Differentiating Your Private Label Business on Amazon

December 22, 2020

Meet The Speakers

Jason Boyce

Founder and CEO of Avenue7Media

Listen to the podcast

Here’s a glimpse of what you’ll learn:

• Jason Boyce discusses how the concept of private label businesses on Amazon has changed over the last 20 years
• The role of third-party sellers in the Amazon flywheel and how these brands can better leverage the platform
• How e-commerce brands can differentiate themselves from other players in the market
• What Jason would do differently if he built a private label business from scratch today
• The first steps to creating a more balanced relationship between Amazon and Amazon sellers
• How Section 230 of the Communications Decency Act (CDA) impacts Amazon consumers and sellers
• What Amazon and FBA sellers should do to avoid shipping logistics problems in 2021
• Strategies for Amazon sellers looking to improve their businesses in the new year
• Jason talks about the rise of FBA business aggregators

In this episode…

To be successful on Amazon, third-party sellers must find ways to differentiate themselves from their competitors. So, what are some tried-and-true strategies for standing out, boosting sales, and building a memorable brand?

According to Amazon expert Jason Boyce, the best way to differentiate your private label business on Amazon is to create and sell unique products that provide unmatched value to your current and potential customers. As he says, these products should be one-of-a-kind in order to attract customers who are willing to spend a premium price. With this expert tip—and more—third-party sellers on Amazon can successfully take their businesses to the next level in 2021.

In this week’s episode of the Buy Box Experts podcast, James Thomson interviews Jason Boyce, the Founder and CEO of Avenue7Media, about the strategies online brands can take to differentiate themselves on Amazon. They discuss the benefits of being a private label seller, strategies for improving Q4 shipping problems, and tips for boosting your Amazon sales in 2021. Stay tuned.

Resources Mentioned in this episode

• Buy Box Experts
• Controlling Your Brand in The Age of Amazon: The Brand Executive’s Playbook For Winning Online by James Thomson and Whitney Gibson
• Avenue7Media
• Jason Boyce on LinkedIn
• The Amazon Jungle: The Truth About Amazon, The Seller’s Survival Guide for Thriving on the World’s Most Perilous E-Commerce Marketplace by Jason Boyce and Rick Cesari
• Rick Cesari on LinkedIn
• Disruptive Advertising
• eComEngine

Sponsor for this episode…

Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.

The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.

Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.

Learn more about Buy Box Experts at BuyBoxExperts.com.

Episode Transcript

Intro 0:09

Welcome to the Buy Box Experts podcast we bring to light the unique opportunities brands face in today’s e-commerce world.

James Thomson 0:19

Hi, I’m James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a Partner with Buy Box Experts and former business head of the selling on Amazon team at Amazon, as well as the first account manager for the Fulfillment by Amazon program. I’m the co-author of a couple of books on Amazon including the recent book Controlling Your Brand in the Age of Amazon. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts, you receive the strategy optimization and marketing performance to succeed on Amazon. Buy Box Experts combines executive level advisory services with expert performance management and execution on your Amazon channel business. Go to buyboxexperts.com to learn more.

Before I introduce our guest today, I want to send a big shout out to the team at Disruptive Advertising. For off Amazon advertising, Disruptive Advertising offers the highest level of service in the digital marketing industry, focusing on driving traffic, converting traffic and enterprise analytics. Disruptive helps their clients increase their bottom line month after month. Check out disruptiveadvertising.com to learn more. I am thrilled today to have as a guest Jason Boyce, CEO and Avenue7Media’s founder. Avenue7Media is an Amazon agency supporting brands. Jason was the CEO and co-founder of Dazadi.com, a top 200 amazon seller, and one of the original private label sellers on Amazon. Having started selling on Amazon way, way back in 2003. Earlier this year, Jason co authored the book, The Amazon Jungle, a survival guide about the challenges of being a seller on the Amazon Marketplace. Jason, welcome. And thanks very much for joining us today on the Buy Box Experts podcast.

Jason Boyce 2:04

Hello, old friend. It’s such a pleasure to be here. Always great to talk to you under any circumstances. And I’m honored that you would invite me on this great podcast you guys have created.

James Thomson 2:13

Thank you, Jason. So for the amusement of our audience, why don’t you share the story and remind us all how it is that the two of us first met many, many years ago.

Jason Boyce 2:25

I love telling this story, James I don’t even know what year it was. But it was a heck of a long time ago. You know, my brother and I, we have this big amazon seller business and the sports and outdoors category. You’re running sports and outdoors. Right? The three were that well, I don’t know what your title was. It was a fancy title. And so we flew up to meet with you because you were one of the few folks that actually like face to face meetings with the big sellers. Imagine that. You think they do that anymore? James? I

James Thomson 2:55

don’t think they do. Not very often. Really, really special.

Jason Boyce 2:59

Yeah. But we but Ilana and I jumped on an airplane that flew from LA up to Seattle. And we’re walking around, you know, we’re in the Amazon headquarters. And I’m sure which bill got 60 buildings there. Now, I’m not sure which one it was back in the day. But I see all these people looking like walking around with their blue shirts, you know, their blue dress shirts and their jeans. Like they’re trying to be like Jeff Bezos. And then I bumped into this guy in the hallway. They ‘re wearing an Edmonton Oilers hockey jersey. And I said, Hey, I’m looking for James Thomson. You’re like, hey, that’s me. And that’s how this long friendship started. I thought, I think I can, I think I can like this guy. You know, you’re someone over there. You’re your own thinker. You went way above and beyond always, even in your days back in Amazon jams, where you literally always had Amazon sellers back, which is why, you know, I call you the godfather of Amazon sellers. Because even back when you were there, you always fought the good fight for third party sellers, you know, just became fast friends. And then Luckily, a few years later, when we moved up to Seattle, we really we really hit it off. And so, you know, this is a I really value my friendship with you. And it’s funny to think about how long ago that was when we first met on Amazon edgecliff.

James Thomson 4:20

I didn’t have gray hair back then.

Jason Boyce 4:22

I mean, everybody.

James Thomson 4:25

back before the term private label seller was a sexy term to use on Amazon, you and your brothers. I mean, you were original gangsters selling your own brand on Amazon. When you look at what constitutes private label businesses today on Amazon. How have things changed in the last 20 years? What’s important is what’s been just reinvented under different terminology. Give me your thoughts.

Jason Boyce 4:47

Well, you know, it was never my intention to create our own brand. We had to do it because when we first started selling all the way back in 2000 to 2003 we were selling other people’s stuff and we were drop shipping. We didn’t even carry inventory like Life was good back then when you didn’t have to do inventory projections. And then you know, you wake up one morning and Amazon’s attached to all of your listings at 20 to 30%, lower retail price than you can imagine you could sell it. So then we moved on. And we started selling other people’s brands. But we work with the brands to create what we call exclusives. Because we figured out if we had our own UPC code, even though it wasn’t our brand, we didn’t have to share the buy box and you know, not sharing the buy box had these tremendous results. So even though Amazon locked on all of our other stuff, the items, the brands, we were able to convince them to do exclusives, we saw 234 x revenue growth as a result. And then that of course, that’s until Amazon would call those vendors and say, if you don’t sell those, we’re gonna stop buying all your goods, stop selling to Dazadi and sell to us. And then we’re like, okay, the only way we’re going to survive on here, this is where the customers are, this is where the shoppers are, because we got to build our own brand. And, and so and so it was just one of the most meaningful things I ever did professionally. I never realized this, but I just really had a passion for first listening to the customers, what they didn’t like in the marketplace and come up with creative solutions that solve those problems before we even listed our product. And then the even more fun part for me, was making things look cool. And you know, in my book, I talked about the story about how we designed an air hockey table. And I used to walk in a surf shop at a mall, and I saw these cool board shorts, these cool color schemes, and I took a picture, I was too cheap, I’d even buy them. I took a picture, took it back to my graphic designers and said this is going to be an air hockey table. They’re like, What are you talking about? I’m like, No, no, this is going to be an air hockey table skin it with these, these colors. And so that that sort of creative process was something that was much more engaging and much more fun for me. And you can still do that today. So I mean that I still think that that’s a lost art. That being able to do those things to create something new and different in the marketplace is incredibly relevant. Now. You can’t do like we did for a while before we started designing our own stuff, going and knocking off a product and offering a lower retail price. You can’t do that, you can’t compete with the China factories. Yeah, that Amazon’s rolled out the red carpet too. So you’ve got to be different. And our mutual friend Rick says I By the way, I talked to him earlier today. He said to say hi to you. You know, Rick says Eric says difference better than better? If you can be different and better. Yeah, yeah. And design something that looks cool and pops off that search results page. You can really have success on Amazon. And you know, I’m just an agency now. So I help others develop skewed pipelines. I missed that creative process, James.

James Thomson 7:46

It was a lot of fun. So, in the book that you wrote with Rick Cesari, The Amazon Jungle, you advocate very strongly for the Amazon seller. Share with me how you see the role of the Amazon seller today in that whole Amazon flywheel of growth.

Jason Boyce 8:04

Well, first of all, James, no one is a bigger advocate for the third party amazon seller than you are. No one’s been doing it longer than you are. And I thank you and the entire seller community. Thank you. But but but secondly, yeah, man, I was in their shoes. I was a seller. And I know what it’s like to have to make payroll in two weeks, when Amazon suspends your account for a reason. They don’t tell you why. I know what it’s like to have two or three of your top sellers that are putting food on the table go down. Right? And it’s just, it’s not okay. It’s not okay, for sellers who are doing everything right, who are following terms of service, who are breaking, they’re breaking their tails to bring great products to the Amazon shopper that this is happening. And so, you know, I start all the way back to the beginning. Amazon would not be what it is today. Without the hard work, the product knowledge, the ingenuity, the grit, the capital of the third party seller, what is there something 15 million SKUs, which is a lot for a retailer that Amazon retail has third party sellers bring half a billion to the table. Yeah, good luck. I mean, Amazon just hired what half a million people this year, which, you know, hasn’t happened since the shipbuilding days of World War Two for an industry, but they can’t hire enough people to replace the third party seller. It wouldn’t be where they are today. Without them. They won’t be what they are in the future or what they’re going to become the future without them. And it sucks that they don’t do a better job of protecting these small businesses that are so critical to not only the Amazon ecosystem but to the entire small business community. And so yeah, I have a bone to pick with them. It really does so.

James Thomson 9:50

So let’s talk about this love hate relationship. Where can third party private label brands? How can they position themselves to be able to leverage the Amazon Without giving up too much, or being in a place where there is some insulation from some of these random actions on Amazon’s part,

Jason Boyce 10:09

you know, it’s a great question. Well, well, first of all, the private label path is the way to go. Right? You have to have that you and I both know him retail arbitrage years, there’s still some dropshippers, even though it’s not allowed on the platform, there’s resellers, some of them are wildly successful. I just don’t think that’s a long term strategy, you’ve got to be a private label seller. That’s step number one. Number two, you’ve got to be brand registered, although that’s not even close to a silver bullet, right? Number three, not only do you have to have your own product, and you have to have your own brand, you have to differentiate yourself in the market, you have to bring a product, that’s more than just another knockoff at a cheaper price, you cannot compete with China, right. And so that’s where you have to sort of engage the creative juices. So let’s let’s

James Thomson 10:55

talk a little bit more about that. Because honestly, when I look in lots of different products, search results, I’m seeing products that all basically look the same. And yet, there are obviously some products that show up at the top of search, they don’t look that different from the products on the second page or the third page, but they may be spending more money to drive traffic. And the differentiation is really up. Being willing to spend more on advertising versus my listing isn’t fundamentally better or worse than the next guy. My reviews aren’t fundamentally better or worse than the next guys. But people are assuming shipping, we’re still talking all white hats here. Even among white hat sellers. There are some that quite frankly, they have a me too product. So how do you? How do you leverage that last start of really having a meaningful point of differentiation? How do you do that? And how do you do it on a sustained basis?

Jason Boyce 11:47

That’s a really good question.

James Thomson 11:49

I know, hours to have this conversation,

Jason Boyce 11:52

we need more, we need more time, James. But I’ll try to give some high level stuff here. But I want to start by saying that there’s 150 million prime subscribers. When I talk to my clients, I say, Look, you’re not going to get the first 50 million of those prime subscribers that are only looking for price, they’re only looking for the lowest price, let China have those, let somebody else have those clients, what you want is the 50 million on the top third of those prime subscribers that have very high income. Our strategy that we are proponent of is coming at a premium level on Amazon. And what I mean by that I’ll give you a real world example, that air hockey table that I was telling you about that had the boardshort design. Yep, though, you know, when we first started selling our own air hockey tables, we were doing the knockoff thing. But then we started to differentiate, right, we started to notice that all of the designs on this page looked a certain way that looked like some old professional dude who used to play pool buying this thing. And it was ugly, right? So we just realized by looking at our our client base, which is something that I encourage all sellers to do, and you can get some of this demographic information now in Seller Central, which is a nice, thank you amazon for that. You identify who your key customer is and the people that are buying your product category now, and make sure that the designs that you create. Now, this goes far beyond the features, but the designs are really attractive to that premium customer that’s within your demographic. Right? And how do you do that? Well, we used to do it on the cheap, you know, anything, I look in popular culture anywhere, whether it was online at a mall, driving down the road, I’d take pictures of stuff that I thought looked cool, color designs, cool shapes. I mean, I designed a ping pong table, when I saw this really cool, blue racing stripe Mustang, right, we took the color design from a blue Mustang, and put it on. So those kinds of things, something that adds a little juice to the product that’s makes it more than a commodity. And you know, it makes it like, you know, sort of a premium product and look, mp3 players back in our time, James were just a dime a dozen. And they sucked and they didn’t work. And there it was a commodity market. If you looked at it before Apple launched, you know, the iPod, you would say this is a commodity market, I don’t want to go in here and do that. Steve Jobs came in and said, We can do better. So that’s the attitude that you have to bring, like, I’m not a Steve Jobs, and most people aren’t. But look at the premium side, what can you do to inject some juice into this product design? Because I’ll tell you, when I got my features, right, when I got my reviews, right on that, that, you know, boardshorts air hockey table, right, right. I was the top 10 seller in the category at a 30% higher retail price 30%. And I sold just as many as the guy that was you know, 10, 11 and it just jumped off the search results page. So take a product design, right?

James Thomson 14:52

product design is one point of differentiation. Let me ask you, let’s go back 20 years ago, let’s say today, you were building a private label business from scratch and you had the last 20 years of learnings behind you. What would you do differently than what you did 20 years ago?

Jason Boyce 15:09

Oh well I wouldn’t make all those mistakes that I that made me get to that point there were many jams but you know I don’t honest to god if I were to start a brand tomorrow, okay, I would do the exact same thing that I did once I figured this process out you know, forget about all the steps and failures that I had leading up to this process I would do the exact same thing and look if I was in if I was in a category where you know six other sellers already beat me to the punch and they were already have great premium products with four and a half stars that was priced premium but also ranked really well. I don’t know if I go after those guys. There’re so many subcategories and you and I see them every day James, where it is uninspiring the first page of search results is just a big freakin Aeon. Right? And there’s so much opportunity. So maybe I pivot from the category I’m in because there’s some folks that already figured it out. I pivot to another category where I can apply the same process under different content different categories and be like, you know, I don’t want to say be the apple because that’s sort of ostentatious, but yeah, to be the premium brand.

James Thomson 16:23

One of the things though, that I would say as an outsider looking in on your private label business, you were able to keep somewhat of a moat around other competitors because you were selling big, bulky oversized products, which is not something that every private label seller wants to jump into.

Jason Boyce 16:38

Yeah.

James Thomson 16:40

Would you still go oversized?

Jason Boyce 16:42

Now? Tell me No, no, because the freight LTL less than truckload delivery business is one of the worst businesses in America. It’s the most disjointed, crazy, bad business there is. I used to pray that Amazon would actually get into that business and fix it because it was such a mess. I mean, it definitely created a moat. For us, it was a lot harder to launch a product that was a 500 pound pool table than it is that’s, you know, a two pound FBA item. There’s a lot more competition in the FBA world. If I were to start again, I’d probably start making spatulas jams, no parts FBA. And I’d have the coolest damn spatula you could ever imagine.

James Thomson 17:25

You heard it here first for Mr. Jason Boyce. But let’s let’s shift gears here a little bit. You’ve been following the Amazon antitrust discussions and been quoted in the press a few times on this. When you look at the size and scope of Amazon’s a day in its marketplace, what do you think might lead to a more balanced relationship between Amazon and Amazon sellers in the future?

Jason Boyce 17:50

It’s a problem. There’s a lot to unpack there. Mm hmm. And I think the first step is awareness. Right? What is it like? The first step is admitting you have a problem? I think the country is getting there. Now. I think legislators are getting there that, you know, I’ve said this a few times that the one thing that Democrats and Republicans can agree on is that Amazon is a problem. You know, we can’t become the United States of Amazon. I mean, they just launched Amazon pharmacy. Now they’re going to have not only all of your purchasing data that you’ve ever had, but now they’re going to have your health information. They’ve got the, you know, the new band that’s come out. So they’re so I mean, look, there’s, there’s not a situation now where the next Amazon can come up. And look, it you know, in the early 90s, the antitrust folks came out, attempted and failed to bust up Microsoft, but because of the concessions they got from that process, Google was able to be born, there would be no Google, if the legislators hadn’t taken action, and beat up Microsoft about the head and shoulders to open up, you know, the possibility for Google to come up. Now. Google’s a problem. Right? Now. There’s no there. Now the way things are set up, there’s no chance for the next Google to come up either. It’s just not possible. They just do their own search. And Amazon owns products. And so yeah, you and I’ve talked about this so many times. I mean, there’s a couple of things that I think I feel like instead of home runs instead of thinking I think it’s a long shot. I hope it happens, but because I think Mr. Bezos would be even richer, if it happens. I think Amazon should be busted up. But that’s going to require an entire rethinking of antitrust law for the last 20 years. And by the way, I’m no lawyer, so I’ve just you know, obviously, I’m a hobby lawyer. You know, I did sleep at a Holiday Inn last night and so. When I look at what can be done. I think legislators need to change the laws so that they can hit some singles. And so what do I mean by that? section 230 of the CDA is an approved problem. It wasn’t a problem in the 90s. It was brilliant legislation that allowed these companies in the internet age to become what they are. But for God’s sakes, put a number of years cap on it, you know, you as a company shouldn’t be allowed for the rest of your existence to have this protection. You know, that’s text product safety.

James Thomson 20:19

Yeah. So talk to our audience about how section 230 helps Amazon specifically with the marketplace.

Jason Boyce 20:25

Sure. So section 230, probably, you know, a good way to look at this as these platform companies like Facebook would have never been able to be come in, be able to come into existence if there weren’t legal protections for them, which allowed you and I to go on Facebook and say whatever the hell we want to say, as long as we’re saying the buildings on fire, right. And so which was important, which was important to this nascent Silicon Valley industry, Seattle industry that came up. And so a lot of people don’t realize that Section 230 protects Facebook from, you know, and look what they’ve done, to our politics to our country to this building this divide, but it also protects Amazon. And so specifically with Amazon, although not in California, because the California Supreme Court just allowed a shopper to, you know, to sue them. So Amazon as a platform is allowed to sell whatever the heck that they want, from China from anywhere else from, you know, wherever, not require safety requirements and measures and testing before selling the product on their platform. And if an Amazon shopper buys that product, and the retractable dog leash snaps, and they lose an eye, guess what, there’s no recourse for that shopper to sue Amazon. And also when they sign away their rights, I think, you know, the overarching theme of the next two things that I’ll say, James is, this has to happen in the courts. But the legislators have to make it possible for consumers and sellers to sue Amazon to sue Facebook, I can’t happen right now. You know. And so when you become an Amazon buyer, a shopper, you waive your rights, when you become a seller, you’re forced into or you do this forced arbitration which forbids you, from who, you know, you have the same problem. Amazon is suppressing my buy box, when I put things on sale on walmart.com. And I’m losing 30% of my business. You can’t go out and find the other 10,000 120,000 sellers that are doing that and file a class action suit to get Amazon to overturn this nefarious practice. Right. So I think that’s the path here.

James Thomson 22:48

So you talked about consumers also not being able to sue, tell me more about

Jason Boyce 22:53

that. Well, section 230 protects them. I mean, there were two to two very famous cases, one in Pennsylvania, one in Ohio, and Pennsylvania, Lady bought a dog leash, retractable dog leash from a seller that was not in the United States, the damn thing snapped, she lost an eye, she tried to sue Amazon, it’s worked its way all the way up to the highest courts in Pennsylvania. And she lost she was not able to sue Amazon because Amazon is saying, I’m just a platform, I don’t have any responsibility to make sure with my, with my customer obsession that the products they’re selling on my platform are actually safe. And then there was a kid and just this is an awful story. A kid bought caffeine powder, you know, he’s a fitness freak. And he died as a result of buying a product that was completely beyond the limits of the amount of caffeine that should be included in a powder and the kid died. His parents tried to sue Amazon in Ohio, and the Ohio Supreme Court said under existing law, you cannot sue Amazon after the seller. Well, where’s the seller from here? It’s not a US company. Right? Yep. So section 230 had a time in history where it was important. But the biggest mistake that they made is they said, okay, after 10 years, after 15 years, you’re going to lose these because you got to, you know, if you’re Amazon, you got an entire high rise building full of lawyers, right. So you should be able to defend yourself and you should be able to do things in the public good. That that allows, you know, for things to work themselves out in the courts. So that’s so that’s Section 230. That’s the product safety side, which I think is a big issue. Yep. And then from the seller side, for the right to sell on Amazon, which is incredibly powerful. You keep up all of your rights to basically sue them or combine your case with many others in a class action lawsuit, to have them stop. So Amazon does whatever the hell they want, James, I mean, nobody knows this better than you do whatever they want. And they don’t have any rules requiring them to give sellers a heads up. They don’t Yeah, it’s a problem. It’s a societal problem, in my opinion.

James Thomson 25:06

Let’s jump out of that frying pan. Let’s go. Let’s go. Okay,

Jason Boyce 25:08

good, because I’m getting too hot and hot and bothered.

James Thomson 25:12

Now let’s let’s talk about what’s happening with shipping and last mile logistics and q4. UPS and FedEx both had to shorten or stop ground shipping. A few days earlier in December, that’s creating a big mess for retailers that are not called Amazon. Amazon’s got the largest last mile logistics of any retailer in the US. Tell me a little bit more about what FBA sellers that are struggling today in Q4, struggling to get inventory replenished into FBA? What should they be thinking about for next year? And what should Amazon be doing to prepare for Christmas? 2021? And let’s, let’s assume COVID has passed. But the interest in buying products online, continues to be there. What do you suggest Amazon do? What do you suggest FBA sellers do in order to avoid some of these challenges again next year?

Jason Boyce 26:08

Great question. James. Let’s start with Amazon. Amazon is going to be fine. You know, they have half a million contract delivery drivers right now. they’ll hire another half a million next year, if it means they won’t have a repeat of the late deliveries that we’ve seen this holiday shopping season. Mm hmm. They had no problem. All they’re convinced investors are convinced they don’t have to make money on this. Yeah. This is continuing to build a bigger, deeper, wider moat with, you know, lots of nasty creatures in it that prevents any other competitors from crossing. Yep. And so they’re going to be fine. I kind of anticipate a small contraction on the growth rates for online shopping. because, frankly, you know, we’re all been so cooped up for so long. We’re gonna love to go back and walk around the mall.

James Thomson 27:02

Want to go shopping? Rather than buy? Yeah,

Jason Boyce 27:04

yeah, look, the brick and mortars aren’t going anywhere. A lot of them are going away, the ones that don’t adapt. And you know, I’m in LA now, James, and there’s two amazon shopping stores, like within 10 miles of where I live. So I say Amazon grocery stores, sorry. And so Amazon is going to be fine. I actually predict that this time next year, there one day delivery is going to be out of this world, because they, unlike these other folks, are not going to reduce this excess capacity that they’ve added. They’re just going to increase the delivery times. Yeah. So I think their system just gets better and better. And the competition gets farther and farther. And that includes FedEx and UPS. FedEx and UPS are not investing at the rate that is keeping up with demand. And they will continue to not invest at the rate that is keeping up with demand.

James Thomson 27:54

I don’t get it. So what do I do if I’m an FBA seller, and I’m so dependent on Amazon’s fulfillment centers to do all my order fulfillment? Well, I do between now and next year.

Jason Boyce 28:05

Yeah, great, great question. You have got to have a backup plan. And you have to have more than one warehouse location. use third party logistics companies. But I’ll give you an example. When at our peak business in my previous business, we had a warehouse in Salt Lake City. Okay. And from Salt Lake City with FedEx Ground rates, you can deliver with the ground rate, two days anywhere in the western states. Okay. I think it’s 13-14 states.

James Thomson 28:35

So we’re talking merchant fulfilled here at this point,

Jason Boyce 28:37

we’re talking that’s the backup plan, you’ve got to have a backup plan for merchants fulfilled because, frankly, we have seen that Amazon will put its own buyers way ahead of third party sellers. When it comes to warehouse space. You know, we’ve got an anecdotal

James Thomson 28:55

even so a bunch of my first party clients right now, they can’t get their orders picked up. Amazon’s more than two weeks behind just getting the truck to physically show up. Yeah, so maybe one piece is getting a little advantage, but it still does not have adequate coverage to make one p brands happy.

Jason Boyce 29:14

Yeah, I mean, I think you’ve got to have an FBA and fbm listing. You’ve got to have the ability to deliver fast, not ship fast, not get it out the door or 24 hours, like at the doorstep. You know, in two days, three days. So how do I do that?

James Thomson 29:28

I’m a modestly sized fbm seller. Yeah, I have a FedEx account. I have a UPS account. I have a Post Office account. How do I create a better solution when, you know, earlier this month, US ups ups announced that they were not picking up from some major retailers like nike.com How the heck is some small fbm seller supposed to be able to compete in a model where even the big guys can’t get ups capacity?

Jason Boyce 30:00

Yeah, I mean, that’s a tricky one, you know if the projections are what’s important. So in October, what you’re alluding to is FedEx and UPS came out and said, We don’t have any more excess capacity. Yep. But everyone who had the forethought to say, I’m going to need this many trucks in November and December and get those in before October, are going to be fine. So long as they don’t have like the baby Yoda hut toy this year. And they have to sell much more than they thought they were going to sell. Right. You know, like, I think that I think you have to have warehouse locations in multiple places across the United States so that you can do these deliveries when the trucks become available. So you have to start thinking nine months ahead of time, 12 months ahead of time in January, take a look at your holiday shipments and your sales, both FBA and fbm. If you’ve got it, and you have to make a reasonable projection of what how much volume you’re going to do next holiday season, and start working on those contracts with UPS and FedEx in January and February and March, you can always tell them you need less, but you’ve got to get those orders in and that capacity locked in with a contract with them early. And you have to have inventory and more than one location. James Salt Lake City covers you for the West Coast, Ohio is a great location. Atlanta is a great location, if you can have inventory placed in those three locations. And you have these contracts, these national contracts. Even if you’re small, you can still do this, if you’ve got inventories, and have them all under one account, have your third party logistics company ship under your account. You can deliver fast and you can make up for hiccups in the system. Although you know you and I know Amazon well. Amazon is not going to have the same number of hiccups next holiday season that they had this holiday, it just not.

James Thomson 31:52

You know there may be fewer. But when Amazon has hiccups, they have all sorts of long term ramifications that go and hit 1000s of sellers. And so to what extent can you realistically reduce the risk of Amazon doing something that’s going to majorly impact your third party business? It’s part of life living in the Amazon frying pan.

Jason Boyce 32:13

So I mean, this is the antitrust thing we’re talking about, right? The simple answer, like if you listen to Jeff Wilkie and Jeff Bezos, is just go sell somewhere else, no one’s holding the gun to your head. But what happens when they go try to pick up the same business on walmart.com, they get 5% of the sales. So this is just circles back to our other previous discussion. You know, Amazon is really, really powerful. And COVID has made them probably three times more powerful than they were before COVID.

James Thomson 32:40

So you went through this process at least 16, 17 times, early q1, after a successful q4, you look back at your recent performance and you say, okay, over the next year, I’ve got to make some changes. Talk to me about the logistics discussion we just had. Are there other types of affordable but important changes that you would suggest three p sellers be looking at making to prepare themselves better for late 2021?

Jason Boyce 33:11

Yeah, I mean, the SKU count is something that we would do in February every year, you know, late January, early February, we would take a look at the performance of every single SKU. And at our peak, I think we had to look at our dropship peak, we had 30,000 SKUs. But when we transitioned to private label sales, we had maybe four or 500 SKUs. And so we looked and did an honest assessment on every one of those SKUs, we doubled down on the ones that performed really well. And we put the other ones under the microscope that didn’t do well. And we did our research, we said why didn’t this do well, and we looked at the competitors. And you know, you got to look at the competitors on a quarterly basis, because there’s a whole new batch every three months, right. And we look to the competitors. And sometimes we walked away from SKUs, you know, we closed some stuff out, we took a haircut, we got rid of it, we turned that inventory into some amount of cash. And then we looked at, you know, opportunities that we missed. And we looked at categories that we wanted to expand into to see if there were opportunities to make a cool new premium product. And and, you know, the whole 80/20 rule doesn’t apply online, it doesn’t apply on Amazon you should have, you shouldn’t necessarily have 20% of your SKUs doing 80% of your sales, all your SKUs should be doing well. You know, you’re gonna have some that aren’t gonna do quite as well, but they should be top sellers in the category. And if you can’t have any sort of meaningful sales, you have to ask yourself the question, do I want to apply my limited amount of capital to this SKU? So to consider cash on the shelf, or do I want to get rid of that thing, turn it, tweak it, make it better or eliminate it entirely and put those dollars into my big sellers. You know, can I have a SKU that does 10 million a month? I’ve seen it and I’ve seen it. Can I have one that does 250,000 a month, a million a month? Yeah, maybe that’s where my energy should go.

James Thomson 35:04

So the conundrum here is we tell sellers, you need to diversify. And yet, and yet, because you have to double down and drive traffic to your listings through advertising investment, you do have to consolidate because you can’t split your ad budgets to the point where you get $5 a month for this product. Well, it’s not going to do anything for me. So on the one hand, Amazon can suspend the listing and darn it, you’re stuck with a big problem, because when listings are not going anywhere, but on the other hand, if you spread yourself too thin, you’re going to be in a situation where your mediocre company that’s not going anywhere.

Jason Boyce 35:40

Yeah, I mean, it’s a real squeeze the, you know, the advent of sponsored ads, and the requirement of having to pay for ads has been a real strain on sellers. I never liked it when it launched. I hate it still. But that I mean that that’s the reality. So there’s some other creative things that you can do. James, let’s say you got a hero product. And you want to expand your SKU pipeline. Yeah, well, if you think there’s some ancillary products, or some, you know, some products that are like it, you can you can do some promos you can offer you know, if someone buys my hero product I can offer, you know, you get this other product for 10 15% off, right, so you’re not putting that 10 or 15% in the ad budget, but you’re picking up some sales and rank, because you’re piggybacking off of the success. And typically when we do promos for our clients. You know, we’re seeing some pretty good adoption rates. 20 30% of people are seeing these promos and taking advantage of them. Have you tried?

James Thomson 36:33

Have you tried out the virtual bundling beta? Have you done any that within your clients?

Jason Boyce 36:37

We have? I tell you, I wish the bundling virtual bundles would allow us to combine two packs and three packs. They don’t they don’t there has to be different products. Yeah. And so look, it’s early stage, we don’t have a ton of data to look at. But we have some clients where it just makes a whole lot of sense to do a virtual bundle. And we’re grateful that the FBA is allowing us to do that now. So you know, you send as you send it, you know, one set of towels, one set of sheets, whatever you can, you know, certain bundles that you can put together virtually. And it doesn’t cost you much to test three or four of them and get rid of the ones that died and you know, double down on the ones that worked. So virtual bundles will cool.

James Thomson 37:19

So I want to wrap up our conversation today and ask you when you look at what’s happening right now in the Amazon ecospace? Are there certain types of brands or companies or solution providers that you’re seeing that we should all be paying attention to, again, a brand audience we have here today? When you look at what’s happening on Amazon, he looks at the types of technologies and companies that are coming along to help support those brands. What are you seeing that’s of interest to us?

Jason Boyce 37:51

Well, look, we can talk about that. But I want to go a little bit higher level there.

James Thomson 37:54

Sure. Sure.

Jason Boyce 37:54

James said that. You know, the most interesting thing. I think that you and I have talked about this that we’ve seen in the last couple of years is the rise of the aggregator. You know, the FBA business aggregator thrass CEO was the first to market with a gazillion dollar valuation, they’ve proven the model. And now they’re just, you know, what, half a dozen to a dozen aggregators that have raised, you know, billions of dollars, you know, I think at least I shouldn’t say billions, at least a billion dollars has been raised. So why is this good for the third party seller? And what do you need to do differently as a result of the aggregators? So number one, you know, the margin squeeze has been happening forever. And so it’s really hard. If you think if you think today, you’re going to start a third party seller business, and you’re gonna run that thing as an Amazon seller for the rest of your life and make a ton of money, you are wrong, you are absolutely incorrect, right? You know, Amazon will be your major sales channel, and you got to be there. But that is a really hard life. Now, because of all these aggregators. If you set up an FBA business, and you do a really good job, and you keep your costs really, really low, and you create cool, new, exciting product that gets really great reviews, you have another option to make money, you can sell your FBA business, you can run it for three to five years and or maybe even less, if you can get up to seven figures, then you can get one of these aggregators and buy what you’ve created. And now you can walk away with some money and take the six months off that you got to take off to recover from running your business. I mean, that’s that’s the most exciting thing and I’ve been tracking that and I think it’s great for third party sellers. Especially if you know, I think it also tells you just how big if, if that doesn’t tell you that Amazon’s big that there are companies out there that are raising hundreds of billions of dollars or hundreds of millions of dollars to go by Amazon sellers to make bigger companies. I don’t know what it is. I mean, Amazon is the Internet of products. And that that story just sort of proves the model.

James Thomson 40:05

Jason, I want to thank you very much for joining us today on our podcast. For those of you interested in learning more about Jason’s Avenue7Media agency, please visit Avenue7Media.com. And if you’re interested in checking out Jason’s new book, The Amazon Jungle, guess what? You can go to Amazon and type in The Amazon Jungle.

Jason Boyce 40:25

They haven’t taken it back. They haven’t taken it down yet. James.

James Thomson 40:28

Thanks very much for joining us today, Jason.

Jason Boyce 40:31

Thank you, James. Always a pleasure.

James Thomson 40:33

And now to finish today’s podcast, I’d like to share some final thoughts. For third party sellers to be successful on Amazon, a critical lever will be soliciting feedback from customers. We at Buy Box Experts are really big fans of the team at eComEngine, and its tools that help Amazon sellers to simplify the process of messaging customers of Amazon orders. To learn more, go to ecomengine.com. And with that, I want to thank you for listening today and I look forward to joining you next time on the Buy Box Experts podcast.

Outro 41:04

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