart money is going, we just had Richard from 101 Commerce on the podcast at the end of last year. And they have built this fund. I’m not sure exactly how much money they’ve gotten, but I know it was somewhere in the eight figure range, maybe even nine figures. They’re looking to buy 101 Amazon businesses and make a fund basically that that does this. And there’s another guy I was talking to, Joe Valley who just raised $20 million doing the same thing. So, you know when smart investors are building funds like this, the reality is that as stressful as Amazon has been in my life and this business has been because it’s definitely not been the easiest thing I’ve ever done, it still is incredibly easy compared to a zillion other businesses.
I mean, it’s unbelievable that when you take a step back and look at it, how easy selling on Amazon is, right? I mean they’re handling all the pick pack and ship and the logistics and most of the customer support and return process, and I can be in anywhere in the world and run my Amazon business. It’s completely location independent. I think about the volume of stuff that we move on Amazon and it’s hard to get your head around when you aren’t seeing it day in and day out.
But we used to see a day in and day out because we were sending everything ourselves to begin with. I mean we are basically have like the amount of goods that we put in is like a Wal-Mart and like we would fill that much space. And the thought of like having to deal with all that logistics ourselves and all the orders that go out tens of thousands of orders a month, they’re handling all of that, and you can focus on what you’re really good at, which is making good products. And if you aren’t just focused on like, I just want to sell any widget as best as I can and you’re looking to build the legitimate stuff like we talked about, I think that it’s still an incredibly unique and huge opportunity.
We’ve done it. I look at companies like 101 Commerce that are out there investing millions of dollars into buying up these types of businesses because they realize the opportunity for return on investment of money is unprecedented. You can’t invest in real estate or stocks, or anything else and get the same return that you can on Amazon inventory. The net margins are really, really high, the return on investment is really, really high, and the hassle factor is relatively low. And the overall amount of risk is relatively low, especially once you’re established. So, I just wanted to bring that update because I think it’s another angle to be looking at where outside people are starting to figure this out. And I still think it’s a great opportunity.
Dave: Well, I mean, I look at myself too. This time last year, December, we did well under $10,000 in sales for the month. We’re well over $100,000 a year this year basically starting from scratch. So I mean, I’m not, again, we’re not the smartest people, and if I can do it, anybody can do it out there. So I mean, this is not a big — we’re not trying to be cheerleaders here and say rah, rah, rah, now, now, now start building your Amazon business. But I mean if this is what you want to do, it’s definitely not dead yet. There’s still a lot of opportunity on there. Things have changed a little bit, trends have changed, but overall there’s still a ton of opportunity out there.
Mike: Yeah, I couldn’t agree more. So, I think that that rounds up everything on my list. I don’t know if you had anything else that you wanted to cover.
Dave: I do have one thing I wanted to cover, so is it niche or niche?
Mike: I think it depends on where in the world you are, and you actually have been seeing niche now which is like because I always said niche, but it’s like is it mum or mom?
Mike: Yeah mommy. It’s like I got to go see my mom. I was like what the hell is mom?
Dave: Don’t they say that after you live with somebody for five years you start to sound like your spouse or your partner, you guys start to sound like it, and I can see that going on now not just my wife. I see my daughter day after day; she starts to sound like me. I’m like, oh no, I sound just like this, don’t I?
Mike: Yeah, I mean I know that I’m in trouble because I keep on saying revenues are vanity and profits are sanity, and I end everything with a.
Dave: You know what they say, you chase two rabbits, and both will get away.
Mike: That’s right. That’s right. All right guys, happy New Year everyone out there. Hope you guys found this episode helpful. And Dave well, we’ll talk soon man.
Dave: Have a good one guys.
Mike: All right everyone, that is a wrap on the 211th episode of the EcomCrew Podcast. You can go to EcomCrew.com/211 to get to the show notes for this episode. Let us know what you think. If you got any comments, questions, concerns, want to add to the conversation, go over to EcomCrew.com/211. If you’re just getting started on your e-commerce journey, and want to take some of our free training courses, you can go over to EcomCrew.com/free. Sign up for that today.
Again, it’s 100% free, no gimmicks, all that good stuff. Same thing that we do with our ColorIt brand that’s really helped build our audience over there. I want to thank you guys for all your support and everything you’ve done for us in 2018. I can’t wait to be with you guys in 2019. We’ll see where we can take EcomCrew from here. We have a lot of exciting plans, most of which we can talk about yet, but we’re going to be announcing some stuff soon, definitely excited to be doing that. So, until the next episode everyone, happy selling, and we’ll talk to you soon.
Michael started his first business when he was 18 and is a serial entrepreneur. He got his start in the online world way back in 2004 as an affiliate marketer. From there he grew as an SEO expert and has transitioned into ecommerce, running several sites that bring in a total of 7-figures of revenue each year.