Decision Vision Episode 49: Should I Sell on Amazon? – An Interview with Cordelia Blake
What are the pros and cons of selling your products on Amazon? How do you get started? What are the skills you need to succeed as an Amazon seller? Veteran e-commerce professional Cordelia Blake answers these questions and much more in this edition of “Decision Vision,” hosted by Mike Blake and presented by Brady Ware & Company.
Cordelia Blake, CordeliaBlake.com
Cordelia Blake has been a successful business owner in the fields of technology and e-commerce for over 20 years. Her diverse skill set spans systems administration, web development, training, training development, customer service, and e-commerce.
After running her own e-commerce company for 5 years which included launching a clothing line, gourmet gift baskets and branded merchandise, she joined the HuntGirl team in 2018. She is also a public speaker, consultant and trainer in the field of e-commerce and runs an organization of Amazon sellers, Scanner Society.
A Philadelphia native who happily transplanted with her family to Atlanta, Cordelia is a graduate of Franklin and Marshall College. She resides with her husband, 2 sons, black lab, and 2 cats in Chamblee, GA.
To learn more, go to Cordelia’s website or her YouTube channel. You can also connect with her on LinkedIn.
Michael Blake, Brady Ware & Company
Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.
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Show Transcript
Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, a clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from a business owners or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:39] My name is Mike Blake and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton, Columbus, Ohio, Richmond, Indiana, and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast, as well.
Mike Blake: [00:01:01] So, today’s topic is about using Amazon as a sales channel and, should you adopt Amazon or expand the use of Amazon as a sales channel? And anybody who’s listening to this is obviously familiar with the internet. And you’ve heard of this little company called Amazon that started out about 25 years ago selling books online and now, have come to dominate almost anything that we can think of, whether it’s television media or selling laptops and TVs and music and now, smart devices in our home, but, you know, what you may not realize is that Amazon’s selling its own stuff on its own account is actually less than 50% of the business.
Mike Blake: [00:01:52] What are called third-party sellers account for over 50% of Amazon’s annual revenue. It has been that way for some period of time now. So, what that’s done is that that has, to a large extent, democratized the retail sector. You know, you see, back in the old days, if you want to sell stuff online, you did on eBay or you had to put up your own website and build your entire unique e-commerce platform. And that’s no longer the case.
Mike Blake: [00:02:22] You know, there are very few places in the world, certainly, no place in United States you cannot reach by Amazon at this point. Now, is it necessarily for everybody? No. We’re going to learn more about that. But, you know, if you’re thinking about, you know, how do you get Amazon to pick your stuff up, it’s not necessarily that hard to get Amazon to pick your product up, but it’s hard to kind of keep it there because they do have a fairly tightly regulated ship.
Mike Blake: [00:02:49] And there are some pros and cons. If you are going to put products on Amazon, you are going to give some things up in order to do it. And so, I am not qualified, as is the case for most of our topics. I’m not qualified to talk about that topic other than what I just said. And so, I have brought in a very special guest expert for our show today. And her name is Cordelia Blake. And yes, that Cordelia Blake, the fabulous and marvelous Cordelia Blake.
Mike Blake: [00:03:21] And in spite of the fact that she is indeed my wife, she is very successful and has been a successful business owner in the fields of technology and e-commerce for over 20 years. Her diverse skill set spans systems administration, web development, training development, customer service, and e-commerce. After running her own e-commerce company for five years, which included launching her clothing line, gourmet gift baskets, and branded merchandise, she joined HuntGirl in 2018, where she is a partner.
Mike Blake: [00:03:50] She is also a public speaker, consultant, and trainer in the field of e-commerce and also runs an organization of Amazon sellers called Scanner Society. You can also see at least some of her Amazon training and informational videos on YouTube. A Philadelphia native who happily transplanted with her family to Atlanta, Cordelia is a graduate of Franklin & Marshall College. We actually met in the registration line in freshman year. She resides with her husband, me. I think that’s me anyway, two sons, a black lab, and we want a dog, by the way, anyway, and two cats in Chamblee, Georgia. Cordelia, dear, welcome to the program.
Cordelia Blake: [00:04:27] Thank you so much for having me on, honey.
Mike Blake: [00:04:30] So, this Amazon thing, it’s so big, it’s kind of hard to get your arms around, isn’t it?
Cordelia Blake: [00:04:39] It is, and frequently the last people you should ask about it are anybody that works at Amazon. So, that makes it like doubly difficult to find out what to do.
Mike Blake: [00:04:49] So, I was right in not finding somebody who’s an Amazon driver or a warehouse worker to come on and do the podcast, they’re not going to know the knots and bolts.
Cordelia Blake: [00:04:56] Or even an executive.
Mike Blake: [00:04:57] Yeah.
Cordelia Blake: [00:04:57] Even an Amazon executive. I’ve spoken with Amazon executives there. The way they run their ship is very vertical. So, if you’re in one division of Amazon, you know that division and nothing else. I’ve met executives who have literally not heard of other things Amazon’s doing. They just don’t stay up to date. So, they’re not really your business partner. They’re just a service provider that you need to manage.
Mike Blake: [00:05:23] So, maybe this is obvious, but I don’t want to assume, if a company is not already selling their products on Amazon, why should they consider doing that?
Cordelia Blake: [00:05:34] So, a company, I kind of want to unpack that a little bit. So, companies who sell products is a little bit vague. So, you have companies that produce their own products. Maybe it’s, you know, their patented product or their dream product or their passion product. Commonly, you’ll have a company that is a distributor for other companies. That’s a model that’s been around for hundreds of years and still very much in play. So, they sell, you know, like a Foot Locker doesn’t really sell Foot Locker shoes, they sell Nike, they sell Adidas. They’re essentially a re-seller for other brands, but they have products to sell. So, there’s different kinds of product companies and different solutions that work for the size of the company and what kind of products they sell.
Mike Blake: [00:06:25] And so, you talked about something I think is a very important distinction, and in particular, I think your comment’s going to be interesting, because you’ve drifted back and forth between those worlds. There are companies that indeed sell their own products on Amazon as a garden variety retail channel.
Cordelia Blake: [00:06:43] Correct.
Mike Blake: [00:06:43] Right? And then, there are the re-sellers, right? The third-party sellers-
Cordelia Blake: [00:06:47] Right.
Mike Blake: [00:06:47] … and something called retail arbitrage we’d maybe get into later in the show.
Cordelia Blake: [00:06:52] Well-
Mike Blake: [00:06:52] But what is the difference between those two?
Cordelia Blake: [00:06:54] So, there’s also a scale difference. So, Foot Locker, which is the example I gave, they’re essentially a re-seller, right? I mean, you go to Foot Locker, you’re not buying Foot Locker sneakers, but they’re a massive company with lots of revenue. Then, you also have people who are essentially hustling out of their garage or they have smaller businesses where they’re reselling products, whether they acquire them wholesale like Foot Locker does or they acquire them arbitrage, which is a term used to describe really buying stuff retail, whether you buy it at Walmart or you buy it at Walgreens or you buy it on walgreens.com and then, you just sell it on Amazon.
Cordelia Blake: [00:07:33] Now, that business model is a lot dicier than it was five years ago. But there are many, what I would call, more legitimate like bigger established brands and companies that are essentially re-sellers that are distributors. And so, for them, you know, their business model is valid. They just have to understand how e-commerce can now integrate within it.
Mike Blake: [00:08:00] Now, a fun example of the retail arbitrage or RA, as it’s called in your community, is, I remember when you used to sell Trader Joe’s peppermint tea.
Cordelia Blake: [00:08:11] I do.
Mike Blake: [00:08:12] Right?
Cordelia Blake: [00:08:13] Yes.
Mike Blake: [00:08:13] And that used to be a big moneymaker, because it was a seasonal item and Trader Joe’s still has only select locations, they’re not ubiquitous like a Kroger is, right? And they haven’t caught on or if you can even still do this anymore. Well, you have to tell me why you stopped.
Cordelia Blake: [00:08:28] It’s still on Amazon.
Mike Blake: [00:08:28] But I remember there was a time that we went into, I think, the Buckhead Trader Joe’s, right? And I’m the idiot. I’m starting to like put the stuff in the shopping cart. You’re like, “No, no, no. Wait here”, right? You went back to the manager, you basically said, you know, “How much can I just buy all of your inventory?” Right? And we lucked with that inventory, filled up our old broken down CRV with peppermint tea and the truck smelled great and that stuff sold very well and made a pretty tidy profit with that.
Cordelia Blake: [00:08:58] I did. I think I tripled my money on that. So-
Mike Blake: [00:09:00] But those are getting harder to come by as, I guess, people are catching on and-
Cordelia Blake: [00:09:04] And also, brands are a lot more savvy now than they were even a few years ago. So, now, Trader Joe’s, you can actually still find that tea on Amazon. Trader Joe’s does not sell on Amazon. So, what Amazon does is they essentially take advantage of the third-party smaller sellers to fill the gaps in inventory for companies that won’t sell to them. So, if they go to Nike or Trader Joe’s, they’re like, “Hey, we want to sell your products”, and they’re like, “F you, we don’t want to sell on Amazon. You’re going to kill our product.” They’re like, “Fine, Cordelia will sell it”, you know. So, I don’t do arbitrage anymore.
Cordelia Blake: [00:09:39] Right.
Cordelia Blake: [00:09:39] I don’t do that business model anymore for a lot of reasons. But yeah, you could go and so, those tea boxes were about $2.50 each and a four-pack, so that costs $10, four boxes selling for $25 to $30 on Amazon. Now, that’s not all profit because Amazon, you know, they’re like the dealer in Vegas, right? The dealer always gets paid. So, that would be about, you know, a $7 profit per unit.
Mike Blake: [00:10:07] But you sell enough of them and it becomes worthwhile, right?
Cordelia Blake: [00:10:10] It’s nice.
Mike Blake: [00:10:10] So-
Cordelia Blake: [00:10:10] Yeah. And Trader Joe’s runs out. It’s a seasonal product. And people love that tea, they buy it as long as it’s available.
Mike Blake: [00:10:17] So, lots of companies aren’t already selling on Amazon. I think to me, you would think that Amazon being so ever present, right? You can’t get away from Amazon anymore. I don’t think there’s a place in country you could hide out from Amazon conceivably. But there are companies that are not yet selling on Amazon. You know, in your mind, why do you think that is? And you said that there’s some companies that do not want to sell on Amazon. Why do they make that choice?
Cordelia Blake: [00:10:46] So, Amazon is its own ecosystem. They have their own rules. They’re irrational. They don’t do what they say they do. It’s crazy. And so, you really need to know that ecosystem well. And there’s not that many people that actually know it well. So, if you treat selling on Amazon like, say, any other channel that you might sell on, then you’re probably going to have a bad experience because you don’t understand the rules of Amazon. And Amazon, they don’t always tell you the rules, you kind of have to figure them out, which is why bringing in a consultant or somebody else who can help you on your team is a really important part of that decision, in my opinion.
Mike Blake: [00:11:25] So, what’s an example? In fact, you and I are having lunch, I think, you gave a good example of this. What’s an example of somebody accidentally stepping on a landmine? Because I didn’t understand how Amazon works, that you’re telling me a story about there’s this individual inside a company thought they’re doing everything right, right? That was their intent.
Cordelia Blake: [00:11:43] Yeah.
Mike Blake: [00:11:43] Right. And then, bad things happen. So, why don’t you take us through that story, because I think it’s very illustrative.
Cordelia Blake: [00:11:47] So, this was a business, a completely legitimate business. They were selling wholesale and private label products on Amazon, had an employee who, you know, did all the things that he was supposed to do. This employee decided to open their own Amazon account and do their own selling.
Mike Blake: [00:12:05] Now, with competing products, it turned entirely different.
Cordelia Blake: [00:12:07] They weren’t, in any way, competing, they weren’t trying to be devious or difficult, they were just doing their own thing on the side. But they used the same cell phone number on that account as they had listed on their user account on this business account. And that business account got shut down for months. They finally had to go through legal to get unsuspended. And she had to fire the employee. It was a disaster. Months of revenue just gone.
Cordelia Blake: [00:12:38] So, I mean, this is kind of a bigger picture thing. I actually think Amazon really needs to be regulated in the US, but there’s very little recourse like she should have been able to just say, “Hey, this guy did his own thing. We don’t sell the same accounts.” And he shut down his account. As soon as it happened, he felt terrible. It was not intentionally done. And she said, “The account shut down, the cell phone is disconnected. It was-“, blah, blah, blah. All you get is like a bot. You’re not getting a human being who’s actually taking your case.
Mike Blake: [00:13:15] Right.
Cordelia Blake: [00:13:15] And so, for her, you know, this was her business, tens of thousands of dollars of revenue a month, and for Amazon, it just wasn’t even on their radar. And so, a lot of what we do in the consulting world is work to prevent suspension. We tell our clients, “Don’t do this because you might get in trouble”, not because it’s rational or makes sense, but just because I’ve known people who it’s happened to.
Mike Blake: [00:13:41] So, you know, if you’re in a sell on Amazon, then you need to make a commitment to understanding that ecosystem. Is it fair to say there’s kind of a language to Amazon as well?
Cordelia Blake: [00:13:50] There is. And if you’re a larger company, which I know that’s what your audience is, it’s more larger companies, I’m still surprised at how many large companies treat the decision to sell on Amazon as if it’s like a side hustle. So, you could have $500 million in revenue and you’re still really essentially treating it like a side hustle. And I just feel like you need to treat it, if you were opening like a new amazing facility in midtown Manhattan, right?
Cordelia Blake: [00:14:19] And you were investing in the pretty storefront and you had a grand opening with models and movie stars. You wouldn’t get your junior intern who was still in college to manage that, but that is what big companies do with Amazon all the time. They don’t treat it like that midtown Manhattan opening. They treat it like the side hustle. And then, the top-level executives in the companies don’t understand. They don’t know what’s happening. They don’t know how to make these decisions.
Cordelia Blake: [00:14:48] And so, things go wrong. And so, some companies, rather than dealing with any of that, they just opt out. So, that kind of goes back to your original question, why would a company not sell, because they’re just not ready for that commitment or they don’t even know where to get the information, because there’s no certification for Amazon consultant. So, everybody says they’re the best and that they know what they’re doing.
Mike Blake: [00:15:10] Right.
Cordelia Blake: [00:15:10] So, you have to kind of suss that out.
Mike Blake: [00:15:13] But what makes them more confounding is it sounds like it’s a lot like Google, that Google has algorithms that they maintain or change or whatever, and they don’t tell anybody, right? In fact, their model is to keep people guessing, I guess. And I don’t fully understand why that is, but their model is to keep people guessing. And I guess Amazon kind of works the same way, too. So, even if you think you’ve got Amazon nailed right today, January 10th, the day we’re recording this podcast, you know, by July 1st, it could be completely undone.
Cordelia Blake: [00:15:54] It could be and, you know, their trade secrets, the way they do the AI, there’s actually some legislation in Europe to regulate this in terms of informing sellers how search works. But here, we don’t have anything about that. And so, we’re all basically trial and erroring what works and what doesn’t, because what they tell us is basically wrong.
Mike Blake: [00:16:21] So, there are smaller sellers and larger sellers on Amazon. I’m curious, I can be of two minds, do you think larger companies have an easier time on Amazon or do you think smaller companies may have an easier time because they’re more willing to learn, they’re more nimble?
Cordelia Blake: [00:16:38] Well, I think like any business, it really depends what your goal is. So, if your goal is to have like a small income, then as a small salary, you definitely have an advantage. But if your goal is to use Amazon as a tool to both increase your sales by millions and also increase your marketing reach, because, you know, people see your product there, then a bigger company has an advantage because really, any business that can like lose money longer has an advantage. A smaller business, they have to be profitable to eat. But a larger company can pour tens of thousands of dollars into something and say, “Okay, well, we know in five years, this is going to be profitable to this point, so we’re going invest this much.” And it is very hard for a smaller seller to be able to have those resources to do that.
Mike Blake: [00:17:31] So, you know, let’s say that somebody comes to you and they want to know about Amazon, they say, you know, “I know all about online selling, I’m on a website. I’ve sold on eBay. I’ve sold on jet.com”, are they pretty much all the same? How much does that experience with other channels translate into an Amazon exercise?
Cordelia Blake: [00:17:54] I mean, every channel has its own rules, its own ecosystem, its own platform. And so, just as I know people who are Amazon sellers who fail utterly at eBay, because they don’t take the time to learn how eBay is different. If you are really good at your own e-commerce site or your own brick and mortar location or whatever your current business model is, any time you venture into a whole new area, which is what Amazon is, it’s a whole new area, and people, again, they don’t really treat it like that, then, you know, you have to learn the way that works.
Cordelia Blake: [00:18:26] I see all the time, like even catalog listings, you can tell by looking at a listing once you kind of know what to look for, that they just took their listing off their website and upload it to Amazon. They didn’t actually take the time to learn how an Amazon listing is its own separate thing. And you can tell. So, absolutely, any kind of knowledge you have in another area, it doesn’t necessarily apply to Amazon.
Mike Blake: [00:18:51] So, I’m going to change gears a little bit, but one thing that strikes me about the Amazon platform that I’ve learned observing you and observing how you advise your clients is Amazon has one big drawback that would concern me and that as the seller, you’re never going to own that retail channel, right? At the end of the day, you are completely at the whim and the mercy of what Amazon decides to do with you, unless you have an exceptionally large legal budget, basically, right? And including if you have an Amazon account and identity, it’s hard to even transfer that. If I’m a business and I’m selling a lot through Amazon, it’s actually hard to transfer that to a buying party, isn’t it?
Cordelia Blake: [00:19:45] Technically, you’re really not supposed to even do that.
Mike Blake: [00:19:47] Right. Okay. Yeah.
Cordelia Blake: [00:19:48] Yeah.
Mike Blake: [00:19:48] Technically, you’re not even supposed to do it, right? So, now, if I’m selling my stuff on Amazon, technically, my business is not saleable, because I’d had to shut it down.
Cordelia Blake: [00:19:57] So, the nuance of that is, the way that you handle that is if you’re setting up an account correctly, what a lot of people do is they set it up in their name and their personal email or their personal business email. So, I would do, you know, my accounts in are Cordelia Blake, cordelia@whatever, whatever, right? But what they should do is to the extent keep—their possible is have all the emails be generic.
Cordelia Blake: [00:20:19] So, have your, you know, amazon@mycompany.com. And so, then you’re not really selling your Amazon account, you’re actually selling your business entity and your bank account. So, if you came in, acquired my business, and you have the bank account and the email and all of the inventory and the log in, you can essentially take over the operation of that account, because it’s not in my personal name.
Mike Blake: [00:20:46] Right. So then, that becomes transparent.
Cordelia Blake: [00:20:49] It’s like an asset of your business. But if you read Amazon’s policies, they say that you’re not allowed to sell an account to somebody else.
Mike Blake: [00:20:57] Right. Right. You know, it’s a little bit minutia, but it’s important if you sell the company that owns the account, right? Then, if you set it up correctly, then as far as Amazon is concerned, that’s entirely a transparent process.
Cordelia Blake: [00:21:15] I mean, honestly, they won’t even know about it.
Mike Blake: [00:21:16] They won’t even know, right?
Cordelia Blake: [00:21:17] Right.
Mike Blake: [00:21:18] And I would imagine on some level really don’t care, what they need to make sure is that there’s some sort of chain of accountability, right? That’s what Amazon’s got to be looking for.
Cordelia Blake: [00:21:28] Today, maybe yeah.
Mike Blake: [00:21:30] Today, maybe yeah. Again, check back with us in six months, right?
Cordelia Blake: [00:21:34] Yeah.
Mike Blake: [00:21:34] You ought to do an Amazon podcast. You never thought of that before, right? All right. So, we’ve gone through this, we’ve set up some of the risks. What does it cost to sell on Amazon?
Cordelia Blake: [00:21:47] It actually costs very little in terms of actual, like you just write a check. A professional seller’s account, and this is the same account every seller has, whether you’re, you know, me, little in my garage or you have a multi-million-dollar account or whatever, it’s $39.99 a month for your sellers account.
Mike Blake: [00:22:05] Okay.
Cordelia Blake: [00:22:05] That’s it. That’s really the only fee. Now, of course, there’s like business costs, like pay per click and inventory and all that kind of stuff, but the actual costs, whereas if you started your own e-commerce site, you know, you’re going to have to invest in the infrastructure of your site, warehousing. I mean, Amazon even will let you use their warehouse. And you’re fulfilled by Amazon and you just pay us a fee based on the number of units that you have in the warehouse. So, it’s not like you have to pay a flat monthly rent. Like if you rented a warehouse, you have to pay rent whether you have stuff or not.
Mike Blake: [00:22:38] Yeah.
Cordelia Blake: [00:22:39] Whereas at Amazon, you only pay on the stuff you actually have in the warehouse at the moment. And so, there are a lot of advantages they give to smaller businesses that would be very hard to leverage on your own.
Mike Blake: [00:22:52] And do they take a percentage of the sales price as well?
Cordelia Blake: [00:22:55] Yeah, they take a percentage of the sales price. They take a fee for fulfillment. They take some other fees and some more fees.
Mike Blake: [00:23:03] That sounds great. We need to build Amazon. Screw this podcast.
Cordelia Blake: [00:23:07] Yeah.
Mike Blake: [00:23:07] We’re going to build an Amazon competitor right now. Forget it.
Cordelia Blake: [00:23:10] I actually know an entrepreneur who built a marketplace. It wasn’t Amazon, but he did turn his business into a marketplace so that he could sell other people’s products as well as his own.
Mike Blake: [00:23:19] Okay.
Cordelia Blake: [00:23:19] So, that is a viable business option if you’re in a niche market.
Mike Blake: [00:23:24] Okay. Now, you said something that might surprise a listener and that is pay per click. When most of us think about pay per click, we think that that’s basically Google, right?
Cordelia Blake: [00:23:35] Right.
Mike Blake: [00:23:35] But Amazon has its own pay per click, its own search algorithm, its own search ecosystem, correct?
Cordelia Blake: [00:23:42] It does. And it’s kind of funny, because now, you read all these articles about how Amazon’s growing their advertising revenue. And I’m like, “That means they’re making me pay more money for my ads.”
Mike Blake: [00:23:53] Okay.
Cordelia Blake: [00:23:53] That’s what that translates as, in case you’re wondering.
Mike Blake: [00:23:56] So, maybe the short answer is if you’re an Amazon re-seller, at least have Amazon stock so that you get some of that back.
Cordelia Blake: [00:24:02] It used to be-
Mike Blake: [00:24:02] Not an investment recommendation.
Cordelia Blake: [00:24:04] It used to be that if you had a product that was relevant to the customer, that wasn’t saturated, that was niche-specific, and was a good fit for what the customer wanted, you really didn’t need pay per click. You could just launch, you could write a solid listing and the customer would find your product. And if it was what they wanted, you know, I’m not talking about selling people’s stuff they don’t want, but like, if you’re really into grass-fed cattle jerky and you sell grass-fed cattle jerky, then you could sell them on Amazon.
Cordelia Blake: [00:24:33] I still want stuff all the time, no ads. But in the last year, that has really changed. It’s almost impossible to do a product launch at any level now without pay per click on Amazon. And then, there’s a lot of Amazon sellers, especially larger companies who, you know, they have off-Amazon marketing as well. And so, that helps their Amazon sells, too.
Mike Blake: [00:24:55] Yeah, I know one of my clients, you know, opened their own Amazon channel about two years ago and they combined that with influencer campaigns, because they do consumer products, right? And basically, there’s an element of affiliate marketing with it. And then, you know, press the Amazon link and then buy through Amazon, right? So, what I’ve learned, it sounds like you’re saying is correct, is that you could make your distribution effort and marketing effort entirely self-contained within the Amazon ecosystem or the Amazon ecosystem and retail channel could be supported by other by other marketing channels as well.
Cordelia Blake: [00:25:35] It could be. And, you know, a lot of times, and I’ve done this, you know, you’ll get a Facebook ad for something that you’re interested in. And instead of clicking through the ad, I switch over to Amazon and look for that product, because I’m like, is that legit or are they going to take me to somewhere, website or whatever? I don’t know, it’s suspicious, whereas there is this trust of Amazon.
Cordelia Blake: [00:25:53] And so, there’s a lot of companies who it’s not always a direct click, where, you know, you click from the Facebook ad to the Amazon product, but that marketing results in increase in your Amazon sales, because people then start searching for your product. And I think if you have a product that you produce or represent that, at the very least, you should have enough of an Amazon presence so that if people are already searching for it on Amazon, you’re not losing those sales, because you’re not there. So, that’s kind of a minimal level of Amazon participation, I think, a lot of companies should have that they don’t necessarily have.
Mike Blake: [00:26:31] And I have to imagine that’s even made all the more complex, because Amazon, itself, is now offering an increasing array of its own products.
Cordelia Blake: [00:26:39] They are. And they will steal your customers like without even thinking about it.
Mike Blake: [00:26:44] Right. They lose less than zero sleep over that.
Cordelia Blake: [00:26:49] They do.
Mike Blake: [00:26:49] Right.
Cordelia Blake: [00:26:49] And in fact, one real issue that a lot of larger companies are having that used to sort of master their whole, you know, like say a paper towel company or a diaper company, you know, they don’t really have a patentable product, it’s just paper towels.
Mike Blake: [00:27:03] Right.
Cordelia Blake: [00:27:03] But they’ve built their reputation over the last 100 years and their supply chain and they know how to make paper towels really well. Well, Amazon’s like, “I can make paper towels, no problem.” And so, they will actually advertise in, you know, let’s say your bounty listing on Amazon for Amazon Essentials paper towels for $3 less than the bounty one and literally just steal that sale.
Mike Blake: [00:27:30] That’s cold blooded, man.
Cordelia Blake: [00:27:32] And that’s where you have, Europe is starting to look at regulating that, because they’re saying, “There’s no way that you can.” I think in the next five years, we’re going to start to see regulations around marketplaces selling their own products and competing against their third-party sellers because it’s a real data gray area.
Mike Blake: [00:27:53] All right. So, let’s switch gears a little bit. You know, our listener, we’ve walked the listener through the pros and a lot of the cons and the cautions about selling for Amazon, but the listener says, “You know what, I get it. I think I’m going to give this thing a shot.” What are the first couple of steps you undertake to now start an Amazon selling channel?
Cordelia Blake: [00:28:15] Well, there’s a lot of learning. So, it really depends. If you’re talking like, you know, somebody who has a small business and they just want to sell on Amazon versus a larger company. So, we’ll simplify it again.
Mike Blake: [00:28:26] Well, I’d be very surprised if Nike executives are listening to this.
Cordelia Blake: [00:28:32] They are, they’re totally.
Mike Blake: [00:28:33] Yeah. Well, hi. Love your shoes. Wearing Air Monarchs, by the way, which my son actually says they’re cool. He’s so delighted I’m not wearing Skechers anymore. No, I think our audience is going to be a small and mid-sized business and they’ve got their own products they’re selling. But, you know, they have probably heard some of the horror stories or have not gotten around to selling on Amazon. And now, we’ve convinced them that that’s something they may want to consider doing. So, I’m in that $20, $30 million a year company, I want to start selling on Amazon. What’s sort of the initial checklist to get started?
Cordelia Blake: [00:29:08] Well, I would honestly reach out to somebody like me. There’s a lot of great consultants out there who really know what they’re talking about. And one of the things that surprises me, I’ve had several companies reach out to me and the first thing I usually do, especially if they’re kind of new to Amazon, is we offer to do a report for them, where we say, “Okay, we’re going to look at your costs. We’re going to look at, you know, the dimensions of your product, the weight, the competitive marketplace. We’re going to see who else is selling what you’re selling and we’re going to deliver you report and basically tell you how this might work for you.” Good, bad, you know, all of it. And they come already having made a decision based on very little data.
Mike Blake: [00:29:50] Right.
Cordelia Blake: [00:29:50] And they don’t want that report.
Mike Blake: [00:29:52] Right.
Cordelia Blake: [00:29:52] And I’m like, “Why would you not want that report?”
Mike Blake: [00:29:53] “Shut up and take my money.”.
Cordelia Blake: [00:29:55] So, I mean, I had a client not hire me, because we really felt like they were making a bad strategic decision.
Mike Blake: [00:30:02] I remember that.
Cordelia Blake: [00:30:02] And they didn’t want to hear it. And I didn’t really want to help them make this bad strategic decision, because I felt like we were just going to end up in an unhappy situation.
Mike Blake: [00:30:10] And you don’t want your name on that.
Cordelia Blake: [00:30:11] So, I would say, if you’re starting out, get that damn report. Get somebody to write you a report. It doesn’t necessarily cost that much in terms of your—and explain the fees for your product, explain the market for your product, the number of searches for not just your product itself, but the category, what the competition looks like, what their costs are, and really start to understand, because the Amazon ecosystem, it’s different. Like I have one client, you know, they sell products in one industry.
Cordelia Blake: [00:30:44] And so, they’ll give me a list of their top competitors. They’re like, “Well, this is our thing and this is what all our competitors are selling it for.” None of those competitors are on Amazon. Those are their brick and mortar competitors. They’re some Chinese company that you never heard of that’s stealing 90% of this business, because they know how to do Amazon. So, the Amazon competitive marketplace may look completely different than the real world’s competitive marketplace. And somebody can do a report for you on that.
Mike Blake: [00:31:14] So, I guess, are there some products that sell better than others or worse than others? And how do you decide what you’re going to sell on Amazon?
Cordelia Blake: [00:31:24] Well, I mean, shipping, right? You can’t live without it.
Mike Blake: [00:31:29] Yeah.
Cordelia Blake: [00:31:29] Shipping is expensive. And so, one big factor is how much does your product weigh? How big is it? How much is it going to cost to ship it?
Mike Blake: [00:31:37] Like FedEx and I think all the other shipping services followed suit, they lowered the bonus threshold to 50 pounds as opposed to 70 pounds, right?
Cordelia Blake: [00:31:46] It’s really getting to the point. I mean, look, shipping costs money and at some point, somebody is going to pay for it.
Mike Blake: [00:31:52] Yeah.
Cordelia Blake: [00:31:52] And so, the big thing is if you sell anvils versus if you sell toothpicks, it’s going to be a different analysis. But the other thing a lot of companies don’t do is they really don’t work the shipping costs into their profitability, so they’ll come and be like, “Our costs are $5 and these are selling for $50, so it’s a win.” And I’m like, “Yeah, but it costs you 40 bucks to ship it.” So, that is one thing I would look at. And then, the other thing is, how can you strategically increase the price of your product?
Cordelia Blake: [00:32:20] You know, if your product is cheap, let’s say you sell a toothpick box, which is $2. There’s like no way that’s worth selling online. But if you sold 20 of those toothpick boxes, it might be. And that’s another thing that surprised me. A lot of companies don’t think about how they can bundle or combine their products to make a higher value product to solve their customer problems and, you know, sell 10 products with the same number of profits as if he sold 100. It’s a lot less work, a lot less labor, all that stuff. So, that’s another way you can be strategic.
Mike Blake: [00:32:51] Now, if I understand correctly, there are certain products Amazon will not allow you to sell.
Cordelia Blake: [00:32:57] Like CBD.
Mike Blake: [00:32:58] CBD. And-
Cordelia Blake: [00:32:59] You may wonder how I know that.
Mike Blake: [00:33:03] Yeah.
Cordelia Blake: [00:33:03] Somebody asked me, “Hey, I’ve got a great source for CBD products.” I’m like, “Yes. So, does everybody and their brother.”
Mike Blake: [00:33:09] Right.
Cordelia Blake: [00:33:09] You cannot sell. And people will say, “But it’s on Amazon.” Because you can buy CBD on Amazon or hemp oil, whatever you want to call it.
Mike Blake: [00:33:18] Right.
Cordelia Blake: [00:33:18] But it’s like, “Yeah, but they’re violating terms, so I’m not going to do that.”
Mike Blake: [00:33:22] Right. Just because they haven’t got caught yet doesn’t mean-
Cordelia Blake: [00:33:24] Right.
Mike Blake: [00:33:24] … they’re not breaking the rules.
Cordelia Blake: [00:33:25] Right.
Mike Blake: [00:33:27] Now, from my understanding, also from going back to kind of the retail arbitrage perspective, there are certain products you can’t sell as well, correct? Because companies have some sort of unique channel relationship arrangement to make sure that third-party sellers can’t compete with the primary supplier, correct?
Cordelia Blake: [00:33:46] Yeah. So, you know, you can brand-register your brand and then, just like, you know, anything else. Larger companies, they have bigger lawyers, bigger law firms that represent them, they’re willing to pursue IP infringement and things like that. And the smaller business can’t necessarily fight that. So, it used to be that you could sell Barbie and you could sell Lego and you could sell all these brands that you just bought, you know, at Toys R Us. Haha. Back in the olden days.
Mike Blake: [00:34:10] They’re coming back.
Cordelia Blake: [00:34:12] But now, you know, those brands are regulated. Some of them are restricted. And there are things that like if you meet somebody who say, “I sold an Amazon for 10 years”, they’re going to just be allowed to sell stuff that you’ll never be allowed to sell if you just start out today. So, it is different. It’s more restricted now.
Mike Blake: [00:34:31] So, as you have been an Amazon seller of some kind for a number of years now, what skills have you found that you have needed to develop in order to be more successful as well as to evolve with how that marketplace works?
Cordelia Blake: [00:34:47] I mean, I’ve just had to become a stronger business person, in general. You know, when I first started selling on Amazon, you could basically sneeze and make money. I didn’t really know that at the time. I just thought it was easy money and it was great.
Mike Blake: [00:34:59] You thought you’re brilliant.
Cordelia Blake: [00:35:01] Because I’m brilliant, you know. But I’ve had to really evolve as a business person and understand things like long-term profits and investing in infrastructure and things that I really didn’t grasp when I first started doing this as a side hustle six years ago, seven years ago. So, Amazon now, it’s a real business. So, just like you wouldn’t go into any other business and assume that you could invest very little money and make a ton of money in the first week, Amazon is the same way. But one of the bad things about YouTube is people will search up videos and videos from five years ago, come up and they’re like, “Oh, this is so easy”, right? And then, they go do this stuff that people were teaching five years ago. And there are teachers out there that are still teaching that. And it’s very bad. So-
Mike Blake: [00:35:55] But even if they’re not teaching it, it’s just some legacy archive video. You look at the timestamp, you realize that it’s basically like being in a time machine.
Cordelia Blake: [00:36:04] Yeah. And people get mad. They’re like, you know, “Why are people taking the price?” And I’m like, “Well, you just did that, because you want that sale.” Like, they just want to have this bubble and it doesn’t exist anymore. So, if you’re going to sell on Amazon, you need to treat it like a real business, whether you’re a re-seller or sourcing your own products. However you do it, it’s a true channel for your business and you really need to understand it and treat it accordingly.
Mike Blake: [00:36:29] And I would also observe that you’ve had to become a much better data analyst than you have been.
Cordelia Blake: [00:36:37] Yes.
Mike Blake: [00:36:37] And had to embrace that.
Cordelia Blake: [00:36:38] I’ve had to embrace data, bookkeeping, I hate bookkeeping. No. But yeah.
Mike Blake: [00:36:45] Thank you for saying that on an accounting podcast, we do appreciate that.
Cordelia Blake: [00:36:48] That’s why you hire people to do that for you.
Mike Blake: [00:36:49] Yes, it is.
Cordelia Blake: [00:36:50] Like Brady Ware.
Mike Blake: [00:36:50] If you hate bookkeeping, call Brady Ware.
Cordelia Blake: [00:36:52] Call Brady Ware. But seriously, yeah, data analytics are important and creative data analytics, which is what I like. So, some people will, you know, their software you pay and I pay for the software and there’s software you get through Amazon if you’re brand-registered, which I love, called Brand Analytics and I could geek out on data all day long. But yeah, there’s data available and you definitely need to learn how to leverage data. And the Amazon data is different from marketplace data.
Mike Blake: [00:37:25] So, how do you use Amazon’s data to figure out which products to sell? I know in your business, you’re selling products and you don’t just sort of say, “Hey, this looks cool. Let’s start selling some.” You’ve done that in the past, you’re no longer doing it.
Cordelia Blake: [00:37:43] It used to work.
Mike Blake: [00:37:43] You could get away with it before, right? But now, you have to be a little bit more thoughtful. So, walk us through a little bit about your process. How does a product make the cut-
Cordelia Blake: [00:37:52] Okay.
Mike Blake: [00:37:52] … to become a product that HuntGirl is going to carry?
Cordelia Blake: [00:37:56] So, I will give you an actual example of a product that I wanted to sell, because I really liked it. And as usual, I teach people stuff from the mistakes I made, because that’s how you learn and I hope to prevent you from making the same mistake. But it’s a leather bracelet. It’s a beautiful leather bracelet, has inspirational sayings on it. It’s just the kind of thing that makes you feel good to wear. It’s attractive, it’s gorgeous, it’s ethically sourced, blah, blah, blah, blah. It’s wonderful, right? So, I’ve seen it off trade shows.
Mike Blake: [00:38:23] The cows voluntarily gave up the leather.
Cordelia Blake: [00:38:24] They did. So, the first thing you do is you look up to see if it’s on Amazon. So, when you do a search on the Amazon, it’ll tell you how many search results there are. So, if you put in coffee mug, for example, into an Amazon search window right now, you will see like 50,000 results. So, that might indicate to you that that’s a little bit saturated.
Mike Blake: [00:38:47] A little bit, of course.
Cordelia Blake: [00:38:49] Right. And maybe you don’t want to sell coffee mugs, but like let’s just say you were trying to do insulated coffee mugs that are made from ethically sourced stainless steel, if there is such a thing, I don’t even know if that exists. Well, then that’s going to be less result. So, the first thing you want to do is do some searching to see how saturated on Amazon your product is. In general, I try to find stuff that has less than 4,000 search results.
Cordelia Blake: [00:39:15] And really, under 2 is ideal. So then, the next thing is, so everything on Amazon is ranked. So, everything has what’s called a BSR or best seller rank. So, just like on a New York Times book list, you want to be the number one best seller, while you want to be the number one best seller on Amazon, too. But there’s a lot of things on Amazon. So, kind of anything under, this is super rough, under 100,000 is usually a decent rank. That’s a very broad generalization and-
Mike Blake: [00:39:43] That shows you how big Amazon is.
Cordelia Blake: [00:39:47] Yes. But certainly, under 50,000 is good. That’s a good rank.
Mike Blake: [00:39:53] Okay.
Cordelia Blake: [00:39:53] So, you want to see if in your search results, there’s stuff that has—because sometimes, you’ll look something up and you’ll be like, “Oh, there’s only 30 results.” And then, everything is like 10 million BSR. You don’t want to sell that. That means nobody’s looking for it. Nobody’s buying it. So, if you have on a search result page, let’s say half your results are, you know, under 50,000, then that’s good. Not only are people searching for that, it’s not saturated, but it’s selling. And then, this is the thing that I made the mistake with the leather bracelets. You want to see the prices stuff is selling for.
Mike Blake: [00:40:28] Okay.
Cordelia Blake: [00:40:28] And if you want to compete on that. So, sometimes, you’ll look and like everything selling for like $20 each and your thing is going to cost $20. And so, you’re like, “All right, I can write a good listing. I can throw some pay per click. I can compete.” But maybe everything is selling for like $8, which is what happened with the leather bracelet. So, I got this beautiful leather bracelet that sells for $40 and every leather bracelet on Amazon was selling for like $6.
Cordelia Blake: [00:40:57] So, I ended up having to donate all those leather bracelets. So, you want to look at the price point. Are you competitive on price and can you realistically compete? Because, you know, there’s some battles that are worth fighting and some battles that are better to walk away from. So, if everything is selling for $6 and there is like 50,00 things that are selling for $6, most likely, it’s just better to walk away. So, those are my three. So, you see how many search results, the ranks of the search results and then, the price point.
Mike Blake: [00:41:32] What’s the most common mistake you see made by people ore companies selling on Amazon.
Cordelia Blake: [00:41:37] They really do not take the time to learn how to sell on Amazon. They want their first thing to be a hit. And they’re like, “I sold one thing. Why didn’t it work well”, instead of really thinking like, “All right. I’m going to sell 100 things and then, I’ll learn.” So, the biggest thing is really to give yourself time for that learning curve and money for the learning curve. Whatever your budget is, divide it by 10 things or a hundred things and just know that you’re going to screw stuff up, you’re going to learn, and just that’s part of it. You can hire a consultant, you can take a high-priced class, you are still going to have a learning curve. It just is part of the process.
Mike Blake: [00:42:16] There’s going to be some trial and error.
Cordelia Blake: [00:42:18] Yeah.
Mike Blake: [00:42:18] As is often the case in e-commerce.
Cordelia Blake: [00:42:20] Or any business, really.
Mike Blake: [00:42:23] Well, we’re running out of time here. There’s a lot more questions we could ask, but I know we got to get you moving along. If people want to learn more about the Amazon Channel, how to take advantage of it, how can they contact you?
Cordelia Blake: [00:42:34] So, they can go to my website, which is cordeliablake.com. I have a couple different companies, so I just unified it all into one website. And then, I’m on YouTube, Cordelia Blake TV on YouTube. I’m on Facebook, I’m kind of on Instagram. So, I do educational videos. You can reach me on LinkedIn. I’m pretty easy to find.
Mike Blake: [00:42:58] Well, that’s going to wrap it up for today’s program. I’d like to thank Cordelia Blake so much for joining us and sharing her expertise with us. We’ll be exploring a new topic each week. So, please tune in so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.
