Ryan Coisson has been studying ecommerce websites and how to sell on Amazon specifically since 2003 and has since amassed an incredible wealth of knowledge. In this episode of the podcast, Ryan shares more information that you’d get in most paid courses about how to sell on Amazon profitably, and I can assure you that it’s all top-notch insight. From what to sell, to how to price it, and products to sell on Amazon, Ryan is the leading authority on ecommerce selling and in a physical product market that keeps expanding, this is stuff you need to know.
- Find Ryan at RyanAndDaniel.com
- Check out Shopify at Shopify.com
- And I trust you know how to find Amazon!
Transcript Of: How To Sell On Amazon AND Maintain Massive Profit Margins
Welcome to the Entrepreneur Ignited podcast, a podcast designed to skip the hype, skip the BS, and to bring you real, actionable tips to help you grow your business on the internet. This is your host, Derek Gehl. Today we’re gonna be diving deep into ecommerce and leveraging platforms like Amazon to build an ecommerce business. We’re fortunate today because our guest is one of the leading experts in how to sell items on amazon; he’s an expert at search engine optimization and affiliate programs, too–he’s been online since 2003.
He’s been mentored by and partnered with some of the biggest names in the marketing industry so he brings a ton of value to this call today.
Without further ado, I’d like to welcome Ryan Coisson to the show.
I’ve always had that entrepreneurial bone in my body. I grew up in a working class family and I was always looking for ways to make extra money. It really started to take off for me when I was in high school. I found some things that I could do. I immersed myself in all kinds of books at the library on ways to make myself more money. For me, the most interesting was options trading in the stock market. For those of you that have experience with the stock market, options trading is often quite high risk but it can also be the most profitable.
I really started to dig in and I found a mentor that would help me learn his system. He was a retired chiropractor that had been trading for about 15 years. He’s still trading to this very day. He taught me a really simplistic system that I could apply to the beginnings of my investments in trading options.
I learned that system, started doing some light paper trading to figure it out. When I got started, I was able to more than double my investment with options in under 90 days. I realized there was tons of opportunities in the stock market. I used that money to pay some of my tuition.
Then, I learned the greed gland can cause problems. It’s just like any business.
As entrepreneurs, we really learn how to master one thing, and then assuming we’re masters at other things, or a slightly different version of what we’ve been working on. Then when something new implodes, we wonder why it happened. That started happening from me.
I veered away from the system. I decided to be more aggressive, and things started falling apart, and I had to go back to what was proven.
I realized that while trading options was great, I didn’t get much excitement out of it. Looking at the chart was okay because I’m a pretty analytical person, but I wanted to find something else that I could create with and use to be creative.
I dug into online marketing in late 2003, early 2004, and I started promoting other people’s products. That’s how I became an affiliate. It just expanded from there. As I started to make money, I started finding more and more opportunities. I started an SEO agency, I started with all these different business models.
Then a few years ago, I sat down and really thought about what I’d been doing.
As an entrepreneur, it’s really important to continue to evaluate what you have been doing and what you plan on doing. It’s usually quite infrequent that we look back at what we’ve been doing.
So while I had built a really successful business and had generated a ton of income, one of the things I realized is that I wasn’t focused on building a company with any longevity. I built a business, but it was only an income stream–I couldn’t ever sell it down the line, it didn’t leverage systems and processes and staff. Then I really started to revert my attention to–how could I do that? How could I build a long lasting business with true assets?
I wanted something that would stand the test of time.
I remember when Google first updated its algorithm and I lost all of my work–I freaked out a bit. That’s why I sort of reverted to selling physical products. All over the world, the physical product market is only expanding, and it’s expanding at a rapid pace. It’s everyone that’s willing to buy online now.
This is the right opportunity for me to focus on and build a true long term business. I’m currently living in Manilla with my business partner, with about 40 staff, and we sell our products globally right now.
I want to emphasize something you just said there. So many people start out with affiliate marketing, looking for quick cash, and they fail to realize that if you want long term value, you need to create a real business with real products and real branding and all of that. It’s not just about cash and cash flow and that immediate income.
Really interesting story! Now, let’s shift gears and dive into ecommerce here. Let’s talk about everything that’s going on with Amazon. It is the future. Everything is being bought online. I saw today that Amazon recently added around 700 products that you could buy and get delivered in under an hour, if I read that right.
I don’t know how it’s possible, but people are buying everything online now. They’re pulling it off.
Here’s the question that people ask me all the time. Okay, I see that people are making money, but where do I get started? How do I decide what to sell? Are there still product categories out there that are that I can compete in?
That’s a great question. The biggest question is always, what do I sell? First, it depends on what platform you want to start with. We usually recommend that you start with Amazon.com. It’s the largest platform, it has the biggest customer database. However, if someone is in one of the countries where there’s an Amazon marketplace like Germany, it could be a great place for you to start there. Those places will have less volume, but that becomes less competition.
Let’s talk about finding products and what to look for. Just like ten years ago when you wanted to sell an information product, you could put pretty much anything online, get in on an affiliate program, drive a bit of traffic, and the conversions were there. It was easy because it wasn’t as competitive, the consumer wasn’t as educated. Amazon was that way around three years ago. It was a lot easier to sell. Now, just like in every type of business, you have to be careful about how you position what you’re going to sell.
I’m a bit old school. When I look for a new opportunity, I don’t sit down and look for it. I’m constantly scanning, waiting for that opportunity to show up. As entrepreneurs, we’re constantly finding opportunity pretty much everywhere. So when I’m driving around or looking at magazines, I’m seeing opportunity there.
I keep an idea bank that I continually add to, to come up with products that I can sell. You should be building something like that over time. You could go to the store right now, pick up a magazine, come up with twenty ideas and call it a day. But when you get down to brass tacks, one of the easiest ways to come up with an idea is to simply go to your choice marketplace. When I go to Amazon, and look at a certain marketplace, I’ll find the best sellers easily. By seeing that data, the bestseller data, I’ll be able to start estimating how much they’re selling. I liken it to golf.
The lower the number, the better.
If I wanted to sell some kind of charger for my iPhone, and that marketplace already has a great bestseller ranking, that’s telling me that this product sells. Then, I need to validate that with some other opportunities.
After we’ve done some research on products to sell on Amazon, I look for a small group of products, and I do some more research. Once I’ve found the bestsellers, I’ll take those products out and look for opportunities surrounding that marketplace. If I want to sell golf tees, does it make more sense to just sell the tees and build a brand around the tees, or to build a brand around golf with a line of tees.
I’m looking at an iphone charger. Can I build a brand that can compete? What would I have to do to compete?
Then we look at, where is the value in that space? Are there lots of big influencers out there? Look at the iPhone. There’s tons of opportunity to reach out to influencers because there’s so much talk about these products.
Is there opportunity to get in magazines? Or work with someone that runs a massive blog, but is underutilizing how to monetize it?
You can even start to look at opportunities around your competitors that are doing okay but are missing the boat that you can just purchase.
Getting started, you can either take the short road based on that easy data, or you can be focused on building a lasting lifestyle brand like we are, and you can take that holistic, larger approach. You can understand the whole ecosystem that your brand would fall into.
I’m sure you see all of those “make money on Amazon” courses. I hear people saying, just post a product and the sales will happen. But you’re taking this to a whole different level.
What you’re saying is, when you go out there, you’re not just plugging anything into how to sell on Amazon. You’re building an entire campaign, reaching out to influencers, and driving traffic to that brand. Is that correct?
Absolutely. It used to be that you could just toss something up on Clickbank and affiliates would drive some traffic and you’d be making sales. It was great. It used to be that way when you were considering how to sell on Amazon, and it still can be for certain products. But the challenge is, we knew so many people that when they started with how to sell items on Amazon, they had amazing successes right out of the gates. The biggest thing they didn’t do was build any skillsets to accomplish that. It was blind luck.
Then, as competitions came in and Amazon began to shift, they didn’t know what to do and their businesses collapsed.
So many people have reached out to Daniel and I saying that they didn’t know what to do, because they’ve quit their job and are selling products online full time, and their revenue just went from $100,000 per month to $5,000 overnight.
They’re now in their fifties, they were working at the old company for twenty plus years, they were devastated. That’s why, we believe, when you launch a product, you need to build a brand and a campaign around it. With a solid campaign around it, it’ll do nothing but help increase your sales. If you’re strategic, you’ll be able to blow out your competitors quickly and easily.
You have my respect. You’re telling the real story and what it really takes. I respect that and I really appreciate it.
Just to elaborate a little further. When you build a brand around a product, you’re also creating your own ecommerce sites to sell independently from how to sell on Amazon, correct?
That is correct. We go through different phases. We look at Amazon.com as a launching platform. We launch all of our products there. We get our baseline. Then we decide on the most strategic way to grow our brand.
People start with how to sell items on Amazon, they start to do well. Then they make one of two mistakes, and most people don’t understand the issue of growing too fast. If you have a small team without a lot of outside funding, you have to be able to grow in a managed state.
The two mistakes people make is trying to launch a bunch of additional products, or they go international too fast.
They invest way too much in inventory.
We had a problem with one of our partners where they were trying to expand in too many different areas, and kept selling out of stock and then having to buy more stock, and their revenue was fluctuating by as much as $30,000 per month. As soon as we cut away the excess, their revenue grew by almost 300%, because they were focused and were managing their growth in a strategic way.
Once we’ve launched on Amazon.com, we start to line up our next step. Is it to launch in Europe? Amazon UK is usually the next largest site, or do you want to build a Shopify site? How do you make that decision?
We like to look at how products are selling on each of the platforms. Then, we look at how easy it is to drive traffic in that area. We like to look at the data and say, wow, there are five people running different websites spending $20,000 on Adwords per month. That could be great for us to tap into those PPC keywords.
As you expand your brand and products to sell on Amazon, you get more traffic. It’s naive to think that everyone is going to buy right away. Your conversions and your products to sell on Amazon can be insane, but those people that aren’t buying are out looking at your competition.
So if you show up for your brand keywords, and paid traffic, with a nice looking website, you’re going to make more money.
I see it all the time. People say, I’m doing $120,000 per month with products to sell on Amazon. Do you have any other properties outside of Amazon? No. They launch a very simplistic Shopify store, that will kick into Amazon’s backend fulfillment, and they start making another 5% to 10% revenue. People are finding them, realizing they’re a real brand, and buying straight from the website.
Everytime I use a platform, I’m always looking to get the lead and bring them back to my own properties to add to my list.
How do you deal with that? How do you follow up when someone buys something on Amazon?
This is one of the biggest challenges with how to sell on Amazon. I always encourage people to read through Amazon’s Terms of Service. You need to understand what it is.
The way that we do it is with tools that allow you to follow up with your customers through Amazon’s API. We have a series of emails that we send out after someone purchases. They’re designed to make the customer have a good experience, to show them that we’re there if they need a hand–everything we can do to turn this customer into a raving fan. We want them to go and buy other products of ours.
Outside of that, depending on the products you sell, we like to use inserts in our packaging to collect potential information from our customers. If your product is tough to use, you can include a phone number. Then, if someone is calling in, after you’ve helped them with their issue, you can provide some kind of lead magnet that will allow you to collect their information.
It’s not a good idea to send marketing messages through Amazon’s API.
On the same inserts, depending on what you’re doing, if I was selling a toy or something that a mom would buy, I could create a specific newsletter or report on the ten best toys to buy your child as a lead magnet to collect that information.
You could also use a product warranty to get that information.
However, getting a high conversion on any of those things can be tough. It might make sense depending on your product, and some is better than none, but it’s tough.
We like to collect that lead ahead of time before they hit Amazon, so now, we have the information of not only people that are buying, but who’s not buying as well.
Products to sell on Amazon will in turn give you your customers address and phone number. You can always follow up by phone if it’s appropriate to your product. You want to be careful with that, because we’ve heard stories where customers have complained about the phone calls.
If you’re selling a hemorrhoid cream, they probably don’t want a phone call to follow up. But if you’re selling something that will provide added service and value, it would make sense.
Then, using the information you’re collecting, you can go over to Facebook and build a custom audience. Then you can do specific targeted promotions. There’s a lot of opportunity to be creative. Because of these added steps you have to go through for the lead capture, that’s why it’s important to consider what your next steps will be after you launch your product. Do I go to Shopify? Where it’s easy to get the information? Or do I hop to another Amazon platform where I have to do the same thing?
It really depends on your product, but we usually go to Shopify and then the international market.
Awesome. For everyone listening, I’ve paid for Amazon courses that didn’t give that much detail. That was awesome.
Let’s shift gears and talk about another challenge I see people facing–sourcing products.
So we find a product. Obviously, it’s so much easier to get stuff from China, but it’s not totally smooth yet. How do you teach people to get products?
There’s a lot of misconceptions around where we tell people to source products. We believe you can source locally, but you need to consider where that product is best created.
When we were looking at sourcing a coconut oil, we decided to not go with it, but, the best place that we could find was in Sri Lanka. That was something I wouldn’t have thought of right away.
People have this misconception that if they don’t source from the US it’ll be a big hassle because people don’t want Chinese products. We help make a paradigm shift and help people realize that not all products made in China are garbage. Most of the products in your home are likely from an Asian country, probably China, and they’re really high quality.
The key is finding the right supplier. There’s different tiers. There’s the mom and pop simple workshop that’s very low end, tier three. Tier two is a bigger company with English speaking staff that help with outbound sales, and with finding suppliers there. Then there’s the large suppliers that supply factories and focus on one particular thing.
There’s a difference between these kinds of people and sometimes you need to start with one place and then level up along the way.
What we like to do is find where a product is meant to be sourced from. If I’m looking for an iPhone charger, I can start looking at AliBaba, but there are so many other sites that you can use to find products. We prefer to find someone in China to be a sourcing agent for us.
This is a very inexpensive way to get some help. We have to realize that we can negotiate for ourselves, and it’s fine to start that way right out of the gate, but if you can leverage a sourcing agent, you will create an amicable relationship with that supplier. If your sourcing agent specializes in the local culture and electronic devices, and can go talk to the person running that factory, of course I’m going to get a better deal and see the quality better.
You can find these people online. Chinese job sites, or there are groups of people that team up and have sourcing agents themselves. The key is finding someone with boots on the ground experience for you to assist.
The caveat is that we say not to do electronics right out the gate without experience. If you’re not working with a tier one business, your defect rate can kill your business. I’ve seen someone build a massive business, and then one shipment with a 10% defect rate caused a whole slew of negative reviews.
Let’s pivot, if you want, to talk about how to do it if you’re just getting started and you want to do it yourself. You can start with AliBaba, but keep in mind that some of the best suppliers are not on that website.
What we like to do is build a spreadsheet that will provide the details of all of the suppliers that I want to reach out to. I can search on AliBaba and find suppliers that have pictures of their factory, have websites, have phone numbers and Skype details, all of these things build the case for a legitimate and high quality factory.
We look for five to ten high quality factories. We reach out to them in one fell swoop. The make sure that we never jump ahead and say, I see your minimum order quantity is 1,000, but could you just do 100? I’m just getting started. Worst idea ever.
You need to reach out to them. My name is Ryan, I’m selling in the electronic space. I’d like to know who the best person is to speak with at your company about building a relationship together. Something simple like that. If they don’t reach out, it’s fine to follow up. If they have a phone number, respect the time difference, but phone them.
Next, we like to have a Skype call with them. You ask some basic questions about the product, about the facility? Are you the trading company or the manufacturer? You can ask if you can visit the factory. This can be a test question or a real possibility. If they say no, they’re almost always a trading company, and you want to avoid that. You want to wind up with the best items to sell on Amazon.
We have fifteen questions or so that we ask, and once we’ve narrowed down your choices, you want to start requesting samples. Often they’ll charge you a lot for samples. if you have that sourcing agent, it’ll cost way less. But they’re trying to protect themselves and prevent you from requesting samples and never ordering anything else. They’re shipping to the US, after all.
We like to have someone package everything in one box and ship that one time. It’s far less expensive. Then, we examine the product. You can also request another sample as somebody else to double check that they’re giving everyone the same quality of product.
You have to make a decision on that supplier. You have to do your absolute due diligence. AliBaba has an inspection side of things, I think it’s Inspection.AliBaba.com. Then, we recommend that you place your order.
As you place your order, you need to have your conversation about the minimum order quantity and the pricing. You need to ask for the price breaks. They’ll send it over. Then, you should phone them, or get back on Skype, and discuss those price breaks. One of the things that people make a mistake on, is only ordering 100 or 200 units because they’re uncertain. The product is often going to be less than $5. But when you only order a few hundred units, and you list that as one of the best items to sell on Amazon, what’s going to happen if you do a promotion and your product starts selling like crazy, but your lead time is 45 days? You’ll never be able to stay in stock.
One of the most important things with how to sell on Amazon is momentum. If you run out of stock, you lose your momentum. Even from Amazon’s side of things–if you’re doing well, they start to advertise for you. When you run out of stock, the best items to sell on Amazon is going to shift to someone else that converts better and sells more. Then you have to fight your way back up.
We’re not scared to be stuck with a bit of stock. If you’re buying and shipping to Amazon for $5, and you’re selling for $30, worst case scenario, liquidate the product for your costs. Put up a coupon or drop the price. You can sell it, but it’s really challenging the other way around.
I want to shift a bit here. That was awesome.
Next question I get all the time is how do I price? I think people go into this a lot and think that they should have the cheapest product because that will sell the fastest. When you have your brand, how do you position yourself? What kind of profit margins do you expect?
This is a really important question because it dictates what you can and can’t do with your brand. When we build a brand, we always aim to be premium. We want to be the most premium product possible within that marketplace. If you think about the cell phone accessory market, a lot of the products out there are quite inexpensive. But there are products out there selling for over $100 per units and they do really well, because they’re positioned themselves as premium products.
We like to be in that position. This allows us to spend more money on having a higher quality product. It allows us to come up with some amazing packaging, too. If you’re selling crappy jewelry, you won’t be able to afford the $40 or $50 boxes that Tiffany uses, because you’re selling your product for $10, and Tiffany is selling for far more than that.
In fact, that brand is so great, if you mention that turquoise type box, everyone thinks of Tiffany. That’s the difference. You can spend more to create amazing packaging. Especially when someone is buying your product online, it’ll help a customer to choose you over someone else. If you’ve got ten photos of the charger, and a few photos of some really great packaging, it’ll make a big difference.
Once we start selling our product, we typically aim for a profit margin of 40% to 50%, and at least $15. This is variable, obviously, but on average that’s what we like to do. That gives us enough room to spend money on advertising. Just like Adwords, someone will build a funnel to increase the lifetime value. The reason for that is the higher the lifetime value of a customer, the more you can spend to acquire them.
If my lifetime value is $200, and my competitors is $100, I’ll always win, because I can spend more money on advertising. This is a huge advantage. Most people forget what they can do with LTV. You have to think about it in terms of the ecosystem. Usually, you want to go for higher prices because it allows you to do so much more.
I totally agree. Anything I’ve ever done… I don’t ever want to be in a market where I have to compete on price.
When you take a product into a category, what else can you do to make your product stand out, outside of your packaging?
You have to work with what you have. Amazon will give you all of these different images, and you want to use that space wisely. Use images that convey a message. Sometimes people just use the photos that the supplier gives them. What we like to do is hire a professional photographer, and showing our product being used. We show our charger plugged into a phone and my computer, showing the real life applications. They’re not action shots, but it’s the product being used.
Sometimes those shots are really necessary, too. We always like to do something like that.
Then you have your product listing. This is what Amazon gives you to convey what your product is, and to explain why your products are the best items to sell on Amazon. You get your title, your bullet points, and then your product description. You can get advanced product descriptions where you can embed images and supplier information, but all of this is designed in a specific way. It’s kind of like on page SEO, but you have to be able to convey all of your benefits over your competitors. Amazon is also making it easier to test. You have to constantly do different things to stand out. But what’s great how to sell on Amazon, is if you come in and do a lot to outdo the blind lucky ones and the companies that have been around for decades, you can be some serious competition. We’ve been beating legacy companies in the online space for a long time now because of our testing.
One other thing that most people don’t realize about how to sell on Amazon is there’s a questions and answers space. It’s important to kind of bulk those up. I’m looking at an iPhone charger right now, and they have almost fifty questions and answers. This keeps people on your page. If they had one objection, and you can resolve that with a question and answer, then they can go ahead and buy your product right there.
So it’s important to look at your competitors’ questions. What’s great, is if someone asks a question, and it has four or five responses, those are usually the more popular questions. Then you can address that in your Q&A and in your listing. You can answer their questions before they think to ask it, and that leads to higher sales.
Awesome. Well everyone, that was how to sell on Amazon ecommerce expert Ryan Coisson. All of the links we mentioned will be in our show notes. Amazon is such a massive opportunity. If you’re selling any physical products, you need to be paying attention. I also highly recommend you take a look at Ryan’s website, just to see what it looks like to be succeeding with Amazon on such a massive scale.
Once again, I hope you learned a lot here today, and if you like what you heard, head over to iTunes or Soundcloud, subscribe, and leave us a quick rating or review.
Now it’s time to take the final ingredient and apply it to the tips and strategies you learned from Ryan here today, and that ingredient is action. So, by all means, use what you learned, apply these tips to your business, and we’ll see you in the next episode.
This is Derek Gehl, signing off.