James Thomson, a partner at Buy Box Experts, explains how to gain an edge and win on the competitive Amazon marketplace.
Building a brand on Amazon is different than doing so on any other offline channel. If you want insight into what works and doesn’t work, then I highly encourage you to listen to my fascinating interview with James Thomson, a partner at Buy Box Experts, a managed service agency supporting brands selling online. James is the former business head of Amazon Services, the division of Amazon responsible for recruiting tens of thousands of sellers annually to the Amazon marketplace. James also served as the first Fulfillment by Amazon (FBA) account manager. In 2015, James Cofounded the Prosper Show, a continuing education conference for large Amazon sellers. In 2017, he published the book, The Amazon Marketplace Dilemma designed for brand executives seeking to optimize the distribution strategy on the Amazon marketplace.
James will give us the inside scoop on what most sellers don’t get about how Amazon works and how the concept of loyalty on Amazon is something different from what brands are used to having in other channels. Learn what’s critical for brands to think about when assessing how they’re positioned, how to drive brand awareness on and outside of the platform, and how you can compete with big-box names.
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How To Win as an Amazon Seller with James Thomson
James, thank you for joining me on the show.
I’m delighted to be here. Thanks for having me, Meny.
I’ve been following what you’re doing for quite some time now. What you’re doing as a Partner in the Buy Box Experts and most importantly, what you’ve done for the Amazon community with the Prosper Show for many years now. We got to know each other even closer as we’ve been preparing for the upcoming Prosper Show, where you have the involvement on the countdown and strategy. I’m delighted to speak to you and bring this content to our readers. As you and our readers know that a large portion of the Ptex client base is based on product brands, primarily some of them selling on Amazon. I felt that it’s important to bring this topic to the forefront, speak about what you see in the marketplace and dissect a couple of those myths, the dos and the don’ts. Before we get into the details, for our readers, tell a little bit about yourself, James.
I was fortunate to have the opportunity to work at Amazon for a few years. I was able to work on a number of different marketplace businesses within Amazon, including being Amazon’s first FBA Account Manager as well as running Amazon services, which is the group responsible for recruiting almost all third-party sellers to the marketplace. I got to see a lot but people build businesses successfully out of their basements and garages. I see a lot of people decided they wanted to become entrepreneurs but not have the foundation necessary to succeed on Amazon. Since I left Amazon, I’d been working with resellers and brands specifically helping them think through what strategies make sense for them to succeed. I am blessed to have had the opportunity to work with many different companies and see different business models, see things that work amazingly and see other things that you would think would work but don’t seem to work particularly well on Amazon.
Many people that you and I speak to in the marketplace in general, they jump on the Amazon platform thinking they’ll be making millions easily, but then they discover the reality, which is hard work. What are the common misconceptions that people have out there that they’re not properly planning for?
There are a couple of different common issues that I run into commonly. The first one is the role of brands on Amazon. You would think the consumers would go looking for particular brands and say, “I want to buy a pair of Reebok running shoes.” It turns out the vast majority of customers on Amazon, when they go searching for products, they’re not using branded terms. They’re using unbranded terms. They’re looking for men’s running shoes, not Reebok men’s running shoes, and as a result of them using unbranded terms, the role of the brand coming in and you think you’ve done all this work investing in building your brand name and so on. A lot of that is irrelevant to Amazon. Whether you’re a small brand or whether you’re a huge brand, it all comes down to what it takes to succeed and get your products on the first page of organic search. If you understand what it takes to do that, then you start to realize that companies and brands you’ve never heard of, brands you’ve never competed within any other offline channels, those are often the companies that you’re competing against with on Amazon.
You may think you’ve got a big customer base and people who are loyal to your brand and then you jump on Amazon, and you are surprised to discover that there’s a whole different group of players and the way that you have to compete to get visibility is different than anything you’ve experienced anywhere else. That’s one big issue. It’s the issue of brands. Their big issue that we run into commonly with companies is this misunderstanding that somehow, they’re going on to Amazon to get new customers. They’re going on to Amazon to get transactional sales meaning you don’t own the customer relationship and your ability to get that customer to come back over and over and buy from you again on Amazon. It’s difficult unlike other channels where you might have a retailer who’s promoting your product or you may have the opportunity to interact with consumers and get them to try to follow you. It’s much harder to do so on the Amazon channel.
Going back to the first misconception that you mentioned, I want to dissect a little bit. What people don’t realize is that in order to win on the Amazon platform, there are two main objectives. One is getting traffic to your listing and converting those traffic into sales. I would love to hear how you approach this, but both of them are equally important, correct?
You first have to have consideration meaning consumers have to be able to find you. If they find your product listing, you have to be able to answer their questions and get them comfortable with putting your product in their cart. If you can’t do both of those, quite frankly, I don’t care how good your mousetrap is. You’re irrelevant until you are able to find customers and keep them interested long enough that they feel comfortable saying, “Your product looks good enough for satisfying the needs that I have.” I would agree with you for both organic search and customer conversion are critical. The way you succeed in on Amazon in those two areas is quite different than what most brands might otherwise experience.
You’re not so much paying for external advertising that creates all this warm and fuzzy brand awareness. Warm and fuzzy brand awareness on Amazon means you have to be spending money either driving advertising to your listings on Amazon, whether that’s advertising from within Amazon or whether that’s external traffic that you’re driving from email lists or social media traffic or some other way to get your existing customers to come and follow you and buy from you on Amazon. That’s a different exercise than going to Walmart or going to Target and saying, “Could I have placement on your shelves?” and having a conversation with the appropriate managers of these companies to get placements.
There was a study that I read, which was speaking about the trends and buying patterns. How much it shifted in the last decade, especially in the last few years. For our readers, they would find this fascinating which is once upon a time, including we’re a branding agency and we focus on branding, you would speak about the brand way in advance with the notion that eventually, that person will buy from us. Now, what changed is that the way you introduce your brand is getting the product as up in the funnel as possible, connect them to the product. From there, you build brand loyalty.
The concept of loyalty on Amazon also is something different from what brands are used to having in other channels. There is much less loyalty because of this transactional nature of the marketplace. You may buy multiple pairs of running shoes, but every time you come back to buy a pair of running shoes, if you’re searching using unbranded terms, you’re going to have the opportunity to be presented with a bunch of brands that you may never have seen or may never have historically considered as part of your purchase experience.
Which on the flip side also gives opportunities for new brands to do a good job.
There was a story that broke about Nike leaving Amazon. Amazon versus selling products for first-party through Amazon. I find this quite fascinating to see different media coverage on the story. People are saying, “Nike is mad at Amazon on the way.” The reality is here’s a successful brand that spends hundreds of millions of dollars a year on advertising outside of Amazon. Yet, you’ve got several hundred million customers on them who do have the opportunity to see their product listings. Nike doesn’t have a good catalog control fault. They don’t have the channel control.
While they may choose to no longer supply Amazon with the product, they’re going to walk away from a channel where there’s complete disharmony, there are messy listings, there are counterfeit products, there are unauthorized sellers, there’s price erosion. I don’t understand how Nike walking away from that is viewed as a matter of Nike being in control and being able to say, “Go away, Amazon, we’re not dealing with you.” Amazon is a marketplace where brands are going to be sold whether they want to be sold there or not. It’s critical for brands to think about how they’re positioned.
Are they effectively positioned with the right content? Is that messaging consistent with what they’re putting into other channels? These are big complicated issues, especially for brands that say, “I haven’t learned how to play in the online marketplace space. Do I have to have somebody focus on Amazon?” The answer, for better for worse, yes you do because that’s where customers go shopping. Either you choose to be present there positioning your product for the opportunity to get some sales or you’re at least protecting your brand to make sure that if product shows up through sales channels that you don’t necessarily desire, at least your branding is consistent with what you’re investing in other channels to have put out there in front of consumers.You're irrelevant until you are able to find customers and keep them interested long enough that they feel comfortable with your product. Click To Tweet
For the brands that are following the story of Nike, they are like saying, “What is this telling us?” What would be your message to them?
It’s not so much whether you’re following Nike or not. It’s a matter of if you’re a brand that has any level of popularity in any channel meaning customers do like to buy your product, whether it’s in a retail store setting, whether it’s in an online setting, chances are your product is going to find its way onto Amazon. Nobody cares about the way your brand is positioned as much as you do like the brand and the owner. If you’re not proactive, at least managing your branding. What message is being put in front of consumers? What do your product listings look like? Are you getting involved in the brand registry program for lockdown content and make it consistent with what you’re doing elsewhere? If you don’t do that, nobody else is going to do that.
Here you have a channel with lots of consumers, lots of potential customers who may find your products. What are you doing to make sure that they’re getting the right message, the message that you want to be communicating to people? The second part of the equation is you may choose as a brand not to actively sell them in a channel, but I know a few brands that have complete control of their distribution. The brands can affect who does or doesn’t sell the product on Amazon. Chances are popular brands that are going to show up on Amazon because somebody is going to find a way to get it onto Amazon.
You’ve got the question of how do you manage distribution so that you don’t end up with price erosion problems or worse yet lower than expected prices on Amazon that caused your brick and mortar retailers to get upset with you and potentially dump your brand. We’ve talked to retailers who will walk away from carrying brands in their brick and mortar stores. Because they can’t compete with what’s happening on Amazon, even though what’s happening on Amazon is primarily sales from unauthorized sellers who the brand has decided to walk away from managing. It’s a complicated situation for brands where you may have a small portion of your total sales going through Amazon. The impact of what happens on Amazon can be devastating, can be damaging to not only your own online sales, but more importantly to your larger offline sales.
Let’s flip the coin and speak about the brands that are successful on Amazon and what you’re seeing. What are they doing right?
I feel like a broken record in some ways. The first issue is they are managing their brand and they’re making sure that their listings look good. They’re making sure that the content is correct. They’re making sure that if they have any regulatory issues related to their products, those regulations are being properly divided by within the content that’s on those listings. They’re making sure that the images properly represent the product, not last year’s version. The photos of last year’s packaging, but this year’s packaging, this year’s versions, so customers get the products they end up buying off of these listings.
That’s issue number one. Contrary to that is the brands are also going in and making sure that the catalog of all products that are using their brands, in fact the whole catalog is clean. If I’m a brand that chooses to sell, let’s say 100 SKUs to Amazon, that doesn’t mean there are only 100 SKUs in the Amazon catalog. There may be a bunch of other retailers that created bundles, there may be duplicate listings, there may be people misappropriating my brand name to put it on their products. Who’s going and looking at all that stuff and making sure that the catalog is completely clean. Don’t manage the listings that you happen to be selling to Amazon or you happen to be selling through an authorized reseller.
You’ve got to make sure as a brand that you’re controlling the content for all of your listings on Amazon including the ones that you don’t sell. There are brands that have done a good job. They’ve hired agencies or they’ve hired people internally who know how to create high-quality in Amazon listings. That’s great. By the way, that’s not a one-time deal. You have to have somebody consistently going back to look to make sure that duplicate listings aren’t being created and noise isn’t being created in the catalog that will ultimately harm your brand. Step one, clean up your brand. Make sure the catalog looks good.
Step two and this is not necessarily going to be popular with everybody who’s reading the blog, but for brands that won’t want to control what happens on Amazon, they can’t be in a position where there are dozens of unauthorized sellers creating price erosion problems for the brand. That price erosion will spill over and hurt their brick and mortar channel relationships. It’ll impact their ability to get further distribution and other channels as distributors say, “Why am I going to carry your product when product is cheaper on Amazon?” Brands need to be thinking about how they tighten up online reseller policies. Do they need you to enforce their trademark in different ways? What do they need to do to make sure that the company representing them on Amazon is doing it in a way that’s consistent with what the brand is trying to do in every other channel?
I can’t count how many times I have people sitting in my office and speaking about branding. I asked them, which channels do you sell? They would tell me brick and mortar and so on and so forth. I ask them, have you done anything on Amazon? They will say no. I opened up Amazon, search for the product and they were amazed, “Who’s selling my product?” People don’t realize that it’s a huge market there that you have to control.
I call this the curse of being successful. The more successful your brand is, the more broadly it’s likely distributed, the easier it is for someone to get their hands on the product. Amazon’s an easy place to go to try to sell those units. For brands that have created some level of success among consumers, most probably selling it on Amazon. If you start with the assumption whether I want my products to be there or not, someone’s going to be selling them. You as a brand have a responsibility to make sure your branding is done properly. You as a brand have a responsibility to figure out, do we want to actively manage the Amazon channel so that we don’t end up with all sorts of price erosion problems that spill over into these other channels where we do want to be selling actively.
Speaking about Amazon in general, what have you seen changed? When you speak to sellers, they are concerned about the suspension that is happening all over the place but they’re also concerned about the Amazon brands with the Amazon logo in it or not. You’ve been in this space for quite some time. What was your feeling about where this is going?
Once upon a time, several years ago when I started at Amazon, it was a land grab in the sense that sellers would jump on Amazon and say, “There’s an opportunity for me because I’m going to sell products that nobody else is selling. If anybody goes looking for those products, I’m going to get the sale.” That was all nice but Amazon was able to find not necessarily all the selection that you might need, but five sellers to sell every single one of those SKUs. With five different sellers selling those products, you now have the challenge of whose branding contribution is going to be used to determine what’s in the content of the listing. You’ve got all these issues with regard to price erosion. The other big shift is people talk a lot about Amazon’s own brand.
The reality is private label sellers had been attacking national brands for years and years. While Amazon may have its own private label products, they may have potential access to additional sales data that most private label brands don’t have when they do their product development. The reality is, take any category and go see how many private label brands there are in that category that isn’t called Amazon. It’s a popular category. There’s already dozens and dozens if not hundreds of private label brands you’ve never heard of except for being sold on the Amazon channel. We’ve worked with some large consumer goods companies who have multi-billion-dollar brands and they’re used to saying, “We have 15% market share in brick and mortar.”
What does a 15% market share look like on Amazon? Lo and behold, they don’t have a 15% market share on Amazon. They have a lot less than that because there are all these private label brands nibbling away at their share, private label brands that know how to play the Amazon game much better than the national brands. That’s good for private label brands, but it also causes me to say different people in Congress and different legislators are looking at Amazon and antitrust issues related to how they use data. Even if those issues are getting worked out, whether it’s Amazon competing against you or 100 other private label brands competing against you.
Either way, the type of competition on Amazon that exists is such that you need to have people who understand how the Amazon channel works. What you need to do to position your brand as effectively as possible within the budgets you have available to turn the Amazon channel into a growth channel. First, you need to control all the channels and then you need to grow in the channel. If you don’t control, why bother growing? If you aren’t growing, that means your competitors or new competitors are going to come in and grab those 250 million customers who are shopping on Amazon.
I want to speak about the topic of a lot of Amazon sellers be themselves, “This is a great opportunity. I could do this as a side gig. I could do this without putting myself into.” In your case and in my case, when I see those that differentiate successful sellers than not, it’s a business like every business. It has its challenges. It has its growth projections. You got to be in it all the way, correct?
It used to be that you could have a little side gig and you could sell miscellaneous stuff on Amazon and make some money. Along came the sophisticated third-party seller. The sophisticated third-party seller is not only all in, but has built software to be able to find the right products, has figured out how to get in and out of the products as margin opportunity remains. They figured out how to source products from all different parts of the world to be able to satisfy customer demands. That’s different than the model of several years ago where you’d say, “My next-door neighbor can sell me some product and I’ll throw it on Amazon and see what happens.”The more successful a brand is, the more broadly it's likely distributed, and the easier it is for someone to get their hands on it. Click To Tweet
You might get lucky and sell a little bit of a product that would make a little bit of money. If you’re selling something that’s doing well and you’re not proactively looking for the next ten products that you should be getting into, you’re going to wake up one day and discover that, “Either someone’s underpriced me on the products I do carry or some private label seller has come along and created a better version of the mousetrap and is able to sell it at a lower price. Also, it is able to invest more in organic search, get better placement for every one of those customers that are doing an unbranded search for the types of products I sell.” There are enough sophisticated sellers on Amazon and enough for the categories on Amazon that the amateur seller on Amazon, that’s a hard model to make work.
It’s also hard to be what I call a general merchandise reseller on Amazon, where you’re going to a bunch of brands and saying, “Can I sell your product?” A lot of brands are lazy about putting together their online reseller distribution. They’ll let twenty different companies sell the same product on Amazon. Not understanding that will create price erosion. You being the twentieth seller on a product on Amazon, chances are you are not anywhere near positioned well-enough to be able to get the sale and win the buy box. What are you doing to make sure that not only do you pick the right products where you can have enough of the buy box but you’ve got enough flexibility in terms of either building your own brands or sourcing brands in a unique way that you can make money. The number of companies over the last several years that I have connected with that sell on Amazon that sells millions of dollars a year that literally do not know if they’re making money until the end of the year when their accountant tells them, “Good news, you made money this year.”
I don’t understand how anybody can run a business this way because it is a labor-intensive exercise selling a lot of products on Amazon. If you don’t have unit economics on each of your products, if you’re not getting in and out of products as the market changes or if you’re not at least realistic about how long you’ll be able to sell your private label brand before someone with a better mousetrap comes along, you can get demoralized quickly. All that Amazon has done is accelerated the types of competition that already existed. They create price transparency. They make it easy for consumers to look at large shelves of products because it’s all transaction-based. It’s easy for customers to get in and out of products and say, “I had a good experience with your brand last time, but I don’t remember the name of the brand. I’m willing to explore and look for new options the next time I have to buy that type of product.”
That leads me to my next question. There’s a huge debate in the Amazon seller community, which is quality versus quantity. Should I rather have fewer products, higher-priced with larger margins or we constantly have to bring in new products because products go in and out or they rank now and they don’t rank tomorrow. There’s no right and wrong answer for this but what’s your opinion on this?
I’ve worked with companies that do both models successfully. If you’re going to do small whole numbers of products, let’s say you have ten SKUs that you carry. They’re all your own private label brand. The important thing to keep in mind is you need to be upgrading those products every time you get an opportunity to do so. Let’s say you’re sourcing product out of China and you do your first pallet of product, you bring it in. You sell it. You do okay and you start to get some customer reviews. You’ve got to be reading those reviews and saying, “If I were a competitor to myself, what are the things that I would do to make this product even better? Better packaging, better instructions, better functionality.”
I need to look at how I make version 1.1 that much better. The next pallet I buy, I’m telling my manufacturer overseas, “I need to make a couple of little tweaks. Let’s refine this. Let’s make it a little bit better.” As you consistently improve the product, in some ways, you’re extending the life of the product on Amazon because all those private label sellers are looking for ways to take out your brand by leveraging all the negative feedback that’s on the listings. You should be doing that in yourself to your own products and trying to make the current version of your product obsolete because you’re making it better and better every time you get an opportunity to buy more products.
If you’re taking that approach, you don’t need a huge catalog in order to be successful. On the other hand, if you’re in a churn and burn model where you say, “I’m going to carry as much product as I can. Throw it up against the ceiling. See what sticks. Whatever sticks, we’ll stick with everything else. I’m going to go find another 10,000 products and throw it at the Amazon ceiling and see what happens.” You can do that model. It’s labor-intensive in other ways and it can work fine unless you’ve got unusual skills in sourcing products, that model is easily copyable by every other guy who decides, “I want to have a huge empire on Amazon.”
I’m a big believer that whatever model you’re going to use, you’ve got to be asking yourself, “How do I make the process better for myself every single day?” When I worked at Amazon, in many ways, there were a lot of similarities here because we were asking ourselves, “How do I make myself obsolete in this particular role? How do I either automate parts of the process? How do I eliminate parts that aren’t value add?” You’ve got to be asking yourself the same questions as a seller and say, “If I want to do a long-term business out of this, I need to continually evolve and make myself more efficient, make my employees more efficient, make the products better every single day.”
It sounds cliché in some ways but the reality is what stops your competitors from doing exactly the same thing and undermining your business by leveraging the feedback that they can see as easily as you can about your own products. I get a big laugh out of every conversation I have with a brand and I show them some of the public data about their own brands and they say, “Where did you get all of this? Who gave you access to this?” I’ll say, “I can get you the same data on your competitors.” They look at me and say, “We need to learn how to do that.” I tell them, “By the way, some of your competitors are not competitors you’ve ever heard of and they’re absolutely eating your lunch. Let’s figure out who in your company is going to manage the Amazon channel strategy. What are the things that they need to be up to speed on so they can inform important decisions within your organization? Not to drive more sales on Amazon, but to take all that amazing customer data that’s sitting there to make your products better for every channel in which you saw your products.”
Something we’ve seen a lot and I would love to get your take on this, which is a lot of successful sellers for quite some time are seeing decreasing level of sales and they will say, “Because this competitor came into my niche in the kitchens category and this came into the beauty category and so on and so forth. When we dissect it, we try to see what’s happening.” We see a lot of them are building brand awareness outside of Amazon and sending traffic to Amazon. What have you seen in that? How important is it if you want to have a viable successful Amazon brand to create brand awareness outside of Amazon, even the sales are coming to Amazon?
A few years ago, there was no Amazon advertising platform. Along comes Amazon advertising, people jump on it, it gives us a little advantage. Within a few years, we’re now at a point where if you want to launch a brand, you have to be spending money on Amazon advertising. While there has then some increase in the overall amount of advertising space, for all intents and purposes, the ad space within Amazon, the stuff that matters, sponsored products, sponsored brand space, that’s fixed. You’ve got more and more companies competing for exactly the same billboard space and naturally, the cost of that advertising has gone up and up. It’s easy to spend money on Amazon advertising.
You can go into Seller Central, set up a campaign and your campaigns are up and running. The problem is if everybody’s playing the business using the same approach and the price of the ads keeps going up and up, then where are you creating an advantage for yourself? You’re standing on the side of the road yelling at cars to go by saying, “Stop, look at my product.” The problem is there are 5,000 other people standing on the side of the road doing exactly the same thing now, so it’s hard to get anyone’s attention. One of the things off Amazon advertising that’s interesting is there’s a whole lot more ad inventory outside of Amazon whether that’s Facebook or YouTube or other social media outlets.
There’s a lot more opportunity to get in front of large numbers of online consumers who might be interested in buying things. It’s not only doing the advertising outside of Amazon. The thing that I like is when brands will set up all this external traffic and they’ll drive it to the squeeze page and they will educate people about their products and have only those people that are ready to buy driving those customers to Amazon. You end up in a situation where rather than trying to educate people about your product on Amazon, let’s get as many people only to buy the product on Amazon.
Let’s get them to learn somewhere else. If you want them to learn off of Amazon, you’ve got to drive traffic to whatever that destination is. For brands that are investing in social media advertising, driving the traffic to a landing page which serves as a squeeze page to educate consumers, get them excited and only those that are ready to buy. At the bottom of the page, there’s an opportunity to click on the shopping cart that drives them to Amazon. Those customers are high-converting customers. That’s where we get a huge advantage in the organic search algorithm.
If you have a conversion rate that’s higher than all your competitors on Amazon, Amazon is going to reward you with much better placement in organic search. They want to present the next Amazon customer with options they know historically have sold well with other Amazon customers. If you can improve your conversion rate by driving high-converting traffic to Amazon and bump up the average conversion rate you have, you’re going to help your business greatly.
To your original question, we see brands spend proportionately more money outside of Amazon on traffic-building exercises not to drive unfiltered traffic to their Amazon listings, but to drive that traffic to landing pages. That they can warm people up, educate them on their products and then get only those that are interested in buying to go and look at the Amazon product listings. That’s a beautiful model. One that’s hard for somebody who’s only looking within Amazon and to say, “Why are my competitors winning?” The reason they’re winning is not necessarily because they’re showing more units, but they’re much more efficient in converting traffic into sales. Amazon rewards companies greatly for having higher conversion rates.
This is an interesting point. What we’ve also seen is we’ve done some split testing on some of those brands that maybe started their website and trying to send traffic. We have run some Facebook paid campaigns with the education part of it. We see an increase even if the URL is taking them to their own websites. We’ve seen a spike in Amazon sales, which means that you’re not going to control the convenience of the shopper. You could educate them and at the end of the day, the shopper is buying where their convenience or what their preference is. When people are trying to control this is how you’ve got to go and you’ve got to go to the finish line according to how we plan you should go. Not always it works. Going back to the point that Amazon is a marketplace and is going to stay in a marketplace. It’s either you figure out how it’s going to work and attach to your business plan and to your brand or you’re going to lose out on sales.
I don’t know the other channel out there that has a couple of hundred million customers with their credit card out ready to buy. If you can figure out how to intercept some of those customers and get them to pay attention to your product whether you got their attention on Amazon or you got their attention off of Amazon and then drove them to Amazon. In either case, there are few brands out there that can afford to walk away from a couple hundred million active customers. Brands may say, “I’m upset that I have to play in the Amazon space.” I get it. Online marketplaces are here to stay. There are additional costs, there’s additional knowledge that brands need to incur and develop in order to be able to succeed in a world that has online marketplaces. If you don’t want to play in a space, that’s fine, somebody else will likely play in that space for you. If they’re playing in that space, they view your product as a widget.Do something properly even if that means it takes twice as long as you initially expected. Click To Tweet
If they view it as a widget, you’ve got a bigger problem on your hands, which is somebody doesn’t care about your branding, doesn’t care about your pricing and will ultimately get in and out of that product as fast as they can or as long as they’re making money. Do you want to be actively thinking about what is my Amazon channel strategy? How does it fit in with everything I do in other channels? How do I address some of the channel conflicts that are selling on Amazon is naturally going to create with retailers and other channels? I can’t tell you how many companies we work with, they have a map policy and they force that map policy on their retailers, but at the same time, they don’t bother to manage pricing on Amazon. All these retailers will say, “I’m sorry, you want me to follow certain rules to get customers to buy in my store, but I can’t price anywhere near the prices that I see on Amazon. That’s hardly fair.” Brands say, “Don’t worry about it. There’s not many people buy on Amazon.” That may be true, but lots of people go and look at pricing on Amazon and use that information to try to negotiate down with the retailer.
It’s also a missed opportunity. I know a couple of brands that finally got that meeting with a buyer of a retailer and then the door was shut on them because of that. Let me ask you about marketplaces. A lot of our clients are asking me and I would love to get your take on, which is they’re selling successfully on Amazon.com. How much effort should a person put in going to all the other Amazon marketplaces such as Canada, UK, and they’re opening up Australia and Japan? Even outside of Amazon, the Walmarts of the world and Jet and any others. Is there a benefit? Is it worth the work that we put in? What would you see of the brands that you work with?
What’s the end goal here for the brand? Is the end goal to package up your brand and sell it to a private equity company or to sell through Amazon space? What is the goal here? Are you trying to build a $1 million brand, a $10 million brand, $100 million brand? Depending on what you’re trying to do, depending on what you’re trying to take off the table when you exit the business, there are different approaches. I believe selling your products into Europe, if you don’t have regulatory issues or major constraints with hazmat or oversized products, it’s worth at least doing some of the market sizing work to figure out how big a sell my type of product at my price point in Europe. If you can knock that out, great. You might be able to improve your overall business by 40% to 50%. Figure out a 3PL overseas and get yourself all the right banking and financial information in order to be able to accomplish that type of growth.
If you’re not interested in doing Amazon in the US, to me it comes down to how much time do I have to spend on Amazon? Most of the brands we’ve worked with, it takes about the same amount of time to manage an Amazon.com business. The amount of return you get from Walmart.com or eBay.com is a whole lot smaller, so don’t want to make that investment, but you have to ask yourself the question, “What is the ultimate point of growing? I’ve been trying to grow 20% by way of adding eBay and Walmart or do I get 20% by to get me a placement in some brick and mortar channels?” If you’re trying to sell your business, package it up to illustrate that your product has credibility online and offline because it’s got shelf space to take the deal to a potential investor. On the other hand, if you’re an Amazon-only brand, you can still sell your business distributed across online and offline channels.
There’s so much that you packed in. I appreciate it. I invite all my readers, if you sell on Amazon and anything eCommerce, you should check out the Prosper Show’s website for the beautiful lineup. I’ll personally be there and I’ll be speaking. I look forward to meeting you all in person. Everything will be at www.PTexGroup.com/podcast. Let’s close with the four rapid-fire questions. Number one, a book that changed your life?
A book by Chris Hadfield called An Astronaut’s Guide to Life on Earth, an autobiography of an astronaut. It’s an amazing book to help people understand why we are here on earth and what we are trying to accomplish during our lifetime. It’s an incredible book.
Number two, a piece of advice you got that you’ll never forget?
If you’re going to do something, make sure you do it properly, even if that means it takes twice as long as you initially expected.
Number three, anything you wish you could go back and do differently?
Every week, I ask myself that question. There are always little things and big things. I’ve been fortunate to have a lot of good runs at a lot of companies. I have a wonderful wife. I wouldn’t change any of the big things.
Number four and final question, what’s still on your bucket list to achieve?
One day, I want to go to Antarctica. I want to see what it’s like to have more snow and ice than anyone could possibly imagine.
James, thank you for joining us. I know your time is valuable and that is why in the name of our readers, we will forever be grateful for sharing some of your time with us.
Meny, it’s been my pleasure. Take care.
I enjoyed my interview with James and how he graciously shared how brands are winning on Amazon. If you are a brand owner looking to grow and trying to figure out what your next step is, I would like to invite you to a one-time opportunity to sit down with me one-on-one to do a brand audit. In our conversation, we will go through what is your online strategy? How can you maximize the Amazon platform? How could you drive traffic outside of Amazon to your brand? To take advantage of this, please go to www.PtexGroup.com/brandaudit. Fill out the information and I’ll get back to you at a time that we could meet together. Until then, make it a great week.
- Buy Box Experts
- Prosper Show
- The Amazon Marketplace Dilemma
- An Astronaut’s Guide to Life on Earth
About James Thomson
James Thomson is a partner at Buy Box Experts, a managed services agency supporting brands selling online. Earlier, he served as the business head of Amazon Services, the division of Amazon responsible for recruiting tens of thousands of sellers annually to the Amazon marketplace. He also served as the first Fulfillment by Amazon (FBA) account manager. Prior to Amazon, James was a management consultant and banker.
In 2015, James co-founded the PROSPER Show, a continuing education conference for large Amazon sellers, and in 2017 published the book “The Amazon Marketplace Dilemma”, designed for brand executives seeking to optimize their distribution strategy on the Amazon marketplace.
He holds a Bachelor of Science from University of Alberta, an MBA from Vanderbilt University (Owen School), and a Ph.D. in Marketing (B2B Pricing and Distribution) from Northwestern University (Kellogg School). James has guest lectured at more than a dozen top business schools around the world, including Stanford University, University of Michigan, University of Notre Dame, and Manchester University. James has been featured in Wall Street Journal, New York Times, Wired, Forbes, Washington Post, Consumer Reports, Entrepreneur, Inc., CNBC, Bloomberg, Internet Retailer, Globe and Mail, CBC, USA Today, and many more.