How to Prepare Your Private Label FBA Business For an Exit From the Start
July 6, 2021
James Thomson 3:06
So Kevin, you run this Billion Dollar Seller Summit, which is a mastermind of private label sellers leveraging the Amazon channel. Tell me more about your group and what differentiates your mastermind from many of the other amazon seller groups.
Kevin King 3:20
Sure, yeah, the Billion Dollar Sellers, something like you said is twice a year, one spiritual and once in person in Austin. And I think the average and our last one was eight and a half million dollars in gross sales on Amazon alone. So it’s a pretty high level group. Yet, I bet the people that come in, you know, someone could always say they’re, you know, off the screenshot that they’re doing something that they’re not doing. But majority, you know, it’s almost sneaky. And that might shouldn’t be there. But for the vast majority, it’s a very well successful group of people. And they like to come together for the networking aspect of it. We do things differently than the normal conference, you know, there is the traditional classroom type of stuff. But right in the middle of the day of the conference, the four day event that is the middle of the first day is the working party, the second day is all talks and stuff. The third day is actually we take them out in Austin, and we spend the entire day out in the city, doing crazy stuff, throwing axes, eating barbecue, you know, Texas stuff, shooting guns driving into f1 racetrack, you know, that kind of thing, watching sunsets at the lake. It’s a very strong networking day that they love, you know, yes. They work hard. They like to play hard. Yep. And then the last day is more conference stuff. But the differences by putting speakers to this event that are very tactical, you know, there’s something to be said for a lot of conferences that have talked about mindset and talks about general principles and accounting and this and that, but these sellers are at a level that one little tweak one little, not so much a hacks to say one little, hey, here’s what’s working right now on Google SEO. If you implement this, you know, at your level, it’s going to make a six figure difference almost right? Right. That’s what they’re looking for. And so that’s, that’s what we do. And then, you know, like, like, we’ve had people come and speak about selling the business because people at this level, they’re like, some of them are looking, you know, to take some chips off the table and take an exit. And so we’ve had people come in and say, Look, this is what we’re looking for from the buyer side, this is what we’re looking for is a broker side, this is what you should be doing to get your ducks in a row. And these are some of the common questions and answers. We’ve had people come in and speak about that as well.
James Thomson 5:27
Great. We’re going to talk a lot more about that here in the coming minutes. So let me start with a general question. These FBA private label businesses are a very hot commodity right now. What do you think has happened to generate this recent interest in these businesses that have been around since the start of the Amazon Marketplace nearly 20 years ago?
Kevin King 5:44
Yeah, it’s interesting. say that because back in like 2015, or 2016, somewhere in that timeframe, I’m gonna Ryan Moran, he had one of the earlier podcasts and he was talking about he sold some yoga business for like, 2 million, I think it’s a $2 million, or something like that. It was some outfit out in Chicago. At the time, I was like, Who’s the guys and I looked him up. And it was the precursor to today’s aggregators. I forget the name of the company now and no, they’re still around. And then we had 101 Commerce that came with Richard, 101 Commerce and you know, he really beat the pavement hard for about a year talking to everybody, he could learn everything he could about the business, and they got started. And then they realized, you know, selling on Amazon is not so easy. And that there’s a lot to it. And they end up getting bought out. And I think they’ve pretty much gone to the wayside, but out of their ashes have risen. What is it I think the marketplace poll said, I think there’s like 50 of them in their list. And there’s even more than that, that are out there. You know, last year was the big one, everybody knows, because they raised the most money. But there’s tons of them in this space. And I think people, some of us press some of us because of threats to success, that all these investors are saying, hey, there’s actually money to be made here. And these smaller guys, they’re really good at getting to know it’s not too hard to get to seven figures on Amazon, if you have a basic skill set and some money behind you. But to take it from seven to eight to nine, it’s a whole different animal Penny-wise, pound wise and everything. And so I think that’s where these big investment guys have come in. And they’re seeing that opportunity. And they’re like, you know, how can we get a piece of this. And unfortunately, someone knows what they’re doing. And I unfortunately, I’m sorry, some of them know what they’re doing. But unfortunately, I think a lot of them are going to fail, because they don’t realize how hard this actually is. And it’s going to be interesting to see what happens over the next couple years. There’s a gold rush right now. But the next couple years are going to be very interesting in space. Let’s see what happens.
James Thomson 7:38
What do you think’s going to happen in the next two years as the number of aggregators continues to grow, but also the number of sellers who think maybe this is a good time to sell as they start to poke around at options? What where does where does this evolve in the next few years or so,
Kevin King 7:53
From a seller’s perspective, the biggest opportunity to make money in this business is itself. People always when I teach them the Freedom Ticket to new people, someone who’s just starting with, you know, 10 grand, I want to start, get this freedom start my own Amazon business, not telling you it’s gonna take a few years, but I teach them a four year process, first year is learning, the second year is earning, third year is optimizing, fourth year selling that you can squeeze that into a shorter timeframe, money and skill set, but that’s why I teach them and I said, why would I want to sell this business? I’m profitable and making some money. It’s because it’s so cash intensive. And you can only do so much. And Scott Dietz, you know, for Northbound Groups says something like 70% of the money you’re ever been to make is the day you sell, not when you’re on. Yep. And you don’t know what’s going to happen in the future. So from a seller’s point of view, this is a great time. Over the next few years, you know, if you’re in a position to sell, you need to really seriously be considering it. From a buyer’s point of view, I think it’s gonna get too crowded. And I asked the brass to do this on a clubhouse chat a month or so ago, I said, you know, what, there’s a finite number of the sellers that are in a position to sell. And I know, there’s plenty of them. And I was like, are you sure about 10 tonight? Yeah, and the ones that aren’t looking to sell, we’ll find them right there. And they’re developing AI algorithms internally, the big guys like crazy that will identify potential companies to buy and will approach them so meet instead of me saying, Hey, I’m ready to sell what I need to do, they’ll come to me if I know, if I met their criteria. But it’s gonna be interesting, because there’s so many of them doing it, a lot of them are going to fail. Some of these sellers are gonna get screwed because some of these guys are not going to execute and they’re doing deals where it’s an X amount up front, you know, seven or 8% 30% on the back end, and all these different offers and some of those guys will never see that money. So I’m always told if you’re going to sell. You need to be happy when we get in the bank of the day’s sale and the rest of it’s great. If you’re not happy with that number. Don’t do the deal because You know, I trust you or someone like that has a much better chance probably to have success and to actually turn something down the road. But a lot of these guys are gonna go belly up, you never see it. And that’s what I want a lot of people against. From a seller’s point of view, from the, I think you can see from a buyer’s point of view data creators, I think someone we’re going to consolidate, I think you’re gonna see some sort of consolidation there, I think you’re gonna see someone start to specialize more on you know, they’re gonna be kind of more specially. But as a seller, too, you know, one of the things I hear like, you know, in the Billion Dollar Seller Summit and stuff is people like, should I sell to an aggregator? You know, there’s opportunity there. But there’s a gold rush right now, should I take advantage of this while it’s hot, and there’s a lot of people bidding against each other, and maybe I can get a higher multiple, but maybe you shouldn’t sell to an aggregator because a lot of times they are paying a lower multiple than what you could go in, if you have a good solid brand. And a good solid business, if you’re just an Amazon seller, an aggregator might be a good choice.
But if you’re really developing a strong brand, a strong Amazon off Amazon presence as well, you might be better at holding off and selling to, you know, if you’re in the packaged goods, maybe Unilever or Procter and Gamble, or someone like that, offer you a lot more money, and a lot more upside, if you can pivot into that. So it’s not always best to sell to an aggregator depending on what you’re doing, you might be able to use that as leverage, use that to get your ducks in a row to see what the pitfalls are. But someone outside the space might be actually better to sell to. And you know, I know someone you may know David and Leah cup cups, you know, the husband and wife team that started the baby business back in 2014. I think they did amazingly calm through that. He didn’t quit his job, until shortly before they sold the business. She didn’t stay at home mom raising the kids doing everything on the kitchen table.
They grew to be able to sell it for 4 million bucks in like three years. Then they took that money and put some money aside to care for the kids’ education. Last year, they started again, and then they sold for I don’t know the figure, but I think it was north of eight figures. They just sold that again. And now they’re doing it again. You know, and so the leverage you can get by selling your business as a seller is tremendous. And the leverage that these aggregators can get by aggregating all these and putting all these resources on one thing and having the funds and the money to take it to other marketplaces, other channels is great. So it’s like a perfect marriage for both if, if the chips fall the right way.
James Thomson 12:27
So let me ask you with all these new investment interests, how are the conversations changing with your mastermind members? Now? What kinds of new questions are being asked today? What are their biggest concerns today? Can you fill me in on some
Kevin King 12:40
of the things you’re seeing a lot of them a lot of understand where they messed up in myself. You know, I started a couple Amazon businesses in 2015, in 2015, and one of them is no longer around because I just, I typed it. The other one is doing good, but it’s not sellable. At this point, is it making me money? Yeah. But it’s not selling. But there’s a lot of people that are doing 5 million, 7 million, 10 million on Amazon, and they don’t have two nickels to rub together. Because they haven’t done everything. They haven’t done their books, right? Are they on something or they are just generating cash flow, not profits. And so I think it’s a wake up call to somebody bigger sellers. Like, look, it’s not all about how much money I’m generating. You know, it’s not who has the nicest car in the driveway. It’s who’s actually putting the most money aside, it’s how much you how much you take at the end of the day, not how much you make. So I think a lot of them are starting to ship and starting like Okay, look, I even need to start another company with the intent to sell it but I need to get my house in order so that I can sell this if I want to.
James Thomson 13:48
So I’m a brand. I’ve got these concerns about how good my business does or doesn’t look right now to potential investors. How do I go about gathering the information I need to address those concerns and actually make my business appropriate for sale?
Kevin King 14:04
Probably the best way is to reach out to all the brokers in the space, you know, people like Joe Valley of Quiet Light is someone that I taught that I tell people like Look, don’t talk to you if you don’t do a deal with them. They can go through your stuff and spend some time with you and tell you this is what you need to do. They have a great blog that has all this kind of stuff like all the questions that you’d ever asked and what you need to do. There’s plenty of others out there. But those are the type of people Scott Dean’s at North balance. And we brought him in on one of our companies that we started last year. It’s about to launch its first product in the summer, day one. And from day one like 70 accounting upset the structure of the business. Sometimes these business structures are not set up, you know, the operating agreements are not set up properly to make it easy to sell or whatever it may be. So someone like that would come in and look at it, hire him as a consultant, come and go through your stuff and start making those changes. And some of that might take time, depending on the setup to do. Those are the things that I would do. recommend doing if you should do that anyway, even if you’re not selling, are playing to sell. But selling is the best opportunity out there. And some people are like, well, I don’t want to sell my baby or this is my baby product. But you know, it’s the best leverage you can get financially, personally and in business is to sell and do it again,
James Thomson 15:21
What you’re talking about, though, requires this mindset that from day one, when you start your business, you recognize that at some point, you will need to be ready for an exit. So the way you structure your operating agreement, the way you structure your legal entity, you know, those are decisions you make today thinking, Oh, I can fix it later. Well, you can’t actually easily fix it later. And so having that mindset from day one that you will exit that’s an important shift in the way that private label sellers jump into this Amazon space.
Kevin King 15:50
I agree. And that’s why I teach that originally, is that from day one, actually. There’s a book called Profit First, that was done for just general business. And then they did one. Cyndi Thomason, I think her name is One Profit First for e-commerce. And you get it on Amazon. And it’s a really good book that will force you to like, Alright, I need to be, this is what I need to take, you know, to live, if your goal is to make $70,000 a year, how much do I need to sell on Amazon based on these criteria, these certain criteria, he has a little spreadsheet that I give to you, and they will back it up. But this is why I need to be at you know, million dollars a year in sales to take $70,000 off the table for myself. I’m just making this up, right? And start there. And that’s this business is all about math, that’s what the aggregate is about. I mean, that’s why all these sophisticated investors are starting to come into a space like this is math. And most Amazon sellers, unfortunately, aren’t good at math. And, you know, just look at how many people have trouble with PCs. Almost my mind is how many people can’t get their head around basic, etc. And so these guys have seen an opportunity and they’re bouncing. And that’s, so if you’ve already started your company, and you’re like, Okay, now what I need to do it, you’re going to have to go back and fix this, it may be spinning off part of your business, maybe you got you know, 20 different CPUs, maybe you got to do your own self divide, you know, you’re gonna divide your top five skews. And, you know, Kevin King into or whatever. Sure, sure, properly and knowing that, okay, we’re going to run this for a year, but most of these guys want to drill in gear and, and have it perfectly set up and then boom, sell it. And maybe that’s, that’s a cleaner approach of how you can approach this to clean that up. Sometimes you don’t want to let debt know, you might have some skeletons in the closet that you don’t want. And some of these guys, these bigger seller, they might have done something with some of these Chinese, you know, methods and other things, that’s gonna scare off aggregators, so, and some of the aggregators are getting more sophisticated and knowing how to find that when they’re doing their due diligence on the beginning, some of them didn’t know what to look for. And they can come back and bite you to
James Thomson 18:01
show how do you see the next generation of private label brand owners adapting to the changing environment where there is clearly an interest in companies buying these brands,
Kevin King 18:10
I think that this fever is going to die down. I think we have probably two years here, where you can see a tremendous amount of activity in it, because there’s just a lot of fresh fish in the sea. But it’s got to reach a point of saturation. And in a couple of years, just like any market does, yeah, it’s still gonna be there. I don’t think this is going away. But the model is going to evolve and change. Suddenly the aggregators realize that, that, you know, a lot of these things on Amazon, a lot of have an 18 month shelf life or less, and so the getting’s good right now. But they’re going to realize, okay, this is what the true endgame is, this is how long we could average these things out, this is what we need to do. So the evaluations are going to change. And you may see them looking more towards the brand inside things versus just aggregating a bunch of agents that are just cash, ATMs. Right. And I think you’ll see it right now a lot of them just want ATMs. And they’re just buying ATM machines. They’re spitting out cash, but I think the evolution is going to be in a few years. I mean, you might start seeing some of that now. And there are buyers that do want to brand, but the vast majority are not looking at they’re looking at some type of ATM machinery moving into an existing brand and every half, but I think you’re gonna see where it’s true black brand plays, you know, it’s a true play into the brand and they’re buying that to either extend themselves or incorporate in their existing distribution channels. And I think you’ll see more and more people that are not just aggregators going into the space, you’re gonna hear unit letters, your Procter and Gamble’s your big packaged goods companies, your big dog food companies or whatever I think they at some point or they’re set up probably Google divisions that may say, hey, let’s you know, Amazon’s 50 60% of you know, online sales or more depending on who you ask. 10 to 15% of retail. So all retail sales in the US are growing, e-commerce it’s getting bigger, we need to have a division that takes a look at Words, good matches for us. And they’re gonna come in. They have deeper pockets, better distribution, then, you know, but as your anybody has, and that I think that’s going to be the next evolution is some of those may start off in their head up.
James Thomson 20:15
So I want to run through a number of issues here and get your thoughts in terms of if you’re advising new private label sellers. What do you have to say to them about the following? How do you update your operating procedures or manage your P&L better than you then you might have been able to get away with in the past
Kevin King 20:33
was you need to not, I mean, you need to cut everything every expensive, you can cut cut, you know, sometimes people new sellers, especially they got 10 different software tools they’re using, you didn’t use one final one or two, because every one of those software tools that’s costing you 50 bucks a month, you know, if you’re on a 3x multiple, that’s adding up to serious cash over time. So that one is called that excess stuff, all the shiny object stuff, focus on the core competencies. And, and, and focus on so many sellers are always new sellers, especially or newer sellers. Like I gotta get off Amazon, I have all my eggs in one basket, I understand if I get off Amazon, my brands work more, I can sell for more, I gotta get up on Amazon. Well, if they shut me down, I owe the opinion. And this differs in a lot of deals like don’t go off Amazon right away. Focus on Amazon, it’s the money making machine, it’s got the traffic, optimize that before you go and stuff. You know, it’s starting to suck your Shopify store stuff, but you need some of that for credibility for searching. But don’t focus a lot of time on that initially, you know, I need to own the customer. Yes, and no, it’s a different business model. You know, that’s a focus on the Amazon side, that’s where the opportunity is right now. Go to Amazon, Canada, before you go, the focus of time on on Shopify, that five to 8%, you might get off in Amazon, Canada, we already know kind of what to do is going to probably be a much better payoff than trying to do a Shopify thing and learning how to do Facebook and all that. Yeah. That’s why I tell him in most of these, when you sell your company the pain rule of thumb is unless 30% or more of your business is off Amazon it doesn’t make any difference in the multiple.
James Thomson 22:09
So how do you help a new brand owner today think about this timeframe to launch? You talked about four years, versus where we were a year and a half ago, before these investors popped in, you know, as your thinking changed at all around this time frame from launching to selling?
Kevin King 22:27
Yeah, I think you’ve shortened that from, you know, four years to probably a year and a half to two years. If you have money behind you to grow faster. So if you’re if you have you know, you could put together some, you’re an experienced, if someone like me, comes into this has a lot of experience in space knows a lot of what to do, I could probably sell a company within a year and a half to two years, legitimately, because I can grow it faster, and I know what to do. But the average new guy who’s coming in with 510 20 grand, hasn’t really done a lot to e-commerce experience. It’s gonna take them longer, in most cases. So I think you can shorten that to here and a half to two years, from Day Zero to selling gaming. I’ve seen this as a sale in eight months to just depend on if it’s the right buyer.
James Thomson 23:12
It’s pretty crazy to even have a business after eight months that somebody else wants to buy. When you think about it when we talk about an actual brand. I don’t know what a brand is anymore. When I look at all these so-called brands. How do you have a brand that’s existed for eight months?
Kevin King 23:27
I call that a brand is a single product? Is it like a hairbrush? And they sold it for I think half a million bucks every month? Good for them? Yeah, I’m like good for you. Good for you. But that’s the unicorn that’s not normal.
James Thomson 23:40
So how do you change the way you think about building a business from the ground up? If you know that there are investors now actively looking for certain types of characteristics?
Kevin King 23:49
That’s why I said like more about, you know, Scott, I use him because he’s got way too easy. So I don’t know how many businesses have been involved in and sold. But way more than me, and you know, he can talk circles around me and we can, you know, I can say, well, we set it up this way. He’s like, No, no, like one of our businesses, for example, that we just set up, we want him to take the pay, we already take a paycheck. Yeah, someone’s putting in $300,000 with a 1.2 million line of credit. And we’re like, we just won’t pay ourselves. He’s like, no, you’re paying yourself. Like, Oh, no, it’s okay. We didn’t make money on such things. No, you’re gonna come to regret it if you don’t, and it’s gonna affect you, when you sell down the road. Just take 5000 bucks a month or whatever. And he went through like 20 different reasons for wine, it all makes sense, which things I had no experience with. differently. So that perspective of bringing someone in that has that experience. It can be crucial. He’s not the only one. There’s others out there but that can make a huge difference. And everything.
James Thomson 24:48
So let’s talk about where things were with the topics being covered in your mastermind a couple years ago and now. People thinking about Okay, I want to build a private label brand. There’s all this investment opportunity and potential to exit. What expectations do members of your mastermind have around? What it’s what what it will take to build a successful private label brand successful for exit,
Kevin King 25:13
how things changed. It still takes patience, and it takes money. I mean, it takes patience, patience and money. And the ability to really know your numbers. I mean, really get in there and know your numbers, from your advertising to your to your influencer marketing to your costs. I always say money’s made in the sourcing, not in the selling. So you know, that’s where a lot of sellers in the masterminds used to be, they’re focused on what can I sell this for on Amazon, I can sell this for 10 bucks 10 bucks and buy it for $1. Now it’s more of what can I sell it, what can I buy it for? What can I buy for 50 cents instead of $1? I’ve got a major price advantage against the Chinese sellers and only Chinese sellers are changing the game. Because they have major advantages. They know the language, they can usually negotiate better prices, they’re using us, they’re oftentimes willing to do some tactics that Western people aren’t willing to do. And so there’s criteria, there’s some things there. And that’s one of the things I look at when I’m product sourcing is how many on page one as tools and plugins, I will tell you this, how many of these, especially now that Amazon is sharing them, the sellers information publicly in the US on their store page, they will tell you instantly how many little flags, how many of these are Chinese sellers, and how many are not. And it’s actually a red flag, no pun intended a red flag to me, if over 50% on page one are Chinese sellers, because that tells me that I might not be able to compete on on, on sourcing, and I may not be able to compete on some of the tactics that they want to do or not going to resort to may not be something that a buyer is going to be comfortable knowing we had to do. So that’s changed some of the way that people are looking at what they source and what they do. And then others are like, you know, I actually it’s kind of a wake up call, I actually should create a brand, a real brand, a brand is on logo and a and a name. a brand is something that a certain people have an affinity to, in a brand doesn’t have to be just a sporting goods, it can be across multiple categories as appealing to that same avatar, that same profile. So I think a lot of people are starting to wake up to like, maybe if I actually, you know, Amazon is going this direction, they really want more brands, and they are just individual sellers. But it’s a shift, and it’s gonna take a while before that really happens. It’s never going to 100% be that. But I think that’s where a lot of these bigger sellers, like, you know what, I just quit selling products and actually make a real brand that’s more than just a logo and a name. And a lot of them are trying to do that and make that pivot. But it’s not easy.
James Thomson 28:00
Kevin, how does your mastermind group help members become better prepared for that stage where they’re eventually evaluated for sale or for purchase by some of these investor groups? What are you able to do to help your members get ready for that exciting day?
Kevin King 28:18
I mean, one of the things we do is we introduce them and the people that come to the events. And the networking that we have is probably second to none. There’s some great events out there that have lots of great things, but the way we organize it and the way we do it is probably second to none. So they’re meeting and they’re rubbing elbows with people that can really make a difference in the business. And then we bring in people, you know, some of the speakers are from both sides, you know, from the seller side, these are the things you need to look at. And then from our side, what are they looking for that you need to know? What are some of the gotchas that you know some of these guys might take advantage of or why should you go with this one versus that one? So I’ve had brokers speak, I’ve had people who have sold their businesses speak about their experience, I’ve had buyers come in and speak, you know, this is what we’re looking for. And so you put all that together, it gives you if you’re paying attention, it gives you a pretty good idea of what’s working right now where you need to go.
James Thomson 29:14
So among your members that have sold their businesses, what have you and your other fellow members learned about this whole sales process? How have things changed? versus say, trying to sell a business three years ago?
Kevin King 29:26
It’s actually probably easier now. Yeah, three years, three years ago, there was Empire Flippers and their split, but there were a couple other brokers in the space. A handful here and there. And a lot of people were still gun shy about buying. They didn’t understand it. Even when you went to your bank. I need a loan for Amazon business. What? Yeah, I had one time when some banker looked at me, cross tails, like you’re doing $2.7 million out of your house with no employees. I don’t know. This doesn’t make sense. Sorry. We don’t run LNG money, the same thing was happening with people buying, they just didn’t understand it. But now, with the success of Brasfield, the media that’s in some of these companies, that On the flip side, I’ve had buyers, you know, I know that it’s over $40 million, a supplement company. And shortly after we bought it those early days, you know, three years ago, about three years ago, sold for 40 million bucks. And the buyers came in and bought it. And you know, he stayed on for a month or two and helped them with the transition or whatever. Then he went on. And he actually started a software company and did some other stuff and started another business, they came back to him a year later saying, you know, we, we don’t know what we’re doing we’ve taped this thing in curry back. Well, so he went back in. So you had a lot of that three years ago, you had a lot of people probably, I don’t know the number. But if I had to guess 50% of the ones that were being bought, were being tainted by this virus, it knows that doing that is getting much more sophisticated nowadays aggregators. So there’s a lot less tanking going on, and more improving, going on. And so that’s one of the big changes that I’ve seen in space from three years ago to now. And so that makes it in some ways, harder, in some ways easier to sell now, because there’s a lot more people that understand it, that makes it easier, there’s a lot more money, there’s billions of dollars out there. It has to be deployed. So it makes it easier. But also, they’re more sophisticated now. So you can’t pull the wool over their eyes anymore. So that makes it a little bit hard in some aspects. And you got to really have your ducks in a row if you want a decent exit.
James Thomson 31:36
So in your review, should firms be exiting now or waiting a year and waiting two years? You talked about this being a two, two and a half
Kevin King 31:42
year window? That’s always the 100 million dollar question. Am I missing friends at Helium 10? You know, they sold a little about a year and a half ago. And they debated. They were like, should we hold out another year? And I asked them, man, he’s a good friend of mine. And I asked him recently and said, Hey, do you think you made a mistake? Is it like, you know, if we would have held out? Yeah, we would have significantly raised what we got, you know, in our pockets? We did okay. Well, we are and you know, I’m set for life. So it, that’s what matters most is on set right on? You just don’t know, with Amazon, what’s going to happen? You know, at that point, we didn’t know, are they going to shut off the API? So that is the 100 million dollar question. I think, you, man, I would probably if you’re in a position, if you don’t have your ducks in a row, start getting on a roll and sell next year. But if you have your ducks in a row now, I think you need to seriously have a gut check with yourself and a mental check. And like, Look, can I take enough chips off the table right now that I’m sad that it’s going to either set me for the rest of my life, or it’s going to put me in a very strong direction towards that. Right, I would do it while the money’s there. I’m a bird in the bushes, you know, in the field. And so if you’re on a huge upward projection I’ve had this happen to love is one of my business, huge upward projection. And, you know, I filed a claim with Amazon for some missing inventory on this item. They took that listing for two weeks while they did bench checks to completely derail the entire product line, this was a few years ago. That could happen at any point. And that’s what you’re playing with. It’s an Amazon sandbox. Amazon makes the rules. It just happened to me and one of my businesses, one of our businesses, we sell PP products. Yep. 140 $1,000 a day, you know, last year, and now it’s down to you know, significantly less than that, because it’s so much competition and only once a day wars markets flooded. But Amazon, this is a perfect example, saying this business was still doing really well.
Amazon just came back three days, three weeks ago, and it’s not two weeks ago and said, hey, these are dangerous goods, you know, sanitizer and wires and all the EPA stuff, not facemask but understand this is dangerous goods. So you have to have a special allocation, special warehouses of Amazon that the stuff goes in. We had I think it was 10,000 cubic meters of square footage, a scientist. They just came back literally a few weeks ago and said we are cutting you to 272 cubic meters. I think it’s because there’s so many people just sitting there 272 cubic meters is enough to do about 30 grand a month. on it. That’s not our decision, that’s Amazon’s shift. And they said you have until the end of May and get in line and we’re charging you ridiculous speeds. So if I would have been holding out to sell this until July, it just changed everything. If I would have sold it to someone in March now it’s their problem. So those kinds of things are things that can come up and bite you at any time. In the rear, and so it’s rolling the dice unfortunately. I love Amazon. I love selling on Amazon. It’s the greatest thing ever. But it’s also one of the scariest things you can do.
James Thomson 35:12
So let me ask you, what do you think it’s going to take for your mastermind members to be more successful in the long run? Given that we now have all this investment activity?
Kevin King 35:23
What’s gonna take some of the more successful in the long run? Yep. I think it’s pivoting more like we said, we talked about earlier toward this brand mentality. And actually, instead of just selling products, actually creating two brands. And that opens up a lot more opportunities to other buyers, not just the aggregators, but your other guys are getting SBA loans, your big packaged goods companies and other types outside of these aggregators, aggregator world. Their role is aggressive right now, it’s a great opportunity, but it’s also some of the lowest multiples you’re going to see for the most part in a business, if you truly have brands.
James Thomson 36:04
Want to finish our conversation today? By asking you a little bit of a loaded question. How do you see these investors getting their value out of the growth efforts they put into their portfolio brands?
Kevin King 36:16
I think that some of them are looking to flip it. Yeah, they’re looking to build into some, I mean, I remember one, 101 Commerce start, is the whole premise there was to build this to $100 million, and sell it for a billion. And get out. That’s the whole premise is this aggregate enough of this to where we have $100 million in SD E and sell it for a billion. So that was the whole play. Now, I don’t know all this, what all the different aggregators have now, what their true intentions are, but that’s their best opportunity to do so. And that some of them might be, you know, a Thrasio might want to become the next Procter and Gamble and be around for 50 years. And maybe they can do that but the vast majority of those that don’t have those kinds of resources and funding are going to have to be looking to clip this at some point. There has to be I mean, just like I’m an Amazon seller looking to build to sell, they’re thinking that that’s where their money is gonna come from so it’s not going to be the pain of selling dude to maintain this for 510 20 years it’s gonna be difficult. Yeah. versus someone like a Casio that can come in and start with the Amazon is the foundation and then expand that off. Shopify is a you know, it’s a massive distribution channel. So retail and diversification can do that. Those guys have the best chance of success versus the others.
James Thomson 37:37
Kevin, I want to thank you for joining us today. It’s exciting times to be a private label seller. Lots of open ended questions for people to think about. Thank you again for your time today, Kevin.
Kevin King 37:46
No problem. Glad to be here.
James Thomson 37:48
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Outro 38:21 Thanks for listening to the Buy Box Experts Podcast. Be sure to click subscribe. Check us out on the web, and we’ll see you next time.
